Political upheaval has hit Finland, and it’s merely a foreshadowing of bigger changes ahead. The core issue is whether Finland ought to be paying for bailouts for other EU states. In reaction to establishment support for the bailout, voters ousted the pro-bailout ruling party and gave an upset victory to the bailout-critical conservative party. Against every expectation, the eternal rule of the social democrats is at an end.
But most striking of all are the gains made by a previously invisible party called True Finns. This is the only party to take a hardcore position: no bailouts at all. It also so happens that this party is predictably nationalist on issues of trade and immigration. But that’s not the source of the appeal. The bailout is what is on everyone’s mind. And you know that the anger must be palpable if it fired up the usually sleepy world of Finnish politics.
In the sweep of history, few issues are as politically volatile as tax-funded bailouts of foreign countries, especially during difficult economic times. It’s a policy that provokes dramatic political change. The 20th century’s most famous case was in interwar Germany, when nationwide resentment against payments to conquering allied nations ushered in National Socialist rule.
It should be no surprise that over-taxed Finns have no interest in sending their tax dollars to bail out the banking industry of Portugal, a country that is 2,500 miles and two days travel away. Even governments should have learned long ago that it is never a good idea to enact these sorts of policies. In this case, however, every EU nation is bound by a political contract to bail out any other; the bailouts are embedded in the very structure of how the political, financial, and monetary sector is currently structured.
The entire EU system is afflicted with the paper money disease. It creates a boom that balloons the banking sector, allows politicians to spend wildly, and encourages private enterprise to expand operations in an unsustainable way. Then the bust comes and everything falls apart. Government revenue crashes, banks are threatened with insolvency, and mass bankruptcies are apparent everywhere.
There is a fork in the road, one branch labeled liquidation and the other bailout. When the fiat money is available—and with their favorite interest group, the banking establishment, warning of the end of the world—guess which way the politicians choose? This is why member states are being told that they must cough up $129 billion (it will be more) to save Portugal from its own problems.
It’s not that politicians all over Europe (and the US) love Portugal so much that they are glad to lavish it with more paper money. The real fear is contagion. If Portugal goes, Spain and Italy are next, and then the whole shaky system comes down, first in Europe, then in the UK, and finally in the US. This is the scenario that allows politicians once again to paper over the problem rather than confront it.
Wasn’t the invention of the European Central Bank supposed to control credit expansion in Europe? Philipp Bagus, in his book The Tragedy of the Euro, identifies a fatal flaw. There is nothing that the ECB can do, even if it wanted to, about sovereign state finances or the fractional-reserve banking system that feeds on government-created debt. The ECB can control money injections, but it can’t stop debt creation or the banks that thrive on it.
This debt creation generates its own unsustainable boom. A country’s finances then correct to reflect reality and the banking system comes under pressure. Then the bailouts begin. What ends up happening is that the (relatively) frugal states in the European Union subsidize the less frugal ones. There is moral hazard embedded in the very structure of the entire system.
Nothing is going to fix it. Bailouts are only temporary aids until the next round of credit-fueled profligacy. And there is absolutely nothing that the ECB can do to stop it. Every profligate country knows that it is too big to fail, and that it enjoys presumed access to the financial resources of every other state in the EU. So the result is ongoing and worsening bailouts, leading to total bankruptcy.
For this reason, everyone knows that there is far more at stake than just Portugal. The entire system of European finance and monetary arrangements is broken. It can’t be repaired with patchwork bailouts. At some point, the flaw in the system will have to be fixed (via a hard currency) or there will be a reversion to sovereign paper currencies and the Euro will be chalked up as yet another failed experiment in monetary and regional planning.
Keep in mind that this is the third country to be bailed out recently. Ireland and Greece came first. And those bailouts barely worked. Once we plough through the smaller countries, we will move on to the larger countries. And there is not enough money, absent hyperinflation, to bail out Spain, much less Italy.
The European Central Bank, which has been less irresponsible than the Fed in recent days, is the first world central bank to do what should have been done three years ago. It is raising rates with the intention of tightening money. The Fed should and must do the same thing. But there is a problem. If real interest rates reflected financial reality – with no presumed bailouts and no power to create new money – they would be sky high.
The Portugal case and the Finnish reaction should serve as a wake-up call. All these bailouts and stimulus packages cannot hide the fact that the governments and banking systems of the US and Europe are fundamentally bankrupt, sustained only by the power to create money out of thin air. Each intervention is working to buy time but not to deal with the fundamental problem. And each time when the problems return, they are worse than before.
It doesn’t take a True Finn to recognize the injustice of bailouts for foreign governments. Neither nationalism nor bailouts will fix the real problem. We will eventually find our way back to sound money. But it is going to be terrible slogging, and real convulsions, along the way.
Finland's likely new prime minister has insisted that the new administration will not seek radical changes to a euro-zone bailout for Portugal.
Jyrki Katainen, head of the National Coalition Party that topped the poll in Sunday’s general election, said he was confident a “spirit of compromise” would prevail.
Doubt about Finland’s commitment to Lisbon loans and guarantees follow the strong election showing of the populist True Finns, a Eurosceptic party opposed to bailouts.
“We’ll see what is possible, but the changes would not be very big anyway,” said Mr Katainen at a party conference. The 39-year-old outgoing finance minister told party confidants he has already begun “putting out feelers” to other parties and is confident he can “mesh together” a coalition.
In the new 200-seat parliament, the top three parties are the National Coalition Party with 44 seats, followed by the Social Democrats (SDP) and True Finns with 42 and 39 seats respectively.
Mr Katainen’s most likely coalition partner, SDP leader Jutta Urpilainen, said yesterday it was by no means certain the True Finns would be brought into a three-way coalition.
But Ms Urpilainen, whose party had its own criticisms of bailouts, said a majority government was important. In an apparent shift away from blanket opposition to bailouts, she said her party would be looking for private bank involvement in future arrangements.
“The liability of banks and investors must be reflected in the management of the crisis in some way,” said Ms Urpilainen. “We intend to stick to this line and, in this regard, the True Finns have been closer to us than the National Coalition Party has.”
True Finns leader Timo Soini has stuck to the anti-bailout position that gave his party a fourfold increase in support to 19 per cent. He said “Finland shouldn’t be sitting in the first carriage” in an EU drive to federal construction.
The party is determined to reduce Finland’s contribution to the EU budget and renegotiate the deal with Lisbon, but Mr Soini admitted yesterday that it “might take some time” to find common ground with his pro-EU potential coalition partners.
Though Mr Katainen said Finland had insisted that tough conditions be attached to the Portuguese loan, he said it was necessary. “It is such a big issue for Finland. It is in our own interest.”
Finland’s new government will have to agree a strategy towards Portugal ahead of a mid-May EU foreign ministers meeting to work out details of the bailout. A spokeswoman for the European Commission said the results in Finland had had no impact on preparations for the Portugal deal.
“It hasn’t changed anything for us,” said Pia Ahrenkilde-Hansen, spokeswoman for European Commission president José Manuel Barroso. “We are fully confident that Finland will continue to honour its commitment.”
Finland's prime minister-elect says Finland will not upset Portuguese bailout plans
Finland's prime minister-elect says his country will not upset plans for helping debt-ridden Portugal although difficult coalition negotiations in his country may require some changes to the program.
Jyrki Katainen says he will demand that all members in a new ruling coalition accept the "Portuguese package" and that Finland should help solve problems in Europe and not create them.
Katainen's conservative National Coalition party won Sunday's parliamentary election, leaving him the task of forming a new majority government.
Katainen said Tuesday he would sound out various possible partners, but was widely expected to begin talks with two euroskeptic opposition parties that finished close behind the pro-Europe conservatives.
Boris Nemtsov, Putin Foe, Is Shot Dead in Shadow of Kremlin - A Staged Shooting? 2015-02-28 22:37 NY Times: Boris Nemtsov, Putin Foe, Is Shot Dead in Shadow of Kremlin
Mr. Nemtsov, a former first deputy prime minister of Russia, was killed in central Moscow in the highest-profile assassination in Russia during the tenure of President Vladimir V. Putin.
A Staged Shooting?
Why does the dead body of fitness enthusiast Boris Nemtsov have a pot belly?
The Anti-New York Times doesn't ...
Holocaust, Hate Speech and Were the Germans so Stupid? 2015-02-28 20:31
Description form YouTube:
This is an updated version of the video which was taken down by YouTube following a spurious copyright-infringement claim. It addresses issues regarding claims that Zyklon B in liquid form gives off fumes at temperatures below 0º C.
As the world approaches the brink of a new Middle East crisis this time involving Syria, clearly at the behind-the-scenes ...
California Infant Dies after 8 Vaccines, Family Gets Him Back from Hospital Cremated 2015-02-27 21:55
Parents in California are distraught after losing their infant son after being vaccinated. He died in his sleep and was taken to the hospital already deceased. Hospital staff ruled his death as sudden infant death syndrome. The couple was told an autopsy was required to be performed on their son.
After returning home, waiting to get an update, they never received ...