Lurch Ain't Just a Character from the Addams Family

The Germans will pay up! Europe is saved! Hooray:

Germany’s Bundestag lower house of parliament approved a motion to strengthen the euro zone rescue fund via leveraging on Wednesday, providing Chancellor Angela Merkel with the mandate she needs to negotiate at a key euro summit later in Brussels.

That’s why the markets are happy this morning. But look past the lede:

The vote is largely a symbolic measure that was widely expected to pass. The motion, introduced by Merkel in order to give German lawmakers the opportunity to review the proposals being discussed in Brussels, had the clear backing of most of her coalition.

As a rule, when there’s this much euphoria over a symbolic vote, that means you aren’t yet out of the woods. Not by a longshot. And remember, Greece is a big problem — but not nearly as big a problem as is Italy. And what’s going on in everyone’s favorite boot-shaped nation? Chaos:

The deepening divisions in Prime Minister Silvio Berlusconi’s coalition over how to meet European Union demands for more robust efforts to tame a $2 trillion debt are fueling calls for early elections.

Berlusconi reached an agreement late yesterday with Umberto Bossi, leader of the Northern League party and his key coalition ally, over raising the retirement age. To secure Bossi’s support, Berlusconi agreed to resign in January and hold early elections, newspaper la Repubblica reported today.

“Either this government is able to take structural reforms or we need another government,” Mario Baldassarri, chairman of the Senate Finance Committee and a former Berlusconi ally, said in an interview in Rome today. “We will see in the next few days or week” whether Berlusconi resigns.

I’m not sure the EU could afford to bail out its third-largest member, even if Rome were to straighten up and fly right for a change.

Earlier this morning on Twitter, Jim Pethokoukis wrote, “One bank predicted a disorderly Greek default would add 3pts to US unemployment.” Keep in mind, please, that an orderly Greek default, backed and blessed by the EU, would still mean a 40%-60% haircut for holders of Greek debt. And we still haven’t gotten around to taking haircuts for Spain, Ireland, Italy, Belgium, perhaps Hungary. Maybe France. Etc.

Meanwhile, on the other side of the world

We all know by now the standard-issue worry about China — too much debt-fueled building too fast, raising the risk of a hard landing. There’s an additional wrinkle to the story, too, one that might be more worrying, as it has a bit of the feel of the subprime mortgage debacle that took down the global economy just a few years ago.

We’re talking about a large, off-balance-sheet world of debt, China’s “shadow banking” system, which has grown to make up about 22% of all new financing in China, Barclays Capital reports.

The system is made up partly of bank loans, trust companies that “sell wealth-management products to the public,” Barclays writes, while also doing some lending on the side, along with similar loans using banks as intermediaries. This lending helps finance infrastructure, industrial and commercial projects and real estate.

This corner of the market is poorly regulated and opaque, raising worries about what dangers lurk within.

That’s Mark Gongloff at the WSJ, hardly a panic-monger. If a Greek default could boost unemployment up to 12%, what happens if China has a hard landing?

Closer to home, in California — where unemployment already is over 12% — the “Air Resources Board” is instituting the nation’s first cap-and-trade program. California already has some of the highest energy costs in the nation, and they’ll be going even higher.

Back east, the Fed is considering yet another form of stimulus. This time, Fed leaders want to find ways to reduce interest rates for home buyers. Never mind that interest rates are already at historic lows, that banks won’t make loans, and that potential homebuyers are either unemployed or already stuck with underwater mortgages. Ben Bernanke is going to keep pushing on that string, dammit, even as his policies are killing your parents’ retirement savings.

At least we aren’t Argentina. There, the just re-elected Peronist president Cristina Fernandez de Kirchner has gone to war against private enterprise. Hugo Chavez must be bursting with a mix of with pride and envy:

President Cristina Fernandez de Kirchner, in her first move since winning re-election on Oct. 23, changed a 2002 decree requiring companies such as Repsol YPF SA and Pan American Energy LLC to keep at least 30 percent of their export revenue in the country. Today’s decree, published in the official gazette, applies to future sales.

The decision by Fernandez, who nationalized the $24 billion pension fund industry and called for a limit on purchases of farmland by foreigners, is part of an effort to slow capital flight estimated at $3 billion per month that is draining central banks reserves. The policy may make it harder to attract foreign direct investment to Argentina that the United Nations estimates fell 30 percent in the first half of the year.

“These types of controls only discourage investment and thus hurt exports,” said Juan Pablo Fuentes, a Latin America economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “The oil sector is already hampered by controls and regulations. This will only add to those problems.”

Here in the US, we’d never cripple our energy sector — unless, you know, we would:

• Shell recently announced it would scrap efforts to drill off the coast of northern Alaska; the EPA withheld critical air permits.

• A proposed EPA regulation would force the coal industry to install special materials inside smokestacks to clean carbon particles. It’s estimated this requirement would cost the industry $180 billion, causing the closure of coal energy producing plants resulting in the loss of hundreds of thousands of jobs.

• The Interior Department recently blocked plans for Mountain West oil shale development because it needed to study its effect on water, power and land-use issues.

It’s so bad, that even a slumping economy and a prolonged employment crisis can’t keep gasoline prices from near-record highs. Think about this: Demand is in the toilet while prices are in the stratosphere. Go on and blame the free market for that, twinkles.

Can’t anyone, anywhere, do just one damn thing right in this global crisis?