Turkey's Downing of the Russian Fighter: Expect Nuclear Saber Rattling and Threats to NATO's Existence

The world is in for a tense time of possible nuclear brinksmanship. If the United States and the other NATO countries blink, NATO is no more, and Putin has achieved his major goal. We must worry whether the Western world is led by leaders up to the task. There should be some sleepless nights in Berlin, London, Paris and Washington D.C. Putin is rightly described as a bully—and the standard procedure against bullies is to fight back. Turkey’s Erdogan has done just that. Will Turkey’s military allies back him up or cave once more? This test, if it comes, will have profound consequences.

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Sham Election Proves Putin Does Not Want A Peaceful Solution In Ukraine

Sunday’s sham elections in Donetsk and Luhansk prove Putin does not want a peaceful solution for the Ukraine conflict. Rather, his goal is the defeat and humiliation of NATO and the U.S. Putin is prepared to risk new sanctions and world opprobrium, and a clear understanding of his intentions may wake up NATO and the U.S. Minsk peace process is dead, and Europe and the United States understand they must either fight back or capitulate.

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Is Obama's Team Now To The Left Of Socialist France?

France’s first socialist president in two decades, Francoise Hollande, was elected on the promise to tax the rich, promote social justice, free France from the “yoke of austerity,” and (as a sop to the nationalist right) restrict immigration. From the campaign trail, Hollande preached that, instead of  Germany’s (Angela Merkel’s) budget restraint, France needed more government spending to jump start its economy.

Hollande’s 2012 campaign was a close twin of  Barack Obama’s 2008 “Hope and Change.” As the head of a socialist party that traces its roots back to Marx, in contrast to Obama, Hollande felt no need to conceal his anti-business views and redistributional intent. Once in office, Hollande promised to restore theegalite lost in the twenty years of  conservative rule.

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The Greek Vote, Blame Germany, and the Forgotten Reforms

Greek, French and Egyptian voters went to the polls today. In what was supposed to be a turning point for Egyptian democracy, voters turned out in small numbers to cast their ballots for the Muslim or establishment candidate. They well understood the military had assumed control and the election was meaningless. In Europe, Greek voters remained evenly divided between the center-right and the Left, which promised to jettison the austerity of the Euro bailout agreement. Although preliminary results suggest that a pro-Euro coalition may achieve a fragile majority, it is sure that Greece will continue to muddle along from crisis to crisis. Europe needed clarity but got more confusion. The Greeks did not vote to leave the Euro, and no one wants to be responsible for pushing them out. Greek voters reckon that Europe will bail them out unconditionally rather than risk Greece’s departure from the Euro. Quite a gamble, but it may be a winning bet.

In France, electors gave their new socialist president Hollande a solid parliamentary majority to support his pro-stimulus and pro-welfare state policies. With two elections out of the way, attention turns tomorrow to Mexico where the G-20 leaders can pontificate and agree on general principles while deciding nothing.
Sunday’s votes took place against the drumbeat of blaming Germany for all that ails the Euro zone. If only the miserly, self-centered Germans would lend a helping hand to their deserving neighbors, all these troubles would go away. The blame-Germany narrative gives the weak European countries an excuse for not taking tough action, and the facts show that Germany’s stingy reputation is undeserved.

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Dr. Gregory's latest book can be found at Amazon.com.

Swiss Try to Shut the Flood Gates for French Capital Flight

A well-informed colleague related to me that he had spoken with Swiss banking authorities trying to stem the flow of French capital into Switzerland. Wealthy French families have been spooked by the election of a socialist president threatening them with 75 percent tax rates. They cannot park their money inside the Euro zone; so they are flooding  Switzerland and England with capital flight.  The Swiss will likely impose a "parking fee" on incoming capital high enough to keep it within manageable proportions. If not, Swiss tourism and exports will be priced out of the market and the Swiss economy will take a nose dive. New York City realtors are also reporting French purchases of high end real estate.

Capital flight is the last thing France needs given its pressing borrowing constraints.

Dr. Gregory's latest book can be found at Amazon.com.

Hollande Wins and Europe Descends into No-Man’s Land

Socialist candidate Hollande has won the French election as expected. His high-tax, pro-stimulus, welfare-state-protection platform, in effect, scuttles the Eurozone rescue program engineered by Merkel and a reluctant Sarkozy.

Hollande’s election leaves the European Union with three stark choices, none of which are good: 1) Germany and the European Central Bank cave and bail out any and all debtor countries under the cover of some fictitious future fiscal discipline, or 2) The Eurozone countries muddle along from one band-aid fix to the next as the bond vigilantes breathe down their necks while they hope to catch a break, or 3) Germany and the Nordic states withdraw from the Eurozone to their own currency. The rest of the Eurozone can stay on the devalued Euro or revert to their own currencies.

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Dr. Gregory's latest book can be found at Amazon.com.