Target Luxembourg

It will first start as trickle, and then it will grow to the size of a brook, then as other brooks join it will grow to the size of a creek, and then as other creek join it then a small river, and as the small rivers join together a large continent draining river.

The trickles are just starting in Luxembourg, a country known for it’s banking, but not much else.  Luxembourg is a country with banks deposits in significant excess of its gross domestic product, just like Cyprus.  But just like Cyprus, Luxembourg cannot print enough physical currency to cover the entire electronic Euro currently held/deposited within the various disk drives of its banks.

Cyprus banks had deposits greater 10.8 times the GDP of the country.  Luxembourg banks according to IMF in 2011 held deposits greater than 20 times the countries GDP.  I suspect that deposit growth has been greater than Luxembourg GDP growth, meaning that deposit to GDP is even greater today.  If you think Cyprus is bad, just wait.  The “ChubbChubbs” are coming.  It will sweep over the continent, each of the weak sisters being picked off one by one, as they succumb to monetary forces at work.

It was a good wave to ride while it lasted by the shore is close at hand the wave is starting to break lose form, it is really had to keep on your board in the spray and foam of a crashing wave.  The smart surfers would have already pitched out, looking for the next wave.

So the really smart money is starting to slowly move those electronic Euro’s out of Luxembourg.  I suspect a significant percentage of those electronic Euros’ that are being moved are also being converted to electronic Dollars.  Given that of all the various world currencies that are convertible and not illiquid, and that have enough GDP to cover deposits being held within the confines of their banking system, the United States is it.  At this time the exchange rate is rather favorable for jumping out of the Euro, not as good as it was a few weeks ago, but it is only going to get worse in the coming months.

Some of electronic Euro’s are staying in Europe.  These electronic Euro’s are just going to other location in Europe, which for the moment appear to be safer.  The reason for this is that individuals and companies need to cover operating expenses within Europe.  But where to put those funds is the solvency question?  As I look upon the GDP landscape the only European country with enough GDP to cover this flood of electronic Euro’s is Germany.

Another possible location is Switzerland, but even the Swiss have limits how many Euro’s they are willing to accept at the current exchange rates.  A big large flow of Euro will destabilize their currency something the Swiss National Bank is battling everyday, but even their reserves are limited.

As stated in the CNBC article "The Insanity of the Cyprus Crisis".  The ECB is not the FED.  The ECB on its own has no ability to print money to rescue failing banks.  The ability to print money falls to the various member National Country Banks that are members of the ECB who issue money in the name of the ECB.  The ECB is responsible for just 8 percent of the notes issued the various National Country Banks.  The National Country Banks are responsible for the remaining 92 percent, and the bad news it that their responsibility is limited to only those notes that they physically issued.  The majority of the printing of Bank notes his handled by each member country.  There is a country code printed on each note.  For those who are interested “G” is the code for Cyprus.

The European Banking Authority, which has some limit responsibility in regulation bank the majority of the authority rest with the respective nations and their respective agencies, does not have the authority to borrow money (issue bonds) to rescue these failed banks, since it does not have any taxing capacity to back up any bonds.

What individual/corporation would put their electronic Euro’s in Italian Banks, Spanish Banks, Portuguese Bank, French Bank, Belgium Bank, or Dutch Bank?  If I were a citizen of any one of the afore mentioned countries, I would be giving serious consideration to a minimum the amount of funds held in a bank.

The next question is when is a Euro note not a Euro note.  Some would say that it is any such note with a Country Code of “G”, after all 92 percent of that note is backed by the full faith and credit of the Government of Cyprus.

We have gone from “one for all and all for one”, to “one for some of us and some for some of us”, the finally step will be “one for me and nothing for the rest”.  It will be a very interesting summer, as another one bites the dust.

What are THEY thinking about?

Or Why is the United States Stimulating the German Economy?

What are THEY (Department of Defense just in case you do not know who they are, not to be confused with THEM a bunch of giant ants in the desert of New Mexico) thinking about when it comes to stimulating the German Economy to the tune of at least .75 Billion Dollars to replace the primary United States Armed Forces medical facilities in Europe LARMC (Landstuhl Region Medical Center)?

LARMC is still operational.  Given that there is an overall force reduction currently taking place in all armed services.  The operational tempo down range (Afghanistan) is dramatically being reduced daily (You know we are wining the hearts and minds of the Afghan people, just like we did in Iraq, it is almost time to declare victory and leave, God knows that many of our Allies have.).  Given the mood of the Senate and their reluctance to keep US Forces in Afghanistan after 2014, the observed reduction in operational tempo may be even further reduced.  The reduction of forces forward deployed in Europe (2 Infantry Brigade Combat Teams (170, and the 172) disbanded in 2012).  The Department of the Army downgrading of United States Army Europe USAREUR commander slot from a General O-10 to a Lt. General O-9.  The current USAEUR actions to consolidation and or reduce the number of United States Army Garrisons in Europe.  The Department of Defense plans to pivot of our forward force structure from being concentrated in Europe to being concentrated in the Pacific.  Further announced reduction of personnel in Europe (Lajes Field reduction have just been announced, and the Portuguese government is not happy.  After the Portuguese government the United States is the largest employer on the island.).

Given all of the above, why is it that the Department of Defense, and more particularly the Department of the Army is trying to spend at least $750,000,000.00 ($ 750 Million, or $ 0.75 Billion) on a replacement facility for the Landstuhl Regional Medical Center?  (Replacing the facility did make sense with are past operational tempos in Iraq and Afghanistan, because it was busting at the seams.)  More importantly do THEY really think that they can build a replacement facility for that amount?  Given their track record on other project (pick on any one) and the current currency conversion ratios it is looking rather questionable. Additionally all constructions that take place on the local facilities has to be funnel through a single German corporation, we promise that we will get you the best price.  Look at the mess that was the KMCC.  To date the Department of the Army has a Total Obligation Authority of $197,592,000.00 or $197.595 Million Dollars.  Next years numbers are not out yet, that will be sometime in February 2013, and I can hardly wait.

It will also be a game of bait and switch, if the new hospital is built, at Rhine Ordnance Barracks (ROB), the next thing you will hear is that there is not enough supporting facilities at ROB, and that these facilities which existed at Landstuhl will have to be recreated at ROB to provide the same level and ease of support.  Surprise that will be at least another Billion Dollar shot into the local German economy.

Yes the current facility is old, but it is paid for.  Yes it separated from either of the two major DOD facilities located in Kaiserslautern.  Yes that makes more expensive to secure, but because it is separated, all of our eggs are not in one basket we do gain some security via separation.  If a foreign power wants to take the facilities out they (not the DOD) will now require the use of a large force structure to accomplish the task.  Larger force structures are harder to hide.  Attacking multiple targets, and being successful requires higher levels of execution, higher levels of coordination, higher levels of communications, and as stated earlier a much larger force, and the job does not scale linearly, it is exponential.

Remember Pearl Harbor, it was harder to guard all of the aircraft dispersed in their revetments, and harder to destroy aircraft in their revetments from sabotage, so General Short ordered all of the aircraft pulled from their revetments and lined up on the flight line, that way it would be easier to guard, and consequently easier to be destroyed by a concentrated attack.  The IJN air staff and strike leaders were pleasantly surprised when they discovered most if not all of the United States Army and Navy air assets neatly lined and boxed together at Naval Air Station Ford Island, Naval Air Station Kaneohe, Marine Corp Air Station Ewe, AF Bellows, AF Wheeler, AB Hickam.

One reason for the proposed consolidation is that operations and maintenance and security at these spread out facilities is expensive, and this is one way to reduce these re-occurring costs.

If the Department of Defense/Department of the Army with the blessing of the United States Congress is so dead set about spending this money, why not spend it somewhere back in the United States Where the Pork would help some congressman in his up coming election in two year?  Why are we the United States going to drop at least three quarter of Billion Dollars into the German economy?  Why are we stimulating the German economy?  Why are we not stimulating the United States economy?  I ask one question to members of the House and the Senate why is this pork not being kept at home?  Are large numbers of German citizens now voting for members of the House and Senate and they must be repaid?  Is this the United States way of paying German for the use of their troops in Afghanistan?  What are THEY thinking about?   It is not too late to stop.

This Just In

"Europe is in one of its toughest, perhaps the toughest hour since World War Two,"

Angela Merkel Chancellor Federal German Republic, 14 November 2011 address to the Christian Democratic Union party meeting in Leipzig.

Come on Angela, here is a link to a Spiegel article full of before and after pictures.  I suspect that you might be stretching the story just a little.

http://www.spiegel.de/fotostrecke/fotostrecke-56828.html 

 Seriously?  I do not know but judging from the picture in the above link it sure looks like 1946-1953 was just about as bad as it can get and still be called a society/civilization..