- Eurozone economies are cratering. Every fix tried so
far failed. Combining 17 dissimilar countries under one monetary/fiscal
system assured disaster waiting to happen.
- British economist Bernard Connolly knew it before the
euro's 1998 introduction. His 1995 book titled, "The Rotten Heart
of Europe: The Dirty War for Europe's Money" called it a harebrained
idea doomed to fail.
- Saying it cost him his job. Maybe he should be running
failed economies to fix them one by one. Even laymen can do a better job
than current and past officials who wrecked them and ordinary households
to pay bankers. More on Connolly's book below.
- On November 17, New York Times writer Landon Thomas headlined,
"Words of a Euro Doomsayer Have New Resonance," saying:
- Eurozone countries are "crumbling, just as he had
long predicted, yet Bernard Connolly, Europe's most persistent prophet
of doom, still" faces skeptics.
- Addressing the Los Angeles-based Milken Institute last
spring, he said:
- "The current policy of lending plus austerity will
lead to social unrest." Troubled Eurozone countries can't cut their
way to recovery. "And one should not forget," he said, "that
of the four countries (now six) we are talking about, all have had civil
wars, fascist dictatorships and revolutions. This is history."
- "And this is the future if this malignant lunacy
of monetary union is pursued and crushes these countries into the ground."
- In 1995, Connolly took leave from his job as EU monetary
affairs department head for his book. It remains a powerfully persuasive
account of the Eurozone's predicted collapse.
- He argued that monetary union would lead to political
unification dominated by Germany and France, Europe's two largest economies.
As a result, it had to be pursued quietly because people and parliaments
of other Eurozone nations wouldn't support it.
- After publication of his book, Connolly was suspended,
then sacked. He's regarded as the foremost expert on European economic,
monetary, and political integration.
- Months before the euro's 1998 introduction, he predicted
that one or more of Europe's weakest countries would face rising budget
deficits, troubled economies, and a "downward spiral from which there
is no escape unaided. When that happens, the country concerned will be
faced with a risk of sovereign default."
- Introduced in 1979, Europe's Exchange Rate Mechanism
(ERM) as part of the European Monetary System (EMS), was intended to propel
the continent to one European currency unit (ECU).
- ERM never worked. ECU is failing. At issue is duplicity,
conflicts of interest, and trapping 17 dissimilar countries in the euro
straightjacket, usurping their monetary and fiscal autonomy disastrously.
- Connolly said in his book:
- "My central thesis is that the ERM and the EMU (European
Monetary Union, the mechanism which ultimately brought the Euro into technical
existence) are not only inefficient but also undemocratic: a danger not
only to our wealth but to our freedom and ultimately, our peace."
- He also wrote:
- "As we shall see, in France, the long arm of the
authoritarian state pressurized dissident economists and bankers, deployed
financial information programmes on international TV channels, threatened
securities houses with loss of business if they questioned the official
economic line, and shamelessly used state-owned and even private-sector
banks, in complete contradiction with their shareholder's interests and
Community law, to support official policy."
- "The economic profession in Europe organized literally
hundreds of conferences, seminars and colloquia to which only conformist
speakers were invited; and the Commission's 'research' programmes financed
large numbers of economic studies to provide the right results from known
- In other words, a system doomed to fail was reengineered
fraudulently to look workable.
- Now consulting for private clients, Connolly has many
admirers. Hedge fund manager Nicolas Carn said he "shaped my views
on Europe and contributed significantly to my investment performance."
- Chicago Mercantile Exchange trader Yra Harris called
him "like no one I have ever met," adding:
- "Each time I talk to him, it's like I've been to
Harvard for four years." He was right way ahead of his time. Today,
the Eurozone is slowly collapsing. Connolly may one day write its epitaph,
saying I told you so, but you wouldn't listen.
- Global Europe Economic Anticipation Bulletin's (GEAB)
- GEAB calls America "the epicenter of the global
systemic crisis." On November 23, Congress' Super Committee must agree
on $1.2 trillion of budget cuts or face mandatory 2013 ones. Either way,
purchasing power lost means less spending, fewer jobs, and greater public
anger than today's high levels.
- Both sides are deadlocked. Failure is assured. Washington's
political system is paralyzed. As a result, expect US debt downgrades and
higher borrowing costs with predictable economic consequences.
- China's Dagong Global Credit Rating agency fired the
opening shot, confirming another downgrade if Super Committee members fail.
- GEAB calls America's private debt worse than Greece's.
It believes Western banks will be decimated. Crisis conditions are deepening.
Rising bond yields signal trouble. Core European debt is being abandoned.
France may lose its AAA rating. America's been overrated for years. So
have many European countries.
- Compared with rigged higher ratings from S&P, Moody's
and Fitch, Weiss Research rated nine sovereign countries as follows:
- Belgium: C-
- France: C
- Germany: C+
- Greece: E
- Ireland: D-
- Italy: C-
- Portugal: D+
- Spain: D+
- USA: C-
- For private firms, the lowest investment grade debt is
BBB- or Baa3. For Weiss, it's C-.
- Their highest junk grade is BB or Ba1. Weiss' is D+.
- Lower Weiss ratings than C- signify red flags. Notoriously,
S&P, Moody's and Fitch grossly overrate public and private debt because
paying clients demand it.
- Progressive Radio News Hour regular, economist Jack Rasmus,
discussed eight reasons for America's deficits and debt. He explained that
from 2000 - 2011, federal government debt rose from $5.6 - $14.8 trillion,
according to Federal Reserve Flow of Funds figures that exclude trillions
more from Fannie and Freddie.
- Eight reasons stand out, including:
- (1) $2.1 trillion in Iraq and Afghanistan war spending.
Rasmus calls the figure very conservative as it doesn't include other war
costs related to military construction, department of energy costs, veterans
benefits, intelligence, Homeland Security, huge black budgets, off budget
secret weapons programs, and other costs plus more for inflation.
- (2) $3,150 trillion in Bush administration tax cuts for
super-rich Americans already with too much.
- (3) $900 billion in Wall Street bailouts. Excluded are
trillions of Federal Reserve dollars for troubled banks. The Fed keeps
separate books, excluded from US deficit and national debt totals.
- (4) $1,896 trillion in Bush and Obama administrations
tax cuts and stimulus spending from 2008 - 2011.
- (5) $450 billion in unfunded Medicare Part D expense.
- (6) $180 billion in "excess inflation costs for
- (7) $225 billion in "lost tax revenue (from) 18
million (new) unemployed.
- (8) $270 billion in interest.
- (4) "(P)rice gouging by health insurance companies
and health services providers."
- In other words, Social Security, Medicare and Medicaid
aren't responsible for America's debt problem. Imperial war spending, bank
and other corporate bailouts, tax cuts for the rich, failed fiscal stimulus,
and "price gouging by health insurance and health services providers"
take full blame.
- Nonetheless, American households, working poor and unemployed
get strapped with the full burden.
- Wall Street crooks, war profiteers, and other corporate
scoundrels, including price gouging healthcare providers, got off scot-free
to steal again.
- No wonder OWS protesters rage against a corrupted system
they want changed.
- Stephen Lendman lives in Chicago and can be reached at
- Also visit his blog site at sjlendman.blogspot.com and
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