Bankers, governments and investors are preparing for Greece to stop using the euro as its currency, a move that could spread turmoil throughout the global financial system.
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GLOBAL ECONOMIC COLLAPSE – STARTING WITH GREECE
How shock waves will reach the US if Greece drops the euro
Greeks will have to wrestle with a crucial dilemma when they go to the polls for the second time in as many months on June 17 to elect a new government.
Greeks will have to wrestle with a crucial dilemma when they go to the polls for the second time in as many months on June 17 to elect a new government.
A Greek election on Sunday will determine whether it happens. Syriza, a party opposed to the restrictions placed on Greece in exchange for a bailout from European neighbors, could do well.
If Syriza gains power and rejects the terms of the bailout, Greece could lose its lifeline, default on its debt and decide that it must print its own currency, the drachma, to stay afloat.
No one is sure how that would work because there is no mechanism in the European Union charter for a country leaving the euro. In the meantime, banks and investors have sketched out the ripple effects.
They think the path of a full-blown crisis would start in Greece, quickly move to the rest of Europe and then hit the U.S. Stocks and oil would plunge, the euro would sink against the U.S. dollar, and big banks would suffer losses on complex trades.
ACT I
What would Greece’s exit look like? In the worst case, it starts off messy.
The government resurrects the drachma, the currency Greece used before the euro, and says each drachma equals one euro. But currency markets would treat it differently. Banks’ foreign-exchange experts expect the drachma would plunge to half the value of the euro soon after its debut.
For Greeks, that would likely mean surging inflation — 35 percent in the first year, according to some estimates. The country is a net importer and would have to pay more for oil, medical equipment and anything else it imports.
Greece’s government and banks currently survive on international loans, and if it dropped the euro, the country would probably be locked out of lending markets, says Athanasios Vamvakidis, foreign-exchange strategist at Bank of America-Merrill Lynch in London. So the Greek central bank would need to print more drachmas to make up for what it could no longer borrow from abroad.
That’s one reason analysts say the switch to a drachma would lead the country to default on its government debt, possibly triggering losses for the European Central Bank and other international lenders.
Most assume foreign banks would have to write off loans to Greek businesses, too. Why would Greeks pay off foreign debts that effectively double when the drachma drops by half?
Say a small shop owner in Athens has a €50,000 business loan from a French bank. She also has €50,000 in savings in a Greek bank. The Greek government turns her savings into 50,000 drachma.
If the new currency fell by 50 percent to the euro as expected, her savings would suddenly be worth €25,000. But she would still owe €50,000 to the French bank.
European banks would take a direct blow. They’ve managed to shed much of their Greek debt but still held $65 billion, mainly in loans to Greek corporations, at the end of last year, according to an analysis by Nomura, a financial services company. French banks have the most to lose.
Global Economic Collapse – Why Hasn’t Obabma Prepped the U.S For Economic Doomsday
Why hasn’t Obama doomsday prepped the U.S. economy?
OK, here’s where we are right now, and it isn’t good:
1. Europe is in recession, and its financial crisis is growing worse. The bailout of Spain was a bust. Yields on Spanish bonds are now at their highest point of the crisis. Here’s looking at you Italy.
2. The sputtering U.S. economy may well be heading into another recession, and the approaching fiscal cliff is hardly helping confidence. It sure looks like nothing will be done on that front before the election.
3. Three-fourths of the BRICs—China, India, and Brazil—are all slowing. There go the emerging-market growth engines.
How to avoid a worsening of this already dire scenario? AEI economist John Makin thinks four steps are urgently needed:
1. Europe’s banking system must be stabilized to end runs from depositors withdrawing funds;
2. Europe must articulate clearly a framework for rapid evolution toward fiscal union;
3. The policy mix that includes additional fiscal stringency in return for rich loans to Europe’s periphery must be softened.
4. The ECB can help calm markets and reduce uncertainty by signaling its support of more accommodation, including a system of deposit insurance for European banks and could cut interest rates by fifty basis points and undertake another round of extra lending to ensure ample liquidity to banks.
I would add that Europe should be cutting taxes, not raising them.
But here’s the problem: As Makin notes, the odds of all that stuff happening are low, maybe a 50% chance depending on “Greece electing a coalition government willing to cooperate with Europe’s core countries to move toward a true monetary and fiscal union.”
So we have a) a 50% probability of a cooperative outcome from the Greek election on June 17, and b) conditional on that, a 50% probability that Europe will be able to quickly move forward to enact a more credible monetary and fiscal union.
Do the math. The joint probability of these events is 25% at best, “meaning there is only a one in four chance that the euro system will survive through the summer. Should the more likely outcome—an acute European financial crisis—emerge, the United States will be forced to act to prevent serious damage to its financial system and economy.”
So we have a 75% chance of a nightmare summer and autumn heading smack into the U.S. elections in November. The only question is how bad it will be. We don’t know what’s beyond the veil formed by the EU financial crisis, so any predictions about Obama vs. Romney are pretty much worthless.
But it’s hard to see how a financial shock would help the Obama campaign. He is the incumbent, after all. While the president cannot be blamed for the financial crisis, the Romney campaign could charge him with not doing everything possible to doomsday prep the U.S. economy for another global economic shock. It’s not like the EU debt crisis popped up in the past few weeks.
Why do we still have the highest corporate tax rate in the world?
Why did Obama nix the Keystone pipeline?
Why is the president still talking about raising taxes?
Why has the White House offered no long-term debt plan to reassure global markets?
Already, Romney has been hitting Obama for becoming obsessed with passing healthcare reform in 2009 and 2010 rather than boosting economic growth and job creation. Expect more of that.
And if the economy slows further—and if Obamacare is tossed by the Supreme Court—it’s a message that may powerfully resonate with voters.
EUROPE TRYING TO TURN AMERICA INTO A ZOMBIE WASTELAND
Victim … blinded Ronald Poppo is led by doctors after his face was chewed off in horrific attack
A WAVE of gruesome cannibal attacks that have left Americans fearing a “zombie apocalypse” is being fuelled by a drug imported from the UK, The Sun can reveal.
The mind-bending narcotics that make users eat living human flesh are bought off the internet — labelled as BATH SALTS.
Cops have been shocked by a surge in frenzied attacks by people, which includes:
HOMELESS Ronald Poppo, 65, had three-quarters of his FACE chewed off by Rudy Eugene, 31, who was high on the drug when cops shot him dead last month in Miami. The officers had repeatedly ordered him to stop but he just growled at them like a wild animal. Poppo is now partially blind.
MUM Pamela McCarthy, 35, who was tasered by cops as she attacked her three-year-old son this month. She had a cardiac arrest and died in hospital in New York.
CRAZED Carl Jacquneaux, 43, bit a chunk out of the face of his ex-wife’s new lover Todd Credeur, 48, when he turned up at her home in Lafayette, Louisiana, this month.
ON the same day, Brandon de Leon, 21, was restrained in a Hannibal Lecter-style face mask when he tried to bite off the hands of cops who arrested him in Miami. He screamed at them: “I’m going to eat you.”
Another user said the “bath salts” made him feel “evil” — and convinced him he was possessed by Jason Voorhees, the psycho in the Friday the 13th movies.
Ronald Poppo … had three-quarters of his face chewed off in attack
Freddy Sharp, 27, from Tennessee, said: “It felt like the darkest, evilest thing imaginable. I was hallucinating about being in an insane asylum and being possessed by Jason Voorhees. I couldn’t stop whatever was in me.”
TV reporter Cenk Uygur watched footage of Freddy being restrained by medics and said: “He looks like a zombie. People are talking about a zombie apocalypse and all these people eating each other. I cannot fathom why you would do bath salts that make you want to eat someone’s face off.”
Zombie … Rudy Eugene was shot dead by cops last month after attack on Ronald Poppo
US authorities fear the cannibalistic attacks could become a pandemic. They have discovered that many shipments are coming from the UK.
In an investigation by network NBC, a girl of 16 ordered a batch from a firm which, despite saying it did not sell to under-18s, soon delivered. A reporter said: “Just days later, the drugs arrived from England to the NBC studios. Even more alarming is cops that say they cannot stop the sale of the drugs as they are not illegal.”
The Sun knows of several British “bath salts” sites which boast delivery to the US in five-to-eight working days — but we will not print the addresses.
Zombie … Carl Jacquneaux bit face of his ex-wife’s new lover
One mockingly suggests users put them in their bathtub to help “erase fatigue and invigorate the body”. It says the products are offered “for scientific research purposes only” and are “not designed for human consumption”.
But it also advises buyers to use the drug “sparingly” and predicts the effects will last for several hours. No mention is made, however, of the risk that users will turn into the crazed, flesh-eating monsters horrifying America.
Earlier this month, a naked man was arrested ranting and screaming outside the Los Angeles home of British actor Orlando Bloom, 35. He was said to be manic and sweaty as he prowled the estate.
Zombie … Pamela McCarthy attacked her three-year-old son
Users of the drug have reported feeling incredibly hot, which is why many strip off. They can also develop superhuman strength — meaning it can take five or six men to restrain them.
They become so manic and delusional that the term “excited delirium” is being used to describe their mental state. The shocking wave of attacks has sparked fears of a real-life zombie outbreak as seen in movies such as Dawn Of The Dead.
The dangers of so-called legal highs has hit the headlines in the UK in recent weeks with two incidents linked to a new “bath salts” drug called Benzo Fury.
Zombie … Brandon de Leon tried to bite off the hands of cops who arrested him
Alex Herriet, 19, died after taking the £10 high at the Rockness festival in Scotland.
And Katie Wilson, 19, paraded naked in a Tesco in Bourne, Lincs, after taking the drug.
The “bath salts” are actually a cocktail of amphetamine-like chemicals, mainly mephedrone, MDPV and methylone. Authorities in the US and UK have tried to close loopholes allowing the drugs to be sold.
Crazed … ‘possessed’ drug user Freddy Sharp is restrained
Last year America’s Drug Enforcement Administration imposed a 12- month emergency ban on the three chemicals. MDPV is illegal in the UK.
But experts have warned the current rules are ineffective.
David Shurtleff, of the National Institute on Drug Abuse in the States, explained drug makers are constantly “tweaking” the molecular structure of the substance to get round regulations while maintaining the effects.
Dr Shurtleff said: “The problem is that chemists are very clever.”
Bath salts … US authorities have discovered that many shipments are coming from the UK
The number of calls America’s Poison Control Centers receive about the drug rose from 304 in 2010 to 6,138 in 2011. Addiction expert Dr Deborah Mash of University of Miami says the problem should chill people to the bone. She said: “This is almost like a science fiction episode where someone creates a dangerous molecule and it is released into the public. The results are terrifying in the extreme.”
Cannibal rap … Luka Magnotta
Things have got so out of hand in America that many people feared a mutant virus was to blame.
The Centre for Disease Control and Prevention had to release a statement saying it is not aware of any virus that can cause zombie-like behaviour.
Addiction expert Dr Karen Hylen believes the cannibals were already disturbed — and that eating human flesh can become addictive. Dr Hylen said: “It takes a very disordered psyche to become interested in cannibalism. But once a person entertains such fantasies and acts on them, eating flesh will release brain chemicals that can make the process addictive.”
Luka Magnotta, 29, is the most infamous recent “flesh eater” after he was held on suspicion of killing and eating a lover.
But the Canadian oddball, who lived in London for a while, is not known to have used “bath salts”.
The Home Office said it is trying to root out the “bath salts” menace. A spokesman said: “MDPV is an illegal and harmful drug and stiff penalties are in place for people who possess or supply it. Drugs ruin lives which is why we are taking tough action against dealers and criminal gangs and helping people to free themselves from the cycle of dependency.”
Mutant bird flu would be airborne
June 21st, 2012
02:00 PM ET
Mutant bird flu would be airborne, scientists say
Here’s what it takes to make a deadly virus transmissible through the air: as few as five genetic mutations, according to a new study.
This research, published in the journal Science, is the second of two controversial studies to finally be released that examines how the H5N1 bird flu virus can be genetically altered and transmitted in mammals. Publication of both studies had been delayed many months due to fears that the research could be misused and become a bio-security threat.
Although these particular engineered forms of H5N1 have not been found in nature, the virus has potential to mutate enough such that it could become airborne.
H5N1 influenza can be deadly to people, but in its natural forms it does not easily transfer between people through respiratory droplets, as far as scientists know. The World Health Organization has recorded 355 humans deaths from it out of 602 cases, although some research has questioned this high mortality rate.
The journals Science and Nature had agreed to postpone the publication of the two studies related to the genetically altered virus.
In January, the National Science Advisory Board for Biosecurity recommended that this research be published without “methods or details” that terrorists might be able to use for biological weapons. The board also said the data could assist in preparing for a possible future outbreak, however.
Then in February, the World Health Organization convened a meeting, at which the recommendation was to publish the studies – just not yet. In April, the National Institutes of Health chimed in, also recommending publication.
The first study to be published on the topic was in the journal Nature, and was led by the University of Wisconsin-Madison researcher Yoshihiro Kawaoka. It was released in May.
The other research group, which authored the new study in Science, was led by Ron Fouchier at the Erasmus Medical Center in Rotterdam, Netherlands.
Both Kawaoka and Fouchier’s groups created a mutated version of H5N1 that made it easier to transmit from mammal to mammal. They used ferrets because these animals are a good approximation for how viruses behave in humans.
Fouchier’s study examines what mutations would be necessary to get the virus airborne. He and colleagues found five mutations consistent in a form of the H5N1 flu virus that could spread among ferrets through the air.
None of the ferrets died after developing the flu, the researchers said.
In a separate analysis, researchers looked at the likelihood that an airborne avian flu virus would evolve on its own from the H5N1 currently found in nature.
This study, also published in Science this week, looked at nearly 4,000 strains of influenza virus and frequently found two of the five mutations that appear to be involved in airborne transmission. These two mutations have been found in viruses from both birds and humans, although not in naturally-occurring H5N1 strains.
Derek Smith of the University of Cambridge, who co-authored that study, said at a press briefing that it’s possible that only three mutations are necessary for the virus to evolve.
Smith’s group also did mathematical modeling to look at whether the other mutations could evolve when the bird flu jumps to a human or other mammal.
“We find that it is possible for such a virus to evolve three mutations within a single host,” Smith said during the press call.
If it takes four for five mutations to become airborne, that would be more difficult – but it’s unclear just how likely it would be, Smith said.
While the Nature study looked at how a bird flu virus could become airborne through mutations and re-assortment with other viruses, the latest research in Science suggests mutations alone could do the trick.
Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told reporters that the benefits from the Science study, in terms stimulating ideas and pursuing ways to understand the transmissibility, adaptability and pathogenesis of the virus, outweigh the risks that someone will use the data for nefarious purposes.
“Does that mean that there’s no risk? No, of course not. I can’t tell you at all
that there’s no risk. But the benefits in my mind outweigh the risks,” he said.
Making the research available generally will hopefully spark input on this topic from researchers in a wide variety of fields, he said.
It is technologically possible to create vaccine based on the genetic code of a flu virus strain including this one, researchers said. Several companies are already making H5N1 vaccines.
Research is ongoing to accelerate the amount of vaccine doses available by using adjuvants, which are agents that modify the effects of vaccines, Fauci said. There is also work ongoing into using computational sequencing to anticipate every possible influenza strain that could emerge, such that a databank could be established to prepare for the outbreak of any one of them, he said.
“Right now we’re in a much, much better position than we were when we had vaccine available after the peak of the 2009 H1N1 two years ago,” Fauci said.
Summer solstice, 2012: Six months to doomsday?
WASHINGTON — When the summer solstice arrives Wednesday, it will mark six months until the winter solstice on Dec. 21, when, according to some people’s reading of the Mayan Long Count calendar, the world will be destroyed.
Scientists and archeologists have debunked the doomsday theory, but it remains alive and well in popular culture.
“People who are not specialists in the Maya calendar have taken a few quotes and a few misunderstandings by scholars, and they’ve picked it up and run with it,” says Simon Martin, co-curator of a “Maya 2012: Lords of Time” museum exhibit in Philadelphia. “So it becomes somewhat unrecognizable.”
In 2009, the movie “2012”destroyed the world in the best special-effects fashion. The cable channel Spike TV has announced a new reality show called “Last Family on Earth,” in which one of the prizes is a spot in an underground bunker provided by Vivos, a company that sells space in such shelters. Vivos, for its part, maintains a countdown clock on its Website.
Striking a more positive note, the online stock trading firm Ameritrade suggests, “Say the sun rises on December 22, and you still need to retire. Ameritrade consultants can help you build a plan that suits your life.”
The end of days has been scheduled often during human history. The Bible’s Book of Revelation predicts it. Many Europeans expected the end of the world would come in the year 1000. More recently, American evangelist Harold Camping predicted doomsday would arrive May 21, 2011, then he switched the date to Oct. 21. Now he’s reconsidering.
The source of the current fear apparently is the end of the cycle of the Mayan Long Count calendar, one of the Mayans’ many calendars. The Mayan culture in Middle America thrived for six centuries before collapsing around 900 A.D., according to recent scholarship, because of a series of droughts and possibly warfare. The Mayans were sophisticated calendar makers and time keepers; in Guatemala recently, a Mayan mural with calendar calculations etched on the walls was discovered.
Kate Quinn, director of the University of Pennsylvania Museum of Archeology and Anthropology, or the Penn Museum, where the “Lords of Time” exhibit was displayed, says that the previous end date on the Mayan Long Count calendar occurred 5,125 years ago and was regarded as a significant event.
“They really thought of it as the turning over of dates, as the rebirth, the reawakening — the time to really reflect and start anew and just refresh,” Quinn said. “They really believed in that in the same way that we do with our New Year’s resolutions, but this was a bigger one for them. A much larger time frame. A very big party.”
Martin, co-curator of the exhibit, says that because of different correlations of dates, there is some dispute over when the Mayan Long Count calendar actually will end this time. He said you might want to wait until Dec. 25 to be in the clear.
In September 2011, Archeology Magazine published an article exploring various doomsday theories, from black holes to magnetic fields. Even the National Aeronautics and Space Administration is getting into the act, with its “Ask an Astrobiologist” feature including a question-and-answer column on “Nibiru and Doomsday 2012.” (Nibiru is a planet that the ancient Sumerians forecast would hit and destroy Earth.) E.C. Krupp of the Griffith Observatory in Los Angeles wrote an article for Sky and Telescope magazine going through various theories, “The Great 2012 Doomsday Scare.”
“In various spiritual and religious beliefs we find evidence of the end. It comes back as a kind of classic theme in the culture that we’re imagining it’s about to end,” says author Ben Winters, whose new mystery, “The Last Policeman,” is based on the premise of Earth’s destruction from an asteroid.
The doomsday theories provide “a reason to not be engaged in the world as it is,” he said. “To be thinking about some imagined future, some brutal future. It’s a kind of a fantasy, it’s a kind of escapism.”
Quinn said, however, that when the museum polled visitors to the Maya 2012 exhibit, most people were unaware of the details behind the Mayan Long calendar and the end of days.
“You ask, how do you think the world’s going to end, and they say, ‘Well, it’s something with the sun, aren’t we going to crash into something?’or, ‘It’s going to be a flood,’ and they didn’t really know,” Quinn said. “So there seemed to be a lot of theories out there, and a lot of opportunities out there for us to help the public to be directed to what we know to be true.”
Martin said that doomsday scenarios seem to be a North American phenomenon dating to the 1970s.
“It is something that recurs in societies that are looking for answers beyond what science seems to offer,” Martin said. “I think that people aren’t always happy with what science tells them.”
One positive benefit of the possible end of days, however, could be a boom for tourism in Honduras and other areas where Mayan civilization thrived.
“The hotels are selling out; the restaurants are going to be booked,” Quinn said. “It’s a great opportunity for them to bring in tourists altogether because the people who are interested in this idea of apocalyptic thinking, whether they believe the world going to end or not, they understand that the event is going to be here. They want to be there at that time.”
Locals in those areas seem bemused by it all, Quinn said. While preparing for the exhibit, she said, the descendants of the Mayans asked her, “Why do you Americans think the world’s going to end? And what is it with you people? How can you possibly trace it back to us?”