This morning’s key headlines from GenerationalDynamics.com.
- Israel’s Defense Minister suggests unilateral withdrawal from West Bank
- Palestinian officials reject Israeli withdrawal from West Bank
- Spain’s bonds collapse after ECB rejects illegal funding scheme
- Ireland expected to ratify new EU fiscal treaty in Thursday referendum
- Krugman campaigns for Ireland to reject EU fiscal treaty on Thursday
- France’s unemployment high highest rate this century
- Oil prices fall 3% on Wednesday
Israel’s Defense Minister suggests unilateral withdrawal from West Bank
Israel’s Defense Minister Ehud Barak said on Wednesday that the Israeli government is considering taking unilateral action if peace talks with the Palestinians remain stalled. The unilaterial action would be to withdraw from the West Bank, similar to the unilateral withdrawal from the Gaza Strip in 2005.
Israel cannot afford to tread water. [If a deal] proves to be impossible, we have to consider a provisional arrangement or even unilateral action.
In the case of Gaza, the withdrawal was followed by a violent takeover by the terrorist group Hamas. Prime Minister Benjamin Netanyahu has indicated that he would not permit a similar takeover in the West Bank. AP
Palestinian officials reject Israeli withdrawal from West Bank
A top aide to Palestinian President Mahmoud Abbas rejected the proposal by Ehud Barak for unilateral Israeli withdrawal from the West Bank:
Israeli unilateral moves will lead to the formation of a Palestinian state in temporary borders, to which we object.Without Jerusalem, we won’t agree to anything. Haaretz
Spain’s bonds collapse after ECB rejects illegal funding scheme
The remarkable thing about this story is not that Spain’s government tried to push an illegal transaction to fund its banks. The remarkable thing is that they didn’t get away with it, in today’s culture of fraud and extortion. Spain’s 10-year bond prices were crashing last year, meaning that their yields (interest rates) were skyrocketing. The European Central Bank (ECB) saved the day last December by “printing” €1.1 trillion in its LTRO program, pouring into the eurozone banking system, pushing bond yields from the extremely dangerous 7% down to a less dangerous 5%. (By comparison, Germany’s 10-year bond yields today are at 1.75%.) Well, the ECB’s LTRO program ended three months ago, and since then, Spain’s bond yields have been surging, reaching 6.67% on Wednesday. So Spain’s government tried a little trick. They would sell their bonds to the Spanish bank Bankia, which would then get swapped out for cash at the ECB’s three-month refinancing window, effectively giving Spain a personal LTRO. Well, on Tuesday, the ECB rejected the scheme, as violating EU rules against central bank funding of governments. Tsk tsk. So Spain’s bond yields are closing in on the 7%, which is the point at which Greece and Ireland were given bailouts. MarketWatch and AP
Krugman campaigns for Ireland to reject EU fiscal treaty on Thursday
Polls indicate that Ireland’s voters will vote “yes” to a new European Union fiscal treaty that will demand further austerity from Ireland and from any other countries that require bailouts. Proponents of the treaty say that it will provide stability, and they point out that if the treaty is rejected, then Ireland won’t get any more bailout money after next year.However, the situation has been muddled by the active campaigning of NY Times far left columnist Paul Krugman, who won the Nobel Prize for Economics because of his hatred of President George Bush. In general, Krugman favors “printing” an unlimited amount of money, through monetary and fiscal policy, in both Europe and America. And so Krugman was in Britain on Wednesday telling the Irish to reject the treaty. His reasoning is exactly the same as the claim by Greece’s radical left candidate Alexis Tsipras. Both Krugman and Tsipras claim that EU officials in general, and German officials in particular, are bluffing when they say that they will stop bailing out any country (Ireland or Greece) that doesn’t stick to strict austerity requirements. While almost all of Ireland’s political parties have campaigned in support of the treaty, the Irish nationalist Sinn Fein has shot up in popularity in the opinion polls because it’s the only significant party opposing it. AP and Irish Examiner
France’s unemployment high highest rate this century
France’s unemployment rate hit almost 10% in April, a tenth consecutive monthly increase, and the highest unemployment rate since September 1999. This is the first unemployment report since the election of the new Socialist president François Hollande, and there are signs that a number of corporate layoffs were postponed until after the election. However, France’s labor unions have the solution: raise France’s minimum wage even higher than it’s current value of €9.22 ($11.50). This would trigger additional layoffs and more unemployment, but it would have the advantage of giving a lot more money to labor unions. Reuters and Euro News
Oil prices fall 3% on Wednesday
In another sign that the global economy is slowing down, oil prices fell more than 3% on Wednesday, on news that the eurozone debt crisis is spreading, and news that China apparently doesn’t plan a new, massive economic stimulus like the one it unleashed in 2009. Investors are clamoring for unlimited money “printing” in America, Europe and China, but apparently even politicians are now able to see that this is causing huge dislocations and will only make the coming global financial crisis even worse. Reuters