Quick Hits - February 21, 2012 - UPDATED

After a marathon 14 hour session, European Union Finance Ministers have approved the second bailout for Greece - amounting to about 140 million Euros.  During the meeting, some last minutes changes / additions were seen as needed:

• Private creditors holding Greek bonds will increase the amount of their loss or 'haircut' from 50% to 53.5%.  This means that these holders of Greek bonds will be forced to take a 75% loss of the net present value of their holdings - which is up significantly from the 21% they thought they had to take last summer.
• Greece will get an immediate 50 basis point reduction on the interest they are being charged by EU bailout members for their loans to Greece.  This lessens Greece's debt payment.
• Greece will deposit into an escrow-type account at least one quarter's worth of debt service payments to ensure that the loans will be repaid to the 'troika' [European Union, European Central Bank, and the International Monetary Fund] for this bailout.

Even with this deal, the Finance Ministers know that this bailout may go the same way as the first bailout that Greece received (about 110 million Euros) in May 2010 - and fail to solve Greece's fiscal challenges.

The bailout does not solve Greece's problems - it only kicks the can a little further down the road.  Greece still has huge hurdles that it needs to address before it returns to any semblance of fiscal responsibility.

Greece still faces a huge debt burden that just increased by 140 million Euros.  They also face immense implementation challenges around the austerity measures they need to adhere to.  These are complicated by a collapsing economy.  Still unaddressed - the fundamental problems that put Greece into this current position - the fact that they can no longer afford the euro-socialist welfare state that they created.

As the Telegraph notes, Greece remains locked in its lost decade..

Back in the real world, this is a country where manufacturing output fell 15.5pc in December. Unemployment jumped to 20.9pc in November, up from 18.2pc the month before, and 60,000 small firms have gone bankrupt since the summer. The Greek private sector is inextricably linked to state patronage so will continue to shrink along with the public sector.


Unlike countries such as the UK, Greece’s membership of the euro means it has no currency of its own so can’t devalue to competitivness and it has no central bank to set interest rates in future or print money to try and inflate its way out of trouble. Its fiscal policies are now dictated by Brussels, the IMF and the European Central Bank so it cannot pass its own taxes without permission.


By April, when Greek elections are planned, the whole thing may look even more unpopular than it does now. Greek families are bound to be thinking of leaving the country, a wave of economic migration could sweep Europe and don’t forget the package has to be ratified by all 17 members of the currency union too.


This deal keeps Greece afloat until March 20 and avoids a chaotic default on its debts. After that, it’s still anybody’s guess.

Nearly 21% unemployment, and that in a country where 1 in four works for the Government.  Minimum wages are being slashed 22% - yet the tax burden, and high costs, high inefficiency, and corruption still remain.  Private industry and small businesses continue to be squeezed by a combination of higher taxes, higher regulations, productivity killing initiatives - and face a consumer who has even less to spend than they did before.  As the numbers of those needing government safety net services skyrocket - the government has less funds available for those in need.  The result - those who can are leaving Greece and taking their assets with them.

And if Greece still defaults - the impact on the EU and the ECB will be even more dire than if Greece would default now.

“If the plan doesn’t work, and a combined $317 billion in fiscal bombardment in the span of two years has still left Greece in a state of fiscal and economic necrosis, it will be very dire indeed. The current European recession would certainly deepen. It would speed the demise of the euro and might set off a crisis in Italy and other grossly indebted nations.”

Yet, with all of this happening before our eyes, the Obama Administration and progressive Democrats in Congress insist that we continue down this very same path as we try to emulate the 'social justice' and 'fairness' of Euro-socialism.

We've embraced, during the last three plus years, an accelerated sprint down the same path as Greece as the Obama Administration increases the anti-business, anti-economic growth direction of the US government.  This is an Administration that focuses on the equality of results as opposed to the equality of opportunity.  This is an Administration that called nearly $5 trillion of deficits created by it's predecessor Administration across 8 years 'irresponsible' and 'unpatriotic' - but is on pace to spend $6.2 trillion of deficits in its 4 years in office - including $2.1 trillion in just 14 months.

This is an Administration that is ignoring the ticking time bomb of entitlement spending, in particular Medicare, while implementing legislation like Obamacare which only accelerates the fiscal irresponsibilities.  Government regulations cost the nation hundreds of billions of dollars.  Demands to increase taxes to 'cover the deficits' - are not used, as evidenced by the President's FY2012 and FY2013 budgets to reduce the deficits, but ramp up additional government spending.

We are in the longest, slowest economic recovery since the Second World War.  Gasoline prices are reaching historic levels for this time of the year - yet this Administration does nothing more than provide lip service towards domestic oil production. 

But, at least DoE Secretary Chu can take solace that even with his crony capitalism issues around DoE loans to green energy companies, he is well on the way to bringing US gasoline prices on par with those of Europe.

The Chairman of the Senate Budget Committee, the same Senate that hasn't passed a federal budget for over 1,000 days, prances around saying that last year's Budget Control Act which sets spending caps on discretionary spending for the government is the same as passing a budget.

The Administration massages unemployment numbers to try to generate the perception that unemployment is decreasing when the labor participation rates are at their lowest in decades.

Gallup, taking a hard look at what the February unemployment might be, is reporting that despite the Administrations excitement over the January 8.3% 'official' unemployment rate, the numbers and unemployment conditions have deteriorated significantly since mid-January...

Unemployment in the U.S. rose to nine percent in mid-February, up from 8.3 percent a month earlier, according to a new Gallup survey. The polling company said this suggests that it is “premature” to assume the economy will not feature prominently in the 2012 election season.


Gallup figures typically provide an indication of what the government will report at the end of the month.

“The U.S. unemployment rate, as measured by Gallup without seasonal adjustment, is 9.0% in mid-February,” Gallup said in its mid-month unemployment survey, released on February 17. “The mid-month reading normally reflects what the U.S. government reports for the entire month, and is up from 8.3% in mid-January.”

But what is really interesting in the Gallup report is this sentence...

Regardless of what the government reports, Gallup’s unemployment and underemployment measures show a sharp deterioration in job market conditions since mid-January.”

Why would Gallup believe that it needs this sentence unless it believes that the Administration is deliberately misrepresenting the data for political purposes?

UPDATE - Adding graph of Gallup data...

If unemployment rises to 9% - even with the significant reduction in labor force participation that the Administration is ignoring - that would push the 'real' unemployment rate back up to the 18%+ levels we saw for most of 2010 and 2011.  That would reflect not only the unemployed, but also those who have been unemployed for so long that they've given up looking for work, or have taken part-time or lesser jobs in order to just get by.

We've talked about how the media is going to be complicite with the Administration to minimize the economic challenges as much as possible for this election season.  In addition to ignoring the 'real' numbers of the economy, they are also going to create false flag's / issues in an effort to generate other issues for voters to focus on. 

Hot Air notes that the Washington Post's Ann Gerhart is actively trying to create a false meme that the the 2012 election will be about contraception... as she writes "This is now: The issue of birth control has suddenly become an obsession of the 2012 presidential campaign. To many observers, it seems that the clock has indeed been turned back."

Ed Morrissey at Hot Air calls it for the BS that it is...

No one disputes the fact that government can spend tax money as Congress authorizes. No one today is arguing to end Title X or to ban or restrict the use of contraception at the federal or state level. In fact, the people who raised this issue want to maintain the status quo, not change it.


The real issue today is whether employers — any employers — should be forced by the federal government to supply contraception for free. Under what authority does the federal government have that power, and for what purpose?

Simply enough - the federal government does not have that authority.  Just as I believe the SCOTUS will rule that the federal government does not have the authority to mandate that individuals have to purchase a good or service like health insurance. 

The Syrian city of Homs is bracing for a bloody assault by the Assad government which is continuing to mass tanks, artillery, and troops outside the main neighborhoods of the city which are stronghold's for the opposition groups.  The international community remains powerless and leaderless in deciding if they are to support the opposition groups or halt the Assad regime from butchering more of their people.  Meanwhile violence in Iraq is decreasing as reports are more al-Qaeda of Iraq forces are moving to Syria to join the fight to replace the Assad regime.

Tensions in the Persian Gulf region increased again today as Iran warns that it may take pre-emptive military action against its 'enemies'.  As this takes place, Tehran also has announced that the UN nuclear inspectors in the country will not be allowed to visit any of the country's nuclear sites - citing their presence in the country is just for 'talks'...

Without mentioning Israel directly, Mohammed Hejazi, the deputy armed forces head, said on Tuesday: “Our strategy now is that if we feel our enemies want to endanger Iran’s national interests, and want to decide to do that, we will act without waiting for their actions,” Reuters reported. Divisions in Iran’s leadership make it difficult to interpret the government’s intentions, but the statement showed a new level of aggressiveness in Iran’s rhetoric.


The statement came a day after a team from the International Atomic Energy Agency arrived in Tehran on Monday for the second time in three weeks. The Associated Press quoted the Foreign Ministry spokesman, Ramin Mehmanparast, as saying the investigators from the International Atomic Energy Agency had no plans to visit the contentious nuclear sites, which the West maintains are part of a covert weapons program.


The inspectors did ask on Monday to see a military complex outside Tehran that is a suspected secret weapons-making location, Iranian radio said, according to The A.P. It was not clear whether the Iranian authorities had specifically turned down the reported request.

On This Day in History

1848 - The Communist Manifesto by Karl Marx and Friedrich Engels is published in London

1885 - The Washington Monument is dedicated in Washington DC

1916 - The Battle of Verdun begins with a German assault on the city.  This is the start of a 10 month battle, the longest of the First World War.  Both sides would suffer nearly 800,000 casualties, including 300,000+ dead during this battle of attrition.

1965 - Malcolm X is assassinated by rival Black Muslims in NYC

1972 - President Richard Nixon travels to the People's Republic of China for a historic week of talks

1994 - CIA double agent Aldrich Ames is arrested for selling secrets to the Soviet Union which included the identifies of dozens of CIA agents inside the USSR.  He is responsible for at least 10 deaths of these CIA assets and is one of the most destructive double agents to US intelligence efforts in US history.