The latest news from the EU Crisis Front:  Southern Europe's debtor states must pledge their gold reserves and national treasure as collateral under a €2.3 trillion stabilization plan gaining momentum in Germany.  The German scheme -- known as the European Redemption Pact -- offers a form of "Eurobonds Lite" that can be squared with the German constitution and breaks the political logjam. It is a highly creative way out of the debt crisis, but is not a soft option for Italy, Spain, Portugal, and other states in trouble. The plan is drafted by the German Council of Economic Experts and inspired by Alexander Hamilton's Sinking Fund in the United States -- created in 1790 to clean up the morass of debts left by the Revolutionary War. Flourishing Virginia was comparable to Germany today. Germany would have a lockhold over the fund, able to enforce discipline. Each state would have to pledge 20% of their debt as collateral. "The assets could be taken from the country's currency and gold reserves. The collateral nominated would only be used in the event that a country does not meet its payment obligations," said the proposal. This demand could enflame opinion in Italy and Portugal. Both states have kept their bullion, resisting the rush to sell by Britain and others. Italy has 2,451 tons of gold, valued at €98bn in March.

Today (5/220, Fitch Ratings has downgraded Japan two notches to A+ -- just above Spain and Italy -- citing a surge in public debt since the Lehman crisis and the lack of any plan to restore fiscal probity. Key indicators are deteriorating on almost every front, raising concerns that the world's third largest economy is running aground after two "Lost Decades". Japan's debt has jumped by 61 percentage points of GDP since 2008, compared to eight points for the AAA bloc. Public debt is expected to reach 239% of GDP this year, uncharted levels for a major economy in peace-time. `Net debt' - subtracting Japan's vast holdings of foreign bonds - is nearer 137% but this is rising at an even steeper trajectory. "Japan's addiction to public sector spending is way beyond the boundaries or remedial `austerity'," said Dylan Grice from Societe Generale. "Political pressure on the Bank of Japan to crank the printing presses into top gear will become irresistible. We see no alternative."

If they did not put our troops, our citizens and our country at risk, the Left's fantastic lies about terror and terrorists would be hilarious.  The problem, of course, is that many of our national leaders have been brainwashed with the same slogans.  The Left has mastered another technique dictators forged long ago: Repeat a lie often enough and it will be taken as truth.    And, of course, our media play along. So let's give the slogan-hucksters a brief time-out and dissect just seven of their favorite lines: One:  Killing terrorists only turns them into martyrs.  Nope.  Killing terrorists turns them into dead terrorists. 

Yesterday in Jerusalem (5/09), a new unity Israeli government was created by a deal between Prime Minister Binyamin Netanyahu, leader of the Likud Party, and Kadima leader Shaul Mofaz.  Together they have 94 out of 120 seats in the Knesset. Bibi has made a very smart move.  Netanyahu was presented with an offer he'd be an idiot to refuse. In return for essentially nothing, he built himself the strongest and largest coalition Israel has ever seen. Here's how it works.

On April 1 and May 27 of last year, two tiny tremors were detected by seismographs with magnitudes of 2.3 and 1.5 in England's Blackpool region of Lancashire.  They are being blamed on fracking.  The same claim is being made in Ohio. It is now official: drilling for shale gas by fracturing rock with water may rattle the odd teacup. But is highly unlikely to cause damaging earthquakes. That much has been obvious to anybody who has followed the development of the shale gas industry in America over the past ten years. More than 25,000 wells drilled have caused a handful of micro-seismic events that can barely be felt. To call a two-magnitude tremor an earthquake is a bit like calling a hazelnut lunch. Such tremors happen naturally more than 15 times a year in Blackpool but go unnoticed and they are a common consequence of many other forms of underground work such as coalmining and geothermal drilling. So can we now get on with fracking and get over fear of it? The economic and environmental benefits are vast.

"A conservative," the old cliché goes, "is a liberal who has been mugged." But some liberals who are mugged refuse to admit that it happened. Observe the rough treatment to which the new American ambassador in Moscow, Michael McFaul, has been subjected since his appointment last January. Since his arrival, the ambassador has been constantly accused in the media of stirring up anti-government protests, and lately he has been ambushed by Russian state-TV crews at his meetings, official and unofficial, suggesting that his phone was tapped. This comes on top of numerous other strong indications that the Obama administration's attempts to "reset" relations with Russia - a policy spearheaded by Mr. McFaul - have failed. But while McFaul has complained loudly about his recent treatment, he does not seem to realize that he, along with his boss Hillary Clinton, have been mugged in a much broader sense.

President Barack Hussein Obama has laid out the core message of his re-election campaign. It is a message whose claims are blatantly false and whose point is irrelevant to what is of greatest concern to Americans today. Despite this, there is no evidence so far that his strategy and messaging is not working and won't be successful. In his speech last week (4/10) at Florida Atlantic University in Boca Raton, the president defined what he called "the defining issue of our time." This defining issue, per the president, appears to be that America is not fair. Now excuse me for pointing out the irony of hearing from our nation's first black president a suggestion that America may no longer be a nation where dreams can be realized or where someone can come out of nowhere and make it. Ironically, I would say that if America is unfair today, it is because politicians and government have the power to do exactly what it is that Obama wants to do: Seize control of the wealth of some and redistribute it to whomever they choose. The Bible that I read every day calls this theft.

"I'm confident that the Supreme Court will not take what would be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress."  --Barack Obama, April 2, 2012 I don't think that President Obama believes a word of his remarks about what the Supreme Court can or cannot do about any given piece of legislation.  Attorney General Holder said as much when he agreed that the Supremes are there specifically to protect against laws they consider unconstitutional. Holder's not picking a fight with his boss. It's not about that.  It's about power.  And freedom. Power, because the president and his people think that, since they are smarter and better than the rest of us, anyone who tries to limit their power is bad, and has to be brought into line.  Thus, the tough words of warning to any Justice contemplating voting against Obamacare. Freedom, because the accumulation of power in the hands of the executive branch comes at our expense, bit by bit and law by law, precisely as Alexis de Tocqueville feared.

What are the ramifications if the Supreme Court finds the individual mandate provision of the healthcare reform law unconstitutional? This provision requires individuals to purchase government-defined health insurance or pay a fine. I hope it will serve as a wakeup call to a nation that I believe is still sleeping through a crisis. Liberal and open-ended interpretation of the Constitution has rendered it practically meaningless, opening the door to steady growth of the federal government and its inexorable encroachment in our lives over the last half century. The problems we are having today all originate here. Our growing burden of taxes and government debt -- what now is breaking European countries and is about to break us -- stems from the growth of government programs, enabled by open-ended interpretation of the Constitution. Our private economy, in which freedom and the creative spirit are still allowed to operate, is going great. A miracle is taking place in energy, with new domestic production of oil and gas made possible by new drilling technologies.  New technologies abound, with more and more gadgets appearing all the time at lower and lower prices. So why are we turning over more and more of our lives to the most unproductive, least efficient part of our country: government?

Next to the Nobel, the richest and most prestigious economic award is the £250,000 ($400,000) Wolfson Economics Prize, awarded by the Wolfson Foundation, founded by British entrepreneur and philanthropist Sir Isaac Wolfson in 1955.  It currently has an endowment of $1.2 billion. Unlike the Nobel, the final contenders for the Wolfson are known in advance.  This year, out of 425 entrants, five were chosen as finalists - and they all have a shared nightmare on how to "manage" a full or partial disintegration of monetary union. They agree on little else. "The consequences of a completely unplanned 'Exit' are likely to be catastrophic," said Neil Record from Record Currency Management, one of the five qualifiers. Catherine Dobbs, a former algorithms expert at Gartmore, said the global shock could be five to 10 times worse than the Lehman earthquake in 2008, given the scale of contracts and counter-party exposure. The Lehman lesson is that authorities must have contingency plans in place to stop a seizure of the global credit system. The crucial point is exactly how a break-up occurs, not whether it does so.

A few weeks ago the Obama administration put out a video extolling Obama's record on Israel. They took excerpts from speeches by Israeli leaders praising Obama and used them as proof that Israelis view Obama is a great friend of the Jewish state.  On the whole it was an obscene production. What can Benjamin Netanyahu or any other Israeli official say other than that Obama is a great friend of Israel? We have to face the dismal fact that Obama may remain in the White House until 2017. No Israeli official can afford to say openly what they think of this man.  While Israel's leaders cannot say the truth about Obama, American Jewish groups can say the truth. Unfortunately, since the majority of American Jewish leaders are more concerned about maintaining their liberal bonafides than defending Israel, the voices opposing Obama's hateful treatment of the US's most vital ally in the Middle East have emanated mainly from the underfunded margins of the American Jewish community. Here's one voice that tells the truth.

It was only a matter of time before one of our men broke down. On Sunday, March 11, just before dawn, an American staff sergeant walked away from his post in the badlands of Kandahar Province, Afghanistan, went into a nearby village, and methodically murdered sixteen civilians, including women and children. This didn't happen in the confusion of a firefight amidst the "fog of war." It was the brutal act of a veteran who cracked. The deed cannot be excused. But I believe it can be explained. That staff sergeant-who turned himself in after the killings-is guilty of murder in a degree yet to be determined, but the amazing thing is how disciplined, patient and tenacious our troops have been. Given the outrageous stresses of serving repeated tours in an environment a brand-new private could recognize as hopeless (while his generals fly back and forth congratulating themselves), it's remarkable that we have not seen more and even uglier incidents.  The problem in Afghanistan isn't our troops - although craven generals routinely insist that everything is the fault of "disrespectful" soldiers - it's a leadership in and out of uniform that is bankrupt of ideas, bankrupt of ethics, bankrupt of moral courage, and rich only in self-interest and ambition.

The blistering asset rally of 2012 has run ahead of economic realities in Europe, America and China. It is exhibiting symptoms of a schizophrenic market, with technical indicators flashing signs of exhaustion. Graham Secker from Morgan Stanley said it is rare for global stocks, oil prices and government bonds to rise in lockstep, and such exuberance becomes a "very reliable sell signal for stocks" once speculators join the party. Equity long positions on NASDAQ have reached 1.5 standard deviations and long bets on oil are at an extreme of 1.9, according to data from the Commodity Futures Exchange Commission. This is occurring at a time when yields on 10-year US Treasuries are still at 1.96%, signaling depression, deflation, or both. The historical relationship between bonds and equities has completely broken down over the past six months. "You can't have a sustained period where equities are going up, while bond yields are flat or trending down," said Mr Secker. One or the other must give, and bears have no doubt which it will be.

Whenever an old alliance comes apart, our foreign-policy establishment behaves like the spouse who pretends away a partner's ever-more-flagrant infidelities-hoping that patience and indulgence will somehow bring the straying party around. But real life doesn't work that way for lovers or for states. When we look away from shameless betrayals, it only encourages further bad behavior. And sometimes the situation requires a divorce. With no more support payments. The worst current case of a supposed ally gone wildly, viciously wrong is, of course, Pakistan, which our government refers to as a "friend" even as the real rulers in Islamabad-the military and the security services-shield the world's most wanted terrorists; support, supply and train insurgents who kill and maim our troops; and cut off our main supply route to Afghanistan (presumably, in thanks for the billions of dollars we send the Pakistanis year after year). But another, potentially graver case goes largely unremarked, when not willfully misinterpreted: Turkey, a NATO member and long-time ally (at least, on paper), is suffering from increased repression, the step-by-step subversion of its democratic system, and creeping, clawing Islamism.