The danger of a euro crisis is increasing; it may prompt more political integration, not less.The signalling is coming not from the foreign-exchange market (the euro has climbed back from its October low against the dollar) but from the bond markets. Spreads on the ten-year government debt of Greece, Ireland, Italy, Portugal and Spain over that of Germany have widened sharply. Rating agencies are paying particularly close attention to the fiscal positions of the profligate five: Standard & Poor’s has downgraded three of them and put another on credit watch.

That need not imply a straightforward bail-out. But it does suggest the euro area might need an equivalent of the International Monetary Fund’s rescue packages. It would imply both a bigger role for the centre and more intrusive monitoring of euro members’ budgets. Far from fulfilling the eurosceptics’ dream of kiboshing the entire European project, a crisis could thus lead to even deeper political integration. That is a guess. But some form of euro drama looks ever more likely—and it would be better if governments started preparing for it now.

Dear Governments get ready for that !!!

As Ray Dalio ( Bridgewater ASS.)  says in Barrons :” There will be substantial nationalization of banks. It is going on now and it will continue. But the same question will be asked even after nationalization: What will happen to the pile of bad stuff?

Let’s say we are going to end up with the good-bank/bad-bank concept. The government is going to put a lot of money in — say $100 billion — and going to get all the garbage at a leverage of, let’s say, 10 to 1. They will have a trillion dollars, but a trillion dollars’ worth of garbage. They still aren’t marking it down. Does this give you comfort?

Then we have the remaining banks, many of which will be broke. The government will have to recapitalize them. The government will try to seek private money to go in with them, but I don’t think they are going to come up with a lot of private money, not nearly the amount needed. “

As we see in the graphic above, The debt service is in the top of the cycle…

Last year America ramped up wind-power capacity to 25 gigawatts (GW) in 2008, overtaking the previous leader, Germany, according to new data from the Global Wind Energy Council. America added 8.4GW of installed power in 2008, more than any other country. China is also investing heavily in wind power, nearly doubling its capacity for the fourth year running. Global capacity grew by 29% last year, the highest annual increase for six years.