On the other hand, there are things we do know. We know irresponsible lending by profit-hungry banks to irresponsible socialist governments to fund economically unsustainable economies has put the EU on the brink of the abyss. In America, we know there’s a presidential election next year, and if there’s one thing for certain that would seal the fate of Barack Obama, it would be a severe economic downturn caused by the ripple effect of the EU crisis dragging America down with it. Such a crisis would undoubtedly engender comparisons to the 2008 financial crisis that, as irony would have it, was the primary reason Mr. Obama got elected in the first place. It would also hammer the same stock market that has been the closest thing to a bright spot this administration could credibly point to as a reason to believe any of its economic policies are working.
Yet it should be noted that one of the other drivers of the stock market on Wednesday was China’s decision to cut the reserve ratios of its banks for the first time since 2008. This too makes more cash available for lending. What is telling is that the move represents a complete reversal of its previous policy of tamping down liquidity to keep inflation in check. Now it is worried more about growth. Growth that would be severely hampered if the EU, one of its biggest export customers, experienced a meltdown.
Which brings us to the fundamental question: whose interests are being looked out for here? One of the things we learned back in August, when it was thought that the total amount of secret loans made by the Fed totaled a “measly” $1.2 trillion, was that almost half of the Fed’s top 30 borrowers were European firms. Royal Bank of Scotland, Zurich-based UBS, Belgium-based Dexia SA and France’s Société Générale SA, all got their own chunk of Federal Reserve cash. We also know that the same inflation China was worried about could ramp up with a vengeance in an America, due to currency-debasing programs from low interest rates, to quantitative easing (QE 1 and 2). We also know, or we ought to, that a nation with $15 trillion of its own debt has no business lending money to anyone, much less a European Union which has done nothing to solve its own problems.
For the last three years, the Obama administration, the Feds, and a host of the usual suspects in Congress have told Americans that what is now known to be a $7.7 trillion bank bailout program “saved” the world’s financial system from “systemic failure.” Really? Then why are we right back in the same soup–or worse? And where is Congress, who ought to be making it crystal clear that the United States Federal Reserve has no business bailing out an EU that steadfastly refuses to put its own house in order.
Right now it looks like a damnable truth could be emerging. It’s beginning to look like national sovereignty has become an anachronism, and it’s the New World Order or bust. It’s a damnable truth that must come to the fore in the 2012 election–if we make it that far.
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