On February 4, 2012 one of the saddest events  in the history of the United Nations Security Council occurred. A resolution  seeking to end the violent suppression of the pro-democracy movement in Syria and largely sponsored by the Arab League was vetoed by Russia and China. Though 13 out of 15 Security Council members voted in favor of the draft resolution, the fact that the objecting nations are permanent members of the Security Council meant that the latest effort by the UN to end the bloodbath in Syria was torpedoed.

Since China makes no pretense to being a democratic country, and has a consistent policy of not “interfering  in the internal affairs” of other countries (and ensuring the issue of Tibet does not make it onto  the agenda of the United Nations), it is not surprising that Beijing sided with the Bashar al-Assad dictatorship. However, since Moscow at least claims that it is a democratic country and is genuinely concerned about the plight of the Syrian people, the Kremlin’s stubborn defense of Bashar Assad is as inexplicable as it is cynical. In effect, Moscow is telling the suffering people of Syria, as they are being bombarded by heavy artillery, to “drop dead.”

While the city of Homs was being shelled into oblivion by the dictatorship in Damascus, simultaneously with the draft UN resolution being watered down to appease Russia’s “concerns”   (specifying no military intervention was being authorized by the Security Council) the Russian foreign minister, Sergey Lavrov, was rationalizing with tortured nuance his government’s defense of the Assad crackdown on the Syrian people, seeking to equate the Syrian people’s resistance to the tyrannical Baathist regime to the violence of President Assad’s security forces. Thus, by seeking to halt the massacres being perpetrated by the Assad regime, the United Nations is “encouraging”  violence, according to the policymakers in the Kremlin, whose views are amplified by Moscow’s state-controlled propaganda arm, Russia Today.

Since the views articulated  by Lavrov are inherently illogical, one may ask what the true reason is for Moscow’s rigid support of one of the most brutally repressive regimes in the Middle East, at a time when the winds of change are blowing throughout the Arab world. It could be that Moscow wishes to preserve the Assad regime as a client state that has purchased billions of dollars worth of weapons (some of which are now being used by Assad against his own people). Some have theorized that the Kremlin fears that if the Assad regime falls, it will be replaced by an Islamist government, which would encourage Islamic separatist movements in Russia’s troubled Chechnya and Dagestan republics. What makes this reasoning questionable is that the most entrenched allies of the current regime in Damascus are the Islamic Republic of Iran and its Lebanese proxy, Hezbollah.

Mr. Lavrov may do well to reflect on a predecessor of his from Soviet times, Vyacheslav Molotov. It was Molotov, on behalf of Soviet dictator Stalin, who negotiated a non-aggression pact with Nazi Germany, unleashing the Second World War. When the Nazis unleashed their aggression against Western Europe in 1940, Molotov actually sent the German foreign minister a telegram indicating full support and understanding for the measures taken by Hitler. When German troops marched through Paris, Molotov congratulated the Nazis. One year later, the same  army that conquered Western Europe with Moscow’s approval invaded Russia, and nearly destroyed the country.

The Kremlin’s policy in support of the bloodthirsty Assad dictatorship may be cynical. However, based on Russia’s own calamitous history of aligning with foreign tyrannies, it is certainly not wise and may in the end harm Moscow’s most vital interests irreparably.

It is unlikely that the increased rhetoric emanating form the mouths of European politicians that their monetary bloc is just on the cusp of a new wave of economic growth will impress the ratings agencies. The question then is this; who will investors trust? Will it be the ratings agencies, which are falling all over each other in their ratings cuts and negative outlook with respect to the Eurozone, or will they place their bets on European politicians, who so far are batting a big fat zero in all their multitude of prognostications on the trajectory of the global economic crisis? I suspect the answer will not surprise many.

While the IMF still projects overall global growth, though at a lower projected 3.3 percent, its latest report states that this strangely optimistic projection is “predicated on the assumption that in the euro area, policymakers intensify efforts to address the crisis.” In other words, the Eurozone must reverse its fiscal austerity, and once again engage in deficit stimulus spending.

What the IMF seems to ignore is that the bond market is increasingly unlikely to lend money to debt-strapped European economies at interest rates that are sustainable. Or, perhaps, the IMF is hoping it will gain a massive cash infusion so it can bail out Eurozone economies, or the European Central Bank will get the hint, and start running its printing press at maximum velocity. But not even the ECB’s printing machine, along with the IMF, can easily sort out this economic and fiscal crisis.

Developing economies are still projected to have a higher growth rate than developed economies, but at a slower rate, due to overall global contraction resulting from the sovereign debt crisis in Europe.  In a warning to developing economies, Justin Yifu Lin, the World Bank’s chief economist said, “developing countries need to evaluate their vulnerabilities and prepare for further shocks, while there is still time.”  It should be added that all countries need to be prepared for future shocks, as the Eurozone debt crisis, now rampaging for two years, seems likely to get a lot worse during the course of 2012.

Predictably, French Finance Minister Francois Baroin said “It’s not good news, but it’s not a catastrophe.” A statement of self-contradicting spin that will be unlikely to arouse confidence among sovereign wealth funds and private investors. But perhaps most alarmingly, with Germany now the only Eurozone economy retaining a AAA credit rating, and the German economy having contracted in Q4 of 2011, all these downgrades and somber economic trends undermine the supposed savior of the insolvent Eurozone countries, the so-called European Financial Stability Facility. How will the EFSB sell its bonds to generate capital lend to the fiscally most vulnerable members of the Eurozone? Things are looking increasingly gloomy in Europe, with no resolution for the sovereign debt crisis or economic downturn in sight. And yet, the politicos are still banking on the European Central Bank and its printing press as the savior of last result. What a thin reed to base hope of an economic miracle on.

No doubt, President Barack Obama would like nothing more than to reverse the disastrous employment picture in the United States. But he is caught in a trap, one only partially of his making. The American economic  order he inherited, and which Obama is unable to transform beyond minor cosmetic alternations, is a de-industrialized, financialized monstrosity. No wonder his minions are reduced to creative bookkeeping to show that jobs are in fact being created and an economic recovery is truly underway. The reality is that the percentage of Americans of working age participating in the workforce is at a record low, overall labor wages are stagnant or declining and there are no indications that this is being changed.

And what about Barack Obama’s Republican would-be challengers? GOP frontrunner Mitt Romney may boast of his “business experience,” though in reality the man from Bain Capital is nothing more than a poster child for the domination of financialization over the manufacturing sector in the United States. Other Republicans seeking the GOP presidential nomination such as Newt Gingrich are offering the same old mantra of infinite tax cuts for the mega-wealthy of America and trickle-down economics for everyone else.

Between President Obama and his GOP rivals, I see no one with the transcending vision and leadership skills to undertake the massive economic changes required to restore America’s economic and fiscal health.

A sign of how  bad things look in Europe is the latest PMI data on European manufacturing, which was continuing to contract towards the tail end of 2011. This all points to a recession. In fact, there is now a clear consensus among economists that the Eurozone will enter a double-dip recession in 2012, if it in fact has not already done so. Clearly, nations such as Greece, Ireland and Portugal are currently in a recession so deep, it meets the definition of a full-blown economic depression.

And what about the United States? With 2012 a presidential election year in America, expect the Obama administration to spin economic data seven ways to Sunday in an effort to make things look more rosy. Thus, an unprecedented reduction in the total size of the American work force is twisted into a lowering of the unemployment rate.  But such gimmicks will probably become totally inoperative, once the impact of the looming Eurozone recession and banking crisis migrates to American shores.

In 2009, in my book , “Global Economic Forecast 2010-2015: Recession Into Depression,” I forecasted that the massive transfer of private debt into public debt by sovereigns as a synchronized response to the global financial and economic crisis unleashed in 2008 by the collapse of Lehman Brothers would fail to resolve the crisis, and would lay the seeds for an even more virulent global economic crisis by 2012. With a global sovereign debt crisis now an established reality, and the Eurozone teetering while America has had its previous AAA credit rating downgraded by at least one major ratings agency, neither a continuation of failed policies  nor gimmickry by politicians and central banks will bring an end to the global economic crisis in 2012. Instead of a return to economic growth, the most optimistic forecast one could make is stagnation which, at a time of structural mega-deficits and ballooning national debts, is a guarantee  of further long-term economic misery for a great many of the planet’s inhabitants.

It appears that the ECB is abandoning its policy of monetary prudence, and imitating U.S. Fed Chairman Ben Bernanke in running its printing press wildly. Mario Draghi, ECB boss, has made available cheap loans to European banks experiencing liquidity problems. In response, more than 500 European banks stampeded to the ECB discount window, and have borrowed nearly 490 billion euros, equivalent to $643 billion USD at current exchange rates. Clearly, the European banks had desperate need for new capital, while the Eurozone politicos hope the banks will use the newly minted euros to buy European sovereign debt.

Nouriel Roubini I think described this rather nicely as in essence quantitative easing and stealth debt monetization. As with Ben Bernanke’s repeated bouts of money printing, I don’t think this new loose monetary policy by Mario Draghi will avail itself of any meaningful results. Since the global financial and economic crisis was unleashed in 2008, money printing by central banks has been a symptom of the problem, not its solution.

WALL STREET POLICE: GLOBAL ECONOMIC CRISIS

Officer Larry of the NYPD is on his way to Zuccotti Park in lower Manhattan to arrest peaceful protesters involved with the Occupy Wall Street movement. Being a public spirited member of the New York Police Department, Officer Larry does remind us that there is a global economic crisis underway that rivals the Great Depression of the 1930s.

The grim outlook from the IMF is in sequence with cascading warnings from France and Germany that unless fiscal policy in the Eurozone becomes “harmonized” (e.g. more erosion of national sovereignty) and other countries outside the Eurozone (especially China) provide funding for the “big bazooka” to backstop the danger of sovereigns becoming insolvent, the global economy will implode. What the IMF and the politicians have not said is that it is politically impossible for them to obtain all the scenarios they claim are needed to prevent outright catastrophe.

WALL STREET POLICE: GLOBAL ECONOMIC CRISIS

Officer Larry of the NYPD is on his way to Zuccotti Park in lower Manhattan to arrest peaceful protesters involved with the Occupy Wall Street movement. Being a public spirited member of the New York Police Department, Officer Larry does remind us that there is a global economic crisis underway that rivals the Great Depression of the 1930s.

“ It’s time to start calling the current situation what it is: a depression. True, it’s not a full replay of the Great Depression, but that’s cold comfort. Unemployment in both America and Europe remains disastrously high. Leaders and institutions are increasingly discredited. And democratic values are under siege. .. Specifically, demands for ever-harsher austerity, with no offsetting effort to foster growth, have done double damage. They have failed as economic policy, worsening unemployment without restoring confidence; a Europe-wide recession now looks likely even if the immediate threat of financial crisis is contained.”

Krugman points out in his piece that the economic disaster now unfolding in Europe threatens a resurgence of anti-democratic, populist authoritarianism of the type that infected European civilization during the Great Depression of the 1930s.Of course, the same dangers also lurk in the United States.

In my book, “Global Economic Forecast 2010-2015: Recession Into Depression,” I predicted in 2009 that the policy responses following the collapse of Lehman Brothers in 2008 would not only fail to resolve the global financial and economic crisis; they would create a sovereign debt contagion that would transform the recession into a depression.  Paul Krugman has confirmed the validity of my forecast made in 2009.

In his closing observation, Paul Krugman offers an ominous warning. After describing how Hungary, one of the new democracies in Eastern Europe, is receding into authoritarian rule as its politics become more extremist, all due to the economic crisis in Europe, Krugman writes about the Eurozone political leaders,  “they also need to rethink their failing economic policies. If they don’t, there will be more backsliding on democracy — and the breakup of the euro may be the least of their worries.”

It appears that the global economic crisis, and Eurozone debt crisis, are increasingly becoming a political crisis.

WALL STREET POLICE: GLOBAL ECONOMIC CRISIS

Officer Larry of the NYPD is on his way to Zuccotti Park in lower Manhattan to arrest peaceful protesters involved with the Occupy Wall Street movement. Being a public spirited member of the New York Police Department, Officer Larry does remind us that there is a global economic crisis underway that rivals the Great Depression of the 1930s.