Is France Europe’s Next Crisis?

Is France Europe’s Next Crisis?

BORIS HORVAT/AFP/Getty Images

France’s economic collapse has destroyed the Franco-German alliance. That means the end of the EU as we know it.

“The trouble with socialism,” said Margaret Thatcher, “is that eventually you run out of other people’s money.” Although a bit of an oversimplification—it ignores the major role of the euro—it sums up France’s economy.

France’s citizens face the highest tax burden in the eurozone. Public spending makes up 57 percent of the overall economy—also the highest in the eurozone—yet the country can’t get its debt under control, and its economy is shrinking.

No wonder the French are currently the world’s biggest pessimists. But the consequences reach far beyond France. This is about a fundamental change in the most important relationship in Europe—the Franco-German axis.

The collapse of the French economy is part of a trend catapulting Germany to the forefront of Europe.

The bad news seems to come out of France on a daily basis. The latest was on May 15, when France’s statistics office revealed that the economy had shrunk 0.2 percent over the first three months of 2013, putting France in a “triple dip”recession. The International Monetary Fund said earlier this year it expected France’s economy to shrink over the course of 2013, putting it on a list of countries that includes Portugal, Italy, Greece and Spain.

After publishing a poll of European nations on May 14, Pew Research concluded that “No European country is becoming more dispirited and disillusioned faster than France.” On the same day, the Financial Times wrote, “Whereas Spain and Italy are suffering from a severe credit crunch and drastic austerity, France’s biggest problem appears to be the generalized gloom infecting businesses and households.”

Unemployment is at 11 percent—double Germany’s. For youth, it’s 26.5 percent, compared to Germany’s 7.6 percent. At 3.2 million, the number of unemployed is setting new records. And it’s been rising every month for nearly two years. Many in France are cutting their spending, as they fear they could soon add to those statistics. “Scarcely a week goes by without another factory closure or a redundancy plan,” wrote the Economist last month.

Under eurozone rules, the French government cannot borrow more than 3 percent of gross domestic product each year. With borrowing at 4.8 percent, it was forced to ask permission from the European Commission to miss its target for the next two years.

French President François Hollande has painted himself into a corner. As a result, he is the most unpopular president in France’s history. He is a socialist, and was elected based on promises to reverse the austerity of the previous government. But now that he’s in office, he can’t get around the fact that the government has run out of other people’s money. With the tax burden already so high, he can’t raise taxes to increase revenue. Since he came to power opposing spending cuts, he’s stuck.

All of this could push France onto the list of problem countries. “France could get into a situation that is not too dissimilar to Spain if you see the economy contract a couple of percent from where we are now,” said the cio of Armstrong Investment Managers, Patrick Armstrong.

But the French aren’t just worried about the short-term economy. Only 9 percent think their children will be better off than they are, according to the Pew survey.

The unhappiness is so bad that Le Point magazine recently published an article titled, “How revolutions are born: Are we in 1789?”—referring to the year the French Revolution began.

Some argue that it’s not that bad. The French government can still borrow money cheaply. With Japan printing money, investors are desperate to put their cash anywhere they can avoid losing money. They assume France is “too big to fail,” and that Germany will always back it up.

They could be right. France may not ever request a bailout. But that doesn’t matter. Spain and Italy on their own could force a revolution in the eurozone.

The fact is, France is now a problem for Europe. Economists debate how big a problem it is, but almost no one disputes that it is a problem. It’s not one of the strong economies that will pull Europe out of this mess. It’s actually dragging the euro down.

In the long term, this gives more power to Germany. In the short term, it’s having the opposite effect as France sides with southern Europe against Germany. This shift in the balance of power makes it harder for Germany to gets its way.

However, in the long term, the golden rule applies: He who has the gold rules. France has run out. The borrower is servant to the lender. And France is a borrower.

The director of global economic attitudes at Pew Research Center, Bruce Stokes, says that its survey on economic attitudes in Europe suggests that France and Germany, “which have for decades been the driving force behind European integration, increasingly see the world through different lenses.”

“The Franco-German alliance was based on rough equality between these two continental powers,” he continues. “In the 1980s, West Germany’s economy and population were slightly larger than France’s, but not overwhelmingly so, and French economic growth actually exceeded its neighbor’s.”

Three decades later, this rough balance between Germany and France no longer exists,” he writes. “Germany’s population is now a quarter larger than that of France, the German economy is 38 percent bigger” (emphasis added).

“Today the French and the Germans differ so greatly over the challenges facing their economies that they look as if they live on different continents, not within a single European market,” he writes.

“This new evidence of a dramatic divergence of public opinion across the Rhine on the problems now facing Europe and the merit of the European Union itself raises new questions about prospects for the European project,” Stokes concludes.

He’s right. Pew’s study shows that before the euro crisis, France and Germany were in broad agreement about the advantages of the EU and its future. Now there’s a huge difference. The French are now more Euroskeptic than the British—only 22 percent believe they’ve benefited from European integration.

This news comes just weeks after a public spat between the two countries. Last month a French government paper on European policy was leaked. It scolded Germany for “the selfish intransigence of Chancellor Merkel, who thinks of nothing but the deposits of German savers, the trade balance recorded by Berlin and her electoral future.” Merkel’s coalition partners, the Free Democratic Party, hit back, publishing an internal report titled “France—Europe’s biggest problem child”—which somehow made its way to the German press.

There is no more Franco-German axis. This means the end of an era and the end of the EU as we know it.

As both the Telegraph’s Ambrose Evans-Pritchard and think tank Open Europe’s director, Mats Persson, point out, this isn’t a temporary falling-out that will go away if a left-wing party wins the German elections. There’s a broad agreement between all of Germany’s major parties when it comes to Europe and the euro. Germany won’t become more like France after the election.

The direction of Europe will no longer be decided by meetings of French and German leaders, who used to get together ahead of EU summits. Instead it will be a clash of wills—the future of Europe will be dictated by whoever can get their own way.

Germany, with its healthy economy, holds most of the cards. It doesn’t hold all of the cards, so it will have to make some compromises. But with the French economy weakened, France can no longer compete with Germany for leadership of Europe.

“Germany has more economic weight and political will to determine Europe’s future than it has had since World War ii,” wrote Reuters’s Fred Kempe. “Now, though, it lacks a partner that can replace France’s pivotal importance.”

France and Germany used to share the driving seat, listening to the demands of the other EU passengers and choosing the overall direction. France is out of the driving seat—it is now occupied by Germany alone.

However, there’s still a limit on what Germany can do alone—the passengers can still get out of the bus. The Trumpet has pointed before to the growing role of the Catholic Church in speaking up for southern Europe’s unemployed masses. The Vatican will supply the glue Germany needs to keep the EU together. The Catholic Church will soon take France’s place as Europe’s second driver.

The decline of France is a major milestone on the road to a new Europe. The next one will be the rise of the Catholic Church.

For an overview of what to expect from this crisis, see our 2008 article “Did the Holy Roman Empire Plan the Greek Crisis?

Detroit’s Financial Woes Worsen

Dave Bing announced Tuesday that he will not seek a second term as the mayor of Detroit. Bing has been unable to bring the city out of its financial free fall. The crisis has been so bad that Michigan Gov. Rick Snyder has appointed a powerful emergency manager to try to fix what Bing could not.

Detroit was once the heart of a successful American auto industry. But the Motor City is now careening toward bankruptcy. Decades of corrupt leadership, poor management, high crime rates, selfish unions, high taxes and excessive spending have taken their toll.

Emergency manager Kevyn Orr reported on Monday that the city’s finances are even worse than expected. Its deficit is expected to rise to $386 million before July 1. Long-term liabilities are calculated to exceed $14 billion.

Officials are hoping that Orr can do for the city what others did for one of its biggest automakers.

Daniel Little, chancellor of University of Michigan, Dearborn: “When General Motors went into bankruptcy, it was able to eliminate its fixed costs and its future liabilities, and it had cars to sell. But the city of Detroit doesn’t have cars to sell. Really, what it has to sell are high-quality services, which people will then be willing basically to pay taxes for.”

However, about half of Detroit’s property owners don’t pay taxes.

East-side homeowner Fred Phillips asked, “Why pay taxes? Why should I send them taxes when they aren’t supplying services? It is sickening. … Every time I see the tax bill come, I think about the times we called and nobody came.” On Phillips’s block, only five people paid their taxes in 2011.

Bible prophecy shows that Detroit’s problems are coming to cities throughout the United States. For insight into this city’s slow-motion financial demise, read “Detroit Has a Spending Problem.”

Temperatures and Violence on the Rise

Ten shootings occurred within 48 hours in Chicago over Mother’s Day weekend. The shootings left three people dead and 11 injured. Three of the injured remain in critical condition.

Recent figures suggest a correlation between Chicago’s crime rate and its temperatures. As the temperature has increased, so has violence. As summer approaches, Chicagoans are becoming more concerned about their safety.

Lucy, a senior at Columbia University, said:

“I’ve been a victim of violence in Chicago. I was shot by a stray bullet in 2007, like a month before I went off to college. So I definitely feel the weather does have an impact on whether [there’s] gonna be more violence or not. … [I]t’s sad. And something needs to be done about it.”

Lucy’s family lives in southern Chicago. The frequent crime there makes her worry about her brothers and sisters, who attend middle school in the area.

Statistics confirm her concerns. Last year, more than 500 people were murdered in Chicago. That’s more than in Afghanistan, where 310 U.S. soldiers died during the same period.

Tragically, Bible prophecy indicates that what is now happening in Chicago will soon spread to many more American cities. To stay informed about where these crime trends are leading, subscribe to our free newsletter, the Trumpet Weekly.

Words of Peace in the Middle East

Words of Peace in the Middle East

Manan Vatsyayana/AFP/Getty Images

What does the Middle East have to say about Israel?

The Qatari prime minister let slip that the Arab League would consider territorial compromises as part of an Israeli-Arab peace deal. As soon as the United States got word of it, Secretary of State John Kerry rallied behind the deal in an attempt to get Israel on board. The comment, made on April 29, was seen by the U.S. as a leap forward in the direction of a peace deal.

It is almost comical that the U.S. could be so moved by the smallest of statements, while at the same time ignoring the threats directed at Israel by many nations in the Middle East, including those that claim to seek peace with Israel. There are numerous instances when Israel has been verbally attacked by surrounding nations, yet the threats have generated almost no response from the U.S.

The Arab League consists of 22 nations, many of which are passively, if not openly, hostile toward Israel. They certainly make known their hatred toward the Jews through their speech.

In Egypt, during a sermon in which a cleric asked God to “destroy the Jews and their supporters and disperse them, rend them asunder,” President Mohamed Morsi said, “Amen.”

In 2010, Mr. Morsi described Zionists as “bloodsuckers” and “the descendents of apes and pigs.”

The Palestinian Authority’s religious leader, the mufti, said, “The killing of Jews is a religious obligation.” When a religious leader calls the destruction of Israel an obligation over the sound of cheering crowds, what hope is there of achieving peace?

Hamas leader Khaled Mashaal said that Hamas’s goal was the “liberation of the Palestinian territories”—by which he is referring to the entire nation of Israel. Israel gave up the Sinai to Egypt in 1978. Since Egypt has become radicalized in recent years, the Sinai has been used to send weapons and terrorists up to Gaza, from where Hamas has launched rockets into Israeli towns such as Sderot, and threatened cities such as Jerusalem and Tel Aviv.

To the north of Israel, Syria is in upheaval while the Israel Defense Forces conduct strategic attacks on weapons shipments that are on their way to Lebanon. The terrorist group Hezbollah, which is part of the Lebanese government, openly threatens the lives of the citizens of Israel. Hassan Nasrallah, the leader of Hezbollah, said he was “against any reconciliation with Israel.” Mr. Nasrallah’s viewpoint is shared by many of his followers and by other Middle Eastern leaders.

Then there are the inflammatory remarks and actions of Iran, which actively pursues Israel’s destruction. While attending a United Nations meeting in New York on Sept. 24, 2012, Iranian President Mahmoud Ahmadinejad said Israel had no roots in the Middle East and would be “eliminated.”

Regardless of how hard the U.S. tries to bring peace, it can’t satisfy the myriad players that affect stability in the region. Peace with Israel would contradict the religious convictions of many Islamist believers in the region. Some Iranian leaders, for example, believe Iran’s weapons will speed the second coming of the Mahdi, their version of the Messiah. It is a guiding principal of their foreign policy.

As Trumpet editor in chief Gerald Flurry writes, “In the face of such problems—considering the existence of nation-threatening weapons today and the violent hostility bubbling up within whole populations in our world—you would think people would be scrambling to find some kind of a peace plan that would really work! Human civilization faces the very real threat of annihilation! This world desperately needs real peace.

“Herbert W. Armstrong actually showed this world a peace plan that does work: the way of God, and God’s law—the way of give versus the way of get. He taught about that way throughout his life, even taking the message of that way personally to kings and other leaders of nations all over the Earth.”

To understand the peace plan that works, read The Way of Peace Restored Momentarily.

Texas Groundwater Levels Plummeting

Texas Groundwater Levels Plummeting

Jack Newton

An effect of a three-year drought

The levels of groundwater in Texas’s aquifers dropped sharply between 2010 and 2011, according to a report by the Texas Water Development Board.

The report, published in February 2013, shows a sharp decline in groundwater levels in the state’s nine major aquifers. This is a major consequence of the ongoing U.S. drought.

Manager of the water board’s groundwater monitoring program, Janie Hopkins, said the drought has “affected even the groundwater levels to a greater extent than I’ve ever seen.” Ms. Hopkins expects the results for the 2011-2012 period—due for publication in August—to show a “continuing downward [trend] in the majority of [Texas’s observation] wells.”

The state of Texas has experienced the worst drought in the continental United States. Nearly 99 percent of the state is in “abnormally dry” or worse conditions, and almost 13 percent of it is experiencing “exceptional” drought conditions.

According to the report, the Trinity Aquifer of Central Texas was hardest hit. The 33 monitors in this aquifer recorded a median decline of 16.7 feet and an average decline of 19.7 feet during the 2010-2011 period. The Carrizo-Wilcox Aquifer of South Texas recorded a median water-level decline of 4.4 feet and an average decline of 17.1 feet in its eight monitors.

Water levels in the Ogallala Aquifer in the Panhandle region receded in 25 of its 26 observation wells, with a median drop of 1.8 feet and an average drop of 3.5 feet.

The Ogallala is Texas’s major source of underground water, and it stretches all the way from South Dakota, spanning eight states. It is a chief source of water for these states as well.

The conditions in Texas give a stark, microcosmic picture of 51 percent of the continental United States that is in moderate to exceptional drought. These conditions are not normal and are significantly worse than those in previous years, even as the Texas Water Development Board report concluded.

When water levels recede drastically, water needed for agricultural, industrial and domestic uses becomes a scarce and pricey commodity. Money and effort will have to be expended to lower pumps in wells or to drill deeper wells.

The situation in Texas, and much of the U.S., is a result of the now-rapid removal of the prophesied blessings that were once showered on this great nation.

To learn more about why the U.S. has to experience these weather trials, request your free copies of The United States and Britain in Prophecy and Why ‘Natural’ Disasters?

German Arms Exports Grow

German Arms Exports Grow

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While Europe is in the midst of economic troubles, Germany’s arms exports continue to push the nation forward.

In a controversial move, Germany has approved the sale of 164 tanks to Indonesia, according to a member of the German Parliament. News outlets found out on Wednesday that German military manufacturer Rhinemetall was given approval by the government to sell 104 Leopard 2 tanks, along with an assortment of other vehicles. The decision was made by the German Security Council, which meets in secret, and its decisions on arms deals cannot be vetoed by the German Parliament.

Though reports suggest that many of these vehicles will be secondhand items from German Army stocks, a lot of concern has been raised over this sale because of Indonesia’s human rights violations and corruption concerns.

The sale is but the latest in a string of high-profile arms sales by Germany over the past few years. Last year, Germany approved arms exports valued at €1.42 billion (us$1.84 billion) to countries of the Gulf Cooperation Council. The previous year, the figure was just €570 million (us$739.5 million). All of this is part of what has come to be known as the “Merkel doctrine,” in which Germany is working to strengthen partner countries by supplying arms.

Watch Germany as it continues to prosper from its arms sales while the world plunges closer and closer toward global conflict. Bible prophecy shows that Germany will prosper financially in these end times. Revelation 18:15 says that many people will be made rich by German commerce and trade. But the same chapter also shows the ultimate fate of this great power. Read “Germany—Reverting to Militaristic Type?” to see where this increase in German military production is leading.