Pope Francis Meets the World

The first Latin American Pope was chosen in the Vatican City in Rome yesterday, Pope Francis I from Venezuela.

From NBC News

Pope Francis is unique not just for being the first Latin American pope. He's also the first Jesuit pope, possibly signaling a renewed emphasis on traditional Catholic theology by the church.

The Society of Jesus, as the Jesuits are formally known, observes a vow of poverty, and as archbishop of Buenos Aires, the former Cardinal Jorge Mario Bergoglio was known for his accessibility and simplicity, said Michael Sheeran, president-elect of the American Association of Jesuit Colleges and Universities.
"Pope Francis took the bus to work every day," Sheeran said in a live online discussion of Bergoglio's election. "He sold the cardinal's residence and lived in a small apartment where he cooked for himself."

. . . "I'm amazed (Francis) was selected," Sheeran said, because "the Jesuits steer clear of getting high-ranking jobs like this."
The society was founded in Rome in 1540 by St. Ignatius of Loyola and St. Francis Xavier as a movement devoted to living in the imitation of Jesus.

What Other Countries Did to Stop Gun Violence

It makes sense for President Obama to study the models of other countries that have dealt with gun violence and stamped it out of their society.  It should give us all hope that there are places in the world where politicians have said "enough" and stood up quickly to the right wing gun lobbyists - in Australia it only took them 12 Days to get going!!!  It's got to happen here in the U.S. because the alternative is chaos and anarchy - and more death. It has to happen now - there's no turning back.


The Finland Approach

Finland's established culture of gun ownership (1.5 million firearms in a country of 5 million people) was called into question after two horrific shooting incidents at schools that took place within a year of each other.
On Nov. 7, 2007, a teenager in Tuusula killed eight people before killing himself at Jokela High School. Just a year later, on Sept. 23, a gunman shot 10 people on the campus of Kauhajoki city's School of Hospitality before turning the gun on himself, according to CNN.
In the wake of the shootings, Finland raised the minimum age for firearm licenses from 15 to 20 for short weapons and to 18 for hunting guns, according to Agence France Presse.
"No one in a country like Finland needs to have a gun at home," said Foreign Minister Erkki Tuomioja in August 2011, following the rampage by Anders Behring Breivik, in neighboring Norway.

NYT: Australia, Scotland, and Japan

Australia is an excellent example. In 1996, a “pathetic social misfit,” as a judge described the lone gunman, killed 35 people with a spray of bullets from semiautomatic weapons. Within weeks, the Australian government was working on gun reform laws that banned assault weapons and shotguns, tightened licensing and financed gun amnesty and buyback programs.

At the time, the prime minister, John Howard, said, “We do not want the American disease imported into Australia.” The laws have worked. The American Journal of Law and Economics reported in 2010 that firearm homicides in Australia dropped 59 percent between 1995 and 2006. In the 18 years before the 1996 laws, there were 13 gun massacres resulting in 102 deaths, according to Harvard researchers, with none in that category since.

Similarly, after 16 children and their teacher were killed by a gunman in Dunblane, Scotland, in 1996, the British government banned all private ownership of automatic weapons and virtually all handguns. Those changes gave Britain some of the toughest gun control laws in the developed world on top of already strict rules. Hours of exhaustive paperwork are required if anyone wants to own even a shotgun or rifle for hunting. The result has been a decline in murders involving firearms.

. . . In Japan, which has very strict laws, only 11 people killed with guns in 2008, compared with 12,000 deaths by firearms that year in the United States — a huge disparity even accounting for the difference in population.

Slate: The Australian Model after 1996 shooting

At the heart of the push was a massive buyback of more than 600,000 semi-automatic shotguns and rifles, or about one-fifth of all firearms in circulation in Australia. The country’s new gun laws prohibited private sales, required that all weapons be individually registered to their owners, and required that gun buyers present a “genuine reason” for needing each weapon at the time of the purchase. (Self-defense did not count.) In the wake of the tragedy, polls showed public support for these measures at upwards of 90 percent.
What happened next has been the subject of several academic studies. Violent crime and gun-related deaths did not come to an end in Australia, of course. But as the Washington Post’s Wonkblog pointed out in August, homicides by firearm plunged 59 percent between 1995 and 2006, with no corresponding increase in non-firearm-related homicides. The drop in suicides by gun was even steeper: 65 percent. Studies found a close correlation between the sharp declines and the gun buybacks. Robberies involving a firearm also dropped significantly. 

Romney's Bain Gave Italy the Business

I wrote earlier today about the economic dangers in the Eurozone, and the negativity of Italy's Prime Minister Mario Monti, who told Der Spiegel that Europe is going through a "psychological dissolution." Wow - that's a strong statement. But some of their problems stem back to the 1990s, when the Italian government was selling off assets to raise money to enter the Eurozone. One of those investors was Mitt Romney's Bain Capital.

Bloomberg has the story about Bain buying up Italy's telephone directory, then selling it back to them a few years later at a huge profit. This is a good insight into the way Romney did business - and yes, he was involved through his offices in Boston at the same time that he supposedly wasn't the CEO while working on the Utah Olympics.

Oh, and the profits? Most were hidden in the tax-shelter country of Luxembourg.

This past history in Europe is not as easily etch-a-sketched as Mitt's Olympic excesses or his absent tax returns in the U.S.

Bloomberg: Romney Persona Non Grata in Italy

Bain Capital, under Romney as chief executive officer, made about $1 billion in a leveraged buyout 12 years ago that remains controversial in Italy to this day. Bain was part of a group that bought a telephone-directory company from the Italian government and then sold it about two years later, at the peak of the technology bubble, for about 25 times what it paid.

. . . Romney himself probably earned more than $50 million, and possibly as much as $60 million from the Italian directory sale of Seat Pagine Gialle SpA, according to a person familiar with the matter. The deal turned into one of the biggest windfalls of his tenure.

. . . When Bain sold the directory business in 2000, Romney, while still holding the title of CEO, was in charge of preparations for the 2002 Winter Olympics in Salt Lake City. Romney has contended that he gave up management control of Bain in February 1999 to run the games.

“Mitt Romney and Bain played the role of successful financial speculators at the peril of the Italian government and the small stock-market investors who were burned by the sharp decline in Seat (PG) shares,” said Giovanni Pons, a journalist for la Repubblica and co-author of “L’Affare Telecom” (2002), which recounts details of the Bain deal.

. . . Bain moved profits through a series of subsidiaries in Luxembourg, a country that makes it easy to get cash out without paying taxes, according to corporate filings. Corporate records in Luxembourg show Bain carried out technical steps for a tax- free repatriation of profits to the U.S.

Warnings About the Eurozone

The Republicans can blame President Obama or do-nothing Ben Bernanke for all the economic problems, but this mess in the Eurozone gets worse week after week, and while you can possibly put blame on the Bush Administration and Wall Street for starting the crisis in Europe, this is also a political problem that only those countries can solve. However, while we wait for that to happen, the angst and fear emanating from the Eurozone make the markets seem unstable even on a good day, and every weekend there is some dire warning just before the Monday opening. This week is no different.

A few weeks ago, Mario Draghi, European Central Bank President, made a speech promising to do "whatever it takes" to save the Euro. But his words didn't calm the markets, which instead reacted negatively. They just aren't buying what he is selling, so to speak. Then he spoke again last Thursday, to mixed reviews.

"It's pointless to bet against the Euro," he said.


Can Draghi Turn the EU Ship Around?

Draghi, when he spoke late last week in Frankfurt, did not step away from his sweeping “whatever it takes” reassurance of the week before. In fact, he reaffirmed that the ECB would enter the bond markets to keep sovereign borrowing rates down. And he put this every which way he could. The central bank would “undertake outright open-market operations of a size adequate to reach its objective.” Interest rates, he said later, “that are related to fears of the reversibility of the euro are unacceptable, and they need to be addressed in a fundamental manner.”

What changed? Nothing of consequence. Draghi spoke a little more technocratically, offering details and leaving behind the billboard headlines. He implicitly acknowledged a target yield on European sovereign debt. That amounts to another commitment to whatever it takes.

In the meantime, Germany’s central bank president, Jens Weidmann, repeated that Germany was against the ECB’s latest thinking about bond buying.

Meanwhile: Italy's President is in a panic, and sees the Euro collapsing:

Mario Monti Sees Euro Alliance Dissolving

Monti, in an interview with Germany’s Der Spiegel magazine published yesterday, said that disagreements within the 17- nation euro area are detracting from the policy response to the debt crisis and undermining the future of the European Union.

“The tensions that have accompanied the euro zone in the past years are already showing signs of a psychological dissolution of Europe,” Monti told Der Spiegel. While he backed the ECB’s willingness to address “severe malfunctioning” in the government bond market, Monti said the problems “have to be solved quickly now so that there’s no further uncertainty about the euro zone’s ability to overcome the crisis.”

. . . Monti told Spiegel that he intends to stay in office until April 2013, when Italy is due to hold elections, and he hopes he “can save Italy from financial ruin until then, with the moral support of some European friends, and Germany foremost. But I say very clearly: moral support, not financial.”

An article reprinted on CNBC from Financial Times hints that Spain might actually be leaving the Eurozone:

Wall Street Warned of Possible Euro Exit

The eurozone continues to be the predominant concern of US bank executives, ahead of the faltering US recovery. Last summer the worsening of the eurozone crisis produced wild swings in US banks’ stock prices and led the Securities and Exchange Commission to demand they provide more disclosure of assets in Spain, Greece, Italy, Ireland and Portugal.

. . . Last week the speculation on whether Mario Draghi, European Central Bank president, would take more aggressive action to tackle the crisis produced further gyrations in US stock prices.

One senior Wall Street executive said his bank was approaching derivatives counterparties to say: “‘We’ve got this contract, it’s in euros, what I want to know is in the event that Spain were to be redenominated are we going to end up being adversaries on this or can we just agree that this is a euro contact? Let’s just move it to London law so we each agree that we know where we stand.’

Snark in Pictures

John Stewart Critiques Romney in London

LOL ~ Romney will wake up someday and wonder why he didn't have someone who would tell him the truth on this trip. Maybe then he wouldn't have trashed the London Olympics and offended our closest ally.

The Daily Show
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Romney Camp plays "Curse the Press" in "Ass-Gate"

Romney rode on the plane with a Press entourage all week, but his handlers didn't treat them well.

• On Friday outside 10 Downing Street Romney only took questions from the British Press.
• On Saturday, he told both the U.S. and Israeli press that they were shut out of a fundraiser.
• On Sunday after an uproar, he allowed the press into the fundraiser after all.
• On Monday, Greta Van Susteren of Fox said they were being held on the bus in Poland like "animals in a petting zoo" and not allowed to ask questions.
• On Tuesday in Warsaw as Romney was leaving a soldier's tomb to go make his speech in Warsaw, frustrated reporters shouted questions and were told off by a Romney operative named Gorka.

This "Curse the Press" thing can only go so far, although I'm sure it's resonating with the far-right who loved Sarah Palin's characterization of the "Lamestream Media." The problem is, some of the people in the press are far to the right of mainstream.

And if Romney is going to talk about Israel and Poland as beacons of democracy, he's going to have to accept that a free press is crucial to a free society.

They also should have realized that when people like Rupert Murdoch, Charles Krauthammer, and Greta from Fox are complaining about the candidate, they should try to be nice once in a while and answer questions, even if Romney has to say "no comment." In fact, that's what he should say sometimes, but he doesn't know how.

Today more newsprint hit the fan, so to speak. :)

Talking Points Mem ~ Romney Aide Curses at Press in Poland

Transcript

CNN: “Governor Romney are you concerned about some of the mishaps of your trip?

NYT: “Governor Romney do you have a statement for the Palestinians?

Washington Post: “What about your gaffes?

NYT: “Governor Romney do you feel that your gaffes have overshadowed your foreign trip?”

CNN: “Governor Romney just a few questions sir, you haven’t taken but three questions on this trip from the press!

Gorka: “Show some respect”

NYT: “We haven’t had another chance to ask a question…”

Gorka: “Kiss my ass. This is a Holy site for the Polish people. Show some respect.”

Hey, Gorka ~ respect works both ways!!! And you should have more faith in your candidate and let him practice answering questions before you tick off more journalists. Things are not going to get easier after this trip - Romney has seen to that will his gaffes.

Of course now the Romney camp says they are sorry it happened, and they've rolled it back. As David Corn of Mother Jones said on Hardball - "They should call this the 'moonwalking tour' because every time Mitt Romney speaks he has to walk backwards while seeming to go forward. How many remarks can you walk back?"

And yet here's another one . . .

From Politico

Gorka subsequently called a pair of reporters to apologize, saying he lost his cool. “It was inappropriate,” Gorka said. Romney was at the square to visit the Polish Tomb of the Unknown Soldier. After he did that, laying a wreath and greeting Polish military veterans, the GOP hopeful decided to walk down to a monument on the other side of the square. Romney has not held a media availability for his traveling press corps since taking three questions outside 10 Downing Street in London last Thursday.

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Romney Warsaw Speech: "Pulaski" a Ku Klux Klan Dog Whistle?

I debated whether to write this down, but after reading Mitt Romney's Warsaw speech several times, a possible racist dog whistle jumped out at me. I do not know if this was intentional or unintentional, but I bring it up since everyone from Cokie Roberts to Chris Matthews has mentioned that Romney is trying to get the white Polish American vote in Pennsylvania and elsewhere.

But my theory now is that the goal is bigger than that -- What if he is trying to seal the deal not just with European ethnic groups, but with all the white supremicist voters in the United States? After all, he has to have them to win because he's alienated so many other groups in the country, such as Hispanics.

I'm talking specifically about all those people who hate Barack Obama just because he is African American, the ones outraged that he was ever elected President in the first place, the birthers who view him as "foreign" or un-American - as Romney spokesman John Sununu was blabbing about a few weeks ago.

Sometimes for the racist factions, "European" is as much a dog whistle as "Anglo-Saxon," which Romney threw out in a statement just last week before his London debacle.

And NOTE: I realize there are lots of other places called Pulaski in many states. I'm discussing just one in particular. Stay with me here, and follow Romney's own words . . .

Let's look at what Romney said, then study some history:

I, and my fellow Americans, are inspired by the path of freedom tread by the people of Poland. Long before modern times, of course, the Polish and American people were hardly strangers. The name "Pulaski" is honored to this day in America, and so is the memory of other Poles who joined in our fight for independence.

Complete Text of Speech Here

The "fight for independence" is a reference to the Revolutionary War, correct? That could just be a shout out to the "Patriot" movement connected to the Tea Party, but there's more . . .

Who is he talking about specifically? Who is the person called "Pulaski" who helped us in our fight for "independence" from the British?

Here's the answer: Casimir Pulaski, native of Warsaw, who fought with George Washington.


From the Polish American Center

Casimir Pulaski, son of Count Joseph Pulaski, was born in Warsaw, Poland, on March 6, 1745. At the age of fifteen, he joined his father and other members of the Polish nobility in opposing the Russian and Prussian interference in Polish affairs. Outlawed by Russia for his actions on behalf of Polish liberty, he traveled to Paris where he met Benjamin Franklin, who induced him to support the colonies against England in the American Revolution. Pulaski, impressed with the ideals of a new nation struggling to be free, volunteered his services. Franklin wrote to George Washington describing the young Pole as "an officer renowned throughout Europe for the courage and bravery he displayed in defense of his country's freedom."

In 1777, Pulaski arrived in Philadelphia where he met General Washington, Commander-in-Chief of the Continental Army. Later, at Brandywine, he came to the aid of Washington's forces and distinguished himself as a brilliant military tactician. For his efforts, Congress appointed him Brigadier-General in charge of Four Horse Brigades. Then again, at the Battle of Germantown, Pulaski's knowledge of warfare assisted General Washington and his men in securing victory for American forces.

All well and good - he was a Revolutionary War hero. Nice.

But here's the Dog Whistle part: there's a town named precisely for Casimir Pulaski here in my home state of Tennessee.

Pulaski, Tennessee, in Giles County.

But beyond the European/Polish/Revolutionary War connection, what is is Pulaski, Tennessee, MOST famous for? Do you know? Well, here's the dog whistle part: Pulaski is where the Ku Klux Klan was founded.

From PBS, Jim Crow Stories

The Ku Klux Klan was originally organized in the winter of 1865-66 in Pulaski, Tennessee as a social club by six Confederate veterans. In the beginning, the Klan was a secret fraternity club rather than a terrorist organization. (Ku Klux was derived from the Greek "kuklos," meaning circle, and the English word clan.) The costume adopted by its members (disguises were quite common) was a mask and white robe and high conical pointed hat.

According to the founders of the Klan, it had no malicious intent in the beginning. The Klan grew quickly and became a terrorist organization. It attracted former Civil War generals such as Nathan Bedford Forrest, the famed cavalry commander whose soldiers murdered captured black troops at Fort Pillow.

The Klan spread beyond Tennessee to every state in the South and included mayors, judges, and sheriffs as well as common criminals. The Klan systematically murdered black politicians and political leaders. It beat, whipped, and murdered thousands, and intimidated tens of thousands of others from voting. Blacks often tried to fight back, but they were outnumbered and out gunned. While the main targets of Klan wrath were the political and social leaders of the black community, blacks could be murdered for almost any reason. Men, women, children, aged and crippled, were victims.

The Klan occasionally still marches in Pulaski, although most of the locals aren't happy about it.

Klan Rally in Pulaski, TN, 2009


The Southern Poverty Law Center calls Pulaski the "white supremicist epicenter of the nation" in this article about a Klan march there back in 2010:

Racist Event in Pulaski

Although it’s a small town of about 7,800, Pulaski, Tenn. may well be the white supremacist epicenter of the nation — at least if the number of rallies held there by bigoted groups is any indication.

The mayor and other residents aren’t pleased. “There’s never been a local person involved in these marches or rallies,” Mayor Daniel Speer told Hatewatch this week. But they’re resigned to being a favorite locale for the haters on the American radical right. Speer’s town is more than one-quarter black, but it has for decades been a favorite place for white supremacist groups to rally because of one unfortunate historical fact: This was where the Ku Klux Klan was born.

“It’s a great place to come and learn about the heritage of European Americans,” the festival’s website says. The site includes links to racist individuals and groups including David Duke, who founded Robb’s Knights of the Ku Klux Klan in 1975; the Council of Conservative Citizens, a group that has described black people as a “retrograde species of humanity” and opposes “race mixing”; and The Barnes Review, the leading American journal devoted to denying the Holocaust.

The European Heritage Festival follows by three months a “White Unity Day March and Rally” in Pulaski conducted by the neo-Nazi Aryan Nations. A year earlier, in July 2009, the Fraternal White Knights of the Ku Klux Klan staged a birthday march in Pulaski for their hero, Confederate Lt. Gen. Nathan Bedford Forrest. There have been many other Klan rallies in Pulaski over the decades.

. . . “It’s frustrating,” the mayor says. “[We’re associated with] the Klan. It’s a stigma. Unfortunately, I just don’t see it going away.”

"A great place to . . . learn about the heritage of European Americans." Yep - just like Casimir Pulaski, the guy referred to in Mitt Romney's Warsaw speech.

More Here: Southern Poverty Law Center and Hate Watch

NOTE: I do NOT in any way, shape, or form mean to insult anyone named "Pulaski" or any Polish Americans, nor anyone living in present-day Pulaski, Tennessee. My goal is just to point out that Mitt Romney may have made a racist reference in his Warsaw speech, whether intentional or unintentional. If it is unintentional, then he really needs a new speechwriter because it is unbelievable that they would let the candidate unintentionally invoke the history of Pulaski, TN, in the United States.

If it is intentional, then Romney is just as cynical and cut-throat as everyone thinks, since he also quoted Condileeza Rice and Pope John Paul II, who make strange bedfellows with the Klan. My feeling is that his political team will do or say anything to win, and that's why this speech is a jumbled word salad aimed not at Europe, but at the Tea Party and even the Aryan Nations in the U.S. He is name-dropping this and that to get the couple hundred thousand votes he needs to win, ironically along with the help from the new Jim Crow-style laws in the swing states. Does this sound strange? Well, stranger things have happened - remember the election of 2000?

I'm only talking here about the way that reference might be taken by certain factions, and given the fact that Romney needs the Southern White or Midwestern White vote to win this election, this is a fair topic. I don't seek to insult anyone or any place either, but history is history, and considering how many borderline racist comments Mitt Romney has made in the past few months, let alone the past few days with the Israel/Palestine comparison, I'm just throwing this out there . . .

Ron Paul Supporters in . . . Poland?

No other group is as determined as the Paulites, LOL. And they will literally follow Mitt Romney anywhere. And like the roadrunner, they got there way ahead of Wile E. Coyote (Romney).

When Mitt Romney and family got off the plane in Gdansk, Poland today, they were met with the sight of Ron Paul supporters holding up a banner with his name on it.

As Romney's enters Gdansk, Poland his motorcade passed these supporters...for Ron Paul (photo) twitter.com/scottwfoster/s…
— Scott Foster (@scottwfoster) July 30, 2012

And another demonstration is planned tomorrow for Warsaw, where Romney is set to make a major speech:

Planned demonstration for Romney's Warsaw event tomorrow. Get the word OUT to the Poles. #RonPaul in Poland dailypaul.com/246829/ron-pau… #OTB
— Ian Shilling (@Ian56789) July 30, 2012

Romney Flubs His British Invasion

I have been enjoying the heck out of Romney's British Invasion so far, even before he landed in the country. One (or possibly two) of his surrogates went nuts yesterday and told the British tabloid Telegraph UK a few bizarre things about what Romney wants from British relations, including several racist dog whistles about how Romney is "more Anglo Saxon" than Barack Obama, who "hates NATO." You can't make this stuff up.

Updates on this ever-evolving story from Think Progress

UPDATE: Romney doesn't dispute Telegraph's "Anglo-Saxon" report, says "I dont agree with whoever that advisor might be" thkpr.gs/PgzcpP

— ThinkProgress (@thinkprogress) July 25, 2012

UPDATE: The Romney campaign has not requested that The Telegraph update or retract their "Anglo-Saxon" story thkpr.gs/PgzcpP

— ThinkProgress (@thinkprogress) July 25, 2012

More humor, quotes and tweets on Snark Amendment
Mitt Goes Brit (Anglo-Saxon, That Is)
Mitt's Epic Anglo-Saxon Fail
Romney Dog Whistles: Foreign, Anglo-Saxon, Atlanticist

Original Article in the Telegraph UK

We are part of an Anglo-Saxon heritage, and he feels that the special relationship is special,” the adviser said of Mr Romney, adding: “The White House didn’t fully appreciate the shared history we have.
. . . Obama is a Left-winger," said another. "He doesn’t value the Nato alliance as much, he’s very comfortable with American decline and the traditional alliances don’t mean as much to him. He wouldn’t like singing ‘Land of Hope and Glory'.”
. . . He is naturally more Atlanticist.

Comment by Vice President Joe Biden

Despite his promises that politics stops at the water's edge, Gov. Romney's wheels hadn't even touched down in London before his advisers were reportedly playing politics with international diplomacy.
. . . The comments reported this morning are a disturbing start to a trip designed to demonstrate Gov. Romney’s readiness to represent the United States on the world’s stage. Not surprisingly, this is just another feeble attempt by the Romney campaign to score political points at the expense of this critical partnership. This assertion is beneath a presidential campaign.

Romney spokesman Ryan Williams quoted in the LA Times: The Vice President of the United States used an anonymous and false quote from a foreign newspaper to prop up their flailing campaign. We have very serious problems confronting our nation and American families are hurting, yet the Obama campaign continues to try to divert voters' attention with specious shiny objects. We have more faith in American voters, and know they will see this latest desperate ploy for what it is.

Obama Spokesperson Jen Psaki: One of his advisers violated exactly what they said they wouldn't do which is criticize the president beyond the borders of the U.S.
This is a case where there is a continuous fumbling of the foreign policy football here, and it does raise a question as to whether Mitt Romney and his team are ready to have serious conversation about a foreign policy

Romney campaign spokeswoman Amanda Henneberg in a statement to ABC News: It's not true. If anyone said that, they weren't reflecting the views of Gov. Romney or anyone inside the campaign.

World Markets Watching Spain

For a long time, market watchers have predicted that Spain might be the next economy to crumble after Greece fell apart and needed a bail-out. Don't you hate it when the doomsayers are right? It just doesn't bode well for the world economy to see all this instability in Europe, and unfortunately it's nowhere near over because Italy is next in line. The pain continues, and could leave the rest of Europe ~ and the world ~ overwhelmed.

 Ezra Klein on Rachel Maddow

. . . If you're picking one indicator to watch to see if it was going to survive or fall, you would pick Spanish bond yields because it would be bad if Greece had to leave the euro, but it would be survivable. There is no world where Spain goes down and the euro endures. If Spain goes down, the euro is going down. Spanish bond yields, the thing you need to remember is the higher a bond yield is, the higher a country has to pay when they borrow money.
Spain can't afford to borrow the money necessary to finance itself, and the Eurozone is going down. and that means our economy might be going down, too.
Well, Spanish bond yields have kept going up. This is way above the level which Spain and the euro can survive.
Tonight's Ezra Klein challenge is to explain why this happened. . . . Austerity isn't working! . . . Spain has been doing what the Eurozone has asked them to do, austerity, cutting budgets. They're trying. everybody agrees they have been a good faith actor. but that treatment is driving them deeper and deeper into recession, and these bond yields are the market . . . saying 'this is not working.'

Visit NBCNews.com for breaking news, world news, and news about the economy

From MSN Money UK:

The Dow Jones Industrial Average, after falling 239 points earlier in the day, ended down 101.11 at 12,721.46. Yields for US government bonds sank to record lows as traders sought the safety of American debt.

Borrowing costs rose sharply for Spain and Italy after news that the Spanish economy contracted by 0.4% in the second quarter. Falling economic output makes it more difficult for Spain to deal with its debts. The Standard & Poor's 500 index fell 12.14 points to 1,350.52. The Nasdaq composite index dropped 35.15 points to 2,890.15.

"Increases in Spanish borrowing costs have brought back questions about the health of Europe," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia. "That's driven a flight to safety."

More Scary Stuff from Bloomberg

Now, that worst-case scenario has re-emerged. The catalyst is Greece. Over the weekend, Germany’s economy minister, Philipp Roesler, said he doubted that Greece would keep the fiscal promises it made in return for its bailout. If help for Greece is cut off, a disorderly exit from the euro becomes much more likely. For the rest of Europe and the world, that’s alarming less in its own right than because of the risk of contagion.

Spain would probably be the first to suffer, and as things stand there’s nothing to stop the situation from unraveling. With anxiety about Greece rising again, it was reported that Spain’s regional governments were seeking bailouts from Madrid, threatening to add to the central government’s debt burden. The Spanish economy is contracting, the latest figures showed last week. At the same time, Prime Minister Mariano Rajoy sparked protests when he said he would press on with further fiscal tightening, which is likely to slow growth even further.

On Monday, Spain’s 10-year bond yields rose for the first time above 7.5 percent. Rates sustained at this level are unaffordable and, in effect, make the Spanish government insolvent. Disturbingly, yields rose sharply at shorter maturities, too, and the cost of insuring against a Spanish default set a record -- both signs that confidence is evaporating.

Spain is the fourth biggest economy in the euro area. If it has to be bailed out, the EFSF and ESM will be overwhelmed. Then comes Italy, whose 10-year bond yield just climbed to a six- month high, remaining well above 6 percent. That’s no less crippling than Spain’s cost of borrowing, because Italy’s debt burden is far greater.

If Europe’s governments continue to stand aside, they will sink not only Greece, Italy and Spain, but the wider European and global economies as well. Europe’s leaders must either greatly expand the ESM and start to use it more proactively, or urge and empower the ECB to buy or somehow guarantee distressed sovereigns’ debt. One way or another, bond yields have to be capped at a supportable level.

Greeks Go Conservative, May Stay in Eurozone

The Greek Elections are over now and the right-leaning New Democracy government won led by Antonis Samaras, who spoke of "a new national unity in a European direction." They still have to form a government and prove stability to the rest of Europe, but this is an encouraging outcome if Greece wants to remain in the Eurozone.




From MSNBC:

Sunday's vote was seen as crucial for Europe and the world, since it could determine whether Greece was forced to leave the joint euro currency, a move that could have potentially catastrophic consequences for other ailing European nations and the global economy. As central banks stood ready to intervene in case of financial turmoil, Greece held its second national election in six weeks after an inconclusive ballot on May 6.

The Eurozone's finance ministers said the outcome should allow for the formation of a government that will carry the support of the electorate to bring Greece back on a path of sustainable growth.

"The Eurogroup acknowledges the considerable efforts already made by the Greek citizens and is convinced that continued fiscal and structural reforms are Greece's best guarantee to overcome the current economic and social challenges and for a more prosperous future of Greece in the euro area," the group said in a statement.

"We congratulate the Greek people on conducting their election in this difficult time," the White House said in a statement. "We hope this election will lead quickly to the formation of a new government that can make timely progress on the economic challenges facing the Greek people."

Uncertainty in the Eurozone Confuses Markets

As I wrote a few weeks ago, even if the Germans kick Greece out of the Eurozone and they go back to the drachma and a future of austerity, there are other countries in the same shape waiting in the wings. Spain, Portugal, Italy, Ireland . . . know one really knows where the ripples with stop. It's a dangerous time for the world economy. Yesterday the markets seemed happy that Spain will get a $125 billion bail-out - today, not so much.

This article describes the volatile situation succinctly:

Spain, Italy in market storm ahead of Greek vote
12 June 2012 | 14:45 | FOCUS News Agency

Madrid. Investors pounded Spanish and Italian debt on Tuesday, beset by grave doubts over a Spanish banking rescue and fears of a looming Greek exit from the eurozone, AFP reported.
Despite eurozone powers striking a deal Saturday to extend Spain a banking sector rescue loan of up 100 billion euros ($125 billion), the alarm gripping bond markets showed no sign of relaxing.
Two major concerns stood out: doubts over Spain's outlook even with the mega-loan and this Sunday's Greek elections, which in a worst-case scenario could send Athens back to the drachma.
It was impossible to say how things may turn out, said Edward Hugh, an independent economist based in Barcelona.

Pundits Slam Greece as Euro Exit Looms

Considering some of the Greek-bashing going on in Europe, you wouldn't know that other countries such as France, Spain, Portugal, Italy, and Ireland might have lots of trouble if Greece makes a disorderly exit from the Euro. Who will the pundits blame when Greece is no longer the scapegoat?

Last week Christine Lagarde, the International Monetary Fund chief, insulted the Greeks by implying they were all tax dodgers. She told Guardian UK:

"Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax."
Even more than she thinks about all those now struggling to survive without jobs or public services?
"I think of them equally. And I think they should also help themselves collectively."
How?
"By all paying their tax. Yeah."
It sounds as if she's essentially saying to the Greeks and others in Europe, you've had a nice time and now it's payback time.
"That's right." She nods calmly. "Yeah."

That statement brought an onslaught of criticism to Lagarde's Facebook Page where she later posted an apology:

As I have said many times before, I am very sympathetic to the Greek people and the challenges they are facing. . . . An important part of this effort is that everyone should carry their fair share of the burden, especially the most privileged and especially in terms of paying their taxes. . . .

Bill Mitchell, an Australian economist saw Lagarde's statement as more European bullying towards the Greek people, especially from the IMF. He wrote in his blog:

. . . the European banking system interacted with the bailout funds to benefit the German banks. The benefits dwarf the amount of funds Greece has received.
So when Lagarde talks about payback time it is clear that she is continuing the IMF tradition of bullying the weak and vulnerable to benefit the rich and strong.
. . . Remember, that Greece was not in crisis before the Euro was imposed. Its crisis is the result of lax regulation by EU officials interacting with a flawed monetary system design.

Unfortunately, other Europeans continue to enjoy some Greek bashing, like this so-called "Wealth Manager" Nick Dewhirst from Integral Asset Management who echoed Lagarde's condescending judgment when interviewed by CNBC today (my transcript):

Dewhirst: I think the easiest way to understand it is at the ordinary human level. Nations are just very large numbers of human beings. And it's like a club, so I was down at my Sailing Club . . . talking to a few friendly Greeks among others and the attitude is very simple. As a club member you have to obey by certain rules. Lots of people cheat a little bit. They get away with it. Some people cheat a helluva lot. They get away with it until everybody notices. And that's the key difference between now and a couple of years ago.
Every German voter, every Slovak, Finn, and every other savings nation voter now knows that cheating is not just the occasional email joke he's got about Greece, but a way of life.

Question: What's the real impact of Greece leaving the eurozone as you say on June 18th?

Dewhirst: Probably like Y2K. A lot less than everybody thinks.

Question: But there are so many unknown unknown-unknowns...

Dewhirst: Um, I don't think so. I wrote a piece in December 2010 predicting this would happen and predicting how it would happen. We would have a bank holiday . . . and during that period they would have to pass a simple law amending one clause of the European treaties they signed. And then your accounts would be frozen. And everyone would come in on Monday and say 'they've stolen my money - they can't do that!' But they can! They've just done it and it's been done before. It was done in Argentina in 2001.

Question: But isn't the concern here the knock on impact through the banking system, because there would be quite significant implications for the Greek banks? The European financial system is very interconnected . . . Banks are holding some debt as well....
Question: Because if the new currency in Greece devalues 50-70% and they've lost that amoung of their wealth, why wouldn't every person in Spain, in Italy, or anywhere else that this could potentially happen and put it into a safer currency, thus perpetuating the bank runs?

Dewhirst: Um, that's very sensible, and indeed, I think about 30% of the Greek bank deposits have all ready disappeared that way. And 8% of those in other countries have done the same sort of thing. That's true.

Dewhirst was also quoted by CNBC as saying:

“The euro zone is a club but you get cheaters who get away with it until everyone finds out and at that point you need to remove them otherwise everyone will cheat. It’s better for Greece to leave," . . .
“The basic question is that a German has to increase working from 65 to 67 and that is to pay for Greeks retiring at 50. The 17th of June is the perfect opportunity to say either 'we’ll behave' or 'we’ll carry on cheating.

And Dewhirst continues his undiplomatic rant with a flippant joke:

“Greeks would no longer be able to afford German cars and Germans would be able to buy Greek villas and the young unemployed in Greece would have jobs as tourism booms. The best thing would be that they [Greeks] could blame the foreigners."

Unbelievable, and it's no wonder they left that last bit out of the video below. Let's hope Mr. Dewhirst never makes a bad investment or loses his wealth (*cough* JP Morgan *cough*). Woe betide him if he's ever part of the 99% in any country. He might be hungry enough to eat his words.

Economics Round-Up ~ The London Whale

Forbes: How JP Morgan Lost $17.5 million

According to the May 12th New York Times, JPMorgan decided to make a bet on a very obscure corner of the derivatives market. And due to the scale of JPMorgan’s trading, hedge funds figured out its identity and placed bets against the bank that are continuing to make profits for them at JPMorgan’s expense.

NPR Interview with Wall Street Journal's Zuckerman: Bruno Iskil Bears Some Blame for Morgan's Fall

GREGORY ZUCKERMAN:His name is Bruno Iksil. He's an interesting guy. He lives in Paris, but he commutes to London. Wears a lot of black. Informal dresser. He comes home, (unintelligible) from his home in Paris on Fridays, the rest of the week is in London. And he is one of a group - it's a group called the CIO group, and frankly, when I started reporting on this, analysts and investors didn't really know much about this group. And the more I uncovered it the more fascinating it became. They're a group that ostensibly hedges the positions of the banks. So the bank does all these loans and other kinds of things, and the group is charged with protecting and hedging the bank by doing various trades. But it also is charged with making money. So it does things that can potentially be risky at the same time.

New Statesman: JP Morgan Hedge-Bet Unbelievably Ineffective

The bank JPMorgan announced last night that it had lost $2bn in trading on credit derivitives, through what chief executive Jamie Dimon called "errors, sloppiness, and bad judgment" and a "bad strategy, badly executed and poorly monitored".
The loss was made by the bank's chief investment office, which is under the aegis of Bruno Iskil, who earned the nickname "London Whale" earlier this year following accusations that his oversized bets on credit derivatives, one said to be as large as $100bn, were skewing the market.

Guardian UK: London Whale Blows Hole in Bank's Value

A graduate in engineering from the École Centrale in Paris 20 years ago, Iksil had become so well known in the opaque $10tn market for credit default swaps – a complex type of insurance product – that he was nicknamed the "London Whale" and also known as Voldemort, after Harry Potter's nemesis.
Iksil is thought to be one of the highest-paid bankers in London and his New York-based boss, Ina Drew, whose pay has to be published, received $14m last year.
. . . Reports of Iksil's risky transactions surfaced in the US a month ago, but were dismissed by Dimon as "a complete tempest in a teapot". But in a hastily arranged conference call to investors on Thursday night he said: "The portfolio has proved to be riskier, more volatile and less effective as an economic hedge than we thought. There were many errors, sloppiness and bad judgment."

The Hill: Senator Corker (R-TN) Calls for Hearings on JP Morgan Chase

"I believe that we need to know the answers to the following questions: 1. Are we confident that taxpayers are fully protected from losses at major financial institutions?," Corker continues in the letter. "Were these bona fide hedging transactions, or were these poorly managed proprietary trades? And what, precisely, is the distinction?"

AP: World Stocks Lower on JP Morgan Loss

"This has permeated to the wider market as investors assess the possible systemic risk, adding another layer of caution to the fragile trading environment," said Jordan Lambert, a trader at Spreadex.
"When such shocks occur, it is wise to err on the side of caution and consider whether it is a possible 'tip of the iceberg' scenario, especially when one contemplates the interconnectedness of the banking system," he said.

Economics Round-Up

CNBC Slideshow: Europe's Real Estate Ghost Towns

Euro Tumbles Due to Wild Weekend Elections 

Anti-Austerity Ballot Backlash 

France, Greece, and the End of the Euro 

 Continued German support for the single currency relies on acceptance of the austerity imposed by the fiscal compact. Both France and Greece have now resoundingly rejected the old political consensus, making the future of the single currency more uncertain than ever.

 Greeks Reject "Barbarism" of Economic Austerity

Alexis Tsipras became the surprise package of the Greek election by telling Angela Merkel to get lost.
“The people of Europe can no longer be reconciled with the bailouts of barbarism,” Tsipras, 37, said on state-run NET TV late yesterday after his Syriza party unexpectedly came second in the country’s election. “European leaders, and especially Ms. Merkel, should realize that her policies have undergone a crushing defeat.”

Germany's Merkel Defends the Euro and Austerity

Ms Merkel has called for giving Athens time to "analyse the election result" and determine "which groupings are possible for a new government".
She acknowledged that the budget cutting imposed on the debt-mired country in exchange for two separate rescue packages was "difficult" but said it "nevertheless must continue".

Socialist Hollande Defeats Sarkozy in France

“After 35 years of politics, after 10 years at the highest levels of government, after five years as head of state, I will become a Frenchman among the French,” Sarkozy said last night, conceding defeat.
With joblessness at a 12-year high and public debt at a record, the electorate proved unwilling to forgive the 57-year- old lawyer for foibles such as celebrating his 2007 victory at a chic Paris restaurant and a holiday on a billionaire’s yacht, making the election an anti-Sarkozy vote.
“If the French had jobs and more money in their pockets, they’d be confident and ready to forgive,” said Laurent Dubois, a professor at the Institute of Political Studies in Paris.

 Austerity Could Be Over for Europe

“Immediate austerity, in recessionary economies, simply doesn’t work – a point apparently better understood by many European voters than those they have elected,” said David Kelly, chief market strategist at J.P. Morgan.
In less than two years, voters in seven European countries have thrown out leaders or ruling parties.
What Europe needs now is some “enlightened macro-economic approach,” according to Mr. Kelly. And that means less pressure on the austerity pedal, he argued.