If Spain’s crisis deepens Europe’s recession, it could tip the entire world economy into a stubborn slump. The ramifications would be enormous, including: reduced odds of Barack Obama’s reelection, assuming a weaker U.S. recovery; less political cohesion and more social unrest in Europe (even now, the European Union’s unemployment rate is 10.2 percent); and growing pressures in many countries for economic nationalism and protectionism.

Spain is suffering a hangover from what economist Desmond Lachman of the American Enterprise Institute calls “the mother of all housing booms.”

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President Sarkozy, whose personal unpopularity dominated the campaign, is the first head of state to come second in a first-round poll since France switched to presidential politics 50 years ago. Even a barn-storming performance by Mr Sarkozy in TV debates with Mr Hollande in the next two weeks seems unlikely to save his presidency in the two-candidate, second round on 6 May.

In a speech to ecstatic supporters in his fiefdom in Tulle, south-west France, Mr Hollande said: “I am now in a position of strength to be the next President of the Republic…This vote is a disavowal of the policies, and the personal behaviour, of the outgoing candidate, whose campaign in recent weeks has finally served the interests of the National Front.”

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In interviews at Paris polling stations, French citizens expressed little real joy in the vote but felt that France’s future is so uncertain that they needed to do their civic duty.

“Whoever is elected, things are going to be hard,” says a middle-aged Frenchman, Angelo Benkaddour, outside a voting station in Paris’ 10th district. “What’s happening in Greece and Spain [economic woes], it is coming here.”

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The Gideons in Germany give away 2,000 Bibles a day and nobody complains. The Koran is another matter. A group called the True Religion has handed out 300,000 copies, many from “information stands” in shopping areas. All told, it wants to give away 25m in German-speaking Europe. Intelligence agencies are alarmed; politicians have condemned the plan. The printing firm has even cancelled its contract. “The public pressure was too great,” it explained.

The problem, critics say, is not the gift but the giver. The True Religion espouses Salafism, a fundamentalist branch of Islam. Its leader is Ibrahim Abu Nagie, a Palestinian-born, Cologne-based preacher with intolerant views and a knack for getting others to embrace them. The Cologne prosecutor wanted to try him for inciting violence against Christians and Jews but could prove nothing worse than predictions that they would end in hell. The case was dropped in January.

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Overheard next to me last week while getting a facial on West 72nd Street on the Upper West Side:

Woman in her 80s reclining next to me with green cream on her visage asking her facialist: “So, do you Russians have brisket for Passover?”

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Some of the same spoilers that interrupted the recovery in 2010 and 2011 have emerged again, raising fears that the winter’s economic strength might dissipate in the spring.

In recent weeks, European bond yields have started climbing. In the United States and elsewhere, high oil prices have sapped spending power. American employers remain skittish about hiring new workers, and new claims for unemployment insurance have risen. And stocks have declined.

There is a “light recovery blowing in a spring wind” with “dark clouds on the horizon,” Christine Lagarde, managing director of the International Monetary Fund, said Thursday….

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…the team around him has quietly started to have doubts about victory, and is debating the best strategy to try to overcome serious odds.

Mr. Sarkozy is in deep trouble and is looking, for now, as if he could be the first one-term French president since 1981. He appears to be running neck and neck with his main challenger, the Socialist candidate François Hollande, in the first round of voting on Sunday, when 10 candidates are competing. But all the opinion polls show Mr. Sarkozy losing to Mr. Hollande in a face-off two weeks later.

His possible defeat carries implications that would radiate far beyond Paris. Mr. Sarkozy has had contentious but valuable relationships with Chancellor Angela Merkel of Germany, a fellow conservative, on European and euro zone issues; with the British on defense issues, including the Libyan war; and with President Obama on issues involving Iran and Israel, NATO and Russia.

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With the incorporation of the former DDR into the Federal Republic, Germany has become a more Protestant country in demographic terms. But there has been no lasting “Protestant revolution”. West Germany is somewhat less secularized than the East, but it too partakes of the overall Eurosecularity. It seems likely that the parsonage still resonates, even if faintly, in the minds of Angela Merkel and Joachim Gauck. Does this mean a new cultural influence of the Protestant church? Probably not. More likely what we hear are the last echoes of a Bach chorale that has ended. All the same, it is useful to recall that history always has surprises.

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Herewith the BBC summary:

In 1943, a group of Belgian Jews escaped from a train bound for the Nazi death camp at Auschwitz.
In the only incident of its kind, they were helped by members of the Belgian resistance.
Witness speaks to Simon Gronowski, who at the age of 11, jumped from the train to safety.

Listen to it all (10 minutes). I caught this by accident yesterday in the car driving to a meeting, and it left me shaking in silence. Do take the time to give your attention to it–KSH.

Europe threw its weight behind Spain yesterday after a diplomatic war broke out between Madrid and Buenos Aires over Argentina’s decision to take over a multibillion-pound energy company.

In the wake of tensions between Britain and Argentina on the anniversary earlier this month of the Falklands invasion, President Cristina Fernández de Kirchner risked further alienation around the world by pushing ahead with the nationalisation of Yacimientos Petrolíferos Fiscales (YPF), in which Repsol, a Spanish energy group, has a majority shareholding.

In response, Spain launched a trade and diplomatic offensive against Argentina, rallying allies in Brussels and the G20 against the move to take over 51 per cent of YPF.

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I fully intended to ignore Spain this week. Really, truly I did. I had my letter all planned, but then a few notes drew my attention, and the more I reflected on them, the more I realized that the inflection point that I thought the European Central Bank had pushed down the road for at least a year with their recent €1 trillion LTRO is now rushing toward us much faster than ECB President Mario Draghi had in mind when he launched his massive funding operation.

So, we simply must pay attention to what Spain has done this week ”“ which, to my surprise, seems to have escaped the attention of the major media. What we will find may be considered a tipping point when the crisis is analyzed by some future historian. And then we’ll get back to some additional details on the US employment situation, starting with a few rather shocking data points. What we’ll see is that for most people in the US the employment level has not risen, even as overall employment is up by 2 million jobs since the end of the recession in 2009. And there are a few other interesting items. Are we really going to see 2 billion jobs disappear in the next 30 years?

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In a largely claustrophobic game at the Allianz Arena, Bayern Munich dramatically defeated Real Madrid 2-1 thanks to an 89th-minute strike by Mario Gomez, giving Jose Mourinho endless cause for concern heading into the second leg at the Bernabeu on April 25.

Many wondered how Real Madrid would handle its first truly top-class opponent in the Champions League knockout stages — having sparred with CSKA Moscow and cruised past plucky APOEL in the round of 16 and quarterfinals — and I suppose this dispiriting defeat gives us plenty of indication….

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For many years now, we’ve heard sombre warnings that the white countries’ easy dominance of the world would be eclipsed by the developing nations.

One day, we were told, the fast-growing economies of the poor countries would be bigger than those of the more sclerotic rich countries.

The Australian Treasury has now calculated this is no longer a looming prospect but that, on a key measure, it has already happened. The Treasury estimates the developing countries’ collective gross domestic product overtook that of the rich world last month.

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Is the euro crisis back with a vengeance, or do investors have a needless case of anxiety?

Until very recently, the gloom over the Continent had seemed to be lifting, with the conclusion of Greece’s second bailout and the calming effect on the financial sector of cheap loans from the European Central Bank. But last week’s jump in borrowing costs for Spain and Italy provided a clear signal that the euro’s problems are far from solved….

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Hungary’s Ambassador to the Holy See is rather perplexed by the negative reaction of some European figures and institutions to his country’s new Constitution — a document he sees as offering a possible impetus to a “Christian renaissance” in Europe.

“We think it’s a little bit strange to hear such voices,” Ambassador Gábor GyÅ‘riványi told ZENIT March 27th. “The real founding fathers of the European Union planned to base the Union on Christian values, and expressed the notion that European democracy can only be viable if constructed on the Christian basis.”

The preamble of the new Constitution, or “Fundamental Law,” which came into force Jan. 1, contains references to God, Christianity, and traditional family values. It further stipulates that the life of a fetus be protected from the moment of conception (abortion remains legal, however, in cases where the mother’s health is threatened).

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Lord Carey argues that in “case after case” British courts have failed to protect Christian values. He urges European judges to correct the balance.

The hearing, due to start in Strasbourg on Sept 4, will deal with the case of two workers forced out of their jobs over the wearing of crosses as a visible manifestation of their faith. It will also take in the cases of Gary McFarlane, a counsellor sacked for saying that he may not be comfortable in giving sex therapy to homosexual couples, and a Christian registrar, who wishes not to conduct civil partnership ceremonies.

Lord Carey, who was archbishop from 1991 to 2002, warns of a “drive to remove Judaeo-Christian values from the public square”. Courts in Britain have “consistently applied equality law to discriminate against Christians”.

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If I read my Twitter feed correctly, Jorg Asmussen, the German representative on the European Central Bank’s executive board, thinks that the ECB has already played its part as far as saving the euro is concerned with last December’s LTRO intervention; it’s now up to national governments to complete the process, he says, by undertaking the necessary structural reform (Mr Asmussen has been speaking at the Institute for New Economic Thinking conference in Berlin).

As is becoming ever more common when it comes to euroland, it’s a view which is quite at odds with the facts. True enough, the ECB’s surprise liquidity operation did succeed in dousing the crisis, at least temporarily. A Lehman’s style meltdown was averted. But the idea that the ECB can now sit back and let the politicians do the rest is surely deluded.

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Any “success” in new nuclear talks between Iran and world powers will depend on bridging a trust gap that has widened since the last round of talks failed 15 months ago.

In that time, Iran has advanced its uranium enrichment expertise and material stockpiles, and not resolved questions about possible past nuclear weapons-related efforts.

Though Iran’s supreme religious leader Ayatollah Ali Khamenei declares that having nuclear weapons is a “sin,” and vows that the Islamic Republic will never pursue them, the US and some other nations demand incontrovertible proof.

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The Spanish reading public now has a very good grasp of the fundamental realities of EMU. This will have consequences. Spain is not on the fringes of the Balkans, terrified of being cast into Ottoman banishment. It is not a small country that can be pushed around for year after year.

How and when all this will end is anybody’s guess but I have suspected for a long time that Spain is the lynchpin of the system. The intellectual atmosphere has changed entirely. Politics must surely follow.

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(The full title is: “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You”)–KSH

What was the main difference between Great Britain and France? It -wasn’t the size of their national debts: at the time of the French Revolution, Great Britain’s debt per person was much larger than France’s. The difference was politics. In Great Britain, the political system was dominated by elected representatives who supported an activist government and were willing to endorse the taxes necessary to pay for its resulting debts. In France, the government did not have the legitimacy necessary to raise the money to service its smaller debts. And although its tax rates were lower than Britain’s, the problem of taxation without representation was an important cause of the Revolution.

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When the European Union’s finance ministers met in Copenhagen on 30 March they gave the clearest indication yet of what has been clear to most observers for months: that the 27 member states cannot agree a tax on financial transactions. A tax on share deals modelled on the UK’s stamp duty might be possible, but a wider tax on financial trades is off the agenda for the foreseeable future. The German finance ministry, one of the strongest supporters of the tax, admitted as much at the meeting, calling for work to focus on a tax on share transactions.

Since June 2011, when the European Commission announced it would propose an FTT, it had been obvious that the plan would not fly…
Apparently heedless that the object was immoveable, José Manuel Barroso, the Commission president, last week made yet another attempt to exert irresistible force in support of the tax. He told members of national parliaments and the European Parliament that the revenue raised by the tax would allow member states a cut of up to 50% in their contributions to funding the EU.

Perhaps Barroso’s intransigence is inspired by the unfortunate fact that the FTT proposal was central to the Commission’s plans for financing the EU’s multiannual financial framework (MFF) for 2014 to 2020. Removing the idea of an EU-wide tax from the agenda leaves a big hole in Barroso’s plans for financing the MFF.

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Spain’s first general strike for 18 months has been well-supported, as citizens protest against the government’s labour reforms and austerity plans.

Protests began early, with demonstrators clashing with police in several cities as they tried to disrupt buses and prevent lorries arriving at, or leaving, wholesale markets. Over 50 people were arrested, and a small number treated for injuries.

Unions say they were pleased with the turnout today. Transport links have been badly affected, with hundreds of flights cancelled, and trains and buses delayed.

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Update: There is more there as well.

Prime Minister Mariano Rajoy will unveil the most austere budget since before Spain’s return to democracy in 1978, risking a deeper recession in a bid to avoid succumbing to Europe’s debt crisis.

“There’s interest in seeing how they are going to manage this particular trick of cutting the budget so aggressively,” said Harvinder Sian, an interest-rate strategist at Royal Bank of Scotland Group Plc in London, during a telephone interview. “The recession will be dramatic.”

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With the highest unemployment rate in the European Union at 23 per cent and 50 per cent of young people out of work, Spain this week veered back to recession for the second time in two years.

The strike comes amid mounting international concern that Spain might become the next casualty of the eurozone debt crisis after Greece, Ireland and Portugal, which were all forced to accept financial rescue packages.

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Sedláček: Eve and Adam grab the opportunity and eat the fruit. The original sin has the character of excessive, unnecessary consumption. It is not of a sexual nature. A desire for something she doesn’t need is awakened in Eve. The living conditions in paradise were complete, and yet everything God had given the two wasn’t enough. In this sense, greed isn’t just at the birthplace of theoretical economics, but also at the beginning of our history. Greed is the beginning of everything.

SPIEGEL: So evil is the result of insatiability?

Sedláček: The demands of people are a curse of the gods. In Greek mythology, the story of Pandora, the first woman, who opens her jar out of curiosity, thereby releasing poverty, hunger and disease into the world, tells the same story as the Bible. In Babylonian culture, the Gilgamesh epic shows how desire rips man out of the harmony of nature.

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“The work of the Spirit can be compared to mining. The Spirit’s work is to blast to pieces the sinner’s hardness of heart and his frivolous opposition to God. The period of the awakening can be likened to the time when the blasts are fired. The time between the awakenings corresponds, on the other hand, to the time when the deep holes are being bored with great effort into the hard rock.

To bore these holes is hard and difficult and a task which tries one’s patience. To light the fuse and fire the shot is not only easy but also very interesting work. One sees “results” from such work. It creates interest, too; shots resound, and pieces fly in every direction! It takes trained workmen to do the boring. Anybody can light a fuse.

”¦the Spirit calls us to do the quiet, difficult, trying work of boring holy explosive materials into the souls of people by daily and unceasing prayer. This is the real preparatory work for the next awakening. The reason why such a long period of time elapses between awakenings is simply that the Spirit cannot find believers who are willing to do the heavy part of the mining work. Everybody desires awakenings; but we prefer to let other do the boring into the hard rock.”

–Ole Hallesby, Prayer (Minneapolis: Augsburg Fortess, 1994 printing of the 1931 original), pp.77-78

In his alleged attacks, Mr. Merah appeared to follow al Qaeda’s founding cause of killing “Jews and crusaders.” He is suspected of having shot dead three soldiers from regiments that had dispatched troops to Afghanistan, and of having opened fire on a Jewish school in Toulouse, leaving four dead, including three children.

On Wednesday, police say he told his interlocutor that he had “brought France down on its knees,” expressing regret that he had failed to kill more people.

“He appears to have drifted into a parallel world where he picked and chose elements to build himself a new identity,” said Jean-Pierre Filiu, a professor in the Middle East department at the Paris Institute of Political Studies.

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The centerpiece of the case against Obamacare is the requirement that everyone buy some kind of health insurance or face stiff penalties–the so-called individual mandate. It is a way of moving toward universal coverage without a government-run or single-payer system. It might surprise Americans to learn that another advanced industrial country, one with a totally private health care system, made precisely the same choice nearly 20 years ago: Switzerland. The lessons from Switzerland and other countries can’t resolve the constitutional issues, but they suggest the inevitability of some version of Obamacare….

Twenty years ago, Switzerland had a system very similar to America’s–private insurers, private providers–with very similar problems. People didn’t buy insurance but ended up in emergency rooms, insurers screened out people with pre-existing conditions, and costs were rising fast. The country came to the conclusion that to make health care work, everyone had to buy insurance.

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The French Interior minister says Mohammed Merah, the prime suspect in seven murders in and around Toulouse, died Thursday morning in a jump from an apartment window after “shooting madly” at police who raided the building.

French Interior Minister Claude Gueant said police entered the apartment Thursday after hearing nothing from Merah overnight, only to be ambushed by the suspect who “came out of the bathroom shooting madly at everybody.”

“At the end, Mohammed Merah jumped out of the window with a weapon in hand, continuing to shoot. He was found dead on the ground below,” said Gueant.

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Sweden was the first European country to introduce bank notes in 1661. Now it’s come farther than most on the path toward getting rid of them.

“I can’t see why we should be printing bank notes at all anymore,” says Bjoern Ulvaeus, former member of 1970’s pop group ABBA, and a vocal proponent for a world without cash.

The contours of such a society are starting to take shape in this high-tech nation, frustrating those who prefer coins and bills over digital money.

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