Please note that you can leave a comment on any of our posts at our Facebook page.  Subscribers can also comment at length at our Angel's Corner Forum

OCTOBER 6,  2011

SHORT TAKES ON THE DRIFTING WRECKAGE – AT 10:46 P.M. ET:

MITT APPOINTS – Mitt Romney clearly wants to project an image of inevitability, and so he's behaving like a general-election candidate.  That may well be a good strategy.  Today he appointed a star-studded list of heavyweights to be foreign- and national-security advisers.  The list, found here, reflects a generally conservative view of the world, Reaganesque we might say.  The most imaginative name:  Nile Gardiner, Director of the Heritage Foundation’s Margaret Thatcher Center for Freedom and a former researcher for Thatcher.  Romney is clearly signaling that he will restore the special relationship that Obama has worked hard to weaken.

VULGAR – We don't expect much taste from MSNBC, home of TV's whining liberals, but the basement was probably reached in a signoff by Martin Bashir, a new MSNBC host, who exploited the death of Steve Jobs to take a stab at Sarah Palin, who'd just announced that she would not be running for president.  Said this alleged journalist:  “Although the death of Steve Jobs coincided with Sarah Palin’s announcement, it has been a helpful accident of fate,” adding “because it allows us to realize and commemorate the greatness of one’s individual’s contribution, and the utter futility of the other.”  Real class, Marty, real class.  We're sure the pseudo-intellectuals at MSNBC have sent their congratulations.

ADVICE FROM JIMMY – Jimmy Carter, to whom Obama is increasingly compared, is in Oslo this week, and is using his visit to Norway, which has one of the goofiest governments in Europe, to lecture President Obama, saying that Obama must live up to his Nobel Peace Prize.  Maybe the way Arafat did.  Carter is a vile man and constant self-promoter.  There is a tradition that advice is given to the president privately, especially advice tendered by former presidents.  We're certainly not fans of Obama here, but his office deserves more respect from a former holder of that office, even though the former holder diminished it considerably.  Public lectures to the president by Jimmy ("I'm the best former president ever") Carter are way out of line.  But Carter considers himself too good for our traditions.

NEW MEDICAL CONDITION! – A new medical condition known as "text neck" has been discovered.  It comes from being hunched over a mobile phone or tablet.  It can result in headaches and pain.  And, of course, there are treatments available, in exchange for mucho dollars.  Yeah, I know text neck.  I've known it since I took my first exam in junior high.  Strange, they didn't have a name for it then.  The cure was getting through the exam quickly and straightening up, even looking at things like a pretty girl at the next desk.  And to think, I discovered this and they didn't give me the Nobel Prize.  I'll sue.

October 6, 2011       Permalink 

A WARNING FROM LEON – AT 8:36 P.M. ET:  Leon Panetta, who'd been a pretty conventional liberal Democrat, has turned out to be one of President Obama's better appointments, first as director of Central Intelligence, and now as secretary of defense.  Panetta has turned out to be a national defense Democrat, and he is warning, firmly and loudly, about extreme defense cuts.  From The Politico:

Defense Secretary Leon Panetta arrived at the Pentagon as a man who matched the times, a shrewd insider Democrats viewed as possessing the will and the weight to tame the sprawling defense budget.

But in only a few short months, Panetta has emerged instead as Washington’s sharpest critic of further cuts — an unexpected Mr. Doomsday of the supercommittee deficit drama.

He has angered Democrats by urging Congress to whack Social Security and Medicare before touching defense again. He drew scorn from liberal and conservative analysts alike for predicting a 1-point hike in the unemployment rate if the supercommittee deadlocks and the Pentagon loses $600 billion in funding. And he has delighted Republicans with his constant, cataclysmic warnings about the perils of trimming even one more dollar from the defense budget.

Good for Leon! 

But reasonable cuts can, of course, be made.  The Department of Defense does not always plan well, and, if we really care about defense, we should subject the Pentagon to tough, but honest scrutiny.  Will Stroock, an Urgent Agenda reader and contributor, is an expert in these matters.  A distinguished military historian and fine military novelist, he's written a thoughtful essay for us on the very subject of defense cuts, showing what a knowledgeable approach can do.  He says:

I am not advocating deep cuts in American defense spending, but I do say that modest savings can be found by eliminating infrastructure that is no longer needed. For example, we could close Ellsworth AFB in South Dakota and Whiteman AFB in Missouri. These are Cold War relics. It makes absolutely no sense to have strategic bombers, slated to strike targets on the other side of the world, stationed in the center of North America. They should be stationed in Hawaii and Guam. More savings could be found by bringing the last of our ground combat troops, four brigades and a Stryker regiment, home from Europe. There is already a massive American presence in Central Asia and Iraq, bringing these troops home from Europe does not affect our deterrent in that part of the world. These brigades could be deployed to Guam, Hawaii and Alaska, or at least the West Coast, to keep an eye on China.

Remember a few things about military cuts. When you trim, say 5 billion from the defense budget, you save 5 billion this year, and the next year, and the year after that…. Also, and more importantly from a political standpoint, the public will embrace cuts in defense spending. As the GOP proposes entitlement reform, we better have an answer to liberal charges that we are slashing services to our "most vulnerable" but leaving defense intact.

Will Stroock's full essay will be available at our weekend edition of "The Angel's Corner," and I urge you to read it.  And, by the way, check out Will's new novel, "To Defend the Earth."  Great story, and you'll learn much.  It's at Amazon, here.  It's always great to read an author who actually knows what he's writing about.

October 6, 2011       Permalink

RIGHT UP THERE WITH THE WINNERS – AT 9:58 A.M. ET:  Andrew Malcolm has one of the best, and best written, political blogs on the web.  He has just moved from the Los Angeles Times to Investors.com, one of our favorite sites.  Check him out here if you haven't already done so.

Andrew reports on another famous polling victory for the man who came down in 2008 to save us from all evil:

In the accelerating chronicles of the Democrat's decline, Barack Obama has just achieved a new level of disapproval among American voters:

On the 990th day of his presidency, 52% of his countrymen disapprove of the Chicagoan, according to Gallup's latest three-day rolling average.

That means Americans now think as little of their own president as they do of Vladimir Putin, the former Russian spymaster and authoritarian tough guy who's expected to become president again over there.

That's gotta sting.

Putin's the unsmiling fellow who's seen abroad as reining in Russia's democratic movement, limiting independent media and allowing a certain cult of macho man personality to develop around his outdoor adventures and frequently shirtless torso.

Yeah, and we've seen Obama shirtless on the beach, he doesn't seem too high on democracy around the world, and our media has limited its own independence in his service.  Hey, wait.  What country are we talking about?

Rasmussen Reports surveyed 1,000 Americans last week and found 52% had an unfavorable view of the once-and-likely-future president of the Russian Federation. That includes 23% who have a Very Unfavorable view.

COMMENT:  I'd love to see one of Obama's old hard-left friends burst into the Oval Office and announce, "Barack, joyous day.  You're as popular as Comrade Putin." 

A moment in history. 

October 6, 2011        Permalink

STILL MISERABLE – AT 8:41 A.M. ET:  The weekly unemployment report has just been issued, and it isn't pleasant.   Despite the fact that new unemployment claims are slightly lower than expected, that's like saying the Titanic is sinking a bit more slowly than the engineers had thought.  From The Wall Street Journal:

New claims for unemployment benefits rose only a bit last week following the steep drop in the previous period, but moved back over the key 400,000 level.

Initial jobless claims rose by 6,000 to a seasonally adjusted 401,000 the week ended Oct. 1, the Labor Department said Thursday. Claims filed in the previous week had dropped by 33,000, the sharpest decline in more than four months.

The data were better than expected. Economists surveyed by Dow Jones Newswires had forecast claims would bounce back up by 19,000.

Still, the level of claims remains too high to signal a real improvement in the labor market. Economists generally think the economy is adding more jobs than it is shedding once the figure falls below 400,000. It's been below that mark only for nine weeks this year -- only to bounce back up above it.

The four-week moving average of new claims, a more reliable indicator of the labor market's recent performance because it smoothes out the volatile weekly figures, fell by 4,000 last week to 414,000.

COMMENT:   The election is barely more than a year away.  If this economy doesn't turn around, it could sink Obama...unless the Republicans do their usual loser thing.  Indeed, if the economy remains this bad, and Obama wins despite it, it would be one of the stunning political miracles of modern American politics.  Don't you sometimes wish that Reagan had been cloned?

October 6, 2011       Permalink

SNIPPET OF THE DAY – AT 8:18 A.M. ET: 

From Bloomberg:  Billionaire investor George Soros lost a challenge to his 2002 insider trading conviction, with the European Court of Human Rights saying French market regulations were clear enough to hold him responsible.  France didn’t violate Soros’s rights in punishing him criminally for trading on inside information about Societe Generale SA in spite of the market regulator’s conclusion that its rules were unclear, the Strasbourg, France-based court said. 

Hmm.  When is the last time you read that George Soros, financial darling of the left, was criminally convicted?  Why, isn't he just a wonderful philanthropist?  At heart a man of the people?  Uh, not quite.  He has a strange and controversial past, and stranger political views.  But he backs causes that are popular with the media elite, so what do minor court convictions mean, right?

TRUE CULTURAL CHANGE – AT 7:51 A.M. ET:  "Cultural change" is a cliché.  But when it actually happens, it can happen rapidly, and be stunning.  The coming of rock 'n roll in the 50s, the collapse of golden-age Hollywood in the 60s, "live-together-before-marriage" phenomenon that has become commonplace.  Those were cultural changes.

We are seeing one now.  Have you ever witnessed the outpouring on the death of a corporate executive that we're seeing with Steve Jobs?  There truly is the belief that he changed the world.  It may be part myth, part truth, but the belief is there.  And there is true emotion in the reaction.  It is reported that in China, people went to the few Apple Stores there and wept.  In our country, even the White House issued a statement marking Jobs's passing.

Outside of the deaths of presidents, I've not seen such a spontaneous reaction in years.  Not even major entertainers have gotten this kind of press.  Indeed, the last time I truly saw something like this was the reaction to the death of Babe Ruth. 

It was part of Jobs's genius that he gave us a personal relationship with machines.  The same might be said of some auto executives, but no one man ever defined cars the way Jobs defined computers. 

The death of Steve Jobs is the first major passing of a key figure of the digital age.   The reaction shows just how much that age has changed us.

October 6, 2011       Permalink

POST-CHRISTIE, POST-PALIN – AT 7:32 A.M. ET:  It appears the Republican field is set, unless a truly dark horse suddenly announces a run.  Yes, Rudy Giuliani is still undecided, and in fact polls reasonably well, but his Hamlet routine is wearing thin, and his exploits on 9/11 a distant memory.  We detect no great "wanting" of Rudy.

So who benefits?

With Christie out, Romney won a string of endorsements yesterday, but mostly from political insiders, not major names.  There is a consensus growing that he will eventually be the Republican nominee.  He has fended off a challenge from Rick Perry, whose impressive fundraising in the last quarter is not matched by public support.  Romney may face a surprise competitor in Herman Cain, who's become remarkably popular in the Republican Party, but Cain has not been fully vetted, and doesn't really have a presidential campaign organization.

Romney, though, has a huge deficit, one that he'll carry with him even if he is the nominee:  He attracts plenty of "like," but little love.  In 2008 there was the "Obama girl" singing the praises of The One in a popular song.  I doubt if we'll see "the Romney girl."  The Romney accountant maybe, but not the Romney girl.

So, can Romney defeat Obama?  He is not the "scary" candidate the Democrats hoped for, and, just as he doesn't elicit much love, he doesn't draw much hate either.  He is in fact the only Republican candidate who leads Obama in several polls, but only by several points.  I would say, based on what I've seen, that he has an uphill battle for these reasons:

1) He's run for president for years, and still hasn't built a head of steam.  People know him, and we hear one hand clapping.

2) Despite his weakness, Obama still has passionate core supporters, if only for ethnic reasons.  And his support is in areas where political machines know how to get people to the polls.

3) Much of the media will work for Obama, as it did in 2008.

4) There will be a reluctance, and it will be plainly stated, to turn out the nation's first black president.  Watch how this issue is played.

5) If street demonstrations against "Wall Street" grow, and we expect them to, many voters may fear defeating Obama, believing violence against a conservative president is much more likely than against Obama. 

Obviously, conditions can change.  Right now, Romney faces a greater struggle than would a GOP candidate who electrifies his party.

October 6, 2011     Permalink

OCTOBER 5,  2011

SHORT TAKES ON THE DRIFTING WRECKAGE – AT 10:53 P.M. ET:

RUBIO PASSES ON VP SLOT – Senator Marco Rubio of Florida, who has firmly said he will not run for president in 2012, now says, with equal firmness, that he does not want the second spot on the Republican ticket and will turn it down if offered.  When asked if he would accept, he replied "The answer is gonna be no."  Rubio, who we believe should run for president because he arouses such voter excitement, says he wants to stay in the Senate.  He is only 40, and, biology permitting, has a very long career ahead of him.

UNIONS JOIN PROTEST MOVEMENT – Labor unions are joining the movement that began with the "Occupy Wall Street" demonstrations in New York.  The protests are spreading, and we urge readers not to underestimate them.  While a number of the protesters are no doubt flakes and goofballs, and a good chunk are the usual Marxists, the movement is reflecting some of the very real anger that many Americans feel toward Wall Street and corporate executives.  I have no doubt that this movement will grow, whether responsibly or not, and will be a factor at next year's national political conventions.  Remember – these characters may have no good ideas for change, but they will have the support of much of the trendy media.  The media that tried to find racism in the Tea Party movement finds only romance in left-wing activism. 

AMATEURISM – We also cheer Herman Cain and his rise in the ranks of Republican presidential candidates.  But Cain is an amateur, and it showed today in this foolish comment about the demonstrations on Wall Street:  "Don't blame Wall Street, don't blame the big banks, if you don't have a job and you're not rich, blame yourself."  That's the kind of thing you just don't say.  Yes, there are loafers out there.  But there are millions of Americans out of work through no fault of their own, and a comment like that is hurtful and untrue.  If Cain gets on the national ticket in either position, that quote will be a sound bite.  It is very similar to something Herbert Hoover once said, and you know what happened to him.  Be careful, Herman.  There are good people hurting out there.

PATHETIC – We beat the Russians in the space race, and we beat them in the Cold War.  Now, NASA is requiring all new astronauts to learn Russian because we are dependent on the Russians to get into space, since we've retired our shuttles with nothing immediately available to replace them.  "When China can reach the moon and we cannot, I don't see why any other nation would regard us as a world leader," former NASA administrator Mike Griffin said recently.   Thanks, President Obama.  Thanks loads.  On your watch America is becoming a second-rate power.  I'm sure the coffee-house intellectuals around you are cheering.

October 5, 2011       Permalink

PASSING OF A GIANT – AT 9:30 P.M. ET:  We don't normally do obituaries here, but the passing of Steve Jobs, at 56, deserves special mention.  He was one of the great visionaries of our time.  As some have said of him this evening, he knew what we wanted before we did.  As the man who, with a superb team, built Apple into what it is today, he was one of the major guiding forces in the development of the computer industry, and he changed the music industry with the iPod and the whole concept of the telephone with the iPhone.

Jobs, with Steve Wozniak, founded Apple in the 1970s.  He was later thrown out of his own company by "businessmen" who had no understanding of what innovation and vision were all about.  He later returned in triumph, guided the iMac, the iPod, the iPhone and the iPad to the market.  A company that was almost bankrupt in the early 1990s, written off as a failure, is now one of the two most valuable companies in America, the other being Exxon-Mobil. 

Urgent Agenda is run on Apple Macintosh computers, using the newest Lion operating system.  We get on the internet through an Apple Airport Extreme wireless base station.  Everything you read is backed up, not only in our office, but at Apple's servers through its remote backup system, soon to be absorbed into something called "the cloud."  I visit our local Apple Store regularly for inspiration, to play with those great gadgets, and to get the kind of tech support no one else in this outsourced economy gives.  (Yes, yes, I know, not all Apple Stores are wonderful, but we have a great one here.)  The Apple Store concept itself was developed on Steve Jobs's watch.  Other companies tried the same thing and failed because they lacked two things that marked Jobs's tenure as CEO – design and style.  Apple came to define "cool" in the best sense of that word.

It is sad to think that Steve Jobs died at only 56.  But he packed vast accomplishment into that short life.

October 5, 2011     Permalink 

BULLETIN - AT 6:32 P.M. ET:  Sarah Palin has just announced that she will not be a candidate for president. 

SNIPPET OF THE DAY – AT 9:14 A.M. ET: 

ATLANTA (AP) -- Drunken driving incidents have fallen 30 percent in the last five years, and last year were at their lowest mark in nearly two decades, according to a new federal report.  The decline may be due to the down economy: Other research suggests people are still drinking as heavily as in years past, so some may just be finding cheaper ways of imbibing than by going to bars, night clubs and restaurants.  "One possibility is that people are drinking at home more and driving less after drinking," said Dr. Thomas Frieden, director of the Centers for Disease Control and Prevention.

Or, of course, Al Gore could come along and say that people are drinking less because it's too hot to drink.  You've noticed that, haven't you?

GETTING IT RIGHT – AT 8:41 A.M. ET:  We are in economic hard times, and most of the stories we hear are probably accurate, and often heartbreaking. 

But this is also a time when propagandists try to slip in their agendas, and their views of society, no matter how corrupt and uninformed those views may be.  Because of the pain out there, they might be taken more seriously than they should be.

The great Tom Sowell, one of the finest commentators writing today, destroys one of the myths being circulated:

Twenty years ago, hysteria swept through the media over "hunger in America."

Dan Rather opened a "CBS Evening News" broadcast in 1991 declaring, "One in eight American children is going hungry tonight." Newsweek, the Associated Press and the Boston Globe repeated this statistic, and many others joined the media chorus, with or without that unsubstantiated statistic.

When the Centers for Disease Control and the Department of Agriculture examined people from a variety of income levels, however, they found no evidence of malnutrition among those in the lowest income brackets. Nor was there any significant difference in the intake of vitamins, minerals and other nutrients from one income level to another.

That should have been the end of that hysteria. But the same "hunger in America" theme reappeared years later, when Sen. John Edwards was running for vice president. And others have resurrected that same claim, right up to the present day.

And...

Those who see social problems as requiring high-minded people like themselves to come down from their Olympian heights to impose their superior wisdom on the rest of us, down in the valley, are behind such things as the hunger hoax, which is part of the larger poverty hoax.

We have now reached the point where the great majority of the people living below the official poverty level have such things as air-conditioning, microwave ovens, either videocassette recorders or DVD players, and own either a car or a truck.

Why are such people called "poor"? Because they meet the arbitrary criteria established by Washington bureaucrats. Depending on what criteria are used, you can have as much official poverty as you want, regardless of whether it bears any relationship to reality.

Those who believe in an expansive, nanny-state government need a large number of people in "poverty" to justify their programs. They also need a large number of people dependent on government to provide the votes needed to keep the big nanny state going.

Politicians, welfare-state bureaucrats and others have incentives to create or perpetuate hoaxes, whether about poverty in general or hunger in particular.

COMMENT:  Well said.  Yes, there is real pain out there, but general hunger there is not.  The liberal press does a poor job of separating fact from self-serving advocacy when reporting on social conditions in the United States.  It also does a poor job of reporting when social conditions are the result of self-inflicted damage.  It is often culture, not economic status, that dictates social behavior and social pathology. 

We know that many Americans don't get medical care because their cultural group doesn't stress it, even though it's available under a variety of programs.  We know that some Americans do poorly in school, not because the school is bad, but because their culture doesn't stress the value of education.

Tom Sowell is the proverbial breath of fresh air in a media culture that loves headlines about how terrible things are, but refuses to do the digging to determine if the story is true.

October 5, 2011       Permalink

NEW DEBATE FORMAT – AT 8: 17 A.M. ET:  The next Republican debate, on October 11th at Dartmouth College in New Hampshire, should prove fascinating.  The sponsors are chucking the usual format, and devoting the entire debate to the economy.  From the Washington Examiner:

"With the nation facing sustained high unemployment as well as concern over deficits, weak growth and a possible double-dip recession, the Bloomberg/Washington Post debate will devote the entire program to a substantive exploration of the candidates' specific plans for a national economic recovery," says a release from Bloomberg News. The debate will be moderated by public television's Charlie Rose.

And...

The debate, which will be the first face-off in New Hampshire since June, will have a different look from previous sessions as well. "The candidates will outline their economic and job creation proposals in a unique format: seated side-by-side at a round table facing the hosts and surrounded by audience members," a Bloomberg news release says. "This format will facilitate serious and substantive debate on issues of vital importance to the country."

As the article points out, some of the most newsmaking moments in previous debates have not involved the economy, such as Rick Perry's comments on immigration.  But the new format, I think, is good.  There are already too many candidates on the platform.  Add to that a whole variety of subjects and the debate becomes confusing, and runs out of steam after 45 minutes.  This format should seriously test the candidates by giving each one far more time to address the economy than in previous outings.

The coming debates, though, must thin out the herd.  The most you can handle for a truly good debate is three or four participants.  Getting it down to two is even better. 

The new format does provide a means for Rick Perry, who's been falling rapidly, to get back into the game.  The main argument he's given for his election is that he's brought jobs to Texas.  He gets the chance to expand on that theme Tuesday.  The format also, of course, helps Mitt Romney, who really is a whiz at discussing economic subjects.  And, indeed, watching Herman Cain will be fascinating, since his entire background is in business.  It could be a breakthrough moment for Cain if, with his refreshing delivery, he proves himself to have more common sense and straight talk than the other guys.

Mark Tuesday night to watch.

October 5, 2011       Permalink

SARAH THE INDEPENDENT? – AT 8:12 A.M. ET:  The article in The Hill is speculative, but it's the kind of thinking that will probably set off a lot of discussion in the media.  Can Sarah Palin, not terribly popular in her own party these days, run as an independent?

The question itself reminds us of 1992, when a Ross Perot candidacy probably cost George H.W. Bush reelection.  Will Sarah do it?  The party doesn't love her much, and the feeling is reciprocal:

The consequences for both her and the presidential race couldn’t be more profound, and there are a number of reasons why this could be a very real possibility.

The deadline for entering primaries in many states is rapidly approaching, and yet a rapid decision from Palin doesn’t seem to be on the horizon, despite past words to the contrary.

And...

Palin has held the GOP establishment in contempt since 2008. During the 2010 elections, she regularly railed against the “GOP machine” and “good old boys,” and both she and her supporters have accused the party of trying to muzzle Palin. In fact, Palin’s embrace of the Tea Party movement has regularly been coupled with attacks on the Republican Party, and she’s often keen to note that her spirit and principles are conservative, not Republican.

In short, Palin doesn’t claim loyalty to the GOP, and in fact loathes the party establishment. There’d be no greater blow she could strike to the GOP elite than to run as an independent and siphon off votes from the Republican nominee. Party bigwigs would either fawn over her, trying to coax her out of the race, or attack her mercilessly as they try to discredit her among conservative-minded voters. Either way, Palin would once again be the center of attention.

That makes a great deal of sense...if Palin wants to permanently separate herself from the GOP.  She would never be welcomed back if she cost the party the presidency.

Imagine that the independent candidate is Sarah Palin. The equation would be explosive — a political figure who’s provoked endless fascination with a phenomenon that’s rarely seen.

But would Palin actually draw that many votes?

Dartmouth Professor Brendan Nyhan, a best-selling media critic, said the prospect would raise overwhelming flash — if not overwhelming results at the ballot box.

“It would be a spectacle,” Nyhan said, “but I don’t think she’d be taken nearly as seriously by the press as a centrist third-party candidate like Perot would be. Perot actually briefly led in the polls, whereas she has negative ratings well over 50 percent and would be lucky to get double digits.”

COMMENT:  That could be true, but 10% would make her a pretty effective spoiler.  And, you never know, with Romney not generating much gut enthusiasm, many conservatives might choose a protest vote over a real vote. 

My guess is that Sarah, despite her love of attention, will stay out of it, figuring that all she could do is spoil, and, as with Perot, it would end her political career.  She's young, and might well have her sights on rebuilding her image and running in the future. 

October 5, 2011       Permalink

WHAT HAPPENS AFTER THAT? – AT 7:51 A.M. ET:  The European debt crisis continues.  There is growing concern, expressed by analysts across the internet, that we're only at the beginning, and that a convulsion is coming that could deeply affect the United States, and possibly the 2012 presidential election.  The operative name is "Greece."  From CNN:

NEW YORK (CNNMoney) -- It was once unthinkable but is now widely expected: Greece is headed toward default.

Not if -- but when.

"A default is likely," said Wolfango Piccoli, director of the London office of the Eurasia Group. "At this stage, the question is about the timing."

The timing is important because European authorities are scrambling to build a "firewall" that will protect banks and other euro area nations from the fallout of a Greek default.

The first step is to overhaul an existing bailout fund for Europe, which is expected to be officially approved by all 17 eurozone nations by the end of October.

The goal, analysts say, is to create conditions for Greece to default in an organized way, rather than an abrupt collapse that could cause chaos in global financial markets.

And...

The threat of a banking crisis is one of the main reasons why euro area politicians have pledged to do whatever it takes to prevent a Greek default.

In addition, officials in Europe are afraid a messy default would lead to a so-called debt contagion that would undermine larger economies such as Italy.

Euro area governments are expected to unanimously approve a proposed expansion of the European Financial Stability Facility by the end of October. The revamped bailout fund will have greater flexibility to intervene in sovereign debt markets and provide financing for troubled banks.

COMMENT:  The psychology of a default could be even more significant than the numbers involved.  If followed by extreme danger for other European economies, like Spain or Italy, it could trigger worldwide changes in markets that could hurry a double-dip recession in the United States, with consequences for the American election.

The psychological mood building is that there is trouble ahead around the world.  This is not the psychology of investment and growth, but the psychology of stuffing money under the mattress.  Answers, Mr. President?

October 5, 2011     Permalink