Facing a disorderly withdrawal from the Euro and Eurozone, Greeks are starting what appears to be a run on the banks, withdrawing nearly $900 million on this past Monday alone. The Greek President is warning of a deeper run as Greeks, anticipating that the Euro will be replaced by a highly devalued Drachma after Greece's exit, seek to protect their assets before it is too late.
While not a large number to us, this is a huge number for a country the size of Greece - and threatens the stability and viability of its banking system. This action also will have ramifications in other nations of the Eurozone currently experiencing major economic challenges like Spain, Portugal, and Italy.
As the UK paper, the Independent notes...
"Whoever tells you a Greek exit would be no big deal is an idiot, lying or disingenuous," said Sony Kapoor of the European think-tank Re-Define. Economists fear that a disorderly exit would prompt a huge run by investors on Spanish and Italian debt, forcing those countries to seek support from an EU bailout fund, which, with a capacity of just €500bn, is widely regarded as too small to cope with those pressures.
The Wall Street Journal has the following take on the crisis with Greece....
In a sense the Greeks are using their elections as a way to renegotiate the terms of their most recent €130 billion bailout by the rest of Europe. They assume that if they refuse to go along, the Germans and the European Central Bank will give in and ease the terms of fiscal retrenchment and reform.Based on early polling for the June election, the far left Syriza party appears to be gaining the most ground - and it is the one that is running on the premise that Europe will not let Greece default - and Greece can continue to spend, borrow, and provide unviable levels of entitlements for its people.
The belief, at least on the Greek left, is that the country will be able both to stay in the euro and keep its generous welfare state, albeit with some mild adjustment. Syriza leader Alexis Tsipras is even proposing to hire 100,000 more public employees.
European leaders will be doing everyone a favor if they make clear that there is no such easy way out. If Greeks want to continue being rescued by the rest of Europe, they must meet European terms. If Greeks can't manage that, then Athens will get no more bailout cash and will have to find the money to pay its own bills.
And if Athens fails to do so, then default and ouster from the euro zone are likely, with all of the predictably terrible consequences for Greek living standards following the return of the drachma and devaluation. Instead of staying as part of modern Europe, Greece will slide toward a Third World future.
European leaders need to deliver this message not as a threat, but as the reality of what Greeks are risking if they reject reform. At least this is a choice Greeks will be making for themselves. The lesson will not be lost on voters elsewhere in the euro zone.
Europe's leaders can't repeal democracy on the Continent, and therefore they can't ask countries in the euro zone for more than their politicians can deliver or their populations can take. This means admitting that the bailout model that Europe adopted for Greece two years ago has failed and is increasing political polarization across Europe, and not only in Greece.
The euro zone was conceived as a currency union among countries adhering to certain basic fiscal rules. Had it stuck to that vision in this crisis—rather than turn it into a fiscal or debt union—and let Greece face the consequences of its economic mismanagement from the beginning, Greece might have defaulted and stayed within the euro.
Now so much damage has been done that it's hard to see such an outcome. Trying to turn the euro into a larger political union has put the entire euro zone in jeopardy...
Just as Greece has a fundamental flaw in its approach towards governance, embracing a socialistic model that is unsustainable, the EU also has a fundamental flaw that is rooted within the vision for a 'United States of Europe' that moves far more than agreements or treaties that promote free trade and other common interests would have done. The simpler approach would have been the better approach - and avoided the current crisis.
With these issues coming to a head, it is at a particularly bad time for President Barack Obama and his reelection efforts. The coming economic collapse of Greece is a political nightmare for the President...
As the Eurozone heads for the abyss, wedded to the same damaging policies that threaten to bring the United States to its knees, Americans will be sharply reminded of President Obama’s own big government agenda, and his administration’s addiction to squandering other people’s money. The Greek tragedy is a nightmare for Barack Obama, because it holds a mirror to his own presidency’s mounting debt crisis, against a backdrop of the biggest rise in federal spending in US history. With good reason, the unfolding drama in Europe is a mounting liability for the American president.
The US is spending more today, per capita, than the most troubled nations in Europe...
The is the Obama legacy and the Obama record...
...and we're seeing the effects of this. In Wisconsin, which is undergoing a special recall election on June 5th, polls are reflecting badly on the state Democrats who pushed for the recall of Republican Governor Scott Walker. The latest, from the liberal pollster PPP (which is the pollster for the far left blog Daily Kos), shows the Republican Scott Walker with a 5 point lead over his Democrat challenger, the Mayor of Milwaukee, Tom Barrett.
Walker is benefiting not only from strong enthusiasm from the Republicans in the state, but also from his record which has seen the state move from a several billion dollar deficit to about a $154 million surplus largely from the legislation he promoted that reduced the power of public sector unions and required those union members to pay more towards the health and retirement benefits (but still less than workers in the private sector pay).
Wisconsin is a state that in the 2008 Presidential election, was won by Barack Obama by 14 points over John McCain. In the PPP poll, he has only a 1 point lead over Mitt Romney.
The electorate in Wisconsin is looking far more like the electorate in 2010 than the one in 2008 - and this may be a bell weather state because it represents the fundamental choice that all of us will be making in November - do we want the progressive agenda of higher taxes, higher spending, more government controls and power, and more union power or do we want to follow the model of Walker and other leading Republicans like Mitt Romney of lower taxes, reduced government spending, less government controls and influence, and less union power?
California is often called America's Greece - because of the fiscal irresponsibility that exists in the state. Ace of Spades notes this about Governor Jerry Brown and his solution to the state's fiscal crisis....
Here's why you can't elect Democrats to run statewide office: They are beholden to the bureaucracy, which is determined to fleece the taxpayer.Stunning. Just stunning.
To save $400 million, he's negotiating with public labor unions to reduce the state workweek to 38 hours, worked over four days — a 5% cut in payroll costs.
He has to negotiate allowing people to work 20% fewer days per year in exchange for a 5% reduction in income?
Is this that tough a sell? I think most people would be on the fence about it -- 5% less in pay, yes, but then again, 20% less in commuting costs, less expenses during the workweek (no child care costs one day a week), and three days off every week.
This is almost something you'd just agree to without anyone pressuring you to do so.
And a 5% cut in pay is the best he can do? Why not something more reasonable, like 10%? They're overpaid as it is.
He added: "This is the best that I could do."
Unfortunately, this isn't just with California.
From the Investors Business Daily today...
Congressional Democrats plan massive tax increases and crippling defense cuts after November. Why not now? Because the voters would realize the Obama presidency has set the stage for fiscal catastrophe.Part of this happens today when Senate Democrats are poised to continue on their streak of 1,115 days since they've last passed a federal budget. They are scheduled to vote today on as many as 5 different budgets, including the budget offered by President Obama and the budget passed by the House, authored by Rep. Paul Ryan. None of the budgets are expected to pass - and all are expected to face unanimous rejections by Senate Democrats. Senate Majority Leader Harry Reid has already made it clear that the Senate Democrats will not take up their own budget before the November elections.
'The way to deal with sequestration is put revenues on the table." That is third-ranking Senate Democrat Charles Schumer of New York's coded way of telling congressional Republicans that if you want to prevent the budgetary devastation of the U.S. military, you'll have to break your promises to voters and agree to major tax hikes.
After the presidential and congressional elections this November, a lame-duck Congress will address an impending fiscal calamity.
…
The answer is a spending spree during two years of absolute rule by Obama and a Democrat-controlled Congress, which left our children and grandchildren with a $1.3 trillion deficit and a $15.7 trillion national debt.
Spending cuts, budgetary reform with teeth, and tax reform are the obvious solutions to our fiscal ills.
But Obama and congressional Democrats refuse to do anything to defuse the economy's ticking fiscal time bomb before the November election.
How else are they trying to hide the truth about progressive fiscal policies? We see it in the jobs numbers - they cook the books.
Would you hire President Obama as your financial adviser? Three years ago his administration invested more than $100 billion in taxpayer money to bail out General Motors. On Tuesday, the entire company, not just what the government owns, was worth less than $34 billion. By anyone’s definition, that investment is a glaring failure. Yet over the last few days the Obama campaign, in a $25 million marketing blitz, has flooded the airwaves with ads in battleground states, claiming the bailout should be counted a rousing success.
Unfortunately, assertions that “all loans have been repaid to the federal government,” that the bailout “saved more than one million American jobs,” that “U.S. automakers are hiring hundreds of thousands of new workers,” that GM is again the “number-one automaker” — all are based on creative accounting.
…
The only real winners from the GM bailout were unions, which were protected from pay cuts, from losing their right to overtime pay after less than 40 hours a week, and from cuts to their extremely generous benefits. They faced only minor tweaks in their inefficient union work rules.
As for “hundreds of thousands of new workers,” the truth is closer to a tenth of that.
Having just $34 billion to show after a $100 billion-plus investment would get a chief executive of any private company fired. Unfortunately, Obama does not seem to understand how this money has been wasted.
American Crossroads is launching a $25 million advertisement campaign against the President's record...
An independent group favoring Republican presidential rival Mitt Romney is launching a $25 million, monthlong advertising campaign in 10 states against President Barack Obama, further escalating an expensive TV ad war in presidential battlegrounds six months before Election Day.
Crossroads GPS plans to open the effort Thursday by spending $8 million on a TV ad that castigates Obama on the economy by using his own words against him.
And just where will these ads run? The list is instructive:
“We need solutions, not just promises,” says a 60-second commercial that’s to run in Colorado, Florida, Iowa, Michigan, North Carolina, New Hampshire, Nevada, Ohio, Pennsylvania and Virginia.
In more signs that this is more like 2010 than 2008 for Barack Obama...
Fundraising for President Obama's reelection campaign and the Democrat National Committee in April was $10 million less than what was collected in March...
Then there is North Carolina - another key battleground state...
Mitt Romney has moved out to an eight-point lead over President Obama in North Carolina after the two men were virtually tied a month ago.
The latest Rasmussen Reports telephone survey of Likely Voters in the Tar Heel State shows the putative Republican nominee earning 51% of the vote to Obama’s 43%. Two percent (2%) like some other candidate, and four percent (4%) are undecided.
That’s a big change from last month when Romney posted a narrow 46% to 44% lead over the president in Rasmussen Reports’ first survey of the race in North Carolina. Democrats have signaled North Carolina’s importance as a key swing state by deciding to hold their national convention in Charlotte this summer.
Romney has held a slight lead over the president nationally for over a week now in the daily Presidential Tracking Poll following the release of a disappointing jobs report for April.
Voters nationally regard the economy as far and away the most important issue in the upcoming election, and just 11% of North Carolina voters now describe the U.S. economy as good or excellent. Forty-seven percent (47%) rate it as poor. Thirty-one percent (31%) say the economy is getting better, but 41% think it is getting worse.
The Obama Administration is shrugging off the threats that the House of Representatives will charge Attorney General Eric Holder with Contempt of Congress over his role in the Operation Fast and Furious cover-up.
The U.S. Department of Justice struck back on Tuesday against House oversight committee chairman Rep. Darrell Issa’s push to hold Attorney General Eric Holder in contempt of Congress for his failure to comply with a congressional subpoena related to Operation Fast and Furious.
“We believe that a contempt proceeding would be unwarranted given the information the Department has disclosed to the Committee to date; unprecedented given the law enforcement sensitivities at issue; and ill-advised given the damage it would cause to relations between the Executive and Legislative Branches,” Deputy Attorney General James Cole wrote to Issa on behalf of the DOJ.
“The Committee’s concerns about the Department’s response to the October 11 subpoena appear predicated on a misunderstanding both of the extraordinary lengths the Department has gone to respond to the Committee’s requests, of of the threat that disclosures of sensitive law enforcement information would pose to open criminal investigations and prosecutions,” Cole continued. “Furthermore, we believe that the core questions posed by the Committee about Operation Fast and Furious have been answered.”
Unfortunately, the facts around this are quite clear - the DoJ has provided only 10% of the materials known to exist on the Operation - and 13 of the 22 categories of information requested by Congress have not been answered at all by the DoJ - which they readily admit. Then there is the fact that the AG lied to Congress during his testimony under oath on the program - starting with when he learned of the program.
Appearing last night on The O'Reilly Factor, Charles Krauthammer made this observation about the Attorney General...
This Day in History
1868 - The US Senate voted against impeaching President Andrew Johnson and acquits him of committing 'high crimes and misdemeanors' by a vote of 35-19 - 1 vote shy of the 2/3rds needed to impeach him.
1918 - The US Congress passes the Sedition Act - which imposed harsh penalties on anyone found guilty of making false statements that interfered with the prosecution of the war, insulting or abusing the US Government, the flag, the Constitution, or the military.
1943 - The Royal Air Force launches Operation Chastise - a bombing raid conducted by the 617 Squadron on the Mohne, Edersee, and Sorpe dams in Germany's Ruhr Valley. The first 2 dams were breached using a specially developed bomb causing massive flooding. The third dam only suffered minor damage. Of the 18 bombers taking part on the mission, 6 were lost along with 56 air crew.
1963 - Astronaut Gordon Cooper returns to Earth 35 hours after lift off - after completing 22 orbits in not only the longest US mission to date, but in the last flight of the Project Mercury program.
1966 - Mao Tse-tung issues his 'May 16 Notice' and begins the Cultural Revolution in the People's Republic of China, which would last for 10 years. The Cultural Revolution would result in between 60 and 80 million deaths - this on top of one estimate of up to 40 million who died in the Great Famine of 1959-61 after another of Mao's major ideas for 'reform'. Well over 100 million are to believed have died at the hands of Mao's regime between 1949 and 1976.
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