New Spanish Government More Aggressive Over Gibraltar

New Spanish Government More Aggressive Over Gibraltar

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Former Prime Minister Tony Blair tried to give it away. Can Britain hold on to Gibraltar now?

Spain’s new government is pushing Britain to negotiate over Gibraltar without consideration for the wishes of the inhabitants of Gibraltar. Spanish Foreign Minister Jose Manuel Garcia-Margallo wrote to his British counterpart to this effect after British Prime Minister David Cameron promised last week to respect Gibraltar’s right to self-determination. The majority in Gibraltar wants to remain British, but Spain does not recognize this right.

The Times reports that new Spanish Prime Minister Mariano Rajoy will demand that Gibraltar not be a part of negotiations over its future. This, wrote the Times, “marks a hardening of Madrid’s position over its controversial claim for the return of the Rock.”

In recent years, negotiations have been tripartite, between Britain, Spain and Gibraltar, and Gibraltar has held a veto over any potential deal.

The Gibraltar news source Panorama writes: “The new PP [People’s Party] government is obviously seeking to go backwards to the days of General Franco when they did not like to refer to the government of Gibraltar, because they probably see that as ‘independentist’ in Gibraltar’s case, and prefer to speak about the ‘Gibraltar authorities.’” It notes how “hurriedly” the new government has brought up the issue after its election in November.

This push to exclude Gibraltar from negotiations comes just over a week after former Europe Minister Peter Hain said that then Prime Minister Tony Blair came close to giving up the Rock in 2002. He said that Mr. Blair was “contemptuous” of the wishes of the inhabitants of Gibraltar to remain British and wanted “to secure a better relationship with Spain” and remove Gibraltar “as an obstacle to our relations within Europe.”

Mr. Hain claims that Britain made a deal with Spain on April 18, 2002, to share sovereignty over the area and allow Britain to keep a naval base there. The Spanish vetoed the deal.

Britain has already come close to giving away the Rock. With the Spanish pushing for Gibraltar once again, will Britain have the will to hold on to it? Bible prophecy says it won’t.

Vatican Renews Negotiations With Palestinians

Vatican Renews Negotiations With Palestinians

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Vatican officials met with representatives of the Palestine Liberation Organization (plo) in Ramallah on January 29 to resume bilateral negotiations. The Vatican is seeking “a formal agreement regulating and promoting the presence and activity of the Catholic Church in the Palestinian territories,” according to the Catholic News Service.

“[T]he talks took place in a positive atmosphere to strengthen further the special relations between the two sides,” a joint communiqué on the meeting said. The Vatican presented a draft agreement that both sides will look at before meeting at the Vatican “in the near future.”

The Vatican desperately wants control of Jerusalem and Israel, which makes its negotiations with the Palestinians and Israelis important to watch. For more information on its agenda in the area, read our article “Why Does the Vatican Want a Palestinian State?” from the latest print edition of the Trumpet magazine.

Occupy Oakland Protests Turn Violent

Occupy Oakland Protests Turn Violent

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Expect violent rioting of the type seen last week in Oakland to engulf cities across America.

A march to take over a vacant building by members of the Occupy Oakland movement turned violent on Saturday, after protesters began tearing down barricades and destroying construction equipment.

When police ordered the crowd to disperse, officers were pelted with bottles, metal pipe, rocks, spray cans, improvised explosive devices and burning flares. According to an Oakland press release, the police responded to these attacks with smoke, tear gas and beanbag projectiles.

Some of the protesters even pre-constructed elaborate shields in anticipation of police resistance. One such shield, on display at City Hall on Sunday, was about 6 by 4 feet and built of corrugated metal on wood panels, complete with multiple handles. “Commune Move In” was painted on the front of the shield. “The shields are becoming stronger, larger and more mobile,” said Oakland Police Department spokeswoman Johnna Watson. “We’re in a dangerous area for law enforcement …. We are being assaulted, and when we react to those assaults, we can’t penetrate shields like this.”

Apparently the protesters wanted to “occupy” the empty Henry J. Kaiser Convention Center and use it as a commune-like command center for further protest. After being expelled from the area surrounding the convention center, the protesters attempted to “occupy” the nearby Oakland Museum of California. Later, the protesters entered the downtown Oakland ymca and broke into City Hall.

Three police officers and at least one protester were injured in the hostilities. So far, over 400 people have been arrested.

In an open letter to Mayor Jean Quan, the group threatened actions like “blockading the airport indefinitely, occupying City Hall indefinitely” and “shutting down the Oakland ports.”

The mayor reiterated to the press that the damage done by the protesters to the City Hall plaza alone has cost $2 million since October. City officials estimate that another $2.4 million in damage was suffered when the protesters closed down the Port of Oakland last December.

For the latest damages, Mayor Quan said the city would seek monetary compensation from protesters.

Ironically, a protest movement that sprung up to demonstrate against joblessness and poverty is only making matters worse. Closing ports and occupying public buildings are not just anti-Wall Street; they are anti-trade and anti-business. In the end, such a strategy of shutting down businesses and harming profits will harm the average American worker far more than it will harm Wall Street bigwigs.

Yet, such protests seem to be growing in strength despite, or perhaps because of, police action taken against them.

Last week, billionaire investor George Soros warned of all-out class warfare as the economy deteriorates. “Yes, yes, yes,” Soros told the Daily Beast on the subject of whether “riots on the streets of American cities are inevitable.” Soros then went on to claim that the solution to such violent rioting was for President Barack Obama to increase taxes on the rich in an attempt to solve social inequality.

While Soros is right about the inevitability of rioting in the streets, his solution is only likely to further escalate class tensions. Taking money from those who own businesses and giving it those who are threatening to shut them down is not a viable solution to American joblessness.

Expect violent rioting of the type seen last week in Oakland to soon engulf cities across America. The political establishment is gearing up for a presidential election campaign based on partisan division, class warfare and even hints of racism. The Occupy protesters are likely to become a major component of this campaign. For further information, read Philip Nice’s article “Blood in the Streets” and the most recent editorial by editor in chief Gerald Flurry, “U.S. Attorney General Ignites the Race Bomb.”

Mitt Romney, Bain Capital and American ‘Creative Destruction’

Mitt Romney, Bain Capital and American ‘Creative Destruction’

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Could a private equity president save America?

Venture capitalists are really vulture capitalists, says former presidential candidate Rick Perry. And Mitt Romney’s Bain Capital was a venture/vulture capitalist. Such firms swoop down on sick companies, devour them, and leave only bones and lost jobs behind. Getting rich off destruction is deplorable, Perry said.

Are venture capitalist/private equity firms really devouring America? This might be a good time to ask that question, since one of the men who might be president was an innovator in this industry that has become increasingly influential in American-style capitalism.

According to Mitt Romney, venture capitalism is what makes America’s economy so dynamic. “The reality is in the private sector that there are some businesses that are growing and thriving, and we were fortunate enough to be able to be a part of that in a small way,” he said. But “there are some businesses that have to be cut back in order to survive ….”

“And every time that we invested in a business, it was to try and encourage that business to have ongoing life.”

It is all about the economic gospel of “creative destruction.” Sometimes jobs have to be destroyed, so that others can not only survive, but thrive.

Sounds relatively reasonable. As evidence, Romney points to his successes in revitalizing struggling companies such as Sports Authority and Domino’s Pizza. He says he has created 100,000 jobs by making companies such as these stronger so that they could grow again.

Yet, even if you believe Mitt Romney’s job creation numbers, his description of venture capitalism is not how many private equity firms—including Bain Capital—actually work.

Consider the case of KB Toys. Remember KB Toys? In 2000 (one year after Mitt Romney retired as a director, but remained a major shareholder), Bain Capital bought KB Toys for $305 million. To do this, it borrowed $297 million from big banks and other investors. It used only $18 million of its own money.

Immediately following the purchase, Bain Capital made the toy company borrow $297 million so that Bain could pay back the initial money borrowed from investors. Now KB Toys, not Bain Capital, owed investors the $297 million.

At this point, Bain Capital was free and clear. It was the owner of a profitable, if now indebted, company.

But Bain wasn’t satisfied. Nor was it interested in cutting fat from the company, or increasing long-term corporate profitability. The evidence shows it wanted a fast buck. Those who got hurt in the process were, apparently, collateral damage.

Even after the additional $297 million in extra debt, KB Toys was still valuable enough that Bain Capital could direct it to borrow tens of millions more over the ensuing months.

But here is where Bain Capital illustrates the dirty side of corporate America.

While Bain Capital was directing KB Toys to borrow more and more money, what was Bain Capital doing with it? Developing a bigger online presence? Building factories? Expanding product lines? Adding distribution capability? Creating a better company? Innovating new products? No.

Bain Capital was sucking KB Toys dry.

Over the next 16 months, Bain Capital paid itself a whopping $85 million in dividends from the now super-indebted toy retailer.

It was too much for KB to endure. In the face of growing competition from Toys R’ Us and other retailers and with basically a giant parasite as majority stakeholder, KB Toys filed for bankruptcy in 2004—at the direction of Bain Capital. Over 500 stores were shuttered. Thousands of employees lost their jobs, their retirements and their livelihoods. And all those investors that lent money to KB were left holding an empty toy box.

But what about Bain Capital? With tens of millions in dividends—plus consulting fees paid to itself from KB’s borrowed money—it still made around a 400 percent return on investment! All legal. And all ugly.

There was no “creation” in the destruction of KB Toys. It was never about “cutting back in order to survive,” or always and “every time” investing with the intent to encourage “ongoing life.”

And KB Toys was not alone.

Some call it vulture capitalism. But that is an insult to vultures. Vultures generally eat the dead and dying. Bain Capital seems to have very deliberately killed KB Toys—by sucking the life out of it. Parasite capitalism may be a better description. But even most parasites don’t kill their hosts so quickly.

If KB Toys was just one sad case, it would be regrettable but survivable for America. But the leveraged buyout boom of the pre-2008 Wall Street meltdown was massive. There are thousands of formerly healthy U.S. corporations now struggling under dangerous debt loads that, like KB, may be destined to kill them.

And with all that extra debt, when interest rates start to rise from their historic lows America’s parasite-bloated companies will become actual vulture food.

Are private equity and venture capital firms good for America? Just like anything else, how they are used is what counts the most. Many venture capitalists do actually seek to make money by making companies more efficient, by both investing and growing—and also cutting dead wood. But sadly, in too many cases, Wall Street is a place where tools like these are used for greedy destruction, not productive creation.

Can a private equity president save America?

America truly needs a Creative Destruction moment. But can any human save an economy so infested with wrong practices, greedy human nature and fraudulent foundations? If we are brutally honest with ourselves, we need to admit that it’s not an overhaul or a new set of regulations that we need. It’s a complete wipeout of the entire system so that a new, equitable, productive, honest foundation can be built. And if we are honest with ourselves, in the long run, and despite the short-term pain, wouldn’t that kind of creative destruction be a good thing to look forward to?

Germany Wants Greece to Hand Over Control of Budget

Germany Wants Greece to Hand Over Control of Budget

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To stay in the eurozone, Greece must hand over control to a commissioner, a German government report says.

Greece should hand over control of its tax and spending policies to an EU commissioner in return for its next bailout program, according to a German government proposal published by the Financial Times January 27.

“Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time,” states the report. “A budget commissioner has to be appointed by the Eurogroup with the task of ensuring budgetary control.”

This commission should have the power to “veto decisions not in line with the budgetary targets set by the Troika,” it says.

Several German politicians have publicly supported the proposal. “We need more leadership and monitoring in implementing the course of reform,” said German Economy Minister and Vice Chancellor Philipp Rösler in an interview published in the Bild on January 30. “If the Greeks fail to do this themselves, the leadership and monitoring must come in a stronger way from outside, for example through the EU.”

Head of the Christian Democratic Union (cdu) in the German parliament Volker Kauder made a similar suggestion in an interview with the Spiegel Online on January 26, saying, “[W]e must increase the pressure on Greece.”

Even Greece’s unelected government seemed outraged at the suggestion. Greek Finance Minister Evangelos Venizelos said the suggestion undermined Greek “national dignity.” Education Minister Anna Diamantopoulou said the suggestion was “the product of a sick imagination.”

The Greek newspaperTo Ethnos went much further, saying: “The document recommends conditions dictated by a conqueror to an enslaved population and must be treated by the Greek people as a hostile attack by a state that wants to destroy Greek sovereignty just like the German Nazi attack of April 1941.”

Others supported Germany’s ideas. Swedish Prime Minister Fredrik Reinfeldt said the Greeks “do not deliver on the reforms that they have promised others.”

Germany shows some signs of bowing to the outrage. It may beat a strategic retreat, but the fact remains that German money is keeping the eurozone afloat right now. It’ll get what it wants in the end—Greece will have to comply or have its economy destroyed even more. Germany’s finances give it great power over the eurozone.

EU-Iranian Tensions Rise

EU-Iranian Tensions Rise

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On Sunday, Iranian Oil Minister Rostam Ghasemi said Iran will soon halt oil exports to “certain countries” in response to the European Union’s announcement last week that it will impose sanctions on Iran effective July 1.

Tehran also affirmed that it is considering closing the Strait of Hormuz as part of its struggle against the West. Ali Aghazadeh, a member of Iran’s parliamentary commission for national security, explained on Monday:

The Islamic Republic has never been the initiator of sanctions or threats, but Europe and the West have been endangering our country through sanctions, propaganda and even military threats. Now that the threats have escalated, Iran has all options on the table including stopping oil exports to Europe and even closing the Strait of Hormuz …. Europe must understand that Iran will respond to the embargo. Iran will not leave military and economic threats from the West unanswered.

The planned EU sanctions prohibit European states from signing any new contracts to buy oil from Iran, but permit existing deals to continue until July so that countries have time to secure alternative providers. But if Iran preempts this timescale, as Ghasemi said it plans to do, Tehran will strike a serious blow to countries like Italy, Greece and Spain, which rely heavily on Iran’s supply and are already in dire economic straits.

Ghasemi did not identify the specific countries Iran’s cutoff will target, but analysts expect several of Europe’s more fragile economies to be among them. Spiegel Online explained the degree to which European nations currently depend on Iranian oil, saying, “Some 500,000 barrels arrive in Europe every day from Iran, with southern European countries consuming most of it. Greece is the most exposed, receiving a third of all its oil imports from Iran, but Italy too depends on Iran for 13 percent of its oil needs. If this source were to dry up abruptly, the economic conditions in the two struggling countries could become even worse.”

The International Monetary Fund warned that the ramifications of the EU’s planned embargo will also extend beyond Europe and the Middle East, and could drive up the global price of oil by 20 to 30 percent.

To understand more about the implications of the developing tensions in EU-Iranian relations, read columnist Brad Macdonald’s latest article, “Europe, Iran and Bible Prophecy Come Alive in the Strait of Hormuz!