May 11, 2010

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Europe fixes debt with more debt Anybody remember the last G20 Summit? Hard to forget. It’s only been what? - six months since the event, held in Pittsburgh last September. The words of our leaders, triumphant and self-congratulatory, still ring out today. Boasting of having launched “the largest and most coordinated fiscal and monetary stimulus ever undertaken,” the G20 looked back at the London Summit, where Gordon Brown, now former PM of Britain, orchestrated a rousing session around the theme of spend, spend, spend to get the world out of economic crisis. “At that time [in London], our countries agreed to do everything necessary to ensure recovery, to repair our financial systems and to maintain the global flow of capital. It worked.” Monday, the subprime government debt crisis, the direct product of the above-mentioned summits and other meetings of the world’s economic and political leaders, produced another threat. The European Union, its members sliding into stimulus debt and losing market confidence, would again do “whatever is necessary” to end the crisis, restore confidence and protect the euro. Whatever is necessary turns out to be more of the same. The amazing European and IMF economic stimulus machines will tackle their debt crisis with a new strategy: More debt! Already racked with rising deficits and debt loads that are in dangerous territory, the EU plans to fix the problem with US$1-trillion loan packages. And if the debt doesn’t work, they’ll crank up monetary policy and have the European Central Bank buy up government bonds and private bonds of banks that are lending money to the governments. That spells inflation, although the ECB said it would be taking countermeasures to “sterilize” or neutralize the inflationary impact of its bond plan.
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Time for Greece to Play by the EU’s Rules For the time being, the markets have been pacified. For the moment, the riots in Athens have subsided. Only “hundreds” of demonstrators came out over the weekend, fewer than the rioters who killed three people during a violent petrol bomb attack on a bank last week. But this temporary truce in Greece has been bought at a high price -- by which I don’t just mean that it was expensive. In front of me as I write is a draft version of the Council of the European Union’s most recent “decision” on Greece. It isn’t a classified document: Bits of it have been in the newspapers; the Greek parliament has already voted to pass some provisions; and a similar, though less comprehensive, decision was published last February. Yet while it’s not secret, no one is talking much about its political significance either. For this is no ordinary piece of Euro-bureaucracy: This is the kind of thing a surrendering field marshal signs in a railway car in the forest at the end of a bloody war. Europe and the International Monetary Fund will spend billions of euros to rescue Greece. And in exchange, Greece will not merely agree to reduce its vast public deficit but will adopt, by June, no fewer than 17 specific legal and budgetary changes. Among other things, the council declares that Greece “shall” reduce the “Easter, summer and Christmas bonuses” of civil servants and pensioners; increase taxes on fuel, tobacco and alcohol; reduce the operating costs of local government; and pass a law to simplify the rules for new business start-ups.

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I'm a watchman for Christ, looking on the horizon in expectation for the fulfillment of God's Word.

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