The Government Is After Your Retirement Accounts

The Government Is After Your Retirement Accounts

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The president’s myRA plan tells you a lot about where the country is headed.

Many Americans have virtually nothing saved for their retirement. That is a fact. President Obama emphasized this point in his State of the Union speech and proposed a dramatic solution. He wants you to trust your retirement money to the government—so you can be protected.

One of the most important rules in investing is never invest in something you don’t understand. Just behind that is never invest in something just because some guy in a good suit tells you to. You work too hard to waste what you earn.

So let’s look at the president’s proposal and collect some more facts.

Fact one: The average savings for a 50-year-old American is a paltry $44,000—a little over a year’s worth of income for an average American. Fact two: 35 percent of those over 65 completely rely on Social Security. Fact three: 80 percent of Americans worry that they won’t have enough money for retirement—yet 36 percent of Americans are putting nothing away for the future.

Fact four: The above represents a huge problem.

Actually it’s a humongous problem considering that the Social Security trust fund is broke. It is now paying out more in benefits than is collected in taxes. This problem will get worse as the baby boomers continue to retire. Compounding this is that politicians have also spent all the surpluses accumulated over the years. So the lock-box is empty. And the government is now forced to cover shortfalls out of general revenue.

Taken together with Medicare and Medicaid, the government has promised tens of trillions of dollars it doesn’t have—and can’t hope to have—to future retirees.

So if you are one of those 65 percent of Americans looking to the government to provide you a retirement, face this uncomfortable fact: You are heading for a vastly different retirement than you think.

But if you fall into this category, President Obama says there is good news. He’s got your back—and he’s done it by supposedly finding the holy grail of investing—a risk-free return. “Let’s do more to help Americans save for retirement,” the president told the nation.

Today most workers don’t have a pension. A Social Security check often isn’t enough on its own. And while the stock market has doubled over the last five years, that doesn’t help folks who don’t have 401(k)s. That’s why tomorrow I will direct the Treasury to create a new way for working Americans to start their own retirement savings: myRA. It’s a—it’s a new savings bond that encourages folks to build a nest egg.MyRA guarantees a decent return with no risk of losing what you put in. And if this Congress wants to help, work with me to fix an upside-down tax code that gives big tax breaks to help the wealthy save, but does little or nothing for middle-class Americans, offer every American access to an automatic ira on the job, so they can save at work just like everybody in this chamber can.

The president’s solution to the savings crisis: a myRA. He describes it as a risk-free investment that comes with a decent return. No risk—decent return? Why hasn’t someone thought of this before? Why has the government not offered this to poor Americans sooner?

Because that kind of investment doesn’t exist—anywhere, or ever! There is no such thing as a risk-free investment—and especially one that also comes with a “decent return.”

Where is the president getting this stuff?

Here is how the plan works. Anybody who makes less than $191,000 household income can contribute to the myRA. Contributions would be with after-tax money. Once in retirement, withdrawals are tax-free.

If that sounds a lot like a Roth ira, that’s because it is a lot like a Roth ira—something that is already available to folks who don’t have 401(k)s, and that the president is seemingly pretending to be oblivious to.

There is a big difference though. In a Roth ira, you can invest in virtually anything you want. You choose. With the president’s myRA, you only get one investment choice. What is it?

You guessed it! The only thing you can invest in is government bonds.

As the Daily Progress reports, “Never in the history of retirement planning have the choices offered to workers been more severely restricted or more inappropriate.”

You can’t make this stuff up. Yet it gets better.

The bonds in the myRA will be modeled on the government’s Thrift Savings Plan Government Securities Fund.

Guess how much the government fund returned in 2012? 1.47 percent. How about over the past three years? 5.92 percent.

This is the great investment the president is offering? This will solve the retirement crisis? That doesn’t even keep up with the rate of inflation. And what if interest rates start rising from their historic lows? Investors will get massacred.

For comparison purposes, the Total Bond Market Index appreciated 10.10 percent over the past three years. The Dow Jones Industrial Index went up 35 percent.

Then there is the fact that if it was a private company offering this plan to investors, it would be illegal! And whoever was sponsoring it would go to jail. But this is a government that is increasingly showing itself to be above the law, so it can apparently do whatever it wants.

The myRA violates multiple fiduciary standards required by the government’s own legislation.

Employee Retirement Income Security Act laws are designed to protect investors from plan managers who might use investor money for their own advantage. For example, investment administrators cannot use investors’ money to make loans to themselves or to businesses they are associated with. Yet this is exactly what the myRA does.

Additionally, a private company would have to identify potential conflicts of interest and both communicate and address them. President Obama did neither.

So why would the president of the United States promote such a terrible investment that would be illegal if anybody else offered it?

It gets down to this: America has largely fleeced the Chinese and Japanese for all it can, so now the government is turning to the last big pool of money left to keep it operating: retirement funds.

With the Federal Reserve saying it has to cut back its money printing, the U.S. government will soon need to come up with an additional $45 billion per month to pay its bills. For the past several years, the Federal Reserve covered the entire U.S. deficit with money printing. It allowed tough budget decisions to be postponed, but now, unless some other source of cheap money is found, a day of reckoning may be imminent.

Hence, the president knocks out two birds with one stone: Look good to voters and finance the deficit—without politically uncomfortable raising of taxes or spending cuts.

Sadly, in the end it is going to hurt most the group of people the president purports to be helping. The only people likely to invest in such a plan are the poor and middle class. That’s because many of the poor are uneducated, and the middle class is trusting.

But there may be an even bigger motive revealed by the myRA plan. And it gets back to the president’s ideology.

In 2010, the Wall Street Journal wrote an article about U.S. Deputy Treasury Secretary J. Mark Iwry, the man said to be behind the president’s myRA plan. The article described the government’s plan to make people save more by requiring companies to automatically deduct employee’s wages, without the employees approval, to put into an ira-like account.

That year, Iwry presided over a Treasury and Labor departments forum featuring “a line-up of left-wing activists” proposing ways to make people save more (National Seniors Council, Oct. 10, 2010).

One speaker from the American Federation of Labor and Congress of Industrial Organizations (afl-cio) argued for more government regulation over private retirement accounts and pushed for the establishment of government-sponsored annuities that would replace privately owned 401(k) plans.

Another speaker from the liberal Pension Rights Center, Rebecca Davis, testified that the government needs to get involved because 401(k) plans and iras are unfair to poor people. She demanded the Obama administration set up a government-sponsored program administered by the Pension Benefit Guarantee Corporation.

“These people want the government to require that ultimately all Americans buy these government annuities instead of saving or investing on their own,” says National Seniors Council National director Robert Crone. “The government could then take these trillions of dollars and redistribute it through this new national retirement system.”

The plan seems to be gaining traction.

On January 30, U.S. Senator Tom Harkin unveiled legislation to “rebuild the private pension system.” The slightly Orwellian-sounding Universal, Secure and Adaptable (USA) Retirement Funds Act of 2014 calls for employees to be automatically enrolled, paychecks to be automatically deducted, and the money managed under the direction of a board of independent trustees appointed by the government. As of now, employees will be “allowed” to opt out if they like. The plan generally follows what President Obama outlined in his FY2014 budget proposal.

Some people like Crone warn that this kind of legislation is just a step toward government nationalization of retirement accounts.

But the beauty of these plans being pushed by the administration is that there may be no need for outright confiscation—at least at first. If you control where the money is invested, what does it matter who ostensibly “owns” it?

It does make you wonder what the government’s true motives are though.

Neither the myRA, Harkin’s bill, or any other government proposal actually fixes the underlying problem. You can’t get something from nothing. Most Americans live paycheck to paycheck and are not investing enough for retirement—it is as simple as that. So unless people invest a lot more, how can the government, which is also broke, somehow magically turn those meager investments into “secure” retirements?

It can’t.

But if the government can get its fingers on the more than $18 trillion worth of retirement funds in America, it can insure its own ability to borrow more money by “investing” those retirement funds in “secure” government treasuries.

There is plenty of precedent. Argentina, Bolivia, Hungary, Portugal and Bulgaria each recently stole their people’s money to prop up their respective governments. Ireland used a big chunk of its state-run pension investments to bail out its banks. Poland confiscated half of its people’s retirement money to prop up the government. France too is fiddling with its pension system.

Of course each of these countries was or is teetering on the edge of economic collapse. But that is beside the point. Or is it?

So where is America headed? The president’s myRA plan—which does nothing to solve America’s savings problem, but uses retirement savings to prolong unsustainable government borrowing—tells you a lot.

England Suffers Wettest January on Record

England Suffers Wettest January on Record

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Britain has been hit with a ‘highly unusual’ series of storms, tides and wet and windy weather.

A total of 5,800 homes have flooded over the last six weeks as England experienced its wettest January since 1766, part of an unprecedented series of record-breaking wet weather.

“The country has faced an extraordinary period of severe weather and flooding since the start of December, with the wettest December in 50 years in central southern and southeast England as well as the biggest east coast storm surge in 60 years followed by the wettest January on record,” writes the Environment Agency. Insurance experts say total costs could hit £1 billion (us$1.67 billion).

The Met Office, Britain’s official weather forecasting agency, noted: “Although no individual storm can be regarded as exceptional, the clustering and persistence of the storms is highly unusual.”

“For England and Wales this was one of, if not the most, exceptional periods of winter rainfall in at least 248 years,” the office continued in a paper it produced to document “how unusual” the recent storms “were in the terms of past records.”

Britain’s winter of wetness began on the evening of Dec. 4, 2013. In a North Sea storm surge, 1,400 properties were damaged by strong winds and a low pressure system that caused sea levels to rise during one of the highest tides of the year.

More bad weather arrived on December 24, as weather stations recorded “potentially the lowest land station pressure record since 1886,” leaving hundreds without power. The Somerset Levels, an area of moors and wetland in southwest England, were among the worst affected. Some areas are still flooded over a month later.

As January arrived, North Atlantic storms meant that Western Europe recorded some of its highest ever waves. These storms weakened Britain’s sea defenses in time for another storm to hit at the start of February.

These storms did more damage, including £4 million worth in the county of Cornwall, with 2,300 homes left without power. The powerful waves severely damaged a key stretch of railway, effectively cutting off Cornwall from Britain’s railway system.

During the last week, 850 homes have flooded. It’s still raining, and the flood seems certain to continue.

The British Geological Survey is warning that even if the rain stopped right now, so much water has soaked into the ground that water levels will continue to rise. It estimates 1.6 million properties in England and Wales are at risk of groundwater flooding.

This means that the Somerset Levels—where 100 properties are still flooded—may not dry out until spring, even without any extra rain.

Without modern flood defenses, the damage caused by all this wind and water could have been much, much worse. The Environment Agency claims that these defenses have saved 1.3 million homes from flooding. Without the Thames barrier, the waters would have covered large areas of London.

Why all this unusual weather? Britain has gone from serious drought to record rain in just a matter of months. Is there any hard evidence for what is causing this? For answers to these questions, see the cover article of our September 2013 Trumpet edition, “Are You Causing Climate Change?

God’s Unbreakable Covenant With David

It’s a promise God cannot and will not break!

Preparing the Middle East for War

Preparing the Middle East for War


The Arabic call to arms is on.

Few would say the Middle East is safer today than it was three years ago at the outset of the “Arab Spring.” The sudden ignition of the Spring, followed by the frothing and boiling upheavals of the “Arab Winter,” may appear in some ways to be simmering down. But just as steam rises from a boiling pot, there are signs that the Middle East is yet to experience more violent repercussions of the Spring. In fact, the region may be about to heat up like never before.

One sign that more trouble is brewing is the revelations from ihs Jane’s Annual Defense Budget. The report was released on February 3, and has some dramatic spending figures in regards to the Middle East.

Four of the five fastest-growing national defense budgets in the world are in the Middle East. The report states that “globally, defense spending is seen inching 0.6 percent higher to $1.547 trillion in 2014, in part thanks to the Middle Eastern contribution, the first increase in five years.”

These militarizing Middle East nations are Saudi Arabia, Oman, Iraq and Bahrain. The United Arab Emirates and Algeria were both in the top ten. All these nations have Islamic influence to one degree or another, and most have been influenced by the violent Arab Winter.

According to the Wall Street Journal, “Oman’s defense budget surged 36 percent to $9.3 billion in 2013 compared to the previous year, while Saudi Arabia boosted its military spending by 19 percent to $42.9 billion in 2013, the largest rise for the kingdom since 2007.”

Since the outset of the Arab Spring, Iran has capitalized on the social and political turmoil stirring in the region to gain influence over other nations through its proxies. An environment where there is chaos is an opportunity for Iran to pursue aggressive foreign policy and expand its region of influence. In response, Saudi Arabia has stepped up. It is seen as the most powerful Arabic force that can stand up to Iran. Ruled by Sunnis, Saudi Arabia has worked to prevent this spread of Iran’s Shiite influence. The most obvious example is in Syria, where Saudi-backed forces are working to overthrow the Iranian-backed government of Bashar Assad.

But the Sunni-Shiite Islamic infighting has been going on for years. Why the sudden spike in military growth? For the Saudis, it is intricately tied to U.S. foreign policy.

First there was the U.S. swooning over newly elected Iranian President Hassan Rouhani. The press couldn’t get enough of the smooth-talking leader. Then there was President Obama’s back-down in Syria. The president reneged on his promise to intervene, handing the situation over to Assad’s ally, Russia. Saudi Prince Turki al-Faisal lashed out: “The current charade of international control over Bashar’s chemical arsenal would be funny if it were not so blatantly perfidious.” By the time President Obama personally phoned the Iranian leader, the message was already sent to the Saudis: America can no longer be trusted to counter Iran. If anything, by giving Iran free reign to do as it wishes, the U.S. is helping Iran in its war of influence over the region.

Little wonder, then, that Saudi Arabia feels the need to boost arms purchases, including obtaining nuclear weapons.

Elsewhere on the Arabian Peninsula, Oman has been relatively unaffected by the “Arab Spring” and has avoided Middle East headlines. With the majority of the population living by the Ibadi form of Islam—neither Sunni or Shiite—the nation has avoided the religious friction. What Oman cannot ignore, however, is its proximity to Iran. It stares directly at the increasingly belligerent Iranians across the waters of the Gulf of Oman.

Once again, the U.S. departure plays a large role in Oman’s military spending. The U.S. was the police force of the Middle East; its departure means there is nobody to keep Iran in check.

Look at the other two nations that have increased military spending. Iraq and Bahrain are both in the middle of a savage tug of war between Sunnis and Shiites. Bahrain has seen plenty of rioting against the Sunni royal family. Iraq has descended into chaotic violence, with large parts of the country being occupied by terrorist groups. Both nations can see the situation spiraling out of control, and feel compelled to fill the void that America has left by raising armies and amassing weapons.

That is why four out of the five fastest-growing defense budgets are in the Middle East.

Terrorism is rising, and U.S. influence is waning. Reports such as that of ihs Jane prove the damaging effects of the U.S. decline. America’s withdrawal from Iraq and Afghanistan might be a relief to many, and might be hailed as a success by the U.S. government, but the proof is in the budgets. The nations left behind are arming, and many are already fighting.

This trend is hastening the fulfillment of a multitude of prophecies in the Middle East. The king of the south, the Psalm 83 alliance, the fall of half of Jerusalem, the decline of U.S. influence and many more prophecies are all found in your Bible, and they are all coming to pass. The Trumpet offers several free books and booklets that explain many of these prophecies in detail.

Don’t miss the opportunity to understand world events as never before! The Middle East is descending into more violence and the nations are arming, but there are still more prophecies to be fulfilled in the region. After those mentioned above, think of the return of Jesus Christ to the Mount of Olives, the establishment of God’s government on Earth, and the dawn of an age of peace and prosperity. As sure as the current violence is set to increase for a short time, we can be sure God will soon establish peace that will last for eternity!

Taiwan Edging Back Into the Chinese Fold

Taiwan Edging Back Into the Chinese Fold


China and Taiwan held a landmark meeting on February 11 to establish representative offices (equivalent to embassies or consulates) that will enable closer cooperation between the two sides. The talk was the first of its kind since Taiwan’s establishment, and is the latest of many significant measures showing that reconciliation between Taiwan and China is near.

Tension has saturated the relationship between Beijing and Taipei since Taiwan’s establishment in 1949, when Chinese Communists fought Kuomintang soldiers off the mainland and onto the island of Taiwan. The civil war effectively divided China into two nations: China and Taiwan. But the Communists of mainland China have consistently claimed rule over Taiwan ever since then. Hence the tense relations. But when China-friendly Ma Ying-Jeou became Taiwan’s president in 2008, he began making conciliatory overtures toward Beijing, and the cross-Strait frost began to thaw.

“The two sides of the Taiwan Strait should not quarrel,” Ma said in 2011. “We should instead focus on encouraging and helping each other grow in terms of the core values of freedom, democracy, human rights and rule of law.”

Ma explained that since people on both sides of the Taiwan Strait share common ancestry, they should build mutual trust and dispel their disagreements. Their common culture, Ma has often said, should give Taiwan and China the wisdom to find satisfactory solutions to their quarrels.

The warming relationship between China and Taiwan is bad news for the U.S. and any other nation concerned about China’s ascendancy. For many years, Taiwan has been the best location from which to monitor China’s rise because of both the island’s advanced information technology and its proximity to China. Shared language, ethnicity and culture also allow Taiwanese spies to blend into Chinese society, giving them a great advantage in their reconnaissance missions. But now Taiwan appears to be questioning its role of being the eyes and ears for other nations. Reports say that Ma has already halted the activities of some Taiwanese spy agents operating in China, and is now planning to stop sharing intelligence with the U.S. and its allies.

The Trumpet has long predicted the China-Taiwan reconciliation which is now gaining great momentum. “How could anyone fail to see that Taiwan is destined to become a part of mainland China?” editor in chief Gerald Flurry wrote back in 1998.

The establishment of the representative offices may become a key step toward fulfillment of that bold geopolitical prediction. We can expect China’s gentle approach with Taiwan to continue until Taipei is offered something similar to the status Hong Kong currently holds. If Taipei were to refuse China’s increasingly bold advances, then Beijing would probably respond with threats of force—but under Ma’s Beijing-friendly rule, such refusals are becoming less and less likely.

When the Chinese-Taiwanese reconciliation is complete, it will boost China’s ability to dominate in the Pacific, and to persuade other Asian states to rally behind Beijing. To understand the significance of China’s rise, read “Czars and Emperors.”

Did Germany Just Destroy the Euro?

Did Germany Just Destroy the Euro?

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The German Constitutional Court has made a huge European financial crisis inevitable.

For months we’ve been waiting for the German Constitutional Court’s ruling on the European Central Bank as the next game-changer for Europe. And we weren’t disappointed. Its ruling is of huge importance—to the entire global economy.

By the summer of 2012, things were looking desperate for the euro. Greece, Ireland and then Portugal had been forced to ask the EU for a bailout. Then it was the big boys’ turn: Spain and Italy were next. It was so expensive for them to borrow money that neither could keep going for long. But a bailout of these nations would be hugely expensive. There seemed no way for the euro to survive.

Into the breach stepped the new head of the European Central Bank (ecb), Mario Draghi, wielding what has somehow become known as a “big bazooka.” If a government had trouble borrowing the money it needed to keep going, he promised to print an unlimited amount of money and lend it (in a convoluted way) to the troubled government, in a process called Outright Monetary Transactions (omt).

Draghi hoped that this “bazooka” would never need to be used. If investors believed that the ecb would never allow a government to go bankrupt, then they would lend money more easily.

It worked. The euro crisis peaked in the autumn of 2012. It has still been simmering away, never actually solved, but Draghi’s move averted the immediate danger. Until last Friday.

On that date the German Constitutional Court, based in Karlsruhe, issued a ruling that will make it very hard for Draghi to use his bazooka.

Before we get to the actual ruling, we must understand what is at stake.

At the heart of the court’s ruling are two key questions about the future of Europe: who pays and who controls.

Compare the situation in Europe to the one in the United States. As America recovers from its financial crisis, neither of these questions is a big deal. Americans share a loyalty to the same nation. They pay their taxes into the same pot. The Kentuckians are not up in arms because they don’t think the New Hampshirites are paying their fair share and the Michiganders are not accusing the Wisconsinites of lording it over them. The blame game is still played (i.e. it’s all the fault of the 1 percenters) but it’s not split along geographic borders.

In Europe, these questions are standing in the way of a solution to the euro crisis. The Germans don’t want to pay, as they say it’s the Greeks’ fault. The Greeks protest their innocence, and insist that Germany actually owes them money from World War ii. And it goes round and round.

Draghi’s bazooka—if ever used—would get around this problem by making everyone, including Germany, pay, but by doing it quietly. Financial laws have been broken in Europe, just as they have in America, and no amount of economic trickery can eliminate the penalty for breaking those laws. Draghi’s maneuvers can only change who pays, and how much.

Many at the very top of Germany’s government were happy with Draghi’s move. After all, Germany will incur some substantial losses from its euro membership whatever happens—either through more bailouts or collapsing exports to southern Europe. But Draghi’s way of doing things was more subtle, and if it all went wrong, the European Central Bank, not the government, would get the blame.

But last Friday’s ruling put a stop to all that. The Constitutional Court said it considers omt “incompatible with primary law.”

The way the court made the ruling, however, has thrown up a lot of confusion. After saying it was sure omt was illegal, it referred the case to the European Court of Justice (ecj).

Many saw that as cause for rejoicing. The ecj is run by judges who don’t worry about tiresome details like what the law actually says. To them, it’s all about what they, in their infinite wisdom, think is best. Hence their decision last year that even though the Lisbon Treaty states that Britain is exempt from the EU’s Charter of Fundamental Rights, it actually isn’t.

The ecj should have no trouble in ignoring EU law and ruling Draghi’s actions legal. But Germany’s Constitutional Court does not consider the ecj a higher court. It’s essentially said, We think omt is illegal, but the ecj is the court directly responsible for EU law, so we’ll consider its opinion.

If the ecj says that everything is fine, that will trigger a showdown with Germany’s top court, and the ecj will almost certainly be overruled. It might be much safer for ecj to rubber stamp the court’s decision.

Even in the months that it takes the ecj to consider the matter, Draghi’s bazooka seems disabled. “The German court has parked a tank on the lawn of the ecb,” the Telegraph’s Ambrose Evans-Pritchard quoted an anonymous “expert closely involved with the case.”

“The bank’s nuclear weapon is no longer operational, but you could say they bought 18 months of eurozone calm, so the omt served its purpose,” continued the expert.

“If you look back to all the previous German Constitutional Court cases on the euro, the answer was always a variant of ‘Yes, but.’ This ruling was the legal equivalent of ‘No, no, no,’” writes Financial Times columnist Wolfgang Münchau—though noting that the referral to the ecj made it a little more complicated than a straightforward “No.”

Münchau also writes that it seems impossible for the omt to be used. Even if Germany doesn’t take part in it—which in itself would be a big deal—the government would still have to give its approval. If that happened, it would be challenged at the Constitutional Court, at which point “the court would then either eat its words or trigger a crisis,” he concludes. “I cannot see how it could be triggered in practice given such explicit condemnation by Germany’s highest court.”

Spiegel Online notes that the ramifications could spread even further: “In truth, it is nothing less than a final reckoning with the crisis-management strategy pursued by the ecb.”

“The German justices insist that the German constitution sets limits on the ecb’s strategy in the crisis,” Spiegel continues. “And that could have consequences that go far beyond the jurisdiction of the court in Karlsruhe. In a worst-case scenario, the Constitutional Court could forbid Berlin from contributing to efforts to save the euro or even force Germany to leave the currency zone entirely.”

The court ruled that Draghi’s bazooka is, in its opinion, as “ultra vires act.” “Measures taken by European institutions that are not covered by treaties occur ‘ultra vires,’ meaning they violate the sovereignty of EU member states,” explains Spiegel. “By extension, that means that if the German government and parliament do not protect the country from the multibillion euro policies of the ecb, then the Constitutional Court must step in—even by way of a verdict which could force Berlin to withdraw from the eurozone.”

Spiegel speculates that the court’s decision to send the case to ecj could simply be a way of advertising its preeminence:

The Karlsruhe justices feel stronger than ever. For the first time, they dared to do what they had been threatening to do for years: They branded a European decision as ultra vires and thus found it to be inconsistent with the German constitution. Sending this finding to a European court has far-reaching implications for the court’s reputation and authority: “The ruling will now be translated into the 23 other official EU languages and sent to all EU member states,” one Constitutional Court insider noted with gratification.

The court’s ruling indicates that it would strike down any similar method the ecb may try and use to mitigate the immediate pain of a financial crisis—such as quantitative easing.

The ruling means that there will be no quiet, subtle pilfering of German taxpayers’ money to help indebted European countries. If southern Europeans want German cash, they’re going to have to ask for it up front.

That’s not as easy as quietly printing the cash and lending it to indebted governments. The Germans won’t hand it over without a stiff price: German control over how that money is spent, which will translate into German control over the whole of the eurozone. Even then, most in Germany would be unhappy.

The final result will have to be something that looks a lot more like the United States, with a more central government, so the transfer of money is less obvious and less contentious. But because Germany is putting up the lion’s share of the money, it will retain overall control.

Even then, the union will be much more fractious than America. European nations have centuries of separate history; they cannot become American-like states, certainly not overnight. But the only way to make a common currency work is to create that kind of union.

The road to the United States of Europe will not be smooth. The German court’s ruling will probably be forgotten, until the next crisis. At that point, investors will not have the confidence they once had in Draghi’s bazooka—and its confidence-boosting was always its greatest strength. The ecb’s attempts to create some kind of fudge that prevents an economic emergency has been thwarted by the German Constitutional Court.

A full-blown crisis is now inevitable, and that crisis will force Europe to unite like never before.