From Bill Bonner....for those still living in the USA....The Noose tightens.....

And more thoughts...

In America, the deal is pretty straightforward. The Fed prints. The feds borrow the counterfeit money and spend it.

In Europe, the central bank prints up money too. It lends it to the banks. The banks lend to the marginal governments around the periphery. This puts the banks in a bad situation. They’re holding a lot of subprime government debt. But the central bank keeps lending them money to buy more!

Bloomberg has the story:April 18 (Bloomberg) — Spanish, Italian and Portuguese banks are loading up on bonds issued by their own governments, a move that shifts more of the risk of sovereign default to European taxpayers from private creditors.

Holdings of Spanish government debt by lenders based in the country jumped 26 percent in two months, to 220 billion euros ($289 billion) at the end of January, data from Spain’s treasury show. Italian banks increased ownership of their nation’s sovereign bonds by 31 percent to 267 billion euros in the three months ended in February, according to Bank of Italy data.

German and French banks, meanwhile, have cut holdings of those countries’ bonds, as well as Irish and Greek debt, by as much as 50 percent since 2010 in some cases. That leaves domestic firms on the hook for a restructuring such as Greece’s last month and their main financier, the European Central Bank, facing losses. Like Greece, governments would have to rescue their lenders with funds borrowed from the European Union.

The jump in sovereign-debt holdings by Spanish and Italian banks has been fueled by the ECB’s 1 trillion-euro long-term refinancing operation, or LTRO, initiated in December, to provide liquidity to the region’s lenders. Encouraged by their governments to take the money and buy bonds, banks borrowed 489 billion euros on Dec. 21 and 530 billion euros on Feb. 29.

For lenders in so-called peripheral countries — Spain, Portugal, Ireland, Greece and Italy — profit also was an inducement: They could borrow at 1 percent to buy government bonds yielding between 6 percent and 13 percent.

In Europe as in America, nobody goes broke...until they all go broke.

Meanwhile, in Greece, farmers are organizing special “food relief” programs to help children in the cities who are said to be almost starving. The government, meanwhile, is preparing to head off “food riots.”

In France, the communist party, which was practically dead a few years ago, is coming back to life...like the zombie it is...under the leadership of Jean-Luc Melenchon. Unlike the ‘responsible’ politicians in Europe, Melenchon wants no cutbacks in government spending. Just the contrary. He wants to increase it. For example, the minimum wage would go up from about $1,600 per month to $2,300 per month. And the top marginal income tax on rich people, those who earn more than about $500,000 per year, would go to 100%.

Melenchon’s star is rising. His left coalition could get 12% or more of the vote on Sunday. Which is only natural. Promise the mob that you will give them free money; few will resist it.

*** Alone among the developed nations...America has something the others don’t have...and by the look of things, something they don’t want. The US population is growing!

Yes, dear reader, when it comes to having babies...or importing babies from other countries...America still has what it takes. The UN says that US population will increase by nearly 27 million people by 2020.

Twenty-seven million people is about 40 cities the size of Baltimore. If each one of these people lives in a household of four people, it’s more than 6 million new houses...and, assuming they are all two-car families, about 12 million autos. And, of course, each family needs a dishwasher, a toaster oven, a refrigerator, and so forth. A lot of stuff, in other words.

Compared to the rest of the developed world, America is still enjoying a major population boom. After all, Japan’s population is shrinking. So is Germany’s. Europe as a whole is still growing, but not by much. And after 2020, it begins to shrivel up too.

But American population growth may not be as strong as it is advertised. Why? Because more and more people are sneaking out.

As we reported yesterday, illegal immigrants are going home...as well as the children of legal immigrants. And now comes word that native-born Americans are slipping away too. Yes, according to our sources, 742 US citizens leave the country every hour — and don’t come back.

So many are leaving that Sen. Barbara Boxer has proposed legislation — a law that would make it impossible for Americas to cross the border until they settle up with the IRS.

The noose tightens...

Regards,

Bill Bonner
for The Daily Reckoning