This morning’s key headlines from GenerationalDynamics.com.
* The European situation continues to worsen
* Britain may hold referendum on leaving the European Union
* Sarkozy tells Cameron to ‘shut up’ in euro clash
* Anti-Immigrant party loses ground in Switzerland
* Libya’s interim leader declares support for Sharia law
* Colonel Gaddafi’s will calls for his supporters to fight on
The European situation continues to worsen
I’ve quoted the following many times in the past, and now it’s worth doing so again. John Kenneth Galbraith’s 1954 book The Great Crash – 1929, contrasted the 1929 with previous panics:
“A common feature of all these earlier troubles [previous panics] was that having happened they were over. The worst was reasonably recognizable as such. The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune.” (p. 108)
Shell-shocked European leaders are aware that they’re facing imminent disaster, but they keep hoping that if they can only stall a few days or a few weeks longer, then things will improve. But the singular feature of Europe’s problems is that the worst is continuing to worsen.
As we’ve reported, A new bombshell hit the EU finance ministers on Friday, when they learned that Greece alone could swallow the eurozone’s entire €440 billion bailout fund, leaving nothing for Italy, Spain or France.
And on Saturday, Christine Lagarde, the new head of the International Monetary Foundation (IMF) announced that the IMF would no longer be willing to pick up a third of the total bill for rescuing Greece, a contribution worth €73 billion, unless Greece were forced to default, and investors were forced to take at least a 50% “haircut” — meaning that European banks that had invested heavily in Greek bonds would have to write off 50% of their debt.
This worsening situation is caused by generational changes, as I’ve described many times. I’ve used the analogy before that this is like a tsunami that was launched decades ago, and is now drowning Europe. No politician could have either caused or prevented this tsunami, nor the tsunami that’s also headed for America, nor the one headed for China. The politicians are trying to pile sandbags on the beach, but the tsunami keeps getting higher and higher, pouring over the sandbags, ready to drown everyone.
The EU finance ministers met all weekend without reaching any conclusions. That Greece will have to default is now a given, even though they’ll get their next bailout payment in November. When Greece defaults, German banks will come out relatively OK, while French banks face disaster. That’s why the Germans want each country to bail out its own banks, while the French want the European Central Bank (ECB) to bail out everyone’s banks.
The next meeting of EU finance ministers is Wednesday. No one knows whether they’ll come up with some kind of agreement by then. But Generational Dynamics tells us that it doesn’t make any difference. No matter what deal they come up with, it won’t be enough, and the tsunami will overwhelm it. Telegraph and Irish Times
Britain may hold referendum on leaving the European Union
Britain’s Prime Minister David Cameron is facing a massive political rebellion as over 70 MPs in his own Conservative (Tory) party are threatening to vote in favor of holding a referendum on leaving the European Union. In a sign of the growing acrimony on the Tory benches, one senior party member accused William Hague, the Foreign Secretary, of “insulting MPs’ intelligence” by claiming that such a vote would be damaging in a time of economic uncertainty. Independent
Sarkozy tells Cameron to ‘shut up’ in euro clash
This reminds me of the good old days of 2005. (See “Acrimonious European Union summit ends in crisis”) In 2005, there was a very acrimonious EU summit meeting where French President Jacques Chirac was demanding that Britain receive less EU money and France receive more EU money. Furious EU President Jean-Claude Juncker shook his fist at British Prime Minister Tony Blair. Several months later, Britain caved in to Chirac’s demands.
Well, there they go again. French President Nicolas Sarkozy told British Prime Minister David Cameron to “shut up” on Sunday. “We are sick of you criticising us and telling us what to do. You say you hate the euro and now you want to interfere in our meetings.” The particular issue that triggered the acrimony was Cameron’s insistence that he be allowed to attend Wednesday’s meeting of the eurozone finance ministers, even though Britain is not in the eurozone. They finally compromised by agreeing to allow Cameron to attend for the first hour. Independent
Anti-Immigrant party loses ground in Switzerland
For the first time in four years, Switzerland’s major anti-immigrant party has lost ground. In elections on Sunday, support for the Swiss People’s Party (SVP) fell by more than 2 points to 26.8%, instead of growing to more than 30% as party leaders had predicted. The party rose to fame in 2007 when it got 29% of the vote on an anti-immigrant campaign that the United Nations described as “racist.” In 2009, the SVP shocked Europe by backing a referendum forbidding the building of minarets. (See “Switzerland shocks itself by passing a ban on minarets.”) Sunday’s election indicates that, for the first time, the xenophobic fervor may be starting to retreat, as other issues, particularly the growing financial crisis, threaten to overwhelm Europe. Independent and SwissInfo
Libya’s interim leader declares support for Sharia law
In an announcement that’s sure to raise human rights concerns in Western countries, Mustafa Abdul-Jalil, the chairman of the National Transitional Council and de facto president of Libya announced:
“We, as an Islamic state, have adopted the Islamic Shariah as the main source of legislation. As such, any law that runs contrary to the Islamic principles of the Islamic Shariah is legally void.”
Islamic law, or Sharia law, is perceived extremely negatively in the West, even though most of the concerns are exaggerated. As a practical matter, the biggest consequence of Sharia law is that banks are not permitted to charge interest. “Interest creates disease and hatred among people,” according to Jalil. However, Sharia law is practiced in some Gulf countries, which have pioneered the development of Sharia-compliant banks which charge fees rather than interest for loans, while they normally run alongside western-style banks. Telegraph
Colonel Gaddafi’s will calls for his supporters to fight on
In his will, former Libyan leader Muammar Gaddafi made it clear that he had decided to die in Libya rather than flee, telling his supporters: “Let the free people of the world know that we could have bargained over and sold out our cause in return for a personal secure and stable life. We received many offers to this effect but we chose to be at the vanguard of the confrontation as a badge of duty and honour.” Gaddafi asked to be buried, clothed as he died, with his body unwashed, in a graveyard in his home town of Sirte, not far from where he was killed as he fled the city on Thursday. He said, “I call on my supporters to continue the resistance, and fight any foreign aggressor against Libya, today, tomorrow and always.” Telegraph