The economic crisis across Europe has made it clear that the European Union isn’t meeting today’s economic realities, a condition that promises to have a global impact on other economies, including that of the United States, according to a report from Joseph Farah’s G2 Bulletin.

The economic crisis is growing worse as central European bank lending to such countries as Italy, Greece and Spain now has dwindled to a trickle because investors are backing away from funding the region’s lenders.

There isn’t enough capital on hand to finance debt which is due to mature next year. Analysts believe there need to be dramatic changes in the structure of the EU if it is to survive.

They add that the EU is at the stage now where it needs to change to a more centralized parliament representing the respective members, who will have to give up some national sovereignty to create what amounts to a United States of Europe.

“The old EU is finished,” said one informed regional observer. “The 27-member bloc has never been as unpopular as it is today.”

As it now stands, the old EU is made up of countries whose parliaments can dictate the limits of their participation. They’ve seen how some countries in southern Europe with fewer resources and spiraling debt are forcing the more productive countries of northern Europe to help bail out the less fortunate ones, without any requirement for the southern countries to implement belt-tightening measures needed to help themselves recover from their own economic downturn.

As a consequence, the richer, northern countries such as Germany are dictating terms to such southern countries as Greece and Italy on belt-tightening measures needed to receive further bailout money.

Given the level of interdependence by countries now, it is too late to recede to a more isolated position. In fact, these experts say the thinking is toward “more Europe” with expanded powers and a “real government.” These analysts say that Europe today is where the U.S. was as a confederation prior to 1787 when the U.S. Constitution gave the U.S. a federal system.

Then, the confederation was comprised of 13 sovereign states with a Congress having certain powers in foreign affairs, to borrow money, deliver mail and control Indian affairs.

However, Congress then didn’t have the power to enforce its requests to states for money or troops until the 13 states ratified the U.S. Constitution.

Various analysts’ views are reflected in the concept put forward by Charles Grant of the Center for European Reform. He envisions a democratically united Europe in which citizens of the various countries vote directly for European commissioners, much like the U.S. does now in electing its representatives for the U.S. House of Representatives and Senate.

The Vatican called on Monday for the establishment of a “global public authority” and a “central world bank” to rule over financial institutions that have become outdated and often ineffective in dealing fairly with crises.

A major document from the Vatican’s Justice and Peace department should be music to the ears of the “Occupy Wall Street” demonstrators and similar movements around the world who have protested against the economic downturn.

The 18-page document, “Towards Reforming the International Financial and Monetary Systems in the Context of a Global Public Authority,” was at times very specific, calling, for example, for taxation measures on financial transactions.

“The economic and financial crisis which the world is going through calls everyone, individuals and peoples, to examine in depth the principles and the cultural and moral values at the basis of social coexistence,” it said.

It condemned what it called “the idolatry of the market” as well as a “neo-liberal thinking” that it said looked exclusively at technical solutions to economic problems.

“In fact, the crisis has revealed behaviours like selfishness, collective greed and hoarding of goods on a great scale,” it said, adding that world economics needed an “ethic of solidarity” among rich and poor nations.

“If no solutions are found to the various forms of injustice, the negative effects that will follow on the social, political and economic level will be destined to create a climate of growing hostility and even violence, and ultimately undermine the very foundations of democratic institutions, even the ones considered most solid,” it said.

It called for the establishment of “a supranational authority” with worldwide scope and “universal jurisdiction” to guide economic policies and decisions.

Such an authority should start with the United Nations as its reference point but later become independent and be endowed with the power to see to it that developed countries were not allowed to wield “excessive power over the weaker countries”.

EFFECTIVE STRUCTURES

In a section explaining why the Vatican felt the reform of the global economy was necessary, the document said:

“In economic and financial matters, the most significant difficulties come from the lack of an effective set of structures that can guarantee, in addition to a system of governance, a system of government for the economy and international finance.”

It said the International Monetary Fund (IMF) no longer had the power or ability to stabilise world finance by regulating overall money supply and it was no longer able to watch “over the amount of credit risk taken on by the system.”

The world needed a “minimum shared body of rules to manage the global financial market” and “some form of global monetary management”.

“In fact, one can see an emerging requirement for a body that will carry out the functions of a kind of ‘central world bank’ that regulates the flow and system of monetary exchanges similar to the national central banks,” it said.

The document, which was being presented at a news conference later on Monday, acknowledged that such change would take years to put into place and was bound to encounter resistance.

“Of course, this transformation will be made at the cost of a gradual, balanced transfer of a part of each nation’s powers to a world authority and to regional authorities, but this is necessary at a time when the dynamism of human society and the economy and the progress of technology are transcending borders, which are in fact already very eroded in a globalised world.”

I read a valuable op-ed piece from Pat Buchanon the other day concerning the downfall of what most believed could lead us to a one world government and that was the EU. He says that there is a new world order rising. An interesting read about the one world government!

Keep looking up!

Is the New World Order Unraveling

Will global financial markets reach a breaking point during the month of October? Right now there are all kinds of signs that the financial world is about to experience a nervous breakdown. Massive amounts of investor money is being pulled out of the stock market and mammoth bets are being made against the S&P 500 in October.

The European debt crisis continues to grow even worse and weird financial moves are being made all over the globe. Does all of this unusual activity indicate that something big is about to happen? Let’s hope not. But historically, the biggest stock market crashes have tended to happen in the fall. So are we on the verge of a “Black October”?

The following are 21 signs that something big is about to happen in the financial world and that global financial markets are on the verge of a nervous breakdown….

#1 We are seeing an amazing number of bets against the S&P 500 right now. According to CNN, the number of bets against the S&P 500 rose to the highest level in a year last month. But that was nothing compared to what we are seeing for October. The number of bets against the S&P 500 for the month of October is absolutely astounding. Somebody is going to make a monstrous amount of money if there is a stock market crash next month.

#2 Investors are pulling a huge amount of money out of stocks right now. Do they know something that we don’t? The following is from a report in the Financial Post….

Investors have pulled more money from U.S. equity funds since the end of April than in the five months after the collapse of Lehman Brothers Holdings Inc., adding to the $2.1 trillion rout in American stocks.

About $75 billion was withdrawn from funds that focus on shares during the past four months, according to data compiled by Bloomberg from the Investment Company Institute, a Washington-based trade group, and EPFR Global, a research firm in Cambridge, Massachusetts. Outflows totaled $72.8 billion from October 2008 through February 2009, following Lehman’s bankruptcy, the data show.

#3 Siemens has pulled more than half a billion euros out of two major French banks and has moved that money to the European Central Bank. Do they know something or are they just getting nervous?

#4 On Monday, Standard & Poor’s cut Italy’s credit rating from A+ to A.

#5 The European Central Bank is purchasing even more Italian and Spanish bonds in an attempt to cool down the burgeoning financial crisis in Europe.

#6 The Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan and the Swiss National Bank have announced that they are going to make available an “unlimited” amount of money to European commercial banks in October, November and December.

#7 So far this year, the largest bank in Italy has lost over half of its value and the second largest bank in Italy is down 44 percent.

#8 Angela Merkel’s coalition is getting embarrassed in local elections in Germany. A recent poll found that an astounding 82 percent of all Germans believe that her government is doing a bad job of handling the crisis in Greece. Right now, public opinion in Germany is very negative toward the bailouts, and that is really bad news for Greece.

#9 Greece is experiencing a full-blown economic collapse at this point. Just consider the following statistics from a recent editorial in the Guardian….

Consider first the scale of the crisis. After contracting in 2009 and 2010, GDP fell by a further 7.3% in the second quarter of 2011. Unemployment is approaching 900,000 and is projected to exceed 1.2 million, in a population of 11 million. These are figures reminiscent of the Great Depression of the 1930s.

#10 In 2009, Greece had a debt to GDP ratio of about 115%. Today, Greece has a debt to GDP ratio of about 160%. All of the austerity that has been imposed upon them has done nothing to solve their long-term problems.

#11 The yield on 1 year Greek bonds is now over 129 percent. A year ago the yield on those bonds was under 10 percent.

#12 Greek Deputy Finance Minister Filippos Sachinidis says that Greece only has enough cash to continue operating until next month.

#13 Italy now has a debt to GDP ratio of about 120% and their economy is far, far larger than the economy of Greece.

#14 The yield on 2 year Portuguese bonds is now over 17 percent. A year ago the yield on those bonds was about 4 percent.

#15 China seems to be concerned about the stability of European banks. The following is from a recent Reuters report….

A big market-making state bank in China’s onshore foreign exchange market has stopped foreign exchange forwards and swaps trading with several European banks due to the unfolding debt crisis in Europe, two sources told Reuters on Tuesday.

#16 European central banks are now buying more gold than they are selling. This is the first time that has happened in more than 20 years.

#17 The chief economist at the IMF says that the global economy has entered a “dangerous new phase”.

#18 Israel has dumped 46 percent of its U.S. Treasuries and Russia has dumped 95 percent of its U.S. Treasuries. Do they know something that we don’t?

#19 World financial markets are expecting that the Federal Reserve will announce a new bond-buying plan this week that will be designed to push long-term interest rates lower.

#20 If some wealthy investors believe that the Obama tax plan has a chance of getting through Congress, they may start dumping stocks before the end of this year in order to avoid getting taxed at a much higher rate in 2012.

#21 According to a study that was recently released by Merrill Lynch, the U.S. economy has an 80% chance of going into another recession.

When financial markets get really jumpy like this, all it takes is one really big spark to set the dominoes in motion.

Hopefully nothing really big will happen in October.

Hopefully global financial markets will not experience a nervous breakdown.

But right now things look a little bit more like 2008 every single day.

None of the problems that caused the financial crisis of 2008 have been fixed, and the world financial system is more vulnerable today than it ever has been since the end of World War II.

As I wrote about yesterday, the U.S. economy has never really recovered from the last financial crisis.

If we see another major financial crash in the coming months, the consequences would be absolutely devastating.

We have been softened up and we are ready for the knockout blow.

Let’s just hope that the financial world can keep it together.

We don’t need more economic pain right about now.

From Seoul to Washington, policymakers are increasingly worried about the outlook for the global economy.

Central banks in Europe and Asia took a new, more cautious stance on Thursday and Brazil said the deteriorating world economy prompted its surprise rate cut last week.

U.S. Federal Reserve Chairman Ben Bernanke said the central bank would do what it takes to lower unemployment and boost disappointingly weak growth, but offered no details on what that would entail.

It is against that backdrop that finance ministers and central bankers from the Group of Seven industrialized nations will meet on Friday.

They are expected to stress their commitment to preserving the fragile global recovery, but a coordinated plan to calm financial markets is unlikely, officials said.

“The imperative remains to strengthen economic growth,” said U.S. Treasury Secretary Timothy Geithner as he called on global finance chiefs to boost growth.

Mr. Geithner wrote in the Financial Times that a repeat of the massive coordinated fiscal stimulus efforts of 2009 would not be possible this time as the challenges are different.

But the risks of a “longer period of relatively weak growth are significant, and it makes sense for policymakers to reduce the risk of that outcome,” he said.

U.S. President Barack Obama later on Thursday will push for a “very substantial package” of public investments, tax incentives and targeted jobs measures, Mr. Geithner said.

Mr. Obama is due to address Congress at 7 p.m. EDT to unveil his latest plan to kick-start U.S. jobs growth, which has stalled.

U.S. economic data on Thursday again pointed to a weak labor market, with the number of Americans filing new claims for jobless benefits rising unexpectedly.

The outlook for economic growth in developed countries darkened considerably in the last three months, the Organization for Economic Co-operation and Development said on Thursday. It called on central banks to keep rates low and be prepared to do more to support growth.

“One would say that growth is stagnating,” said OECD Chief Economist Pier Carlo Padoan.

In the eurozone, the European Central Bank held rates steady and signaled it is in no hurry to raise them, saying inflation risks are no longer skewed to the upside and that economic growth in the region will be slow at best.

Europe is still struggling to convince markets it has the political will needed to tackle its debt problems.

Britain’s central bank left interest rates at a record low 0.5 percent for the 30th straight month, leaving open the possibility that it may restart its quantitative easing program should the economy weaken further

In Asia, South Korea, Indonesia and the Philippines were in wait-and-see-mode, pausing in their fight against inflation while they assess how much a slowdown in U.S. and European growth will hurt their economies.

In minutes from its August 30-31 policy meeting, Brazil’s central bank focused more on problems abroad than recent signs of a sharper-than-expected economic slowdown in Brazil, Latin America’s largest economy. The bank also said price pressures were receding due to falling commodities prices.

U.S. central bankers, in speeches and interviews over the past weeks, appeared to be laying the groundwork for a possible further easing of monetary policy.

Markets widely expect the Fed to ease policy further, with some thinking the central bank’s policy-setting committee could announce new measures as soon as its September 20-21 meeting.

The OECD forecast growth across the G7 group of major industrialized economies would average 1.6% on an annualized basis in the third quarter before slowing to just 0.2 percent in the final three months of the year.

The slowdown would hit Germany particularly hard, with the OECD forecasting that Europe’s biggest economy would see annualized growth of 2.6% in the third quarter before contracting 1.4% in the fourth.

The U.S. economy, meanwhile, would register annualized growth of 1.1% in the third quarter and slow to 0.4% in the fourth quarter, the OECD said.