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Greek Bonds Reduced to Junk Status, and consequences

Yesterday, Standard and Poor's rating service reduced the credit rating of Greek bonds to "Junk" status. At the same time, it reduced Portugal's credit rating by two notches.

http://www.aolnews.com/world/article/world-markets-tumble-as-euro-debt-crisis-escalates/19456986

This caused a significant drop in the world stock markets yesterday, showing how the threat of default in Greece affects the whole world. This is a serious crisis. The markets are now waiting to see what happens, particularly what Germany does about the bailout of Greece.

In other words, what Germany does is going to determine whether or not we see the next world financial crisis in the next few weeks. Angela Merkel obviously wants to bail out Greece, but she fears the voters who are solidly against giving away their money to a country that has overspent on Socialist/welfare benefits that German workers themselves do not enjoy.

I do not know what the outcome will be, but I don't see how Germany can avoid bailing out Greece, regardless of the wrath of the voters there. The bigger question, I think, will not be Greece, but the NEXT country that needs a bailout.

To bail out Greece will make it nearly impossible to bail out the next failed state without sparking a revolution in the streets.

It's not so different from America's bailout of the big banks. In September of 2008, the first bailout was passed under threat of martial law as the federal troops moved into place under President Bush. The second bailout in the early days of Obama was riding on the wave of his personal popularity. But now, after all the stimulus (economic dug) money of the past year, which has stabilized the economy somewhat, making it "less bad" than it could have been, the cost has been enormous. The people here are in a near state of revolt. Trust in government is at record lows (22%). Most of those 22% who yet trust the government are probably government employees.

With the passage of the Health Care bill, with its huge price tag and inevitable tax increases to pay for it, many are truly alarmed to the point of going to Washington with pitchforks in hand. It has created a disconnection between Washington and some states such as Arizona, which has now passed an eye-opening immigration bill. Arizona's legislature even overrode a governor's veto of the bill.

The sentiment in Arizona and many other parts of the country is that Washington is out of control, near bankrupt, and the states must "go it alone." It is a mood of defiance, where they say, "We don't care what Washington says; we will solve our own problems without regard to the feds." We are watching a shift in loyalty from Washington D.C. to one's own individual State.

It will be interesting to know what Obama will have to say in the next "State of the Union" address in January. I suggest he use the theme: "The state of Disunion."

There are political consequences to everything. America has been polarizing since the legalization of abortion in 1973. Twenty years later, Clinton's "don't ask, don't tell" policy in 1993 put a further wedge into the Great Divide. His moral failures added fuel to the fire. Then President Bush's wars and torture policies added fuel to the left side, as well as angering many Christians in his own party.

This caused a shift in sentiment that favored the Democratic Party, making it possible for Obama to win easily over McCain and Palin.

But then came all the bailouts and stimulus spending, which was primarily a way to shovel money from Main Street to Wall Street. The divide between rich and poor widened, causing more discontent. The Health Care bill drove another wedge into the crack. Now we have the Tea Party movement, the Restore America Plan, the Oath Keepers, and the Real Oath Keepers. Besides these grass-roots movements, the States themselves have been passing resolutions telling the Federal Government that if they overstep their constitutional limitations, the States will refuse to bow down and be obedient.

The point is that we now have bailout fatigue. The GATT treaty and NAFTA passed under President Clinton has served to move a steady stream of jobs to foreign countries, and yet the poor people are supposed to bail out the rich when consumers here are too poor to buy the products made by those foreign workers, who were hired by the big corporations that moved the jobs overseas.

We are moving steadily to a very serious political and economic crisis, even as the government's manipulated figures show that the situation is relatively stable. (In other words, it hit bottom and can no longer get any worse than it is.)

This kind of situation is being duplicated to some degree in Europe. A bailout of Greece will be easier than bailing out the next nation that needs help. What about Portugal? Spain? Ireland? Iceland? Italy? And when Germany is financially exhausted bailing out everyone else, who will bail out Germany?

This political climate provides fertile soil for revolutions. We really are approaching a climax of world history. It used to be that nations were more or less separate; but today all economies have been tied together in a quasi-world government and world banking system. When one falls, everyone is affected. If even a small nation fails, it devastates other nations.

I think the egg fight in the Ukrainian parliament is an early sign of world-wide discontent:

http://dailycaller.com/2010/04/27/smoke-bomb-egg-fight-breaks-out-in-ukraine-parliament-video/

Somehow, The Three Stooges come to mind. Not sure why.