Tag Archives: Euro

I LOVE PARIS IN THE SPRING TIME

The second round of the French presidential election takes place on Sunday.   Polls (!) show that the centrist candidate, Emmanuel Macron, is leading with 62% of the vote.   Madame Marine LePen, of the National Front, is not doing so well.   Reports say that she is already looking to what is often called “the third round of the presidential election,” voting for the Legislative Assembly, in June.   She has the potential to lead the opposition to Macron, who has no party support.   A future crisis (financial or terrorism), could lead to a major upheaval that would be to her benefit.

Mrs. LePen’s support comes mainly from rural areas and France’s rust-belt; Mr. Macron has all but 5% of the vote in Paris and the more affluent regions of the country.

The French political system, with three elections in just a few weeks, is rather complicated and, certainly this time, quite suspenseful.   For the first time since the birth of the Fifth Republic in 1958, the major parties are not involved in this second round – their candidates did not garner the necessary support.

It’s not just the political system that is different in France. Mr. Macron, married to his former school-teacher, 25 years older than himself, laughed off an accusation that he has had a gay relationship with a prominent radio personality; but now is issuing frequent denials about an overseas bank account!

In a heated televised debate on Wednesday evening, Madame LePen made the best prediction of the evening.   She said that seven days from now, France will have a female leader – either her or Angela Merkel, Germany’s Chancellor.   Mr. Macron is a committed European, whereas she would like the French people to have a Brexit style referendum on the country’s future membership. Under pressure,   M. Macron is talking about the need for Europe wide reforms, but he would keep France in both the EU and the single currency, the euro.

A victory for Emmanuel Macron would mean the 27 remaining members of the EU will stand together against the United Kingdom in the Brexit negotiations.   A win for Mrs. LePen would actually help London, though no politician in the UK is going to say anything to that effect!

So Sunday’s second round is not just about France, but Europe.   We should know the outcome sometime Sunday evening, Eastern time.

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MORE MIGRANTS COMING

  • Turkey appears determined to flood Europe with migrants either way:  with Europe’s permission by means of visa-free travel, or without Europe’s permission, as retribution for failing to provide visa-free travel.
  • The migrants arriving in Italy are overwhelmingly economic migrants seeking a better life in Europe.   Only a very small number appear to be legitimate asylum seekers or refugees fleeing war zones.
  • The director of the UN office in Geneva, Michael Møller, has warned that Europe must prepare for the arrival of millions more migrants from Africa, Asia and the Middle East.   (Gatestone Institute, 5/5/17).

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DIVORCE EUROPEAN STYLE

Yanis Varoufakis, the former Greek finance minister who negotiated with the EU during the financial crisis a few years ago, is warning the United Kingdom NOT to negotiate with the bureaucratic nightmare known as the European Union.   In effect, Mr. Varoufakis was saying that nobody wins against the undemocratic EU.

Wolfgang Munchau, a German contributor to the London-based Financial Times, is also warning the Brits that they cannot win against Brussels.

The alternative for the UK is simply to leave and face the consequences, what is called a “hard Brexit.”   There are plenty of other countries wanting trade agreements with the UK, so there’s definitely a case for this.   But the British government is hoping for a trade deal with the EU post-Brexit.   They have also re-committed themselves to closer military ties, reaffirming their commitment to Europe.

A hard Brexit could be a better choice.   It would certainly be quicker as Brexit talks will last two years – and that time frame only covers the actual exit, not talks on a new trade pact.

It’s like a divorce – after over 40 years together, the UK and the EU are now talking to divorce lawyers about a divorce settlement.   As with a divorce, the only people who will benefit are the lawyers.   And, as any divorced people know, divorce never ends – the animosity (and the financial costs) just go on and on.

Footnote:   Mr. Varoufakis, who cannot vote in France, has called on people to support M. Macron, in spite of the way he and his country were treated by the EU!

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PRINCE PHILIP TO RETIRE AT 96

Britain’s Prince Philip is retiring after seventy years of public service.   His wife, Queen Elizabeth II, will continue with royal duties, but will no longer be accompanied by her husband.

Shortly after the announcement, the prince was at a function when an older man came up to him and expressed his sorrow that the prince was “standing down” from his responsibilities; the prince consort quipped back that his problem was not standing down, but rather standing up!

In his seventy years of public service, Prince Philip has attended over 25,000 public engagements and made over 600 overseas trips representing the United Kingdom.

He will end his official duties in August, by which time he will be 96 but will still take on a few as he feels up to it.. The Queen turned 91 two weeks ago. It is expected that Princes Charles, William and Harry will take on some of Philip’s commitments.

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INTERESTING QUOTE

( I cannot independently verify the following, but thought that some readers would find it interesting. It’s from a magazine called “Truth in History,” which comes out of Oklahoma.)

“…Bob travels to London quite often on business and from time to time has dinner with a very close friend of his, which is Queen Elizabeth’s personal secretary.   Bob told me that he asked his friend when the Queen was going to turn the throne over to Charles.   He replied, “she does not intend to ever give the scepter to Charles – possibly to William, but her desire is to present her crown, throne and scepter to the Lord Jesus Christ when He returns, whose rightful throne it is. This is her desire.”

Anyone who has read “The Servant Queen and the King She Serves,” published a little over a year ago, will know that the queen is a very religious woman.

“This tribute focuses on the Queen’s own words to draw out the central role of her trust in Jesus Christ in shaping her life and work, offering us an inspiring multi-faceted insight into a life well lived for others.” (Backcover, Google Books)

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DEATH OF OBAMACARE

I have mixed thoughts about the vote yesterday to abolish Obamacare.   The ACA went into effect on April 1st, 2014.   Before you marvel at my memory, I should add that I ended up in the hospital on April 2nd and spent over four months fighting for my life. I had one of those deadly infections that’s killing people all over the world.   I needed two major back surgeries and then fought nausea and vomiting while working my way through all the medications.   They gave up on me twice.

During this time period I was in two different hospitals. The bill from the second one was a million dollars; from the first, it was roughly half that.

Obamacare covered almost all my bills.

If it had not been in place, I would have died.   If I had gotten sick a month earlier, before it came into effect, I would have, likewise, died.

Having said that, I’ve also seen the negative side of Obamacare, of people having to spend a significant part of their income to get coverage, of a bureaucracy that has often failed beneficiaries, of a system that is too expensive to be maintained.

I do believe that the Republicans have made a mistake – they should have come up with another system first, before abolishing what the country already had.

I’ve been in the United States for 27 years, since 1990.   Health care (and how to pay for it) has been at the center of American politics during that time.   Whereas other, less affluent countries, have been able to put a workable system in place in months, the richest country in the world still cannot find a solution to the problem of healthcare.

Apparently, President Trump, who is in New York to meet with Australia’s Prime Minister Turnbull, made a favorable comment to the visiting prime minister about their country’s healthcare system. It’s a single payer system, so the president’s comment is of particular interest.

A possible solution lies in each state working out it’s own system,

But it’s embarrassing that, after decades of talking about it, Washington still has not come up with a sustainable medical system.   Perhaps America could start by looking at the medical systems in Australia, the UK and Canada, our next-door neighbor.   France, too, which the WHO claims has the best system in the world. You would think that one of our TV news programs would take a look at one or two of these other countries.

I might add that if a Conservative government in the UK, the closest equivalent to a Republican administration, abolished the medical system, they would not make it back into power for decades.   The same goes for the French, Canadian and Australian conservatives.

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FAVORITE SCRIPTURE

John Wycliffe (1320-84) was a major figure in what became the Protestant Reformation.

“John Wycliffe was an English scholastic philosopher, theologian, Biblical translator, reformer, and seminary professor at Oxford.   He was an influential dissident within the Roman Catholic priesthood during the 14th century.”  (Wikipedia)

His favorite scripture was Philippians 2:12 – “work out your own salvation with fear and trembling.”   This was heresy to the Roman Church, which dominated the country at the time. Later, the Church had Wycliffe condemned as a “heretic.”   It didn’t bother him – he was already dead and buried. But his bones were exhumed and burnt.

He did not just influence religion.   He also had a profound political effect.   Not long after the birth of the modern parliament in 1265, Wycliffe encouraged people to think for themselves, thereby encouraging democracy, an idea the church did not like at all.

The freedom to think for ourselves is seriously threatened today by universities that won’t allow conservative speakers to address students, citing security concerns.   This is unlikely to be a temporary phenomenon.

Sadly, few remember Wycliffe today.   When I visited Lincoln Cathedral in England some years ago, I asked after the man who served there for some years in the 14th century.   A senior member of the cathedral’s clergy had never heard of him!   I did find a very thin book on him in the bookstore, which I bought.

John Wycliffe (pronounced WICKCliff) is one of the greatest men in our common history, who made a big difference both religiously and politically.

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“BEWARE THE IDES OF MARCH”

One hundred years ago, on this day, March 15th, the “ides of March,” Czar Nicholas II of Russia, under pressure, abdicated, ending the dynasty that had ruled Russia since 1613.   The end result was not the liberal democracy that many hoped for, but, rather, seventy years of communism, a period far worse than anything under the czars. When the czar abdicated, nobody could have foreseen the ultimate outcome. The czar himself brought attention to the fact that the day was the “ides of March,” the day Julius Caesar was assassinated, changing the course of Roman history, ending the Roman Republic, replacing it with the Roman Empire.   The term became popular through Shakespeare’s famous play, “Julius Cesar.”

Today, March 15th, The Netherlands is voting for a new government. It’s the first time ever that Holland has received this much media attention.   Once again, an uncertain future awaits the country and the European Union; that is, if Geert Wilder’s ‘Party for Freedom’ makes significant gains and goes on to form a government.   Mr. Wilders has been labeled Holland’s Donald Trump.   He’s a populist, who wants to restore his country to what it was, ending the multiculturalism that has fundamentally changed the country.   In addition, he wants to leave the EU.   He also wants to ban the Koran and Islamic schools and has called for the closure of all mosques; and end the wearing of burqas and hijabs, requiring people to wear western style clothing.

The election result is likely to have a profound effect on France and Germany who hold elections later this year.   If a populist government comes to power in the Netherlands, then, maybe populism will see gains in the two biggest European countries, France and Germany.   This could make 2017 as significant a year as 1989 and 1848 in European history.   Change is in the air.   But, as with Russia a century ago, the future of change is unpredictable.   Sweeping populism may sweep away the European Union, but what will replace it?   Will liberal social democracy be replaced by more nationalistic forms of government?   Could a swing to the right in the Netherlands lead to similar swings elsewhere on the continent?   The European Union, which turns 60 in ten days, may have to go back to the drawing board.

It’s not just the election that is making news in Holland.   For over four centuries the Dutch, once a great maritime power, have had a peace treaty with Turkey.   But now, the two NATO members are going through a verbal conflict that could easily get out of hand.   The basic problem is immigration.   Millions of Turks live in Holland, Germany and other EU countries.   The Turkish president wants to send members of his government to speak to these Turkish citizens, so that they will vote for Mr, Erdogan in a referendum that will grant the president more powers.   Naturally, Holland does not want the Turkish election to be conducted in Holland.   Allowing Ankara to do so would expose the lie that Muslims are assimilated and are, in fact, Dutch.   They are not, identifying primarily with their own religion and culture, not with that of the host country.

A Turkish government minister was not allowed to address a rally in Holland.   Consequently, relations have been negatively affected.

The Netherlands isn’t the only European country that’s hitting the headlines internationally.   The United Kingdom is also in the news.

It’s taken nine months for the groundwork to be laid for Britain to activate Article 50 and apply to leave the European Union.   It’s been a rocky road, with members of Britain’s ruling elite doing everything possible to undermine the will of the people, expressed in June’s Brexit vote.    The unelected House of Lords was the final hurdle.

As if invoking Article 50 is not difficult enough, Nicola Sturgeon, leader of the Scottish National Party picked the same time to demand another referendum.

This time, she believes the Scots will vote to leave the United Kingdom as the majority of Scots voted to remain in the European Union.

In effect, what Ms. Sturgeon wants is to replace English domination with German domination.   Ignorant of history (except possibly watching “Braveheart” over and over again!), Ms. Sturgeon has no problem replacing London with Berlin.

When the UK completes its negotiations with the EU settling Brexit terms, Ms. Sturgeon’s Scotland will have to act quickly and apply to use the euro.  It will also need massive amounts of aid as Scotland has needed English financial support ever since it voted to join the union with England, over three centuries ago.

Scottish loyalists will have to get used to shopping with a new currency  – and won’t even be able to stay home and watch the BBC!

 

 

BORIS JOHNSON MAKES BREXIT MORE LIKELY

Boris Johnson

Donald Trump has a new rival, a fellow New Yorker no less.  Like Mr. Trump, the newcomer is causing just as much turmoil in political circles. He can even rival The Donald with his famous hair.

Boris Johnson (born 19 June, 1964, in New York) is a British politician, popular historian and journalist who has served as Mayor of London since 2008 and as Member of Parliament (MP) for Uxbridge and South Ruislip since 2015.  Mr. Johnson is a popular figure in British politics.

Mr. Johnson attended the same exclusive private school that Prime Minister David Cameron attended.  Later they both attended Oxford University at the same time.  They are two members of Britain’s elite and have been best friends for decades.  That could change now.

While Mr. Cameron is fighting to keep Britain in the European Union (EU), Boris Johnson on Sunday declared himself opposed.  Mr. Johnson will support the “Leave” campaign.  He is in favor of a Brexit, a British exit from the organization.

As the Wall Street Journal put it:  “Mr. Johnson is the most prominent politician to break with the prime minister ahead of the June 23 referendum.”

It should be noted that if the vote goes against Mr. Cameron, he will likely face a “No Confidence” vote in parliament.  If he loses, Mr. Johnson could be his replacement as prime minister.  Unlike Americans, the Brits don’t have laws precluding those born overseas from holding office.  Besides, Mr. Johnson’s parents were both upper middle class English.   Mr. Johnson recently wrote a biography of fellow Conservative Winston Churchill, a predecessor who also had definite American connections.   (His book, “The Churchill Factor” is well worth reading.)

If this sounds awfully like the 1930’s all over again, there are definite similarities, though nobody is threatening violence this time, not right now anyway.

The pro-European faction in parliament is led by Mr. Cameron.  He returned from Brussels late on Friday, promising the equivalent of Neville Chamberlain’s “peace in our time.”   The prime minister announced that agreement had been reached with EU leaders that will serve Britain well.  Consequently, Mr. Cameron will recommend Britain remain a member of the European club.

It came as a surprise on Sunday when Boris Johnson came out publicly against continued membership.  Like Mr. Churchill in 1938 he is concerned to protect Britain’s sovereignty in light of European developments toward a trans-national super-state.  This time it’s not Berlin that concerns him so much as Brussels, the capital of the EU.   But Berlin is a factor as the European project is dominated by Germany.

The European Union began with the 1957 Treaty of Rome, which pledges member countries to form “an ever closer union.”   This does not mean a United States of Europe along USA lines. This could never happen, as the dynamics are very different.   What is far more likely to emerge is something akin to the Holy Roman Empire, which lasted for a thousand years until it was broken up by Napoleon in 1806.

Dictionary.com defines the Holy Roman Empire as follows:

“a Germanic empire located chiefly in central Europe that began with the coronation of Charlemagne as Roman emperor in AD 800 . . . and ended with the renunciation of the Roman imperial title by Francis II in 1806, and was regarded theoretically as the continuation of the Western Empire and as the temporal form of a universal dominion whose spiritual head was the pope.”

The EU has been working toward something similar since its inception almost six decades ago.   It’s already the world’s biggest single market and trading power.   The common currency called the euro rivals the US dollar as a global currency.     Politically it’s more united than ever and there is some progress toward a European military.

For Britain, all this is bad news.  Not even the pro-EU politicians want the UK to be a part of a European super-state.  They want to keep their independence or, rather, what’s left of it.  They want to stay out of the euro and do not want to go any further toward an “ever closer union” or join a European military force.  Mr. Cameron received assurances from the other 27 members of the EU that Britain can stay out of all three.  He was also given some relief on the financial costs to British tax-payers having to pay benefits to EU migrants from the East, but only for seven years.

But anti-EU politicians and members of the public are still insecure about the future.

It’s not surprising really when you consider Britain’s history.  For centuries Britain looked beyond the seas to its colonies and, later, the Commonwealth and the United States, remaining outside of Europe, only getting involved when threatened by a Napoleon, the Kaiser or Hitler.

In 1962, former US Secretary of State, Dean Acheson, observed that: “Britain has lost an empire and not yet found a role.” In the same year, US President John Kennedy expressed his support for Britain joining what was then called the Common Market.  Canada’s Prime Minister, John Diefenbaker, was very much against Britain joining, expressing his concern that it could mean the end of the Commonwealth of which Canada was a founding member.

America wanted Britain “in” so as to have a reliable pro-American voice in the European club.  The US also wanted free trade to boost American exports to Europe.

If the United Kingdom votes to leave the EU, there will likely be far greater repercussions than can presently be seen.  These will not just be economic.  44% of Britain’s exports go to other EU nations – a “no” vote could jeopardize these exports as tariffs exist on imports from non-member countries.

Other repercussions could include the following:

  1. The EU could be less co-operative with the USA.
  1. A British exit from the EU could encourage a Scottish exit from the UK, as it seems most Scots want to stay in the EU.
  1. Ireland would be negatively affected, with 40% of its imports coming from the UK and 17% of its exports going to Britain.
  1. Germany will become more dominant.  Only Britain and France are big enough right now to restrain the central European giant.  Take away Britain and it’s down to France.   France’s priority right now is Islamic terrorism. Germany will be able to go full steam ahead toward its dream of a revived European empire, already referred to by some as the Fourth Reich.  The Holy Roman Empire was the first reich (or empire), that lasted a thousand years; the Kaisers were the second reich; Hitler promised his Third Reich would last a thousand years like the first one, but it only lasted twelve.
  1. There will be a lot of bad feeling if Britain leaves.  Other EU members will not be inclined to bend over backwards to help the Brits through a difficult transition period.   Concessions on trade will be unlikely.  It could also end shared security arrangements at a time when there are increased security risks with Islamic militancy.
  1. International companies operating in Britain could move to other countries.  Many companies have based themselves in the UK to gain advantage in selling goods to other EU countries.  Faced with high tariffs to keep out non-EU goods, they are likely to move elsewhere, leaving greater unemployment in their wake.
  1. There is also a possibility that some other EU members may follow Britain out the door.   Whereas countries at the center of Europe have a long history of strong government from the center, those on the northern periphery have not.  Although some may sympathize with the British position, they may decide it’s not economically feasible to leave as trade with Germany and other nations is too great.

Some of the southern members may also opt to leave so that they can print their own money and boost employment.

Bible prophecy shows that a revived European super-state will include ten nations.

“The ten horns which you saw are ten kings who have received no kingdom as yet, but they receive authority for one hour as kings with the beast.  These are of one mind, and they will give their power and authority to the beast.” (Revelation 17:12-13)

However, this does not rule out the possibility of other countries being closely tied to the ten.  This would be very similar to the Holy Roman Empire where some territories were ruled directly from the center, but others were more loosely attached.

Additionally, dozens of countries around the world are tied to the EU through the Lomé Convention, named after the capital of Togo.  The agreement came into being a couple of years after Britain joined the EU.  It tied British former colonies to the European trading system, along with French, Belgian and Portuguese.  The EU is by far the leading world trading power.

It’s surprising then that there’s little interest in the outcome of the British referendum in the American media.  Any mention of the European Union solicits a big yawn.  But the reality is that Boris Johnson may out-Trump Donald Trump in the upheaval he may cause across the pond!

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TRAGEDY IN KALAMAZOO

Kalamazoo is a big city that’s only an hour’s drive from where we live.  Saturday night it fell victim to the latest American mass shooting, when a 45-year-old Uber driver shot dead six people and seriously injured two others.  In between killing people, he picked up and drove passengers to their destinations.

The lack of motive is disturbing.  So is the following paragraph from the BBC’s website:

“One of the seriously injured, a 14-year-old girl, was believed to have been dead for more than an hour when she squeezed her mother’s hand as doctors were preparing to harvest her organs, police officer Dale Hinz told Michigan Live.”

 

 

FINANCIAL CHAOS AROUND THE WORLD

Euro crisis

Wednesday was quite a day on financial markets around the globe.

China’s stock market continued to lose considerable value, down about a third in three weeks.   Uncertainty over the future of Greece within the euro rocked European stock exchanges. And a technical glitch caused problems on the New York Stork Exchange, the world’s biggest.

The latter was resolved before the closing bell.   Greece should be resolved by the weekend.   China, the number two economic power, poses the greatest threat to the world’s economy.   There are increasing fears that the Chinese stock markets are one big giant ponzi scheme, with nothing tangible to support them.

Late Thursday Greece handed over proposals to its European partners that will, hopefully, end the crisis affecting the beleaguered country.

Greece was a member of the euro from the very beginning, using the new European banknotes and coinage from day one on January 1st, 2002.   Today, the euro is used by nineteen European countries. Euro notes are used daily by more people than the US dollar.  The two currencies are the two most important currencies in the world and are used as payment for most international trading.

When Greece joined the euro, it was suddenly able to borrow vast amounts of money, which it did. It was not all used wisely.   Following the crash of 2008, the country soon found itself unable to repay its loans. The dream currency had become a nightmare for the Greek people. Austerity was forced on the country by European bankers, making life very difficult for the average citizen.   Austerity led the country into a downward spiral, which has recently been speeding up.

In January, the left-wing Syriza party won the election, promising an end to austerity.    However, European bankers, anxious to get their money back, want to impose greater austerity as a condition for offering Greece more help.   Without help, Greece will not be able to stay in the euro.

Without a doubt, Greek governments have been reckless.   Government employees can retire at 48 on generous pensions. Corruption is rife, as also is tax avoidance.

Germany is owed 68 billion euros by Greece, France 65 billion (add 10% to get the US dollar equivalent).   Other countries have loaned lesser amounts.   Total Greek debt amounts to 323 billion euros.   Greece is asking for a further bailout of 53.5 billion.

Although there is much talk of the Greek crisis, in a sense this is not about Greece, so much as Germany.   Germany’s conservative government is taking a hard line, refusing to cancel debt or extend further loans.   The Germans want their money back, on time.   Germany’s stance is setting a precedent that will no doubt be repeated if any other country in the eurozone gets into trouble.   Many have pointed out that when Germany was suffering economically after World War II, European finance ministers, including the Greek finance minister, generously cut Germany’s debt by 50%.   If Germany would reciprocate now, Greece would be fine.

The Greek people voted in a referendum a few days ago, rejecting the austerity demands placed on them by Germany and others. However, they still want to remain in the eurozone, which is an apparent contradiction.   If they leave the eurozone, they could restore their former currency, the drachma, but this would cut them off from many of the benefits of the eurozone.   Business loans and mortgages in euros would have to be paid back in ever depreciating drachmas, leading to many foreclosures.  Importers would have to pay upfront in euros, which may be hard to get if Greece leaves the eurozone.

Nobody wants a “Grexit” (a Greek exit from the euro), but it may not be possible to avoid it if the Greeks are unwilling to make the necessary structural changes to keep them in the euro.

This crisis is not the only crisis facing Europe at this time.   The continent is having to work through a number of challenges all at once.

The migrant crisis is the second biggest issue confronting the European Union.   So many people are fleeing from the Middle East and Africa into Europe that social cohesion is becoming a serious issue.   One consequence of this massive movement of people is the rise of right-wing parties opposed to immigration.

Ukraine is a third challenge for Europe.   Russia’s invasion of parts of Ukraine threatens the peace of Europe.

The possibility of Britain leaving the EU comes in at number four.

There’s even a fifth challenge, and that’s the relationship between European countries and the United States.   France and Germany are both upset over the American NSA spying on them and their leaders, even though it’s quite likely they are doing the same to America.

Depending on how each of these issues is resolved, Europe could be very different in the near future.

SYRIZA WINS GREEK ELECTION

Alexis Tsipras

In the last few weeks we’ve developed a taste for Kerrygold butter, which comes from Ireland.   Diane did the research – Kerrygold and Anchor (from New Zealand) are the two healthiest butters you can buy.   The milk comes from “happy” cows!

Unfortunately, Kerrygold costs more than regular butter.

In theory, the price should have come down recently as the euro has fallen in value against the US dollar.   It now takes only $1.11 to buy a euro; it was twenty-five cents higher fairly recently.   Ireland uses the euro, so the price of everything they produce should have come down with the lower value of the euro.   But the price of Kerrygold has not fallen – in fact, it’s gone up by 50 cents for half a pound.   (We can’t buy Anchor in Lansing but it, too, should have fallen in price as the US dollar has risen.)   Not only has the euro decreased in value, transportation costs have also fallen with the drop in the price of oil.

My favorite beer also comes from Ireland.   I don’t buy it as often as butter (you will be pleased to know) but I’m hoping that the price has not similarly risen.

Sometimes, there’s no logic when it comes to money and exchange rates.   All money today is built simply on confidence.   The value of the dollar and the British pound usually rise when there is great turmoil in the world – people around the world have more confidence in the two older democracies, which have a longer record of stability.   When the euro was launched in January 1999, its’ value was $1.1743. It reached its highest rate against the dollar in July, 2008, when it took $1.6038 to buy a euro.   This was at a time when confidence in the US currency was low.   It’s now almost a third less against the greenback.

Monday will likely see a further fall in the value of the euro, so perhaps I should expect Kerrygold to go up in price again, when it should, in fact, come down.

The reason that the euro will likely drop further in value is the Greek election held today, Sunday.   The “very left-wing” party, Syriza, has been voted into power.   The party campaigned on a promise to end austerity, imposed on the country for its extreme profligacy.

The party leader, Alexis Tsipras, rather naively hopes that he can cut Greece’s debts by 50% in a new deal with the troika (the European Central Bank, the European Union and the International Monetary Fund).   If that fails, withdrawal from the eurozone is a definite possibility.   Other members may even encourage Greece to leave before they do greater harm to the single currency.   Withdrawal would enable Greece to have its own currency.   They could then print money and print more money and then even more money . . . you get the picture.   This would not, of course, solve their problems but it might give them a temporary high.

Spain is watching developments in Greece closely.   The Spanish economy is a lot bigger than Greece’s.   It has also been going through a long period of austerity for the same reasons as Greece.   The Podemos (“We can”) party is Spain’s equivalent of Syriza.   It, too, could win the next election, due later this year.

Germany is unlikely to approve any deal for Greece that absolves them of debts owed to German taxpayers lest Spain make the same demand.

The eurozone is not really in danger, though Greece and Spain could certainly withdraw from the currency union.   Other profligate countries could follow – Italy and Portugal, for example.   Corruption is a big problem in all four countries.   Mr. Tsipras has promised to do something about it, as have other earlier prime ministers.

Nineteen countries are now members of the eurozone.   Six other European countries also use the currency.   Outside of Europe, remaining overseas territories of European countries also use it. Additionally, 210 million people worldwide use currencies pegged to the euro, including 182 million Africans.   This makes the euro the most used hard (convertible) currency in the world.

Expect further turmoil in world financial markets as well as possible changes in the composition of the EU, though few on the continent of Europe seem to want that, at this point in time.   The EU and the euro have brought many advantages and have a great deal of support.   Even Mr. Tsipras is calling first for changes that will simply end the long period of austerity that has devastated his country.

 

INTERNATIONAL NEWS DESK

syriza

Syriza was described on the BBC World Service this morning as a “very left-wing party.”   It looks as if it will come to power in Greece this Sunday, January 25th.

The big issue, as is common in western democracies, is the economy.   In the case of Greece, this means austerity, which, in turn, means the euro.

In May, 2010, faced with imminent national bankruptcy, the European Central Bank, the European Union and the International Monetary Fund (the so called troika) bailed out the small Mediterranean country, while imposing strict austerity on the Greeks.   Austerity measures were increased in 2011 resulting in very high unemployment, especially amongst the young.   The measures were extremely unpopular.   Much of the blame was given to the euro, Germany and Angela Merkel.

Today, Syriza is threatening to unilaterally halve the debt, to end Greece’s national “humiliation” and if necessary, to leave the euro. Angela Merkel has indicated she is ok with a Grexit, the term being used for a Greek exit.

One concern is that, if one country withdraws, others will follow.   The eurozone could unravel.   Although not a member of the eurozone, Great Britain could pull out of the EU, which, again, might influence others.

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King Abdullah of Saudi Arabia died yesterday, automatically succeeded by his half-brother King Salman.   Little change is likely in the kingdom in the immediate future.   The two kings come from a total of 45 brothers and half-brothers.   However, King Salman, aged 79, is likely the last of the present generation.

King Abdullah’s passing is ill-timed.   He has been king since 2005 and before that was de facto monarch for ten years as the previous king had suffered a serious stroke.   So, for twenty years, he has been the most powerful man in Saudi Arabia and a major figure in the Middle East.   His knowledge and experience will be sorely missed.

This is a challenging time for the Arabian peninsula, home of Al-Qaeda in the Arabian Peninsula (AQAP), perpetrators of the Paris terror attack.   Yemen’s pro-American government resigned this week as rebels seized the capital.   At the same time, another neighbor, Oman, will soon lose its leader, the pro-western Sultan Qaboos, who is now 74 and has been suffering from an undisclosed medical condition, which has resulted in him being rarely seen in public.

King Abdullah has been involved in bringing down the price of oil.   If the king had wanted to, he could have reversed the falling price simply by cutting Saudi production, but he didn’t.

He has also played a major role in supporting western efforts at fighting IS (Islamic State) and supporting Sunni rebels against Syria’s leader, who is allied to Saudi Arabia’s enemy, Shia Iran.   It should be noted here that Iran’s leader will attend a memorial for King Abdullah tomorrow.   Under Islamic custom, the king was buried today.

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Tomorrow is the 50th anniversary of the death of Sir Winston Churchill. He died on 24th January 1965.

His official biographer is Sir Martin Gilbert.   Sir Martin spends two months every year at conservative Hillsdale College in Michigan, where he lectures on Churchill.   He has willed his extensive Churchill library to the college.

A few years ago, a student invited me to go with him to one of the lectures.

I asked Sir Martin to sign my copy of his one volume book on Churchill, which he gladly did.   I also took the opportunity to ask him a question:   “If Churchill had never lived, what would have happened in World War Two?”   His response was:   “We wouldn’t have gotten very far.”   His lecture that evening illustrated his point.

That evening’s talk was on the sinking of the French fleet after the fall of France.

Churchill ordered that the fleet should be sunk so that it would not fall into the hands of the Germans.   Hundreds of French naval personnel died in the British attack on the fleet.   The incident remains controversial to this day.   Not only did it deny the Germans the use of the fleet, it had the added side benefit of convincing US President Franklin Roosevelt to back Churchill.    He was now convinced that the British war-time leader would stop at nothing to win the war.

The western world desperately needs a Churchill now.

TERROR ATTACK IN PARIS

BBC News photo
BBC News photo

Europe is the center of attention this week.

In Dresden, an 18,000 strong crowd demonstrated against the Islamization of Europe. PEGIDA (“Patriotic Europeans against the Islamization of the West”) has been staging demonstrations in a number of cities. Counter-demonstrations are also being held by those in support of Muslims. How many of the participants are Muslims themselves has not been revealed.

PEGIDA has been condemned by the German Chancellor and President, along with many other prominent people, but the movement must be a serious worry to the establishment. A backlash against Islam has clearly started and is gaining momentum.

That momentum is likely to build with the terrorist attack in Paris today. Twelve people were killed and as many injured when the offices of the satirical magazine Charlie Hebdo were invaded by two or three gunmen. It’s of particular concern that the gunmen were asking for specific people who they named. The publication has satirized Islam in the past. It has just been revealed that the publication’s editor and two cartoonists were amongst those murdered.

This is a classic example of a clash of civilizations – whereas western countries appreciate satire, Islamists don’t. It remains to be seen what effect this attack will have on freedom of speech. This is the second attack on the publication’s offices – the first was in November 2011. One of the gunmen shouted, “The prophet has been avenged!” – clearly, any publication or writer who speaks out against Islam is in danger!

I wrote a couple of weeks ago about the daily terror attacks that were taking place in France prior to the holidays. France may seem a long way away but the reality is that these attacks could happen anywhere. Ottawa and Sydney suffered terror attacks recently. In the US, one of the Boston Marathon bombers is about to go on trial.

Increasing concerns about the Islamization of Europe will also likely be boosted by a new best-selling novel in France, written by Michel Houellebecq, France’s most famous living writer. The novel’s title is Soumission (Submission), which is the meaning of the word “Islam.”   The book takes a look at France in 2022, not too many years from now, when the country is led by a Muslim who, amongst other things, orders women to stop working (thereby ending unemployment). The novel shows most French collaborating with the new regime, as most did in World War II when the country was invaded by Germany.

Attitudes toward Muslims may also be affected by Europe’s latest economic news. Today, it was revealed that the eurozone has entered a period of deflation, with prices dropping. Partly, this is due to the fall in the price of oil; but it also reflects other factors that show economies going down. There will no doubt be emergency measures taken to stop a deflationary spiral, which is one of the worst things that can happen to an economy. One likely solution to be tried will be quantitative easing, as applied in the US. Otherwise known as printing more money, this practice carries its own risks.

Rising unemployment and economies in disarray will only add to feelings of xenophobia.

Meanwhile, Greece may have a new left-wing government soon, which will increase the likelihood of the country withdrawing from the euro.   The majority of Greeks are angry that the country has gone through a period of severe austerity imposed from outside as the price of staying in the single currency.   The euro can’t be all bad – Lithuania has become the latest country to adopt the currency, which is now used by all three Baltic republics. The three countries, ruled by the Soviet Union before the collapse of communism, are anchoring themselves in the West.

Finally, staying in Europe, Germany’s Angela Merkel is visiting Britain’s David Cameron.   The UK wants to see some changes in the treaties that govern the EU, which Frau Merkel does not want. If those changes are not forthcoming, it’s likely that Britain will pull out of the Union. They will need the German Chancellor’s help whichever way things go, so the visit is timely and comes just before a British general election in May.

It’s going to be an interesting year in Europe, with a serious prospect of big changes.