Greek lightning won’t stay in the bottle

If the economic observers are right, the birthplace of Western civilization is a ticking financial timebomb that will mean the end of the Euro as we know it. This week Standard & Poor's downgraded Greece to "CCC", the lowest credit level possible, on fears of a default. And China’s not very happy about the situation. Two scenarios are likely. The first involves yet another bailout package that would keep Greece afloat. That has stalled. The second is a two-part default with part one by the end of 2013 and part two by the end of the following year. According to currency strategist David Mann, the market has placed the likelihood of a Greek default at 75 percent.

As usual, it’s governments versus bankers. For any second bailout to get the approval of Europe’s largest economy, Germany, public sector support is a must. The European bank is saying it will see any private sector participation in the plan as coercion and call it a selective default. So how the bailout will happen without obliterating the country’s credit score is anyone’s guess. But contagion looks like it’s in the offing. 

Moody’s is examining three top level French banks for their exposure to the probable Greek default.

The Greeks themselves are not taking the austerity measures required for a second bailout lying down. A phalanx worthy of their ancient forebears turned out in force armed with ‘petrol bombs’ turned out near the parliament building to vent their anger at lawmakers. This has led the Prime Minister of Greece to start doing the cabinet shuffle in order to maintain a semiworking government.

The reality is that government defaults are pretty common occurrences. It’s the sovereign equivalent of bankruptcy. The current crisis was also a result of creative practices involving cross-currency swaps by … wait for it … Goldman Sachs, which helped the Greek government paper over its debt so it could appear to be in line with its debt level obligations under its EU membership. Much of Greece’s current woes legitimately may be of its own making, but if default worked for Venezuela nine times during a 175 year period, the world is probably protesting too much over a possible Greek debt conflagration.

U.S. military evolving into the green war machine

It’s nice to know someone has finally realized that the America’s dependence on foreign oil might be a national security problem. The Pentagon is turning its eye to greater energy efficiency on the battlefield. The military spent $15 billion last year on energy. The Pentagon is expected to spend $1.8 billion in 2010 on renewable energy technology and that spending is expected to rise to $26.8 billion by 2030. In 2009, the Department of Defense rang up an energy bill of $13.3 billion. By comparison, the U.S. military uses as much energy as the African nation of Nigeria.

Of course the energy strategy was mandated by law in 2009. U.S. Sen. Mark Udall (D-Colo.) also introduced a bill that would create a Joint Contingency Base Resource Security Project that would facilitate the efforts of the military services to pool their research efforts. With the Army developing hybrid vehicles and the DOD pushing renewable energy technologies, it’s quite possible it will have beneficial effects in the civilian market.

In the first six months of 2011, Americans spent more than $50 billion on fuel. With the economy still reeling from the shock of $4 a gallon of gasoline, the military’s campaign to develop renewable energy technologies may succeed in stemming the transfer of wealth to countries that don’t like the U.S. very much and reduce our carbon footprint. Only the Koch Brothers could argue with that.

A jobless prescription that fails to address the illness

Paul Krugman and Todd G. Buchholz. One of these men is a Nobel Prize-winning economist. The other is not. And the one is not has the temerity to not only cavalierly blow off the Nobel Prize-winner’s explanation of the economy’s present woes but suggests replacing unemployment benefits with vouchers … umm a ‘signing bonus.’

Buchholz’s disconnect comes as no surprise. According to the ID tag line, he was a White House economic adviser to George H.W. Bush and a former managing director of the Tiger hedge fund. It’s not just that elected officials in Congress have put the needs of a few bond-holders over the needs of the many, it’s also the fact that job seekers are experiencing a systemic bias against the unemployed. The problem isn’t that the unemployed want to live on government benefits. The problem is that employers won’t hire them. A point made quite baldly recently by Sony Ericsson when it told job-seekers in a job listing "No unemployed candidates will be considered at all." An ad for Beacon Hill Staffing Group in Boston told prospective paralegals that “to be considered, candidates must be currently employed."

Some lawmakers, such as New York State Sen. Andrea Stewart-Cousins, have grasped the enormity of the problem and are considering legislative remedies to the problem. The Equal Employment Opportunity Commission is also taking a look into the issue to see how extensive the problem is and who, exactly, is being hurt (most likely minorities).

But with the Republican Congress playing chicken with the debt ceiling (and risking default) and engaging in “right wing social engineering” the prospects for any meaningful fix to the economy that benefits Main Street remains dim.

Clearly it doesn't take Nobel Prize-winning economist to see that the economy in general, and American workers in particular, are both in trouble. But the causes of the trouble are beyond Buchholz’s grasp. It’s easy to offer a solution for unemployment when you have a job. In the current environment, having a job is the only way to get a job. One can only hope that if Buchholz’s remedy is adopted, he’ll get a first-hand taste of unemployment and have to swallow is prescription whole.

GOP engineering a bureau's stillbirth

The Daily Show - Exclusive - Elizabeth Warren Extended Interview Pt. 1
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Consumer Financial Protection Bureau is set to begin its work on July 21. Despite Democratic support for Elizabeth Warren, Team Obama is considering naming a former banker, Raj Date, to head the bureau. But Congressional Republicans won’t have it. They are preparing to offer amendments designed to trap/spay/neuter the watchdog bureau before it can perform its mission: to protect consumers.

And while it may be a core tenant of conservatism that big government translates into lax morality, the irony seems lost on them that Wall Street bankers (whose morality was questionable at best) who played dice with the economy and got bailed out by the big government they decry will get a reprieve. Security and Exchange Commission rules that were supposed to go into effect June 16 as a result of the economic crisis will not go into effect. The bank lobby continues to fight against the bureau despite the fact that it might even help Wall Street long term interests. Of course this begs two questions: why is the GOP really fighting the bureau’s creation and whose interests are Congressional Republicans really serving?

Gate's farewell to NATO’s arms

It was U.S. Defense Secretary Robert Gates’ farewell tour and his blunt-speaking stop in Brussels garnered a collective “meh” from America’s erstwhile allies. The North Atlantic Treaty Organization has seen more action against enemies outside of Europe since the fall of the Berlin Wall than it did during the entire Cold War. The irony being that it is probably less battle ready now against the enemies it presently faces (Taliban, Libya and Hezbollah) than it was when it trained against an enemy it never faced in battle (Russia and the Warsaw Pact). It also faces financial pressure with only five of the 28 member nations pulling their mandated weight. Some of the members are underperforming (Spain, Turkey and the Netherlands) while others (Germany and Poland) aren’t performing at all. In the meanwhile NATO member nations are experiencing ammunition shortages and are overly dependent on American capabilities.

The question that begs is whether NATO still has a purpose. When the U.S. drawdown is completed in Afghanistan, will NATO continue to hold together in the face of deficit reduction efforts in the U.S.? Without a unifying mission, will the military alliance give way to the tea and crumpets outing that is the mythical and oft proposed EU Defense Initiative?

Madama President

The Daily Show - Christine Lagarde
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Madam Hillary Clinton is reportedly setting her sights on a new post, that of President of the World Bank. After several years of being America's top diplomat (a post that once was for the heir despairing to the U.S. Presidency) she's setting her sights on running the world body. Of course, this all comes with the standard denials. It seems quite likely that at this crucial moment in time, the two top finance chairs may give way to women, with French Finance Minister Christine Lagarde actively campaigning for the lead role at the International Monetary Fund, the one vacated by Dominique Strauss-Kahn (who is currently cooling his heels in a $50,000 a month townhouse in Tribeca, Manhattan while waiting to go to trial).

In a season of alpha males behaving badly, maybe turning over the world's purse-strings to the ladies is for the best. Now if we just get America's alpha male U.S. President Barack Obama to get behind Elizabeth Warren get that small matter of her running of the Consumer Financial Protection Bureau settled.

Is this thing on?

After several months of neglect, Snarknoir is slowly coming back to life. Expect that the blog will rediscover it's footing. With the spreading gap between rich and poor, the continuing disintegration of the economy, alpha males behaving badly, Election 2012 and the approach of Green Lantern, The Avengers, and The Hunger Games there will be plenty of snark to go around.