(Reuters) – Standard & Poor’s downgraded the credit ratings of nine euro- zone countries, stripping France and Austria of their coveted triple-A status but not EU paymaster Germany, in a Black Friday the 13th for the troubled single currency area.

“Today’s rating actions are primarily driven by our assessment that the policy initiatives that have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone,” the U.S.-based ratings agency said in a statement.

In a potentially more ominous setback, negotiations on a debt swap by private creditors seen as crucial to avert a Greek default that would rock Europe and the world economy broke up without agreement in Athens, although officials said more talks are likely next week.

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It is not necessarily true that as goes the Euro, so goes the Dollar, but as goes the EU, so goes the US is as certain as the rising (or setting) sun. At least, if American fiscal policy continues to emulate that of the European spendthrifts.  The EU heads of state had marathon, round-the-clock meetings in Brussels last week, and inked a plan to finesse a Greek default (which is an eventual certainty) in a way that doesn’t immediately plunge the rest of Europe into a financial hell, and quite possibly drag America along with it.  Under the best of circumstances, the picture remains bleak.  Market analysts who focus on short-term stock market movements responded with sighs of relief.

The Germans, understandably, wanted those who have loaned Greece money (primarily, the European banks) to take a loss of about half of the value of their loans in order to ease the extremis in which Greece finds herself.  France, whose banks are holding a lot of Greece’s debt, preferred to rely more heavily on a pumped up bailout fund to ease the burden on Athens.  Given that the German taxpayer is certain to be the biggest funder of the proposed additional bailout, it is not hard to understand the rising tensions on the continent.

One can’t blame the banks for their reluctance to dance at this party.  Based on commitments the EU countries made, to keep their debt to no more than 60% of GDP and their deficits to no more than 3% over the prior year, Europe’s banks became major financiers of the new Euro countries.  But many of the European countries that were financially irresponsible prior to the advent of the Euro had no intention of changing their ways subsequent to exchanging their old currencies for the new Euro.  Greece flat out misrepresented its financial condition when it applied to become a member of the Euro Zone.

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I had lost touch with my friend and businessman Domingo Bernardo many years ago, and he finally turned up on Facebook.  Domingo’s story is an incredible one:

My father “earned” his way out of Cuba by working essentially as a slave on the sugar cane fields for 2 years, where more than 25% of the people died within a year from malaria, as a punishment for asking for an exit visa.  We went back to Spain with the clothes on our backs (I was a toddler).  When Franco died, many Spaniards (my whole family is from Spain, my parents were in Cuba for only a few years), figured Socialism would come in, so many (like us) left, running from socialism to a country where we knew no one, had no jobs, and didn’t understand the culture or the language.  Socialism always does that — creates an incentive for the bright, the educated, the entrepreneurs and the wealthy to leave, leaving the country with what?  So we came to the U.S.

I learned English at 14, worked hard to get out of the ghetto, got into Cornell with a special language waiver, managed to get a Cornell engineering degree, then joined the Navy. Part of the reason I served was that I felt like I owed the country something for taking us in. I got hurt in Bosnia,came home, worked hard to establish a business, and now I’ve left my country, because I can’t take the Socialist slant anymore, and I am so tired of the regulations that make it almost impossible to do business in the U.S.  When I closed my home theatre installation business, I was not an engineer; I was a paper-filler-outer.  I have ZERO incentive to start my business in the USA between the taxes and the regulations.  The last straw was this summer; there are now over 6,000 lamps I can no longer use in jobs.  If I do, there is a fine of $5000 PER LAMP all for some hoax called Global Warming.  By the way, the new “better” lamps are from 4x to 10x costlier, and the “environment-killing” lamps are being used in every other non-EU country.

You need to understand Domingo as I did.  We were on the same dorm floor freshman year.  All he did was study.  He busted his ass, and every other day he talked about how grateful he was to the U.S.  He always intended to join the Navy, despite us (at the time, foolish liberals) trying to talk him out of it.  For this man to do all he has done, then leave of his own free will?  Wow. (more…)

The concept that seventeen independent rich and poor European countries could come together in a monetary union and perpetuate the “euro” currency has always been a fraud. The real story behind the formation of the euro was the “Grand Bargain”. The governments of the PIGS (Portugal, Italy, Greece, and Spain) receive colossal bribes in the form of the ability to borrow unlimited amounts of money at the same low interest rates the Germans pay; for agreeing to buy enormous amounts of German goods. The PIGS generously performed their side of the bargain. It is the Germans that after running-up vast surpluses are now economically destroying the PIGS by terminating the bargain.

The European sovereign debt crisis did not start 18 months ago when Greek borrowing costs began rising from 3% to the current 75%. The crisis began in 2009 when German politicians passed a constitutional balanced-budget “Golden Rule” at the height of the global credit crisis. The Golden Rule prohibits German politicians from passing a budget with a deficit of more than 0.35% of Gross Domestic Product (GDP). This was a radical departure from the unenforceable “Stability and Growth Pact” of the seventeen nation euro that limits deficits to 3% of budgets.

For a monetary union to be sustainable, it must be operated on the basis of ‘symmetrical obligations’ among the members. Germany’s decision to cut-off spending of its trade surpluses to finance the PIGS trade deficits has created a deflationary spiral in Europe. Over the last two years there have been numerous incremental European bail-out programs aimed at stopping the Greek debt crisis from spreading to the other PIGS. Each successive program forced deeper “reform” cuts to PIGS spending. “No reforms, no bond purchases” has been the message of the German controlled European Central Bank (ECB) and the German controlled European Financial Stability Fund (EFSF).

Following periods of short term relief, each program failed.

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On this 10th Anniversary of the September 11th attack on America we’ll hear politicians and pundits wringing their hands over the “tragic events” of that morning. They’ll wonder aloud whether we’ve “learned anything” in these past ten years and whether we’ve achieved the correct level of “tolerance” and “understanding” that is so desperately needed to solve our worlds problems.

From our president we will hear a call to community service and a plea to find volunteer opportunities in our neighborhoods, because, you know… the real message behind 9/11 is to plant a garden at the local welfare office.

What we won’t hear enough of this momentous day is the truth about 9/11. The truth about what happened that day. The truth about why it happened.

The truth is that on September 11, 2001 war was declared on the United States of America. Our ideological opponents on the left (as well as some of the more troubling supporters of Rep. Ron Paul) will tell you that it 9/11 wasn’t an act of war because the perpetrators were not acting on behalf of any nation. As if in some way the fact that our attackers didn’t have a flag on their sleeves while demolishing our financial and military headquarters some how re-defines the act as merely a “crime”.

The liberals and libertarians mired in their denial of the reality of the world we live in are dangerous and must be answered with vigor. 9/11 was not a “criminal act”. And, despite what President Obama might say, we are not in a war against Al Qaeda. By narrowing our focus and pretending that we must only respond against those whose fingerprints can be found on the 9/11 attack is an invitation to our enemies around the world to wage war on us through proxies like Al Qaeda.  A Commander-in-Chief Ron Paul, with his pathetic call for Letters of Marque and Reprisal, would allow enemies like North Korea, Iran and Venezuela to send hundreds of organizations like Al Qaeda toward our skyscrapers all under the protective banner of “rogue criminal act”.

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David Kreutzer of Heritage has a great item up on The Foundry, on WaPo’s remarkable (it was WaPo!) exposé of the miracle Chinese bullet trains actually leaving a trail of, well, leaving fiscal and other wreckage in their wake. He concludes, “Well, the Chinese finally have a green-energy idea worth stealing: arrest government officials who foist overpriced, underperforming, debt-ballooning, money-losing projects on taxpayers.”

In case you missed the WaPo piece, the man in charge of China’s model train set:

“is ruined, and his high-speed rail project is in trouble. … his ministry has run up $271 billion in debt — roughly five times the level that bankrupted General Motors. But ticket sales can’t cover debt service that will total $27.7 billion in 2011 alone. Safety concerns also are cropping up.

Faced with a financial and public relations disaster, China put the brakes on Liu’s program. On April 13, the government cut bullet-train speeds 30 mph to improve safety, energy efficiency and affordability. The Railway Ministry’s tangled finances are being audited. Construction plans, too, are being reviewed.

Liu’s legacy, in short, is a system that could drain China’s economic resources for years. So much for the grand project that Thomas Friedman of the New York Times likened to a “moon shot” and that President Obama held up as a model for the United States.”

In short, it’s an awful lot like Spain’s wind- and solar program President Obama also longs to impose here.

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Recently, Portugal officially requested a $116 billion bailout from the European Union and the International Monetary Fund. This makes Portugal the third European nation to seek such a bailout in the past year (Greece got $157 billion; Ireland $122 billion). What most people don’t realize is that the U.S. is the largest contributor to the IMF. Therefore, U.S. taxpayers are paying for Portugal’s bailout which – like the earlier bailouts of Greece and Ireland – was caused by too much government spending and borrowing.

Last year, here at BigGovernment.com I warned how the Obama Administration was making a Greek bailout more likely by agreeing in advance that U.S. taxpayers would help foot the bill. Later, the IMF set up a $356 billion bailout fund for European governments with the consent of the Obama Administration– even though the fund will likely cost U.S. taxpayers between $50-100 billion and possibly more – all without a Congressional vote or consultation.

On April 29, 2010, Rep. Mike Pence (R-IN) and I wrote a letter to Treasury Secretary Tim Geithner warning of the dangers of U.S. participation in a Greek bailout. “The Obama Administration needs to understand that bailing out Greece will not solve Greece’s problems,” I said at the time. “It will only create a moral hazard that gets America more involved in the gathering storm of European bailouts.” That storm has since consumed Ireland and Portugal and others may be on the way.

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Just as the discussion in Washington turns inescapably to reckless spending of the sort that earned Spain the title ‘The Next Greece’, President Obama goes to Pennsylvania today for an ‘energy town hall’ to promote policies he used to regularly admit he borrowed from Spain’s socialists. Yet these are policies Spain, Germany and the rest of his models are actually sprinting away from.

Specifically, the president will strike the ‘green jobs’ pose again at a plant owned by Spanish windmill producer Gamesa, rather incredibly reprising his cheerleading for this subsidy-dependent industry – all of whose manufacturing jobs will flee when the subsidies run out. That is, they are not – wait for it – ‘sustainable’.

So let’s review the unhappy history of the agenda and its talking points.

First, a sordid walk-through of the economic recklessness of this persistent, key component of ‘fundamentally transforming America’ is in my February testimony placed into the record by the Senate Environment and Public Works Committee, which makes for some timely and fun reading.

Next, recall how deeply troubling this persistence is: the damage these policies wreak has been specifically, thoroughly and professionally exposed as regards the very countries Obama used to tell us to look because they were his models (Spain, Denmark, Germany; the sole exception not receiving the full review is Japan). He no longer cites them, obviously due to said exposés, but he still pushes the costly schemes. He knows, and cares not. That is disturbing.

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To rephrase President Obama’s State of the Union theme:  “This is our generation’s apparatchik moment.”

Yes, he said “Sputnik” instead, but his actual agenda is about the apparatchik—government by party leaders, bureaucrats and the well-connected.

His agenda is symbolized by his push for “green jobs” as the path to a better future.

Simply put, the green jobs agenda spends billions of taxpayer dollars to destroy existing jobs and replace them with jobs in politically-favored businesses, raising the costs of energy along the way.

The politically-connected win.  Existing job-holders and companies lose.  Home electric bills go up.  Power also costs more for companies, making it more expensive to go into business or to stay in business.

It’s cronyism that is building a political power structure based on false claims about clean green jobs.

It’s economic cannibalism because creating the green jobs requires killing off existing jobs.

As Bloomberg News reported, “Subsidizing renewable energy in the U.S. may destroy two jobs for every one created if Spain’s experience with windmills and solar farms is any guide.”

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Thanks to decades of reckless spending by European welfare states, the newspapers are filled with headlines about debt, default, contagion, and bankruptcy.

We know that Greece and Ireland already have received direct bailouts, and other European welfare states are getting indirect bailouts from the European Central Bank, which is vying with the Federal Reserve in a contest to see which central bank can win the “Most Likely to Appease the Political Class” Award.

But which nation will be the next domino to fall? Who will get the next direct bailout?

Some people think total government debt is the key variable, and there’s been a lot of talk that debt levels of 90 percent of GDP represent some sort of fiscal Maginot Line. Once nations get above that level, there’s a risk of some sort of crisis.

But that’s not necessarily a good rule of thumb. This chart, based on 2010 data from the Economist Intelligence Unit (which can be viewed with a very user-friendly map), shows that Japan’s debt is nearly 200 percent of GDP, yet Japanese debt is considered very safe, based on the market for credit default swaps, which measures the cost of insuring debt. Indeed, only U.S. debt is seen as a better bet.

Interest payments on debt may be a better gauge of a nation’s fiscal health. The next chart (2011 data) shows the same countries, and the two nations with the highest interest costs, Greece and Ireland, already have been bailed out. Interestingly, Japan is in the best shape, even though it has the biggest debt. This shows why interest rates are very important. If investors think a nation is safe, they don’t require high interest rates to compensate them for the risk of default (fears of future inflation also can play a role, since investors don’t like getting repaid with devalued currency).

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From the Associated Press:

Europe struggled mightily Friday to keep the debt crisis from engulfing country after country. Portugal passed austerity measuresto fend off the speculative trades pushing it toward a bailout and Ireland rushed to negotiate its own imminent rescue.

As Portugal and Spain insisted they will not seek outside help, creating an eery sense of deja-vu for investors, Europe braced for what seems inevitable—more expensive bailouts.

The Portuguese Parliament approved an unpopular debt-reducing package, including tax hikes and cuts in pay and welfare benefits. But while that helped to avoid a sharper deterioration in bond markets, the sense among analysts was that the move had only bought a little time.

Adding to the pressure, Ireland’s major banks were hit with credit downgrades—one to junk bond status—as speculation mounted that the EU-IMF bailout of Ireland, to be revealed within days, would require investors to take losses, a possibility earlier denied by officials.

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In the vernacular of financial commentary, “PIGS” is the term recently coined by the financial markets to refer to sovereign countries whose economies are virtually bankrupt and whose bonds are virtually worthless. These are the basket cases of the international economic system — Portugal, Italy, Greece and Spain.  Recent evidence suggests that the fiscally irresponsible PIGS may soon have a new applicant for membership in their club.  Membership in this particular club is somewhat reminiscent of Groucho Marx’s famous remark that “I wouldn’t belong to any club that would have me for a member.” The new expanded club’s acronym is shaping up to be (you guessed it) USPIGS.  No, the United States is not about to go bankrupt.  Not yet, anyway. We are, however, pursuing the very same types of vast spending policies that brought the PIGS of Europe face to face with that real possibility.

What have we done recently to be considered for membership in this club of dubious distinction?  Last week, government budget personnel revised their estimate of when Social Security would begin running in the red from 2017 to, essentially, “right away.”  Yes, Social Security is broke…right now!  So much for government estimates.

The announcement of this distressing news was, it appears, kept well under wraps until Nancy Pelosi and Harry Reid along with a shamelessly compliant Democratic Congress safely ramrodded Obamacare, with its astonishing price tag, into law. The entitlement sinkhole just got an order of magnitude bigger.  “But,” one might ask,  “haven’t we been accumulating all the excess funds paid into Social Security all these years in a special trust fund.”  Well, not exactly.  In fact, not even almost exactly.  You see, the government has been vacuuming out the excess cash as soon as it comes in and spending the money (the money we all paid in) to pay the government’s current bills.  The trust-fund cash has been replaced all this time with IOU’s (that’s internal Treasury debt), which are now being called to meet current payment obligations.  These IOU’s are being replaced, of course, with even more IOU’s but this time there is no more cash to divert from payroll taxes to fund government operations. We have to borrow more.

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Last week, Washington News Observer in collaboration with Big Government attended a speech by former Spanish Prime Minister Jose Maria Aznar. Prime Minister Aznar illustrated the fact that while “not all Muslims are Jihadists, all Jihadists are Muslims.” Prime Minister Aznar’s party lost the 2004 election, only 3 days after the tragic events of the Madrid train bombing. His successor has since withdrawn all Spanish troops from Iraq.

On May 27, President Obama remarked to an audience gathered at Nellis Air Force Base in Nevada that Americans, “pioneered solar technology, but we’ve fallen behind countries like Germany and Japan in generating it, even though they get less sun than we do.  They certainly get less sun than Nevada.”  Today, Vice President Biden and a handful of Cabinet secretaries releases the Recovery through Retrofit report that will extol the virtues of green jobs and energy savings to be had if only the government had its way.

Observers of national policy may want to look at other countries’ experiences to see how they have fared with efforts to improve environmental policies.  Previous research on green jobs policies in Spain showed that costs were high and benefits short-lived.  But what of the President’s example of Germany?

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A friend of mine on Facebook recently wrote the following about an article on the life of the late Irving Kristol:

“Once upon a time, not too many years ago, the Republican Party was the party of ideas. Would even its staunchest supporters say so today? I think not. The sole substance of the Republican Party today is opposition to whatever the Democrats are for, period.”

Were it true, it would be damning.  Thankfully it’s not.

My friend, a former White House high-ranking employee in both the Reagan and Bush 41 administrations, grew angry, very angry, about the direction of the Republican Party under President Bush 43, something upon which I agree with him.  But, unlike him, I prefer to stay and fight for what’s right within the party I agree with most, not abandon it. He grew so angry that he voted for Obama in 2008.  Now, I don’t claim to know how any human being works internally, but I don’t understand how someone who claims to be a conservative could make that sort of switch. Simply because your side didn’t live up to their ideals doesn’t mean, to my mind, that  you switch to the side that advocates explicitly the opposite point of view.

But that’s neither here nor there. My friend, and everyone else, is free to vote for whomever they want, for whatever reason they want.  What I take issue with his the common mantra of the Left, echoed by my friend, that Republicans are out of ideas and Democrats are a fountain new ones.

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On numerous occasions, to tout his own agenda President Obama told America to “take a look at what’s happening in countries like Spain” to witness his model for a “green jobs” economy. Well, a team of Spaniards produced an academic study, officially of King Juan Carlos University in Madrid, which revealed that Spain’s scheme has proven a disaster.

In response, Obama’s administration provided a lesson in how Big Government can be abused when its officials are angered and embarrassed, turning its institutions on a private individual, even a foreign academic whose offense was to produce scholarly research about his own nation’s policy failures.

Here is what happened. The Spanish “green jobs” study received substantial play in the U.S. media and gained favorable attention in the Wall Street Journal’s U.S., Europe and Asia editions, among other outlets. It came up in a White House press conference, embarrassing spokesman Robert Gibbs who boasted how he disagreed with the study and its conclusions while admitting he had not read it.

The rest of administration’s three-fold response was in sum highly troubling. The benign second step was to substitute, without missing a beat, Denmark for Spain in Obama’s ritual “look at what’s happening in…” litany of our environmental superiors (though that experiment, too, has been defrocked). Then things got ugly.

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