August 2011

Fatherless Britain

As Britons recover from the worst civil disturbance to hit their country in 40 years, many are asking why did it happen? The violence, arson and thievery that that swept through British cities 2 weeks ago shocked the world. A predatory breed of mostly inner-city youths joyously plundered shops and destroyed businesses and beat-up people for fun.

In a recent speech, the British Prime Minister vowed to help parents, improve schools, foster a sense of responsibility and decrease welfare dependency among the poor.

As well intentioned as his words may have been, government cannot solve the problem of Britain’s criminal youth. The collapse of the married two-parent family, soft punishment of criminals, and lack of enforcement of the drugs laws has created a nation that is bullied by a lazy, violent, selfish class of youths who number in the millions.

Poverty was not the cause of this childhood savagery in British cities. The problem with British youth goes much deeper. Multi-generation fatherlessness is the chief cause.

In Britain many are desperately calling upon parents to keep their children in at night but this only demonstrates shallow thinking. Most of the thugs do not have responsible parents—the parents themselves are either too drunk or given over to addictions or drugs to care much what their teens and children are doing day or night.

Most of these children come from mother headed households. Over the past 40 years there has been a mass exodus of fathers from the homes of their children. The most crucial factor behind a boy’s development is a father who is fully committed to the family, living in the home. Of course there are many single moms who are dedicated to raising their children with a strong sense of right and wrong, but clearly the role of single mom is very, very hard.

In Britain successive generations are being raised only by mothers, through whose houses pass uncommitted, selfish males leaving the all-ready wounded children more damaged.

The careless view of marriage was encouraged by the Welfare State, which subsidizes single parenthood and encourages the idea of the absent father. Welfare dependency further created the entitlement culture–that the world owes them. The British tax system punishes married couples when the wife does not work, and the school system leaves children to decide for themselves the right and wrong of sexual behavior.

In short, Britain is leaving its children to raise themselves—moral authority is almost non-existent in millions of children’s lives. Marriage is the anchor of a healthy society. When marriage is treated frivolously—a thing to be played with—it is just a matter of time before that nation begins to fight a massive crime problem and incurs a diseased economy.

In Britain criminal activity is mostly excused on the basis that the criminal couldn’t help himself, as he was the victim of circumstances such as prejudice, poverty and unemployment. For too long the criminal has been considered the “victim” of society. This foolishness must stop.

When a society ignores the Ten Commandments and treats the marriage covenant as if it is a cartoon an increase in crime and deeply damaged children is the outcome. We are no different here in America. Our contempt for God’s laws is leading us in the same direction as Britain.

The prophet Hosea warns…

“…my people are destroyed from lack of knowledge. “Because you have rejected knowledge, I also reject you as my priests; because you have ignored the law of your God, I also will ignore your children” (Hosea 4:6).

Children need a clear understanding of right and wrong; they need to see that there are severe consequences when choosing wrong behavior; and most of all they desperately need to be raised in homes where their biological fathers are present.

Steven LeBlanc

The great European experiment – still experimenting

The Eurozone is still struggling to avert crisis after billions of Euros in loans have been extended to its weakest members. Only two weeks after its most recent summit on 21 July, Italian and Spanish government bonds came under pressure leading to increased speculation that they may be the next countries to need a bail-out. More recently, France too is also appearing to be weakened as is Cyprus. European leaders continue to slowly chip away at a problem that seems to grow two sizes bigger with each seeming solution.

The main European vehicle to fund the struggling states of Greece, Ireland and Portugal has been the European Financial Stability Fund. The EFSF is a Luxembourg company and its stockholders are the Euro-zone states. Its remit is to raise money, primarily through issuing bonds, which it then loans to Euro-zone member states. The EFSF currently has a piggy bank of €440 billion to draw on, backed by collateral guarantees from the Euro member states up to 165% of their contribution.

In recent weeks, it has become clear that even at €440 billion, the EFSF is not big enough. Last week it was reported that the fund at €440 billion could not rescue both Spain and Italy. This week it was reported that the EFSF could only satisfy Spain’s debt over three years.  Add to that France and Cyprus and the present impossibility of the task of rescuing so many flailing economies is clear.

One leading investment bank has predicted three possible outcomes from here. The first, now a probability, is that the European Central Bank will intervene in the Italian and Spanish government bond markets to buy up bonds. If they fail to do this, yields on these bonds will continue to increase making interest payments unmanageable for these countries. However, the question is how long the ECB can do this and whether this measure will be effective. In the past when the ECB has intervened to prevent bond yields escalating it has only had a temporary effect and bailouts ultimately were necessary.

This leads to the second measure required: an increase in the size of the EFSF.  The same investment bank suggests that it would need to be increased to €3.5 trillion, a leading European think tank has suggested €4 trillion. The probabilities seem stacked against this solution at this point given the debt to GDP ratio it would require the EFSF states to take on. However, if one considers that European politicians prefer backroom deals which preserve their political capital at home, one might just imagine this is a possibility. After all, if the alternative is to tell their voters that the joint-currency is a failure less than a decade after its inception, you can see that the captains might just prefer to let the ship sink slowly.

As an alternative to the above two possibilities, there is the quiet whisper “Eurobond”, which would mean that Euro-area countries would jointly and severally guarantee debt issuance from all member countries. Although many believe this last solution could end the uncertainty that is causing so much instability in the Euro-zone, there is no European leader (that counts) that is prepared to spend their political capital on pushing it through. In the “saving” countries such as Germany, it is viewed as tantamount to giving financially wayward countries a blank cheque without any political control over how such economies would be brought back into the “black”. So at present, it appears the first two solutions are the more likely.

Assuming that the size of the EFSF is increased so that Spain, Italy, France and Cyprus (at present) could be “rescued”, there still remains the question whether Germany could extract the same measure of austerity from such countries. Remembering that at the very beginning, the very purpose of the European Union’s forerunner was to align German and French interests so closely that one could never attack the other again, it seems unimaginable that Germany could wield its power to force France into an austerity program with all the economic hardship and political instability that would entail. Also, given that these austerity programs take decades to be effective in reducing a country’s debt, how long would European leaders be able to insist on austerity in so many Euro-zone countries before the resulting political instability would end up affecting the Euro anyway?

Clearly at some point austerity measures will not be workable. This could be the tipping point that leads to the discussion of a fiscal union, essentially an agreement to transfer funds between European countries so that states such as Greece are floated by states such as the Netherlands. However, a fiscal union requires greater centralised tax planning and fiscal control. So just as the German Debt Management Office signs off on all loans from EFSF right now, you can be sure that Germany is not going to be giving away “free money” – it will extract the measure of political power it wants, in exchange for it bankrolling the weaker economies.

Countries which have adopted the Euro do not have any contingency planning for unwinding their currency union should it fail. Most agree that such a situation would be messy and perhaps less predictable than sticking with what we have presently. Therefore we should assume that those countries that are “in” the Euro will commit greater resources and relinquish more power in order to save it. Of course then the question of centralisation of power remains “when” and “how” not “if”.

Eye on Europe

LOST SHEEP

During a recent trip to Europe I once again found myself standing in long lines in airports, going through security checks, and finally boarding planes that were waiting to take me to my destination.  What used to be an enjoyable experience, now turned into a dreaded hassle, has become a necessary evil.  I no longer like to travel as I once did.  My curiosity about other cultures and countries has been replaced by a desire for peace and above all, safety. 

Seeing armed guards with M-16 rifles circle through the airports, by the way, does not make me feel more secure.  On this most recent trip I turned to someone as two armed men in black uniforms walked through a street entrance into the airport’s departure hall, and I asked if anyone ever bothers to check their ID’s.  For all I knew they could have been a couple terrorists dressed as security guards.  Then the  Norway massacre that occurred a week later, generated by a man in a fake police uniform, gave my concerns greater plausibility.  It doesn’t take much these days to make you realize we are beginning to resemble Little Bo Peep’s sheep – it seems we have lost our way.

Speaking of being lost, now-a-days it’s a standing joke that men refuse to ask directions when they are lost.  Perhaps that problem has been eased a bit with all the tracking devices we can haul around with us.  But because it is easy to get directions to a restaurant, theater or some other location without stopping to ask someone for directions, it doesn’t appear finding our way through the greater quagmires, like solving the national debt crisis, comes without enormous struggle and ends with results that are unsatisfactory.  And there doesn’t appear to be  anyone on the planet we can ask who can offer real solutions to our mounting national ills.

To say the least, it’s been a gory few weeks watching our national leaders wrangle, curse, call names and deny responsibility for the financial mess the United States is currently in.  It’s been downright depressing.  And through it all I only heard two congressmen mention they were going to a chapel to pray for guidance.  Only two publicly recognized it would be a good idea to ask someone who has been around forever how best to go about solving the debt crisis. 

But there really is a way out of all this mess for our leaders, men and women alike, if they would just collectively seek it. They need to seek guidance from their creator.  Two Congressmen seeking his help just aren’t enough, even though their example is a good one.  Maybe we should give the following a try – all of us.  It wouldn’t hurt:

“Trust in the LORD with all your heart

and lean not on your own understanding;

in all your ways acknowledge him,

and he will make your paths straight.”

Proverbs 3:5-6

 

Market crash triggered by European Debt Crisis

Thursdays 4.31 percent drop put the Dow below 11,500 and is the worst one-day loss since October 2008, when the Dow slid by 679 points.  What triggered the market meltdown?  Many believe the debt crisis in Europe was responsible.

On Thursday the European Central Bank attempted to hose down the debt crisis fire that is sweeping across Europe. The European Central Bank moved after a four-month pause to buy government bonds in response to a debt catastrophe that started nearly two years ago in Greece, and now threatens to overwhelm Italy and Spain.

It was only a few months ago that European bankers were scrambling to protect Spain from defaulting on its debt.  Spain’s troubles now pale in comparison to Italy’s.  It is Italy that Europe and the world are deeply worried about.  Italy’s debt volume is two-and-a-half times larger than Spain’s.

Italy’s impact on the Euro zone is enormous.  In just this month, Italy must repay €36 billion in government debt. That is roughly what Greece will receive this entire year in European loans.  Large investors such as pension funds and insurance companies are pulling out of Italy and investing in Germany—considered to be far more stable than Italy.

The Debt crisis in Europe and America is smothering the so-called “economic recovery”.   The economic map of the world is in a state of flux; global markets are desperately searching for stability.

Steven LeBlanc

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