Getting Rid Of Gov't Run Schools, Now There's A Thought!

Eliminate Public Schools

The following is a fictionalized scenario of what might result if the public schools were eliminated. At the moment this idea has a near-zero, if not zero, chance of happening, particularly in those states whose constitutions now contain or have been construed to contain provisions enshrining a “positive right” to an education, meaning a positive claim upon the labor and property of others, a claim backed by the left’s stock-in-trade, the coercive force of the state. As resistance to ever-bigger government increases, with a commensurate greater appreciation for individual liberty, state constitutions will be re-examined, perhaps even amended. What follows is not a prediction, only an exploration which in turn may lead to better ideas. Finally, readers should bear in mind that eliminating public schooling is not the elimination of education, but rather the expansion of both freedom and education.“Alright, George Bailey, you’ve got your wish. The public schools were never invented. Now stay calm, and don’t fret about the many strange but freedom-affirming phenomena you’ll encounter as you stroll through a re-invigorated Bedford Falls. Ready.

Freedom for Taxpayers. Property taxpayers would no longer support a system which even its supporters readily admit must be “structurally improved” [Statist-ese for, “Give us more money”]. Anything in constant need of major improvements, not just routine adjustment, which produces uneducated “graduates” year after year (JayWalking anyone?), for decades on end, is irredeemable, netting very poor investment returns for taxpayers despite huge outlays. Since a sizable percentage of local municipal budgets (usually well over 50%, typically with supplemental “help” from state capitols) is dedicated to school funding, the elimination of this line item will give meaningful property tax relief.

Freedom for Municipalities. In the view of some – though at this point in time not nearly enough – all education is intrinsically coupled with morality, religion, and the reason of life itself. Necessarily it cannot then lawfully be a proper function of government if we’re to be serious about individual liberty and separating church and state. Governmental involvement in matters with religious overtones and nuances including differing worldviews conflicts with the Establishment Clause and state constitutional counterparts. Freed of school budgets, cities and towns will confine themselves to matters within their appropriate purview, generally subjects associated with public safety.

Freedom for Parents. Parents, relieved of a portion of their property tax burden, will have greater disposable income with which they may choose a private school appropriate for their child. Including a home school. Today, families wanting alternative schooling for their child/ren pay two tuitions, one to the chosen school directly, another to the municipality to support the public schools.

Freedom for Students. Relief to students who simply do not want to spend time in school for whatever reason (e.g., attitude, disinterest, safety concerns). Relief from One-Size-Fits-All-ism. How these now-emancipated students will choose to spend their newly-acquired time and freedom will be left to them and their parents. For the student willing to learn there will be choices galore as a thousand points of light evolve following the demise of the public schools. Throughout their history Americans have shown themselves to be both generous and ingenious. From scholarships and tuition assistance (remember, property tax relief will enable all citizens to spend their property tax relief as they see fit, not as government sees fit) to an array of different school types, all manner of ideas will come forth on “what to do with all those children.” To believe otherwise is to concede that we have lost our way as well as our senses of freedom and personal responsibility, and that only overseeing superintendent-esque nannies can save us.Repealing the truancy and compulsory attendance laws frees students enabling but also requiring them to become personally responsible for usefully filling their time, simultaneously serving as a sobering means of correcting immature attitudes via a dose of reality. Students and parents will of necessity become discerning consumers of those educational services which they desire. Consider this example. A parent/s believes that comprehensive sex education, including awareness of all different perspectives of human sexuality, is an important educational value and that such information should be taught, at all grade levels, to his/her/their child. These parents will choose, through free association and without compulsion, schools accommodating their expressed wishes. While acknowledging the rights of those parents to choose as they may, other parents might avoid those choices, preferring instead other educational values which for them may include emphasis on math & science, fine arts, building trades, mechanics, religious instruction, and so forth. They too will decide through free association and without compulsion. Open choice aka freedom aka liberty will enable each educational consumer to receive the specific educational values which he/she/they seek/s without the application of governmental force upon others who do not share or want those educational choices

Freedom for Teachers. To those who tsk-tsk the viable idea of doing away with the public schools, they should know that eliminating the public schools will not be the end of education. To the contrary it will encourage genuine learning. In an atmosphere of non-compulsion students who want to learn a chosen curriculum will present themselves before teachers who want to teach. The discipline problems of which teachers complain, including bullying, will largely disappear. Teaching to willing students is a joy unto itself. Having been a teacher in several venues – as seminar instructor on tax law matters to other accounting, tax & legal professionals; as host of numerous client seminars; as a homeschooling parent – I am keenly aware of how fulfilling it is to teach receptive students.

Freedom from Incompetence or Indifference. Every large public school system has its “rubber rooms” (search, “rubber rooms Stossel”) to which incompetent, insubordinate, or dangerous teachers are assigned, at full pay, while their cases for dismissal wend their way through a labyrinth of union contract provisions. Why such rooms? Because in the perverse world of public schools it is next to impossible to get rid of bad teachers. Despite the overriding concern, stated endlessly by politicians, bureaucrats and unions, of how much they all want to “educate the children,” the game is really about protecting government and its employees. Big government types, invariably “led” by Democrats and lapdog teachers’ unions, are the biggest offenders. Bureaucrats and union members have little concern whether children learn or not; their principal worry is their own paycheck. And please, let’s not hear about the m any fine, dedicated teachers, blah, blah, blah. Even if true, these teachers are like students and parents: trapped in the grip of the union–big government vise. The fine intentions of these teachers will never loosen this grip; only an adherence to limited government and a commitment to personal responsibility will do that.

Freedom for the Uninvolved. Elimination corrects an inequity visited upon those who have no current direct stake in the educational system. Why should those who have no school-aged children be burdened with the schooling costs of those who do? If you choose to raise children, your obligations include clothing, sustenance, housing, and education. Before setting out, the cost is to be counted. The decision to start a family was yours, not that of your elderly, childless, or empty-nest neighbors. It doesn’t take a village to raise a family: it takes a responsible mom and a responsible dad. As matters now stand your neighbors, not exercising any influence in your family-raising decision, are sent the bill for educating your children. All sorts of rationales are given for continuing this unfairness. They reduce to one: We benefit when all citizens are educated, or in bumper sticker language, If you think public education is expensive, try ignorance. This sl ogan’s encapsulated arrogance assumes that people are incapable of acting in their own best interests and would forever remain inert until the Nanny State intercedes and affects a rescue, all for their own good you must understand. Who else but leftists sell people for such short money? If those who are inadequately prepared understand that the principal difference between themselves and others who have better prospects, employment, or social standing, is education, common sense says that the former will know what to do.Freedom to Choose. Each of us has different driving wants and needs; we choose cars accordingly, based on factors which include cost, safety, options, color, type (sedans, wagons, SUVs, minivans, pickups, light & heavy duty trucks, et alia). Yet the choice of schooling, also subject to a variety of factors, is far more determinative of an individual’s life direction than the choice of a car whose life span is a matter of mere years. Freedom prevails when parents and students, acting as consumers, make thoughtful choices for their purposes among competing alternatives with funds that would otherwise have been taken from them and wasted on a scheme that has failed for decades. Even leftists endorse educational choice, but only for themselves. When given the chance, leftists never choose the public option. Obama’s daughters go to private schools, as did Chelsea Clinton, as did Ted Kennedy’s kids. If this is leadership by example, then the people too should be able to choose. “Do-as-I-say-not-as-I-do.”What is more, genuine educational choice (without a public option) will defuse, at least in the school setting, many of society’s divisive issues, issues brought into the public schools through raw political power imposed on students, a captive, generally powerless audience. Without forced public schooling there would be no more of the seemingly endless battles on church-state separation and courses on human sexuality. Gone and unmissed will be battles over religious songs and symbols, whether religious days special to a particular faith should be recognized as school holidays, refusals to recite the Pledge of Allegiance, prayers at games or graduations. Mandatory sex education and associated hot-button topics such as abortion counseling, creationism, evolution, environ-ism, and countless other subjects which at best are only marginally tangential to core academic subjects, will be dealt with in a manner agreeable to students and parents since they as consumers will be freely choosing schools compatible with their wishes and expectations in these areas.

Tuition will be reasonable as schools will no longer be forced by law to deal with the selfish demands of public employee unions. Rather than serving the interests of their employees and administrators, schools will compete as every other successful consumer service competes, by placing the customer, here parents and students, not employees, as Priority #1. Sometime in the 1980s I heard Lane Kirkland, a then important union leader, speak at an American Federation of Teachers function. After his prepared remarks he took some questions one of which touched on the declining academic achievements of students. His blunt and forceful answer remains with me to this day. Paraphrased, “When children become union members paying union dues, then I’ll care about children’s education.”Ending educational compulsion will bring freedom and freedom will bring responsibility and accountability. Schools in the post–public school era will be burdened to please their customers, parents and students, if they wish to succeed. Today, failing public schools are neither punished nor eliminated; rather, in the eccentric world that defines the “public domain,” they’re rewarded by being allowed to continue, often with increased funding, in order to “self-correct.” Bailouts may be new to Wall Street & Detroit carmakers, but bailouts have long been a part of failed public school systems.Tomorrow, we’ll discuss the beneficial effects accruing to the American system of federalism, which will naturally flow from the elimination of public schooling.

Bank Runs? Could Happen!

Could Continent-Wide Bank Runs Collapse the Eurozone?

The eurozone’s woes are giving us a preview of what could eventually happen in the United States (but not before Europe is engulfed first). As fears of sovereign debt crisis mount, the debt “contagion” spreads. It is not just Greece that has investors afraid, but Portugal. And Spain… and Italy… and so on.
The problem is classic, and long ago highlighted by Austrian economics. Building up a lot of debt, to make a slightly crass analogy, is like putting on a bunch of weight. It’s hard work getting the debt off – the same as it is taking weight off.
The way to lose weight is to eat right and exercise. The way to get out of debt is to cut back on spending and increase productivity.
But when an economy is already weak and sick, it’s very hard, if not impossible, to cut back on spending easily… just as it’s very hard for an obese person to put in vigorous exercise when they are ill.

This is why IMF “austerity measures” have proven so disastrous in the past. To lose weight (or debt), you need vigorous exercise (or spending cuts). But when you are sick, you need the opposite thing – rest and nourishment. Exercise is no good for a sick man. It only makes him sicker.
And so, asking a country like Greece to clamp down harshly on spending, even as their economy reels, is like asking a heavyset man with mild pneumonia and fluid in his lungs to start running five miles a day. Harsh cutbacks at the wrong time become a recipe for collapse.
This extends back to the central failing of Keynesian economics. Keynesians argue with gusto that government should act as a counterbalance to the free market economy, spending in hard times and saving in good times to keep things balanced.
This sounds reasonable in theory. In the real world, though, the government only gets half the equation right. It never saves in the good times. It only spends, spends, spends.
And so Keynesian economies inevitably find themselves in the most vulnerable position… indebted and sick at the same time.
Spain’s Pain
If you can understand this, you can understand why Europe’s problems are not going away. Investors are beginning to realize, with horror, just how sick the various eurozone countries really are. And that sickness will make it very hard, if not impossible, for these countries to address their looming debt issues without descending into political unrest… or collapsing into economic depression.
Take Spain, for example. Recent reports put Spanish unemployment above 20%. Youth unemployment in Spain is reaching civil unrest levels, with the jobless rate for under-25s above 40%.
What investors must face, now, is the prospect of yawning black holes when it comes to sovereign debt. As former IMF economist Simon Johnson wrote last week,
The nightmare for Europe is not at this point about Greece or Portugal – it is all about Italian and Spanish bond yields… The yields for Spain – for example – are rising because hitherto inattentive investors, who always thought these bonds were nearly as safe as cash, suddenly realize there are reasonable scenarios where those bonds could fall sharply in value or even possibly default.
So now we have a situation where faith in eurozone debt is rapidly crumbling. Investors are losing their taste for holding these bonds – and the fear is contagious.
And here’s where the problem takes a familiar turn. Guess who has the most exposure to potentially toxic eurozone debt?
Once again, it’s the banks.
The banks are at the heart of virtually every big financial crisis, it seems… and they are at the heart of this one too…
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Why France Freaked Out
The following chart from Spiegel shows why French President Nicolas Sarkozy is so desperate to have Greece bailed out.
French banks have massive exposure to Greek debt – more than 75 billion dollars’ worth. As a country, France is the single largest creditor to Greece. (The yellow slice of the pie labeled “andere” means “other,” and includes multiple countries.)

And remember, too, that Greece is just the beginning. Fears are mounting as to the solvency and credibility of all sovereign debt issues. Spain alone – a country whose debt got downgraded by Standard & Poor’s last week – is roughly five times bigger than Greece in GDP terms. And Italy is half again as large versus Spain.
American Banks Too
Nor is this just a problem for Europeans. In terms of sheer size, guess which two banks have more exposure to eurozone sovereign debt than any other? (Hint: Both of them have “Morgan” in their name.)
As Bloomberg recently reported (emphasis mine),
JPMorgan Chase & Co., the second- biggest U.S. bank by assets, has a larger exposure than any of its peers to Portugal, Italy, Ireland, Greece and Spain, according to Wells Fargo & Co…
“Regulatory data suggests JPMorgan’s exposure is largest in aggregate, but Morgan Stanley held the largest aggregate exposure to the PIIGS relative to Tier 1 capital”…
What that means, basically, is that JPMorgan has the biggest trade on in absolute dollar terms, but Morgan Stanley has the biggest exposure relative to the size of its trading account.
Remember Northern Rock?
Here is the bottom line:
The major eurozone economies are caught in a downward debt spiral.
IMF rescue funds are a temporary stopgap at best.
The total debt involved, all problem countries included, runs into the trillions.
As banks own much of this debt, we have the recipe for a new banking crisis.
Some eurozone banks are not just “too big to fail,” but “too big to bail.”
Continent-wide bank runs are not out of the question.
In the Fall of 2007, Britain saw its first full-on “bank run” in more than a century. Northern Rock, a troubled British bank knee-deep in mortgages, had lost the confidence of its depositors. As fears mounted, Northern Rock bank branches saw long lines of customers desperate to pull out their cash, like the classic runs of 100 years ago.
If the eurozone debt situation continues to spiral downward, we could see the same dynamic once again – but with “sovereign” replacing subprime, as depositors all across Europe wonder just how much trouble their savings accounts might be in.
The irreplaceable element, the sine qua non, of all fractional reserve banking regimes is confidence. Banks routinely balance huge balance sheet positions on tiny slivers of capital. They can only do this as long as confidence in the system is strong. When confidence ebbs away, the result can be deadly.

Approaching the Point of No Return?
To make matters worse, Europe is still in denial as to the seriousness of this problem.
There is such a strong focus on “containing” the problem – keeping it to just Greece – that vital preparations are not being made for Plan “B”… what happens when panic spreads beyond Greece.
Call it risk management at its worst… or head-in-the-sand politics at its best. Fervent hope that the problem will not grow bigger has replaced realistic preparation as to what should be done if it does.
We have already touched on parallels to Lehman Brothers, the touchstone of the global financial crisis, and further to the Northern Rock bank run and escalating subprime fears of 2007.
But in some ways the strongest parallel of all stretches 18 years back – all the way to 1992 – and it gives a strong hint as to just how this whole thing could be resolved. Stay tuned…

Earth Day In Retrospect

On April 22, Earth Day came and went without even a casual mention by us in this Daily Dispatch. At first I thought this was the correct approach, as even a passing word on the event could lend it credence. But now I’m of the opinion that since this past Earth Day marked its 40th anniversary, it’s worth revisiting the day’s beginnings.
And before you rake me over the coals for “not caring about Mother Earth,” I’d like you to know that I (usually) bring my own reusable grocery bag to the store, refill water bottles numerous times, refrain from littering, recycle, and generally try to live in a way that doesn’t pollute my surroundings. I have no problem with these sorts of activities. What I have a problem with are the outlandish claims made by climate alarmists that aren’t rooted in sound science.
Forty years ago, when Earth Day was born, many dire predictions were being made about our species’ impact on the environment, and it’s important to know what those claims were, so you can judge the historical accuracy of the climate change movement.
Here’s a link to an excellent article on the subject titled “Earth Day 2010 – Celebrating 40 years of outrageous predictions of doom.”
The claims cited in the article include:

~The founder of Earth Day, Senator Gaylord Nelson, famously proclaimed that, “Dr. S. Dillon Ripley, secretary of the Smithsonian Institute, believes that in 25 years [1995], somewhere between 75 and 80 percent of all the species of living animals will be extinct.”

~One of the more interesting statements made by Dr. Paul Ehrlich, author of the largely discredited book The Population Bomb, was that “at least 100-200 million people per year will be starving to death during the next ten years.” The esteemed Dr. Ehrlich also warned that air pollution would “take hundreds of thousands of lives in the next few years alone.”

~North Texas State University professor Peter Gunter echoed Ehrlich’s predictions of death. He said, “Demographers agree almost unanimously on the following grim timetable: by 1975 widespread famines will begin in India; these will spread by 1990 to include all of India, Pakistan, China and the Near East, Africa. By the year 2000, thirty years from now, the entire world with the exception of Western Europe, North America, and Australia, will be in famine.”

~In one of its 1970 issues, Life Magazine wrote that “Scientists have solid experimental and theoretical evidence to support… the following predictions: In a decade, urban dwellers will have to wear gas masks to survive air pollution… by 1985 air pollution will have reduced the amount of sunlight reaching earth by one half…”

~Manmade climate change was around back then, but it wasn’t global warming that they were worried about, it was global cooling. Kenneth Watt, professor emeritus at the University of California at Davis, warned, “The world has been chilling sharply for about twenty years. If present trends continue, the world will be about four degrees colder for the global mean temperature in 1990, but eleven degrees colder in the year 2000. This is about twice what it would take to put us into an ice age.”

So, when you hear the great Al Gore spout dire predictions about the days ahead and why such future events are “certain,” it might behoove you to recall the dire predictions made by other “experts” over the years and to ponder whether the seers of today are likely to be any more accurate. I would bet not.

Obama Shows He's A Socialist/Marxist Every Time He Speaks. Every Time.

Barack Obama, America's Selective Salary Policeman

By Michelle Malkin April 30, 2010
President Obama spoke the most revealing and clarifying 10 words of his control-freak administration this week: "I think at some point you have made enough money." Peddling financial regulatory reform at a rally in Quincy, Ill., Obama then ad-libbed peculiar definitions of what he called the "American way" and the profit motive: "(Y)ou can just keep on making it if you're providing a good product or providing good service. We don't want people to stop, ah, fulfilling the core responsibilities of the financial system to help grow our economy."
Fundamental lesson of Capitalism 101: Governments and bureaucrats don't make what people want and need. They only get in the way. It is individuals, cooperating peacefully and voluntarily, working together without mandate or central design, who produce the world's goods and services. They make what people desire and demand for themselves, not what Obama and his imperial overlords ordain that the masses should have.
As usual, Obama's populist demagoguery is telling in its omissions and selectivity. While he lectures on the morality of salary caps for everyone else, his own cabinet is filled with fabulously wealthy CEOs and statist creatures who have parlayed government employment (a "good" service) into private gain as lobbyists, consultants and advisers ("core responsibilities of the financial system") and then back again to public stints. Revolving doors have always grown the Beltway economy.
To wit: Austan Goolsbee, head of Obama's Economic Recovery Advisory Board, is the 15th wealthiest member of the Obama administration, with assets valued at between $1,146,000 to $2,715,000. He also pulled in a University of Chicago salary of $465,000 and additional wages and honoraria worth $93,000, according to the Washingtonian magazine.
What "good" did he provide? The government research fellow and Obama campaign adviser was a champion of extending credit to the un-creditworthy. In a 2007 op-ed for The New York Times, he derided those who called subprime mortgages "irresponsible." He preferred to describe them as "innovations in the mortgage market" to expand the pool of homebuyers. Now this wrong-headed academic who espoused government policies that fed the housing feeding frenzy is in charge of fixing the loose-credit mess he advocated. This is the "American way"?
After 16 years in Congress, four years in the Clinton administration as budget director and chief of staff, and a lifetime of schmoozing in the halls of power, Obama's CIA director, Leon Panetta, cashed in big. He's sitting on up to $4 million in assets. While he has zero experience in intelligence matters, he has extensive experience in parlaying his past political tours of duty into lucrative speaking gigs, consulting fees and stock options. Welcome to Obama-approved entrepreneurship.
By Obama's definition, first lady Michelle Obama is a model capitalist. Remember: After serving with real estate mogul Valerie Jarrett in Chicago Mayor Richard M. Daley's administration, Mrs. Obama took a post at the University of Chicago Medical Center, where Jarrett was serving as vice-chair of the medical center's board of trustees. Mrs. Obama was promoted in 2005 after her husband won his U.S. Senate race with Jarrett's invaluable aid. As "vice president for community and external affairs" and head of the "business diversity program," her annual compensation nearly tripled from $122,000 in 2004 to $317,000 in 2005. Even after she went on leave in 2007 to help her husband on the presidential campaign trail, the hospital paid Mrs. Obama $62,709 in 2008, prompting one skeptic to ask: "We know this is Chicago, but isn't $63,000 quite a lot for a no-show job?"
Jarrett, of course, is now White House senior adviser to the chief spender of other people's money. And the first lady is now using her new taxpayer-funded position not only to tell folks how they should eat, but also which "good" restaurants and groceries should be built in their neighborhoods.
If there were any doubts left about the Obamas' ideological commitment to wealth redistribution and a command-and-control economy, those doubts have been thoroughly removed. We have a commander-in-chief who presumes to know when you have earned "enough," who believes that only those who provide what he deems "good" products and services should "keep on making it," and who has determined that the role of American entrepreneurs is not to pursue their own self-interest, but to fulfill their "core" responsibility as dutiful growers of the collective economy.
That famous mock-up poster of Obama as the creepy socialist Joker never seemed more apt.

Eurozone Failing In Slo-Motion...

Tuesday April 27, 2010
MACRO-EUROPE: The Titanic is SINKING ...
We rewind to our February 15th Money Monitor entitled "Three Card Monty", with its focus on the 'early stages' of the now full-blown Greek debt-deficit-debacle, and we replay the quotes we spotlighted at the time ...
Greek Finance Minister George Papaconstantinou ...
... "We are basically trying to change the course of the Titanic. People think we are in a terrible mess. And we are.
We note comments from Jean-Claude Juncker, speaking on behalf of European Finance Ministers following a meeting of top EU officialdom in Brussels this afternoon ...
... "Greece is responsible for the consolidation of its public finances. It is first a Greek problem, and an internal Greek problem."
From European Central Bank President Jean-Claude Trichet ...
... "Everyone needs to respect their commitments. We have a particular Greek problem, but the other countries have their programs and they must be implemented. It is important that all of the heads of state and governments do what is necessary to guarantee the stability of the euro zone."
And from German Chancellor Angela Merkel ...
... "Germans should not pay for the consciously flawed fiscal and budgetary policies of others."
We stated, in our conclusion to that Money Monitor ...
Thinking that the problems of Greece, let alone two dozen other European debt-deficit 'offenders', will be 'solved', without PAIN, quickly ... or that they will be easily and quietly 'papered-over' ... is like playing Three Card Monty with the hustlers of Eighth Avenue in Manhattan.
It is ALWAYS a LOSING proposition.
Now, over two months later ... the Titanic is SINKING ... amid today's credit rating downgrade announced by Standard and Poor's, as it relates to Greece's sovereign debt.
Moreover, in our March 3rd Money Monitor, "It's All Over Now, NOT !!!", we stated the following ...
In short, it is NOT, at all ... "all over now", in Europe.
And, in our April 12th Monitor, "Three Blind Mice" ... published in the wake of the announcement of the (alleged) solution via a loan to Greece, from EU member nations, and the IMF ... we said the following ...
What happens when Italy needs a bailout, or Portugal, or Spain ...
... bailouts-that-are-not-a-bailout that would be significantly LARGER than the 45 billion EUR offered to Greece ... what then ????
Again, as we have stated repeatedly since the 4Q of last year ... Europe's fiscal debt-deficit crisis is FAR from 'over'.
Again, as we have repeatedly stated ... it will not be over, until draconian fiscal austerity measures are implemented ACROSS the region.
It will not be over ... for years to come.
Fast forward to the present ... and the announcement by Standard and Poor's wherein the credit ratings agency cut Greece's sovereign debt rating to JUNK status ... and we shine the spotlight on commentary from today's S+P 'statement' ...
... "We believe that the government's policy options are narrowing because of Greece's weakening economic growth prospects, at a time when pressures for stronger fiscal adjustment measures are rising. Moreover, in our view, medium-term financing risks related to the government's high debt burden are growing, despite the government's already sizable fiscal consolidation plans."
... "Our updated assumptions about Greece's economic and fiscal prospects lead us to conclude that the sovereign credit rating is no longer compatible with an investment grade rating."
Also ...
... "The government's multi-year fiscal consolidation program is likely to be tightened further under the new EMU-IMF agreement. This is likely to further depress Greece's medium-term economic growth."
And ...
... "The government's resolve is likely to be tested repeatedly by trade unions and other powerful domestic constituencies that will be adversely affected by the government's policy."
Adding insult to injury, Standard and Poor's also put Greece's credit 'outlook' on 'negative watch', opening the door for FURTHER downgrades ...
... "The negative outlook reflects the possibility of a further downgrade if the Greek government's ability to implement its fiscal and structural reform program materially weakens, undermined by domestic political opposition at home, or by even weaker economic conditions than we currently assume."
Indeed, the ICEBERG is HUGE ... and the unsinkable ship is sinking !!!
Evidence the rising water levels in the engine room, as represented by the 'price' of default 'protection', evidenced in the chart below plotting Greece's 5-Year Credit Default Swap Rate ... which has SOARED today, easily reaching a NEW ALL-TIME HIGH ... by FAR !!!
In fact, in our March 22nd Money Monitor entitled "Three Card Monty, Revisited", we offered a chart perspective on the 5-Year Greek CDS. We spotlighted the downside correction that took the CDS to the med-term trend defining 100-Day EXP-MA, in line with a text-book Fibonacci retracement (between the 38% and 50% retracement levels) ... suggesting that the downside correction provided a 'buying' opportunity.
We also 'warned' about the potential for higher interest rates to significantly impact the entire fiscal environment in Greece. Thus we note additional commentary from within the Standard and Poor's statement ...
... "Pressures for more aggressive and wide-ranging fiscal retrenchment are growing, in part because of recent increases in market interest rates."
After today's parabolic rise in the 5-Year Greek Bond yield, as noted below, the word 'increases' becomes a substantial understatement.
As if this was not enough turbulence, we also note that in line with the downgrade of the Greek government credit rating, Standard and Poor's also marked down the 'rating' on the nation's largest banks ... stating that ...
... "We find that Greece's fiscal challenges are increasing pressure on the banking and corporate sectors. In particular we see continuing fiscal risks from contingent liabilities in the banking sector, which, could, in our view, total at least 5%-6% of GDP in 2010-2011."
Standard and Poor's downgraded the 'long-term counterparty credit ratings on National Bank, Eurobank, Alpha Bank, and Piraeus Bank ... causing share prices to plummet. Evidence the pair of charts on display below in which we plot Piraeus Bank ...
... and, the National Bank of Greece, both of which are breaking down technically, following a rally that mapped out another 'text-book' Fibonacci retracement correction.
Hence we turn the spotlight on the Greek stock market as a whole, represented within the chart below in which we plot the Greek ASE stock index. Indeed, we note another Fibonacci retracement, to the 33% target, followed by this week's renewed technical breakdown.
The ship ... is going DOWN.
We have been bearish on the Eurocurrency since October-November of last year, and after suffering because we were 'early' to this thematic-trade, we have been rewarded for our patience and perseverance ... as evidenced in the longer-term daily chart on display below, revealing today's decline in the EUR to a new move LOW.
Further, we spotlight the bearish technical dynamic, as defined by the negative action in the moving averages, and the slide into bearish territory by the long-term 200-Day Rate-of-Change.
While the Titanic (also known as the Eurocurrency) SINKS ... the price of Gold denominated in the Euro is SOARING, reaching a NEW ALL-TIME HIGH today, in excess of EUR 875 per ounce ...

We are now watching for a 'confirming' upside breakout in the spot (USD based) price of Gold. Noting the daily chart on display below we focus on the most recent re-acceleration to the upside in the med-term trend defining 100-Day EXP-MA.
An upside violation of the April 12th high of $1169 would constitute a full-blown med-term upside breakout.
All 'passengers' are going down with the ship ... with a downgrade to Portugal's sovereign credit rating also announced today, as Standard and Poor's marked down Portugal's rating by two notches, from A+ to A-, while placing the country on a negative outlook watch, portending more downgrades in the future.
Subsequently, Portugal's 5-Year Credit Default Swap is SOARING, as noted in the chart below, spiking to a NEW ALL-TIME HIGH ... today.
Similarly, Portugal's 5-Year Government Bond yield SOARED to a NEW HIGH, jumping by + 60 basis points today alone, capping a monstrous +215 basis point rise in the month of April, easily violating the February high of 3.95% ... as evidenced in the chart below.
Like the Titanic ... the Portuguese stock market is also ... sinking ...
... as evidenced in the daily chart on display below, replete with technical breakdown, head-and-shoulders pattern, violation of the med-term trend defining 100-Day EXP-MA ... and ... the downside reversal by the moving average itself, directionally speaking.
And finally, we have been focused on the downside price action and severe underperformance exhibited by the Spanish stock market (specifically spotlighted as recently as last Friday's ETF Playbook) ...
... and thus we note the chart on display below as Spain begins to unravel too, with the 5-Year Credit Default Swap SOARING to a NEW ALL-TIME HIGH, slicing through the (previous) double-top formed as defined by the February 17th, 2009 high at 170 basis points, and the February 8th, 2010 high at 173 basis points, reaching towards 200 basis points.
And, we shine the spotlight on the chart below plotting Spain's 5-Year Bond yield, which is breaking out to the upside, today, and doing so 'from' historically low levels below 2.75%, violating the February 5th high of 3.13%.
The Titanic is sinking, and ultimately, ALL passengers will go down with the ship, including Portugal, Spain, Greece, and several other Maastricht Treaty debt-deficit offenders.
We have been anticipating this event for months.
Thus, we remain bearish on the European currencies ....
... and bullish on Gold priced in EUR. Gregory T. Weldon ---

Great, We're Paying For The Greek Debt Crisis

I Am The US Taxpayer's Lack Of Surprise (And Money): IMF To Provide Another €10 Billion To Greece
04/27/2010

Where does it end? 100 billion? 1 trillion? 1 quadrillion? And yes America, this is your money, going to bail out Greece... Then Portugal... Then Ukraine....Then Dubai....Then Italy....Then Spain....Then Hungary....Then the Baltics...Then the UK....Then Japan... and by the time we have to bail ourselves out, there will be nothing left, except the Turbo Bernanke 3000 dry heaving with an empty ink cartridge and empty paper cart, while gold oz will be worth one quadrillion Benjamins (or is that Bernankes). In the meantime, as Erik Nielsen, who finally woke up, predicted, the final bailout cost of Greece alone will be €150 billion. So the IMF will do rookie mistake 101 and keep raising the bailout requirement incrementally, even as the depositor runs on Greek banks and the ongoing strikes and riots, destroy the country...But at least in the meantime the dollar will get devalued and Wells-JPM-BofA/REIT investors will be happy.
From the FT:
The International Monetary Fund is looking at raising its share of Greece’s financial rescue package by €10bn ($13.2bn) amid fears that the planned €45bn bail-out will fail to prevent the country’s debt crisis from spiralling out of control.Stock markets on both sides of the Atlantic fell on Tuesday, with leading European indices suffering their heaviest falls of the year, after Standard & Poor’s cut Greece’s long-term credit rating to junk status. The struggling nation is the first eurozone member to have its debt downgraded to junk level.Shares in Athens fell 6 per cent as banks plunged more than 9 per cent. Greek government bonds suffered further heavy falls on growing concern that the country may need to restructure its debts in spite of the proposed eurozone and IMF rescue. Portugal’s stock market was down nearly 5 per cent as Lisbon’s long-term credit ratings were also reduced to by two notches from A plus to A minus, reflecting the country’s weakening public finances.Senior bankers and officials in Washington and Athens told the Financial Times that the IMF was in talks to increase its aid contribution by €10bn. The fund could make that sum available under a planned three-year loan, according to an Athens-based analyst familiar with the talks. Investors and policy specialists said that expectations of the size of the three-year package in Washington policy circles had increased to at least €70bn. The EU has so far proposed to provide €30bn and the IMF €15bn. “The fund’s current ceiling for Greece is €25bn and the release of the extra amount is under discussion,” the analyst said. The IMF declined to comment on the size of the package.
5

Expatriation Is Growing

Renouncing American Citizenship
by Llewellyn H. Rockwell, Jr
Let's be clear about something. A person who decides to give up his US citizenship is not guilty of disloyalty to America; quite the opposite. He could very well be more loyal to American principles than the regime is willing to tolerate.
It also does not mean that he is giving up hope for liberty; he may have great hope for liberty, in a different way and in a different place.
In any case, the rise of emigration, expatriation, and citizenship renunciation is a trend that is not going away. It is rising and will get more significant. In some ways, it is completely expected. When regimes over-control, over-tax, over-regulate, they gnaw at the innate sense of the right to be free. When this gets worse and worse, people tend to look around for better environments.
We've all known people who talk about it openly. It is becoming cocktail conversation, the once-unthinkable now standard fare. It's not just an impression. State Department records show that 502 people gave up citizenship in just the last quarter of 2009. That is more than twice the total for 2008. That might not seem like a lot but what stands out here is the trend line, which is soaring. I also hear reports of year-long bureaucratic delays in approval, and, of course, plenty of people leave without permission.
The driving factors here are not cultural or social; they are economic. The US government is making it ever more difficult for Americans living abroad, taxing them wherever the bureaucrats can find them. The government makes it very difficult even to hold a bank account in the US unless the account holder can point to a US residency (thanks to the Patriot Act). And when the government finds a reporting error on income earned overseas, it can charge a 50% penalty.

Even when a person gives up US citizenship, and establishes citizenship with a freer country, the US government can still haunt him with continuing tax obligations and demands for military service. There is, at the least, a vast exit penalty. Any regime that would do things like this inspires people to want to stay at arm's length.
Far more frightening is the sense that financial calamity is around the corner. A look at the data seems to suggest that. Vast reserves are sitting in the banking system, waiting to be unleashed to create what could be total destruction of the dollar. The deficit is rising so fast that it is hard to chart.
The jobs situation is terrible, especially for young people (and adults often make decisions based on what is best for their kids' future). Personal income is falling and falling. Investment is not recovering after its cliff dive in 2009. The social welfare state is broke. Private debt is rising even though lending has not restarted.
The policies of the fiscal and monetary authorities are absolutely terrifying. The Fed is keeping rates at zero. The government is spending and spending beyond belief. Tax receipts are falling as never before, unleashing the greedy hand of the predator state to extract every last dime.
And look at what the US congress and president are doing about this terrible mess: they are working to socialize health care, start a war with Iran, impose tariffs on China, and otherwise tax, regulate, inflate, and control more more more. An economy that is heavily capitalized and driven by the entrepreneurial spirit can stand a surprising amount of abuse. But that reserve capital is being drained away into new bubbles, and the entrepreneurial spirit is being crushed at every turn.
Based on all these facts, the sense of impending doom is hard to avoid. And consider that most people are thinking only about today, this month, and this year. But among the rich and entrepreneurial we find a class of people who specialize in thinking outside the box, and for the very long term. It is among the ranks of these people that we are seeing the renunciation trend take hold. The smart money is giving up on the US political system.
What precisely is a person actually giving up when he walks into a US consulate and signs the renunciation oath? The right to vote? Yes, but just how much value are we supposed to place on the right to choose between dumb and dumber, and to have your vote cancelled out by the guy behind you in the line? No living person has ever swung a significant election. It is hardly a surprise that people put so little value on going through the motions of democracy.
There is much to give up in a cultural and social sense. It is not a decision to be made with a light heart. It is final and scary for that reason. What compels many people to do it now rather than wait is the sense that at some point, it might not be possible to renounce citizenship. As the controls grow ever tighter, so will the regulations on those who try to escape.
Every socialist and fascist regime in history has put up walls to prevent flight by people and capital. This is why people and capital are flying now, while they still can. In so doing, they are inspired by the writings of the American revolutionaries. The difference is that they have decided that living in the land of the free and the home of the brave means not being a slave of the US government.
The way to stop the brain and capital drain is readily at hand. Relinquish controls. Stop taxing people abroad. Adopt laissez-faire. Reinstitute freedom. Reject militarism and nationalism. Only that path will inspire optimism in the future of this country. Until that happens, we can expect this trend to continue, and to advise the young and successful families who ask us, to get out while the getting is good.