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World View: Germany’s PEGIDA ‘Anti-Islamization’ Protests Grow, Stirring Counter-Protests

German Business Leaders

This morning’s key headlines from

  • Germany’s PEGIDA ‘anti-Islamization’ protests grow, stirring counter-protests
  • Wall Street, European stocks, euro, oil all plunge on Monday
  • Europe speeds ahead to a new, bigger Greece crisis
  • Surge in migrants from Cuba trying to reach the U.S. illegally

Germany’s PEGIDA ‘anti-Islamization’ protests grow, stirring counter-protests

Cologne Cathedral lights turned off in protest of Pegida rallies
Cologne Cathedral lights turned off in protest of Pegida rallies

That anti-Islam PEGIDA movement (“Patriotische Europäer gegen die Islamisierung des Abendlandes,” or “Patriotic Europeans Against the Islamization of the West”) protests have been growing in size since the movement’s founding in October, but they’re also stirring counter-protests by those considering Pegida to be xenophobic.

In Cologne on Monday evening, 20,000 residents gathered on the streets to block Pegida protests in that city, carrying banners that read “Nazis, out!”, “We will not let a racist mob run free on Cologne’s streets.” In addition, the lights on bridges over the Rhine and the Cologne Cathedral were turned off. According to the dean of the cathedral, “We don’t think of it as a protest, but we would like to make the many conservative Christians [who support Pegida] think about what they are doing.” The Pegida demonstrations were canceled in Cologne.

But in Dresden, where Pegida is headquartered, 18,000 people turned up for one anti-immigration rally, carrying signs that said, “Germany for Germans!” and “No to Islamization of Europe!”

German Chancellor Angela Merkel has publicly condemned Pegida. Deutsche Welle and BBC

Wall Street, European stocks, euro, oil all plunge on Monday

A couple of weeks ago, on a day when investors were in a drunken euphoria because the Dow Jones Industrial Average surged 421 points, I pointed out that if the market could go up 421 points in one day, then it could just as easily go down 421 points in one day. That didn’t quite happen on Monday, but there was a plunge of 331 points, illustrating how dangerous the recent drunken euphoria is. Indeed, a number of things happened in unison.

West Texas Intermediate (WTI) oil fell briefly below $50 per barrel on Monday, before settling at $50.44 per barrel, representing a plunge of 4.3%. It was just a few months ago that it was in the range $100-110 per barrel. Although lower oil prices means lower gasoline prices, it’s also signaling a decrease in demand, as the global economy slows down and continues its deflationary spiral.

European stocks also fell on Monday, from 2-4%. The fall in oil prices affected a number of energy companies, resulting in something of a domino effect, and a new report showed that Germany is getting closer to deflation.

The euro currency tumbled to a nine-year low against the dollar, based on widespread concerns that the European Central Bank (ECB) is going to start “printing money” (quantitative easing), in order to bail out Greece again.

In his weekly investors newsletter, investment guru John P. Hussman says that he’s in the camp that believes that “the likelihood of a market loss on the order of 40%, 50% or even 60% in the next few years is quite high.”

According to Friday’s Wall Street Journal, the S&P 500 Price/Earnings index (stock valuations index) on Friday morning (January 2) was back up to an astronomically high 18.66. This is far above the historical average of 14, indicating that the stock market is in a huge bubble that could burst at any time. Generational Dynamics predicts that the P/E ratio will fall to the 5-6 range or lower, which is where it was as recently as 1982, resulting in a Dow Jones Industrial Average of 3000 or lower.

It’s not known even today what the event was that triggered the 1929 panic, except that conditions just prior to the panic were similar to conditions today — an astronomically high P/E ratio, and a period of highly volatile wild swings in stock prices. Motley Fool and AP and Bloomberg and Dow Jones and John P. Hussman

Europe speeds ahead to a new, bigger Greece crisis

As we recently reported, Germany’s Chancellor Angela Merkel has reportedly said that she’s prepared to support Greece leaving the eurozone, and returning to its original drachma currency, if Greece abandons the austerity commitments it made in return for the 240 billion euro bailout that has already been paid.

Polls are showing that the radical far left Syriza party, led by Alexis Tsipras, is poised to win Greek elections on January 25. With Tsipras promising to renege on Greece’s austerity commitments, Merkel’s remarks have triggered a major debate in Europe.

Here are some of the things that various analysts and politicians are saying:

  • Merkel didn’t really mean it; it was just meant as a warning to Tsipras.
  • In fact, when Tsipras wins, he’ll forget his campaign promises and fall in line with European demands, just as Socialist Andreas Papandreou forgot his campaign promises after a victor in the 1981 elections.
  • Merkel is right. If Tsipras continues and Greece leaves the euro currency, returning to the drachma currency, then the eurozone is now strong and stable enough to go on. The difference between today and the last Greece crisis in 2011 is that there have been a number of ECB reforms, including the creation of a permanent bailout fund, the European Stability Mechanism (ESM). The result is that officials in Berlin and Brussels no longer subscribe to the so-called “domino theory,” which held that a Greek collapse would be followed by others. It has been replaced by the “chain theory,” which holds that the entire chain would become stronger were its weakest link to be eliminated.
  • Merkel is wrong. Giving in and allowing far-left Tsipras to renege on Greece’s austerity commitments would cause a domino effect, destabilizing the governments in Italy and France, which would like to be relieved of their own austerity requirements.

Despite 25% unemployment in Greece, the Germans are not prepared to make significant concessions to Tsipras, because significant concessions have already been made — Greece has been allowed more time to pay down its debt than originally agreed and interest payments have been largely discontinued.

The existing aid programs for Greece are set to expire at the end of February. It’s pretty certain that there’s going to be a major new Greek crisis during the next two months, although no one knows how that crisis is going to turn out. Greek Reporter and Der Spiegel and AP

Surge in migrants from Cuba trying to reach the U.S. illegally

Coast Guard approaches a Cuban vessel with 12 migrants on December 30.  The migrants were later repatriated to Cuba
Coast Guard approaches a Cuban vessel with 12 migrants on December 30. The migrants were later repatriated to Cuba

According to the Coast Guard, the rate of Cuban migrants attempting to reach the U.S. illegally has more than doubled since the December 17 announcement restoring diplomatic relations between Cuba and the United States. Cubans on the island are speeding up their plans to make the trip because they fear that immigration laws are about to change, making it more difficult to avoid deportation. Miami Herald

KEYS: Generational Dynamics, Germany, Cologne, Dresden, PEGIDA, Patriotische Europäer gegen die Islamisierung des Abendlandes, Patriotic Europeans Against the Islamization of the West, Europe, Wall Street, West Texas Intermediate oil, WTI, Greece, Syriza, Alexis Tspiras, Angela Merkel, Cuba, illegal migrants
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