What Next? Europe After Cyprus

What Next? Europe After Cyprus

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How the events of last week have changed the euro crisis

The dust is still settling around the new Cyprus bailout. But already there are three significant developments that show us where Europe will go from here.

The first is that Jeroen Dijsselbloem has gone from being an unpronounceable name to one of the most hated men in Europe. Why? On March 25, Mr. Dijsselbloem, who chairs the group of eurozone finance ministers, said that the Cyprus bailout is a template that can be used in other countries.

Here’s the offending comment:

If there is a risk in a bank, our first question should be “Okay, what are you in the bank going to do about that? What can you do to recapitalize yourself?” If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalizing the bank, and if necessary the uninsured deposit holders.

In our daily monitoring of the German press, we’ve sensed a hardening of tone and rhetoric throughout the crisis.
Open Europe
All eurozone countries guarantee the first €100,000 (us$128,290) in their nation’s bank accounts. Anything above that is “uninsured.” When Mr. Dijsselbloem says “we’ll ask” uninsured deposit holders to “contribute,” he’s saying that if Spain gets into trouble, those with more than €100,000 in the bank could lose their money.

Other European leaders have been doing all they can to get out the opposite message: Cyprus is a one-off. If Mr. Dijsselbloem is telling the truth, it would be madness to keep more than €100,000 in any bank in Southern Europe. But if people start taking their money out of Southern Europe even faster than they already are, as Dijsselbloem is encouraging them to, it could take the crisis to a whole new level.

As Business Insider put it: “Really, Dijsselbloem? Why would you say something like that?”

French President François Hollande and Spanish Prime Minister Mariano Rajoy have already contradicted him. Dijsselbloem has put out a statement that says—kind of—that he didn’t really mean what he said earlier, but it’s a fudge that has left everyone confused. The bottom line seems to be this: Europe is planning on repeating Cyprus, but it doesn’t want to spark a panic by making that too clear.

The second new development is the introduction of capital controls in Cyprus. Draft proposals leaked online indicate that Cypriots face tough restrictions on how they can use their money. Those traveling abroad can take only €1,000 ($1,282) at a time. An exception has been made for students, who can take €5,000 out of the country per quarter. Within Cyprus, each individual is limited to €5,000 ($6,414) in credit or debit card transactions a month. People may deposit checks into bank accounts, but cannot cash them.

According to the draft, these controls will be in place for seven days. But Cyprus is clearly planning to keep at least some of them in place for the long haul. What’s the point in detailing the amount of money students can take out per quarter, if the controls are only in place for seven days?

These capital controls will also encourage people to get their money out of Southern Europe. If you see a crisis approaching Spain, would you leave your money there and risk only being able to get it out of your bank a trickle at a time?

Dijsselbloem’s statement and the capital controls increase the divide at the heart of the euro. A German euro in a German bank account is becoming much more desirable than a Cypriot, Greek or even Italian euro. The euro crisis will move even faster from now on.

But the most important change is the change of attitude within Germany.

Think tank Open Europe reports that “the Germans themselves are remarkably united over the agreement.”

“In fact, the feeling is that Germany, collectively, just got a fair bit more assertive over its eurozone policy,” it writes.

Germany’s Social Democrats and Greens will join the government in supporting the deal. “In our daily monitoring of the German press, we’ve sensed a hardening of tone and rhetoric throughout the crisis, not least in response to the overtly anti-German tone of many of the anti-austerity protests in the south,” writes Open Europe.

Thomas Straubhaar, director of the Hamburg Institute of International Economics, called the bailout deal a “turning point” in Die Welt. “Up until now, the bankrupt countries have been able to use fear of a domino effect to extort Europe,” he wrote. “That is now over because the strong eurozone countries have the better hand—and they should not be afraid to play it” (translation by Open Europe).

The think tank concludes: “The implications of a Germany more prepared to assert its viewpoint has huge implications for the future of the eurozone and the EU as a whole.”

It’s right. As a result of Cyprus, the eurozone is a lot more volatile, and Germany is more assertive.

Obamacare to Hit Your Pocketbook—Big Time

Obamacare to Hit Your Pocketbook—Big Time

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In case you are one of the dwindling few who still believe that the Patient Protection and Affordable Care Act (also known as Obamacare) won’t massively impact you, a new study demolishes that idea.

The study by the Society of Actuaries finds that insurance companies will have to pay out an average of 32 percent more for medical claims under President Obama’s signature healthcare overhaul.

And you can take it to the bank that those health insurance companies will pass on as much of those costs to you as they can.

Amazingly, the Obama administration is still claiming that costs will go down—even though insurance cost estimates have continued to rise each year after passing the act.

cbs News summarizes:

The study says claims costs will go up largely because sicker people will join the insurance pool. That’s because the law forbids insurers from turning down those with pre-existing medical problems, effective January 1. Everyone gets sick sooner or later, but sicker people also use more health care services.”Claims cost is the most important driver of health care premiums,” said Kristi Bohn, an actuary who worked on the study. Spending on sicker people and other high-cost groups will overwhelm an influx of younger, healthier people into the program, said the report.

Basically, the law mandates that insurance companies become charities that cover everyone’s medical needs, regardless of age or medical history. But charitable work costs money too—especially when it is covering astronomical medical costs often associated with people who have pre-existing conditions.

Those costs will simply be passed on to everyone else who is in the medical insurance pool.

Politicians’ claims that premiums will not go up will be exposed as lies once actual costs start hitting policy holders more dramatically later this year. Some costs have already hit as companies have raised fees in anticipation of Obamacare-mandated price caps.

The report says that by 2017, medical costs will jump by 62 percent for California, 67 percent for Maryland, and around 80 percent in Ohio. Some few states will see the cost of medical claims decline.

Meanwhile, the deadline to buy health insurance, or pay the government penalty is nearing. Beginning next year, an individual with $50,000 annual income would pay a $500 penalty. In 2015 it bumps up to $1,000 and then jumps to $1,250 in 2016. After that, the penalty increases each year with the inflation rate. For married couples, the penalties double.

The timing of Obamacare could hardly be worse, from an economic point of view. With the economy struggling to avoid recession, these increased costs will hit both the private sector and are already incentivizing companies to shift workers from full-time employment to part-time. Consumer spending is already struggling as people cope with official unemployment at 7.7 percent and real unemployment more than twice that level.

The Affordable Care Act may be attractive to people who don’t have insurance and are old or already sick because they will now be able to buy coverage. For everyone else, prepare to open your pocketbook—big time.

Super Draghi Calls the Tune in Cyprus

Super Draghi Calls the Tune in Cyprus

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Mario Draghi rides to the rescue in Cyprus.

So a deal is done on the Cypriot economic debacle. But in the end, when push came to shove, it was not the troika, nor Merkel, nor Putin, least of all Cyprus’s president, Anastasiadis, but that Jesuit son of Rome, ecb head Mario Draghi, who flung down the gauntlet to the embattled island nation with an ultimatum that had one news source describing it as “acting with unprecedented severity.”

The suave, sophisticated Italian president of the European Central Bank threatened Cyprus with a complete cessation of funding if the government did not agree to the EU’s stringent bailout terms.

Cyprus, as we have long predicted, is but a vassal state of the European Union now, its future at the behest of the Rome/Berlin axis.

We are yet to see what secret deal has been concluded with Russia to protect the substantial funds that nation has on deposit in Cypriot banks.

But of real significance is the reality that the Rome/Berlin axis has now secured the crucially strategic Mediterranean Sea as EU territory, complete with the island stepping stones to Africa and the Middle East—Malta, Greece and Cyprus, through control of both the Greek and Cypriot economies, and strong influence over that of Malta.

That, as Spiegel maintains, “the real loser is the eurozone” is quite obvious to any analyst of this situation. That such an outcome was by deliberate design, is not so apparent.

Ex-EU official and eurozone whistle-blower Bernard Connolly, in his sizzling account of the Catholic German elites who constructed the eurozone for their own imperialist, Holy Roman ends—The Rotten Heart of Europe—claims that the euro was designed to fail from the beginning.

As he mentions in his further account of the euro project, Circle of Barbed Wire, “the erm [European Monetary Union] and its transmogrification into a coming monetary union … was always going to be, and was always intended to be, disastrous ….”

Disastrous, that is, for those nations now caught in its imperialist maw, directed to act at the diktat of the Rome/Berlin axis—Ireland, Portugal, Belgium, Greece, Cyprus—and whichever unfortunates are next on the Euro agenda.

When former European Convention Chairman Valery Giscard d’Estaing and former German Chancellor Helmut Schmidt held a summit at Aachen, seat of Charlemagne’s empire, to conclude their personal agreement on the erm, d’Estaing observed that “Perhaps when we discussed monetary problems, the spirit of Charlemagne brooded over us.”

Duped by Germany into believing that the creation of the German Reich was a bold step in taking a recently united German nation in 1871 on the path to a new federal union akin to the United States, U.S. President Grant failed to see the powerful influence of imperialist German elites behind the vision of a Reich that was to become, as Connolly writes, “Prussian-dominated, personal, dynastic, authoritarian and illiberal” (ibid).

Unfortunately, Washington has again failed to deduce the true nature of the beast arising in Europe. The latest imposition of onerous conditions slapped on Cyprus by the ecb, to “save” it from total financial disaster, is but a reminder that, in Bernard Connolly’s terms, we ought “to see the ‘European flag’ for what it is: a circle of barbed wire.”

The implication is that Europe is becoming one giant concentration camp, destined to act under the iron rule of the Rome/Berlin axis, a virtual resurrection of the old Holy Roman Empire.

Mario Draghi, the “war dragon” of the eurozone, has called the tune yet again on European finance, and it won’t be his last act by far as European elites extend their circle of barbed wire of European regulation around the Continent. Inevitably, Draghi’s latest action on the Cyprus debacle is but one more step toward the fulfillment of the great prophecy of Revelation 13:15-17.

Read our booklet Germany’s Conquest of the Balkans for the history and prophecy relating to these vital events developing daily in Europe, events destined to affect your life increasingly as the months ahead race by toward the grand fulfillment of that ultimate prophecy which declares the imminence of the return of the Savior of mankind foreshadowed by them.

These are indeed the “signs of the times”!

Chicago Schools Face Shutdown

Chicago Schools Face Shutdown

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Chicago plans massive cutbacks in the number of schools for 2014.

Chicago officials announced plans to close 54 schools, which include a total of 61 school buildings. The schools are set to close by August according to the announcement that came on March 21. The decision will go to a vote on May 22.

If the decision is passed, it will be the largest single closure of school buildings in the history of the United States. In the past, the district has never closed more than 11 schools in a single year. According to Chicago Public Schools, the closure will amount to 10 percent of all elementary school facilities.

Teachers, parents and unions have attacked Chicago Mayor Rahm Emanuel’s decision to close the schools. The officials insist the cuts must be made to help close the $1 billion budget deficit. Each school closing is expected to save $500,000 to $800,000. “Consolidating schools is the best way to make sure all of our city’s students get the resources they need to succeed in the classroom,” said the mayor.

Administrators previously warned that up to 129 schools were at risk of closure due to lack of students. Enrollment has plummeted an astonishing 20 percent over the past 10 years.

Aside from closing schools, Mayor Emanuel could cut the excessive wages of unionized teachers that is sucking school budgets dry. According to the Washington Post, the median salary of teachers in Chicago is $71,017. The median household income in the city is only $46,877. “Chicago teachers make significantly more than average, no matter their education or experience level,” reports the Washington Post.

Despite excessive compensation, in September last year Chicago teachers staged protests against unfair wages. Upset with the offered 16 percent pay increase, they demanded a 35 percent hike—even with the nation struggling to emerge from recession, and with national unemployment above 14 percent (U6 measure).

Teacher financing doesn’t stop with pay rates. Over the years, unions have worked to secure sweetheart retirement deals for teachers—at taxpayers’ expense.

In 2011, a teacher retiring after 30 years of work could expect an annual pension payment of $77,496. For every dollar of salary that is paid to a Chicago teacher, it costs the city 46 cents for the future pension benefit.

Nearly 50 percent of education dollars from the state will go to teacher pensions by 2014.

In years past Chicago made deals with teachers’ unions that are now haunting taxpayers and city employees. Record numbers of teachers are retiring. According to radio station wbez, the Chicago Teachers Pension Fund estimated that 2,000 teachers plan to retire by the end of summer break. That is a 40 percent jump over 2011. All these teachers will be drawing on their generous pension plans.

Meanwhile, sky-high teacher compensation has done little for students. In 2012, Chicago public schools’ graduation rate was a mere 60 percent!

School closures cause side effects beyond budget battles.

“There is no way people of conscience will stand by and allow these people to shut down nearly a third of our school district without putting up a fight,” said Karen Lewis, president of the Chicago Teachers Union, in a news conference just before the closures were publicized. “Most of these campuses are in the black community.”

Poorer districts will be hit hard. The population levels in poor neighborhoods have declined due to factors such as “white flight.” To overcome this, officials consolidate schools and bus students in to them.

“These actions unnecessarily expose our students to gang violence, turf wars and peer-to-peer conflict,” Lewis went on to say. “Some of our students have been seriously injured as a result of school closings.”

As the third-largest city in the United States, Chicago serves as a barometer for many of America’s sprawling cities.

Budget problems are weighing on school districts across the country. Taxpayers are beginning to pick up the tab for excessive pay packages agreed to by corrupt politicians and extorted by greedy unions.

America’s education system is in shambles and needs a complete overhaul. For a look at what the foundation of education should be, read Education With Vision.

New Chinese President Honors Russia With His First International Trip

Chinese President Xi Jinping arrived in Moscow on Friday for talks with Russian President Vladimir Putin. The trip to Russia is Xi’s first international visit since taking office on March 14.

The scale of Friday’s reception underlined the close ties between the two Cold War-era rivals. The countries now cooperate closely on energy interests and their shared aspiration to curtail the influence of the United States around the world.

Putin was quick to stress the “development of Russia-China relations” ahead of the negotiations.

Xi echoed Putin’s sentiments, adding that his visit would “help to reach certain results that will benefit our relations and countries.”

The negotiations are set to focus on oil and gas as China seeks to secure new energy resources to fuel its growing economy. Russia is interested in securing a share of China’s giant energy market.

Bilateral trade between the Asian giants has been steadily growing, reaching $88 billion last year. Weapons trade between the two may also be set to increase. Russian arms trade officials said they have recently signed a tentative deal with China to deliver a batch of Russian Su-35 fighter jets.

The Trumpet has long predicted that the relationship between Russia and China will grow close. Watch for Moscow and Beijing to cooperate more and more, economically, politically and militarily. As they do, expect Europe to unite around Germany. These geopolitical trends are leading to a clash between these two power blocs. For more information, read Russia and China in Prophecy.

Cyprus a Vassal State of the German Empire

Cyprus a Vassal State of the German Empire

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The new bailout agreement has destroyed Cyprus’s economy, leaving the nation dependent on Germany for years to come.

During the early hours of Monday morning, EU leaders agreed to another bailout for Cyprus. The island will receive the €10 billion (us$12.9 billion) it needs to avoid collapse without most Cypriots having money removed from their bank accounts. But Cyprus’s economy has been destroyed. The nation is left as a vassal state of the new German empire.

Cyprus’s second-largest bank, Laiki, also known as the Popular Bank of Cyprus, will be split up. The profitable parts of the bank will merge with the Bank of Cyprus. Those with less than €100,000 in Laiki will not lose any money. The unprofitable parts will be used to create a “bad bank,” which will gradually be put out of business. Depositors with over €100,000 in Laiki will lose a lot of money. No figures have been announced yet, but they could lose everything above €100,000.

Those with under €100,000 in Cyprus’s biggest bank—the Bank of Cyprus—will also be protected. But those with more will also lose a lot of money—perhaps 40 percent, although figures have not yet been announced.

The deal will be painful for the whole economy. Last week, German Chancellor Angela Merkel said that Cyprus “must realize its business model is dead.” The latest bailout has ensured that realization.

The Financial Times reports that the Russian businessmen who have poured so much money into Cyprus’s economy are packing up. With all the talk of Russian mafia money, some may say “good riddance,” but their exit will have a dramatic impact on the economy.

The Financial Times quotes Fedor Mikhin, who owns a Russian international shipping company. Although not directly affected by the bailout, the new instability of the financial system means he is thinking seriously about leaving. “The locals should understand: As soon as the money leaves, the people who go to restaurants, buy cars and buy property leave too. The Cypriots’ means of living will disappear,” Mikhin said.

“When the Russians leave, who is going to stay at the Four Seasons for $500 a night?” he asked. “Angela Merkel?”

Think tank Open Europe writes that “the collapse in gdp could be anywhere between 5 percent and 10 percent this year …” (March 25). The bailout has destroyed the engine of Cyprus’s economy. Its only option is to be towed along by Germany. The new deal “offers no way out of the economic ruin that the single currency has visited on the island,” wrote Jeremy Warner, assistant editor for the Telegraph.

“Under this deal, Cyprus is, in effect, kissing goodbye to one of the mainstays of its prosperity and growth—finance,” Warner wrote. “It’s a bit like saying that closing down the City of London would put the UK on a sustainable path to recovery. Many might welcome the death of finance, but the impact on output, tax revenues, employment and public services would be devastating. The same is likely to be true in miniature of Cyprus.”

As Tacitus said, “They make a desert and call it peace.” Cyprus’s economy hasn’t been fixed. It has been destroyed.

Like Greece, Cyprus seems doomed to depend on Germany for one bailout after another, making painful concessions every time. “There is a strong chance Cyprus could become a zombie economy—reliant on eurozone and central bank funding, with little hope of economic growth” (Open Europe, op. cit.).

But the most poignant analysis comes from Charles Moore, the official biographer of Margaret Thatcher and former editor of the Spectator and the Daily Telegraph. His article “Southern Europe lies prostrate before the German imperium” is worth reading in full. Germany, he argues, is now an imperialist power.

The Germans “are perfectly genuine about wishing to overcome what is euphemistically called ‘the problem of history,’” he writes. “So they are obsessed with the importance of rules, of obeying them and being seen to obey them.” He continues:

But as they have grown stronger, their love of rules has turned into an instrument of their power. We are good European citizens, the Germans argue, and we have done well. So the answer is for everyone in the eurozone to behave just like us and they will do well too. One size must fit all, and that size is made in Germany. What the Germans leave out of account is that the single currency which, for them, is artificially low in international value is, for most of the rest of the eurozone, punitively high. What helps them crushes others. After victory in 1945, Churchill broadcast that Germany “lies prostrate before us.” Today, most of southern Europe lies prostrate before Germany.

As if to deliberately underscore Mr. Moore’s point, Germany’s parliament will soon vote on the new deal. Cyprus won’t. It already voted on these kinds of measures before the weekend—before it knew what the deal would be.

Another key part of the situation: Cyprus will have to introduce strict capital controls. These controls will prevent people from taking money out of Cyprus, or perhaps even out of their bank accounts. The fact that they have to be put in place is a symptom of how badly the banking system has been hit. But it also means that Cyprus is now halfway out of the eurozone.

If someone owns a large amount of Cypriot euros, they cannot easily exchange them for Spanish euros or German euros. It means that Cypriot euros are, de facto, a different currency. “[A]t this point in time, it’s hard to argue that a euro in Cyprus is worth the same as a euro elsewhere,” wrote Open Europe.

One final angle to watch is Russia. Russian businessmen could lose thousands, if not millions of euros. Russian Prime Minister Dmitry Medvedev said the terms amounted to stealing. However, Russian President Vladimir Putin has not sounded so outraged. His spokesman has indicated that he may still make it easier for Cyprus to pay back the €2.5 billion that Russia loaned it earlier. Mr. Putin’s calm reaction indicates that Trumpet columnist Ron Fraser may be right in his suspicions that Germany and Russia have already done a deal over this.

Deal or no deal, there is no denying that Germany has just destroyed Cyprus’s economy and turned the nation into a vassal state, just as Trumpet editor in chief Gerald Flurry has forecast all along.