And America will feel the results.

YOU and I will feel the results.

And Mr Obama may decide that he must intervene with YOUR money.

Because fiscal issues are snowballing with furious urgency in Europe.

First, France embraced even more spending by electing Socialist Francois Hollande, whose catch phrase was “austerity can no longer be inevitable.” What a blithering moron, to be kind.

I wrote here that Europe is already on the brink of taking the US down.

Now, from the UK Telegraph:

Merkel tells Greece to back cuts or face euro exit

Greece may be forced to leave the euro if the country refuses to implement spending cuts agreed with the European Union, Angela Merkel warned.

Raising the spectre of a Greek exit, the German chancellor said “solidarity for the euro” was threatened by the ongoing political crisis in Athens.

Stock markets around the world fell sharply with fears mounting that a euro break-up could lead to renewed financial turmoil. The FTSE-100 index of Britain’s major companies fell by two per cent to 5465, with bank shares hit particularly hard.

The cost of Spanish government borrowing also hit a record high since the single currency was introduced because of concerns that the crisis will spread.

With that in mind, the writing is potentially on the wall with regard to Merkel’s conservative party itself, when:

(Reuters) – Chancellor Angela Merkel’s conservatives suffered a crushing defeat on Sunday in an election in Germany’s most populous state, a result which could embolden the left opposition to step up its criticism of her European austerity policies.

Translation: Europe still doesn’t “get it.” Europeans want their early retirements, their froth, their frills, their version of what I call “Free Cheese.”

They don’t want to see that they are on the cusp of stepping into a chasm from which they may not recover for, literally, decades.

Italian banks have already been downgraded in their credit ratings:

To add to the sombre mood, Moody’s announced on Monday night it was downgrading 26 Italian financial institutions by between one and four notches.

Those affected included Banca Monte dei Paschi di Siena, Intesa Sanpaolo, and UniCredit as well as a number of small banks and subsidiaries.

The rating agency cited increasingly adverse operating conditions in Italy, mounting asset-quality challenges and weakened net profits as well as restricted access to market funding. The outlook on all were put at negative.

Here is a remarkably telling paragraph buried at the very bottom of the UK Telegraph article:

The (UK) Foreign Office also has plans to evacuate British citizens from Greece if it becomes dangerous. A government source said: “The situation is now political rather than economic so is out of our hands. We are well prepared to help protect British citizens from the storm.”

Meaning: the UK expects that Greece will devolve into such chaos as to endanger the lives of British citizens in-country.

Oh my.

Gird thy loins.

BZ

P.S.
Don’t despair, Europe. My state, Fornicalia, is in the same precarious position and still doesn’t understand that there is a price to pay for profligate spending for social programs and Free Cheese. Cuts in social programs and Free Cheese proposed by Governor Brown? Of course not! Cuts in education and police and fire services.