German Finance Minister to Be Next Head of Eurogroup?

German Finance Minister to Be Next Head of Eurogroup?

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Jean-Claude Juncker, head of the Eurogroup meeting of eurozone finance ministers, says he “fully supports” German Finance Minister Wolfgang Schäuble taking his job after he steps down at the end of the month.

His successor should be someone who knows the eurozone’s issues and can listen to others, he said at a debate in Hamburg on April 30. Schäuble has “superb qualifications” and “would be the perfect match,” said Juncker.

“Some diplomats have expressed concerns his appointment would be too strong a signal that Germany is running the single currency,” writes the EU Observer.

The Observer writes that if Schäuble did take the job, Germany would have to relinquish control of the eurozone bailout fund. Klaus Regling is currently head of the European Financial Stability Facility and wants to stay on as it morphs into the European Stability Mechanism. The Observer believes that Spain and France would force Germany to give up this position.

However, Germany is running the euro. As Robert Morley points out in his latest column, only Germany can bail out Europe. That gives it huge power. It won’t necessarily use this power for overt power grabs, but it is running the show. If Germany wants to control both posts, it will get its way.

Death will be the only retirement for many

One quarter of middle-class Americans have so little savings (and investments) that they don’t think they will be able to retire until they are 80 years old, according to a new report.

That presents a pretty big problem: The average American life expectancy is 78!

CNNMoney reports:

It sounds depressing, but for many it’s a necessity. On average, Americans have only saved a mere 7 percent of the retirement nest egg they were hoping to build, according to Wells Fargo’s latest retirement survey that polled 1,500 middle-class Americans.While respondents (whose ages ranged from 20 to 80) had median savings of only $25,000, their median retirement savings goal was $350,000. And 30 percent of people in their 60s—right around the traditional retirement age of 65—that were surveyed had saved less than $25,000 for retirement.

This is a disaster waiting to happen—in so many different ways.

$350,000 will probably not provide much of an income in retirement. At the current 2 percent yield of 10-year government treasury bonds, you will only earn $7,000 per year! And that is before taxes.

People need to adjust to the new reality! In today’s inflationary—Federal Reserve money-printing—environment, you will need a lot more than $350,000 to retire comfortably.

So what will many of these people have to do? Many are probably planning on heavily relying on Social Security. This too is a doomed strategy. The Social Security fund has no money in it and is now paying out more than it is taking in. The government has spent the Social Security money. And the government is close to going broke too.

As economic analyst Mike Shedlock says in his blog on the subject, it’s “crazy … to expect Social Security to take care of all your retirement needs.”

So how are these people going to live their retirements?

They won’t.

As cnn points out, almost one third of people in their 60s have saved less than $25,000 for retirement! These people will never be able to retire. They will work to feed themselves until they die.

It is great to work past 65 if you can and choose to. However, the problem is that many of these people will not be physically and mentally able to work even if they wanted to.

The burden on taxpayers in America is going to grow exponentially. Eighty million baby boomers are now beginning to retire. It is an unstoppable wave of retirees that is about to slam into America’s already fragile economy. And it is hitting at a time when the economy—and America’s indebted government—can least afford it.

Read “80,000,000 Retirees” to see what the baby boomer generation means for the future of America.

Spain Officially Back in Recession

Spain announced on Monday that, for the second time in three years, its economy has fallen into a recession.

The National Statistics Institute said the economy shrank 0.4 percent compared to the first quarter of 2011. Meanwhile, unemployment has climbed to more than 24 percent, with youth unemployment soaring at 50 percent.

At the same time, property prices are plunging at a staggering 7.2 percent annual rate.

Standard & Poor’s rating agency recently downgraded Spanish debt by two full notches, and borrowing rates have surged above 6 percent for the Spanish government. With the economy officially in shambles, rioting is now becoming common.

Spain looks to be on the fast track to crisis, following in the footsteps of Greece. At this juncture in the ongoing euro crisis, any bailout is essentially a German move. Other national economies are too strained to contribute their share. To understand how Spain’s deteriorating economy could become a landmark catalyst to Germany’s rise, read “Will Germany Ride to Europe’s Rescue?

Merkel Dumps Sarkozy for Monti

Merkel Dumps Sarkozy for Monti

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Germany’s chancellor has aligned with Italy’s prime minister. This will strengthen ties between Berlin and Rome.

Last week reports emerged of an alliance between Italy and Germany. This is a harbinger of that final axis that will dominate the European Union from here on.

Presseurop observed: “Angela Merkel doesn’t want to be left alone in the turmoil of the [economic] crisis. With her long-time partner Nicolas Sarkozy on the way out after the first round of French elections, the chancellor is already looking for another ally, and Mario Monti seems to be her choice. German government spokesman Steffen Seibert has revealed that Merkel and Monti’s staff have already met to plan a series of joint German-Italian initiatives to promote economic stimulus measures to be discussed at the European Council in June, La Stampa reports” (April 26; emphasis added throughout).

Readers of the Trumpet would know that we have long expected the weakening of the Franco-German alliance and its ultimate replacement with an Italo-German alliance. This is the “holy” Roman connection with Germany that will inspire the prophesied final rise of the ultimate 10-nation combine set to rule Europe—in reality the seventh and final rise of the Holy Roman Empire.

The Merkel-Monti connection is the resurrection of the historic old Chaldean/Assyrian axis in modern clothes. That “series of joint German-Italian initiatives to promote economic stimulus measures to be discussed at the European Council in June” are but the beginning of a powerful influence that will be exerted soon on the global economy from Rome and Berlin (Revelation 13:16-17).

Watch now for the growing nexus between Berlin and Rome.

Watch for Europe’s chief central banker, Mario Draghi, to play a linchpin role in these “joint German-Italian … economic stimulus measures” that will soon flow from this partnership between Berlin and Rome. Draghi may well give a hint concerning those measures when he comments this Thursday at the upcoming European Central Bank governing council meeting in Madrid.

As we have said before, watch the two Marios—Monti and Draghi—and watch closely for Merkel to be increasingly influenced by Rome in her political and economic outlook. The chancellor has already done a U-turn on economic policy, agreeing now to toe Rome’s line. As Presseurop reported, “Merkel’s fiscal discipline creed came under fire yesterday as ecb chairman Mario Draghi declared that fiscal consolidation cannot be achieved through cuts and taxes alone, and requires ‘structural measures to favor economic growth.’ … ‘While waiting for the French election verdict Merkel paid heed to Draghi, finally coming to a formal acknowledgment that ‘we need growth, to be sustained through structural reforms’’” (ibid). That is a real policy reversal from Merkel’s previously publicly declared stance.

Over time, Sarkozy reverted to being Merkel’s EU lap-dog. Watch now for Merkel to fill a similar role, paying obeisance to Rome.

EU to Sue Britain Over Immigration Law

EU to Sue Britain Over Immigration Law

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The European Commission says Britain’s immigration laws violate EU law and has said that unless Britain changes them within two months, the European Union will sue. Legal experts say it is impossible for the government to meet this deadline.

The Commission’s “reasoned opinion” states that the UK is violating the EU’s Free Movement Directive in four areas. Initially, the EU said Britain breached the directive in 80 ways, but most of those have been resolved.

Two of the areas left relate to family members of EU citizens. The directive requires that a non-EU family member be allowed to travel visa-free with his relative who holds an EU residence card. Britain does not allow this as it says that not all resident cards from EU nations are secure enough.

The other issue relates to the Commission wanting Britain to allow family members of EU citizens to be able to apply for UK residency. As the Financial Times explains it, “This would entitle, for instance, an Afghan national in London to apply for residence in Britain on the basis of their Italian brother living in Rome.”

The directive allows the UK to require EU citizens who want to move to Britain to have medical insurance. However, Britain won’t let them count the UK’s National Health Service as insurance. The Commission claims this is illegal.

Its final grievance is that the UK treats immigrants from Romania and Bulgaria differently to immigrants from other EU nations.

Britain said it would appeal against the Commission’s opinion.

Immigration policy and control of national borders are at the heart of a nation’s sovereignty. The fact that the EU is able to boss Britain around on this, with Britain’s only response being to appeal, shows how much power Britain has given up to Europe.

Will Germany Ride to Europe’s Rescue?

Will Germany Ride to Europe’s Rescue?

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Spain is in trouble. What will Germany do?

There is an old saying: Nothing is official until it has been officially denied.

“Nobody has asked Spain, either officially or unofficially, to turn to Europe’s bailout mechanisms. We don’t need it,” Spanish Finance Minister Luis de Guindos said on Friday.

So Spain is probably about to need a bailout.

That’s a big problem, because Spain might be too big to bail out.

More worryingly, if Spain fails, then the investors are sure to turn on Italy next. Italy is the third-largest economy in Europe and is definitely too big to bail out—even for Germany.

Bold action is required if the United States of Europe is going to be saved.

Last week, Spanish borrowing rates surged above 6 percent, a level that triggered bailouts for other European countries. Rating agency Standard & Poor’s downgraded Spanish debt by two full notches. Unemployment has hit 24.4 percent. Youth unemployment is up to 50 percent. Rioting is becoming common. Property prices are dropping at a debilitating 7.2 percent annual rate (in contrast, in America, house prices are falling at a 3 percent rate). And Madrid is expected to announce that even its heavily massaged economic data indicate the country is back in recession again.

Spain is caught in a deadly debt spiral. Cutbacks are reducing the size of Spain’s gross domestic product faster than its debt. So even as Spain works to reduce debt loads, to investors it is becoming a greater credit risk. Spain is locked into the eurozone, so it cannot print money to pay its debts. But with the economy shrinking, it is becoming more difficult for it to pay its creditors. It is unclear if the big European banks that have lent to Spain would survive the loss of a Spanish default.

Without a bailout, a Spanish debt bomb may be about to explode the eurozone.

Germany’s ad hoc approach to the crisis isn’t working. It has tried to ring-fence the crisis with promises of individual bailouts on an “as needed” basis. Ireland failed. Germany bailed it out. The crisis spread. Germany wrung more concession from the eurozone. Portugal failed. Germany bailed it out. The crisis spread. Germany squeezed more concessions from Europe. Greece failed. Germany bailed it out. Germany forced through more “reforms.” And the crisis …?

With Spain now in trouble, it is clear the contagion cannot be ring-fenced—especially in light of perceived growing German bailout fatigue.

But without visible and strong German commitment to Europe, the economic meltdown cannot be stopped.

Consider the European Financial Stability Facility (the much-vaunted bailout fund). Nations have promised €780 billion to be used as needed. Of that amount, €54 billion was promised by Ireland, Portugal and Greece. But these nations are getting bailed out, so clearly they won’t be able to follow through with their commitment. Spain has promised to contribute €92.5 billion. But Spain can’t come up with enough money to help itself, let alone help anyone else. Italy’s share of bailout funds is supposed to be €139 billion, but it is in no better shape than Spain.

But here is where it gets scary for Europe. Austria, Cyprus, Malta, the Netherlands, Slovakia and Slovenia are not in positions to help with bailouts either—and may need bailouts themselves. Even France’s credit rating has been cut.

In other words, while the Europeans may talk a good talk, only Germany can walk the walk. Any European bailout is in effect a unilateral German operation.

So Germany had better be prepared to walk. But toward which destination?

Does Germany continue to try to “ring-fence” individual economies as they collapse—meanwhile taking full advantage of the situation to extort political and economic reforms in exchange for bailout money?

Or does Germany step the bailouts up to the next level?

The number-crunchers in Berlin are doing the math. A complete eurozone meltdown would destroy Germany’s economy just as surely as it would Greece’s. Who would buy German exports? And since Germany is already virtually bankrolling all the bailouts to keep Europe from collapsing, why not run the bailout for all it is worth?

France’s possible next president Francois Hollande is practically begging Germany to agree to a pan-European debt union. Hollande wants a federalized debt union in which eurobonds would be backed by all nations. It would be a huge step toward a true federalized and centralized European government.

And now, more than ever, Germany might be “convinced” to ride to the rescue.

It would be a dramatic move that could alienate German voters—but the potential payoff would be exponentially more massive—if it solved the financial crisis. And who knows what else Germany could get in return for agreeing to become the paymaster of Europe.

Spain appears to be rapidly heading toward a crisis. Can Germany bankroll Spain on its own? Or will this be Germany’s opportunity for the biggest coup of all time? Will Germany agree to a real United States of Europe? If it does, you can be sure it will ensconce itself as the paymaster—and de facto dictator—of Europe. And it will do so without firing a shot.