The U.S. has a continuing policy of siding with friendly countries and going out against the unfriendly ones. This generally seem like the way things should be but if one thinks about it we should be neutral on most international issues unless the come before the United Nations. The UN should be the place where one takes sides based on evidence presented. Keeping our actions to a minimum is the best way to stay ut of harms way. This allows us to be considered as a neutral party relative to international incidents. It also enables the U.S. to remove itself as the policeman of the world.

Such a change would not remove us from helping other countries or their people in need. It would keep us out of the conflicts between other nations. If actions are required against a rogue state then we would be able to provide assistance to the actions ordered by the UN. These would be actions where the UN, by vote indicates the necessity to correct a situation. This would be a time when we no longer need to be neutral and would act in a biased way because we were following the directions of the UN coupled with the actions and opinions of the other countries assigned to correct the troubled situation. It would not take long for the U.S. to establish a reputation that we will assist and we will not take sides unless all parties vote on any given situation. This may make America a target at first but a very profound slap down to any threat would send a signal that we wish to be a good neighbor to all but we will respond to any threat immediately with severe strength and power.

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The U.S. is a strange country with respect to the kindness we address toward other countries. We are a warning nation but we do take care of other countries even the ones we go to war with. There are more than many occasions when the other, so called friendly, countries have picked our pocket and we have allowed it. We generally chalk it up to their having a greater need than we for what they take from us. The problem now square in front of us is we are having problems. It is time the wealthy in other countries take care of their problems and their people in need. We presently send money to countries where disaster has hit or where people just need shelter and other life sustaining resources. At issue is the fact we have a large and growing number of homeless and hungry people right here at home. We also have people who are loosing their homes because they have been out of work for far too long.

The time has come for America to look inward and apply our resources to support the needs of the people at home. I am not talking milk or cheese programs but creating short term, one to two year program, jobs to assist the people and the economy to get back on their feet. If that means not sending money or aid to other countries for help or assistance with their issues then that must happen. Other nations count on our generosity to support the needs they cannot raise the taxes or create the internal programs necessary to resolve their internal issues. The present European Union financial problem is a perfect example of the other countries playing political games waiting for the U.S. to use its treasure to resolve the issue they do not care to resolve themselves.

Germany and France are expecting the U.S. to come to their aid and infuse huge amounts of money into their system to allow them to resolve their debts while saving face. No one wants these countries to fail but at issue is when will the countries of the EU make the changes necessary to correct their financial problems and return to the road of prosperity? This is a lesson the U.S. should take to heart because we are very close to the same financial cliff that Europe faces. Perhaps we should start at home and repair our damages before we send help to those who refuse to help themselves.

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The currency of China is the Yuan and the rest of the world has complained that the Chinese do not let it float free in the market place. It is a hands-off currency because the Chinese have complete control of the so called market rate or value of the Yuan. Using strict internal rules and controls the Chinese keep the Yuan at a very low value which allows the price of the goods they sell to be very low. Because the value of the Yuan is not set in the open market place the value is kept quite low relative to the dollar. This also makes it an almost non-trading currency. There are very few places where the Yuan can be exchanged for other currency. Most countries do not have facilities to make the exchange. This is by the design of the Chinese government.

If the currency is kept in country (as it currently is) then it can not float free in the market place. Over the past two years the value has been raised in very little increments relative to the dollar. However, the time has arrived when the Chinese feel it may be prudent to allow the currency to sort of float. The strategy is simply to take advantage of the stumbling world economy by setting up a program by which Chinese goods could be sold to countries that have bad credit ratings. They would simply make the loan in Yuan's and require the loan or credit be paid back in Yuan's only. They could then work with these countries to set up credit and exchange centers where the dollars could be exchanged for the Yuan. This approach still allows them a strong control over their money. It also puts the U.S. Dollar in a competitive position as the world wide currency of choice. This is a status the Chinese wish to take away from the U.S. and now they have a plan to accomplish that task. The next move is in the U.S. ball park.

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We need to follow the moves and actions of China more closely now. The U.S. is having problems and we have a political system whose members have continually failed to rectify the problems at hand. They simply kick the can down the road to deal with the issues at a later date. Europe is in bad shape and the situation is getting worse each and every day. Once again the collective political structure of the European Union has broken down under the weight of crushing financial issues. The Mid-East and the East itself hold little help for a rescue of the others. The rest of the world is having its issues also. The real concern is China because it has the ability to assist Europe with loans and has made offers but the offers come with strings.

The strings China has placed on the offers of financial assistance is better positioning in the World Trade Organization and a number of trade deals that would never be on the table if the European situation were not desperate. Up to this point the European Union has refused the assistance. If they do come for the aid the Chinese will up the anti on the deals or even add more deals having greater degrees of difficulty tied to them. China is waiting for the opportune time to come back with an offer. Part of the strategy seems to be to let some failures take place and then enter the game as an even bigger white knight with truly outrageous requests for its assistance.

The most ominous outcome of this condition to the U.S. would be a Chinese demand for acceptance of the Yuan as the medium of exchange for all the deals and trade made within the European Union and China. This would give standing to the Yuan as an equal to the U.S. dollar. The China deal would require all payments for goods and services from China to be paid in Yuan's. That would require the establishing of bank exchanges to convert the money from any other currency base to the Yuan. In the end China will make it easy for the rest of the world to buy their products and pay in Yuan's because of the exchange system they will put in place. This is a way of fighting a economic war with the U.S. with out firing a shot. The problem is that Washington is not watching this action with a strategy for keeping ahead of the curve.

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We all know we live in a different world today. It is different by many standards but the basics are still the same. As Americans we honor our country and we also try to keep it safe and out of harms way. Over the last ten years we have sent too many of our soldiers into battle and have lost too many in those same battles. Some people feel these were wars of necessity while others feel they wasted precious lives and spent our treasure unwisely. In time history will tell the tale of who was correct or perhaps both sides were. What we are starting to find out is Americans do not like war and refuse to be harassed, intimidated, or bullied by other nations. We also do not like our chain pulled especially when it is by those we tried to help. The time has come for every American to consider a change in our no first strike policy.

We are a nation of counter punchers. We wait until someone hits us before we strike back. Most Americans tend to think that once hit they have the right to floor the other guy. I do not relish taking a hit for any reason so when I see the big round house wind up a quick strike deflates the intention with my not being damaged. I feel the same way with the first strike policy we have for the defense of this country. We can make that deal with the big boys, basically the nuclear club, but that is not the mode we need to take with rouge nations or terrorist groups. With them a first strike hit, non-nuclear of course, with our best non-nuclear weapons is the way to defuse a first strike by them. We no longer have to play by the rules of the other guy's fairness. We do not have to be the aggressor but we need to tell terrorists and other nations that without the necessity of boots on the ground we will take you out if you do not stop acting inappropriately. It is time for the world to understand that we do not want war and we will not wage war but we will devastate offenders before they have a chance to hurt us.



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I cannot understand why the powers that be refuse to set in motion a plan to repatriate the trillion dollars or so that are in the coffers of American corporations in other countries. The money was made in the other countries but if the corporations bring the money back they have to pay huge taxes upon the return of the money. That amount of money could be a strong stimulus to the economy if it came back to the U.S. without taxation. The government could wave the taxation with a guarantee from each corporation that the money would be spent within one year and used for capital projects or for research and development. Legislation of that magnitude would greatly help the companies and reduce unemployment by at least two percent. There are many different ways to present this scenario and the companies themselves could be responsible for some of the suggestions. The point is why allow the money to sit fallow when it can be put to good use almost immediately with benefits for all. That being said I a still looking for the hold up.

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The current negative financial activity within the European Union is going to hit France and Germany quite hard if Greece, Italy, and Spain default on their debt. Even if the other countries meet their debt obligations the degree to which France is encumbered by the bonds of these nations has already put it on the short list for its credit rating to be downgraded. That will cause the French debt to become harder to fund in the open market. Up to now it has been France and Germany who have moved mountains by taking on huge financial and political risk in order to maintain the EU as the entity it is. The degree of debt held by other countries of the EU, which is held by France in the form of their bonds, could turn out to be the straw that broke the camel's back. France holds so much debt, in the form of bonds, that if enough of the countries run into trouble and cannot pay their bills or even if they partial pay the bills the repercussions for France would be great. It could bring France to its financial knees.

If France goes that route then Germany may not be far behind. Germany, the strongest nation in the EU, has put a lot of money and its political position on the line for this union. The possibility that France could become wrapped in the same financial trouble as the other states would hurt Germany to a considerable degree as they hold a lot of French bonds in their treasury With a number of countries in serious trouble and down grades to their bond ratings would cause considerable political issues in Germany. The great depression and the years of rebuilding after WWII are scars just below the surface of the population. This fear, more than anything else, has slowed the German approach to a solution in the EU. If this scenario were to present itself in the near future the effect on the rest of the world could kick start a world wide recession or even a depression. Most people think it will never happen but stranger things have occurred.



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The European Union is preparing to dismantle itself. The issues for the last year and a half, with the Greek government and its population failing to own up to its debt burden and promising to fix the problem but in reality doing nothing about it, will come to an end soon. Greece is a country that will take everything to the edge so far that they will fall over the clif by mistake at the moment they wish to honestly change their ways. When Greece falls it will hurt everyone in the EU and around the globe. In the meantime there is another country to consider ii this failing scenario and that country is Italy.

Italy has the fifth largest economy in the world. Over the last year they have made financial changes in the way they do business. Unlike Greece they have cut their budgets and they have raised taxes and, unlike Greece, they are even collecting those taxes. All this taken as a whole shows a good posture for Italy with one exception. The exception is that all their positive moves will pay all the bills but one. The one bill they cannot pay is the cost of their debt service. Italian bonds are now about seven percent and that is too high for them to borrow and pay off the debt service also. They are in the process of attempting to change that formula with a new government. If Italy fails then France and German banks will be severely hurt. Both of these countries together hold approximately forty four percent of the Italian bonds.

Spain is teetering on the financial edge with a no growth economy and .008% GDP growth projected for 2012. There are five million people in Spain who are out of work representing twenty one percent of the work force. The debt is still growing and they are looking for the EU to bail them out. The Spanish government figures there will have to be a bail out of Greece and Italy at some point so they seem to be waiting their turn. The surprise is that were this to happen in the way the Spanish expect France will be in deep trouble. The French banks hold about nine percent of Spanish bonds and a Spanish default along with the other countries or the assistance to the other countries will nearly destroy the French economy. Almost immediately upon this scenario occurring Portugal and Ireland could become part of this mix and accelerate the downward spiral. That puts the strongest partner of all Germany, in a bad place.

Tomorrow will be the second part of this article.

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The whole world is watching what is watching what is happening in Greece as they have been for the last twenty months. In twenty months the Greek government has found more ways to stall the financial cuts and changes required to receive outside monetary assistance for its debt. Just about everything they did was to keep the world off balance. The government has lied over and over again believing we are stupid. They are right the rest of the world has been stupid to this point but if we continue to allow this travesty to go past this weekend they are the smart ones. We all seem to be so afraid of what will happen if the Greeks fail that we have stopped thinking about anything except saving them from themselves.

We took the bait and gave them money and leeway and in the first year they did nothing to correct their situation or to act on the corrections they had agreed to for the money they received. They said they would change their ways but they have done nothing but obstruct the process of correcting their situation to this very day. It is time for the world to look at the other problems on the horizon. Italy is a large economy with a substantial debt and if the Greeks fail, and they will, the impact on the Italian banks will send Italy into a debt crisis much larger than that of Greece. Italy has been trying to do the right thing in its financial arena for the last eight months. They are holding on and they may make it with out assistance. The question is what can the world do for Italy when Greece fails after receiving all that money and the E.U. has to bail out Italy? Where will the money come from?

The solution is to bail out Italy and to let Greece fend for itself. They should be ejected from the E.U. and let to fend for themselves. By putting the money in the coffers of Italy the Greek problem could be short circuited. This would allow the Greeks to print their own money and work out their problems for themselves. As for the Italian situation the monetary infusion would hold the credit problem and support the banks that could be hurt by the Greek failure. If the process is carefully orchestrated then the help to the Italians should stop the possible defaults in Spain and Ireland.

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