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Generational Dynamics Web Log for 29-Apr-2010
29-Apr-10 News -- Desperate Europeans try to stave off euro currency collapse

Web Log - April, 2010

29-Apr-10 News -- Desperate Europeans try to stave off euro currency collapse

Continuing 'Red Shirt' protests in Thailand lead to violence

Spain's debt is downgraded, as Greece's bailout requirements triple

The bad news just kept pouring out on Wednesday.

The S&P ratings agency downgraded Spain's debt on Wednesday -- not a lot, but enough to concern everyone that dominoes are falling, the day after the Portugal's debt was downgraded, and Greece's debt was lowered to junk status. AP

Financial officials, including International Monetary Fund (IMF) chief Dominique Strauss-Kahn and Jean-Claude Trichet, head of European Central Bank (ECB), met with German lawmakers in an attempt to break the impasse over the aid package to Greece. The London Times reports that the main result of the meeting was an understanding the planned 45 billion euro bailout package was not nearly enough, and it would have to nearly triple to 120 billion euros over three years.

Nouriel Roubini, who changes his mind as often as the weather, and who was predicting a U-shaped recovery just a few weeks ago, is now talking about the collapse of the euro currency. The LA Times quotes him as saying, "The reality is that what has happened in the last few months is the first test of the viability of the European market [and the euro currency].

He added that the possibility of the European monetary union coming apart is "significantly rising."

Germany is increasingly in the spotlight

Worldwide attention is now being focused on Germany, which is increasingly facing the reality that they're going to be blamed for this debacle.

Highly respected financial columnist Wolfgang Münchau, writing in FT Deutschland, wrote the following (translation):

"The German government's strategy for Greece is bad for the German interest, and Chancellor [Angela] Merkel is walking a dangerous path.

You can have a number of different opinions on how to respond to the crisis in Greece, but no matter how the German interest is defined, it is really very difficult to reconcile the German interest with the postion of the Chancellor.

Politically, the strategy was to sign declarations of solidarity in Brussels, and then to describe herself at home as "Madame Non," but this has backfired.

Angela Merkel would have taken more than one benefit from it, to delay the decision on helping Greece until after the May 9 NRW elections, if the tactic had not been so obvious. And economically it makes no sense, if you examine the story to its logical end."

Münchau goes on to examine the various options, and concludes that the only option that won't be disastrous for the German economy is to bail Greece out. And he suggests that Merkel's motive is to bring about the end of the euro currency.

Many commentators are suggesting that Merkel's delaying tactics are responsible for making the situation much worse, and much more expensive. Thus, an analysis by Der Spiegel indicates that the actual cost will be 135 billion euros, not 120 billion, and it quotes a German opposition politician as saying, "The indecisiveness and dithering of the European Union, instigated by the chancellor, have exacerbated the crisis and driven the consolidation requirement into the heavens."

The claim that Merkel's "dithering" has worsened the crisis is apparently based on the belief that the delay has forced Greece to borrow money at high interest rates, thus increasing their debts. My feeling is that even an early aid package would have reduced the 135 billion euros by only a small amount.

According to recent polls, 86% of the German people are opposed to helping Greece. That poll was taken when the bailout amount was 45 billion euros. Now that the bailout amount is 120 billion euros, or 135 billion euros, it's hard for me to see how the German people are suddenly going to be more willing to help Greece.

This is turning into a potentially ugly situation for Germany. There are still many ill feelings toward Germany in Europe, left over from the last century, and this situation will stoke them.

As I've been saying for some time now, the trend towards a Greek default has a huge amount of momentum, and I don't believe that there is any way of stopping or even slowing that trend, at this point. In fact, the momentum seems to have grown almost every day for the last month.

From the point of view of Generational Dynamics, we're in the midst of a turning point in history. We cannot take our eyes off of it, for the same reason that we can't take our eyes off of a traffic accident. We feel the same morbid fascination, but we also feel horror when we realize that we're not just bystanders to the traffic accident. We're all in the middle of it, and we're all going to suffer from it.

New violence as Bangkok, Thailand, red-shirt protests continue

The "red shirt" protests in Bangkok, Thailand, have now been going on for six weeks, much longer than anyone expected, and have been growing. Since the beginning of April, the protestors have occupied the Bangkok's high-class shopping district, forcing stores to close, and leading to a state of emergency. Army troops attempted to clear the protestors on April 10, but suffered a humiliating defeat, with 25 people killed, and hundreds injured.

On Wednesday there was new violence, with the security forces firing rubber bullets at the protestors, causing 16 injuries, according to the BBC. One soldier was killed, apparently by a shot fired by someone in the security forces.

The red shirts, who support former prime minister Thaksin Shinawatra, have promised to end their protest when the government dissolves parliament, and makes way for new elections. Prime Minister Abhisit Vejjajiva has resolutely refused to give in to these demands.

The following Al-Jazeera video gives a pretty good picture of life in downtown Bangkok these days:

One mystery associated with the protests is identity of the mysterious "men in black," well-armed men wearing black, faces covered with hoods, who have appeared in the crowds of red-shirt protestors and opened fire on troops. They're well trained, according to Reuters, and it's feared that they're former army rangers supporting Thaksin Shinawatra.

With the protests going on for so long, and with the loss of money from having the shopping district shut down, it's feared that the army will again resort to violence to disperse the protestors.

From the point of view of Generational Dynamics, Thailand is in a generational Awakening era, and so a full-scale civil war is impossible. However, as we've seen in Iraq and Iran, spurts of violence that can still occur. They may be short-lived, but people get killed all the same.

Additional links

People who regularly eat chocolate are more depressed than other people. BBC

Russia has posted online Stalin's secret papers on the 1943 Katyn massacre of Polish soldiers. Times Online

A Russian company is selling a long-range precision strike missile that can be hidden inside a shipping container, giving any merchant vessel the capability to wipe out an aircraft carrier, or any other target. Reuters

A drought in western Africa has threatened Niger with total crop failure. Nearly 8 million people are facing starvation. BBC

Migrants in Mexico from El Salvador, Guatemala, Honduras and Nicaragua are facing a "major human rights crisis," according to Amnesty International. Almost half of them are raped or abducted for ransom, often by public officials. BBC

A team of evangelical Christian explorers in Turkey claim that they've found the remains of Noah's ark. National Geographic

Boy Scouts can now earn merit awards for learning video game skill sets. MSNBC

A new map from the state of California shows more than 50 new surface earthquake faults that have been discovered. LA Times

(Comments: For reader comments, questions and discussion, see the 29-Apr-10 News -- Desperate Europeans try to stave off euro currency collapse thread of the Generational Dynamics forum. Comments may be posted anonymously.) (29-Apr-2010) Permanent Link
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