Europe is now looking at the possibility of “social unrest” should the continent be hit with a cold winter this year, the head of the International Monetary Fund (IMF) has now warned.
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PORTUGAL’S ELDER STATESMAN HAS CALLED ON HIS NATION TO DEFAULT
Mario Soares, who led Portugal to democracy in the 1970s after the Salazar dictatorship, has called on the government to default on its debts. The economic pressure on Portugal has been mounting in recent weeks, and the nation is losing patience with the EU imposed austerity. The Portuguese are looking at the death spiral in Greece, caused by their various rounds of bailouts and austerity.
Soares told Portuguese television channel Antena 1, “Portugal will never be able to pay its debts, however much it impoverishes itself. If you can’t pay, the only solution is not to pay. When Argentina was in crisis it didn’t pay. Did anything happen? No, nothing happened”.
Last week Portugal’s top court ruled that the government’s decision to slash pension payments and public sector wages was illegal. The ruling means the government is struggling to find the budget cuts required from elsewhere.
Portugal received an EU/IMF bailout in 2011, and as the crisis deepens again, many think it highly likely they will need another bailout very soon. If Portugal were to default, it would almost certainty mean their expulsion from the eurozone, and may lead other nations to follow their example.
Continued Chaos in Greece
The saga of austerity, recession and bailouts continues in Greece. Today the nation has been brought to a standstill as the unions call a 48 hour General Strike. The strike is ahead of a crucial vote on more austerity measures, the package would see a further €18bn of cuts and reforms. The measures are required if Greece is to receive the next instalment of bailout money. Greek prime minister Antonis Samaras is under massive pressure to carry the vote through parliament. He has only a slim majority, and politicians are deeply divided over the issue.
The EU is concerned that Antonis Samaras ruling coalition could fall apart, as a collapse in government would most likely see the far left and far right make major gains – both sides are opposed to the EU/IMF imposed austerity conditions.
The far right, Golden Dawn party, has capitalised on the problems in Greece, making huge gains across the country. In some areas where crime is out of control the Golden Dawn lead groups patrol the streets and attack migrants, who they see as the problem. The overstretched police have failed to stop the attacks.
Once prosperous areas of Athens are now “no go” areas as gangs take control and crime increases. Residents are now looking to the Golden Dawn to protect them.
Angela Merkel recoils from Greek showdown on Spain contagion fears – Telegraph
Angela Merkel recoils from Greek showdown on Spain contagion fears – Telegraph.
The German Chancellor Angela Merkel has been visiting Athens today, for the first time in three years. She comes at a time when Greece is looking for the next €31.5bn tranche of aid. Without the aid Greece will run out of money by the end of November. Recent figures show Greece has been in recession for 5 years, it’s economy has shrunk by 22%, and youth unemployment is currently at 55%.
Mrs Merkel was met with angry protestors and required 6,000 police officers to protect her. Greeks, and the Greek media, greeted her with Nazi insults.
Both the EU and IMF have been insistent that Greece steps up austerity measures in order to receive the money. However, Mrs Merkel came to Athens with a softer tone than Athens has previously heard.
There has been mounting pressure on Germany not to allow Greece to default, thus forcing her out of the eurozone. If Greece were to exit, then Spain would likely follow, and the euro would break up. Also tougher austerity measures could result in the collapse of the pro-Europe ruling coalition. If the Greek government collapses it would likely be replaced by either a far-right or far-left alternative. That could destabilise the entire region, affecting the Balkan region and Turkey, something no one wants to see.
It is likely Greece will receive the next instalment of money, however the €31.5bn will only keep Greece afloat a few more months. And as time passes both Spain and Portugal are edging closer to requiring more bailouts.
Could the Euro Break Up?
Markets continue to tumble across the globe, as the Euro crisis deepens. Since the election in Greece, no new coalition government has been formed, so no agreement reached on the austerity cuts to satisfy agreements with euro partners. The German Chancellor has now told Greece, if they do not stick to their bailout agreements, they will be expelled from the Euro.
In Greece 70% voted for parties against the EU-IMF imposed austerity, but 69% of Greeks want to remain in the Euro. A leaked report has shown that Germany are drawing up plans for a Greek exit from the Euro.
But this has significant dangers:
- If Greece goes – will Italy, Spain, Portugal and Ireland want to follow?
- What happens to the greek debt? It’s in Euro’s not drachma, ….Greece’s creditors would loose billions.
- The European banking system is already on it’s knees, Greece’s exit could see major banks across Europe collapse.
EU and IMF Preparing for a Greek Exist
As the crisis in Greece continues, EU leaders and officials from the IMF, are publicly talking about the possibility of Greece leaving the Euro.
Before now, this was said to be unthinkable.
But as the crisis deepens an exit is looking more likely despite the high financial costs.
Chancellor Angela Merkel of Germany has called on the Greece to hold a referendum on the Euro.
Despite the Greek people voting against EU-IMF austerity in the elections, polls still show about 70% of the country want to remain in the Euro.
However, Germany have made it clear, to remain in the Euro, they have to stick to their austerity obligations.
Also in Europe, Ireland’s banks are still struggling and it’s thought Ireland will soon need a second bail-out.
America May Save the Euro
Some new and more radical solutions are beginning to be discussed about how to save the Euro from collapse. One of these solutions is for the IMF to provide funding for Italy and Spain if they need help. They are thought to be planning an $800bn bailout package, but the deal would mean the European bailout fund would have to underwrite the first 30% of any defaulted debt, therefore they still need the €1 trillion in the bank (which still poses the same problem of where to get that from), and they also suggest the bail out fund begin to issue bonds. This would mean many other countries other than Eurozone ones, helping bailout the Eurozone. America contributes 17% to the IMF, consequently, America would send Italy $136 billion under this deal!
Another solution is that the US Fed, buys up the European countries bonds. These are currently all but unsellable. By doing so, the borrowing costs of Spain and Italy would fall overnight, and the US Fed would in effect take the place of lender of last resort, a role the European Central Bank has thus far refused to fill. However, there are two problems with this plan: firstly it could hurt the dollar, and secondly inflation, as it would have the same effect as printing money. The fear of inflation is one of the issues which has hampered action being taken. Germany has an unhappy history with inflation, and the German people and government are wary of anything that may trigger it again. But, many respected economists believe the main threat facing Europe is hyper-deflation.
However, neither of these solutions deal with the underling cause of the crisis. That of a single currency operating with a 30% misalignment between north and south; only the exit of either the wealthy northern states, or the exit of the poorer PIIGS states can solve that. Perhaps some US imposed inflation will make this prospect seem more palatable to the German’s?
With the European stale-mate still very much evident, it looks more likely that the rest of the world will have to take action in order to avoid a global depression, worse than that of the 1930’s financial crash.
G20 Meeting Cannes 3rd-4th November
World leaders will meet at the next G20 summit to take place in Cannes, France, 3rd-4th November 2011. With the world on the brink of global financial meltdown, this meeting is being seen as one of the last chances the world leaders will have of formulating a plan to avert financial catastrophe.
The date has galvanised resolve amongst Europe’s leaders to come prepared with a plan for the European Debt Crisis. President Sarkozy and Chancellor Merkel have set a dead line for the end of October to come up with a “comprehensive” response, in time for the G20 summit. Their talks have come as the US, UK and developing world have placed increased pressure on the Eurozone to come up with a plan, criticising Europe for thus far “doing too little, too late.”
Merkel and Sarkozy are seeking to put together a package that will massively recapitalize the European banking sector in order to re-establish global confidence in Europe’s banks, as well as to bolster the European Financial Stability Facility bail-out Fund (EFSF), provide strong action on Greece, and plan ahead to avoid this happening again.
Major problems to find a solution exist. In particular, France is reluctant to use tax-payers money to help the banks, and Germany does not want to continue to pour money into the EFSF. The IMF has estimated that the European banks have a black hole of €200bn, and that the EFSF requires at least an extra €440bn.
The chairman of the Bank of England has said that the current financial crisis is “the most serious… since 1930s, if ever.” Never in history has the global financial system been so interlinked and integrated; meaning that if one part of the system fails, the knock on effects are felt everywhere. If Europe falls, she will take America and the UK with her!
The 1930s financial turmoil led to social meltdown as well as serious political problems. The economic woes of the 1930s helped Hitler’s rise to power in Germany and Communism take hold. However, there is still hope. The west does not need to revisit that type of social and political meltdown. We can yet find a way forward. Key to a solution being found is strong leadership, collective international resolve, and nerve to make tough choices. The G20 meeting in Cannes may be the last chance for the world leaders to show these attributes. Up until now there has been a lack of leadership, unwillingness to act and confusion.
The current raft of measures being considered may help avert economic meltdown, but what is also needed is a workable solution to resolve the fundamental problems within the Eurozone. Until the issue of imbalances between creditor and debtor nations are resolved, any measures will prove to be a sticking plaster on the problem, and we simply stave off disaster for another day.
This is the hour our leaders need wisdom and an atmosphere controlled by the Spirit of God. Support Prophet TV so we can run an intercessory prayer trip into Europe at this key hour of decision making; It will impact upon your life as well as the lives of the next generation.
IMF, World Bank and EU deal for Europe’s Debt Crisis
This last week delegates from the International Monetary Fund (IMF), World Bank and the Eurozone have been meeting in Washington DC to try to find a way through the current economic crisis in Europe, which is the biggest immediate threat to the world’s economy. Failure to find a workable solution will plunge the western world into another deeper recession, if not something much worse.
So far, attempts to solve the problems have done little but delay any real action being taken, and the apparent lack of understanding and leadership amongst Europe’s politicians has sparked fears of global recession throughout the markets.
The latest real suggestion would provide a €2 trillion bailout fund. The hope being, this would provide a sufficient fire-wall around Greece, Portugal and Ireland; as well provide sufficient funds to bail out Spain or Italy if they should require assistance. Furthermore the deal would provide massive re-capitalization of the European banking system. And finally a managed 50% default, or haircut for Greek debt, but still allowing Greece to remain in the Euro.
However, where €2 trillion will be found is unclear. Germany are already skeptical of pumping any more money into bad debt, as well as losing yet more fiscal powers to Brussels. Action is needed fast. The plan has been welcomed by many as a step in the right direction, however it is likely to still be an economically painful road.
The world is now looking to the next G20 meeting in Cannes, France in November, as key in forging a way through this crisis. It is imperative that the spirit under which these complicated and painful decisions will be made, is the right spirit. Support Prophet TV so we can run intercessory prayer trips into Europe at this key time for the world economy.
The Age of Cyber Warfare Beckons..
In the last few weeks and months we have seen a string of news stories of hackers attacking various high profile government agencies, and companies across the globe. Most of these appear to be conducted by loose networks of hackers spread across different countries, many merely teenagers in their bedrooms.
However, what a few kids have been able to do should concern us all deeply. To date these groups have stolen data from Sony, hacked the IMF, Pentagon, and the Italian e-crimes department.
And now we are could be about to see something much more serious than these breaches. Last year, a computer virus was detected with a level of sophistication never before seen. The Stuxnet virus was professionally developed with the purpose of attacking the Iranian nuclear program. The virus was specifically designed to attack the centrifuges within the nuclear plants where Iran have been enriching Uranium. The cyber attack was effective, and hindered Iran’s nuclear program, for a while. Analysis of the code showed a level of sophistication only possible for a government funded virus; it is now believed to have been developed by Israel and America.
The Stuxnet code has now become available to the wider public, and although in it’s raw form it would be of little use, given the specific purpose it was designed the code could be altered and used to attack key sites in the West. For this reason Stuxnet has been called the first Cyber-weapon. Cyber security experts have been warning it is only a matter of time before a major attack happens capable of bringing down a major international corporation, or devastating key infrastructure, such as power or water supplies; even resulting in loss of life. The Department of Homeland Security said several “nation states, terrorist networks, organized criminal groups, and individuals located here in the United States” were “capable of targeting elements of the US information infrastructure to disrupt, or destroy systems upon which we depend”.
With so many major companies and governmental departments being successfully targeted by hackers, we need to pray for the protection of vulnerable agencies and companies upon which we all depend.
Cyber Attack Hits IMF
As well as raising up prophetic warriors, Prophet TV also seeks to educate the church to be equipped in this age so we can be effective in the world as well as spiritually. This is why Prophet TV continues to warn the church to threats posed by hackers.
Last week the IMF was attacked by hackers seeking to gain access to confidential information about world markets. It is thought that the purpose of the attack was to use such information to manipulate the markets for financial gain.
Although the IMF has been a target in the past, this threat is being taken far more seriously, due to it’s level of sophistication. This attack comes after many other high profile companies and organisations have been targeted in resent months by hackers; and shows that the modern day hacker is no longer a teenager sitting alone in his bedroom; but are being carried out by organised groups, with a set agenda and in many cases access to substantial resources (such as the case of the state funded cyber attack on the Iranian nuclear program).
It is important the church is aware of these dangers, and not only takes steps to protect themselves, but also to intercede to protect the organisations in their region from cyber attacks. Security experts say it is only a matter of time before such a cyber attack will seriously affect a nation’s infrastructure resulting in loss of life; or a major company could be brought down. Such threats have this week led the Pentagon to say that if such attack occurs, and the perpetrator is found to be a state funded group, then the attack will be regarded as an act of war.