The Wall Street Journal can tolerate a perpetual Greek debt crisis or one confined to the pigs: Ireland, Greece, Portugal, and Spain, even though Spain is the fourth biggest economy in Europe. It got a little concerned when Italy, the third biggest economy started to have trouble selling its bonds. Then the suspcion centered on France. This was the cause for scrutiny. But when Germany’s growth started slowing down in the latest report, the Wall Street Journal in the article, Fresh Plan For Europe Crisis, pulled out all the stops.

It’s not that Germany is having trouble selling its bunds. That would be unthinkable. But in a report just released, its economic growth in the second quarter stalled after growing at an incredible pace in the first quarter, 5.5%. It’ now only .5% — practically dead still. Everyone in the Euro Zone was counting on Germany’s money to fund all those bailout loans. Now Germany won’t be able to afford it.

This lack of growth has occurred at just the wrong moment when all the other economies of the Euro Zone need restructuring and bailouts. The Journal goes so far as to predict, “that ahs pushed the continent’s common currency to the brink of collapse.”

Remember, the euro is the D-mark, and the old D-mark is the euro.

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David Cameron may lament Britain’s “slow motion moral collapse” that led to England’s worst rioting in decades. He may talk about “broken Britain” in his speeches and refer to a “culture in which people and parents increasingly don’t take responsibility for their actions”. He may discuss how the “fear of stigmatizing people” stands in the way of preventing future riots. He might even conclude that in the “risk-free ground of moral neutrality there are no bad choices, just different lifestyles. Live and let live become do what you please.”

But what is clear to me is that we’re not talking about Churchill’s Britain anymore. No one could have pictured Winston Churchill in a photo op hugging a “hoodie” as Cameron did in 2006. Churchill would just as soon have been caught hugging a Nazi. The stern moral leader of Britain during World War II who stayed at 10 Downing Street during the Blitz as the Queen Mum stayed at the Palace and visited the ruins on tours would not have understood what was going on today. The Britons of the 1940’s who exhibited the “stiff upper lip” and fought back against the Wehrmacht are not the Britons of today.

But then Churchill was born in the 1870’s during the height of Britain’s golden age, the Victorian period, when Queen Victoria ruled the British Isles. He and the generation of young men born before the end of the nineteenth century who were blooded on the battlefields of the First World War like Gallipoli and then came back to fight again one generation later in what Churchill called Britain’s “finest hour” seem like legendary ancestors now.

But then Britain doesn’t have the position in the world today that it did then. In Churchill’s day Britain was still first among nations. It led the Allied policy during the Second World War, though America was funding it. Now it has passed along everything, including that old stern morality, to the Americans. Apparently Cameron wanted to hire an American, Bratton, to be head of Scotland Yard. Can you imagine what Queen Victoria or Churchill would have thought of this? I rest my case.

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Broadwater Farm was built in the late 1960’s as a high density housing project in the Totenham District of London. It was supposed to be an experiment providing 1063 apartments for low-income residents. But it became the center of riots in 1985 and again just this August in 2011.

People speculate that the cause is young, unemployed men and the gang culture, peppered with racial problems with blacks from Africa and other former colonies from the now deceased British Empire.

But that is where I’d look for causes. Remember, this is no longer Churchill’s England where he talked of fighting for both the Mother Country and the Empire. The Empire was not just a glorious thing. It might also have been a safety valve for the ferment that is now convulsing the country. Certainly Australia was a prison colony. But certainly other malcontents must have found their way out of the Mother Country to various points around the world where they could seek their fortune and attempt to make a living.

So no wonder everybody riots and attacks the class system, resenting the “haves” when they are the “have nots”. The Empire that gave them the chance to become a “have” is now gone.

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First there was Greece. That occupied the Euro Zone last year in 2010 and early this year. Nothing else seemed to be going on, and Greece was a Balkan country. You couldn’t expect much from one.

Then it became all the pigs, Ireland, Portugal, Spain, and Greece. That was still somewhat manageable, though Spain has the fourth largest economy in the Euro Zone. They were still southern European countries. People thought the Euro Zone could still pull it off.

Contagion spread. Italy was affected as well as Italian bonds. Many an American mutual fund specializing in bonds contains Italian bonds.Italy is the third largest economy in the Euro Zone, and for once they couldn’t bail her out.

But then last week the unthinkable happened. Rrating’s firms turned a suspicious eye on France’s three star credit rating. They also wondered openly about its banks. Can contagion spread this far this fast? France is after all the second biggest economy in Europe.

Only Germany is left. Can she stand alone? Can Merkel think of a way to save the Euro Zone? With Germany taxpayers in an ugly mood, I wonder.

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The pigs: Ireland, Greece, Portugal, and Spain have been struggling for months to adopt the austerity measures demanded by their northern neighbors: Germany, the Netherlands, and Finland, some say France. But now Italy has joined the crew.

Berlusconi has announced that he will balance the Italian budget by 2013, earlier than expected, by slashing 45 billion euros in public spending. He also promises to raise taxes on people earning more than 90,000 euros/year. Investors didn’t like the previous Italian plan whereby all the cuts weren’t due to take effect until after the next election. They thought they’d be ignored by the new government. So the Prime Minister had to do more.

Whether this will convince investors that Italy can remain the third biggest economy in the Euro Zone remains to be seen. Otherwise, the currency might not continue because Italy, unlike the others, is too big to get a bailout.

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No wonder Germany yearns for a return to the D-mark! Only Germany had control over it. Now sixteen other countries can make decisions about the common currency that Germany cannot control. Nations such as Greece can choose to outright abuse it according to German standards. They can spend more than they make many times over. They can convert their bonds to super junk. And the common currency takes a hit. Germans wish they didn’t use it.

Germany wishes it could make the other nations in the Euro Zone adopt its standards. But Italians are Italians, Greeks are Greeks, Portuguese are Portuguesse, Spaniards are Spaniards, and Irish are Itish. The only way it could succeed here would be to have a currency among same-thinking countries such as Germany, the Netherlands, Austria, Finland, etc. You might have an argument about whether to let France or Belgium in. But that would at least be a more manageable debate.

Money isn’t just money. It’s also culture and politics. Whether it’s viva la differance is a matter of opinion, but it won’t disappear with a flick of a wand or even a nod from Jean Claude Trichet.

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The United States may have lost its AAA credit rating this week. But everybody’s watching France instead. If they lose theirs, the ripples will be far bigger.

The Euro Zone is brand new. Anything could shake it apart. Everybody’s looking for the trigger. They watch with intense scrutiny as Sarkozy meets on Wednesday morning in Paris with his advisors to discuss austerity and pledge that they will propose a constitutional amendment that they must always balance their budget. The French budget hasn’t been in balance for three decades! But more importantly France has a history of political instability. I can remember being in Paris in 1968. Ours was the first tour group allowed into Paris after the student protests on the Left Bank. We were escorted by police. Le Figaro headlines proclaimed, “AZZEZZ DE GAULLE.” And not many years before that it had been Vichy France.

Everyone is piling into treasuries this week as a safe haven for money. It wouldn’t matter if Standard and Poors had lowered the United States rating to junk like Greece. People would do so. For several centuries now the United States has been the place immigrants have fled from political oppression. And since World War II, America has taken Britain’s place as the top dog. Somebody has to be the standard, and we are it. Until that changes, people will react more to France’s credit score than ours. It’s political and historic. It’s not a game of numbers.

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The editorial in the Wall Street Journal, “Bring Back The D-Mark” by Holman W Jenkins, Jr., suggests that the “euro was a noble idea” for two reasons. It would help poor countries and elevate them. And it would solve what became known in the twentieth century as “the German problem” by keeping Germany so occupied that the country could not get into trouble.

But what the Anglo-American victors of World War II fail to realize is that they have set an impossible task for Germany to perform. They want it to head a loose confederation of states with one currency but multiple conflicting governments. In America we got rid of that kind of loose confederation in the eighteenth century and then fought the Civil War to get rid of the remnants of states rights and establish a central control in Washington, D.C.

Germany has no central control of the member states of the EU. It’s just another member, though the most well-off member in financial terms whose currency, the D-Mark, was the envy of Europe. But unless all the states have a common government with a Fed-like body, the ECB, that has the right to make rules for all the member banks instead of just set interest rates, it won’t work.

Germany keeps on insisting upon austerity for Greece, Spain, and Italy. But it can’t enforce such measures. In fact, if Jean-Claude Trichet buys Spanish and Italian bonds, along with Greek, Irish, and Portuguese, it’s the equivalent of printing money. He’s risking inflation. And he’s giving such sttates a motive NOT to pass austerity measures. They will assume that Germany will foot the bill.

So it’s paradoxical. In the modern age you can’t have a successful currency without some sort of central control. If nothing else, maybe the ECB should be given authority over all the banks of Europe. That would be a good start towards maintaining the euro.

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Wolfgang Schauble was not impressed yesterday when Jean Claude Trichet achieved his minor little vindication for his bond buying policy, buying between 3 and a half to 5 billion euros worth. The ECB bought ten-year Italian and Spanish bonds. Italian bonds dropped from 6% to 5.3% and Spanish bonds dropped from 6% to 5.15% a a result. bringing them closer to German bunds.

Trichet says he had to do this because the rescue fund has not yet received the authority to buy bonds. Merkel agreed to let it be raised to 440 billion euros but has said “no” after that. Wolfgang frowns when anyone suggests making that amount greater. The German taxpayers don’t want any such liability.

Besides Trichet’s move didn’t do anything for European stocks yesterday, which were swept up in the downward spiral sparked by the U.S. downgrade. Schauble probably thinks that’s a lesson to be learned. No move will matter unless each country gets the fundamentals straight. Giving money to countries only makes them ineffective and dependent. Adopting austerity measures teaches them a lesson.

That’s called coloring the world Germany.

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The board of the ECB divided along a mostly North/South line about whether to buy Italian and Spanish bonds. Up to now bond buying programs were to be left to individual member states. Germany still thinks that they should be.

After the US downgrade on Friday, Jean Claude Trichet became determined to take the lead role in dealing with the financial crisis. He wants to avoid a world-wide financial meltdown. So he will buy bonds in a big way.

Germany does not want an outside entity dictating its financial policies. So I’m sure we’ll hear more of this conflict in the coming days.

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