The media was all aflutter with the vote in the Slovakian Parliament on the issue of the July 21 changes to enhancing the increased funding for the EFSF. This vote was meaningless for Europe and the world but of significance for the Slovakian government. The amount of money that Slovakia would have to add to the EFSF is a pittance compared to the funds that Europe has sent and will send to the Slovak people under the guise of the EU COHESION FUNDS. Europe has sent the less-affluent states money to help ease the wide disparities between the wealthy core nations and the newly developing nations of the former Soviet Empire.
The NO voters in Slovakia were hoping to bring down the present government by holding the entire nation hostage. Slovakia will vote YES and the money will continue to flow from Brussels and all the media hype is merely fluff. As Charles De Gaulle said, “Europe is France and Germany: The rest are just trimmings.” The proof to this is that the EURO failed to move after the initial NO vote.
This evening the U.S. Senate passed a bill that would seek to punish Beijing and other nations that are deemed to be CURRENCY MANIPULATORS. The U.S. has threatened to do this before but when the HOUSE passed a similar BILL, the Senate blocked it. Some analysts believe that the Senate did this to have political cover for passing the pending free trade agreements. The Senate leaders are sure that the Republican-led House will not pass the legislation, thus making the legislation meaningless. The Chinese are voicing their anger and raising concerns about the possibility of a trade war, but also know that this legislation arises as the U.S. enters the political cycle. HOWEVER, WHAT IF THE BOEHNER-LED HOUSE PASSES THE BILL AND DEFIES ALL THE PUNDITS?
The Republicans could vote yes and send the BILL to Obama where the President will be in a difficult situation as he would risk a trade war with the Chinese or else alienate his base by vetoing the BILL. This political gambit by the SENATE DEMOCRATS may become interesting. If you thought the EQUITIES WERE VULNERABLE TO EUROPE, THE CONCEPT OF A GENUINE TRADE WAR WITH YOUR BIGGEST CREDITOR CAN REALLY SET THE MARKETS ALIGHT. John and Eric Cantor, what say ye?