Germany’s Calculated Crisis

Germany’s Calculated Crisis

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With Greece in flames, and the eurozone in convulsions, all eyes turn toward Germany for the answer.

“The crisis in Greece is a forerunner of a whole rash of similar crises set to soon break out across Europe. They will provide the catalyst for the EU’s leading nation, Germany, to rise to the fore with solutions of its own making.” Trumpet editor in chief Gerald Flurry wrote that statement one year ago.

What is happening in the European superstate is a mystery to most of the world. Yet while stock markets gyrate and bond investors panic, readers of the Trumpet know the ultimate outcome.

For more than a decade, the Trumpet has warned about the rotten heart of Europe. The Trumpet has specifically noted the flawed exchange rate currency mechanism and how the structure of the EU was a Trojan horse for stealth German ambitions.

“Who will get control of this great superstate?” asked Mr. Flurry in June 2000. The battle comes down to two nations—France and Germany, he said. But it will be the nation that controls the money (Germany) that will ultimately reign supreme.

Today, events unfolding in Europe are proving that forecast uncannily accurate. Greece’s massive debt problems are threatening the very viability of the European Union. The disparate nations of Europe are desperately seeking a savior. And all eyes are looking to the only nation that can bankroll a bailout. But what will Germany do?

Anticipated Crisis

From the beginning, the euro was destined—maybe even designed—to fail. At least that is the conclusion of some analysts.

When the euro was created, a chain of events was set in motion. For nations like Greece, a future debt crisis was almost inevitable.

By joining the eurozone, Greece seemingly became the recipient of two big “gifts.” First, Greece traded its inflation-prone drachma for the stability of the euro. Second, it gained the economic borrowing clout of a superstar, even though it had the economy of a small supporting actor.

Initially, these two gifts vastly improved the standard of living for the people of Greece. They allowed corporations, individuals and government to borrow money at the low rates typical within large developed countries like Germany. The new low interest rates were more than Greece could resist. All levels of society binged on seemingly cheap money. The government, for its part, embraced a massive welfare state, also made possible by easily obtained low-interest loans.

But as lenders to Greece are beginning to remember, there was a very good reason Greece paid much higher interest rates to borrow money when it was not a member of the Union. Greece has a history of borrowing too much. According to analyst John Mauldin, Greece has been in default in one way or another for 105 out of the past 200 years.

Even as luxury swiftly came to Greece, so now have the first whiffs of poverty.

With a projected budget deficit of 12.7 percent of the nation’s gross domestic product, Greece is far out of compliance with the eurozone’s mandated 3 percent maximum.

With the world in recession, investors are wondering how Greece will pay its bills.

Typically, when a country takes on too much debt it contracts Argentine-disease. Known also as “quantitative easing,” countries devalue their currency by turning on the money printing presses and simply creating the currency to pay the bills. This of course upsets creditors, but at least the bills get paid. The economy also gets a short-term kick start because a devalued currency makes exported goods less expensive; thus foreigners buy more domestic products.

Greece, however, does not have this option. Since it is locked into the euro, it does not control the printing presses. Germany does.

Analysts worry that Greece may be reaching the point where a debt spiral could bankrupt the government.

What will Europe do?

Crossroads

Both French and German ministers have announced that they will not bail out their Club Med neighbor. Instead, EU monetary authorities are pushing Greece to massively slash its budget. But if Greece were to implement the massive spending cuts needed to get its deficit under control, it could easily plunge the nation into an even deeper recession.

Without the welfare programs, there would be widespread rioting in the streets within weeks.

Yet if Germany and France allow Greece to continue defying its monetary agreements, there will be little to stop other deeply indebted countries such as Spain, Portugal and Ireland from also reneging on their monetary commitments. The credibility of the euro would be thrown into doubt.

The eurozone seems to be at a crossroads.

The Telegraph’s Ambrose Evans-Pritchard wrote on January 31 that the solution to the crises could involve a paring down of the eurozone. He noted the possibility of a bloc of nations centered on Germany leaving the eurozone and creating a new currency—the Deutsch mark 2. The remainder of the eurozone countries would then be free to devalue the euro (turn on the printing presses) to pay down debts.

Although Evans-Pritchard noted that Germany is currently happy with its advantageous position within the euro, he also said there would be certain benefits to a newly created German-led bloc.

Events in Greece bear close watching, especially in light of the advent of the seventh revival of the Holy Roman Empire in Europe, which officially began on January 1 with the onset of the Lisbon Treaty.

The Greek crisis warrants close watching for two reasons.

First, the Bible indicates that this final Roman imperial resurrection will be composed of 10 nations (as indicated in Daniel 2). Whether or not the current 27 EU nations get regrouped into new political regions remains to be seen, but the economic crisis in Greece could very well provoke a vast restructuring or paring down of the European Union.

Far from heralding the end of the European unification project, the current crisis in Greece may actually signal a new beginning.

Back when the euro was first created, the European Commission’s top economists warned politicians that the new currency might not survive a crisis. They knew that because the eurozone had “no EU treasury or debt union to back it up” and a “one-size-fits-all regime of interest rates [that] caters badly to the different needs of Club Med and the German bloc,” the day would come that economic crisis would threaten the EU, reported the Telegraph (Oct. 1, 2008; emphasis mine throughout).

The fathers of the euro did not dispute this. They knew European economic union was risky, but they saw it as an acceptable risk—even a desirable one—as a last-ditch option to force the pace of political union. As the Telegraph said, “They welcomed the idea of a ‘beneficial crisis.’” And as “ex-Commission chief Romano Prodi remarked, it would allow Brussels to break taboos and accelerate the move to a full-fledged EU economic government.”

Berlin has been planning for this crisis before it even adopted the euro,”wrote Gerald Flurry last year. “European elites knew it would eventually come. And they will soon present a solution.”

Is the world about to see a vastly restructured Europe? Or something else?

The second reason the Greek crisis bears close watch is that the Bible indicates that this European superpower will be dominated by Germany. If this crisis in Europe has shown anything, it is that, at least economically, Germany holds ultimate power in Europe.

Bailout or no bailout: Either way, Germany wins.

If Germany and Europe decide to bail out Greece, what will be the cost? If Germany has to ask its citizens to reduce their standard of living to subsidize Greeks, what will it ask Greece for in return? The price is sure to be steep.

Conversely, if Germany was to work to remove Greece from the EU, the result would be a slimmer, economically healthier, core Europe with one less voice to dilute German political clout.

Sixty-five years after the end of World War ii, Germany is again dictating the destiny of Europe.

This should startle the world.

As Britain’s Iron Lady, Margaret Thatcher, warned in 1995, “You have not anchored Germany to Europe. You have anchored Europe to a newly dominant, unified Germany. In the end, my friends, you’ll find it will not work.” It is Germany’s national character to dominate, she said.

Germany has hijacked Europe. Greece knows it. Portugal and Ireland will find out next. And probably Britain shortly thereafter.

But remember: You read it here first.

Baron Guttenberg at Davos and the Munich Security Conference

White House Shuns EU

White House Shuns EU

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U.S. foreign policy is becoming increasingly isolationist.

The gloss is rapidly fading from the image of the current U.S. administration in the eyes of the European public. Following President Obama’s July 2008 euphoric greeting by Berliners, it now appears that Europe’s high expectations for a rosy relationship with Washington are rapidly turning into extreme disappointment.

Back then, commenting on what it described as a “wildly successful public appearance,” the Local commented that “The presumptive Democratic nominee’s speech in front of over 200,000 adoring supporters near the city’s Victory Column memorial on Thursday cemented his status as a political pop star in Germany” (July 25, 2008).

On the foreign-policy front, Eckhart von Klaeden, spokesman for the German government at that time, said that the presidential candidate had broadcast from Berlin “the clear message … that Europe and the United States could only confront the world’s problems together” (ibid.).

Perhaps Herr von Klaeden has now changed his view as a result of President Obama’s snub of the EU by rejecting an invitation to attend the annual EU/U.S. summit in May. Under the headline “EU summit scrapped after Obama ‘snub,’” the bbc declared, “The event in Madrid in May was to have been the highlight of Spain’s six-month EU presidency, and the cancellation is seen as a humiliating blow. … bbc European affairs correspondent Oana Lungescu says many see Mr. Obama’s decision as a snub to the EU’s hopes of boosting its global role” (February 3).

Symbolism is a vital component of European thinking. It seems this is hard for the average American politician to grasp, let alone those who advise the president. Apparently it is difficult for a nation as young as the United States to understand the power of the influence of centuries of Holy Roman imperial heritage on European politics as it is played out, especially behind closed doors, by the real movers and shakers influencing the latest resurrection of the vision of a united Europe—the aristocratic bankers, businessmen, industrialists and influential churchmen.

Such a snub as the Obama administration has dished out to the European Union, so early in its newfound role as the largest duly constituted federal power in the world (courtesy of the Lisbon Treaty) will bode ill for the future of U.S./EU relations. This is another profound foreign-policy error by this novice, year-old U.S. administration. One can only assume that those who advise the president on these matters are grossly ignorant of history.

Observing that “the summit was to focus on strengthening the ties between the United States and the 27-member bloc of nations that make up the EU,” TransWorldNews noted, “Obama’s decision not to attend was being perceived as a major snub by Spain, even more so due to the fact they learned of his decision through press reports” (February 3). Such treatment shows the poorest of protocol practiced by presidential aides responsible for communication between the White House and its embassy staff in such matters. But it is beginning to fit into a pattern of similar gaffes over the past year in the White House’s interaction with foreign powers and dignitaries.

Seeking to cover the administration’s diplomatic missteps, National Security Council spokesman Mike Hammer replied to European criticism of the snub with a degree of sophistry, stating, “The president is committed to a strong U.S.-EU partnership, and with Europe in general” (Deutsche Welle, February 2). The same source noted that U.S. Assistant Secretary of State Philip Gordon “stressed that the U.S. president remained committed to close transatlantic ties ….” Such statements seem to fly in the face of the observation that “Obama’s absence at the summit would likely be regarded as a blow for Brussels. The new president of the European Council, Herman van Rompuy, has yet to formally meet with Obama” (ibid.).

At a time when the U.S. has repeatedly gone public over the past year seeking greater commitment from the EU to the war in Afghanistan, this all seems to be an odd way to curry favor with America’s continental allies sharing in fighting that war. This is especially the case coming so soon after a number of EU member nations have increased their commitment to what they see as a very unpopular, U.S.-initiated conflict in which they are sacrificing the lives of their own nationals. This thoughtless high-profile snub is in fact bound to increase the already low esteem in which the U.S. is already held in the minds of many a European.

In a further demonstration of the arrogance of current U.S. foreign policy, according to the Wall Street Journal, after the refusal by President Obama to attend the May summit, a State Department official glibly declared, “We don’t even know if they’re going to have one [a summit]. We’ve told them, ‘Figure it out and let us know’” (February 1).

Any junior diplomat ought to have understood that this first EU/U.S. summit since the EU formally became a federal global power, via implementation of the Lisbon Treaty/EU constitution on January 1, would hold particularly high importance for the European Union, its newly appointed president and Foreign Ministry. Inevitably the U.S. president’s refusal to attend this first EU summit since what European leaders see as the legitimization of the EU as a global power—a power striving to hit at the same political weight as its transatlantic “partner”—will be to the detriment of both this presidency and America’s standing in the eyes of the global community.

There will be a price to pay for such arrogance. Ultimately it will be a far, far higher price than anything the average U.S. citizen can imagine.

South Africa Courts Iran

South Africa Courts Iran

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Pretoria’s support of Tehran demonstrates its anti-democratic and anti-West leanings.

The South African anc-led government continues to show solidarity with Iran even as the West grapples with trying to stop the Islamic Republic from becoming a nuclear threat. In late January, South Africa’s parliament speaker visited Iran, voicing support for its nuclear program and calling for an expansion of relations between Pretoria and Tehran. Iranian officials also expressed a desire to enhance ties in all areas with South Africa, and for South African investors to be more active in Iran’s economic projects.

South Africa’s Speaker of Parliament Max Sisulu met with his Iranian counterpart, Ali Larijani, in Tehran on January 23. According to the Tehran Times, Larijani said “that the South African parliament speaker’s trip to Iran can pave the way for the expansion of relations between the two countries in the political, economic and parliamentary spheres” (January 24).

Iran’s finance and economic affairs minister, Shamseddin Hosseini, said trade between Iran and South Africa, currently at $150 million, must increase. “He said that the two countries will soon hold a joint economic meeting and an Iranian delegation plans to visit South Africa to review financial venues” (ibid., January 26).

In calling for an expansion of ties between the two countries, the South African Parliament speaker said “that Iran’s Islamic Revolution inspired the South African people in their struggle against apartheid. Mr. Sisulu also criticized the U.S. for applying double standards toward Iran’s nuclear energy program while turning a blind eye toward Israel’s nuclear activities, and said South Africa supports Iran’s right to have a peaceful nuclear energy program” (ibid.). Sisulu reportedly referred to America’s policy on Iran’s nuclear program as an “arrogant one.”

Iran’s irib reported that Sisulu “called Iran … a civilized and powerful country with plenty of capacities for growth …. He described Iran [as] a friend of African countries, especially South Africa ….”

South African Member of Parliament Ian Davidson, chief whip of the opposition Democratic Alliance, released a statement yesterday, asking, “Why is South Africa’s Parliament courting Iran?” Davidson confirmed Sisulu’s visit to the Islamic Republic at the invitation of Larijani, pointing out:

The visit coincided almost exactly with Iran’s execution of two opposition activists, convicted of “trying to topple the Islamic establishment” after they were linked to protests that took place last June, following the disputed Iranian presidential election. …The question is: Why is the speaker of South Africa’s Parliament visiting a country with such an appalling human rights record and, instead of speaking out against the obvious abuses, using it as a platform to attack the West? The answer is: because the anc, from Zimbabwe through to Iran, has always placed a country’s historic ties with its liberation cause above any other consideration; and so principle has been subverted by political solidarity and our international reputation on human rights reduced to nothing more than empty rhetoric and meaningless gestures.

Davidson notes that President Jacob Zuma is continuing the same policies as his predecessor Thabo Mbeki, who “ensured that South Africa’s international reputation as a champion of human rights was fundamentally tarnished by its approach to Zimbabwe and its conduct in the United Nations.”

South Africa has consistently sided with Arab and Muslim entities, and against American and Israeli interests, in the UN.

“It appears that Jacob Zuma’s administration has picked up exactly where Mbeki left off and that, as has been the case for years, party political consideration trump our legislated commitment to human rights,” Davidson stated.

South Africa has in fact been courting radical regimes and turning its back on the West since the African National Congress (anc) gained power back in 1994. In September 1996, President Mandela honored a visit by Iranian President Rafsanjani with a 21-gun salute. Before coming to power, the anc, together with the South African Communist Party (sacp), forged close relations with countries such as Libya, Cuba, Morocco, Russia, Indonesia and Iran. “It would indeed be naive to assume that those who financed the anc/sacp struggle … would not be repaid with valuable political and economic agreements,” we wrote back in 1999.

This is precisely what is happening with Iran.

The Economist reports:

Iran has for many years supplied South Africa with a lot of oil. But economic ties have tightened. Private South African companies are investing heavily in Iran. For instance, mtn, a mobile phone company, invested $1.5 billion-plus in Iran in 2007-08 to provide coverage for more than 40 percent of Iranians. In return, South Africa has been one of Iran’s doughtiest supporters at the UN, abstaining on a resolution to condemn Iran’s human-rights violations and arguing against further embargoes and sanctions over Iran’s nuclear plans.

South Africa’s close relationship with Iran bears particular importance in light of the fact that South Africa is a nuclear power—and Iran is an aspiring nuclear power. If the anc government in the past has allowed the Iranian-backed Hezbollah terrorist organization to establish training camps in South Africa, it should not be presumed that nuclear assistance would not be given.

Additionally, South Africa has been cultivating a close relationship with Russia. These two countries together possess most of the world’s strategic minerals—some 90 percent of them. In a booklet written back in 1997, we drew attention to the potential danger in South Africa’s growing ties with both Russia and Middle Eastern countries: “As some astute Western analysts have suggested, if an African National Congress (anc)-South African Communist Party (sacp)-dominated government in South Africa forges links with the Islamic-Arab crescent in consortium with Russia, only those who bow to radical Islam and a Communist-led anc may get their raw materials!”

As we have pointed out previously, the relationship between South Africa and Iran is one to watch. Read Gareth Fraser’s article “Ready to Explode?” for details on the significance of this relationship.

Traffic flow: Jan. 31-Feb. 6

After a strong first month, last week’s traffic at theTrumpet.com dipped by about 15 percent compared to the previous four weeks. According to Google Analytics, we had 63,000 visits and 180,000 page views, with the heaviest traffic being on Wednesday, February 3.

Of the new stories posted, our most popular were “Jilted: The Looming Dollar Disaster,” by Robert Morley (7,500 views), and “Germany’s Missing Person,” by Ron Fraser (3,500 views). Besides his Monday column, Mr. Fraser also posted an important story on Wednesday, “Davos—the Biggest News,” which generated more than 3,200 views. “Pope Prepares for English Assault” also attracted 2,400 readers.

Of the new videos posted, “The Ramifications of Greece’s Economic Crisis” pulled in 3,500 views, followed by “Assessing America’s Bloated New Budget” and “Tension Over Islam Rises in Europe”—both at 2,100 views.

On the Key of David page, Gerald Flurry’s weekly program brought in about 3,700 views.

We also learned last week that one of our more popular stories was the website traffic update we buried on the Trumpet blog. So in the future, we’ll try to keep you “posted” on the trends and habits of your fellow Trumpet enthusiasts.

The U.S. gives up space

“He was the first president to recognize that for any country to be No. 1 on Earth it also must be No. 1 in space. That’s why the late President John F. Kennedy may have turned over in his grave this week as President Obama abandoned space to Russia and China,” wrote USA TODAY founder Al Neuharth on Friday.

He was referring to President Barack Obama’s 2011 budget, where just $19 billion of the $3.8 trillion budget was allocated for space. nasa’s $100 billion moon program has been abandoned.

“[A]bandoning our onetime leadership in space could become a long-term disaster,” Neuharth said.

To put the Space Age in perspective, we must understand its origin. It started Oct. 4, 1957, when the Russians (then the ussr) launched Sputnik, a non-military satellite about the size of a basketball. Sputnik orbited the Earth for 94 days and nights while we all watched it in awe and fear.At the time, we were in a “Cold War” with the ussr. Scared that we might become dead ducks if the Russians used space militarily, Congress established nasa on July 29, 1958.When JFK became president in January 1961, he gave nasa the assignment of sending men to the moon and bringing them back “in this decade.” We did, on July 20, 1969.After JFK’s tragic death, his successor, Lyndon Baines Johnson, kept the Apollo program a high-priority-high-budget cause. But no president since has understood its importance.So after six moon landings, we abandoned our moon program.

The Trumpet has for some years been warning that the U.S. will indeed lose superiority in space, and that this is destined to have military repercussions. But more than being concerned about the competition from Russia and China, we have warned that it is Europe that the U.S. should be most concerned about. Three years ago, ria Novosti reported that, “Reluctant to fall behind [the U.S.], Europe formulated its own strategy, almost doubling its space financing (emphasis ours).

Read this column by Joel Hilliker from last year for insight into what America’s declining interest in space means, and how it reflects a lack of vision and pioneering spirit—which is quickly being replaced by national complacency and addiction to debt and dependency. In that article, Joel Hilliker wrote:

As the Wall Street Journal points out, it took a mere eight years from President Kennedy’s challenge to place a man on the moon. By contrast, today, eight years from 9/11, we can’t even erect a building. Ground Zero remains a hole in the ground because construction plans, grand though they may be, are tied down with miles of Lilliputian red tape. As for America’s space program, it is withering into obsolescence. By next year it will be completely grounded, after which the U.S. hopes to pay Russia for seats aboard that nation’s trips to the International Space Station.The shift of influence from our visionary minority to its complacent majority precisely parallels America’s loss of national power.