Wednesday, April 28, 2010

The Collapse of the Eurozone is On

April 28, 2010


—With the chaos they have unleashed in their attempt to force through a so-called Greek rescue package, the British have pushed the Eurozone into a terminal collapse.

Interest on two-year Greek treasury bonds shot up 3 percentage points Monday to 13%, and yesterday another 2 percentage points to 15%. These are highest rates for short-term bonds in the world, according to Brown Brothers Harriman as reported in the Financial Times. "Contagion" is now spreading, with Portuguese two-year bond yields having shot up from 3.051% to 3.985%. The FT article has graphs underneath the article to show the rise of Greek bond yields, the Portugese bond yields, and the Euro-dollar rate — not set in years, months or days but set in hours over the course of Monday, as if it were Weimar Germany, 1923.

The system can't stand this sort of wrenching strain. The present Eurozone crisis has justly been compared to the Kreditanstalt collapse of 1931, in its unleashing a next yawning gulf of collapse in the trans-Atlantic system.

It is clear that the issue is not whether the deal will go through, but that even if it does go through, it will not solve the problem, since Portugal, Ireland, and above all, the main act, Spain and Britain, are waiting in the wings.

Bloomberg reports that credit default swaps for Portugal's sovereign debt are trading at rates worse than those for Lebanon and Guatemala. While Portugal's public debt is 77% of GDP, its private debt is 236%. This compares with 205% in Italy, and 195% in Greece. Only 17% of its public debt is held by Portuguese; the rest is held by foreigners, a huge amount. The country also has had virtually no growth in the past 10 years and has no prospect for growth in the future.

Bloomberg also reports that not only are credit default swaps for Portugal, Spain, and Ireland increasing, but the crisis is having a spillover effect on the commercial bond market where CDS rates are also rising.

In an effort to convince the Bundestag to fork over EU8.5 billion for the EU45 billion cement-shoe "rescue" package, International Monetary Fund Managing Director Dominique Strauss-Kahn and European Central Bank President Jean-Claude Trichet have been asked to address the Bundestag tomorrow.

Word Spreads of Obama's Demise

April 27, 2010

On Sunday, April 25, Firedoglake.com ran a headline story entitled, "The Corruption Scandal That Could Bring Obama Down: Redacted Supoena Portions Reveal Much." After reprinting the unredacted information originally posted on Chicago's NBC affiliate station from the motion submitted by Rod Blagojevich requesting the ability to subpoena Barack Obama in his upcoming June 3 trial, Firedoglake concludes that Obama may not have been clever enough to have avoided being caught in illegal acts. Therefore, "when the GOP retakes the House and reclaims more Senate seats, count on the party to use this as its justification for impeaching and removing Obama." Firedoglake.com clearly underestimates the rapidity with which Obama could be overwhelmed by the accumulating scandals surrounding his presidency, but the posting is a recognition of the danger Obama is now in.

As the trial approaches, one notable point made in the Blagojevich submission, which was not redacted, therefore, has not received media coverage, is the fact that according to an article in Britain's Daily Telegraph by Toby Harnden on December 26, 2008, Obama was interviewed at his Chicago transition office by two U.S. Attorneys and two FBI agents for two hours on the prior Thursday.

The Blagojevich motion notes that on December 19, 2009, the defense filed a discovery motion requesting all notes, transcripts and reports generated from the government's interview of Obama. As of last week the defense has not received any notes, transcripts or reports from President Obama's interview with the government.

Others interviewed by the government were Rahm Emanuel and Valerie Jarrett, whom Emanuel had said was Obama's preferred candidate. At the time, Harnden reported that Emanuel was known to have spoken to Blagojevich once or twice, and to his chief of staff John Harris at least four times about the vacant Senate seat. During his impeachment proceedings before the Illinois Senate last year, Blagojevich had failed in his attempt to subpoena both Emanuel and Jarrett. According to the Chicago Tribune at the time the scandal emerged, Emanuel relayed to Blagojevich's team a list of candidates who would be acceptable to the Obama camp, and that these conversations were captured on a tape possessed by U.S. Attorney Patrick Fitzgerald.

The question is what did Obama and his associates say in their interviews, and what does Fitzgerald have on tape?

Among other things, does Fitzgerald have a tape of the telephone discussion between Obama and Blagojevich of Dec. 1, 2008. Just one week later — on the day Blagojevich was indicted — Obama told reporters flatly, "I had no contact with the governor or his office, and so we were not — I was not aware of what was happening." Obama was interviewed by the FBI some two weeks later. Did he perjure himself by repeating this claim to the FBI?

Although Obama would like to portray his relationship to Blagojevich as distant, the fact of the matter is that Blagojevich, Emanuel, Rezko and Obama have had a very close relationship. Emanuel ran for the seat in Congress vacated by Blagojevich. Ryan Lizza reported in the New Yorker that Obama received "his first high-level experience in a statewide campaign" while advising Blagojevich during this campaign for Governor. Rahm Emanuel was also a top strategist for that campaign. According Lizza: "Rahm Emanuel ... told me that he, Obama, David Wilhelm, who was Blagojevich's campaign co-chair, and another Blagojevich aide were the top strategists of Blagojevich's victory. He and Obama participated in a small group that met weekly when Rod was running for governor, Emanuel said. 'We basically laid out the general election, Barack and I and these two.' A spokesman for Blagojevich confirmed Emanuel's account, although David Wilhelm, who now works for Obama, said that Emanuel had overstated Obama's role. 'There was an advisory council that was inclusive of Rahm and Barack but not limited to them,' Wilhelm said."