We’ve been hearing about Greece for months. On Monday, investors fled Italy’s bonds. /The gap between Italian bonds and German bonds (the European standard, just as the United States is the world stard) leaped by 100 basis points or one whole percentage point. And Italy is Europe’s third-largest economy after Germany and France. Predictably European stocks fell. So did the Dow, despite Berlusconi’s promises to get a package of austerity measures through the Italian Parliament urged on by Angela Merkel.

Nobody likes the fact that Italy’s sovereign debt load is 120% of its GDP. Investors know that Germany and the EU could conceivably bailout Greece, Portugal, Spain, and Ireland and survive. But they wonder if the European Union wouldn’t crumble if they had to bailout Italy, too.

What is Germany to do? When all the investors flee Italy and don’t want to buy their bonds, Germany and the ECB could decide to print money. But Germany would rather die. What’s the other answer? The Italians have to start thinking more like Germans. It sounds like a bad joke in terms of European history. Germans have been making jokes about Italians while appreciating their food and culture — and southern Germans their religion — for generations.

No, Italy, unlike the Balkan country called Greece, will never drop out of the European Union or anything to do with Europe. Italy is the source of modern European history. But still the Italians could decide to let the Germans manage the finances for them, set all the rules, and obey them as best they can. If the world can become politically Americanized, it can become economically “Germanized”. For that matter Americans could learn a thing or two from the more austere and frugal Germans while they’re at it.

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The Wall Street Journal published an article on Monday, July 11, 2011, “EU Calls Top Offiicals To Meet On Greece Aid”, to announce that Herman van Rompuy, the EU President, called a meeting of top EU policy makers to discuss plans for the second bailout of Greece, including President of the ECB Jean-Claude Trichet, Luxembourg Prime Minister Jean-Claude Juncker, European Commission President Jose Manuel Barroso, and EU Economy Commissioner Olli Rehn. They are to meet today in Brussels.

But really what good are endless meetings going to do? There is already a meeting of a group of EU finance ministers today in Brussels also? There are more meetings every single week. They rehash the same proposals. Sometimes they pretend to come up with new ones, which are new only because they are worded differently.

In this blog I have previously discussed how this is all ipolitics on the part of Germany to please its voters who are deadset against Greece. But really the question is how Anglo can Germany become in its economic policy? This is a country that didn’t do much with colonies in the nineteenth and twentieth centuries. Hitler wanted to rely on England to take care of an empire in the Far East and other far flung places for him. But Germany can no longer shun such responsibilities. If it wants to create an economic empire in Europe, it must pay for one in the same style the United States or Great Britain would.

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If we had another Three Mile Island, I don’t think the United States would turn off all its nuclear reactors. But then we won World War II partly because we were the inventors of the atomic bomb, which came before nuclear power plants.

Germany did not win World War II or World War I either, for that matter. They are still within living memory of the firebombing of Dresden and other horrors. Cities such as Nuremberg and Hamburg suffered much devastation. Nor did Munich escape. And for the capital city, Berlin, the worst fate of all was reserved —- invasion and occupation by the Russians for forty-five years before the reunification of Germany.

Maybe Germany didn’t experience any nuclear bombs, but the war made them think that such types of devastation were possible. The U.S. thought it was immune even to a terrorist attack. Look at the surprise about 9/11! No one in the U.S. really imagines a nuclear attack. Even the Cold War was more imagined than real. In all honesty, no one except Hollywood envisioned Russia invading and taking over.

So it is chilling how on Friday the upper house in Germany approved the closing of nuclear reactors by 2022 just one week after the lower house voted for it. They say it was the example of Japan in March that did it. But Germany isn’t on a major seismic fault, and it can’t experience tsunamis. It was World War II that did it.

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They ought to turn the Greek Debt Crisis into a Monopoly-style game and sell it. They could give Greece another rollover every time you passed go and got $200.00. The sales might produce enough money to ransom Greece.

Now the talks, dubbed “debt reduction talks”, are shifting to reducing the Greek debt rather than the bailout. They want to cut the 350 billion euro debt burden by taking advantage of the deep discounts at which Greek bonds are trading.

On July 11 the finance ministers of the 17 euro nations are meeting at Brussels to discuss the use of European bailout funds to cut the Greek debt.

It has been announced that the talks will continue until September. So they have enough time to craft that Monopoly game.

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Jean Claude Trichet signaled what was really going on in the EU when he announced that the interest rates were being raised to 1.5% from 1.25%, the second rate increase this year. This is not political and it’s not showmanship like the continuing show called the Greek bond crisis. It’s the meat and potatoes of the European economy — Germany.

Germany needs an interest rate rise because it’s growing and the Germans fear inflation more than anything else after the hyper-inflation of the 1920’s. Trichet even signaled that there will be another increase this fall, again because of Germany.

The German mark is in essence the euro. Germany decided to expand and share it with the rest of Europe. Greece and the pigs want to participated because it raises their level of prosperity, especially in good times. But in bad times it stresses the Greeks, the Portuguese, and the Spanish along with the Irish. But they have to stick with it and hope that they will prosper like the Germans.

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France’s plans for involving the private sector in financing Greek bonds and Greek debt has met with the disapproval of ratings agencies which proclaim that they would create a “selective default”. That resurrects Germany’s original plan for involving the private sector. Senior German government officials brought it back to the discussion table on Wednesday.

Under this proposal investors would swap Greek government bonds for new bonds, the very proposal that Merkel gave up on several weeks ago to the praises of the press. The German attitude seems to be that there will be a selective default no matter what, so what?

What the finance ministers should explore is whether one of the 17 countries in the Euro Zone should be allowed to default. That would make trading in the currency and buying European bonds less attractive to investors. The German rating is the highest. They should keep everybody in their union solvent, too.

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Germany’s next Olympics and its Olympic vision of itself and the image it wants to project to the world will not be on display during the Winter Olympics of 2018. Today they came in second and lost the bid to Pyeongchang, South Korea.

Perhaps one of the reasons it was rejected is that Germany is going through an identity crisis. It doesn’t know what image it wants to project of itself. If it had gotten the nod, it was going to use the 1972 Olympic facility in Munich as the center for the next Olympics in 2018. That alone doesn’t speak of any vision at all. It just speaks of the past. And apparently green protestors were objecting to hosting the Olympics on the basis that it wasn’t eco-friendly. That speaks of a bunch of neo-hippies who’ve decided not to worry about their image but just to coast for the foreseeable future.

Germany hosted the Olympic Games twice during the twentieth century, once in Berlin in 1936 and again in 1972 in Munich. The first occasion was obviously a way for Adolf Hitler to show off the Third Reich to the rest of the world, especially England. The French team gave the Nazi salute as a tribute to how well Hitler and his economic ministers had dealt with Germany’s economic woes and brought it back as an industrial giant to be reckoned with.

Munich in 1972 was a time to showcase the “new Germany” and focus on its miraculously quick comeback after its defeat in World War II.

What is Germany now? It might focus on its lead position in the EU and its new currency, the euro. But instead all too many Germans have succumbed to living in the land of the Lotus-Eaters. They let the United States have the vision for them. They worry about was is green, philosophize, and cop out of any political vision or responsibility.

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Germany wants to involve private investors in the Greek bailout plan. They say they support the French plan to rollover 30 billion euros into the new Greek bonds so the countries involved and the IMF would have to pay less. At least that’s what they say now. They know very well that it won’t work in the long run. But for now they have to keep up the show to satisfy German taxpayers.

This is already being perceived as a “selective default”. It affects some of the investors’ bonds. It would leave the bond holders worse off than before.This means that everybody will have to go back to the drawing board and come up with a new bailout plan. Sovereign debt within the EU cannot be allowed to default. That would adversely affect the currency. Investors wouldn’t take it seriously.

Germany knows all these things. But now they’re on vacation Hopefully so are the taxpayers. They have until September.

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In an article in the Wall Street Journal for Saturday, July 2, 2011, “Euorpe’s Central Bank Faces Credibility Test”, the ECB said it would never buy back bonds involving sovereign debt. Then it reversed itself and affected its credibility. Now it says it won’t accept defaulted Greek bonds as collateral. But the Germans said it should accept longer maturity dates. Merkel backed off. Now they fear that no matter what happens the ratings agencies will say it defaulted if it accepts Greek debt in any form.

The European Central Bank expects a tough decision facing it in the future. Is it going to approve of whatever bailout the European powers, meaning France and Germany, come up with. Should it put the security of Europe first? Or should it think of its own reputation first?

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In an article on Saturday, July 2, 2011, “Russia To Deploy Troops To Defend Interest In Arctic”, the Wall Street Journal discusses how two army brigades are being sent to the north to defend Russia’s interest in its arctic resources. Putin Thursday said that Russia will spend 33 billion to build a year round port in the Russian Arctic on the Yamal Peninsula. An underwater ridge from the Northern Siberian shores is thought to lead directly to the North Poke, and it is expected to have plenty of oil.

The problem is that Finland, Norway, and Sweden have also sent troops to defend competing claims. Canada and Denmark have done the same. Even worse, because of receding ice it is now possible to find more fishing grounds farther north. That hasn’t escaped the attention of these powers either.

Is this to be the scenario for a new World War III? It is easy to imagine that it could be so.

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