- - Monday, May 14, 2012

It was bad enough that the U.S. government risked trillions of taxpayer dollars bailing out banks, car companies, insurance companies, Wall Street firms, and Fannie Mae and Freddie Mac. We’ve even bailed out foreign banks and foreign countries (Greece). But have you ever considered bailing out a continent?

Are Americans asleep at the switch? Did anyone notice that Europe’s financial crisis went from frightening to unimaginable last week? Does anyone know the security color code for “unimaginable?” Perhaps the color of choice should be black to represent a deep, black hole. Besides, black is the color of mourning.

How bad are things in Europe? First, it’s time to say your last goodbyes to Greece. The nation “formerly known as Greece” reports 22 percent unemployment, 54 percent unemployment among citizens under age 25, and 42 percent higher unemployment than a year ago. But here’s the big clincher: There are now only 4 million Greeks still employed to pay off hundreds of billions in European Union (EU) bailouts and its approaching 200 percent debt to gross domestic product (GDP) ratio. And more of them are leaving for Germany every day as they realize that life is over for them in Greece.

I wonder if Greeks say “Opa!” when they break an entire country?

The experts have finally made peace with Greece leaving the EU. It’s only a matter of “when,” not if. The EU and European Central Bank may delay, disguise and distort the truth until 2015. Nevertheless, map makers need to put a hollowed-out, rotting hole where Greece used to be.

The real problem is that Greece is the smallest problem for a leaking EU. Germany waved the white surrender flag last week. It admitted there is only one way out of the EU economic catastrophe: massive money printing by the European Central Bank, which will lead to inflation. When government officials and central bankers - all born liars - admit to inflation on the way, you can predict with certainty a wave of hyper-inflation reminding Germans of that oldie but goodie, the Weimar Republic - where it took a wheelbarrow of bank notes to buy a loaf of bread. Given a choice, thieves stole the wheelbarrow and left the money.

Spain continues to be the biggest catastrophe facing the EU - and the main reason Germany is building bigger printing presses and willing to accept inflation as the lesser of two evils. Spain’s situation is so bad that it just nationalized its fourth-largest bank last week (with many more on the way). The Spanish public and private debt situation can only be described as tragic. Interest rates on Spanish bonds rose above 6 percent last week - another ominous signal of what’s to come.

Italy is hanging by a thread, and then there’s France.

The brilliant French, sick of making do with less, elected a Socialist government earlier this month. Their new Obama-like leader promises to save their collapsing economy with fantasy, bread and circus. He promises to increase spending, dramatically increase taxes on the wealthy (who are making plans to flee), hire 60,000 new teachers, and here’s where the French rely on comedy to hide tragedy - returning the age of retirement from 62 to 60. It’s time to write off France. Paying 10 cents on the dollar for France’s future would not be a bargain.

The synergy of all this is the problem. French banks are four times bigger than the GDP of their entire economy. If French banks go under, there is no way for France to survive. Yet France’s banks have loaned lots of money to Spain. If Spain’s banks go under, France’s banks are dead in the water. If France’s banks go under, so does France. If France goes, that puts Italy and the rest of the continent over the tipping point.

American banks also have huge loans outstanding to all these countries. The $2 billion trading loss disclosed last week by JP Morgan will look like a drop in the bucket when the EU countries start defaulting one after the other.

Last week was very bad for the world economy - if you were paying attention.

President Obama understands only too well what is happening. What a perfect time to change the conversation to gay marriage.

Wayne Allyn Root, former Libertarian vice-presidential nominee, is author of “The Conscience of a Libertarian: Empowering the Citizen Revolution With God, Guns, Gold, Gambling & Tax Cuts” (Wiley, 2009). He writes at RootForAmerica.com.

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