The 1 chart that shows why Germany wants to save the euro … and the 1 chart that show why it might not

By James Pethokoukis

Project Euro is about economics, of course, but not just that, as JPMorgan’s Jim Glassman notes:

Its driving forces have deep historical roots in a century of devastating conflicts (the illustration of war casualties on the following page underscores that trauma) and they are fueled by the enormous economic benefits that come from strengthening economic integration: the efficiencies that members receive when trading with each other by focusing on their comparative advantage; the leverage members gain by locking arms when operating in an increasingly competitive global marketplace.

Certainly, Europe doesn’t want a return to this:

So why doesn’t Germany get on board with empowering the European Central Bank to start a bond buying program as lender of last resort? This next chart shows another German memory:

Glassman’s conclusion:

There is no quick and easy way to deal with Europe’s liquidity crisis. The European Central Bank likely will have to step in to be the bridge, at least for a while, to a fundamental improvement in Europe’s unification process. This will be a difficult politically, but there are few viable alternatives. Given the threat of the financial crisis to the economic health of the region, however, and in turn that impact on inflation, the ECB could connect such activities with its inflation mandate. The ECB surely has the tools to deflate the region’s brewing crisis of confidence and liquidity crisis. Stay tuned.

AEI Debate Prep: Neutralizing the Iranian threat in Latin America

By Roger Noriega

This post is part of an ongoing series preparing for the AEI/CNN/Heritage National Security & Foreign Policy GOP presidential debate on November 22. See the rest of the posts here.
Iran is using Venezuela as a platform to project its asymmetrical warfare into the Western Hemisphere and to sustain its illicit nuclear program. According to documents of the regime of anti-American radical Hugo Chávez, Iran has laundered about $30 billion through the Venezuelan economy to evade international sanctions.
Moreover, Iran is seeking to exploit uranium in Venezuela, Ecuador, and elsewhere in the region, with Chávez’s facilitation. It also is working through its terror proxy Hezbollah to cultivate a network of radicalized operatives in a dozen countries in the region, centered in Venezuela but making significant progress in Brazil and Colombia, among others. The recent plot fostered by Iran’s Qods Force to commit a terrorist bombing in the heart of Washington, D.C., is undeniable evidence of Tehran’s determination to strike against U.S. targets in the event of preemptive military action against its illegal nuclear program.

Botched Cuban care and Chávez’s deceit may have worsened the Venezuelan’s cancer

By Roger Noriega

Fidel Castro’s vastly over-rated healthcare system may finally have achieved something noteworthy: killing Venezuelan dictator Hugo Chávez. According to an investigative report authored by Leonardo Coutinho and Duda Teixeira that appeared in Brazil’s premier newsmagazine Veja on Saturday (November 19), Cuban doctors at that country’s premier medical facility bungled the initial treatment of Chávez’s prostate cancer and may have rushed him to an early grave.
The Brazilian report, which quotes several of that country’s cancer specialists and urologists, delivers a damning assessment of the Cuban care:

It’s Europe’s Economic Growth, Stupid

By Desmond Lachman

European policymakers are clinging to the forlorn hope that the eurozone crisis can readily be defused by putting in place national unity governments in Greece and Italy.

Hope springs eternal among European policymakers. As Greece now verges on a hard default and as Italian bond yields soar to dangerous levels, European policymakers cling to the forlorn hope that the European crisis can readily be defused by putting in place national unity governments in Greece and Italy. By so doing, they choose to turn a blind eye to the highly compromised public finances that brought us to this impasse and that are all too likely to drive the eurozone apart in the year ahead.

Handicapping ObamaCare’s Day in Court

By Thomas P. Miller

An older, exiled vintage of the Constitution may make an encore appearance

The Supreme Court’s decision to review ObamaCare was predictable but nevertheless historic. Given the unresolved trench warfare of our currently dysfunctional political system, many Americans have resorted to another institution that also often disappoints us—the courts.
After dozens of lawsuits, at least half a dozen significant federal district court decisions all over the constitutional law map, and four federal appellate court rulings pointing in different directions, it’s time for the Supreme Court to at least try to resolve several thorny constitutional issues. The most important one involves whether any legal principles remain that might limit the power of Congress to mandate the purchase of health insurance under the Commerce Clause of the Constitution.

By Ambassador Richard S. Williamson

As it begins its post-election path, Tunisia can be the historic lever that changes the Arab world forever.

In Tunisia, 10.5 million people have changed the world. The Arab Awakening began in Tunisia when the people rose up against Ben Ali, their authoritarian ruler. Last month they wrote the next historic chapter by holding a free, fair, well administered, and democratic election—the first in their history. They took an important step from the old order to the new; from fear to hope.
This will not be the end of the story of a renewed Tunisia living in freedom. It may not even be the end of the beginning. But this vote is very consequential for Tunisia, the broader Arab world, and the March of Freedom.

By STEVEN RUSSOLILLO

NEW YORK—U.S. stocks dropped as a downward revision of domestic economic growth and rising European bond yields weighed on investor sentiment.

Markets reporter Brendan Conway joins the News Hub to outline factors impacting the markets on Tuesday, including ratings agencies saying a U.S. credit decline is off the table. AP Photo.

The Dow Jones Industrial Average fell 68 points, or 0.6%, to 11478, in late-morning Tuesday trade. That added to a drop of 249 points on Monday and a loss of more than 5% in the last five trading days, pushing the blue-chip index back into negative territory for the year.
The Standard & Poor's 500-stock index dropped 8 points, or 0.7%, to 1185 late morning. The technology-oriented Nasdaq Composite lost 17 points, or 0.7%, to 2505.

Supercommitte Failure Leaves Congress Scrambling

Missing MF Global Funds Could Top $1.2 Billion

Is Another U.S. Downgrade Looming?

Why the Super Committee Failed

By JEB HENSARLING

All now know that the Joint Select Committee on Deficit Reduction has failed to reach an agreement. While there will still be $1.2 trillion of spending cuts as guaranteed under the Budget Control Act, we regrettably missed a historic opportunity to lift the burden of debt and help spur economic growth and job creation. Americans deserve an explanation.
President Obama summed up our debt crisis best when he told Republican members of the House in January 2010 that "The major driver of our long-term liabilities . . . is Medicare and Medicaid and our health-care spending." A few months later, however, Mr. Obama and his party's leaders in Congress added trillions of dollars in new health-care spending to the government's balance sheet.
Democrats on the committee made it clear that the new spending called for in the president's health law was off the table. Still, committee Republicans offered to negotiate a plan on the other two health-care entitlements—Medicare and Medicaid—based upon the reforms included in the budget the House passed earlier this year.

Thank You, Grover Norquist

So it's all Grover Norquist's fault. Democrats and the media are singing in unison that the reason Congress's antideficit super committee has failed is because of the conservative activist's magical antitax spell over Republicans.
Not to enhance this Beltway fable, but thank you, Mr. Norquist. By reminding Republicans of their antitax promises, he has helped to expose the real reason for the super committee's failure: the two parties disagree profoundly on a vision of government.
Democrats don't believe they need to do more than tinker around the edges of the entitlement state while raising taxes on the rich. Republicans think the growth of government is unsustainable and can't be financed no matter how much taxes are raised.
Sounds like we need an election.

WSJ Editorial Page Editor Paul Gigot appears on OJ Live to discuss why the super committee couldn't reach an agreement. Plus, a discussion of the recent passing of business leader Ted Forstmann.

Of course it would have been preferable if the two sides had come together now to cut spending, reform the tax code and remake Medicare. Preferable, but implausible. That would have required President Obama to have shown more respect for the will of the voters when they revoked his credit card by giving Republicans control of the House in 2010. Or for the President to have honored the findings of his own Bowles-Simpson deficit commission by using it as a basis for negotiation. Instead, he ignored them.

The Finance Crisis: Part Four

GBTV: Stephanie Nielson interview

Ron Paul on CBS's Face the Nation 11/21/11

Ron Paul Is the Most Intellectually Honest Politician For 2012

Donald Trump Now Kissing Up To Ron Paul

The Ignorance of Newt versus the Inalienable Rights of All

by Scott Lazarowitz

Recently by Scott Lazarowitz: Obama’s Latest Scheme and Our Choice Between Freedom and Tyranny

During a recent Republican Presidential debate, former House Speaker Newt Gingrich implied that he strongly disagrees with very important assertions of the Declaration of Independence: "That all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

Additionally, like many people now, Gingrich seems to believe that there should be a different set of laws for society when there is a "war" underway. But the truth is, war is an artificial concept used by collectivists and statists to rationalize the commission of criminal acts of aggression against others and get away with it.

The truth is, there are really two kinds of behaviors in general:

DOOM AND GLOOM:‘Doctor Doom’ Marc Faber said loose monetary policies, which are meant to be a quick fix, can have unintended consequences in the longer term

By Crystal Hsu

Marc Faber, center, stands on stage after making a speech at an event sponsored by Chinatrust Financial Holding Co in Taipei yesterday.

Photo: CNA

Marc Faber, publisher of the Gloom, Boom and Doom report, yesterday reiterated his criticism of money printing practices, which he believes will continue in the US, Europe and elsewhere, causing bubbles such as those seen in the Chinese real-estate market.

Boomer Blindness

by Gary North

Recently by Gary North: Letters to Me Defending Joe Paterno and Attacking the 'Unfair' Board of Trustees

"MarketWatch" ran an article on the attitudes of retired Americans ages 55 to 75. The title is accurate: "Retirees are confident, but workers can't retire." But the subtitle points to the problem facing these people: "Retirees' finances recover, but one-in-four workers plan to work until 80."

The article reports on two surveys. The first is a survey of over 1,500 retirees in 2008 and 2011. These people had $100,000 or more of investable assets in 2008. Age range: 55 to 75. Think about this. Some of these people had retired at age 55. This is surely not a normal segment of the population. Second, they had at least $100,000 to invest. Is this sample representative of retired Americans?

Figures from 2007 – the year before the recession hit in full force – indicate that the median net worth of households whose heads were 65 to 74 years old was $239,400. The word "median" refers to an average where half the sample population is above and half below. It gives a much better indication of the condition of the average Joe than the mean average, where the figure is the total wealth divided by the number of families in the sample.

This median net worth statistic included the equity in homes. To estimate investable capital, we must subtract the equity value of the homes from the total net worth figure. According to this chart on Wikipedia, the median sales price of a home in 2007 was $250,000.

Combining the two figures, at least for those home owners who had paid off their mortgages in 2007, the net investable capital of families headed by people 65 to 74 in 2007 was negative $11,000. This is an optimistic estimate. Not all people in this age group owned debt-free homes.

So, the survey of 1,500+ Americans with investable capital of $100,000 or more is so utterly unrepresentative of retired Americans that it should be considered a survey of attitudes of rich retirees.

The MarketWatch article did not mention any of this. It simply reported on the survey's findings. It began:

The financial crisis of 2008-09 hit retirees hard, but a majority of them now express confidence about their finances and have adopted more prudent spending habits, according to a survey that followed the same group of higher-income retirees from 2008 through 2011.

European Debt Crisis: You Haven't Seen Anything Yet

By: Jeff Cox

Though the daily market gyrations might indicate otherwise, realization is beginning to creep in that the European debt crisis and its effect on the U.S. will not take days, weeks or months to unwind—but years.

Getty Images

How many years is up for debate, but a common range bandied about among investment experts is two to five.

That prolonged time frame — which entails the period it will take to reduce government spending, come up with workable debt repayment plans, and, most likely, witness the contagion that will follow — means that the market tumult that the crisis has brought also won't be going away anytime soon, either.

"Despite rebounding market confidence over the past week, the recent worsening in the larger sovereign bond markets of Europe suggests greater risk to the U.S. and other regions," Steven C. Wieting, Citigroup's managing director of economic and market analysis, said in a research note. "The impact of Europe is no longer a question of isolating weakness to peripheral countries, but one of how Europe's instability/austerity is isolated from the larger world."

The increasingly sober view of how deep the European problem will run has come with the realization that relatively tiny Greece is not alone with its sovereign debt problems.

Jeff Cox
Senior Writer
CNBC.com

Italy has seen interest rates soar, then fall, then climb again over the past week, with an auction Monday producing a high yield for two-year debt at 6.29 percent. That's better than the 7.20 percent blowout last week, but still unsustainable for financing a 1.9 trillion-euro debt.

Policymakers, though, largely have avoided frank discussion over just how long all this market turmoil will last.

"Nobody wants to be that person to get up there and say this is going to be about four or five more years to really work through all this stuff," says Robert "Hap" Sneddon, portfolio manager at CastleMoore, an Ontario-based investment firm. "That's why there's a disconnect between what's good for us today and what's good for us two years from now."

And it could be much worse than that.

Obama’s growing disdain for American worker

By Joseph Curl

President Obama, donning a traditional Ikat shirt Friday at a summit dinner in Indonesia, is spreading the message far and wide that the American worker has let down his nation. (Associated Press)

They say that politics stops at the water’s edge, but apparently, that doesn’t apply to President Obama, as so many things apparently don’t.
The president, jaunting around the world as America’s economy crumbles and Congress lumbers along, leaderless, dropped into a high school in Australia. Talking to the Aussie kids, he said America’s public school students have “fallen behind” them in math and science. And he said in the U.S., many children don’t get the “support they need when they’re very young” so they’re “already behind” when they enter elementary school.
Of course, that doesn’t apply to the president’s and first lady’s daughters. There was no chance the One Percent Couple were going to send their own children to a public school in the District of Columbia; they’re off at a private school that costs $30,000 per child per year.

President Obama's Hopeless 'Malaise' Moment

President Obama seems frustrated these days – lashing out emotionally, intensifying his rhetoric against money-makers, doubling down on his demagoguery, and claiming that heartless GOP rivals want dirty air, unsafe water, poisoned food, and no health care. Mr. Obama blames Congress for not enacting yet more of his destructive “stimulus” schemes, even as the CBO this week reiterated its prior estimate that Obama’s first stimulus scheme ($787 billion, February 2009) will have a net negative impact on GDP over the coming decade.
Mr. Obama says he’ll spend $1 billion on his coming campaign for re-election – gathered, no doubt, from the corporate “fat cats” he likes to denounce – and that thematically he’ll be running against a “do nothing” Congress. In fact, if Congress did nothing for Obama over the coming year, it would be doing him a favor.
More pathetic still has been Mr. Obama’s recent resort to blaming others – as usual, the innocents among us – for the abject failure of his own policies. For some inexplicable reason, he said in Orlando last September, Americans have “gotten a little soft” and “didn’t have that same competitive edge that we needed over the last couple of decades.” In late October he told a gathering in San Francisco that “we’ve lost our ambition, our imagination, and our willingness to do the things that built the Golden Gate Bridge.”

THE LIBERTARIAN

Tuesday, November 22, 2011