Author Topic: Why Europe Keeps Failing........ merged with "EU Seizes Cypriot Bank Accounts"  (Read 473507 times)

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Offline Chris Pook

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Re: Why Europe Keeps Failing........
« Reply #50 on: May 06, 2012, 20:56:07 »
There was an interesting little snippert on BBC World Service in the last couple of days ~ about rapidly increasing house prices in some previously low value London neighbourhoods. Why the sudden surge in demand? French buyers paying premium prices for UK property ... the French rich and super rich already have their money safely tucked away in Switzerland and the Caribbean, now the upper middle class are bailing out.

Good News.  The Brits did well by the first two Huguenot influxes (Elizabethan era running away from the Guise,  Anne and the Georgian's era running away from Louis XIV et XV).

Things are looking up.

On the other hand not so chuffed about Metaxas II, Salazar II, Franco II and Petain II.  Perhaps de Valera II as well?  No.  The Micks wouldn't go for it.

Edit:  Forgot the other feller - Mussolini II.  And there you have a Royal Flush.
« Last Edit: May 06, 2012, 21:01:45 by Kirkhill »
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Offline Chris Pook

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Re: Why Europe Keeps Failing........
« Reply #51 on: May 06, 2012, 21:10:40 »
Sorry ERC,

After reading Schroeder's paean I'm even less happy with his prescription:  Choose your poison - Clovis/Charlemagne/Barbarossa/Bourbons/Bonaparte/Itinerant Austrian Paper Hanger.

I'd rather have 5 little idiots than 1 big idiot.
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Offline E.R. Campbell

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Re: Why Europe Keeps Failing........
« Reply #52 on: May 06, 2012, 21:22:23 »
The only, very faint, maybe pewter lining I see around one of of the black clouds is that François Hollande is a graduate of the mighty École des Hautes Études Commerciales de Paris and, therefore, we must assume that:

1. He knows that he's espousing nonsense; and

2. He knows, indeed is friends with, the bureaucrats who really run France, despite the elected government - they all went ot the same few schools.

The reason it isn't a silver lining is that it is not clear to me that a manager can lead the people in the right, proper direction, not when it is one in which they do not want to go.

France is a pretty healthy democracy but it is an illiberal democracy and, therefore, an unstable one.
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as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
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Offline ModlrMike

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Re: Why Europe Keeps Failing........
« Reply #53 on: May 06, 2012, 21:26:29 »
Of course, France has now decided to defecate on her feet:

http://www.bbc.co.uk/news/world-europe-17975660

Socialist Francois Hollande wins French presidency
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Re: Why Europe Keeps Failing........
« Reply #54 on: May 06, 2012, 22:18:08 »
If the voters of greece and France truly believe that they can keep spending German money with impunity....or that they can simply chain their upper middle class and wealthy class to countries that currently have no border controls as a means to pay for social programs, without something really, really bad happening...

I fear the bad thing will now happen, as Mr Campbell has alluded. The former German Chancellor's article was chilling in how casually he suggested that entire countries surrender sovereignity to Brussels. Entire countries will now sell themselves into totalitarianism, as there is no other way it can work.  And even still, it will only work for a while before the whole thing craters.

If I was the UK, I would be developing plans to flood the Chunnel.  It might be necessary, before too much longer.

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Re: Why Europe Keeps Failing........
« Reply #55 on: May 06, 2012, 22:40:16 »
Of course, France has now decided to defecate on her feet:

http://www.bbc.co.uk/news/world-europe-17975660

Socialist Francois Hollande wins French presidency



Quote
He [Hollande] said he would push ahead with his pledge to refocus EU fiscal efforts from austerity to "growth".

"Europe is watching us, austerity can no longer be the only option," he said.

By "austerity", I think Hollande meant to say "responsibility."


The Great European experiment is really starting to smell rather badly.  I think the Germans are going to hit their tolerance point when Greece spends all its aid money, yet asks for more.

Just a matter of time now for the big split -- RIP €...  :'(

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Re: Why Europe Keeps Failing........
« Reply #56 on: May 06, 2012, 23:01:35 »
Three chilling pledges from Mr Hollande:

Hire 62000 new teachers (looks good on paper until you realize the state (taxpayer) pays the wages);

Lower retirement age from 62 to 60 (looks good to the young until you realize you now have the state (taxpayers) paying 2 extra years of benefits); and

Tax the wealthy at 80% (looks good until they all move away and you realize that theres' no more money to pay for the first two promises).

What could possibly go wrong with cutting down forests for firewood to burn down your own house?
WARNING: The consumption of alcohol may create the illusion that you are tougher,smarter, faster and better looking than most people.
Every normal man must be tempted, at times, to spit upon his hands, hoist the black flag, and begin slitting throats. (H.L. Mencken 1919)
Zero tolerance is the politics of the lazy. All it requires is that you do nothing and ban everything.

Offline Chris Pook

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Re: Why Europe Keeps Failing........
« Reply #57 on: May 06, 2012, 23:08:38 »
Curious timing. 

Just saw a BBC documentary on PBS where some poor blighter had a painting that experts from Buckingham Palace, Boston, New York and many, many more all agreed that the painting in question was a Monet.  They had a photograph of said painting in an earlier collection, in existance when Monet was alive, that attributed said painting to Monet. 

By all normal rules it would be recognized as a Monet and marketed as such.

In this instance though there is a family art institute in France that apparently has the final word.  Modern evidence to the contrary said institute refuses to recognize it as a Monet.

The Rationale?

Nothing to do with the evidence.  Daddy had looked at the painting in question lo these many years gone and decreed that it obviously was not up to Monet's standards, despite being signed by him, and therefore not worthy of being included in the catalogue.

In the words of the institute it was not a matter of evidence it was a matter of Connoiseurship.

And that mindset is the same as touted by Hollande and his fellow bureaucrats.

Evidence bedamned.  The future of Europe is a matter of connoiseurship.
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Online tomahawk6

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Re: Why Europe Keeps Failing........
« Reply #58 on: May 07, 2012, 08:56:06 »
The European future is Zimbabwe where government spending is almost 98% of the GDP and hyperinflation is rampant.

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Re: Why Europe Keeps Failing........
« Reply #59 on: May 07, 2012, 12:01:31 »
I suspect that Greece is in for a few months of political turmoil, a debt default, an economic collapse, riots in the streets, a military coup and a fascist dictatorship.
I'm not quite that pessimistic, but those who could benefit appear to be already stirring the pot a bit....
Quote
Greek neo-Nazi party Golden Dawn warned rivals and reformers Sunday that "the time for fear has come" after exit polls showed them securing their entry in parliament for the first time in nearly 40 years.

"The time for fear has come for those who betrayed this homeland," Golden Dawn leader Nikos Michaloliakos told a news conference at an Athens hotel, flanked by menacing shaven-headed young men.

"We are coming," the 55-year-old said as supporters threw firecrackers outside.

According to updated exit polls, the once-marginal party will end up winning over six percent of the vote and sending 19 deputies to the 300-seat parliament on a wave of immigration and crime fears, as well as anti-austerity anger.

Exulting in the apparent breakthrough, Michaloliakos quoted Julius Caesar: "Veni, Vidi, Vici" -- I came, I saw, I conquered.

Michaloliakos said his party would fight against "world usurers" and the "slavery" of an EU-IMF loan agreement which he likened to a "dictatorship".

"Greece is only the beginning," he shouted at reporters as he walked to the news conference, accusing foreign media of spreading lies about his movement.

At the last general election in 2009, the virulently anti-immigrant group had scored just 0.29 percent.

Once part of the country's political fringe, the Hryssi Avgi (Golden Dawn) had already made headlines in 2010 by electing Michaloliakos, 55, to Athens' city council on a wave of anti-immigration tension in the capital's poorer districts.

Shortly after being elected to the council thanks to more than 10,000 votes in the Greek capital, Michaloliakos made waves by giving two fascist salutes captured by a television camera ....
My guess is that none of Portugal, Spain, Italy or France are immune to the same fate. I will not be surprised if they, all four, follow Greece into fascist dictatorships, in the order in which I listed them.
Italians of today aren't the Italians of WW2 - while admittedly happy to keep collecting pensions from 30 to 80 years of age when possible, methinks any extreme-right-wing government would be herding cats in Italy.
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Re: Why Europe Keeps Failing........
« Reply #60 on: May 07, 2012, 22:39:43 »
The US is headed down the same path as Europe. The politicians are afraid to make the tough decisions to cut the entitlements. No one wants to do what is necessary to fix Medicare for example. If Obamacare goes into effect we will be Europe. If we cant control medicare we wont be able to control the costs for 350m people. I may be a minority view but I think Europe and Canada made a mistake with national healthcare. Its a drag on the budget and the economy. We all may soon be forced to hit the reset button in the form of a massive depression and or social upheaval.

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Re: Why Europe Keeps Failing........
« Reply #61 on: May 08, 2012, 21:05:11 »
I'm not quite that pessimistic, but those who could benefit appear to be already stirring the pot a bit....Italians of today aren't the Italians of WW2 - while admittedly happy to keep collecting pensions from 30 to 80 years of age when possible, methinks any extreme-right-wing government would be herding cats in Italy.


I'm not sure that national attributes have much to do with the appeal of extremist ideologies. Rather, I think, difficult situations provoke a search for easy or, at least, simple answers. The ideologues offer them. And I agree with T6 about America following some Europeans down a destructive path which says that one can have ones cake and eat it, too.

What is disturbing, to me, is that while some countries - notably the UK - have managed to contain public spending, to slow, even stop growth in public spending, in most major European countries, including France, Italy, Spain, Portugal and even Greece public spending continues to grow. Now it may be true that public spending in the profligate latin states is not growing as fast as it did in, say, 2010, it is not being cut and still the people want less and less austerity. This makes them prime candidates for the ideologies with the easy answer.

The most obvious "easy answer" for Greece, to start, is to abandon the Euro and reintroduce the drachma at a rate of 1:1 with the €. They can, then, quickly and radically debase their currency, à la Argentina in the 1990s, and accept inflation rates of hundreds, even thousands of percent. One can always print more and more money to, temporarily, stave off domestic unrest while forceing the bond holders to take more than a haircut ~ they, the mostly foreign, bond holders will get scalped!

My sense is that Germany is not prepared to do for its latin neighbours in 2012 what America did for Germany nearly 90 years ago: bail them out. Germany might bail out the Netherlands, Denmark of Finnland, in the unlikly event any of them needed help, it might even bail out the UK, but not Spain, not Italy and not even France. How will those countries manage? By giving up on the long, hard roiute and buying into easy answers.

I think the modern media have made it easier for ideologues to spread their message and I also think that they have found new, attractive ways to 'sell' ugly ideas.
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
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Re: Why Europe Keeps Failing........
« Reply #62 on: May 08, 2012, 21:18:07 »

I'm not sure that national attributes have much to do with the appeal of extremist ideologies. Rather, I think, difficult situations provoke a search for easy or, at least, simple answers. The ideologues offer them. And I agree with T6 about America following some Europeans down a destructive path which says that one can have ones cake and eat it, too.

If only it were so simple. This is truly a case of the Greeks (and French, Italian and Spaniards) wanting to eat their cake and yet still have it left. A much trickier proposition.
WARNING: The consumption of alcohol may create the illusion that you are tougher,smarter, faster and better looking than most people.
Every normal man must be tempted, at times, to spit upon his hands, hoist the black flag, and begin slitting throats. (H.L. Mencken 1919)
Zero tolerance is the politics of the lazy. All it requires is that you do nothing and ban everything.

Offline Retired AF Guy

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Re: Why Europe Keeps Failing........
« Reply #63 on: May 09, 2012, 21:27:35 »
The European future is Zimbabwe where government spending is almost 98% of the GDP and hyperinflation is rampant.

Or, in the case of Greece, a return of the Colonels.
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Re: Why Europe Keeps Failing........
« Reply #64 on: May 09, 2012, 22:16:02 »
Or, in the case of Greece, a return of the Colonels.


That is what I suspect fear is next for Greece, maybe a few other latin countries, too. The colonels offer easy solutions, they don't explain them, they just say "we will take care fo you, no need to obey the big, bad Germans."
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Re: Why Europe Keeps Failing........
« Reply #65 on: May 10, 2012, 07:47:41 »
Italy cuts the size of its army
As Italy attempts to chip away at its mountainous public debt, the government's austerity drive has found a new target – the armed forces.
Article Link
 
By Nick Squires, Rome

5:26PM BST 27 Apr 2012

Comments24 Comments

Long considered a hallowed institution that was immune from reform, the top-heavy army, navy and air force now face swingeing cuts in budgets and manpower.

The number of generals and admirals will be cut by a third, one in five colonels will be axed and the armed forces overall will be reduced from 183,000 to 150,000.

Civilian staff will be reduced from 30,000 to 20,000.

Italy is one of the largest European contributors to the Nato-led force in Afghanistan and also has peacekeepers deployed in Kosovo and Lebanon.

The cuts were announced to parliament by the defence minister, Giampaolo Di Paola, who is an admiral in the navy and a former military chief of staff.
More on link
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Offline Brad Sallows

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Re: Why Europe Keeps Failing........
« Reply #66 on: May 10, 2012, 07:58:35 »
>"growth"

Translation: inflation.  They're going to go where the money is: people's holdings.  However, "people" includes all the big pension plans as well as private and corporate cash boxes.  As I've said before, people who have a good defined benefit pension plan and retirement on the horizon are the ones who should be first in line demanding fiscal responsibility.  An $80,000 pension won't be much when inflation has pushed the median salary up to $100,000.
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Re: Why Europe Keeps Failing........
« Reply #67 on: May 10, 2012, 09:17:28 »
Military cuts rarely achieve their purpose. If the senior ranks are top heavy cutting is good.Cutting civilian jobs are also beneficial. Replacing civilian labor with soldiers is a cheaper alternative.
I offered a plan once to turn over garrisons to the USAR/NG,which would free up active duty personnel and replace some civilian positions with RC personnel, who would have AGR status.We dont need RA Colonels as garrison commanders.Maybe one day the Army will move in this direction.

Offline Retired AF Guy

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Re: Why Europe Keeps Failing........
« Reply #68 on: May 10, 2012, 10:14:55 »
An interesting article by Robert D. Kaplan over at STRATFOR who argues that NATO is just important now as it was in the past. Re-printed under the usual caveats of the Copyright Act.

Article Link

Quote
NATO's Ordinary Future By Robert D. Kaplan
May 9, 2012 | 0858 GMT

By Robert D. Kaplan 

Whatever one thought of the Libya intervention, the details make for a bad advertisement about NATO. As one U.S. Air Force planner told me, "It was like Snow White and the 27 dwarfs, all standing up to her knees" -- the United States being Snow White and the other NATO member states being the dwarfs. The statistics regarding just how much the United States had to go it alone in Libya -- pushed by the British and French -- despite the diplomatic fig leaf of "leading from behind," are devastating for the alliance.

More than 80 percent of the gasoline used in the intervention came from the U.S. military. Almost all the individual operation orders had an American address. Of dozens of countries taking part, only eight air forces were allowed by their defense ministries to drop any bombs. Many flew sorties apparently only for the symbolism of it. While most airstrikes were carried out by non-U.S. aircraft, the United States ran the logistical end of the war.

"Europe is dead militarily," a U.S. general told me. In 1980, European countries accounted for 40 percent of NATO's total defense spending; now they account for 20 percent. One numbered air force within the U.S. Air Force is larger than the British Ministry of Defense. Western Europe's military budgets are plummeting, even as their armed forces are not allowed by local politicians to do much besides participate in humanitarian relief exercises.

The strength of a country's military ultimately rests on the health of the civil-military relationship within its society. In the United States, there is much debate as well as tension regarding the proper role of a military in a democratic society. But through it all, Americans are deeply proud of their armed forces, even during wars that have become quagmires. For the most part, that is not the case in Western Europe, where the soldiers' profession is quietly looked down upon. (The United Kingdom, France and Denmark are among the exceptions.) Europeans tend to see their own armed forces members as civil servants in funny uniforms. The idea that it is the military that defends their democratic freedoms is something many Europeans find laughable.

Thus, one might conclude that NATO, which comprises the militaries of the United States and of most of the countries in Europe, is finished. Why bother with an alliance in which the overwhelming majority of its members have militaries that go unsupported by their own publics? Isn't the Libya intervention proof that even in so-called NATO operations, the United States does the work of the others without getting proper credit? Doesn't Afghanistan -- despite the blood shed by a few countries like Canada and Denmark -- constitute proof that NATO mainly constricts the actions of the United States without giving it proper battlefield support? Wasn't Kosovo proof that NATO is so cumbersome in its bureaucracy that it took many weeks to defeat a highly vulnerable regime in Serbia?

All this is true, but it is also beside the point. Even during the Cold War, NATO was wholly dominated by the United States. Moreover, northern European countries always did far more inside NATO than their southern neighbors, which from the 1950s through the 1980s were mainly bribed and bullied to go along and be quiet. (And when someone protested, as Greek Prime Minister Andreas Papandreou did in the 1980s, nobody cared.) But because NATO did not fight hot wars during the Cold War, this uncomfortable reality was obscured. Had a hot, conventional war erupted in the heart of Europe during the Cold War, the United States would have overwhelmingly dominated the Western effort.

Of course, during the Cold War NATO had a core purpose, which it lacks today: defending Central Europe against Soviet divisions. The disappearance of that core purpose immeasurably weakens NATO. And the withdrawal of two of the four U.S. Army brigade combat teams from Europe by 2014 will weaken it further, even with the missile deployments in Eastern Europe. But that doesn't mean the alliance has no uses.

In fact, the very weakening of the European Union because of its debt woes makes NATO more crucial than at any time since the Berlin Wall fell -- crucial as a political stabilizing agent within Europe itself. Especially for Eastern Europe, NATO serves as a seal of approval for these former communist states struggling to obtain foreign investment and thus prevents Russia from undermining them. Geography still rules. Russia, because of its own history of invasion from Europe, still requires a row of friendly buffer states in Eastern Europe. Therefore, Russia will do everything it can to undermine states from Poland southward to Bulgaria. NATO is a political, diplomatic and military mechanism directed against that Russian design. Moreover, the more that Europe reels from its debt crisis, the greater the possibility of geopolitical inroads made by Russia, and thus the more relevant NATO becomes.

NATO is also relevant concerning the future geopolitical direction of Germany. As long as NATO exists and Germany is a member, playing a substantial political if not military role, then the chances of Germany pivoting toward an alliance with Russia in future years is lessened.

Analytically, it is a mistake to assume that just because a political-military organization is less useful now than it was a quarter-century ago it is useless altogether. NATO has a bureaucracy, protocols, interoperability between member militaries and all manner of standard operating procedures honed over decades that would simply be irresponsible to get rid of. NATO can act fluently in humanitarian emergencies with which European publics are comfortable and thus somewhat reduce the burden on the United States. NATO, like the United Nations on occasion, still provides diplomatic cover of varying degrees for American actions. NATO is American hegemony on the cheap. Imagine how much less of a fiasco the Iraq War would have been were it a full-fledged NATO operation, rather than a largely unilateral one. Without organizations like NATO and the United Nations, American power is more lonely in an anarchic world.

Aside from the mundane security details provided by some NATO countries in Afghanistan, NATO is not going to get much better at fighting hot wars because Western European publics are not willing to pay the budgetary price that hot wars entail. In any case, land engagements are especially problematic for militaries in pacifist-trending societies. NATO might be ideally suited for air and naval rescue missions in Africa and points beyond. But NATO will be kept alive so that it can continue to serve as a vehicle for European political coherence. The "smart defense" initiative is a case in point, whereby individual countries will increasingly coordinate their weapons acquisition policies. For example, the Dutch are disbanding their tank battalions and putting trust in German units and others to defend Dutch territory. With the savings, the Dutch are investing in ballistic missile defense radars for their frigates, a capability that will benefit all alliance members.

Those who casually belittle NATO assume that Europe will face no geopolitical nightmares in its future. But that assumption might be wrong. Just look at these revitalized military configurations: a Nordic Battlegroup to include the Baltic and Scandinavian states as well as Ireland; and the Visegrad Group to include Poland, Hungary, the Czech Republic and Slovakia. These might on some future morrow partially replace NATO; but they might continue to fall under the NATO umbrella. And they are all responses to a militarily powerful Russia lying to the east.

A more dynamic Russia, a more chaotic North Africa and continued unrest and underdevelopment in the Balkans might all pose challenges to Europe. If they do, NATO will provide a handy confidence-building mechanism. The United States needs NATO to help organize European defense, precisely so that Washington can focus on the Middle East and Asia. NATO is not great, but for the time being it is good enough.

 
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Offline Thucydides

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Re: Why Europe Keeps Failing........
« Reply #69 on: May 11, 2012, 16:34:10 »
Germany does not seem too pleased with the results of the French election. Will this be the wedge that splits the EU between North and South?

http://news.nationalpost.com/2012/05/07/germany-warns-france-it-wont-fund-new-socialist-leaders-promise-to-end-austerity/

Quote
Germany warns France it won’t fund new Socialist leader’s promise to end austerity
National Post Wire Services  May 7, 2012 – 2:16 PM ET | Last Updated: May 7, 2012 3:12 PM ET

Nicolas Sarkozy ‘serene’ after loss

Nicolas Sarkozy told members of his UMP party on Monday that he was serene and at peace following his loss to François Hollande.

Sarkozy met with ministers and senior party officials at the Elysee Palace Monday to discuss the UMP’s plans for parliamentary elections to be held over two rounds on June 10 and 17.

“He encouraged us to be united” and reiterated that he would not seek election in the vote, the source said.

The source said it was an “emotional meeting” and that Sarkozy was “serene and dignified. He insisted he was at peace”.

He said Sarkozy also insisted “on the fact he was happy” despite the result.

The centre-right UMP is gearing up to take on the Socialists in the parliamentary poll and hoping for an upset that would see it gain a majority and control of government. Polls show the two parties neck-and-neck.

Hollande won on Sunday with a vote of 51.62 percent to 48.38 for Sarkozy.

PARIS — François Hollande’s election as French president was greeted by jitters on finance markets and a dour front in Berlin where ruling conservatives warned the Socialist that Germans would not pay for his promises of an end to austerity.

With investors spooked by Greek voters’ rejection of parties which slashed budgets to secure an EU/IMF bailout, festivities in Paris after Hollande defeated centre-right incumbent Nicolas Sarkozy on Sunday soon gave way to a grim sense of getting down to the business of dealing with Europe’s deep economic crisis.

Sarkozy, 57, congratulated Hollande on the win and signalled that he intends to step back from frontline politics. Official final results of Sunday’s second round run-off showed that Hollande had won 51.62% of the vote to Sarkozy’s 48.38.

Hollande, also 57, spent the day closeted with aides who said they reviewed how he may pitch “the priority for growth in Europe” to Chancellor Angela Merkel. They will meet for the first time next week in Berlin to relaunch the Franco-German partnership that lies at the heart of the European Union and the euro currency.

“I must prepare myself,” said Hollande, who has never been a minister and is little known outside France. “I said that I was ready and now I must make sure I am, completely.”

His campaign chief Pierre Moscovici said the president-elect discussed how to present his plan to pull troops out of Afghanistan this year, as well as the economic growth strategy.

A promise of a welcome with “open arms” in Berlin could not conceal unease among Merkel’s Christian Democrats about what Hollande’s centre-left campaign pledges of growth and state spending mean for efforts to contain deficits in a euro zone that is struggling to compete in a world of new economic powers.

“Germany is not here to finance French election promises,” said Merkel’s parliamentary party leader Volker Kauder.

Hollande’s chief economic adviser insisted he was not about to simply “hand out money” and planned to balance the books.

Moscovici would not discuss what demands and compromises Hollande could offer Merkel on May 16, saying only that both parties were conscious of the need to find common ground.

Like other leaders in southern Europe, Hollande argues that cutting state deficits too hard and too fast may choke growth so far it makes the debt crisis even worse. Merkel repeated she would not renegotiate an EU pact on fiscal discipline, though she signalled some tactical shifts may be possible.

“We are in the middle of a debate to which France, of course, under its new president will bring its own emphasis,” she said. “But we are talking about two sides of the same coin – progress is only achievable via solid finances plus growth.”

With other world powers also anxious that a prolonged slump in Europe does not drag down their own economies, and allies and adversaries eager to learn how Europe’s second biggest economy and major military and diplomatic force will be run, Hollande is in demand, even before he formally replaces Sarkozy on May 15.

President Barack Obama invited him to meet in Washington before a NATO summit in Chicago on May 20. Hollande will also attend a summit of G8 leaders near Washington on May 18-19.

LIMITED OPTIONS

He must finalise his team of ministers by next week, as the pressure of nervous financial markets cuts short any hopes of a lengthy honeymoon in office. Polls make his Socialists and their allies favourites to replace Sarkozy’s centre-right bloc as the majority in parliament at elections on June 10 and 17.

“Hollande has little room for manoeuvre. The goal has been fixed – reducing the deficit to overcome the debt crisis,” said BNP Paribas analyst Bertrand Lamielle. “His room for manoeuvre is about how to do it, so we are waiting to see which measures he announces in his first political speech.”

While Greece plunged into turmoil after the vote left a question mark over the country’s future in the euro zone, France was calm, partly due to a public holiday on Tuesday.

Standard & Poor’s, which cut France’s triple-A rating in January, said Hollande’s win did not impact Paris’s creditworthiness although it would scrutinise his policy choices. There was at least a one-in-three chance of a cut to France’s long-term rating within two years, it said.

Hollande – who will be the first Socialist president in 17 years – was deep in discussions all morning with aides Moscovici and Manuel Valls. The three were briefly joined by Jerome Cahuzac, who is tipped as a likely budget minister.

Hollande is widely expected to name Jean-Marc Ayrault, a German-speaking moderate who is Socialists’ parliamentary leader, as prime minister and mix trusted older hands with younger talent when he unveils his cabinet next week.

Sarkozy’s office said Hollande would be sworn in on May 15 and, in a gracious gesture, the outgoing leader invited the president-elect to join him at an annual ceremony on Tuesday, a national holiday, to commemorate the end of World War Two.

Hollande overcame an aggressive campaign by Sarkozy, who veered to the right in a chase for the votes of the nearly one in five electors who supported far-right anti-immigration candidate Marine Le Pen in the first round of the ballot.

Hollande, 57, was buoyed by the same tide of anger over the economic crisis that has felled 10 other European leaders and derailed Sarkozy’s 2007 campaign promise to slash unemployment.

But economists say he too will have to take early measures to rein in public spending and keep markets at bay, potentially disappointing his supporters.

Welfare spending swallows 28 percent of national income – more than any other rich, OECD country – and growth has averaged only 1.6 percent over the past 20 years, raising concerns over the sustainability of public finances as the population ages.

Hollande’s aides say he will be a closet reformer, aided by backing from the left. But some commentators have bemoaned a dearth of structural reform proposals. And past attempts to reform the country’s generous social model have triggered furious street protests that have thwarted change.

Monday’s newspapers featured a beaming Hollande, arms outstretched, on their front pages. Left-leaning daily Liberation ran the headline “Normal!” a reference to the new president’s homely image as a man of the people.

Hollande briefly appeared at the balcony of his campaign headquarters to wave at wellwishers gathered below, but devoted the bulk of the day to work as the turmoil in Greece sent the euro tumbling to a 3-month low with the dollar.

French stocks were firmer, however, and the risk premium investors charge for holding French 10-year bonds rather than safe-haven German Bunds was broadly unchanged at 120 basis points. It hit a high of 191 bps last November amid fears of a euro zone credit crunch.

“Hollande’s victory has already been priced in by markets, however his promises made during the campaign have not been priced in, so there is risk on the downside if he stands his ground when he announces a first set of measures,” said fund manager Christian Jimenez at Diamant Bleu Gestion in Paris.

“The words ’grace period’ do not apply to the situation. That’s the reality,” said Michel Sapin, a former finance minister widely tipped to return to that job under Hollande, whom has been advising on economic affairs. “Nobody expects that we simply arrive in power and hand out money,” Sapin said.

Hollande promises a zero deficit by 2017, a year later than Sarkozy promised, but analysts believe an over-inflated growth outlook makes both goals unrealistic without spending cuts. Economists say Hollande must quickly outline his domestic plans, likely to centre on a tax reform, and revise growth targets.

His plans to tweak a reform that raised the retirement age to 62 and increase the minimum wage are unsettling investors who fear France could drift away from the club of trusted northern European borrowers and towards the debt-laden periphery.

The rest of his cabinet is likely to feature veterans like Laurent Fabius, a prime minister under President Francois Mitterrand, along with younger faces and women.

With files from Reuters and AFP
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

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Re: Why Europe Keeps Failing........
« Reply #70 on: May 14, 2012, 11:14:53 »
The view from Germany: "Greece has been in intensive care for years, but the patient, instead of recovering, is just getting sicker and sicker." Elections were final straw, it's time to leave the euro. Here's how it could happen .....
Quote
.... If the euro-zone countries do give in, the pressure for reform will also decline in the other crisis-ridden countries. If that happens, their debts will continue to rise, investors will flee from the euro and the entire currency union could break apart.

There are no provisions in the regulations of the monetary union for the withdrawal of a member state, and the euro partners cannot force a member to withdraw. But what else can the Greeks do if the Europeans remain truly adamant and insist that Greece satisfy all conditions attached to further aid?

In the end, a Greek withdrawal could only be the result of negotiations, prompted by the realization that it would enable the country to regain its national dignity. If Athens clung to the euro at all costs, it would remain dependent on the international community for decades to come. In contrast, regaining its own currency would enable the country to decide on its own fate ....
Der Spiegel, 14 May 12

"Scenarios for a Greek Exit"
Quote
.... The introduction of the new, old currency will require detailed planning and execution. Money presses will have to produce the drachma notes. "The banks will have to close for a week until the new currency can be distributed," predicts one of the senior EU officials, who spent months studying how other countries reformed their currencies.

Experience has shown that, in such cases, police units are posted behind sandbags at bank branches. During the transition period, cash dispensers would only spit out €20 or €50 a day, so that customers could buy the bare minimum in daily necessities.

The introduction of the new currency would begin with a sort of mandatory exchange period, during which the Greeks' euro assets would be exchanged into drachmas at a fixed rate. Pensions and salaries would only be paid out in the new currency.

EU officials are preparing for the possibility that the Greeks would then no longer be able to fulfill their obligations within the EU, at least temporarily. For instance, the country, as a signatory to the Schengen Agreement, monitors the external borders of the EU. If there is a currency devaluation, customs agents will have other priorities, at least in the short term.

'Turbulence'

It would be the first time in postwar history that a Western European country declared bankruptcy and introduced a new currency. The organizational challenges are considerable, but the economic consequences would be even greater.

If the drachma returns, it will drastically lose value against the euro, with experts expecting a devaluation of at least 50 percent. Insiders say that a loss of up to 80 percent is even possible. Banks and companies with foreign debts denominated in euros could no longer service them and would have to file for bankruptcy.

As a result, Greece would plunge into an even deeper recession. The IMF estimates a decline in economic output of more than 10 percent for the first year following the return of the drachma. This would set the country back by years in economic terms.

But after that, according to the IMF, the Greek economy will grow even faster than it would without the devaluation. "The turbulence could last one or two years," says Hans-Werner Sinn, president of the influential Munich-based Ifo Institute for Economic Research. But after that, he adds, things will improve again ....
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Re: Why Europe Keeps Failing........
« Reply #71 on: May 14, 2012, 12:59:51 »
The IMF scenario of Greece returning to prosperity ignores one crucial truth: tax evasion is a national sport. Until the Greeks realize that they are the primary source of funds for all they want the government to provide, no improvement in the situation is realistic. While the generous social benefits compounded the issue, the root cause for Greece was tax evasion.
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Re: Why Europe Keeps Failing........
« Reply #72 on: May 14, 2012, 14:35:00 »
Quote
What's more, in Germany , most working people pay taxes. In Greece ,
only 20 per cent pay taxes
. Again, unfair.

Further to Mike's comment and courtesy of Jed's post from the Calgary Herald.

http://forums.army.ca/forums/index.php/topic,104857.msg1120833.html#msg1120833
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Re: Why Europe Keeps Failing........
« Reply #73 on: May 15, 2012, 12:13:00 »
A humourous look at the European crisis from Saturday's national Post.

Quote
Dear Diary: What’s a poor German chancellor to do?

Tristin Hopper  May 11, 2012 – 10:36 PM ET  | Last Updated: May 12, 2012 12:41 PM ET

Monday

 I told France not to. I told her she would regret it. But she did it. She went out and got that tattoo she’s been threatening me with. What about your student loans? I said. She said she can’t start paying back her loans until her music career starts picking up steam, which is why she said she needed the tattoo. What a disappointment — and just when we were getting along so well. It’s utterly hopeless with Greece; that brat has been giving me the silent treatment since I made her wash off her makeup before going out with her friends.

Tuesday

 No calls, no visits for more than a month and then suddenly Portugal shows up on my front doorstep with a big smile and a bouquet of flowers: Looks like someone needs to borrow some more money. Still, I appreciate the charm; I’ve yet to hear even a thank-you from Greece. These ingrates don’t know how good they have it. Back in my day, when you wanted to reduce debt you had to buckle down, raise taxes, cut government programs and walk to work every day in a blinding snowstorm. Greece’s financial statements just came in, and apparently the country ran a €2.4-trillion surplus. Nice try, Greece. Do the calculations again. And could you try not covering them in chocolate smudges next time, please?

Wednesday

 Today I found out Italy’s been sneaking bits of my whiskey — and then topping up the bottle with water. Truthfully, it’s not the dishonesty that disappoints me, but the lack of self-restraint: The bottle was little more than brown-tinted tap water by the time I got to it. At least I haven’t had to deal with Ireland for a while: He hasn’t made a peep since I told him that if he didn’t rein in his debts he would get hairy palms. Sure it’s a lie, but you try talking economic sense to a country that once paid €60-million for a freaking house! I ripped up my keynote speech for the next eurozone summit. Instead of speaking about breaking unity and free trade, I’m just going to stick with “don’t buy things you can’t afford.”

Thursday

 Well, Greece had a genius idea today: If someone would just lend her some more money she could build a giant wind farm in the Mediterranean, and then rebuild her economy by exporting “green” power. So, what about all those Olympic venues you never play with, I said? Or all that military equipment you just had to have and never touch anymore? I told her that if she wants to live under my euros, she has to follow my rules — and that means no more stupid purchases. “Well, why don’t we just, like, print more euros?” she said. Well, Greece, a bit of inflation would boost German domestic demand for Eurozone goods, while simultaneously increasing the competitiveness of the weakest Eurozone countries — and potentially turning the tables on at least half a dozen European recessions. But you’re forgetting that about 90 years ago, under completely different circumstances, Germany suffered devastating hyperinflation. So … no.

Friday

 I was really hoping to spend some time in Berlin today to catch up on some spreadsheets and maybe cut the ribbon on a new solar facility. But only 15 minutes after I got to work, the European Central Bank calls me to tell me that Spain’s got pinkeye again and Greece didn’t even show up for attendance. Then the U.K. calls me to say that the Ukraine’s been suspended for bullying. You know, sometimes I think this whole continent would run a whole lot better if everyone just put Germany in cha … wait. Never mind. I’m not even going to go there.

National Post
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Offline Thucydides

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Re: Why Europe Keeps Failing........
« Reply #74 on: May 15, 2012, 21:36:57 »
No matter how many times the debt crisis is "solved", things just seem to keep going farther downhill, with Greece at the front of the bobsled:

http://blogs.the-american-interest.com/wrm/2012/05/15/greeces-bank-jog-turns-into-a-run-is-viral-panic-next/

Quote
Greece’s Bank Jog Turns Into A Run: Is Viral Panic Next?

As Via Meadia has reported in the past, the smart money has been quietly edging out of Greek banks for a long time. As concern spread, the bank walk turned into a bank jog. This weeks, there are signs the jog is breaking into a bank run:

Greek depositors withdrew €700 million ($898 million) from local banks Monday, the country’s president said, as he warned that the situation facing Greece’s lenders was very difficult.

The amazing thing is that there are any deposits left in Greek banks; rather than waiting for your money to be converted into soon-to-be worthless drachmas by some midnight decree from a desperate government, put your money in some nice safe German or Dutch bank and wait out the storm.

Of course a bank run will hasten the insolvency of the banks and force an earlier Greek exit from the euro: that is all the more reason to panic fast. When there’s a fire in a crowded theater, you want to be among the first at the door.

The question now is whether the bank virus spreads to other European countries that are potentially at risk of leaving the euro. Moving money around from one country’s banks to another in Europe is not that hard; considering that you could lose a significant percentage of your life savings by failing to move your assets out of Spanish, Portuguese or even Italian banks into a German (or, perhaps better, Swiss or even British) bank in time, more and more European depositors will make the obvious safety play.

Bank panics are slow to start but they can build with unbelievable speed if the panic goes viral.

Add the unsettling danger of a viral bank panic to the dangers and uncertainties that European policy makers — and the rest of us — face in these uncertain times.

And regardless of how well the current government in Ottawa is doing, we are still a rather small economy compared to the rest of the world; if Greece and the Rest of the PIIGS go the ride will be pretty rough (especially since we are, to continue the analogy, like a lifeboat tied to the Titanic).

Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.