Army.ca Forums

The Mess => Canadian Politics => Global Politics => Topic started by: Chris Pook on November 13, 2011, 15:14:52

Title: Why Europe Keeps Failing........ merged with "EU Seizes Cypriot Bank Accounts"
Post by: Chris Pook on November 13, 2011, 15:14:52
Janet Daley (http://www.telegraph.co.uk/news/worldnews/europe/8886150/Theres-nothing-new-about-this-European-folly.html) (Daily Telegraph) does an impressive job of summing up Charlemagne's Heirs:

Quote
There’s nothing new about this European folly

 The governing class in Europe thinks it knows what is best - and once again, the people are being forced to accept it.

Bigger than the people: European union abandons common sense in favour of ideological delusion Photo: EPA

By Janet Daley

9:00PM GMT 12 Nov 2011

Have we learnt nothing from the terrible century that finished just over a decade ago? Talk about generals fighting the last war: Europe seems determined to remain locked in the first flush of post-war peace, repeating over and over again, with ever more hysterical urgency, the formula that once seemed like a miraculous antidote to its own worst inclinations.
 

Even as the prescription – the permanent integration of those wicked old nation-states into one unified whole – proves damaging and dangerous, it cannot be abandoned, because it is, by now, the received definition of progressive thinking about the future.
 

But it is not about the future at all. Its remedies and pieties, as well as its anxieties and confusions, lie almost exclusively in the past. That is why it offers answers to questions, and solutions to problems, that are so discordant with life as it is actually lived. (So much so that elected governments must be displaced before its mechanisms can be put in place.) The plague of bellicose nationalism is no longer the preoccupying threat to modern European life, yet that is the demon which the EU is most dedicated to driving out. Germany’s fear of hyperinflation is out of touch with its present robust economic reality, yet that is what prevents the ECB from taking the obvious measures to save the Italian economy.
 

But the European project is an anachronism in a much more profound sense. Its institutions may have been developed as a consequence of (and an act of repentance for) the world wars, but its philosophical roots go back much further: this dream of a “modern” Europe is just the latest model of utopian ideology to leave wreckage in its path.
 

Its antecedents are the German and French systems of political theory which held that perfect methods of governing could be derived from first principles: that human behaviour and social interaction could be predicted and controlled in ways that would maximise welfare and happiness. What you hear in the grandiose speeches of European leaders and the bumptious pronouncements of EU officials is precisely this: we have an ideal system which can guarantee infinite security and wellbeing, provided that everyone behaves in ways that are consistent with the rules of life as we describe them.

 
The great irony of the mess we are now in is that this concept of a totally rational, perfect society which must be imposed on actual people, each with his own distinct experience and perception of life, was the same delusion that wreaked havoc in Europe for generations. From one Terror to another, Robespierre to Stalin, the enforced experiments ran their course. And virtually every one required the “temporary” expunging of democracy.
 
Of all the disturbing aspects of the past few weeks, none has been more alarming than the frank contempt that has been expressed for public opinion and democratic accountability: the idea that these decisions are too important to be left to the people, with their inchoate resentments and their self-serving sentimentality. Somehow, while we were busy heading toward the progressive enlightened future, we ended up being forced to accept the most retrograde formula of the past. The governing class knows what is best, and the people must be made to accept it.
 
How did that happen? And what sort of tortuous logic made it seem acceptable? Answer: the economic imperatives that follow when the commonsense understanding of how people behave is abandoned in favour of ideological delusion. This was the 21st-century version of the experiment. Allow countries that have traditions of corrupt, chaotic governance to enter the domain of free money (easy credit and low interest rates) and see if they automatically turn into well-ordered, responsible nations. Now we know: they don’t. So instead of Greece and Italy having dodgy currencies (to match their dodgy governments) that could be devalued whenever necessary, they were locked into one that was supposed to be invincible and could not be devalued.
 
But instead of their national temperaments being remodelled and their populations propelled into the glorious discovery of probity and sound borrowing habits, they continued to be themselves. And the Germans, for all their official commitment to the grand theory, continue to be themselves as well. They have their memories and their inherited fears of inflation and the debauching of their currency to contend with. So here we are at the same old impasse: human beings are not perfectly rational and they will not behave as the beautiful system dictates. (It seems bizarre, in this light, that it is Eurosceptics who are described as “ideologues”.)
 
Perhaps it is not so surprising that we have made this mistake yet again: it seems to be a feature of the European intellectual tradition. But it is outrageous to compound it by pretending that it is unprecedented. Once we accept that the EU is not a pragmatic project at all – not a practical proposition designed to meet specific, actual needs, but a metaphysical system which relies on the reinvention of human nature – then it becomes much easier to understand why it is coming so spectacularly adrift.
 
Meanwhile, in Britain, we fight over the old 20th-century ideological ground, but there is no debate in any meaningful sense. There is an absurd argument going on about the evils of capitalism – only this time around, in the wake of Marxism’s inglorious collapse, there is not even a plausible alternative being proposed to replace it. So the attacks are nihilistic in the strict technical sense of the word, as well as being misguided.
 
However repugnant the present generation of capitalists may be, and however much personal disrepute they may incur, it is not capitalism that is about to destroy the prosperity of the populations of modern Europe. It is the folly of enforced uniformity – yet another dream of enlightened perfection – that will accomplish that.
 
What the architects of the dream, and even those of us who are caught in the backwash, will have to accept is that capitalism is probably incapable of producing enough wealth to cover the cost of limitless “social protection” programmes as well as providing uniform levels of prosperity for all working and non-working citizens. Soon, we will have to make radical choices not just about the power of unelected officials, but between economic freedom and what those who run the EU call “social cohesion”. Or rather, they will have to make the choices. I doubt that we – or the peoples of Europe – will get any say in it at all.
 

Frankfurt and Strasbourg still believe that if only they try a little harder, spend a little more money, draw a little more blood, then they can achieve in Europe that which "The Sun King's" (copyrighted, registered trade mark, patent pending) topiarists achieved at l'Orangerie at Versailles: nature ordered, manicured and trimmed to present the image of sublime order.

Louis wanted to have a peaceful haven in a world of disorder: Where everything was in its place and he could stop worrying.  The fact that he employed armies of gardeners expending their lives to let him relax appears to have escaped the attention of both Himself, the Eurocrats and their fellow travellers that believe that "Order" and "Nature" can be made synonymous.

The controlled managed chaos of the English country garden, and the constant attention of its gardener, is poorly understood on the Continent.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on November 21, 2011, 08:56:44
I think this idea, odious debt, is what we are going to see in Europe in the next few years. The article is reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/news/world/a-new-euro-crisis-strategy-deny-the-debt/article2242826/
Quote
A new euro crisis strategy: deny the debt

GRAEME SMITH
ATHENS— From Monday's Globe and Mail

Last updated Monday, Nov. 21, 2011

It’s always hard to discern a message during a riot, amid fistfights and tear gas, but an undercurrent of ideas runs through street protests in the debtor countries of Europe. When demonstrators scream “Make the bankers pay,” or the equivalent in Greek, Spanish, or Italian, many of them are embracing a concept that has gained popularity during the crisis. It’s a deceptively simple way of dealing with a crushing sovereign debt: Declare the loans illegal, or “odious.”

The doctrine of odious debt was first proposed in 1927 by an obscure legal scholar named Alexander Sack, but did not gain currency until the late 1990s when poverty activists started applying the term to Third World debts. The argument is that when a lender knowingly gives money to a corrupt or dictatorial regime for purposes that don’t benefit the country, the debt should be erased when the tyrant falls.

Iraq invoked the term to shrug off the debts of Saddam Hussein; Ecuador used similar logic when it defaulted on some foreign creditors in 2008.

Now the term has spread to Europe, finding its way into speeches by politicians –both left- and right-wing – as they face rising frustration from voters about the belt-tightening required to keep their countries out of bankruptcy.

None of Europe’s finance ministers have proposed anything of the kind, but they have been forced to explain why not. Peter Matthews, an accountant who serves as a member of parliament for the centre-right Fine Gael, the biggest faction in Ireland’s coalition government, challenged his own party’s policy when he made a public appeal last month for the European Central Bank to write down $75-billion of his country’s loans, calling them “odious.”

Ireland’s Finance Minister quickly dismissed the proposal as “deranged and crazy,” but Mr. Matthews stood by his position, saying that many Irish taxpayers sense that the European lenders are more interested in squeezing money from the public coffers than finding a practical recovery plan for their country.

“They’ve been browbeaten by the bankers,” Mr. Matthews said in an interview. “That’s the true problem across Europe.”

On the other side of the continent, and the opposite end of the political spectrum, left-wing Greek parties have emerged as leading champions of debt denial. Two major political parties have dominated Greek politics since the 1970s, both of which gave their endorsement on Nov. 16 to an interim coalition that has declared it will enforce unpopular austerity measures. But even those involved in the new coalition say that a backlash against the policies may hurt them in the coming elections.

“Our party will take it on the chin, but we all make sacrifices,” said Kyriakos Mitsotakis, a member of parliament from the New Democracy party, the second-largest faction in the new government. He acknowledged that voters may drift toward those who favour the “odious debt” idea, such as Alexis Tsipras, head of the left-wing party Syriza.

“The problem is that Tsipras doesn’t have any credible solutions,” Mr. Mitsotakis said. “His ideas are something like you’d find in North Korea, or maybe Cuba.”

For his part, Mr. Tsipras says his proposal to repudiate the debt represents the only fair outcome after the “orgy of corruption” in recent years. His party calls for an audit of the debt, to determine which loans were handed out improperly – for example, to fund corrupt deals surrounding the recent Olympics, or for the purchase of submarines, tanks, and other unnecessary weapons.

“There are other countries who refused to pay a large part of their debt, because it came as a result of corruption and scandalous contracts,” Mr. Tsipras said.

Such ideas have been popularized by the documentary film Debtocracy, and by lobby groups – the Jubilee Debt Campaign, and the Committee for the Abolition of Third World Debt – that previously focused their attention on the developing world.

Eric Toussaint, president of CADTM Belgium, said his group’s website has seen a 30-per-cent increase in traffic during the crisis and their latest book, La Dette ou la Vie, has almost sold out; they’re working on another volume for release next spring.

“In polls across Europe, you can see a growing majority that rejects the austerity measures,” Mr. Toussaint said. There is also a growing consensus, he said, that the International Monetary Fund doesn’t always have the best prescriptions.

“The IMF said that Canada did not deregulate its banks enough,” he said. “You didn’t follow their advice, and look at how well it turned out for you.”

Despite the rush of enthusiasm for the concept of odious debt, the doctrine remains highly controversial among legal experts. In an acidly funny paper titled “A Convenient Untruth: Fact and Fantasy in the Doctrine of Odious Debts,” in a 2007 issue of the Virginia Journal of International Law, the authors note that the idea attracted few admirers for more than a half-century after it was first proposed.

“The doctrine of odious debts was either overlooked by reviewers or criticized by those who noticed it,” the journal concluded.


The advantage of the doctrine of odious debt is that it excuses politicians from the domestic price of default. In countries like Greece, Italy, Spain, Portugal and, yes, France, the people are of mixed minds: they do not want to pay the price of years decades of overspending but they have enough national pride to not want to be labelled "deadbeats." The idea of odious debts is that the current levels of debt were run up by bad people - the Greek colonels (1967-74), Franco (1947-75), even Berlisconi (1994-2011 (with breaks)) - and, therefore need not, indeed should not be repaid. It's default, that's what the banks will know it is, that's what everyone will call it, but the people will be able to excuse their default by saying, "No, no! We're not defaulting, not at all, we are not deadbeats; we're just renouncing these odious debts." It will, probably, work in Greece, Italy, Spain, Portugal, France and a few other European countries. It is unlikely to even be discussed in Iceland and will, also most likely, be rejected by Ireland.

My question is: will it spread to America? Can Obama's (or his successors) make the case that George W Bust ≈ Berlesconi and that the massive levels of debt that some (many) economists equate to the impact of the Bush tax cuts are "odious?"
Title: Re: Why Europe Keeps Failing........
Post by: tomahawk6 on November 21, 2011, 10:12:03
Europe is failing because of socialism pure and simple.
Title: Re: Why Europe Keeps Failing........
Post by: Haligonian on November 21, 2011, 11:11:35
Europe is failing because of socialism pure and simple.

Care to explain further?
Title: Re: Why Europe Keeps Failing........
Post by: ModlrMike on November 21, 2011, 11:29:24
Care to explain further?

The trouble with socialism is that eventually you run out of other people's money. - Margaret Thatcher

I would add that those from whom you borrow money want it back some day, and that day appears to be now.
Title: Re: Why Europe Keeps Failing........
Post by: Nemo888 on November 21, 2011, 12:26:15
The trouble with socialism is that eventually you run out of other people's money. - Margaret Thatcher

I would add that those from whom you borrow money want it back some day, and that day appears to be now.

And Thatcherite "trickle down"  deregulation has worked so well. What did work well was Roosevelt's plan to save capitalism after the last great financial collapse. A controlled Keynesian economy with huge investments in infrastructure and education. Combined with taxing the rich to the point where they want to reinvest in their businesses and a stiff inheritance tax could turn things around again. Health care would need a revamp though. Most of the money we are spending is wasted on retirees while young people can't get the cutting edge treatments that would actually give a return on investment by making them more productive. Just my 2c.
Title: Re: Why Europe Keeps Failing........
Post by: Haligonian on November 21, 2011, 12:41:50
Care to explain further?

The reason I ask is that simply saying that "socialism" is the problem is too general a comment to contribute to the discussion.  There are a whole legion of different variations on socialism all that result in different policies.  I don't think any of these countries that are doing so poorly have the majority of their industry owned by the government and at the same time there are some countries they have done very well with socialist policies.  So what are the specific "socialist" policies or trends that are causing these countries to fail?
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on November 21, 2011, 12:54:06
And Thatcherite "trickle down"  deregulation has worked so well. What did work well was Roosevelt's plan to save capitalism after the last great financial collapse. A controlled Keynesian economy with huge investments in infrastructure and education. Combined with taxing the rich to the point where they want to reinvest in their businesses and a stiff inheritance tax could turn things around again. Health care would need a revamp though. Most of the money we are spending is wasted on retirees while young people can't get the cutting edge treatments that would actually give a return on investment by making them more productive. Just my 2c.


Some quite reputable economic historians will say that what Roosevelt did (aided by the US Congress) was to turn an ordinary depression into the Great Depression.

There might a lot to recommend Keynes if anyone, ever, implemented his plan: spend in hard times but cut spending and pay off debt in good times. No one bothers with the second half so Keynesian economics remains a totally unproven theory.
 
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on November 21, 2011, 13:11:42
"Greece, Italy, Spain, Portugal, France" -
Metaxas, Mussolini, Franco, Salazar, Petain - and to round out the last of the PIIGS - de Valera. 
The last of the veterans that fought against them and their policies are not yet in the ground - nor are their supporters.

As to the man with the best plan for sorting the greatest financial collapse of 1920s......an Austrian Corporal.  He too had, and has, his supporters.

Give me chaos.  It is less troubling.
Title: Re: Why Europe Keeps Failing........
Post by: ModlrMike on November 21, 2011, 13:40:19
And Thatcherite "trickle down"  deregulation has worked so well.

I made no commentary on that. My point was you can't continue to spend money you don't have ad infinitum. Eventually your economy is going to collapse under the weight of the debt... as we're seeing now.
Title: Re: Why Europe Keeps Failing........
Post by: Journeyman on November 21, 2011, 14:52:14
A quick lesson in Eurozone Economics is making the rounds online, so....

Some years ago a small rural town in Spain twinned with a similar town
in Greece. The Mayor of the Greek town visited the Spanish town. When
he saw the palatial mansion belonging to the Spanish mayor he wondered
how he could afford such a house.

The Spaniard said; "You see that bridge over there? The EU gave us a
grant to build a two-lane bridge, but by building a single lane bridge
with traffic lights at either end this house could be built".

The following year the Spaniard visited the Greek town. He was simply
amazed at the Greek Mayor's house, gold taps, marble floors, it was
marvelous.

When he asked how this could be afforded the Greek said; "You see that
bridge over there?"

The Spaniard replied; "No."

 ;)


Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on November 21, 2011, 21:36:25
Europe is failing because it spends too much of tomorrow's money today.  Much of it is spent on socialist policies and aims, but the problem isn't exclusively a socialist one.  Short of miraculous growth, the only way out is to cheat.  We are just watching the ongoing negotiations to decide who will get shafted, although we know ultimately they are going to go after the holdings of frugal people.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on November 21, 2011, 23:30:47
Europe is failing because people like this are running the show:

http://www.telegraph.co.uk/news/worldnews/europe/eu/8897662/EU-bans-claim-that-water-can-prevent-dehydration.html

Quote
EU bans claim that water can prevent dehydration
Brussels bureaucrats were ridiculed yesterday after banning drink manufacturers from claiming that water can prevent dehydration.

NHS health guidelines state clearly that drinking water helps avoid dehydration, and that Britons should drink at least 1.2 litres per day Photo: ALAMY
By Victoria Ward and Nick Collins6:20AM GMT 18 Nov 20111738 Comments

EU officials concluded that, following a three-year investigation, there was no evidence to prove the previously undisputed fact.

Producers of bottled water are now forbidden by law from making the claim and will face a two-year jail sentence if they defy the edict, which comes into force in the UK next month.

Last night, critics claimed the EU was at odds with both science and common sense. Conservative MEP Roger Helmer said: “This is stupidity writ large.

“The euro is burning, the EU is falling apart and yet here they are: highly-paid, highly-pensioned officials worrying about the obvious qualities of water and trying to deny us the right to say what is patently true.

“If ever there were an episode which demonstrates the folly of the great European project then this is it.”

NHS health guidelines state clearly that drinking water helps avoid dehydration, and that Britons should drink at least 1.2 litres per day.
The Department for Health disputed the wisdom of the new law. A spokesman said: “Of course water hydrates. While we support the EU in preventing false claims about products, we need to exercise common sense as far as possible."

German professors Dr Andreas Hahn and Dr Moritz Hagenmeyer, who advise food manufacturers on how to advertise their products, asked the European Commission if the claim could be made on labels.

They compiled what they assumed was an uncontroversial statement in order to test new laws which allow products to claim they can reduce the risk of disease, subject to EU approval.

They applied for the right to state that “regular consumption of significant amounts of water can reduce the risk of development of dehydration” as well as preventing a decrease in performance.

However, last February, the European Food Standards Authority (EFSA) refused to approve the statement.

A meeting of 21 scientists in Parma, Italy, concluded that reduced water content in the body was a symptom of dehydration and not something that drinking water could subsequently control.

Now the EFSA verdict has been turned into an EU directive which was issued on Wednesday.

Do you think water hydrates?
Yes - It clearly refreshes my body's liquid levels.
No - I agree with the new EU ruling.
Not sure - I feel that the jury is still out.
I simply don't care - this research is a complete waste of time and money.
VoteView ResultsShare This
 
Ukip MEP Paul Nuttall said the ruling made the “bendy banana law” look “positively sane”.

He said: “I had to read this four or five times before I believed it. It is a perfect example of what Brussels does best. Spend three years, with 20 separate pieces of correspondence before summoning 21 professors to Parma where they decide with great solemnity that drinking water cannot be sold as a way to combat dehydration.

“Then they make this judgment law and make it clear that if anybody dares sell water claiming that it is effective against dehydration they could get into serious legal bother.
EU regulations, which aim to uphold food standards across member states, are frequently criticised.

Rules banning bent bananas and curved cucumbers were scrapped in 2008 after causing international ridicule.
Prof Hahn, from the Institute for Food Science and Human Nutrition at Hanover Leibniz University, said the European Commission had made another mistake with its latest ruling.

“What is our reaction to the outcome? Let us put it this way: We are neither surprised nor delighted.
“The European Commission is wrong; it should have authorised the claim. That should be more than clear to anyone who has consumed water in the past, and who has not? We fear there is something wrong in the state of Europe.”

Prof Brian Ratcliffe, spokesman for the Nutrition Society, said dehydration was usually caused by a clinical condition and that one could remain adequately hydrated without drinking water.

He said: “The EU is saying that this does not reduce the risk of dehydration and that is correct.
“This claim is trying to imply that there is something special about bottled water which is not a reasonable claim.”
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on November 23, 2011, 11:46:29
Europe is failing because it spends too much of tomorrow's money today.  Much of it is spent on socialist policies and aims, but the problem isn't exclusively a socialist one.  Short of miraculous growth, the only way out is to cheat.  We are just watching the ongoing negotiations to decide who will get shafted, although we know ultimately they are going to go after the holdings of frugal people.


Michael Walker of the Fraser Institute takes a few paragraphs to say what Brad explained in a couple of sentences in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/news/opinions/opinion/greece-is-broke-and-so-is-its-concept-of-democracy/article2245167/
Quote
Greece is broke, and so is its concept of democracy

MICHAEL WALKER
Globe and Mail Update

Published Wednesday, Nov. 23, 2011

It is often the role of the economist to point at the impending doom with which reality confronts our fondest wishes. For that reason, Thomas Carlyle referred to economics as the dismal science. It is made the more dismal for the economist when the fondest wishes are held and extolled by friends and those whom one admires.

I find myself in this predicament with the pronunciations of two such people on the issue of the Greeks and their political reactions to the gifts borne to them by Germany in the guise of the European Union. In assessing the gift of monetary rescue, wrapped in the sackcloth of fiscal austerity, then-prime minister George Papandreou unexpectedly proposed that there should be a referendum. This gesture caused pandemonium in markets and, after stern ultimatums from the European Union, the Greeks found that they could accept the lifeline without waiting four months for a referendum.

Two Canadians of substance who have given us reason to admire them, Mark Carney, governor of the Bank of Canada, and Preston Manning, founder of the Reform Party and Fraser Institute senior fellow, supported the notion of a referendum. Mr. Carney told the House of Commons finance committee that a referendum was a good idea because it is “imperative that there is widespread support” for the tax and spending reforms that would have to be adopted and maintained for a long time. Mr. Manning, a reliable and able democrat, recently wrote in The Globe and Mail to support Mr. Carney.

The problem with these assessments of the Greek tragedy is that they ignore the fact that in Greece and an increasing number of countries, democracy itself is in deficit. It is in deficit in the sense that a majority of the Greek electorate has been bribed with payments from government – payments for which nobody in Greece is having to pay in taxes.

Corrupted at its very foundation, Greek democracy no longer speaks for the public interest and cannot be relied upon to solve the problem. In effect, that is why the European Union is involved in the lives of Greeks in the first place.

Democracy rests on a delicate balance of economic interests. Citizens both pay taxes to, and receive benefits from, government which is controlled by the democratic process. Rhetoric notwithstanding, the normal pattern in Western democracies is that lower-income families are net beneficiaries and higher-income families are net payers. The crucial balance point for democracy is where the crossover in the weight of the electorate occurs.

The normal circumstance is that fewer families are net overall beneficiaries than are net payers. The ongoing process of democracy is persuading those who pay more than they receive to support the social infrastructure because it does provide some benefit to them and to the society in general. Fiscal democracy works in this context as long as the attempt to spend more is met by resistance from those who must pay – resistance of a kind that it might take the creation of a reform party to effect.

The problem with deficit financing – which unfortunately is being forgotten – is that it makes possible the delivery to the population of current benefits for which nobody pays – or at least nobody who is voting at the moment. Deficits shift the burden of spending forward onto the shoulders of children not yet old enough to vote and those not yet born. And in the case of the Greeks, owing to the system of transfer payments imbedded in the EU, at least part of the cost of their spending could be shifted to voters not yet born in other countries of the union.

The demonstrations in the streets of Athens were not the manifestation of democracy at work. They were the vanguard of the clear majority of citizens who are disconsolate at the prospect of losing their ability to continue to feast at the expense of their children. As past Greek and other experience has demonstrated, the only way that democratic frenzy comes to a halt is when the country hits the wall and can no longer borrow the money to carry on.

The fondest wish of the creators of the European Union was that the fiscal discipline that has historically eluded some European countries would somehow emerge from the great EU democratic coming-together. Regrettably, that wish took no account of the delicate balance of interests that is the crucial underpinning of all successful democracies and which, in the case of Greece, is simply broken.

Michael Walker is the founding executive director of the Fraser Institute.


I hate to bash on about culture matters (and see Samuel Huntington's (and Lawrence Harrison's) book of that name (http://www.amazon.com/Culture-Matters-Values-Shape-Progress/dp/0465031765/ref=sr_1_1?ie=UTF8&qid=1322062797&sr=8-1)) but I'm afraid the answer to the "why" question is that none of Greece, Italy, Spain, Portugal or France are, inherently, liberal countries - they are, in fact, all fairly conservative, but of the unhealthy, statist form of conservatism rather than one of the healthy branches of conservatism (e.g. Confucian). Many conservative movements, including populist and statist movements, tend to morph into fascist/national socialist movements and then into totalitarian governments. That's my (sad) prediction for Europe's Latin tier. It's all about culture, not economics and not politics.

Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on November 23, 2011, 12:38:06
It often appears to me that the only lesson the aristocrats of Europe have learned from their unfortunate brushes with the mob (democracy as THEY see it) is that they can survive and conduct business as usual by the simple expedient of being less ostentatious and ignoring the noise in the streets.

Culture does indeed matter.
Title: Re: Why Europe Keeps Failing........
Post by: milnews.ca on November 23, 2011, 13:11:01
I hate to bash on about culture matters (and see Samuel Huntington's (and Lawrence Harrison's) book of that name (http://www.amazon.com/Culture-Matters-Values-Shape-Progress/dp/0465031765/ref=sr_1_1?ie=UTF8&qid=1322062797&sr=8-1)) but I'm afraid the answer to the "why" question is that none of Greece, Italy, Spain, Portugal or France are, inherently, liberal countries - they are, in fact, all fairly conservative, but of the unhealthy, statist form of conservatism rather than one of the healthy branches of conservatism (e.g. Confucian). Many conservative movements, including populist and statist movements, tend to morph into fascist/national socialist movements and then into totalitarian governments. That's my (sad) prediction for Europe's Latin tier. It's all about culture, not economics and not politics.
Combined with the bottom-up culture in some countries of, "as long as the government pretends to provide services, I'll pretend to pay my full share of taxes."
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on November 25, 2011, 16:07:12
From Der Spiegel  (http://www.spiegel.de/international/europe/0,1518,799237,00.html) via the Daily Telegraph

Quote
11/25/2011
   
Habermas, the Last European

A Philosopher's Mission to Save the EU

By Georg Diez

DPA

Jürgen Habermas has had enough. The philosopher is doing all he can these days to call attention to what he sees as the demise of the European ideal. He hopes he can help save it -- from inept politicians and the dark forces of the market.
 
Jürgen Habermas is angry. He's really angry. He is nothing short of furious -- because he takes it all personally.

He leans forward. He leans backward. He arranges his fidgety hands to illustrate his tirades before allowing them to fall back to his lap. He bangs on the table and yells: "Enough already!" He simply has no desire to see Europe consigned to the dustbin of world history.

"I'm speaking here as a citizen," he says. "I would rather be sitting back home at my desk, believe me. But this is too important. Everyone has to understand that we have critical decisions facing us. That's why I'm so involved in this debate. The European project can no longer continue in elite modus."

Enough already! Europe is his project. It is the project of his generation.

Jürgen Habermas, 82, wants to get the word out. He's sitting on stage at the Goethe Institute in Paris. Next to him sits a good-natured professor who asks six or seven questions in just under two hours -- answers that take fewer than 15 minutes are not Habermas' style.

Usually he says clever things like: "In this crisis, functional and systematic imperatives collide" -- referring to sovereign debts and the pressure of the markets.

Sometimes he shakes his head in consternation and says: "It's simply unacceptable, simply unacceptable" -- referring to the EU diktat and Greece's loss of national sovereignty.

 'No Convictions'

And then he's really angry again: "I condemn the political parties. Our politicians have long been incapable of aspiring to anything whatsoever other than being re-elected. They have no political substance whatsoever, no convictions."

It's in the nature of this crisis that philosophy and bar-room politics occasionally find themselves on an equal footing.

It's also in the nature of this crisis that too many people say too much, and we could definitely use someone who approaches the problems systematically, as Habermas has done in his just published book.

But above all, it is in the nature of this crisis that the longer it continues, the more confusing it gets. It becomes more difficult to follow its twists and turns and to see who is responsible for what. And the whole time, alternatives are disappearing before our very eyes.

That's why Habermas is so angry: with the politicians, the "functional elite" and the media. "Are you from the press?" he asks a man in the audience who has posed a question. "No? Too bad."

Habermas wants to get his message out. That's why he's sitting here. That's why he recently wrote an article in the Frankfurter Allgemeine newspaper, in which he accused EU politicians of cynicism and "turning their backs on the European ideals." That's why he has just written a book -- a "booklet," as he calls it -- which the respected German weekly Die Zeit promptly compared with Immanuel Kant's 1795 essay "Perpetual Peace: A Philosophical Sketch."

But does he have an answer to the question of which road democracy and capitalism should take?

 A Quiet Coup d'État

"Zur Verfassung Europas" ("On Europe's Constitution") is the name of his new book, which is basically a long essay in which he describes how the essence of our democracy has changed under the pressure of the crisis and the frenzy of the markets. Habermas says that power has slipped from the hands of the people and shifted to bodies of questionable democratic legitimacy, such as the European Council. Basically, he suggests, the technocrats have long since staged a quiet coup d'état.

"On July 22, 2011, (German Chancellor) Angela Merkel and (French President) Nicolas Sarkozy agreed to a vague compromise  -- which is certainly open to interpretation -- between German economic liberalism and French etatism," he writes. "All signs indicate that they would both like to transform the executive federalism enshrined in the Lisbon Treaty into an intergovernmental supremacy of the European Council that runs contrary to the spirit of the agreement."

Habermas refers to the system that Merkel and Sarkozy have established during the crisis as a "post-democracy." The European Parliament barely has any influence. The European Commission has "an odd, suspended position," without really being responsible for what it does. Most importantly, however, he points to the European Council, which was given a central role in the Lisbon Treaty -- one that Habermas views as an "anomaly." He sees the Council as a "governmental body that engages in politics without being authorized to do so."

He sees a Europe in which states are driven by the markets, in which the EU exerts massive influence on the formation of new governments in Italy and Greece, and in which what he so passionately defends and loves about Europe has been simply turned on its head.

 A Rare Phenomenon

At this point, it should be mentioned that Habermas is no malcontent, no pessimist, no prophet of doom -- he's a virtually unshakable optimist, and this is what makes him such a rare phenomenon in Germany.

His problem as a philosopher  has always been that he appears a bit humdrum because, despite all the big words, he is basically rather intelligible. He took his cultivated rage from Marx, his keen view of modernity from Freud and his clarity from the American pragmatists. He has always been a friendly elucidator, a rationalist and an anti-romanticist.

 


Nevertheless, his previous books "Structural Transformation of the Public Sphere" and "Between Facts and Norms" were of course somewhat different than the merry post-modern shadowboxing of French philosophers like Jacques Derrida and Jean Baudrillard. What's more, another of Habermas' publications, "Theory of Communicative Action," certainly has its pitfalls when it comes to his theory of "coercion-free discourse" which, even before the invention of Facebook and Twitter, were fairly bold, if not perhaps naïve.

Habermas was never a knife thrower like the Slovenian thinker Slavoj Žižek, and he was no juggler like the German philosopher Peter Sloterdijk. He never put on a circus act, and he was always a leftist (although there are those who would disagree). He was on the side of the student movement until things got too hot for him. He took delight in the constitution and procedural matters. This also basically remains his position today.

Habermas truly believes in the rationality of the people. He truly believes in the old, ordered democracy. He truly believes in a public sphere that serves to make things better.

More To Follow......
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on November 25, 2011, 16:25:34
Quote
Part 2: A Vision of Europe at the Crossroads

This also explains why he gazed happily at the audience on this mid-November evening in Paris. Habermas is a fairly tall, lanky man. As he stepped onto the stage, his relaxed gait gave him a slightly casual air. With his legs stretched out under the table, he seemed at home. Whether he's at a desk or not, this is his profession: communicating and exchanging ideas in public.

He was always there when it was a question of putting Germany back on course, in other words, on his course  -- toward the West, on the path of reason: during the vitriolic debate among German historians in 1986 that focused on the country's approach to its World War II past; following German reunification in 1990; and during the Iraq War. It's the same story today as he sits here, at a table, in a closed room in the basement of the Goethe Institute, and speaks to an audience of 200 to 250 concerned, well-educated citizens. He says that he, the theorist of the public sphere, doesn't have a clue about Facebook and Twitter -- a statement which, of course, seems somewhat antiquated, almost even absurd. Habermas believes in the power of words and the rationality of discourse. This is philosophy unplugged.

While the activists of the Occupy movement refuse to formulate even a single clear demand, Habermas spells out precisely why he sees Europe as a project for civilization that must not be allowed to fail, and why the "global community" is not only feasible, but also necessary to reconcile democracy with capitalism. Otherwise, as he puts it, we run the risk of a kind of permanent state of emergency -- otherwise the countries will simply be driven by the markets. "Italy Races to Install Monti" was a headline in last week's Financial Times Europe.

On the other hand, they are not so far apart after all, the live-stream revolutionaries from Occupy and the book-writing philosopher. It's basically a division of labor -- between analog and digital, between debate and action. It's a playing field where everyone has his or her place, and it's not always clear who are the good guys and who are the bad guys. We are currently watching the rules being rewritten and the roles being redefined.

 A Dismantling of Democracy

"Sometime after 2008," says Habermas over a glass of white wine after the debate, "I understood that the process of expansion, integration and democratization doesn't automatically move forward of its own accord, that it's reversible, that for the first time in the history of the EU, we are actually experiencing a dismantling of democracy. I didn't think this was possible. We've reached a crossroads."

It also has to be said: For being Germany's most important philosopher, he is a mind-bogglingly patient man. He is initially delighted that he has managed at last to find a journalist whom he can tell just how much he abhors the way certain media ingratiate themselves with Merkel -- how he detests this opportunist pact with power. But then he graciously praises the media for finally waking up last year and treating Europe in a manner that clearly demonstrates the extent of the problem.

"The political elite have actually no interest in explaining to the people that important decisions are made in Strasbourg; they are only afraid of losing their own power,"  he says, before being accosted by a woman who is not entirely in possession of her faculties. But that's how it is at such events -- that's how things go with coercion-free discourse. "I don't fully understand the normative consequences of the question," says Habermas. The response keeps the woman halfway at a distance.

He is, after all, a gentleman from an age when having an eloquent command of the language still meant something and men carried cloth handkerchiefs. He is a child of the war  and perseveres, even when it seems like he's about to keel over. This is important to understanding why he takes the topic of Europe so personally. It has to do with the evil Germany of yesteryear and the good Europe of tomorrow, with the transformation of past to future, with a continent that was once torn apart by guilt -- and is now torn apart by debt.

 Without Complaint

In the past, there were enemies; today, there are markets  -- that's how the historical situation could be described that Habermas sees before him. He is standing in an overcrowded, overheated auditorium of the Université Paris Descartes, two days before the evening at the Goethe Institute, and he is speaking to students who look like they would rather establish capitalism in Brussels or Beijing than spend the night in an Occupy movement tent.

After Habermas enters the hall, he immediately rearranges the seating on the stage and the nametags on the tables. Then the microphone won't work, which seems to be an element of communicative action in practice. Next, a professor gives a windy introduction, apparently part of the academic ritual in France.

Habermas accepts all this without complaint. He steps up to the lectern and explains the mistakes that were made in constructing the EU. He speaks of a lack of political union and of "embedded capitalism," a term he uses to describe a market economy controlled by politics. He makes the amorphous entity Brussels tangible in its contradictions, and points to the fact that the decisions of the European Council, which permeate our everyday life, basically have no legal, legitimate basis.  He also speaks, though, of the opportunity that lies in the Lisbon Treaty of creating a union that is more democratic and politically effective. This can also emerge from the crisis, says Habermas. He is, after all, an optimist.

Then he's overwhelmed by the first wave of fatigue. He has to sit down. The air is stuffy, and it briefly seems as if he won't be able to continue with his presentation. After a glass of water, he stands up again.

He rails against "political defeatism" and begins the process of building a positive vision for Europe from the rubble of his analysis. He sketches the nation-state as a place in which the rights of the citizens are best protected, and how this notion could be implemented on a European level.

 Reduced to Spectators

He says that states have no rights, "only people have rights,"  and then he takes the final step and brings the peoples of Europe and the citizens of Europe into position -- they are the actual historical actors in his eyes, not the states, not the governments. It is the citizens who, in the current manner that politics are done, have been reduced to spectators.

His vision is as follows: "The citizens of each individual country, who until now have had to accept how responsibilities have been reassigned across sovereign borders, could as European citizens bring their democratic influence to bear on the governments that are currently acting within a constitutional gray area."

This is Habermas's main point and what has been missing from the vision of Europe: a formula for what is wrong with the current construction. He doesn't see the EU as a commonwealth of states or as a federation but, rather, as something newIt is a legal construct that the peoples of Europe have agreed upon in concert with the citizens of Europe -- we with ourselves, in other words -- in a dual form and omitting each respective government. This naturally removes Merkel and Sarkozy's power base, but that's what he's aiming for anyway..

Then he's overwhelmed by a second wave of fatigue. He has to sit down again, and a professor brings him some orange juice. Habermas pulls out his handkerchief. Then he stands up and continues to speak about saving the "biotope of old Europe."

There is an alternative, he says, there is another way aside from the creeping shift in power that we are currently witnessing. The media "must" help citizens understand  the enormous extent to which the EU influences their lives. The politicians "would" certainly understand the enormous pressure that would fall upon them if Europe failed. The EU "should" be democratized.

His presentation is like his book. It is not an indictment, although it certainly does at times have an aggressive tone; it is an analysis of the failure of European politics. Habermas offers no way out, no concrete answer to the question of which road democracy and capitalism should take.

 A Vague Future and a Warning from the Past

All he offers is the kind of vision that a constitutional theorist is capable of formulating: The "global community" will have to sort it out. In the midst of the crisis, he still sees "the example of the European Union's elaborated concept of a constitutional cooperation between citizens and states" as the best way to build the "global community of citizens."

Habermas is, after all, a pragmatic optimist. He does not say what steps will take us from worse off to better off.

What he ultimately lacks is a convincing narrative. This also ties Habermas once again to the Occupy movement. But without a narrative there is no concept of change.

He receives a standing ovation at the end of his presentation.

"If the European project fails," he says, "then there is the question of how long it will take to reach the status quo again. Remember the German Revolution of 1848: When it failed, it took us 100 years to regain the same level of democracy as before."

A vague future and a warning from the past -- that's what Habermas offers us. The present is, at least for the time being, unattainable.

Summary - A nice old man that truly believes in the concept of people even if he doesn't like them individually.  A man scarred by Hitler's war that found solace in Marx and neither understands nor accepts capitalism.  A man that rails against the nation-state's leaders and yet supports the nation-state and yet craves a supra-national international state.... and all the time failing to grasp that everytime a crowd forms some intellectual heir of Ralph Klein will run to its head and take it wherever they will let him.   And the less they pay attention the farther Ralph Jr. will be able to go.

Halbermas reminds me a lot of a recent Canadian philosopher with internationalist tendencies.

Edit:  It is especially interesting to note his desire and intention to use the media to talk over the elected governments to the masses to undermine the authority of the nation-state.  And that undermining of the nation-state, by squeezing them between the twin jaws of supra-national institutions (like the EU and the UN), and "subsidiarity" (the nominal demand for decentralization of nation-state powers to their citizens so as to reduce the nation-states impact on their lives), that desire to deprive the nation-state of authority is key to the EU project and to the Socialist International project generally.

It has also been key to the Holy Roman Empire, the Catholic (Universal) Church and the Communist International - It is all about the Propagation of Faith.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on January 07, 2012, 09:55:14
Lord Black on the one leader who did turn things around for the UK (and if a similar leader were to emerge, perhaps again):

http://www.nationalpost.com/todays-paper/iron+lady+vindication/5960844/story.html

Quote
An iron lady's vindication
Margaret Thatcher attends a 1980 summit in Paris.

Gabriel Duval, AFP, Getty Images

Margaret Thatcher attends a 1980 summit in Paris.

    Twitter
    Email
    inShare

Conrad Black, National Post · Jan. 7, 2012 | Last Updated: Jan. 7, 2012 5:31 AM ET

Though it is probably happening too late to be overly gratifying to her, events are piling on to vindicate Margaret Thatcher completely in her reservations about British integration in Europe. Her response to the proposal to reduce Britain to a local government in a federal Europe was, memorably: "No, no, no, and never." And her reward for her refusal to get on board what was then the thundering bandwagon of Eurofederalism, was to be sent packing by her own ungrateful party, though she was the only British political leader who had won three consecutive, full-term election majorities since before the First Reform Act expanded the electorate in 1832.

She was immensely popular with millions of Britons as a patriotic and courageous leader who took Britain off financial life support, saved it from strangulation by overmighty, almost anarchistic unions, built a prosperous, home-owning democracy, threw the Argentinians out of the little corner of the British Empire they had wrongfully seized (the Falkland Islands), and played a starring role in winning the Cold War.

But Thatcher was virulently unpopular with some influential groups. In particular, there were those who resented a female leader. A swath of males, from the "luvvies" of the British entertainment and cultural scene to Euroleaders and left-leaning journalists, were so frightened in her presence, they seemed to fear being hand-bagged, or even having a hair-brush taken to them.

And as she liberalized the economy; imposed a free, secret ballot for labour strikes; lowered all taxes; privatized industry, housing, airports, almost everything except the National Health Service and the BBC; jolting economic growth resulted. Unfortunately, its most conspicuous exemplars included many successful entrepreneurs and financier types who offended British sensibilities by their garish and spivvy ostentation. The basis of Margaret Thatcher's support was the Daily Telegraph-reading, gin and tonic-drinking, cricketloving middle class, the backbone of the nation. But her enemies identified her with an infelicitous combination of Colonel Blimp fuddy-duddies and sticky-fingered, vulgar parvenus.

She had a somewhat hectoring manner in debates, and was notoriously impatient with what she considered pusillanimity from senior colleagues, sometimes calling cabinet members "blancmanges," or "suet puddings," or even "spineless, boneless, men" (not necessarily inaccurately). Naturally less known was her exquisite courtesy and unaffected and egalitarian kindness to subordinates and strangers. It annoyed feminists that she was such a traditionalist, and weak men that she was a strong woman. But she triumphed by perseverance and courage; to the end, though a stirring speaker, she was nervous before a speech. She was a strong woman, but not at all a mannish one.

Because she was the first British female party leader, and the first in any important Atlantic country, and such a formidable character, Margaret Thatcher's personality encroached upon her public record as the principal source of voter opinion about her. She is rivalled only by Churchill, Disraeli, Walpole, Pitt (the Elder), Wellington and Palmerston as the greatest personality among the 53 people who have been the British prime minister, but she has even fewer rivals as the greatest of them.

When she came to office in 1979, it was because only she had dared challenge the twice defeated former prime minister Edward Heath for the Conservative leadership, and because she dared to propose a sharp break from the bipartisan consensus for softleft, high-tax, social democratic government. Britain was under daily audit from the IMF; currency controls prevented anyone from taking more than a few hundred pounds out of the country; and in the "winter of discontent" preceding the 1979 election, the garbage collectors, undertakers, transport workers and electric utility unions had all been on strike. The national newspapers never knew from one day to the next if they could publish the next day over the whims of the shop stewards; the railway and coal workers' union leaders had shown their ability to bring the government to heel.

Thatcher cut personal income taxes, forced democracy on unions, and broke those that imposed illegal closed shops and secondary boycotts. British Airways went from horrifying losses as a stateowned concern to huge profits and general recognition as the world's finest airline, once in private hands. British Steel followed a parallel path. Millions of slovenly tenants in tumble-down council houses became proud home-owners. Investment skyrocketed and London surged back to world financial leadership as Thatcher broke up the little log-rolling, back-scratching association of accepting houses (merchant banks) at the feet of the governor of the Bank of England.

When Argentina seized the Falkland Islands, Thatcher took great risks in sending two of the world's largest liners (the Queen Elizabeth 2 and the Canberra), crammed with soldiers, into a war zone, and sent practically the entire Royal Navy to take the islands back. (As an unintended bonus, she also restored democracy to Argentina.)

When her polls were low and traditional elements of her government and caucus were wobbling badly, she sacked a handful of ministers despite a slender parliamentary majority, and told her own party conference: "U-turn if you want; the lady's not for turning." She was instrumental in assuring the installation of intermediate-range missiles in Western Europe in response to the Soviet Union's deployment of similar weapons, ignoring huge protests. She replied to calls for a nuclear-free Europe with her declared preference for a "war-free Europe," and carried British opinion with her. With Ronald Reagan and Helmut Kohl, and notwithstanding the wafflings of the French and opportunistic appeasers of the Kremlin such as Pierre Trudeau, she secured the intermediate missile agreement and the definitive winddown of the Cold War.

No one who heard Margaret Thatcher's spontaneous 1984 address to the Conservative Party conference at Brighton a few hours after the IRA brought much of her hotel down to rubble (almost killing her, and murdering several of her MPs), in which she foreswore any compromise with terrorists, will ever forget it.

As the privatization of state-owned industries proceeded, and unemployment temporarily rose to one million, then two, and finally three-million (before sharply declining), the London County Council, dominated by Marxists, was almost screaming for her blood. Mrs. Thatcher replied by abolishing the municipal government, put one of the greatest cities in the world under direct rule from the Home Office, sold the London government headquarters, County Hall, the largest building in the country, to Japanese developers to be turned into an aquarium, and London enjoyed better municipal administration.

She warned that one currency for all Europe, with a shared credit rating between all participating countries, would not work. She warned that fixed exchange rates would not work; that surrendering powers from Westminster to Brussels and Strasbourg wouldn't work; that importing to Britain European industrial relations, tax rates and union-dominated labour markets wouldn't work, and that subsuming British foreign policy, especially relations with the United States, into a European foreign policy wouldn't work either. In all of this, and in most other policy matters, she has been proved correct.

When Margaret Thatcher spoke at my company's annual dinner in Toronto in 1988, I introduced her as "one of the great leaders who has arisen in a thousand years of British history." This was nothing but the truth, and I can add that she is also a convivial companion and a loyal friend, as gracious out of office as in; that rarest of statesmen, a world historic figure who is also the salt of the earth.

- Margaret Thatcher was a senior member of the Hollinger International Advisory Board from 1991 to 2002, and served as Conrad Black's sponsor at his induction into the British House of Lords in 2001. The film The Iron Lady opens in theatres on Friday.

MONDAY

Richard Vinen on Thatcher's lessons for current British economic malaise
Title: Re: Why Europe Keeps Failing........
Post by: daftandbarmy on January 07, 2012, 21:47:28
Lord Black on the one leader who did turn things around for the UK (and if a similar leader were to emerge, perhaps again):

http://www.nationalpost.com/todays-paper/iron+lady+vindication/5960844/story.html

The Iron Lady had alot of help from one Ronald Reagan as well. If there was a democrat in the White House it would have been alot harder for her to have been as successful as she was.

Our Maggie: Putting the Great back into Britain!
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on January 08, 2012, 00:11:20
It was actually a trio;

Prime Minister Thatcher
President Reagan
Cardinal Karol Józef Wojtyla (later Pope John Paul 2), who provided the moral authority and support for people who stood against oppression.

And of course an outstanding cast of millions who threw off their chains and brought the Cold War to an end.
Liberty of person precedes economic liberty, as John Locke well knew:

Quote
Freedom is...a Liberty to dispose, and order, as he lists, his Person, Actions, Possessions, and his whole Property, within the Allowance of those laws under which he is; and therin not to be subject to the arbitrary Will of another...The great and chief end therefore, of Men's uniting into Commonwealths...is the preservation of their Property
Title: Re: Why Europe Keeps Failing........
Post by: daftandbarmy on January 09, 2012, 02:13:27
It was actually a trio;

Prime Minister Thatcher
President Reagan
Cardinal Karol Józef Wojtyla (later Pope John Paul 2), who provided the moral authority and support for people who stood against oppression.

And of course an outstanding cast of millions who threw off their chains and brought the Cold War to an end.
Liberty of person precedes economic liberty, as John Locke well knew:

Quote
Freedom is...a Liberty to dispose, and order, as he lists, his Person, Actions, Possessions, and his whole Property, within the Allowance of those laws under which he is; and therin not to be subject to the arbitrary Will of another...The great and chief end therefore, of Men's uniting into Commonwealths...is the preservation of their Property

"During my lifetime most of the problems the world has faced have come, in one fashion or other, from mainland Europe, and the solutions from outside it." Margaret Thatcher

Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on January 26, 2012, 10:54:54
More pessimism about Europe, by a thoughtful source, reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/news/opinions/opinion/fear-may-save-the-euro-but-not-necessarily-europe/article2315053/singlepage/#articlecontent
Quote
Fear may save the euro, but not necessarily Europe

TIMOTHY GARTON ASH

Davos, Switzerland— From Thursday's Globe and Mail
Published Thursday, Jan. 26, 2012

Angela Merkel came to Davos on Wednesday and, in a speech as solidly built as a Mercedes, once again assured the world’s business leaders that the euro will be saved. But this time, there’s a difference: More of them seem to believe it. That immediately raises two further questions: Even if the euro zone is saved, where is the strategy for growth? And where would this saving of the euro leave the larger politics of Europe?

On the euro, I find a noticeable shift in mood. Six months ago, business and political leaders were not convinced that Europe in general, and Germany in particular, would do what it takes. A gradual accumulation of piecemeal, pragmatic steps – very much in Ms. Merkel’s style – has changed the balance of sentiment. There is the decision to accelerate the introduction of the European Stability Mechanism this summer, following hard on the heels of the existing European Financial Stability Facility. There is the very active role of the IMF, another indirect way for European governments to help out (and impose conditions on) other European governments.

There are the two Marios. I recently heard one leading banker describe Mario Draghi’s initiative to give generous three-year loans from the European Central Bank to European banks as the European form of quantitative easing. Mario Monti’s professorial program for Italy has also earned plaudits. This is not an American- or Chinese-style big bazooka; the European version of a big bazooka is an array of small- to medium-sized bazookas.

The mood may swing again, even in the next few days, if the apparent impasse over Greek debt is not resolved. But one increasingly hears Greece being discounted as a special case. In case of a Greek default, the euro zone would have to move very fast to show that it would not let Portugal go the same way. But that, if achieved, could also prove a positive turning point. A line would be drawn.

Let’s assume then, for the sake of argument, that over the next six months, the euro zone is saved. Two problems arise. The first: Where is the growth to come from? The German austerity recipe provides no clear answer to that question.

Unless Europe has a growth strategy, it is in danger of falling into a deflationary debt spiral, as George Soros warned Wednesday. If economies contract and tax revenues fall, the debt burden – the ratio of accumulated debt to GDP – would actually increase. Earlier this week, the IMF came out with a revised forecast, predicting a contraction of the euro zone economy by 0.5 per cent in 2012 – with, needless to say, some countries doing much worse than others, and Britain being pulled down with it.

That takes us to the politics. If markets are about perceptions and emotions, so are democracies. If the former are about those of the few, the latter are about those of the many. And the feelings in Europe are very bad.

Read the newspapers, watch television, check out the opinion polls, listen to debates in national parliaments, watch the demos in the streets: You will find precious little of what Ms. Merkel called Wednesday “the happiness of being able to shape things together.”

There are massive resentments between nations – Greeks against Germans and Germans against Greeks; northern against southern Europeans; Brits against almost everybody; almost everybody against Brits. There is a general crisis of confidence in the European project.

If we are witnessing the euro being saved, this is a triumph of fear, not of hope. Other great moments of the European project – the introduction of the single market, successive enlargements, the launch of the euro itself – were driven by hope. Here, it is fear that has led Germany and others to do the minimum necessary: fear that the costs of collapse would be higher than the unpalatable, resented alternative of bailing out the countries in trouble.

If the euro zone does not return to growth, or does so only in a few better-placed countries, these resentments will multiply. Even if it does, there will be legacies of bitterness. More and more people will ask, “What is this Europe really for?” (Remember that the European monetary union was conceived of not just as an economic step but also, perhaps even more so, as a political one.)

There are good answers to this question, and they urgently need to be spelled out. They have to do with our negotiating power in the 21st century world of emerging, non-Western giants such as China and India; global challenges like climate change; the Arab spring, the most hopeful development of this decade; and defending (with the help of essential, managed immigration from the Arab world) the domestic achievements of the last half-century, including a certain European mix of relative prosperity, quality of life, social justice and security.

It would be foolish to pretend that the euro has been the best and straightest path to those larger goals. If the euro did not exist, it would not yet be necessary to introduce it. But it does exist, with all the design faults that have now become evident. We have to start from where we are. To go back now would be worse than to go forward. Difficult though it will be, Europeans have to correct those design faults as they go along, working within the necessary constraints of national democracies, and adding a strategy for growth.

Above all, we have to recognize that saving the euro is no substitute for the larger political project, of which it was once meant to be both core and catalyst. The politics of fear may have saved the euro. We need a politics of hope to find a European answer to the Arab Spring.

Timothy Garton Ash is professor of European studies at Oxford University.


The "great project" of the 20th century was, arguably, the reconstitution of Europe, after 2,000 years of turmoil, as a peaceful, prosperous guild of nations.

But, perhaps, the Europeans paid too small a price for both the peace and the prosperity. General Hastings Lionel "Pug" Ismay, 1st Baron Ismay, KG, GCB, CH, DSO, is credited with a pithy quote about "why NATO?" It was designed, he said, "to keep the Yanks in, the Russians out, the French up and the Germans down." It, NATO, the EU, the Euro, worked: America is, 65 years on, still propping up an economic powerhouse; Russia is a stumbling, shambling monster - no longer a fearsome giant, just worrisome troll - but it remains, safely, outside of 'the new Europe;' The French remain, inexplicably, "up," - exercising far more power than they deserve; and the Germans might not be "down" any more but they are still reluctant to take up the mantle of leadership. The Europeans did not have to work very hard, until 2010, for their newfound peace and prosperity; the Americans, and to a lesser degree, Canadians, underwrote it, subsidized it for 40 years and still pay a too large share of the "price" for a stable, rich, peaceful Europe. Now most European countries are being called upon to "pay the piper;" a few, notably Britain, Iceland and Ireland, are doing that now, a few others, including e.g. Sweden, did their "paying" before the recent crash. But many, including France and Italy, are still trying to hide from reality.

My guess is that Europe can be saved - but only after a few (10±) years of real economic pain which must be felt by ordinary people - and under new leadership which, I suspect will involve Northern European countries: Germany, Netherlands, Denmark and Britain.

Title: Re: Why Europe Keeps Failing........
Post by: GhostofJacK on January 26, 2012, 12:25:32
My feeling on why Europe is in such an economic crisis is this...

(again, this is my opinion and a moderate rant)

Back in colonial days, those that came to America (by choice) knew they had to work and work hard IOT survive and make it. That kind of mentality has been passed down through the generations to today's generations - if you work hard, you will succeed. This drained Europe of a large number of these A-type personalities leaving behind societies of people who will 'weather the storm' or take time to enjoy the pleasantries of life. I argue this latter point due to seeing too many people around me always on the go-go-go (work and take on a million projects, get home, take the kids to karate and hockey, goto yoga class, pick kids up, do some paperwork before bed and repeat).

My feeling, especially for countries like Greece and France, is that there is no work ethic as we Westerners call it. They enjoy a fine wine, long dinners and relaxation. From what I know (based on many of my immigrated friends) is that they love family time and almost reserve time every day to relax. Therefore you get people who work because they have to and put it as not a big priority in life. This is passed down to those same people not making the oodles of cash that gets you the new car every 3yrs, the new house every ten, a new flatscreen TV every year and all the toys everytime they come out. Not having the money to do this prevents the government from gaining money through taxation such as income tax and sales tax.

The west is a very 'now' society. We -have- to know what our friends are doing on momentary basis with Twitter and Facebook. Our workplace is so sped up that we cannot physically go around to our departments to see what their status is and rather send out blanket emails for insant responses. Meanwhile, from what I view, Europeans have an opinion where 'what can't be dones today can be done tomorrow'.

Finally, the West has helped foster the impotency of Europe. It was told to me by a Bosnian vet that we (UN) went in there and gave them whatever they needed to build themselves up again. They needed a generator, water treatment plant, school, whatever? We just gave it to them. We did not make them do it themselves and therefore, as he described, it made Bosnia a welfare nation where they expected handouts rather than do it themselves. The same goes for the rest of Europe militarily. I'd say that after WW2, the big super-army of the US could protect all of Europe. Afterall, communism was bad so they even had a fully manned base out in Germany for a long time. Little France could go to the playground where the communist kids played and if they were given any grief, they could call in their big, bad, enforcer brother, the USA. After the Wall fell, this mentality continued until even Afghanistan where the US, Canada and UK took the volitile south while the other NATO countries 'did their part of contribution' and deployed to the safer regions.

Now I hear many of my friends complaining about the European debt crisis and how it is affecting them. Surely, even the 'we don't need them in NATO' topic comes up and there is more grumbling to be had. Sure, I may agree that the whole purpose of NATO is invalid now (protect against the Soviets) but until that is addressed politically, there is no sense in fretting about it now. As for their economic influence on our markets, all I say to them is 'that is the price of being a part of a global village'. Our economies are so intertwined together that if you drop one pebble in the pond, everyone will feel the ripples.


Now I welcome anyone who wishes to fire back at an inaccuracies or misconcerptions I have. I just remind that is it only my opinion and it can be swayed with logical argument rather than statements like 'You are an uneducated moron, Jack'. In fact, I welcome if anyone can shed light in an area I do not know a lot about.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on January 26, 2012, 14:27:04
TGA per ERCampbell
Quote
... “What is this Europe really for?”  (Remember that the European monetary union was conceived of not just as an economic step but also, perhaps even more so, as a political one.)

There are good answers to this question, and they urgently need to be spelled out. They have to do with our negotiating power  in the 21st century world of emerging, non-Western giants such as China and India; global challenges like climate change; the Arab spring, the most hopeful development of this decade; and defending (with the help of essential, managed immigration from the Arab world) the domestic achievements of the last half-century, including a certain European mix of relative prosperity, quality of life, social justice and security.

Or to summarize: Europe is about power for the few and a quiet life for the many.



Michael White, The Guardian, Thursday 26 January 2012 10.21 GMT
Article Link (http://www.guardian.co.uk/world/2012/jan/26/britain-proud-home-euroscepticism?intcmp=122)

Quote
...Under Thatcher and Reagan, Anglo-Saxon capitalism lurched away from the post-war social democratic consensus towards free markets and free trade. It was exactly what many continental mercantilists – more inclined to managed and protected markets and Catholic "social solidarity" – instinctively mistrusted....

Suffice it to say I am at one with Thatcher, Reagan and "British" capitalism. (Anglo-Saxon in this sense being a pejorative devised by Franco-Saxons with long standing grievances against their fellow Saxons).

This comes from a lifetime of being influenced by quotes of this sort:

Robert Burns, "A Man's a man, for a' that"

Quote
The coward slave-we pass him by,
We dare be poor for a' that!

or as Benjamin Franklin would have it:

Quote
They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.

or Robert Heinlein

Quote
TANSTAAFL
Title: Re: Why Europe Keeps Failing........
Post by: Colin P on January 26, 2012, 14:42:19
The concept of good debt and bad debt is an established practice as is the non-payment of debt by companies. People, companies and corporations are routinely not paying their debts, it’s called bankruptcy. Once you declare bankruptcy you are protected from most debt, but at a price, you lose assets and the ability to borrow credit. The problem is that most citizens of these countries want the debt erased and then carry on as if nothing happened.
An example of “Odious debt” is the bill rung up by Saddam in the Iran-Iraq war. I firmly believe that France, China and Russia know that as soon as Saddam fell, so would the chances of being paid for the debts that he owed. To be fair to the Iraqi’s they had little say in the finances of Saddam and the named countries forwarded credit to someone that was not legitimately elected and therefore own a lot of the risk.
However in a Democracy, the people “own” the majority of that debt as the governments acted on their behalf, with their consent. So if the people wish to disown some of that debt, they must be willing to bear the consequences of that act. This is why I wanted the Greeks to have a referendum, as they needed to “own the problem” Currently I think they are not accepting the reality of their situation.   
Title: Re: Why Europe Keeps Failing........
Post by: GhostofJacK on January 26, 2012, 15:05:40
Didn't know that angle before, Colin. Thx!  :D
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on February 10, 2012, 10:59:45
An interesting perspective on German "leadership" in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/news/opinions/opinion/germans-squirm-in-the-european-drivers-seat/article2331261/
Quote
Germans squirm in the European driver’s seat

TIMOTHY GARTON ASH

From Thursday's Globe and Mail
Published Thursday, Feb. 09, 2012

In 1953, novelist Thomas Mann appealed to an audience of students in Hamburg to strive for “not a German Europe but a European Germany.” This stirring pledge was endlessly repeated at the time of German unification.

Today, we have a variation that few foresaw: a European Germany in a German Europe.

Chancellor Angela Merkel’s Berlin republic is a European Germany, in the rich, positive sense in which the great novelist had come to use the term. It is free, civilized, democratic, law-bound, socially and environmentally conscious.

It’s far from perfect, obviously, but as good as any other big country in Europe – and the best Germany we’ve ever had.

Yet because of the crisis of the euro zone this European Germany finds itself, unwillingly, at the centre of a German Europe. No one can seriously doubt that Germany is calling the shots in the euro zone. The reason there is a fiscal compact treaty agreed by 25 European Union member states is that Berlin wanted it. Desperate, impoverished Greeks are being told “do their homework” by Germans. More extraordinary still, the German Chancellor is now telling French voters who to vote for in their own presidential election, through a series of campaign appearances with President Nicolas Sarkozy. Everyone says Europe is being led by “Merkozy” but the reality is more like “Merkelzy.”

Germany did not seek this leadership position. Rather, this is a perfect illustration of the law of unintended consequences. German leaders, from Helmut Schmidt to Helmut Kohl, had envisaged advancing the European project through a European monetary union, but it was François Mitterrand’s France that insisted on pinning Germany down to it. Historians can argue about how far the commitment in the Maastricht Treaty was a direct quid pro quo for French support for German unification, but two things are clear. Both sides of the Rhine agreed that this was an important part of binding a newly united Germany into a more united Europe, in which France would continue to play a – if not the – leading role. And many Germans saw giving up their precious deutschmark as paying an economic price for a larger political good.

Twenty years on from Maastricht, we see that the precise opposite has happened. Economically, the euro turned out to be very good for Germany.

Politically, it is precisely the monetary union that has put Germany in the driver’s seat and relegated France to the front passenger seat.

So far, Germany is proving a reluctant, nervous and not very skillful driver.

There are many reasons for this. One of these is not wanting to be in the driving seat in the first place. Another is suspecting that everyone else in the car wants you to pay for the gas, the meal and probably the hotel too.

Then there is the unhappy sense that they are damned if they do lead and damned if they don’t. The terrible history that prompted Mann’s postwar appeal plays a role here. If Germany suggests a commissar to oversee Greek budget cuts, he inevitably gets called a gauleiter. Then there is the fact that the German elite simply is not used to playing such a leadership role in Europe, unlike the French elite, who like nothing better. The French want to, but can’t; the Germans can, but don’t want to.

Above all, there is the perennial dilemma of Germany’s awkward, in-between size: “too big for Europe, too small for the world” said Henry Kissinger.

Even with the most self-confident, adroit elite, and even without the memories of 1914-1945, leadership from that in-between position would be difficult.

Two things are therefore needed. First, all Germans should go back and read Mann’s short talk, both to understand the historical dimension of today’s challenge and to recall the intellectual and moral grandeur that was once theirs. For Mann’s beautifully crafted, profoundly moving message to those young Germans in 1953 can also be summarized in three short American words: “Yes we can.”

Second, they need a lot of help from their friends. They won’t manage it on their own. We may laugh at Sarko’s antics in the front passenger seat (“Non, non, ma chérie! Tout droit, tout droit!”), but he’s got the right idea. For Prime Minister David Cameron to consign Britain to the back seat of the European car at this critical moment is folly beyond words. Earlier this week, Ms. Merkel again stressed how much Germany wants to see this fellow northern European, free-market liberal country return to the heart of European affairs.

Back in Hamburg in 1953, the British were doing everything they could, in a far from ignoble way, to help ruined Germany back on its feet. It would be so shortsighted, so plain dumb, for Britain to abandon Germany to its own devices just when it finds itself playing such a decisive role in Europe – a role that it did not seek, for which it is ill-prepared and in which it needs all the help it can get.

Timothy Garton Ash is professor of European studies at Oxford University.


I'm not sure that history supports Timothy Garton Ash's penultimate and final paragraphs: Britain has never done well on the continent except as an interested outsider; Cameron may be playing his cards very well.

As for Merkel: there's no room for anyone useful in the front seat until she pushes France out. German's natural partners in the front seat are Austria, Finland, the Netherlands and, indeed, Britain; but there is no room for any of them and their good, sound economic practices, so long as France plays a leading role. France, Italy, Spain, Portugal and Greece are the problem, not the solution.
Title: Re: Why Europe Keeps Failing........
Post by: Good2Golf on February 10, 2012, 11:42:56

...As for Merkel: there's no room for anyone useful in the front seat until she pushes France out. German's natural partners in the front seat are Austria, Finland, the Netherlands and, indeed, Britain; but there is no room for any of them and their good, sound economic practices, so long as France plays a leading role. France, Italy, Spain, Portugal and Greece are the problem, not the solution.

Concur.  Latin heritage is great in the bedroom, not so much in one's bank account.  Nordic-Teutonic heritage has a practical value that holds the key to long-term stability on the continent.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on February 10, 2012, 12:26:43
Which is least unsafe?

Option A - To be in a vehicle with a Latin and a Teuton fighting it out for control of the wheel?
Option B - To be at the side of the road watching a vehicle coming at you with a Latin and a Teuton fighting it out for control of the wheel?
Option C - To be driving on a road with two other vehicles, one with a Latin at the wheel and the other with a Teuton at the wheel?
Option D - To go to the Pub.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on February 10, 2012, 13:07:22
Which is least unsafe?

Option A - To be in a vehicle with a Latin and a Teuton fighting it out for control of the wheel?
Option B - To be at the side of the road watching a vehicle coming at you with a Latin and a Teuton fighting it out for control of the wheel?
Option C - To be driving on a road with two other vehicles, one with a Latin at the wheel and the other with a Teuton at the wheel?
Option D - To go to the Pub.


The correct answer is B followed, after the inevitable crash, by D. After D the new correct option is:

Option E - Buy a new car, let the Dutchman drive, the Brit navigate and the Teutons and Vikings pay of the gas, the meal and the hotel, too, as Timothy Garton Ash puts it.
Title: Re: Why Europe Keeps Failing........
Post by: Colin P on February 10, 2012, 16:09:26
Which is least unsafe?

Option A - To be in a vehicle with a Latin and a Teuton fighting it out for control of the wheel?
Option B - To be at the side of the road watching a vehicle coming at you with a Latin and a Teuton fighting it out for control of the wheel?
Option C - To be driving on a road with two other vehicles, one with a Latin at the wheel and the other with a Teuton at the wheel?
Option D - To go to the Pub.

I am so using this on my blog (with your kind permission of course)  :)
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on February 10, 2012, 17:38:30
I am so using this on my blog (with your kind permission of course)  :)

Go for it.  :)
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on February 15, 2012, 11:25:41
From the Telegraph's Debt Crisis Blog (http://www.telegraph.co.uk/finance/debt-crisis-live/9083194/Debt-crisis-and-Greek-talks-live.html)

Quote
13.50 Spain has confirmed it will submit its budget to the EC only after regional elections in Andalucia on March 25.
 
Is it just me or are elections in numerous countries this year (US, France, Spain, Greece) getting in the way of sorting out the financial crisis?
 

Quote
13.20 Big news now. Eurozone finance officials are examining ways of delaying parts or even all of the second bail-out programme for Greece while still avoiding a disorderly default, several EU sources have told Reuters. Delays could possibly last until after the country holds elections expected in April, they said.
 
While most of the elements of the package, which will total €130bn, are in place, eurozone finance ministers are not satisfied that Greece's political leaders are sufficiently committed to the deal, which requires Athens to make further spending cuts and introduce deeply unpopular labour reforms.
 
It is also not clear that Greece's debt-to-GDP ratio, which currently stands at around 160pc, will be cut to 120pc by 2020 via the agreement, as demanded by the 'troika' of the European Commission, IMF and European Central Bank.
 
There are proposals to delay the Greek package or to split it, so that an immediate default is avoided, but not everything is committed to. They'll discuss the options. There is pressure from several countries to hold off until there is a concrete commitment from Greece, which may not come until after they've held elections.
 

Quote
.....Governments are instituted among Men, deriving their just powers from the consent of the governed.....
  Some bunch of rebellious Yanks ca 1776.

Memo to Merkozy et al - you probably would have been better off letting Papandreou have his referendum.  You are all going to be judged by your citizenry in any event - including those that don't usually vote.

Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on February 15, 2012, 13:50:28
From the Telegraph's Debt Crisis Blog (http://www.telegraph.co.uk/finance/debt-crisis-live/9083194/Debt-crisis-and-Greek-talks-live.html)
  Some bunch of rebellious Yanks ca 1776.

Memo to Merkozy et al - you probably would have been better off letting Papandreou have his referendum.  You are all going to be judged by your citizenry in any event - including those that don't usually vote.


Very true ... remember Mark Carney's comments back then, he was right, too.

The Greeks are being asked to sacrifice a lot ... they need to understand how and why and they need to understand the alternatives and the consequences. When they do they can, should, in my opinion, must decide for themselves: a bailout with painful conditions or a default which might be even more painful.

Ditto, by the way, Italy, Spain, Ontario and Québec and, and, and ... including California, amongst others.
 
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on February 15, 2012, 20:09:09

More in the same vein ERC...

From the Telegraph (http://www.telegraph.co.uk/finance/debt-crisis-live/9083194/Debt-crisis-and-Greek-talks-live.html) again


Quote
20.33 We are hearing rumours  that Germany, the Netherlands and Finland want guarantees from small Greek political parties that the bail-out measures will be kept in place, or for the elections in April to be called off.
 
20.22 A eurozone government source has reportedly told Dow Jones that both a troika presence and an escrow account is needed in Greece before a bail-out can proceed. An escrow account would ensure Greece gives priority to debt servicing.
 

And.....

Quote
16.03 German Finance Minister Wolfgang Schaueble has got involved in Greek politics just before a teleconference on a second bail-out for the debt-stricken country. He told SWR2 radio:
 
When you look at the internal political discussions in Greece and the opinion polls, then you have to ask who will really guarantee after the elections… - and I find this very alarming - … that Greece continues to stand by what we are now agreeing with Greece. I am also not yet sure that all political parties in Greece are aware of their responsibility for the difficult situation their country is in.
 

Quote
18.36 More on Greek President Carolos Papoulias'  attack on German Finance Minister Wolfgang Schaeuble (16.58). During a visit to the defence ministry, the Second World War veteran  also said:
 
"I do not accept having my country taunted by Mr [Wolfgang] Schaeuble, as a Greek I do not accept it. Who is Mr Schaeuble to taunt Greece? Who are the Dutch? Who are the Finns? We always had the pride to defend not only our freedom, but also that of Europe.
 


Happy Families it is not.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on February 20, 2012, 22:44:11
The north/south split is getting wider:

http://www.telegraph.co.uk/comment/columnists/christopherbooker/9090332/The-European-project-is-splitting-apart-at-the-very-core.html

Quote
The European project is splitting apart at the very core
A gulf is growing between France and Germany over the future of the eurozone.

By Christopher Booker7:00PM GMT 18 Feb 2012244 Comments

Behind all the spin, smoke and fury of recent days, we see unfolding the greatest crisis in the history of the “European project”. What is emerging is a fundamental split which threatens to inflict on it by far the most serious reverse in its 62-year history. It is apt that this conflict should centre on what was always designed to be the supreme symbol of the drive to full European integration, the euro.

As Greece plunges into meltdown – its economy shrinking by more than a fifth, Athens burning, 200,000 businesses already closed or on the brink, unemployment approaching 25 per cent – it is clear that the EU is separating into two irreconcilable camps. On one hand, the defenders of the orthodoxy, led by the Commission and supported by France (which is exposed to a Greek default more than any other country), is battling to hold the line with another massive bail-out. They know that for Greece to leave the euro would be an unprecedented defeat for integration, with almost unimaginable consequences as other overborrowed countries follow suit. To avert this they are prepared to work as closely as possible with the puppet prime minister the EU has imposed on Athens to do its bidding.

On the other hand, it becomes increasingly clear that Germany, supported by Holland and Finland, has had enough. They see no point in throwing colossal sums of money into what Germany’s finance minister, Wolfgang Schäuble, calls “the bottomless pit” of Greek debt. It is they who have wanted to pile ever more impossible demands on Greece to hurry on a default. If other debtor countries such as Portugal, Italy and Spain follow suit and leave the euro that they should never have been allowed to join – so be it.

What makes this moment so significant is not just that the disintegration of the eurozone will be by far the most serious check to the hitherto seemingly irresistible drive for “ever closer union”, but that it marks the rending apart of that Franco-German alliance which has been seen, ever since the Elysee Treaty of 1963, as the central “motor” of European integration. As the slow-motion crisis inches towards breaking point, France and the European institutions are on one side of an unbridgeable divide, and Germany and its increasingly restive people on the other. The latter see that the gamble of the euro has failed just as dismally as the Bundesbank had warned it would back in the 1980s – before being ruthlessly outmanoeuvred by Jacques Delors and Helmut Kohl.

National interest is reasserting its sway over a project that was inspired, above all, by the desire to suppress national interest. However the chips fall in coming days and months, the eurozone will disintegrate. The European dream has entered a nightmare stage from which there is no rational escape and the consequences will be horrendous, for Europe and the world.

Britain, itself sitting on a national debt which has doubled in five years and is still rising, is scarcely even a bit-player on the edge of this tragedy. If only Edward Heath could look up to see where his hubris has led us to.
Alex Salmond’s wind scam doesn’t ruffle Cameron

When David Cameron flew to Edinburgh for his testy exchanges over Alex Salmond’s plans for a referendum on Scottish independence, one rather important issue was not on the agenda. The same day, National Grid Plc announced that it is to spend £1 billion on the world’s longest undersea interconnector cable between Ayrshire and Cheshire, to enable Scotland to send up to 2.2 gigawatts of electricity down to England (with another to follow, down the east coast).

The declared purpose of these cables – in line with Mr Salmond’s pledge that Scotland will have enough wind turbines, within eight years, to ensure that 100 per cent of its electricity needs are met from renewables – is that all the surplus power they produce when the wind is blowing at adequate speeds can be exported to the English. What gets left out of this rosy picture (as I reported on January 21) is that, when Mr Salmond has closed down all Scotland’s nuclear and fossil-fuel power stations and the wind is not blowing at the right speed, the Scots will be relying on those same cables to import some three-quarters of the power they need from conventional power stations in England.

Furthermore, thanks to the ludicrous subsidies for wind energy, the Scots will be able to sell their electricity to the English at two to three times the price they pay for the much larger amount of power they import. This almighty rip-off will be paid for by the English through their electricity bills (not to mention the £2 billion cost of those two cables). Of course Mr Cameron – with his enthusiasm for windmills of the type which earn his father-in-law £1,000 a day – would not worry about a little thing like that.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on March 21, 2012, 11:38:32
Maybe, if this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail is to be believed, Britain is turning the corner:

http://www.theglobeandmail.com/report-on-business/international-news/uk-cuts-income-tax-sees-economy-picking-up/article2376242/
Quote
U.K. cuts income tax, sees economy picking up

MATT FALLOON AND SVEN EGENTER

London— Reuters
Published Wednesday, Mar. 21, 2012

British finance minister George Osborne cut personal income taxes but aimed new levies on the wealthy on Wednesday, taking a political gamble while pledging to stick to his government’s tough austerity plan.

He also said that Britain’s economy was improving, although growth is set to remain very modest this year.

In a move that will please his own Conservative party, he cut a 50 per cent income tax band for the highest earners to 45 per cent, from next year on. The Conservatives say that high a levy is a barrier to aspiration. The Labour opposition say it is a fair way to spread the pain.

In a nod to the Liberal Democrats, the junior coalition partner, Osborne raised the income tax threshold by more than previously announced to £9,205 ($14,300 U.S.), taking more poorly paid people out of the tax net.

Mr. Osborne also introduced a new 7 per cent stamp duty rate on sales of property worth more than £2 million. But he cut corporation tax 2 pence to 24 pence in April.

“We’ll be getting five times more money each and every year from the wealthiest in our society,” he said, in a statement opponents are likely to challenge.

Mindful of the risk that heavily indebted Britain could lose its prized top-notch credit rating, Osborne said there was no room to soften the plan of unprecedented spending cuts and tax increases, aimed at reducing sky-high debts.

A shock jump in public sector borrowing to a new record in February, released ahead of the budget statement, provided a stark reminder that the chancellor of the exchequer had no money to provide the fragile economy with a significant boost.

“This budget reaffirms our unwavering commitment to deal with Britain’s record debts,” Mr. Osborne said in his budget speech to parliament.

Despite the ongoing risks from the euro zone debt crisis, Britain’s economy was set to avoid a renewed recession and growth is expected to pick up in coming years, Mr. Osborne said.

The coalition government of Conservatives and Liberal Democrats also remained on track to meet its fiscal targets to erase the budget deficit - which topped 11 percent before it took office - within the next five years.

In November, the ongoing economic weakness had forced Mr. Osborne to add two more years of austerity after the 2015 election and pointing to a much slower recovery than they expected when they took power in 2010.

Ratings agencies have warned Britain that it could be downgraded, with apparently only Mr. Osborne’s unwavering determination to cut the deficit keeping them onside for now.

Britain has been hit hard by the 2007-2009 financial crisis and had to spend tens of billions to bailout major banks.

The recovery from the steep slump has been very weak, with the economy still running well below its pre-crisis peak and the unemployment rate at its highest in 16 years.

Many Britons have experienced the worst squeeze on their living standards in at least a generation as price rises outpaced meagre wage growth and the government’s tax increases and austerity measures are eating into households budgets.

But in recent weeks, the overall mood among businesses is slowly improving after taking a severe knock from the euro zone crisis at the end of last year.

The government’s Office for Budget Responsibility forecast that growth should pick up from the 0.8 per cent predicted for 2012 to 2.0 per cent next year and 2.7 per cent in 2014, leaving its November predictions largely unchanged.

The government’s Office for Budget Responsibility forecast predicted that net borrowing would fall from £126-billion in 2011/2012 to £21-billion in 2016/2017.

Overall Britain’s public sector debt as share of gross domestic product (GDP) will peak at 76.3 per cent in 2014/15 before falling, fulfilling the second part of the fiscal target.

Any hopes for stimulus still rest squarely with the central bank and Wednesday’s minutes suggested those chances of more money printing are receding.

Minutes from the Bank of England’s latest meeting, also released on Wednesday, showed rising concerns about oil prices and future wage inflation, in a sign that the central bankers may be reluctant to extend quantitative easing beyond the current target of £325-billion.


There is no relief for defence in this budget and my guess is that absent an Argentine invasion of the Falklands, and even if there is a dramatic economic recovery, Britain will still demand some major cuts in defence.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on April 23, 2012, 05:51:22
If, and it's still a big IF, Britain is "turning the corner" in the right direction then France appears to be veering left, in the fundamentally wrong direction, according to this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/news/world/a-surge-from-frances-right-as-sarkozy-hollande-prepare-to-face-off/article2410319/
Quote
A surge from France's right as Sarkozy, Hollande prepare to face off

DOUG SAUNDERS

LONDON— From Monday's Globe and Mail
Last updated Monday, Apr. 23, 2012

Europe’s simmering mood of anti-establishment anger seemed to erupt into French politics as voters turned their backs on conservative President Nicolas Sarkozy with a first-round presidential election result that was polarized between strong centre-left support and a resurgent extreme right that received a record fifth of the vote.

In a rare exception to the solid wall of conservative blue that covers much of Europe’s political map, Socialist Party leader François Hollande captured 28.5 per cent of the vote, ahead of Mr. Sarkozy’s 26 per cent, according to projections. Even these modest returns required both major candidates to deliver messages of stark anti-Europe and anti-capitalist anger, often in a reversal of their traditional more moderate positions, just in order to keep up with the more extreme parties.

The two will face each other in a May 6 runoff vote, and the next two weeks could prove a pitched battle to capture votes from an angry two-fifths of the electorate who, apparently alarmed by globalization, immigration and the collapse of the euro, cast its lot with the parties on the fringes.

A good part of France’s anger was directed at Mr. Sarkozy himself, whose air of haughty luxury, un-presidential emotional outbursts and close relations with his German counterpart have spurred a phenomenon known as l’anti-sarkozysme. Yet there seemed to be a wider anger as well, aimed at the entire economic and political system.

The biggest shock of the evening was far-right candidate Marine Le Pen, whose National Front is hostile to religious minorities and opposed to immigration. She was projected to end up with a staggering 19.6 per cent of the vote, according to projections, a record for her party and possibly the strongest result an extreme-right party has received in a recent European election.

Though not enough to make her a final-round contender, that result means that a good part of the major candidates’ activities in the next two weeks will be devoted to trying to win the support of her voters by appealing to their fears of economic and cultural insecurity.

Mr. Sarkozy seemed to acknowledge this Sunday night when he addressed his party, the Union for a Popular Movement, to explain the poor result. “Voters have expressed fear and anxiety in the face of a new world,” he said, before using rhetoric that seemed to come from Ms. Le Pen’s speeches. “We have to protect the French way of life,” he said, framing immigration and globalization as threats.

Indeed, it sounded like an echo of the speech Ms. Le Pen gave at around the same time to a jubilant audience. “We are seeing French opinion changing,” she declared, “returning to traditional French values that Marine Le Pen embodies.”

The odds are good, but far from certain, that France’s presidency will change on May 6 from right to left for the first time since Francois Mitterrand’s 1981 victory. One projection on Sunday, by the polling firm Ipsos Mori and based on current voting intentions, shows Mr. Hollande beating Mr. Sarkozy by 54 per cent to 46 per cent.

But even Mr. Hollande is likely to be effected by the strong Le Pen showing – a large part of her success came from her appeal to working-class voters alienated by globalization, the same constituency Mr. Hollande tried to reach with his unusually left-wing campaign in which he railed at the market economy and promised to raise taxes on the wealthy and withdraw from European Union fiscal obligations.

Surveys show that the centre-right Mr. Sarkozy will pick up only half of Ms. Le Pen’s supporters in the runoff, while a fifth of her voters intend to switch to Mr. Hollande. Some of her support may have come from people casting a protest vote against the establishment, but who would rather see a Socialist win than Mr. Sarkozy. But it’s also fair to say that Mr. Hollande and Ms. Le Pen are part of the same phenomenon. They both campaigned against the established conventions of European politics, including the tight bond between German Chancellor Angela Merkel and Mr. Sarkozy that had been at the root of a euro-crisis bailout pact built around fiscal austerity and limited growth. Ms. Merkel, perhaps unwisely, had sealed the “Merkozy” relationship by endorsing her French counterpart.

Both the extreme-right leader and the Socialist Party veteran were campaigning against that European status quo. Ms. Le Pen wanted to withdraw all but completely from the euro zone and the European Union, and Mr. Hollande wanted to renegotiate the European fiscal treaty so that it was built on growth and stimulus rather than austerity.

Mr. Hollande also will gain the lion’s share of votes from far-left candidate Jean-Luc Mélenchon, who won 11 per cent of the vote after a charismatic and attention-grabbing campaign, and spent the weekend urging his followers to back Mr. Hollande in order to prevent a Sarkozy re-election.

“I call on you to come out on May 6 and beat Sarkozy without asking for anything in exchange. I urge you: don’t drag your heels, mobilize as though it were me you were sending to victory in the presidential election,” he told his backers. No such support for Mr. Sarkozy emerged from Ms. Le Pen.


The French, like the Americans, hold themselves in the highest possible regard and with even less reason. The "anti-establishment anger" is even a copy of what's happening in the USA on both ends of the political spectrum ("Occupy" vs "Tea Party") but the French copy is neither as authentic nor as productive as the American originals.

No one should be sorry to see Sarkozy go but it's a bit sad that he will be replaced by someone even worse.

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Ffc09.deviantart.net%2Ffs8%2Fi%2F2005%2F274%2F1%2F6%2FCircling_the_Drain_by_halfthelaw.jpg&hash=6a86883ac648a2cbf0eff72e8c26b609)
21st century France
Title: Re: Why Europe Keeps Failing........
Post by: GAP on April 23, 2012, 07:43:29
Germany and France were the two main proponents holding up the ultimate fate of the Eurocrisis, and if France is flushing itself out of it's position, I don't see much good coming out of Europe in the next few years.......
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on April 23, 2012, 09:02:05
Is National Front really an "extreme right" party, or is it another case of the left painting its unwelcome cousins with the "right wing" brush?
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on April 23, 2012, 09:12:49
Is National Front really an "extreme right" party, or is it another case of the left painting its unwelcome cousins with the "right wing" brush?


I'm not sure about its economics: more national socialist than conservative if I understand what little I have read. It is socially nationalist: anti-immigration, à la Enoch Powell without the intellect, maybe closer to Oswald Mosley.
Title: Re: Why Europe Keeps Failing........
Post by: Good2Golf on April 23, 2012, 12:08:59
How long do we think it will take before Germany taps out and reverts to the DM?

Regards
G2G
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on April 23, 2012, 12:42:02
How long do we think it will take before Germany taps out and reverts to the DM?

Regards
G2G


My guess is not soon, despite enormous domestic political pressure to 'decouple' from the profligate Latins; the costs of collapsing the Eurozone - and that's what a German withdrawal (followed quickly by Dutch and Finnish withdrawals) would do - would be enormous. The only question is: are the costs (to Germany) of collapsing the Eurozone greater than the costs of sustaining it?
Title: Re: Why Europe Keeps Failing........
Post by: Good2Golf on April 23, 2012, 14:21:09
Mr. Campbell,

While I think that (West) Germans do fundamentally believe that the frustrations and challenges they experienced integrating the GDR into a unified Germany were "worth it", I'm not convinced that they have mentally ruled out absorbing a little more pain a second time -- especially if that means less long-term impact (the perpetual bail-outs, etc...) on their society's quality of life/economy, i.e. de-linking themselves from the net average drain of those profligate latins on their economy.

That said, you may well be right about "not soon."  However, if someone makes the case for a second 'investment' in time and national treasure over a suitable period, Germans are pargamatic enough as a people, that they may do so.

Regards
G2G
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on May 06, 2012, 19:27:45
So, the Greeks have, finally, had the referendum they (probably) should have had 18 months ago. They have decided that they don't like hard work and saving: quelle surprise!

A few days ago former German Chancellor Gerhard Schröder wrote a newspaper article (International Herald Tribune? Straits Times? South China Morning Post? - sorry I cannot remember) in which he begged Chancellor Merkel to back away from austerity and to give the French, especially, but also the Italians and Spanish what they really want: a free ride.

Why would Schröder, a sensible enough fellow, even if he is a Social Democrat, want Germany to throw its good money after bad? Because he has a bigger fear; in the article he suggested, darkly, that buying social peace, at any price, is better that the alternative, the alternative for which, I believe, Greece just voted: fascism.

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. 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.
Title: Re: Why Europe Keeps Failing........
Post by: GAP on May 06, 2012, 19:38:49
Well, one of the items/promises of the new French president is that he will create 60,000 new government jobs by taxing the rich.....good luck on that....interesting times.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on May 06, 2012, 20:35:34
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.

Title: Re: Why Europe Keeps Failing........
Post by: Retired AF Guy on May 06, 2012, 21:18:50

A few days ago former German Chancellor Gerhard Schröder wrote a newspaper article (International Herald Tribune? Straits Times? South China Morning Post? - sorry I cannot remember) in which he begged Chancellor Merkel to back away from austerity and to give the French, especially, but also the Italians and Spanish what they really want: a free ride.

This is probably the article, in the International Herald Tribune, by Gerhard Schröder that you refer to. Re-produced under the usual caveats of the Copyright Act.

Quote
Op-Ed Contributor

Austerity Is Strangling Europe

By GERHARD SCHRÖDER

Published: May 3, 2012

BERLIN — The emergence of a united Europe is a process that has been going on for decades, characterized by progress but also by setbacks. There have been crises again and again in the history of European unification. Europe has always found an answer to these crises and come out stronger. It will be the same this time if the political actors face up to the challenges and muster the political will to overcome them.

Since the founding of the European Coal and Steel Community in 1951, the number of participating states has increased from 6 to 27. The European institutions and bodies of regulations have been steadily enlarged in parallel. For politicians in the nation states, but also on the European level, this complexity signifies a great challenge. The decision-making processes, the distribution of powers between the European Union and the nation states, and the interaction of the institutions must be simplified and regulated more clearly. Only then will it be possible to continue the integration process needed and make the European Union more capable of action.

This capability, and the ability to react more quickly to the development of financial markets, requires a European policy. The current crisis has plainly shown this. The president of the European Parliament, Martin Schulz, rightly speaks of a crisis of confidence, because people doubt the ability of democracy to solve urgent problems. The Union must overcome this crisis of confidence.

In the past months it has become clear that there are different speeds in the European Union. The gulf between countries that are able and willing to integrate more quickly, and countries that are applying the brakes has become wider. This development is not at all unusual: We have gone through many phases with different speeds.

In my time in office, Belgium, Germany, France and Luxembourg initiated a debate about security policy in Europe at the “Chocolate Summit” in 2003. Today we again need a solid core of states to push the integration process forward. More Europe, not less Europe: that must now be the goal. And the political leadership in the nation states has the responsibility to promote the European idea aggressively to the public.

This is true, for example, for growth initiatives, structural reforms and proposals to strengthen European institutions in relation to nation states. And above all it’s about enacting European decisions more democratically. At the moment the role of parliaments is decreasing, which could bring an erosion of democracy. We must resist this.

There are three areas in which European policy must be rerouted. These are the goals of the Nicolas Berggruen Institute’s Council on the Future of Europe, of which I am a founding member:

First, the direction of European economic and financial policy must change, away from pure austerity toward growth. Greece, Ireland, Portugal, Italy and Spain have made substantial progress in stabilizing their finances. But the economic and political situation in these countries shows that austerity alone is not the way to resolve the crisis. On the contrary, there is a danger of half-strangling national economies with a strict policy of austerity.

This policy conceals dangers. It delegitimizes democratic politics in the nation states that find themselves faced with protests and the growth of extremist parties. But this policy is also economically wrong for the whole Union, because developments in these states affect other export economies. Germany sells more than 60 percent of its exports within the Union. We would therefore be well advised to cushion harsh austerity measures with programs for growth. For instance, revenue from a tax on financial transactions, which I support, could be used for this.

Second, we need a program of European structural reform. The international competitiveness of E.U. states must be strengthened further because emerging countries like Brazil, Russia, India and China are catching up, but also because the disparities within the Union are too large. Bold structural reform will spur growth and create new jobs. At least, that has been our experience in Germany. With Agenda 2010 we in Germany pushed through reforms in the welfare system. Germany has changed within a few years from the “sick man of Europe” to “Europe’s engine.”

This has been helped by Germany’s unusual economic structure, which is marked by strong industry and many Mittelstand businesses. Other economies, such as France, Italy and Spain, need to follow suit with similar reforms.

And third, I believe Europe must become more politically integrated to overcome the financial crisis for the long term. The current situation makes it clear that you cannot have a common currency area without a common financial, economic and social policy. So we must work to bring about real political union in Europe with further transfer of power from the nation states.

To this end the European institutions must be reformed in the following ways:

•The European Commission must be further developed into a government elected by the European Parliament.
•The European Council must give up powers and should be transformed into an upper chamber with similar functions to the Bundesrat in Germany.
•The European Parliament must have increased powers and in future it should be elected via pan-European party lists with top candidates for the post of president of the commission.

A European Convention is part of a process of renewal that leads to Europe-wide discussions. In my time in office Germany initiated the convention to develop a European Charter of Fundamental Rights and a Constitution for Europe. The debates were about democratization, accessibility and clarification of responsibilities: the delimitation of powers between the Union and member states. Unfortunately the Constitution for Europe came to nothing, but many of its elements are present in the Treaty of Lisbon. It is now time for a core of states ready for integration to initiate a new convention for the future of Europe.

We need an integrated Europe more than ever. In global political and economic competition only a united Europe will stand a chance, because a nation state alone, even a strong Germany, is too weak. We can survive between the centers of power — the United States and China — if we continue the path to integration. Then the European Union will remain a socially, economically, culturally and politically successful community that will be a model for other regions. Europeanization is a rational political response to globalization.

Gerhard Schröder was chancellor of Germany from 1998 to 2005.

 TMS/GLOBAL VIEWPOINT

 Article Link  (http://www.nytimes.com/2012/05/04/opinion/austerity-is-strangling-europe.html?scp=1&sq=Gerhard%20Schr%C3%B6der&st=Search)
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on May 06, 2012, 21:52:44
Yes, that's it; thanks for finding it RAFG.

You will not be surprised to learn that I do not agree with Schröder's prescriptions ... Merkel was hoping to spend quite a bit of good, hard earned German money to buy time for a miracle; Schröder is proposing to spend even more German and Dutch and Finnish and ... money to buy even more time for an even bigger miracle.

I regret to inform Germany that there ain't no tooth fairy, nor can Germany buy responsibility for irresponsible, illiberal political partners. Europe must, yet again, shatter - perhaps, just this once, without another horrible, bloody European Civil War into which Britain, America, Canada, Australia et al will be dragged.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on May 06, 2012, 21:56:07
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.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on May 06, 2012, 22:10:40
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.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on May 06, 2012, 22:22:23
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.
Title: Re: Why Europe Keeps Failing........
Post by: ModlrMike on May 06, 2012, 22:26:29
Of course, France has now decided to defecate on her feet:

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

Socialist Francois Hollande wins French presidency
Title: Re: Why Europe Keeps Failing........
Post by: SeaKingTacco on May 06, 2012, 23:18:08
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.
Title: Re: Why Europe Keeps Failing........
Post by: Good2Golf on May 06, 2012, 23:40:16
Of course, France has now decided to defecate on her feet:

http://www.bbc.co.uk/news/world-europe-17975660 (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 €...  :'(
Title: Re: Why Europe Keeps Failing........
Post by: ModlrMike on May 07, 2012, 00:01:35
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?
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on May 07, 2012, 00:08:38
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.
Title: Re: Why Europe Keeps Failing........
Post by: tomahawk6 on May 07, 2012, 09:56:06
The European future is Zimbabwe where government spending is almost 98% of the GDP and hyperinflation is rampant.
Title: Re: Why Europe Keeps Failing........
Post by: milnews.ca on May 07, 2012, 13:01:31
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 (http://ca.news.yahoo.com/afraid-exultant-greek-neo-nazis-warn-rivals-203620995.html)....
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.
Title: Re: Why Europe Keeps Failing........
Post by: tomahawk6 on May 07, 2012, 23:39:43
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.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on May 08, 2012, 22:05:11
I'm not quite that pessimistic, but those who could benefit appear to be already stirring the pot a bit (http://ca.news.yahoo.com/afraid-exultant-greek-neo-nazis-warn-rivals-203620995.html)....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.
Title: Re: Why Europe Keeps Failing........
Post by: ModlrMike on May 08, 2012, 22:18:07

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.
Title: Re: Why Europe Keeps Failing........
Post by: Retired AF Guy on May 09, 2012, 22:27:35
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. (http://en.wikipedia.org/wiki/Greek_military_junta_of_1967–1974)
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on May 09, 2012, 23:16:02
Or, in the case of Greece, a return of the  Colonels. (http://en.wikipedia.org/wiki/Greek_military_junta_of_1967–1974)


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."
Title: Re: Why Europe Keeps Failing........
Post by: GAP on May 10, 2012, 08:47:41
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 (http://www.telegraph.co.uk/news/worldnews/europe/italy/9231770/Italy-cuts-the-size-of-its-army.html)
 
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
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on May 10, 2012, 08:58:35
>"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.
Title: Re: Why Europe Keeps Failing........
Post by: tomahawk6 on May 10, 2012, 10:17:28
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.
Title: Re: Why Europe Keeps Failing........
Post by: Retired AF Guy on May 10, 2012, 11:14:55
An interesting article by  Robert D. Kaplan  (http://en.wikipedia.org/wiki/Robert_D._Kaplan) over at  STRATFOR  (http://www.stratfor.com/) 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  (http://www.stratfor.com/analysis/natos-ordinary-future-robert-d-kaplan#ixzz1uN2XpxX1)

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.

 
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on May 11, 2012, 17:34:10
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
Title: Re: Why Europe Keeps Failing........
Post by: milnews.ca on May 14, 2012, 12:14:53
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 (http://www.spiegel.de/international/europe/why-greece-needs-to-leave-the-euro-zone-a-832968.html)

"Scenarios for a Greek Exit" (http://www.spiegel.de/international/europe/why-greece-needs-to-leave-the-euro-zone-a-832968-4.html)
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 ....
Title: Re: Why Europe Keeps Failing........
Post by: ModlrMike on May 14, 2012, 13:59:51
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.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on May 14, 2012, 15:35:00
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
Title: Re: Why Europe Keeps Failing........
Post by: Retired AF Guy on May 15, 2012, 13:13:00
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
thopper@nationalpost.com
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on May 15, 2012, 22:36:57
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).

Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on May 16, 2012, 08:00:01
I am sitting here, killing time in the airport lounge in KL, reading the Asian editions of various news magazines and getting more and more depressed at the level of analysis. The journalists and commentators, including Nobel laureate Paul Krugman get the signs right: Europeans don't like austerity, they don't want austerity and, given the chance, they say a resounding NO to austerity. Some, including Krugman, interpret those signs correctly and get the "map" right, too: saying NO to austerity means that the bills for years and years of overspending will come due sooner rather than later.

Greece, for example, is headed for national bankruptcy; soon - sometime in 2012 most likely, it will default on some bonds; there will not be enough money in the treasury to pay the loans (bonds) that pay pensions, civil service salaries, hospital operating costs, military salaries, electricity bills for government buildings ... Greece will try to float new bonds but no one, not even the European Central Bank will buy them, no matter how much interest is offered. ALL of Greece's commercial banks will fail because they, being the biggest holders of Greek government bonds, will be unable to pay deposits. They will lock their doors and watch as angry mobs burn down their buildings. Greeks, rioting in the streets, will storm their parliament and the presidential palace - but they'll find neither money nor food there. Hospitals will close - those able to find gas for their cars will flee to neighbouring countries; they will not be able to fly because the airport will have closed.

The army will,most likely, take over - they will renounce all of Greece's debts and print new currency. A few new, national (army backed) banks will open; someone (civil servants 'conscripted' back into service) will send out some pension cheques that will, surprisingly, not bounce - but there will not be much to buy with the money. Australia and Canada, Germany and Finland, Brazil and the USA, even China will send food aid and some money - enough to reopen the airport and restore a few essential services. In a decade or so, after other countries and the IMF and World Bank pour in billions and tens of billions and hiundreds of billions of dollars  and euros and yuan and SDRs the Greek economy will sputter back to life - but not until after babies and seniors will have starved to death and not until after hundreds, even thousands will have died in civil unrest.

Portugal is almost certain to follow suit; maybe Spain, too; it is not clear that Italy can escape and even France is in danger.

That is what is in store for Europe ~ and some commentators see that. What they don't see is why. They, the newsmagazines and the New York Times and so on, don't, maybe just don't want to understand, that there is no Santa Claus. Most of us know this; my kids figured it out when they were about four years old (coorect me if I'm wrong, MARS) but somehow we, when we grow up and when we look at real world economics, seem to forget that there is no Santa. We, the big human we that wants something for nothing, convince ourselves that we can have something for nothing ~ Santa will bring it, or maybe the perpetual motion machine will materialize. The reasons Greece is going to go bankrupt, the reason Greek senior and Greek babies are going to starve to death, is because Greeks, in their millions, refuse to believe that there is no Santa Claus.
Title: Re: Why Europe Keeps Failing........
Post by: milnews.ca on May 16, 2012, 08:37:25
.... The army will,most likely, take over - they will renounce all of Greece's debts and print new currency. A few new, national (army backed) banks will open; someone (civil servants 'conscripted' back into service) will send out some pension cheques that will, surprisingly, not bounce - but there will not be much to buy with the money. Australia and Canada, Germany and Finland, Brazil and the USA, even China will send food aid and some money - enough to reopen the airport and restore a few essential services. In a decade or so, after other countries and the IMF and World Bank pour in billions and tens of billions and hiundreds of billions of dollars  and euros and yuan and SDRs the Greek economy will sputter back to life - but not until after babies and seniors will have starved to death and not until after hundreds, even thousands will have died in civil unrest ....
I hope you're wrong, but the military's done it before.....
Title: Re: Why Europe Keeps Failing........
Post by: Good2Golf on May 16, 2012, 08:46:02
I hope you're wrong, but the military's done it before.....

..and not too long ago, either.

I think the Germany will only go as far as to help cushion Greece's fall when it hits rock bottom.

The notable difference to potential national default in the PIIGS is, I believe, Italy where the large majority of the Italian debt is actually owned by Italians themselves and where the government can outright tell Italians that to avoid the Grecian Fate, they will be paid out for eurocents on the Euro.

 :2c:

Regards
G2G
 
Title: Re: Why Europe Keeps Failing........
Post by: Larry Strong on May 16, 2012, 09:13:29
I wonder if Greece failing and hitting bottom will open the eyes in the other countries..........
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on May 16, 2012, 09:23:02
I wonder if Greece failing and hitting bottom will open the eyes in the other countries..........


It will remind the Dutch, Finns and Germans, etc about the necessity of "pay as you go" but, unless the rich countries actually kick them while they're down the other spendthrifts will likely not draw useful lessons. People feel "entitled to their entitlements."
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on May 16, 2012, 11:28:40
ERC - I feel that you have too much of Hobbes and not enough of Hutcheson in your diagnosis.

Yes, it is true that self-interest drives much of the problem.  But equally (or perhaps not equally but certainly a significant consideration) is the inability of people to stand back and watch babies and seniors die.  The problem arises when people that can't afford to do things for others themselves insist that something must be done - even when nothing can be done.

Or as Maggie put it, when they run out of other people's money.

People find that it is easier to suffer themselves than it is to watch others suffer.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on May 16, 2012, 11:41:58
People no longer believe that "it can happen here," here being Athens or Lisbon ~ but it did during the Great Depression and a national bankruptcy might look a whole lot like the "dirty thirties" all over again, maybe even worse.

We, all modern countries, have pretty sophisticated social safety nets, but we have, I suspect, forgotten how to manage very large scale private charity. What happens when hospitals run out of supplies? What happens when there is no more 'surplus' food for food banks? In short, what happens when the government's purse is empty? Who opens an infirmary? Or a soup kitchen? Churches? Political Parties? Will the Red Cross be ready to respond to that sort of crisis on a national scale?
 
Title: Re: Why Europe Keeps Failing........
Post by: Rifleman62 on May 16, 2012, 12:40:27
On FOX News yesterday, there is a huge run on Greek banks as citizens withdraw all their funds.
Title: Re: Why Europe Keeps Failing........
Post by: 57Chevy on May 16, 2012, 16:53:40
                                                  Shared with provisions of The Copyright Act

Papoulias announced this morning that almost $1.27 billion has been pulled from Greek banks in the last 10 days.

Bank runs in Greece as country spirals out of control
http://fellowshipofminds.wordpress.com/2012/05/16/bank-runs-in-greece-as-country-spirals-out-of-control/
Title: Re: Why Europe Keeps Failing........
Post by: milnews.ca on May 16, 2012, 16:59:55
Greek judge in charge to prep for ANOTHER election 17 Jun - highlights mine....
Quote
Greece put a senior judge in charge of an emergency government on Wednesday to lead the nation to new elections on June 17 and bankers tried to calm public fears after the president said political chaos risked causing panic and a run on deposits.

In a blow to confidence, the European Central Bank said it had halted liquidity operations with some Greek banks because their capital was too depleted. That means they can no longer offer assets to the ECB as collateral for loans, and would have to seek costlier emergency financing from the Bank of Greece.

It was not immediately clear which banks, or how many of them, were affected. One person familiar with the matter said the capital of four Greek banks was so low that they were operating with negative equity.

Greeks have withdrawn hundreds of millions of euros from banks in recent days as fears grow that the country might be forced out of the euro zone, although there has been no sign of a run on Athens bank branches.

Political leaders failed to form a coalition after an inconclusive election on May 6 when parties opposed to the austerity terms of Greece's international bailout did well. This raised the chance that the rescue funds could be halted, pushing the country towards bankruptcy and a departure from the euro.

ECB President Mario Draghi said that the EU treaty did not give his bank responsibility for the euro zone's composition.

"I want to state that our strong preference is that Greece will continue to stay in the euro zone," he said in Frankfurt. However, he added: "Since the treaty does not foresee anything on (an) exit, this is not a matter for the ECB to decide."

President Karolos Papoulias named supreme administrative court head Panagiotis Pikrammenos as caretaker prime minister.

Pikrammenos will have no power to take political decisions, only to lead Greece to the vote. The parliament that was elected on May 6 will convene on Thursday and be immediately dissolved, a presidency source said.


The interim leader, who was sworn in at a brief ceremony presided over by Archbishop Ieronimos on Athens on Wednesday, is little known. State television said he was born in 1945 and studied law in Athens and Paris ....
Reuters, 16 May 12 (http://www.reuters.com/article/2012/05/16/us-greece-idUSBRE84D07X20120516)
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on May 18, 2012, 00:17:48
Two articles caught my attention today (it's raining in HK  :'(  ): one by Martin Wolf in The Financial Times (http://www.ft.com/intl/cms/s/0/614df5de-9ffe-11e1-94ba-00144feabdc0.html#axzz1vBXSHXyV) and the other by Niall Ferguson in Newsweek (http://www.thedailybeast.com/newsweek/2012/05/13/niall-ferguson-will-europe-act-to-avoid-an-economic-cataclysm.html). Both aim to explain what's happening in Europe but both, it seems to me are more prescriptive than explanatory and both appear to prescribe the same harsh remedy: union.

It seems to me that the EU has been, broadly, a runaway success story. The European civil wars that dominated 20th century history are over: Germany failed to unite Europe by force but, now, as Ferguson said, Germany risks losing all it has gained - and make no mistake Germany is the big winner in the EU - by being timid and isolationist. It is time to save the euro (€)  the EU itself by going the next step: a confederation. Some countries, notably the UK but, likely, also Denmark and Norway and Switzerland (which are not even in the EU) will not wish to join the new union but they will wish to revise the European Free Trade Area and secure a full free trade deal with the union.

But isn't the EU already a union? Yes, but not a full one; that's why it can even consider kicking Greece out of the Eurozone and that's why it cannot have sane, sensible economic policies. What else must they do? First they need to make themselves look a lot more like Canada: a very loose, highly decentralized federation but one in which a single, sovereign government sets economic (fiscal and monetary) policy, trade and foreign policy and even defence policy.

I would suggest that the new Union of European States (or whatever one wants to call it) should be even looser than Canada. The member states should have full control over their social policies and programmes - but they must be able to fund them through their own state taxes and through a system of transfer payments copied, in aim but but not in too much detail, from Canada. They must pay taxes to the new, federal superstate for areas of federal responsibility, which includes M. Hollande's call for growth because, right now, the EU/Eurozone cannot "do" growth - austerity is the only course open - because it has no resources of its own. Nations should retain their "own" armed forces but some fixed amount (say 75% of manning levels) must be assigned to be "under command" of the superstate's MOD. (It must be recognized that states have legitimate internal security requirements that requires state level "national guards," but hundreds of thousands of European men and women must be enlisted in national ships and units (flying squadrons and wings, regiments, brigades, divisions and even corps) which will serve under a combined command.) (NATO will have to die.) The superstate will be big, strong and rich and able to pursue a strategy comparable to, say, America's or China's.

Oh, and since the new superstate will set foreign and defence policy I am about 99.99% certain that the French nuclear forces are gone.

Thus, I see a three level structure for Europe:

1. European Free Trade Group: the new European superstate plus Britain, Denmark, Iceland, Ireland, Norway and Switzerland;

2. Independent states, which includes the new European superstate and all other states in Europe including the ones mentioned above plus Russia, Ukraine, Turkey, etc; and

3. "Member states" of the European superstate which still have "national" identities, are likely UN members, maybe even have "national" passports, but are no longer independent in economic, foreign or defence policies.

I'm pretty sure the Germans don't want it and French will hate it, but ...
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on May 18, 2012, 09:01:21
The US tried that; the pressure to push power and money upward is hard to resist.  Brussels already looks too much like Washington, so Europeans will not enjoy 150 years or so of relative liberty during which the national capital is a place far away and of not much influence in most people's lives.

It is not immediately apparent why Greeks should suffer much more than Argentinians, so I do not foresee a great hand-wringing among charitable organizations.  Is there some reason Greeks need to fare better than Egyptians or Libyans?  They are all relatively close neighbours, after all, but I don't see hearts breaking over the well-being of people on the south side of that pond.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on May 18, 2012, 15:04:55
Previous attempts to impose some sort of order on Europe have been rather ill starred, generally the component areas were not willing to surrender sovereignty to the center, regardless if the "center" was the Vatican, the Holy Roman Emperor, the Hapsburgs or Napoleon (to use a few past examples). When it did work it was because the "center" could impose its will by force, which really wasn't that often.

The United States is exceptional since it is a nation essentially designed during the Enlightenment, so the political structures and underlying philosophies are far different than anything anywhere else. Of course the historical experience is also quite different (arguably the trend to centralize and empower the Federal government over the states really took flight during the Civil War, but reached its apex during the Cold War); don't forget prior to the Civil War the formulation was properly "These United States".

I would actually argue the direction of evolution is away from large, cumbersome bureaucracies, centralized States and all that goes with it; smaller, nimbler polities will have huge advantages by being able to react far more quickly and efficiently to crisis and opportunities. Overarching structures like NATO, the EU and so on still serve a purpose so long as they stay focused and avoid bloat and mission creep; the ability to form "Tiger teams during a crisis will be much more useful than any number of standing committees.

What this means for Europe might be some sort of loose steering committee for Northern Europe, with a larger trade union to encompass the rest of Europe much like Edward suggests, but without much of  the formal structure.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on May 20, 2012, 23:04:22
European voters and depositers are starting to vote with their feet, and could essentially unravel the "fixes" that Germany and the ECB have covvled together to keep the debt crisis from imploding the EU. Frankly, I suspect there is no stopping the process now; the only real solution to any debt crisis is to deleverage and there is no way this is going to happen under the current system. Investors may have to decise that a 60% haircut may be the best possible outcome, and trillions of dollars of "value" will be erased from the books. Don't think the US in in any better shape, the estimated $52 trillion stock of wealth is also largely based on real estate, which is overvalued by anything from 15 to 25% depending on what market you are in, and Canadians are highly overleveraged on a personal basis, hardly a happy situation.

http://blogs.the-american-interest.com/wrm/2012/05/19/ratcheting-up-the-crisis-in-europe/

Quote
Ratcheting Up The Crisis In Europe
WALTER RUSSELL MEAD

“Crisis in the eurozone” stories are getting boring and this is one two year old soap opera the world would just as soon see disappear. Nevertheless it grinds on; yesterday the German finance minister said it could go on for another two years.  Unfortunately, he’s right.
But while the news from Europe is complicated and inconclusive (they are always threatening to jump off the bridge but so far, no one has), this is still a story one has to watch. And after months and years when the crisis was mostly in the hands of elites — heads of government, central bankers and the like — in the last couple of weeks the public has been getting involved, and that makes the crisis more dangerous and harder to solve.

The Greek and French elections were the public’s first real chance to get a word in on how Europe is handling the crisis, and the word from the public is one of those expletives that we don’t allow at Via Meadia. The public not only doesn’t approve of the way Europe is handling its problems; it wants to hang, draw and quarter the people responsible. The Greeks and the French both voted for candidates who wanted to rip up the fragile agreements already negotiated; as more European countries hold elections we must expect that more European politicians will come to power with mandates to change Europe’s direction. Many like the new French President François Hollande will try to manage this artfully, but the Greeks are unlikely to be the only bull in Europe’s china shop by the time this is done.

The other way that public sentiment threatens to blow Europe sky high is swifter, less predictable and far more dramatic. As Greek savers and investors read the writing on the wall, they are pulling their money out of Greek banks. They know that if Greece pulls out of the euro, the government will do something funny to the banks; they aren’t sure what (nobody really is), but there is a strong suspicion that any money left in Greek bank vaults will be converted from euros to drachmas at the stroke of a pen (more likely, by the tap of a keyboard), and those drachmas will soon be worth much, much less than a euro.

Better to have your money in Swiss or German bank than in a Greek one, every sentient vertebrate in Greece has to understand; as a result, hundreds of billions of euros have been moving out of the Greek banking system. At one point last week, television networks were sending camera crews out onto the streets to look for panicky customers standing in line at ATMs or at bank counters; but then they realized that these days you can do it all on the net. We have entered the age of the invisible bank run and are waiting for the first virtual panic.

An invisible bank run is a hard thing to watch; not only is it less telegenic than the old-fashioned kind, one relies on numbers from official government agencies for statistics. How much money left the banking system today? How many banks need emergency liquidity to meet the tide of withdrawals? In the old days, reporters could and did watch lines form outside the banks and watch the armored trucks arrive with cash. These days it is happening anonymously and you only know what they tell you.

They are very unlikely to tell you the truth. Officials lie like rats in times of financial panic; they do it out of a sense of duty. They will insist that a given country will never leave the euro until the moment that it does; they will say that a deposit freeze is unthinkable until they announce that they’ve done it; they will tell you a bank is rock solid until the moment they padlock its doors. This is all for your own good, of course. They don’t want you to panic — and they want to make sure that your money is trapped when they take it away or turn it from gold into straw.

Bank runs, even virtual ones, are the method by which public fear can blow up the eurozone. A bank run, as hundreds of thousands of depositors decide to pull their money out of a bank or a banking system at the same time, is the financial equivalent of a dam break. Banks, even very well run ones, never have all the money that their customers have deposited in their vaults. They lend that money out to other people, and because they charge borrowers a higher rate on their loans than they pay savers on their deposits, they make money.
At least they make money as long as enough of the borrowers can pay back their loans.

When borrowers can’t repay their loans, the bank sooner or later has to “write down” the value of those loans. In bad economic times, when borrowers are going bankrupt and the collateral on their loans loses value, banks can make huge losses. This is how Ireland lost its shirt; the banking system collapsed as the Irish real estate bubble burst, making building contractors and home owners bankrupt all over Ireland, and making the real estate that served as collateral for their loans almost worthless at the same time. The government — to prevent a panic and bank runs — guaranteed the deposits held by Irish banks, and ended up assuming such a massive debt that the Republic of Ireland needed a bailout from Europe.

Since then, European bailouts have been the safety net for all the countries in the eurozone. When investors worry that countries like Spain, Portugal and Italy will have a Greek style financial meltdown and the interest rates on their bonds rise to reflect that risk, the ECB steps in to buy their bonds and the panic goes away — for a while. More, when individual banks are having trouble, the ECB has made huge amounts of money at extremely low interest rates available to them. Spanish banks, for example, can borrow cheap money from the ECB in order to buy Spanish government bonds at high interest rates. They pay one percent interest to the ECB and collect four percent interest from the Spanish government, and use the profit of three percent to offset their losses on their loans to private companies and consumers who are going belly up in Spain’s savage recession.

The success of this little merry-go-round is why Europe calmed down last December. The ECB in effect prints money which it gives to busted banks. The busted banks lend the money to insolvent governments at artificially low rates (but at rates that still allow the banks to make a profit). It was a neat little trick that kept the crisis quiet without forcing the Germans to admit openly that the ECB was in effect using German resources to bail out the rest of the zone.

Bank runs, even virtual bank runs, would blow this fragile arrangements to bits. As the prospect of Greece leaving the euro becomes more likely, savers in Portugal, Spain and Italy have to start wondering if their countries, too, will have to jump ship. Sophisticated investors have been moving their money out of those countries for some time; things may soon reach a pass in which ordinary, unsophisticated investors start to do the same thing. Again, why have your money in some gut-shot Spanish bank when you can transfer it to a German, Austrian or Dutch bank with a mouse click? And if you are worried about the whole eurozone, or that devious financial trolls will find a way to convert all deposits held by Spanish citizens in European banks to pesos when and if the change comes, put the money in Switzerland, the UK or even the US.

If a few thousands or a few tens of thousands do this in Portugal, Italy and Spain, no problem. But if hundreds of thousands or millions of people shift their money out of their home banking systems, then you have a new and very grave bank crisis that blows the December fix out of the water. Either the ECB would start creating trillions of euros to bail out the Club Med banks (and Club Med under some circumstances could stretch as far north as France), or banking systems start exploding like firecrackers across the southern tier. At the same time you would have a new panic on the bond markets; nobody is going to want to own Spanish or Italian debt under those circumstances.

This is one of those cases when what is good for one is bad for all. A good financial investor would probably be suggesting to anybody in Spain or even Italy that it is a good idea to separate the fate of your savings from the fate of your country’s currency or its banking system. The trivial costs of moving money into a safer banking system are well worth the protection you gain.

But if everyone gets and acts on this sound and prudent advice, the whole banking system and perhaps the whole eurozone comes down.
Europe’s stability now rests on the sloth and stupidity of European savers. As long as millions of retail investors think their money is OK, it will be sort of OK for a while. But while governments can and will lie, and while soothing official pronouncements can be printed up almost as fast as the ECB produces euros out of thin air, sooner or later people may start to put two and two together.

Voters are not nearly as scary as depositors right now from the standpoint of Europe. Elections in Greece can’t cause as much trouble as bank runs in Barcelona or Turin.

This isn’t an abstract or imaginary worry; on Thursday rumors of a bank run in Spain led to a fall of thirty percent in the value of Spanish bank shares; the government denied any run was taking place, and, this time, people believed the denials. The panic stopped and the next day the bank shares recovered most of the loss.

Bank panics are contagious; everyone who read last week’s stories about the banking problems in Greece and the rumored problems in Spain is suddenly aware that the safety of their money is something that they need to think about. Invisible runs can spread and spread fast; this is the specter at the feast of the G-8 leaders as they meet at Camp David.
Title: Re: Why Europe Keeps Failing........
Post by: daftandbarmy on May 21, 2012, 11:22:19
Well done Boris:

Europe is driving full-tilt, foot on the pedal, into a brick wall

It’s unbelievable that we should be urging our neighbours to adopt a tighter fiscal union, argues Boris Johnson.
 
I see the G8 has a brilliant solution to the problems of the eurozone. President Obama says it’s time for “growth and jobs”. Jolly good. That’s the stuff. Let me show you how to create employment – the Brussels way.

Come with me through the streets of Athens, not far from Syntagma Square, and your mind will reel with the horrified realisation that history is not a one-way ratchet, that human progress is not guaranteed, and that a proud country can be reduced – by years of torture and bullying – to a state verging on total political, economic and moral collapse.

You will see businesses boarded up and windows smashed because no one has the money or the energy to fix them, and on almost every wall a riot of graffiti full of poisonous hatred for politicians. You will see people sitting on cardboard, heads down, hands out, or pushing trolleys full of scrap metal.

Not far from the town hall, I saw a man using the pavement as an operating theatre to eviscerate a mattress for its springs. In the eyes of every politician there is a glassy humiliation, a sense that the fate of the nation is no longer in their hands. Even worse than the humiliation is the dread that things will deteriorate further still. Thousands are now being fed by soup kitchens.

Unemployment is rising by the day, and among young people it now stands at a shameful 54 per cent. Yup, folks – those are the results of an EU plan to produce “growth and jobs”. It was called the euro, and it has been a catastrophe for Greece and pretty bad (with one notable exception) for the rest of the continent.

As far as I can understand the “strategy” of the EU, it is now to prepare for Greece to leave the single currency. Not that the Greeks themselves are anything like psychologically ready to quit: the politicians are punch-drunk, exhausted, and appalled at the loss of face and loss of security that would go with a sundering from “Europe”. Most voters choose pro-euro parties. But money is being withdrawn from banks; events are gathering momentum; and it is clear from their remarks that other EU leaders are getting ready for an outcome which until recently was held to be impolite to mention: the Grexit.

And then what? And then the strategy would appear to be to cauterise the amputation; to circle the wagons; to issue the most ringing and convincing proclamation to the markets that no more depredations will be tolerated; and to get the Germans to stump up, big time, to protect Spain and Portugal. We are told that the only solution now is a Fiscal Union (or FU). We must have “more Europe”, say our leaders, not less Europe – even though more Europe means more suffering, and a refusal to recognise what has gone wrong in Greece.

The euro has turned out to be a doomsday machine, a destroyer of jobs, a killer of growth, because it entrenches and exacerbates the fundamental and historic inability of some countries to compete with Germany in making high-quality goods with low-unit labour costs. Unable to devalue their way back into the game, these countries are forced to watch industry wilt under German imports, as the euro serves as a giant trebuchet to fire swish German saloon cars and machine tools across the rest of Europe.

Germany is almost alone in recording economic growth in the first part of 2012; Germany is doing well from the euro; and so the theory is that Germany should pay to keep the whole racket going by bailing out the improvident and the uncompetitive, just as London and the South East subsidise the rest of the UK.

Alas, it is not a strategy that is likely to work. As Angela Merkel has made clear, there is little political support – let alone popular support – in Germany. EU leaders may want a fiscal union, but it is deeply anti-democratic. We accept large fiscal transfers in this country because Britain has a single language and a single political consciousness in a way that Europe never will. Rather than creating an “economic government of Europe”, the project will lead to endless bitterness between the resentful donors and the humiliated recipients, as these diminished satrapies will be instructed to accept cuts and “reforms” – designed in Berlin and announced in Brussels – as the price of their dosh.

http://www.telegraph.co.uk/comment/columnists/borisjohnson/9278862/Europe-is-driving-full-tilt-foot-on-the-pedal-into-a-brick-wall.html
Title: Re: Why Europe Keeps Failing........
Post by: DBA on May 22, 2012, 00:38:53
I would modify Sun Tzu's line of thought that defence everywhere is defence nowhere to apply to social safety nets: the larger the net the less it protects. Where entitlements have expanded to the point they aren't actually being paid for the vaunted "social safety net" is full of holes and will fail when it's needed the most. Same for government, the bigger it is the less actual governance it performs.

Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on May 23, 2012, 01:26:04
The same rules could apply for mismanaged economies anywhere (see Ontario, for example). Astute readers will recognize the prescription, JFK did it in the 60's, Ronald Reagan did it in the 80's along with Margaret  Thatcher and Mike Harris. I'm not quite as sure about the Monetary Stimulus idea, first off it sounds like something politicians can manipulate for their cronys, and more ominously, it is the prelude to a Hayekian "Boom and Bust" cycle by encouraging misallocation of resources. If anything, we have a cheap money environment now:

http://www.nationalreview.com/corner/300641/more-spending-wont-save-europe-veronique-de-rugy#

Quote
More Spending Won’t Save Europe
By Veronique de Rugy
May 21, 2012 8:26 P.M.

In the face of the problems in Europe, many have suggested that the solution is for Germany to provide the necessary stimulus (through, among other things, a boost of German domestic demand and/or an erosion of its current-account surplus) to help other countries fix their fiscal troubles. But that’s unlikely to work, says Amit Kara:

    Even if Germany manages to increase domestic demand, there is no guarantee that the additional spending will find its way into the peripheral euro-zone economies. A simple macroeconomic simulation suggests that a permanent increase in German government consumption equivalent to one percentage point of GDP would raise output in Ireland and Greece by 0.1% at most, and in larger countries, such as Spain and Italy, by much less than that.

    That should come as no surprise. After all, exports to Germany account for just 2.5% of the combined GDP of Italy, Ireland, Portugal, Spain and Greece. In order to make a difference, Germany would therefore have to embark on a fiscal expansion that is too big even for the largest economy in Europe.

    What about households and companies? German household saving is relatively high at 11%, in theory providing some scope for additional private spending. Here, too, however, there are difficulties. Designing a fiscally neutral set of measures that encouraged spending would be challenging because German households have, on average, less net wealth than their counterparts in France or Italy.

    There is also the possibility of faster wage growth in Germany, which would undoubtedly help stimulate consumption. But only a small portion of that additional spending would be directed toward the troubled countries. And Finance Minister Wolfgang Schäuble, while acknowledging the likelihood of more rapid German wage growth, also warned that the economy should not lose its focus on competitiveness, implying that there is a limit to how much wage growth German authorities will tolerate.

    What if German corporations spent more? That would help, but it is not clear how the German government can help channel that spending to the peripheral economies.

Then what? In this piece in the LA Times on Friday, I argued that European countries should stay away from the “balanced approach” to austerity, that is, some spending cuts coupled with counter-productive tax increases. Tax increases (private-sector austerity), especially in times of economic contractions, are never a good idea or a good way to promote growth. That’s true even in a Keynesian model. Yet, we aren’t hearing anti-austerity advocates complain loudly that Europeans are raising taxes. Where are the headlines saying, “Europe needs to stop raising taxes”? Instead, we read that spending, and the lack of it, is to blame for austerity. Maybe that’s because acknowledging that austerity through spending cuts and tax increases has produced terrible results in Europe makes it hard to continue calling for tax increases–even if only on the rich–in the the US’s weak economy.

Obviously, I disagree that stimulus through spending should be pursued in Europe. Instead, along with cutting taxes, failing European governments should cut government spending. This form of austerity accompanied by the “right policies” (according to Harvard’s Alesina that’s easy monetary policy, liberalization of goods and labor markets, and other structural reforms) is more likely associated with economic expansions rather than with recessions. As I explained before, this makes intuitive sense: Austerity based on spending cuts (austerity in government) signals that a country is serious about getting its fiscal house in order in a way that taxing and more spending does not.

That leads us to the role of monetary policy. For over three years, economist Scott Sumner has argued that monetary stimulus is the best way to go. He explains how to get austerity and growth:

    So let’s see, how do we get austerity and stimulus at the same time?  How about easy money and deficit spending?  No, that won’t work.  Tight money and budget surpluses?  No.  Tight money and big deficits?  Hell no, that’s what we’ve been doing.  That’s how we got into this mess.  How about easy money and budget surpluses?  Bingo.  That’s a growing NGDP and budget surpluses—the Swedish way.

Read also his post about the successful austerity measures implemented in Sweden and the lesson for England: no Keynesian stimulus, what may look like social-transfer spending cuts, and a 2009 monetary stimulus. Sumner writes:

    Readers of TheMoneyIllusion were the first to find out about the Swedish monetary stimulus back in 2009.  But that begs raises another question.  Isn’t Britain also outside the euro?  If monetary stimulus makes fiscal stimulus unnecessary (and it does), then why would Britain want to do fiscal stimulus?  Why not just do monetary stimulus, and avoid the big deficits?  After all, just the other day didn’t Krugman say that there’s no argument at all for fiscal stimulus when monetary stimulus is available?  Yes he did.  And now he’s (correctly) attributing Sweden’s relative success to monetary stimulus (it sure wasn’t deficit spending!)

The whole thing is here. In my view, monetary policy in Europe, or in the U.S. for that matter, would increase the effectiveness of spending cuts and structural reforms (kind of like the water you drink to help the medicine go down). There may even be a good case that it would be useful independently of other reforms. But it is mistake to oversell it and it certainly won’t achieve our long term goals without serious reductions is government spending.

For more nonsense from Europe, read this. It explains a lot of this.

(Thanks to Tyler Cowen for sending me the WSJ piece about Germany.)
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on May 26, 2012, 19:35:04
Wealthy Frenchmen are bailing on  François Hollande and his "growth" program. This should be no surprise; wealthy Britons ducked out when David Cameron raised tax rates in the UK, and many American States have tried to implement "millionaire taxes", only to discover th4e millionaires went missing next tax season. McGuinty will be learning the same lesson next April when he looks at the tax receipts (especially if he goes along with the NDP's extra tax bites), but politicians live inside the event horizon of their own pocket universe, and never let evidence get in the way of their plans:

http://www.nytimes.com/2012/05/27/realestate/voting-with-their-wallets.html?pagewanted=2&_r=2&pagewanted=print

[/quote]
Voting With Their Wallets
By ALEXEI BARRIONUEVO

THE French aided the Americans in their revolution against their British oppressors. Now Benoît Pous-Bertran de Balanda, the descendant of a French general who fought for the Americans, is trying to help his wealthy countrymen escape what he calls the tyranny of a new Socialist government primed to severely tax the rich.

And France’s loss could be New York’s gain.

Mr. Pous-Bertran de Balanda, 30, is a broker for wealthy French clients looking to buy apartments in Manhattan. With the election of the Socialist François Hollande as president this month, the wealthy in France are suddenly scrambling for places to stash their money for a while.

Well-heeled French citizens are scouring real estate opportunities in neighboring countries like Britain and Switzerland. The United States — particularly New York and Miami — is also drawing French investors looking to pick up rental properties or pieds-à-terre, brokers say.

In recent months, as Mr. Hollande’s victory appeared more possible, the French stepped up their house-hunting visits to New York, several brokers said.

These are not billionaire Russian oligarchs with blank-check budgets on the hunt for trophy properties. The French buyers most active in recent months are generally looking at properties between $500,000 and $5 million, brokers say.

What the French are so concerned about is Mr. Hollande’s campaign vow to tax income over 1 million euros at a 75 percent rate. The Socialist government, trying to put a dent in France’s $1.3 trillion euro debt, has said it will also raise the tax rate on capital gains to the same level as the tax on ordinary income.

“So there would not be any kind of advantage to invest in something in France, in the stock market or real estate,” said Mr. Pous-Bertran de Balanda, who runs Black Tulip Capital, a New York-based real estate asset management company he started last August that helps clients find properties and manages them.

To Mr. Pous-Bertran de Balanda and other wealthy French people, the news feels like a rerun of 1981, when President François Mitterrand decided to nationalize several big companies and raised taxes (though both moves were later reversed). And after the tax policy flip-flops by President Nicolas Sarkozy over the past five years — he gave the wealthy tax breaks only to raise taxes two years later — many in France see their own market is too volatile, and are searching for a safe haven.

The flagging euro and the economic struggles in Greece, Italy and Spain have only further shaken their confidence in investing at home. Last month, a Parisian couple in their 50s decided to buy a $4 million waterfront house in Miami after first considering Cannes, said Christophe Bourreau, a French broker with Barnes International who is now based in New York.

“They feel like the new president is hunting the wealthy,” Mr. Bourreau said, “and that the sooner their money is out of France the better.” The window may close soon: Mr. Hollande has said he will look to put his tax plans in place this summer, after parliamentary elections next month.

Many in the new wave of French buyers who have descended on Manhattan are focused on finding something downtown and have been frustrated by the lack of inventory, said Edward Johnston, a broker with Brown Harris Stevens. Others are looking near Central Park and Columbus Circle, with buildings like the Sheffield, at 322 West 57th Street, and the Setai Fifth Avenue drawing multiple visits, brokers said.

Deborah Gimelson, another broker at Brown Harris Stevens, said that in the last two weeks she had shown three different French bankers a duplex town house in the East Village that she is co-listing for $2.95 million. One made an offer on the home but was outbid, she said.

She said she suspected that the property itself — with an enclosed porch that looks out on a garden that “feels like parts of Paris,” she said — had something to do with the visits. But they were the first French buyers she had seen in 10 years.

“Whether they are French, Italian or Greek,” she said, “people from Europe want to put their money here. We are seeing a lot more people come out of those countries than in a long time.”

Mr. Johnston says the city is seeing a “massive influx of people” from France. He has taken five groups on visits since the beginning of the year. “They are serious buyers,” he said, although “they are not quick to act.”

Mr. Pous-Bertran de Balanda said he had about 20 French clients looking for condo apartments to buy in New York. He has been suggesting that they consider the Trump SoHo, the hotel-condo property. It offers “fractional occupancy” to owners, who can use the apartment for up to 120 days a year and have it rented out as a hotel suite the rest of the year.

The French invasion is poised to give Trump SoHo a needed boost. The 46-story project has been a source of tension in SoHo. Some residents have grumbled that it is an out-of-place abomination, towering over the surrounding low-rise structures. Amy Williamson, the development’s vice president for sales, said Donald J. Trump had taken advantage of a zoning loophole that had not anticipated the “hybrid” between a commercial and a residential building, enabling it to be built to 46 stories.

Trump SoHo has done well as a hotel, Ms. Williamson said. But it has struggled as a condominium development. About a quarter of the 391 residences have been sold or are under contract since 2007, she said. Prices range from studios starting at $995,000 to penthouse suites starting at $2,966,250.

No French buyers have signed on the dotted line, but Ms. Williamson is confident that several purchases are imminent, particularly in view of the French election. “The people that were originally looking have now reaccelerated their interest,” she said.

Ms. Williamson is planning to travel with Mr. Pous-Bertran de Balanda in late June on a Trump SoHo road show to Geneva, Luxembourg and Paris.

He has been living in New York for only two years, yet Mr. Pous-Bertran de Balanda has deeper ties to North America than most Americans.

His ancestor François Bertran de Palmarolle served as a French general in the American Revolution. The general’s father, François-Charles Bertran de Palmarolle, died on the battlefield in Canada during the Seven Years’ War. The town of Palmarolle in Quebec was named after the Frenchman, who is buried there.

Of course, preserving the French noble family meant pulling out when the going got tough. When the revolution against Louis XVI started, Mr. Pous-Bertran de Balanda’s family emigrated to Spain for five years. Most of them returned when the nobility was reorganized under Napoleon, he said.

Some stayed behind in Spain for good. Now Mr. Pous-Bertran de Balanda, who met his French wife in New York, is considering becoming an American citizen and staying for the foreseeable future. In his circle, at least, he is not alone.

“I have met a lot of French expatriates who are considering the option to stay in the U.S. for at least five years,” he said. “They just want to wait, to wait and see what happens in France with taxes.”

Follow Alexei Barrionuevo on Twitter: @alexeinyt.
[/quote]
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on May 31, 2012, 18:46:44
In the Globe and Mail's Report on Business, Michael Babad is reporting, in his Top Business Stories (http://www.theglobeandmail.com/report-on-business/top-business-stories/almost-100-billion-in-capital-flees-a-troubled-spain/article2448704/) column that something like €100 Billion (yes, Billions with a big B) has "fled" Spain in the first quarter of this year ~ that's 10% of Spain's GDP! A country cannot sustain itself without capital. A country cannot "lose" 10% of its capital quarter after quarter without going bankrupt.

More on the link
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 01, 2012, 08:02:05
The Globe and Mail reports that Ireland votes ‘yes’ to EU deficit-fighting treaty (http://www.theglobeandmail.com/news/world/ireland-votes-yes-to-eu-deficit-fighting-treaty/article2449207/) with about 60% of those who voted supporting the austerity measures.

I wouldn't want to read too much into the vote - a No vote "could have blocked Ireland from receiving new EU loans once its 2010 bailout money runs out next year" according to the article - but it might reinforce my contention that there is a North/South or Scandia-Saxon/Latin divide in Europe that counts as much as basic economic issues.

The article also notes that "the anti-treaty vote was strongest in urban working-class districts where anger over the crippling cost of Ireland’s bank-bailout program runs highest," which would make urban, working class Ireland rather like Greece and Spain.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on June 01, 2012, 10:39:26
Ireland, like the rest of the UK is, in my opinion, much like a melting pot.  Or perhaps a refuge at the end of the world. 

Dublin was founded by Vikings as a slave trading post to supply good looking "Celts" to the rest of the world.  Over the years those Vikings became Normans who became Anglo-Normans (the Anglo-Saxons both being relatives of the Vikings) who became Anglo-Irish.

DeValera's mob, with the help of the same institutions extant in southern Europe, raised the Celts (minus the good looking ones) against their Viking overlords. 

The southern European institutions may have gone away in Ireland, but the mentality, the culture, which allowed them to flourish has not.  At least not completely. 

Also, Ireland has changed.  Not only because of the locals changing and swinging the balance more to the "Viking" side of the ledger, but also because its low tax regime (possible because of EU subsidies), has attracted more "Vikings" from all over the world to Ireland...

My guess is the Vikings won this round against a diminishing Southern European influence amongst the Celts.

At least that's my potted Sit Rep, for what it's worth.  :)
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on June 01, 2012, 15:44:45
In the Globe and Mail's Report on Business, Michael Babad is reporting, in his Top Business Stories (http://www.theglobeandmail.com/report-on-business/top-business-stories/almost-100-billion-in-capital-flees-a-troubled-spain/article2448704/) column that something like €100 Billion (yes, Billions with a big B) has "fled" Spain in the first quarter of this year ~ that's 10% of Spain's GDP! A country cannot sustain itself without capital. A country cannot "lose" 10% of its capital quarter after quarter without going bankrupt.

More on the link



From today's BBC News  (http://www.bbc.co.uk/news/business-18277681) (and you know it's dire when they are piling on the agony against Europe)



Quote
31 May 2012 Last updated at 19:00 ET

Why Spain's regions owe so much money

By Tom Burridge
 
BBC News, Madrid

Valencia's City of Arts and Sciences, which was built to impress, has become a symbol of excessive spending by Spain's regions

Three years ago the mayor of Alcorcon embarked on a hugely ambitious project.

Some 100m euros ($124m; £80m) was to be invested in a world-beating culture and arts centre, complete with nine buildings, three underground levels, and even a circus.

But it did not work out.

The area where the project was being built is now a sorry sight.

Inside, light fittings hang loose and the half-finished futuristic buildings are surrounded by a graffiti-covered corrugated iron fence.

A project that was meant to put the local area on the map has instead become an unsightly symbol of Spain's past unhealthy habit of regional overspending.

Many regions in the country owe billions of euros, partly because some local politicians built anything from airports to swimming pools to cultural projects during the boom times.

 Backpackers visiting Spain these days are greeted by ultra-modern infrastructure
Some of those projects now lie unfinished, empty or inactive. Others were completed as planned.

But most of them have one thing in common: they have left big holes in local public finances.

Take Valencia's City of Arts and Sciences, which was opened back in 1998. The cultural initiative was finished, it is fully operating and very impressive.

But its budget deficit is still some 600m euros, with local media claiming that costs doubled to almost 1.3bn euros.

Black hole
 
Alcorcon, on the outskirts of Madrid, had a change of mayor a year ago.

David Perez Garcia is the new man in charge of the city, where some 180,000 people live.

He says legal fees and out-of-control costs have pushed the final price of the culture and arts centre to perhaps as much as 170m euros.

"It has eaten up all the town's resources," he says, pointing to how the city has been left with 612m euros of debts.

"Even the electricity bills aren't being paid. All the money has been sacrificed to this building."

Build now, pay later
 
According to Llatzer Moix, author of Miracle architecture, the success of Bilbao's Guggenheim Museum in the Basque Country, which attracts nearly a million visitors every year, gave other Spanish cities "cultural envy".

There was a mentality of "my neighbour has that wonderful new facility so I want another one like theirs, or probably even a better one", he says.

As well as large cultural projects, Spain's transport infrastructure grew exponentially during the boom years.

Work on a new airport, costing 150m euros in the autonomous community of Valencia in the east of Spain, finished in March last year.

But not a single plane has landed on its runway.

In the city of Ciudad Real, a short train journey south of Madrid, another empty, expensive airport lies empty.

"An airport in Ciudad Real, for what?" says Celestino Suero from CE Consulting, a nationwide Spanish consultancy firm. "No-one uses it."

Failing projects should simply be closed down, Mr Suero insists, calling for more central government control over Spanish regions' finances.

"Spain has become a country in which every region does what it wants," he says.

"Spain's problems will not be solved unless its autonomous communities are properly regulated."

Fixing the region's debt
 
A rise in Spain's budget deficit for this year, to 8.9% of GDP from 8.5% a year earlier, has been attributed to the indebted regions.

As a result, the central government in Madrid has set a tough 1.5% budget deficit target for all of the autonomous communities for this year.

The government has also said it will provide cheap loans for regional governments so they can pay off their debts.

The hope is that this will help mollify the European Commission, which earlier this week said it was ready to postpone Spain's 3% of GDP budget deficit target from 2013 to 2014 - though on the condition that the Spanish regions also get their public finances in order.

Much of the debt held by Spain's regional governments is owed to small, local businesses, which carried out work for local authorities and have still not been paid.

Enrique Martin, owns Distripaper, a printing and public relations company in Alcorcon.

The former administration at the town hall owed him 80,000 euros for work on a marketing campaign that he carried out on their behalf.

Because he was not paid, he had to let five of his 11 employees go.

He believes the idea of building a multimillion euro cultural centre in the town was flawed from the very beginning.

"It was too big for a town like ours," he says.

"The cost was far too high."

Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 03, 2012, 09:00:03
The Globe and Mail's Eric Reguly has an interesting perspective on the Greek crisis in an article (http://www.theglobeandmail.com/report-on-business/rob-commentary/greeces-loss-germanys-gain-why-merkels-good-crisis-is-set-to-turn-bad/article4226057/) in the Globe and Mail. He notes that while the crisis is very, very real for Greece it is, in fact, beneficial to Germany:

1. " The euro has gone from $1.60 (U.S.) to $1.24 – a 22-per-cent decline. The cheap currency triggered a surge in German exports and a fall in unemployment. On Friday, Germany’s jobless rate dropped again – to 5.4 per cent – taking it to less than half of the euro zone average;" and

2. "The flight to safety has pushed German borrowing costs to record lows; at last measure, the yield on 10-year bunds was a mere 1.2 per cent. That’s money for nothing for Germany, when you factor in inflation."

Reguly posits that these benefits may help explain why Chancellor Merkel is willing "to fiddle as the rest of the euro zone burns." But he cautions that Germany's strategy could backfire and could result in a financial crisis that will burn Germany as much as the PIGS (plus France).
Title: Re: Why Europe Keeps Failing........
Post by: GAP on June 03, 2012, 12:23:25
Europe, pressed by Germany, mulls major step towards ‘fiscal union’
Noah Barkin and Daniel Flynn, Reuters  Jun 3, 2012
Article Link (http://news.nationalpost.com/2012/06/03/europe-pressed-by-germany-mulls-major-step-towards-fiscal-union/)
 
PARIS/BERLIN — When Jean-Claude Trichet called last June for the creation of a European finance ministry with power over national budgets, the idea seemed fanciful, a distant dream that would take years or even decades to realise, if it ever came to be.

One year later, with the euro zone’s debt crisis threatening to tear the bloc apart, Germany is pushing its partners for precisely the kind of giant leap forward in fiscal integration that the now-departed European Central Bank president had in mind.

After falling short with her “fiscal compact” on budget discipline, German Chancellor Angela Merkel is pressing for much more ambitious measures, including a central authority to manage euro area finances, and major new powers for the European Commission, European Parliament and European Court of Justice.

She is also seeking a coordinated European approach to reforming labour markets, social security systems and tax policies, German officials say.

Until states agree to these steps and the unprecedented loss of sovereignty they involve, the officials say Berlin will refuse to consider other initiatives like joint euro zone bonds or a “banking union” with cross-border deposit guarantees – steps Berlin says could only come in a second wave.

The goal is for EU leaders to agree to develop a road map to “fiscal union” at a June 28-29 EU summit, where top European officials including European Council President Herman Van Rompuy will present a set of initial proposals.

European countries would then put the meat on the bones of the plan in the second half of 2012, several European sources have told Reuters, including a timetable for overhauling EU treaties, a step Berlin sees as vital for setting closer integration in stone.

“The fundamental question is relatively simple. Do our partners really want more Europe, or do they just want more German money?” a government official in Berlin said.
More on link
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 04, 2012, 17:24:31
Germany seems to recognize that the current situation is unstable, but are not quite sure how to stage a clean break (if that is even possible). VDH explains:

http://pjmedia.com/victordavishanson/the-limits-of-german-patience/?singlepage=true

Quote
The Limits of German Patience
Posted By Victor Davis Hanson On June 3, 2012 @ 12:48 pm In Uncategorized | 129 Comments

(Cologne, Germany)

I’m still in Germany, and keep noticing a predictable, but continually interesting, pattern in talking to Germans of all walks of life — tourists, hoteliers, guides, drivers, casual bystanders, or students. When Greece comes up (or rather is brought up by Americans), there is a noticeable tension. Brows tighten. German smiles momentarily vanish. A second later a forced recovery and grimace follow, accompanied by a sort of pained EU propaganda speech, along the lines of “Well, yes, we all have to get along” or “We Europeans of the Union must work something out.” Then after the platitudes, we are back to silence and a look to see whether their constructed optimism worked on you.

The Scratched Veneer

But then if you press with a polite question or two — something like an innocent (or perhaps not quite so innocent) “But is it really true that the Greeks find ways to retire in their fifties while you work to 67?” or “How did those deficits get so big without being detected?” — the façade crumbles. Your German friend takes a quick look to the side, to see whether anyone is listening. And then in a quiet, but soon to be louder and finally animated voice, he starts in on the “EU racket” and “How in the world is Germany supposed to pay for all these freeloaders?”

In minutes you begin to sense that the entire cohesion of the EU is predicated now on two dubious premises. One, of course, is 70-year-old war guilt [1]. I do not mean that in the logical sense as it pertains to the use of victimization by Mediterranean debtors (after all, how can once fascist neutrals like Spain and Portugal, or the successors of Mussolini’s Axis Italy, piggy-back onto Greece’s World War II suffering?). Rather, there is a larger guilt about the Holocaust, Hitler, and starting a war that ended up killing 50 million and, obviously, wrecking Germany (Germans like to point out the extent of the 8th Air Force’s and Bomber Command’s destruction along the Rhine, where 60-80% of some of the larger urban centers were destroyed.) War guilt, then, looms as the lever to pry out German cash, and after three generations the Germans are getting tired of it.

The second premise touches on a vaguer issue — the near admission that with a wink and a nod German companies and banks set up a sort of mercantilism, in which a Mercedes or Siemens found lucrative markets in Mediterranean Europe, got banks to back buying on time, and then sold things on credit to dubious government-sponsored entities and private corporations. After all, the Athenians had no business having one of the highest per capita rates of Mercedes ownership in Europe. Did Germans really think that siestas and 9 p.m. dinners led to prompt repayment of Audi and BMW loans?

No Players Left?

In other words, Germans seem to admit that they were playing poker with amateurs, that they knowingly took the players for a ride, and that they now find themselves with all the chips and no one anymore with the wherewithal to keep on playing. And yet they don’t think they can start over and divvy up the chips, not just because to do so would be to forfeit their winnings, but also because they suspect that the game would repeat itself identically every five or six years. They are right, which explains why the euro in its present manifestation is doomed, and why the Germans are exasperated for doing everything rightly that is now condemned as doing everything wrongly.

Worrywarts?

The EU crackup and the looming costs for Germany — are Germans to work until 70 or are they going to put off another bridge over the Rhine, or pass up building an autobahn? — seem to lead to other — how should I put it? — “exasperations. [2]“ The Muslim population in places like Berlin and Cologne is growing and not being assimilated. Meanwhile, the good-life, statist Germans are shrinking and aging with one of the most depressing fertility rates in Europe. The angst grows because the Germans themselves brought Muslims in, kept them as permanent second-class aliens, and now are quite confused over their proper status — both not wanting them to become full Germans (there is still a word, after all, Volk, in their language, which, like Raza, denotes a solidarity beyond mere shared citizenship), and yet resentful of their chauvinism and often militant Islamism. As one of my conversationalists put it, “Oh yes, the Turks — how can their sons somehow afford our BMWs?”

Indeed, the list of other exasperations is growing. The once beloved United Nations’ UNESCO bunch is likewise picking on poor Germany by “red listing” some of their tourist treasures. Must Germans really tear down their new super-modern aerial tram over the Rhine — an engineering marvel which resembles a designer kitchen as much as a cable lift — at Koblenz, or postpone building high-rise office towers and apartments in Cologne just to ensure UN World Heritage status for their Rhine gorge castles or the cathedral at Cologne (e.g., “So an Iran or Syria is to be judge of our heritage?”)?

Then there is Angela Merkel’s proposed shutdown [3] of Germany’s 17 nuclear power plants in the wake of panic about the Fukushima tsunami disaster. Once minor German concerns about geological fault lines and obsolete designs have now snowballed into a hyped-up nuclear terror (e.g., if the Toyota-building Japanese can have a disaster, then even the BMW-building Germans in theory could, too).

But from where comes the replacement electrical power? (The Ruhr today looks like Detroit and Cleveland should have.) There is still plenty of coal, but the green Germans pride themselves on being model globing warming alarmists [4]. The German countryside is dotted with enormous windmills, but they seem to the casual observer to turn slowly, if at all. I have enjoyed about three or four hours of sunshine every other day, so I don’t think solar is going to save Germans from blackouts. In other words, Germans seem again agitated over their dilemma: the greenest of Europeans cannot survive through wind and solar power; their coal is politically incorrect; they have little natural gas; and now nuclear, which used to be a non-carbon, non-heating approved energy, is discredited. What is a good pan-European to do? Perhaps buy nuclear-produced electricity from a cash-hungry France?

Be Careful About What You Wish For

Another grimace comes from mention of their beloved Barack Obama. He too seems lately to be adding to German angst. Make no mistake about it and let me be perfectly clear, Germans, could they vote in the U.S., would reelect Obama by a wide margin. I’ll spare you the reasons (Bush comes up in the conversation, of course). But they are edgy with him nonetheless: Is it really a good time to be drawing down NATO and redeploying Americans to “Asia”? (As in “who will pay for our defense or ensure NATO solidarity as the EU unravels?”)

Resentments, or so Germans fear, are building against Germany and Germans themselves sometimes sound as if they fear their inner demons as much as do the French in the Alsace. Does Obama — “Polish death camps,” [5] Austrian-speaking Austrians [6], Berlin Wall anniversary skipped [7], the old demand for speechifying at the Brandenburg Gate — appreciate the contours of Europe politics and the pretensions of the Atlantic Alliance? Germans assume that we Americans grasp their old postwar two-step that allows them to snicker about Americans (e.g., McDonald’s, Texas, George W. Bush, etc.) publicly and count on us privately. In sum, concerning Obama, there grows a flicker of realization that Germany proverbially should have been careful about what it wished for.

An Edgy Nation

Let me sum up. Germans are, just as the stereotypes go [8], thrifty, solvent, and an industrial people who played by all the postwar rules. To watch the Rhine is a dizzying experience as barges zoom by, as if on a three-lane highway, while rail cars roar in the background and the parallel autobahns are crammed, all beneath the steam stacks of the Ruhr plants. In comparison, California seems like it is in a slumber.

Germans rebuilt their country, renounced war and did not rearm, unified their bifurcated nation at their own cost, subsidized European development, were good EU and UN head nodders, are at the forefront of the green global warming cult, are rejecting nuclear power — and are terrified that they are unfairly not liked. I am not sure whether they are afraid that the world does not appreciate their efforts or that anytime the world does not appreciate German efforts, petulant Germans can become a bit scary [9] to Germans themselves as well as to their neighbors.

I would be very careful to support Germany as much as we can in accordance with U.S. national interests. I would not, like Obama, encourage French-socialist calls for “growth,” which is a euphemism for inflating and stimulating European economies without commensurate structural reform at the expense of Germany.

I would also be careful about downsizing and redirecting NATO at a time when Germany has an anemic military and a growing list of envious if not angry rivals and former friends. I would cut Germany some slack (and I have been guilty in the past in print of not doing this) about its hypocrisies and strained multicultural internationalism, given its own psychological uneasiness about its past proclivities. And finally, at some point, cannot some American flat out state that it was Germany that worked hard, saved, invested, and prospered, and that is to be admired rather than caricatured and condemned? Texas is not responsible for California any more than Germany is responsible for contemporary Greece. An envious Europe seems to look at Germany the way that Obama has trained us to disdain those above the $200,000 in annual income Mason-Dixon line.

Yes, we might prefer to vacation in Florence or Santorini, but only because we are able to — given that there are for a while longer more wealth-producing Germanys in the world than there are wealth-consuming Italys and Greeces.
--------------------------------------------------------------------------------
Article printed from Works and Days: http://pjmedia.com/victordavishanson

URL to article: http://pjmedia.com/victordavishanson/the-limits-of-german-patience/

URLs in this post:

[1] 70-year-old war guilt: http://cdn.pjmedia.com/eddriscoll/2011/11/02/greece-go-boom-soon/

[2] exasperations.: http://www.freerepublic.com/focus/f-news/1550345/posts

[3] Angela Merkel’s proposed shutdown: http://www.bbc.co.uk/news/world-europe-13592208

[4] model globing warming alarmists: http://cdn.pjmedia.com/eddriscoll/2010/09/26/springtime-for-algore/

[5] “Polish death camps,”: http://cdn.pjmedia.com/eddriscoll/2012/05/29/obamas-polish-death-camp-gaffe/

[6] Austrian-speaking Austrians: http://newsbusters.org/blogs/tom-blumer/2009/04/06/if-obama-believes-austrian-language-so-will-ap

[7] Berlin Wall anniversary skipped: http://www.foxnews.com/politics/2009/11/08/obama-draws-criticism-sitting-berlin-wall-anniversary/

[8] just as the stereotypes go: http://www.nationalreview.com/articles/301356/culture-still-matters-victor-davis-hanson

[9] petulant Germans can become a bit scary: http://www.nationalreview.com/articles/300149/let-sleeping-germans-lie-victor-davis-hanson
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 05, 2012, 12:07:16
The Globe and Mail's Report on Business has an article (http://www.theglobeandmail.com/report-on-business/international-business/spain-raises-red-flag-as-g7-holds-emergency-meeting/article4231216/) which is headlined "Spain raises red flag as G7 holds emergency meeting."  Essentially Spain has changed its tune; no longer does it proclaim that it can raise enough in the bond market to refinance its own debt. Spanish bonds are now perilously close to selling at above 6%, a rate which most economists regard as unsustainable ~ those (6%+) are Greek levels.

This is from the article:

Quote
A senior G7 source, speaking shortly before the teleconference, said it was set to turn into a “Germany-bashing session”, with other partners applying severe pressure on Berlin to do more to stimulate growth and help the euro zone.

The source, who requested anonymity due to the confidential nature of the call, confirmed that Germany was pushing Spain to accept an international rescue, as Greece, Ireland and Portugal have done, to help it recapitalize stricken banks.

“They don’t want to. They are too proud. It’s fatal hubris,” the source said of the Spanish government.

Berlin and the European Central Bank have so far resisted pressure from Madrid to ride to its rescue without forcing Spain into the humiliation of an internationally supervised bailout.

French Foreign Minister Laurent Fabius said Europe must find a solution to the Spanish banking crisis that does not add to Madrid’s already heavy budget deficit.

This sets Europe up for a showdown between overextended France and frugal Germany.

The Germans are, fundamentally right: nations need to "bite the bullet" and get their fiscal houses in order, as Germany did in the 1990s. But fundamentals may not be enough ~ the markets are driven by emotion, not reason, and Americans, especially, are at near panic levels. German intransigence may be all that is need to tip the whole world back into an even deeper, longer Great Recession.
Title: Re: Why Europe Keeps Failing........
Post by: dapaterson on June 05, 2012, 12:20:23
No man is an island, nor is any nation.  Germany is reliant on exports, and the Euro helps Germany remain competitive.

Imagine if the other Euro members, rather than pressuring Germany to change, instead ousted Germany, forcing them to return to the Deutchemark.  The mark would spike upwards; Germany's exports would be uncompetitive, and the economies of the rest of Europe would expand to take up the slack.

Title: Re: Why Europe Keeps Failing........
Post by: GAP on June 05, 2012, 12:23:45
Wouldn't that upset the applecart.... ;D
Title: Re: Why Europe Keeps Failing........
Post by: dapaterson on June 05, 2012, 15:05:51
Interesting analysis: Currency union of all countries in the world whose names start with "M" is more logical than the Eurozone.

http://www.theatlantic.com/business/archive/2012/05/the-funniest-graph-ive-ever-seen-about-why-the-euro-is-totally-doomed/256793/
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 06, 2012, 09:04:38
Two articles caught my attention today (it's raining in HK  :'(  ): one by Martin Wolf in The Financial Times (http://www.ft.com/intl/cms/s/0/614df5de-9ffe-11e1-94ba-00144feabdc0.html#axzz1vBXSHXyV) and the other by Niall Ferguson in Newsweek (http://www.thedailybeast.com/newsweek/2012/05/13/niall-ferguson-will-europe-act-to-avoid-an-economic-cataclysm.html). Both aim to explain what's happening in Europe but both, it seems to me are more prescriptive than explanatory and both appear to prescribe the same harsh remedy: union.

It seems to me that the EU has been, broadly, a runaway success story. The European civil wars that dominated 20th century history are over: Germany failed to unite Europe by force but, now, as Ferguson said, Germany risks losing all it has gained - and make no mistake Germany is the big winner in the EU - by being timid and isolationist. It is time to save the euro (€)  the EU itself by going the next step: a confederation. Some countries, notably the UK but, likely, also Denmark and Norway and Switzerland (which are not even in the EU) will not wish to join the new union but they will wish to revise the European Free Trade Area and secure a full free trade deal with the union.

But isn't the EU already a union? Yes, but not a full one; that's why it can even consider kicking Greece out of the Eurozone and that's why it cannot have sane, sensible economic policies. What else must they do? First they need to make themselves look a lot more like Canada: a very loose, highly decentralized federation but one in which a single, sovereign government sets economic (fiscal and monetary) policy, trade and foreign policy and even defence policy.

I would suggest that the new Union of European States (or whatever one wants to call it) should be even looser than Canada. The member states should have full control over their social policies and programmes - but they must be able to fund them through their own state taxes and through a system of transfer payments copied, in aim but but not in too much detail, from Canada. They must pay taxes to the new, federal superstate for areas of federal responsibility, which includes M. Hollande's call for growth because, right now, the EU/Eurozone cannot "do" growth - austerity is the only course open - because it has no resources of its own. Nations should retain their "own" armed forces but some fixed amount (say 75% of manning levels) must be assigned to be "under command" of the superstate's MOD. (It must be recognized that states have legitimate internal security requirements that requires state level "national guards," but hundreds of thousands of European men and women must be enlisted in national ships and units (flying squadrons and wings, regiments, brigades, divisions and even corps) which will serve under a combined command.) (NATO will have to die.) The superstate will be big, strong and rich and able to pursue a strategy comparable to, say, America's or China's.

Oh, and since the new superstate will set foreign and defence policy I am about 99.99% certain that the French nuclear forces are gone.

Thus, I see a three level structure for Europe:

1. European Free Trade Group: the new European superstate plus Britain, Denmark, Iceland, Ireland, Norway and Switzerland;

2. Independent states, which includes the new European superstate and all other states in Europe including the ones mentioned above plus Russia, Ukraine, Turkey, etc; and

3. "Member states" of the European superstate which still have "national" identities, are likely UN members, maybe even have "national" passports, but are no longer independent in economic, foreign or defence policies.

I'm pretty sure the Germans don't want it and French will hate it, but ...


Prime Minister Harper appears to agree. In an article (http://www.theglobeandmail.com/news/politics/ottawa-notebook/with-eu-running-out-of-runway-harper-urges-deeper-fiscal-integration/article4234145/) in the Globe and Mail (based upon his comments in a CBC interview) Stephen Harper suggests that the EU is "running out of runway here." What he means is that the current structure and rules do nor permit he EU to do enough to cope with the crisis. He also makes the very valid point that he EU has the necessary resources (its GDP is about $17 Trillion, compared to about $15 Trillion for the USA, $7 Trillon for China and a mere $1.7 Trillion for Canada) to solve the problem, but it cannot, as current organized, mobilize those resources.

Harper suggests that "there is a need for deeper financial integration" in the EU; using my secret decoder ring I read that as suggesting that European countries must sacrifice more sovereignty, specifically over monetary and fiscal policy.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 07, 2012, 11:18:52
Andrew Coyne of he National Post although no fan of Prime Minister Harper, is a pretty good economist and, in this article (http://fullcomment.nationalpost.com/2012/06/06/andrew-coyne-austerity-and-growth-both-necessary-and-possible-to-fix-europes-economic-crisis/), from the National Post, he offers a pretty good overview of the European crisis and of Prime Minister Harper's 'solutions' to it. Note, especially, this:

Quote
Europe today is essentially a multi-player game of chicken. The Greeks, or at least the Greek left-wing, are gambling they can reject the terms of the bailout to which the previous government had agreed and still keep the euro, on the premise that, however harmful leaving the euro would be to them, it would be even worse for Europe. The Spanish, likewise, are gambling they can force the rest of Europe — by which everyone understands Germany — to bail out their banks, on similar reasoning.

Coyne concludes, correctly, that blaming austerity, in and of itself, as most European want to do, is nonsense. But, equally, as Stephen Harper says, austerity, all by itself, is not the answer, instead we, they must get supply side economic right - without the "tax cuts = prosperity" rubbish (there is a time and a place for tax cuts, now is not the time and neither America nor Europe is the place). But Europe can slow its borrowing and promote growth at the same time - starting with the realization that, absolutely contrary to President Hollande's contention, governments do not grow the economy, business does.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on June 07, 2012, 12:31:38
Andrew Coyne of he National Post although no fan of Prime Minister Harper, is a pretty good economist and, in this article (http://fullcomment.nationalpost.com/2012/06/06/andrew-coyne-austerity-and-growth-both-necessary-and-possible-to-fix-europes-economic-crisis/), from the National Post, he offers a pretty good overview of the European crisis and of Prime Minister Harper's 'solutions' to it. Note, especially, this:

Coyne concludes, correctly, that blaming austerity, in and of itself, as most European want to do, is nonsense. But, equally, as Stephen Harper says, austerity, all by itself, is not the answer, instead we, they must get supply side economic right - without the "tax cuts = prosperity" rubbish (there is a time and a place for tax cuts, now is not the time and neither America nor Europe is the place). But Europe can slow its borrowing and promote growth at the same time - starting with the realization that, absolutely contrary to President Hollande's contention, governments do not grow the economy, business does.

Hollande thinks that taking his foot off the brake and watching the speedometer rise is the same as adding gas.

On Top Gear a little while back they were doing a retrospective on SAAB and describing SAAB's first car which had a 2-Stroke engine.  To prevent the engine over heating and seizing up you had to keep feeding it gas.  Even when you were going downhill.  Even as you were standing on the brake......

SAAB eventually saw the wisdom of the 4-Stroke engine with a separate control loop for cooling allowing for braking, accelerating and cooling each to be independently monitored and controlled.

I wonder if that analogy holds in the economic world.  Can we separate the control functions or are they all inextricably linked like SAAB's 2-Stroke engine powered car?
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 07, 2012, 18:49:33
The problem with Europe isn't the linkages between the various systems; it is the people manipulating these linkages have been pushing/pulling the levers to maximize their benefit without any regard for the rest of the system for a long time. Just like individual voters rarely ask "who is paying for my free (insert government benefit here)?", voters and even governments in the PIIG zone were not asking pointed questions about the sources of their funds (especially identifying the people lending them and asking questions like "when will they want to be repaid?" or "What do they want from us in return for all this cash?").

This should not be any real surprise, people and organizations work to maximize their own benefits, and follow incentives (something Adam Smith recognized centuries ago), now the incentives are ending and people are trying to hand the bag to someone else before the music stops. Normal banking rules and incentives would have stopped this nonsense long ago; French banks tempted by higher yields from Greek bonds would not jump in so deeply without the real or implied incentive of a potential bailout by the EU; just like the subprime mortgage disaster in the United States was allowed to run so long with the implied (and eventually real) guarantees of government cash to backstop mortgage "investments" backed by mortgages held by Freddy Mac and Fannie Mae.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 08, 2012, 08:46:56
The headline in today's Globe and Mail (front page, above the fold in my (Ottawa) print edition) is: PM's EU stand angers Germany. The article (http://www.theglobeandmail.com/news/politics/harpers-refusal-to-help-bail-out-europe-draws-germanys-ire/article4240996/) is a pretty straight forward explanation of the Canadian position ...

Quote
Ottawa insists the IMF exists to help the world’s developing countries, not Europe, and Canada takes the position that it is standing up for non-G20 countries that are uncomfortable with IMF funds going to the euro zone ... [but] the Prime Minister’s stand isn’t likely to make him popular at this month’s G20 summit in Los Cabos, where the Mexican hosts are making the collection of new contributions a key priority for the meeting.

What is really interesting is the comments section (http://www.theglobeandmail.com/news/politics/harpers-refusal-to-help-bail-out-europe-draws-germanys-ire/article4240996/comments/) (sort them by highest score); a generally strongly anti-Harper commentariat is (almost) wholly behind him on this issue:

Quote
Does anyone else find it a little ironic that Germany refuses to bail out Euro PIIGS by approving the concept of EuroBonds, yet (apparently) criticizes Canada for refusing to do something equally undermining of good fiscal prudence.

In other words, Germany says EuroBonds (and other measures they are resisting) would make it too easy for the PIIGS to avoid serious changes to their irresponsible debt and deficit way of life.

Canada is essentially saying the same thing about using IMF funds to bail out Europe.

I agree with Canada's position.

Quote
I'm with the PM on this one.

Quote
Is there any fool in Canada (other than Mulcair) that wants Canada to BORROW more money to lend to the EU! DUMB DUMB DUMB!

Etc, etc, etc ...
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 11, 2012, 16:00:14
Expecting Germany to bail out the EUzone is a mugs game, Germany does not have the resources to do so, and a look at the structural setup of Europe suggests that many of the proposed "solutions" fail because there isn't enough trade between Germany and the distressed nations to shift the balance of payments or boost the affected economies:

http://www.washingtonpost.com/opinions/can-germany-come-to-the-euro-zones-rescue/2012/06/10/gJQAVz2ITV_story_1.html

Quote
Can Germany come to the euro zone’s rescue?
Robert J. Samuelson

Can Germany save Europe?

It’s tempting to think so. Costs are mounting; over the weekend, European leaders offered Spain up to $125 billion to prop up its shaky banks. German Chancellor Angela Merkel has been cast as Europe’s Scrooge dispensing austerity and discouraging recovery. If Germany would only open its wallet, Europe’s instability and suffering would shrink. Well, maybe. But this seductive theory may be wishful thinking, overstating Germany’s power and understating Europe’s problems. The dark truth may be that even a willing Germany can’t rescue Europe.

Let’s start with facts. Germany’s economy is the colossus of the euro zone (the 17 countries using the euro), representing 27 percent of the total. German unemployment, 5.4 percent in April, is half the euro zone’s 11 percent average. Global investors so trust Germany that they’ve beaten down interest rates on its 10-year government bonds to a puny 1.3 percent.

What might Germany do? For starters, it could stimulate its own economy, hoping that spillovers would help Europe’s other economies. Next, it might embrace “eurobonds” backed by all 17 euro countries that, in effect, would be guaranteed by Germany. Weaker countries would benefit from Germany’s strong credit rating; they could borrow at lower interest rates.

Finally, Germany could prod the European Central Bank (ECB) — Europe’s equivalent of the Federal Reserve — to be more aggressive in supporting shaky banking systems and in promoting faster economic growth, even if that created somewhat higher German inflation.

Unfortunately, the effects would be modest. A “rise in domestic demand is unlikely to translate into much growth support for other countries,” concludes a report from the Organization for Economic Cooperation and Development. The reason: Exports to Germany represent only 3 percent of the economies (gross domestic product) of France and Italy, 2 percent for Spain and 1 percent for Greece.

As for eurobonds, they would have to be issued in huge amounts to have a noticeable impact. In 2011, the euro zone’s GDP totaled 9.4 trillion euros ($11.75 trillion). Floating 10 billion or 15 billion in eurobonds would be a nonevent. But large volumes of eurobonds might hurt Germany’s credit rating. “Interest rates would go down for everyone else and up for Germans,” says Stephen Silvia of American University, an expert on Germany.

Indeed, Germany’s costs of saving the euro could be immense. A report by Carmel Asset Management, an investment company, puts the bill at more than 500 billion euros, an amount that would raise Germany’s debt/GDP ratio from 2011’s 81 percent to 103 percent. The report is titled: “Achtung Baby: Germany Is Riskier than You Think.”

It’s true that the ECB, providing deposit guarantees for banking systems, might foster stability — that is, prevent things from getting worse. But with the ECB’s main interest rate at 1 percent, further cuts might not much increase economic growth. If different inflation rates emerged between Germany (where labor markets are tight) and debtor countries (where they aren’t), debtor countries could become more cost-competitive. But this would take years.

There’s a yawning gap between the rhetoric and the reality of what Germany might do. Merkel is understandably reluctant to make large commitments to pay other countries’ costs. In surveys, about four-fifths of Germans oppose eurobonds.

Fortune is fickle. Germany’s economy may not always be as strong as now. Its low birthrate (1.4 children per woman) virtually guarantees a shrinking labor force. Only a decade ago, Germany was regarded as Europe’s “sick man,” losing competitiveness to low-wage factories in former Soviet bloc countries.

“From Bavaria, it’s only an hour’s drive to the Czech Republic,” says Thomas Kleine-Brockhoff of the German Marshall Fund. “You could almost hear the sucking sound of the German industrial economy moving eastward.” But Germany adjusted. Unions and firms adopted wage restraint. From 1996 to 2007, annual gains in German compensation per worker averaged 0.9 percent compared with a euro zone average of 2.4 percent. Germany engineered a huge shift in competitive advantage.

To Germans, other European countries must now adjust to new, if unpleasant, realities. Chief among these is that the economies of many European countries are no longer strong enough to support their welfare states. Economic growth is too low, populations are aging and demands on pension and health-care systems are too high. Benefits must be cut or taxes raised without doing too much damage to economic growth or the social fabric.

It’s a tall order that would be aided by a large and stable source of credit: a rescue fund allowing embattled countries to borrow at low rates while instituting essential policy changes. So far, Europe’s response has been a series of stopgaps, the Spanish loan being the latest.

But Germany is not wealthy enough to anchor such a fund. Together, Italy’s and Spain’s economies equal Germany’s. What if France gets in trouble? Only the United States along with China and other countries with large foreign exchange reserves could create such a fund. That this now seems politically impossible is one measure of global peril.
Title: Re: Why Europe Keeps Failing........
Post by: GAP on June 12, 2012, 18:17:55
NOW 80% DEMAND VOTE TO QUIT EU
Article Link (http://www.express.co.uk/posts/view/326075/Now-80-demand-vote-to-quit-EU)
 Tuesday June 12,2012 By Alison Little

DEMANDS for the British people to have a say on our role in Europe got a huge boost yesterday.

A new poll showed more than 80 per cent of voters are crying out for a referendum.

Nearly half of voters – 49 per cent – want their voices heard straight away, according to the survey.

A further third, 33 per cent, believe that there should be a vote “in the next few years”.

in revealing people’s deep dissatisfaction with Brussels in our popular crusade to get Britain out of the EU.

We have consistently said Europe has changed so dramatically since 1975 – when Britons last had a referendum – that another is long overdue.

Yesterday’s survey by Populus underlined the strength of feeling and will fuel many MPs’ calls for greater urgency.

Labour MP and former minister Kate Hoey said: “This poll shows that the message the Daily Express has been carrying for many months is resonating with the public. A referendum is not a sideline issue – it is crucial to the public and must happen.”

Leading Tory eurosceptic MP Peter Bone said: “The political elite are scared of asking the question. They know people don’t want the EU, they don’t want the £41billion membership fee, they want border controls returned, they want decisions made in Parliament.”
More on link
Title: Re: Why Europe Keeps Failing........
Post by: Sythen on June 12, 2012, 18:54:16
Quote
Article Link (http://)
 

Link not working for me
Title: Re: Why Europe Keeps Failing........
Post by: GAP on June 12, 2012, 18:57:51
fixed
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 13, 2012, 16:04:25

Two articles caught my attention today (it's raining in HK  :'(  ): one by Martin Wolf in The Financial Times (http://www.ft.com/intl/cms/s/0/614df5de-9ffe-11e1-94ba-00144feabdc0.html#axzz1vBXSHXyV) and the other by Niall Ferguson in Newsweek (http://www.thedailybeast.com/newsweek/2012/05/13/niall-ferguson-will-europe-act-to-avoid-an-economic-cataclysm.html). Both aim to explain what's happening in Europe but both, it seems to me are more prescriptive than explanatory and both appear to prescribe the same harsh remedy: union.

It seems to me that the EU has been, broadly, a runaway success story. The European civil wars that dominated 20th century history are over: Germany failed to unite Europe by force but, now, as Ferguson said, Germany risks losing all it has gained - and make no mistake Germany is the big winner in the EU - by being timid and isolationist. It is time to save the euro (€)  the EU itself by going the next step: a confederation. Some countries, notably the UK but, likely, also Denmark and Norway and Switzerland (which are not even in the EU) will not wish to join the new union but they will wish to revise the European Free Trade Area and secure a full free trade deal with the union.

But isn't the EU already a union? Yes, but not a full one; that's why it can even consider kicking Greece out of the Eurozone and that's why it cannot have sane, sensible economic policies. What else must they do? First they need to make themselves look a lot more like Canada: a very loose, highly decentralized federation but one in which a single, sovereign government sets economic (fiscal and monetary) policy, trade and foreign policy and even defence policy.

I would suggest that the new Union of European States (or whatever one wants to call it) should be even looser than Canada. The member states should have full control over their social policies and programmes - but they must be able to fund them through their own state taxes and through a system of transfer payments copied, in aim but but not in too much detail, from Canada. They must pay taxes to the new, federal superstate for areas of federal responsibility, which includes M. Hollande's call for growth because, right now, the EU/Eurozone cannot "do" growth - austerity is the only course open - because it has no resources of its own. Nations should retain their "own" armed forces but some fixed amount (say 75% of manning levels) must be assigned to be "under command" of the superstate's MOD. (It must be recognized that states have legitimate internal security requirements that requires state level "national guards," but hundreds of thousands of European men and women must be enlisted in national ships and units (flying squadrons and wings, regiments, brigades, divisions and even corps) which will serve under a combined command.) (NATO will have to die.) The superstate will be big, strong and rich and able to pursue a strategy comparable to, say, America's or China's.

Oh, and since the new superstate will set foreign and defence policy I am about 99.99% certain that the French nuclear forces are gone.

Thus, I see a three level structure for Europe:

1. European Free Trade Group: the new European superstate plus Britain, Denmark, Iceland, Ireland, Norway and Switzerland;

2. Independent states, which includes the new European superstate and all other states in Europe including the ones mentioned above plus Russia, Ukraine, Turkey, etc; and

3. "Member states" of the European superstate which still have "national" identities, are likely UN members, maybe even have "national" passports, but are no longer independent in economic, foreign or defence policies.

I'm pretty sure the Germans don't want it and French will hate it, but ...


Prime Minister Harper appears to agree. In an article (http://www.theglobeandmail.com/news/politics/ottawa-notebook/with-eu-running-out-of-runway-harper-urges-deeper-fiscal-integration/article4234145/) in the Globe and Mail (based upon his comments in a CBC interview) Stephen Harper suggests that the EU is "running out of runway here." What he means is that the current structure and rules do nor permit he EU to do enough to cope with the crisis. He also makes the very valid point that he EU has the necessary resources (its GDP is about $17 Trillion, compared to about $15 Trillion for the USA, $7 Trillon for China and a mere $1.7 Trillion for Canada) to solve the problem, but it cannot, as current organized, mobilize those resources.

Harper suggests that "there is a need for deeper financial integration" in the EU; using my secret decoder ring I read that as suggesting that European countries must sacrifice more sovereignty, specifically over monetary and fiscal policy.


And now former US Federal Reserve Chairman Alan Greenspan adds his support for "the political consolidation of Europe." He is reported (in an article in the Globe and Mail) (http://www.theglobeandmail.com/report-on-business/international-business/european-business/political-union-needed-to-solve-europes-problems-greenspan/article4256076/) to have made the comment in a panel discussion following a speech to the to the International Forum of the Americas (http://forum-americas.org/montreal) in Montreal.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 14, 2012, 09:00:25
Cue the scary music; even if the election is "favourable" the economic chaos and withdrawl of funds and economic activity as Greek citizens hunker down could lead to a self fulfilling prophecy:

http://m.heraldsun.com.au/election-apocolyse-greeks-stock-up-on-canned-food/story-e6frfm30-1226395368597

Quote
Election apocalypse: Greeks hoard canned food
From: news.com.au
June 14, 2012 11:40AM

Greek retailers say consumers are stocking up on non-perishable foods like pasta and canned goods. Picture: Thinkstock Source: news.com.au

NERVOUS Greeks are withdrawing up to 800 million euros ($1.01 billion) a day and stocking up on canned food as they fear the country will be forced to leave the eurozone after this Sunday's election.

Greek citizens fear the ramifications of a return to the country’s previous currency, the drachma, if the radical left-wing party and strong election contender SYRIZA wins this weekend.

Bankers said daily withdrawals from the major banks were hitting €500-€800 million ($631.8 million-$1.01 billion), Reuters reported.

Meanwhile, retailers say consumers are stocking up on non-perishable foods like pasta and canned goods.

Analysis: What the Greek elections mean for all of us

Latest polls showed the conservative New Democracy party, which supports a €130 billion international bailout, is running neck-and-neck with the leftist SYRIZA party.

And if SYRIZA wins, expect the austerity program to be dumped in favour of "growth" (apparently the EU codeword for stimulus spending, not economic growth the way we think of it).
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 14, 2012, 09:08:32
Cue the scary music; even if the election is "favourable" the economic chaos and withdrawl of funds and economic activity as Greek citizens hunker down could lead to a self fulfilling prophecy:

http://m.heraldsun.com.au/election-apocolyse-greeks-stock-up-on-canned-food/story-e6frfm30-1226395368597

And if SYRIZA wins, expect the austerity program to be dumped in favour of "growth" (apparently the EU codeword for stimulus spending, not economic growth the way we think of it).


The Greeks, no matter which party wins, cannot spend what they cannot borrow and what they cannot borrow, because no one will buy their bonds - no matter what the premium is - are euros.

My guess: 1) Greeks elect one of the lunatic parties; 2) Greece exits the euro; consequently 3) Greece leave the EU; and 4) Greek 'democracy' collapses - a military coup ensues ...

Turkey smiles ...
Title: Re: Why Europe Keeps Failing........
Post by: GAP on June 14, 2012, 09:23:24
As both Thucydides and ER have pointed out repeatedly, the EU will not last until there are consistant standards in budgets, and expenses across the whole spectrum.

Anything else is simply wishful thinking, and I'm still waiting for the toothfairy to come......
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 14, 2012, 09:56:07
As both Thucydides and ER have pointed out repeatedly, the EU will not last until there are consistant standards in budgets, and expenses across the whole spectrum.

Anything else is simply wishful thinking, and I'm still waiting for the toothfairy to come......


And you cannot have them as long as some members are willing and allowed to flout the rules and even lie about their finances.

I think you can have a three tier EU:

1. Top tier: Germany plus several others in a currency union;

2. Second tier: led by France - members unable to qualify for the currency union;

3. Third tier: led by the UK - members unwilling to join a currency union or even the Schengen Agreement (http://europa.eu/legislation_summaries/justice_freedom_security/free_movement_of_persons_asylum_immigration/l33020_en.htm) but who want to be in the free trade area.

In other words you have a large European Free Trade Area (20± members) within which exists a "deeper" European Union (15±) members, and within that there is a smaller (5 to 10) Eurozone which is, de facto, a loose federation, the members of which have sacrificed some sovereignty in order to share common fiscal and monetary policies.
Title: Re: Why Europe Keeps Failing........
Post by: tomahawk6 on June 15, 2012, 09:13:23
Socialism [communism light] is killing Europe. They cant raise taxes high enough to pay for the welfare state. The only hope is to privatize national healthcare and to encourage economic growth which in turn will generate more taxes.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 15, 2012, 09:31:22
Socialism [communism light] is killing Europe. They cant raise taxes high enough to pay for the welfare state. The only hope is to privatize national healthcare and to encourage economic growth which in turn will generate more taxes.


Actually, healthcare in Europe is relatively 'private' - no European country has as fully 'public' a health care system as does Canada. Healthcare costs in every modern European country are lower, as a percentage of GDP, than in the USA and 'outcomes' are universally better.
Title: Re: Why Europe Keeps Failing........
Post by: tomahawk6 on June 15, 2012, 09:43:00
So the governments of Europe dont include national healthcare in their budget ?
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 15, 2012, 09:55:06
So the governments of Europe dont include national healthcare in their budget ?


Yes, just as the USA does (for Medicare and Medicaid). Most (all?) European countries have a fully funded "national" health system which, like Canada's, rely upon rationing to control/regulate access. They also have extensive private insurance schemes which allow most Europeans to access services not covered by the "national" health system or to access "covered" services in more reasonable time frames.

There are only two pretty 'bad' health care systems in the OECD: America's and Canada's. Both are too expensive and provide second rate health outcomes. Neither offers a useful model for anyone to follow.

 
Title: Re: Why Europe Keeps Failing........
Post by: tomahawk6 on June 15, 2012, 10:16:40
The US has a great healthcare system. Even Canadians come to the US for medical treatment as there is no waiting for procedures.
Title: Re: Why Europe Keeps Failing........
Post by: PuckChaser on June 15, 2012, 10:48:59
Even rich Canadians come to the US for medical treatment as there is no waiting for procedures.

Fixed that for you. Only people with money go to the US for treatment, that doesn't make the system great, unless you've got stock in that company.
Title: Re: Why Europe Keeps Failing........
Post by: Rifleman62 on June 15, 2012, 11:05:34
ERC:
Quote
There are only two pretty 'bad' health care systems in the OECD: America's and Canada's. Both are too expensive and provide second rate health outcomes. Neither offers a useful model for anyone to follow.

My wife's doctor, last week, requested an "Urgent" medical test for the obvious reason. Appointment date is: 26 Sep 12.

My wife must an eye specialist annually for a couple of reasons. Her Ophthalmologist retired and his practice was taken over. She must see her GP to get a new referral to the Ophthalmologist even though he took over the other practice an BC health transferred the patients to him.

 Additionally, BC Health requires a referral to this Ophthalmologist every six months. So, she is required and authorized for a visit once per year, but must see her GP for a referral  every year, at least three months prior to the twelve months since the last visit to the Ophthalmologist. At least three months because that is the minimum time a patient with her condition will have to wait to see the Ophthalmologist. If it was not so serious, it would be a longer wait. BC health must pay for the referral visit to her GP.

Since I am a right wing *******, I put this BC Health administration masturbation (beating ourselves to death with admin) blame at BC's previous NDP governments who kept increasing the government with unionized supporters. The liberals, as usual in this province, were gutless to change it.

Off topic. When I moved here, I went through four vehicle registrations and four sets of license plates because I purchased a new vehicle.  (MB plates to BC to BC Vet plates on lease car to BC plates to BC Vet plates on owned car) Why I had to get new plates each time? See reason above.
Title: Re: Why Europe Keeps Failing........
Post by: Fishbone Jones on June 15, 2012, 11:16:55
Fixed that for you. Only people with money go to the US for treatment, that doesn't make the system great, unless you've got stock in that company.

You are wrong.

Many people from Southwestern Ontario are sent to hospitals in and around Detroit, by OHIP, on a regular and recurring basis, for elective and emergency surgery and treatment. Wait times are shorter, sometimes a couple of days vice 6 months, the equipment is better and treatment is better.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 15, 2012, 11:24:25
Candians of modest means can go to India for joint replacement surgery with short wait times and moderate cost; that is hardly a useful summation of the Indian health care system, simply that it can respond rapidly and effectively to the market signals of supply and demand. American health care is also capable of responding to supply and demand, hence private clinics can rapidly treat Canadian patients who are willing to pay.

Since Canadian health care managers are effectively insulated from consumer demand (they only see indirect demand from Provincial health care bureaucrats), they respond to different incentives, hence the different outcomes we get here.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on June 15, 2012, 11:36:03
Candians of modest means can go to India for joint replacement surgery

"Modest means" may be a relative term.   I've heard that similar medical trips to China cost about the same as a vacation to China would have cost, without medical treatment - but many can't afford such a vacation either.  Any idea how much money we're talking about, here?
Title: Re: Why Europe Keeps Failing........
Post by: Bruce Monkhouse on June 15, 2012, 11:56:21
Fixed that for you. Only people with money go to the US for treatment, that doesn't make the system great, unless you've got stock in that company.

I guess that would be what you define "rich" to be,............I'm rich because my family is healthy, not because I actually managed a few times last year to make a paycheque last until the next one.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 15, 2012, 12:55:51
"Modest means" may be a relative term.   I've heard that similar medical trips to China cost about the same as a vacation to China would have cost, without medical treatment - but many can't afford such a vacation either.  Any idea how much money we're talking about, here?

Numbers are all over the place but the average for a hip replacement is @ $10,000 USD. Medical tourism operators also advertise hospitals in places like Costa Rica, so airfare and accommodations can also be adjusted to suit your financial conditions.

Just as a checksum; costs for hip replacement in our system are estimated to be @ $30,000, and there is no airfare or accommodations included in that price either...
Title: Re: Why Europe Keeps Failing........
Post by: GAP on June 15, 2012, 13:15:32
In an effort to kill the practise, did not  a number of Canadian doctors refuse to treat out of country medical tourists for issues after the operation?
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 15, 2012, 13:23:26
In an effort to kill the practise, did not  a number of Canadian doctors refuse to treat out of country medical tourists for issues after the operation?


They might have wanted to, but it would be unethical and I'm pretty sure their lawyers would advise them to provide good, professional treatment rather than risk an (inevitable) lawsuit.
Title: Re: Why Europe Keeps Failing........
Post by: Good2Golf on June 15, 2012, 13:23:58
In an effort to kill the practise, did not  a number of Canadian doctors refuse to treat out of country medical tourists for issues after the operation?

Such conduct does not seem to be consistent with the Hippocratic Oath.  ???
Title: Re: Why Europe Keeps Failing........
Post by: GAP on June 15, 2012, 14:03:54
Such conduct does not seem to be consistent with the Hippocratic Oath.  ???

The issue came up with patients with MS who went out of country to have the operation, but when they came back their doctors refused to deal with problems.....
Title: Re: Why Europe Keeps Failing........
Post by: bridges on June 15, 2012, 14:33:45
Numbers are all over the place but the average for a hip replacement is @ $10,000 USD. Medical tourism operators also advertise hospitals in places like Costa Rica, so airfare and accommodations can also be adjusted to suit your financial conditions.

Just as a checksum; costs for hip replacement in our system are estimated to be @ $30,000, and there is no airfare or accommodations included in that price either...

Thanks for the info and comparison.  My point remains that there are people who can't afford either option, if they're paying directly out-of-pocket - whether in Canada or India or Costa Rica.  If you don't have any money, then $10000 might as well be a million.  Any discussion of health care and economic models will hopefully at least acknowledge the effects on the poor, if not actively try to find a solution.   I know, it sounds naïve ...
Title: Re: Why Europe Keeps Failing........
Post by: SeaKingTacco on June 15, 2012, 17:10:22
The issue came up with patients with MS who went out of country to have the operation, but when they came back their doctors refused to deal with problems.....

Not precisely true.  A number of provinces (Sask and Mb, I think) decreed that since the stent procedure was not health Canada approved, they would not pay for complications arising. You could still get treated, you would just get billed for the costs.
Title: Re: Why Europe Keeps Failing........
Post by: GAP on June 15, 2012, 17:17:19
seen
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 16, 2012, 01:30:34
Thanks for the info and comparison.  My point remains that there are people who can't afford either option, if they're paying directly out-of-pocket - whether in Canada or India or Costa Rica.  If you don't have any money, then $10000 might as well be a million.  Any discussion of health care and economic models will hopefully at least acknowledge the effects on the poor, if not actively try to find a solution.   I know, it sounds naïve ...

Well if the healthcare system could provide hip replacements for $10,000 vs $30,000 and other procedures were also 2/3 cheaper, then there would be far fewer poor people . Why do you think that the average Canadian family pays 41% of their income to taxes? If that amount of money was freed up for investment and savings, then all Canadians would have a higher standard of living.

For people who still have difficulty in the new conditions, private or church charities would be much more able to fund $10,000 procedures. For that matter, you could fund that yourself as your charitable contribution, there is nothing to stop you from doing so. Remember, charity is what you provide, not what is taken from other people.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on June 17, 2012, 09:10:00
Well if the healthcare system could provide hip replacements for $10,000 vs $30,000 and other procedures were also 2/3 cheaper, then there would be far fewer poor people .

Say WHAT?   

 :rofl:      Interesting economic model you have there.  I'll be sure to bring it up the next time I talk to our local food bank volunteers.

So, let's see if I have this right... if nobody had to pay taxes, then everybody would have money to pay $10K for hip replacements - right?   Not clear who would be providing them, or under what standards, or what roads we would drive on to get there.  This may - MAY - be a tad oversimplified.   But.... it's a discussion that needs to be held, clearly. 
Title: Re: Why Europe Keeps Failing........
Post by: Sythen on June 17, 2012, 09:26:00
Say WHAT?   

 :rofl:      Interesting economic model you have there.  I'll be sure to bring it up the next time I talk to our local food bank volunteers.

So, let's see if I have this right... if nobody had to pay taxes, then everybody would have money to pay $10K for hip replacements - right?   Not clear who would be providing them, or under what standards, or what roads we would drive on to get there.  This may - MAY - be a tad oversimplified.   But.... it's a discussion that needs to be held, clearly.

Ermm.. I don't think you understood his post. No one says 0% taxes (well no one worth listening to). Do some reading around the site, the discussion on health care wasted funding has already happened.
Title: Re: Why Europe Keeps Failing........
Post by: GAP on June 17, 2012, 09:57:55
Hey, we want to stimulate the economy, and since we don't have the $$ and you do.......

France seeks 120B EU package
By REUTERS
Article Link (http://cnews.canoe.ca/CNEWS/World/2012/06/16/19886296.html)
 
France wants the European Union to agree before the end of 2012 on growth-boosting measures worth 120 billion euros, the weekly Journal du Dimanche said on Sunday, citing a proposal circulated by France ahead of an end-June summit.

The newspaper also reported that France has accepted Germany’s rejection of its call to issue mutualized debt in the euro bloc and now agreed that so-called euro bonds were a project to be looked at over a 10-year time frame.

The 120 billion euros are to come from a combination of short-term growth instruments such as project bonds, reallocated EU structural funds and fresh investment capital from the European Investment Bank.

French President Francois Hollande submitted his ideas to EU partners and the European Council a few days ago ahead of a Group of 20 summit in Mexico on Monday and Tuesday and four-way talks with the leaders of Germany, Italy and Spain in Rome on Friday.

“From June, the European Council should adopt growth measures having a rapid impact and totalling 120 billion euros,” the newspaper cited Hollande as saying in the document, entitled “European growth pact.”

Hollande said the measures should be enlarged upon before the end of 2012 with the creation of a financial transaction tax and measures to create jobs, especially for young people.
   

The 120 billion euros would be made up of some 55 billion euros of unused EU structural development funds, some 4.5 billion euros in project bonds for infrastructure projects and 60 billion euros in capital that could be raised by the EIB if it were given an extra 10 billion euros in financing, the newspaper said.

Hollande, France’s first Socialist leader in 17 years, is demanding that Europe complement a budget discipline pact agreed earlier this year with a growth pact, an idea so widely supported that Berlin has come around to it.

Hollande has put himself on a collision course with the German government, however, with his push for the euro zone to adopt new mechanisms to insulate member states and their banks from market turmoil, such as a joint fund to pay down debt.

Hollande discussed his ideas with Italian Prime Minister Mario Monti in Rome on Thursday and also circulated them to European Council President Herman Van Rompuy and others two weeks before the crucial June 28-29 summit.

The French president also wants the euro zone’s ESM permanent rescue fund to be given a banking licence to allow it to borrow money from the European Central Bank to bolster its firepower.
More on link
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 17, 2012, 13:03:43
I'll just leave it with Synthen's reply...
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 23, 2012, 23:35:31
I think this blogger has nailed the issue, and we had better look at our practices to see if we are harbouring more counterproductive rules and regulations that affect our productivity (answer: yes). The Canadian government is working to slowly increase our assets, but really needs to do a lot more to shrink our liabilities:

http://southdakotapolitics.blogs.com/south_dakota_politics/2012/06/weve-been-eating-our-seed-corn.html

Quote
We’ve Been Eating Our Seed Corn
 
I have frequently admitted to being simple minded. While the world's economic and financial systems are enormously complicated, it seems to me that the bottom line is not complicated at all. Governments, like private corporations and individuals, have assets and liabilities. When the first is larger than the second, the question is what to do with the surplus. When the second is larger than the first, one must do one or more than one of three things: somehow increase assets and/or diminish liabilities, or default (or declare bankruptcy), or borrow the difference.

The last is the least painful in the short run, though it means increasing liabilities over the long run. That requires that there is someone you can borrow from right now. That in turn means that someone has to be running a big enough surplus to cover your shortfall. The current world crisis seems to be the result of a simple mathematical fact: there is simply not enough surplus in the world economy to cover all of the world's debts.

The only argument on the table right now is the austerity v. stimulus argument. Those favoring the former argue that the world's debtor governments (which is pretty much all of the world's governments) must reduce their liabilities by reducing spending and, in most cases, increase their assets by increasing taxes. The partisans of stimulus argue that this is self-defeating. Reducing spending retards economic growth, which further reduces revenues. Instead, governments should borrow even more and spend even more in order to generate economic growth. Growth will result in assets that can be used to pay down the debt. The obvious question then is whom to borrow from? Germany can't bail out the world.

It is not at all obvious, however, that borrowing heavily and spending heavily can really generate economic growth. Here is a note from Walter Russell Mead's superb blog Via Meadia:

For years, Japan has been the poster child for Keynesianism—and not in a good way. Its "lost decade" of economic stagnation is well known (at this point, it's closer to two decades than one), and this is only the beginning of its problems. Japan has been running a large budget deficit for more than twenty years now, and its debt to GDP ratio is close to 200 percent. But despite these gloriously Krugmanesque accomplishments, the economy isn't really growing, and it hasn't been for a very long time.

If heavy borrowing and spending really generates economic growth, wouldn't it be working for Japan by now?

The other question is whether the borrow now, pay later strategy has ever worked before. Here's Neil Reynolds at the Globe and Mail:

The British government has run a budget surplus in only six of the 37 years since 1975. The American government has run a budget surplus in only five of the 52 years since 1960. The Canadian government has run a budget surplus in only 10 of the 46 years since 1966. As Hudson Institute scholar Christopher DeMuth asserts in a prescient paper, Debt and Democracy, Keynesian doctrine – surpluses in the good years, deficits in the bad – has morphed in the advanced democracies into perpetual stimulus. As a result, the exponential accumulation of debt means that the next generation, people still unborn, could theoretically be required to pay all of their lifetime incomes in taxes merely to make the interest payments on an enormous debt.

I heard Paul Krugman, the high priest of the stimulus cult, saying on NPR that he'd be all for paying down debt when the economy is moving again. I would like to see an example of Krugman calling for real deficit reductions during past recoveries. I don't believe a word of this. It is obvious from the above that this is not what really happens. The governments of the UK and Canada and the US didn't borrow in bad times and pay back in the good ones. They borrowed and spent even more when times were flush.

The real problem we face is one of profligate spending. Democracy means that we the people get what we want and sooner or later that means we get what we deserve. To see how difficult the problem is, consider this story by Paul Geitner writing in the New York Times:

BRUSSELS — For most Europeans, almost nothing is more prized than their four to six weeks of guaranteed annual vacation leave. But it was not clear just how sacrosanct that time off was until Thursday, when Europe's highest court ruled that workers who happened to get sick on vacation were legally entitled to take another vacation.

Did you get that? Employers in Europe are not only legally required to pay for four to six weeks of vacation, but for another four to six weeks if you get sick while on the beach in Italy. This has consequences.

With much of Europe mired in recession, governments struggling to reduce budget deficits and officials trying to combat high unemployment, the ruling is a reminder of just how hard it is to shake up long-established and legally protected labor practices that make it hard to put more people to work and revive sinking economies.

Allow me once again to be simple minded. There are two things you can do with wealth once you generate it. One is to invest it in generating future wealth. The other is to consume it. The latter is the whole point of having an economy. The former is necessary in order to sustain an economy. When you can't put some folks to work because other folks are taking a second vacation, that means you are eating your seed corn. That is really the root of our problem.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on June 25, 2012, 15:11:58
Quote
When you can't put some folks to work because other folks are taking a second vacation, that means you are eating your seed corn.

Getting sick on vacation strikes me as just bad luck - ditto with regional blackouts that give everybody a free week off except those who'd already booked time off that week (clearly, I'm not still bitter about it...).

But while I'm not necessarily on board with the idea of compensatory vacation for illness, the linkage in the quote above isn't clear.  How does giving a salaried employee another few days off prevent an employer from hiring someone new?  The salary & paid benefits don't change - so is the theory that the employee will be less productive because of the extra days off?  Or is the idea to reduce paid benefits like vacation and sick leave altogether, & use the putative savings to hire addl workers? 
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on June 25, 2012, 21:49:05
>How does giving a salaried employee another few days off prevent an employer from hiring someone new?

Another few days off = X days of production lost.
Hiring new employee to recover X = additional cost, for same total productivity.

Basically, the problem is that the employer (initially) absorbs the cost.  Naturally, it will be passed along somehow (higher prices, reduced dividends, etc).
Title: Re: Why Europe Keeps Failing........
Post by: bridges on June 26, 2012, 09:59:58
>How does giving a salaried employee another few days off prevent an employer from hiring someone new?

Another few days off = X days of production lost.
Hiring new employee to recover X = additional cost, for same total productivity.

Taking on a whole new PY, to make up 3 days (or 7, or 1) of missed productivity?   Really? 

If you're looking at 1 for 1, it doesn't work:  a new employee would not only work those 3 days - they would be contributing another PY - so the total productivity would not be the same, it would be more.

Unless they're equating, say, every 100 employees' extra vacation days to every 1 potential new employee - ? But then there's the concept that people might actually be MORE productive after a few days' rest.  I'm certainly not the first to suggest that idea...it's even enshrined in DND leave regs.

While, again, I'm not necessarily on board with the idea of compensatory vacation time for that missed due to illness (or regional blackouts) ;D, I think the idea of looking at rest as a liability to production needs to be treated with wariness at best.       
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 26, 2012, 11:14:00
Actually since there is no indication that production or output would increase with the new hire, productivity would decrease since there are now more employees/unit output.

Since employers don't want to have extra employees, there is a disincentive to hire (and European employers are already very reluctent to make new hires due to the huge regulatory burden and the near impossibility of eliminating excess or unproductive employees).
Title: Re: Why Europe Keeps Failing........
Post by: Nemo888 on June 26, 2012, 11:52:30
If we all have the same counter productive but personally enriching rules we can have a decent lifestyle. No 70 hour work weeks, mat/pat leave, ample vacation to enjoy family and friends, sick days, no child labour and all the other things that were common practices before the evil spectre of socialism infected Europe. Changing the fundamentals of the social contract because politicians took on too much debt and punishing the following generations does not sound fair to me. Slash pensions on those who created the problem.

Or we could rush to the bottom to compete with defacto slave labour in Asia until we have no middle class left.  Eventually people in that hyper captialist system judge all their relationships by profitability. Welcome to Toronto. Better off moving to a small town up North where people are poor but at least they are not all jerks yet.  Where the entire town shuts down for hunting season and no one ever goes hungry at Christmas. A place where people don't judge people primarily by money.

I hope Europe stays European. Eating great food, friends, family and siestas are better than the rat race I am in.  Why would you hope that they have it as crappy as us?  Maybe we should become more like them.
Title: Re: Why Europe Keeps Failing........
Post by: Jed on June 26, 2012, 12:04:23
If we all have the same counter productive but personally enriching rules we can have a decent lifestyle. No 70 hour work weeks, mat/pat leave, ample vacation to enjoy family and friends, sick days, no child labour and all the other things that were common practices before the evil spectre of socialism infected Europe. Changing the fundamentals of the social contract because politicians took on too much debt and punishing the following generations does not sound fair to me. Slash pensions on those who created the problem.


Yep, and we will all be drinking free bubble up and eating rainbow stew. Get Real. Take off the rose coloured glasses.
Title: Re: Why Europe Keeps Failing........
Post by: George Wallace on June 26, 2012, 12:05:00
Like Alberta, many Europeans do not take jobs that are "beneath them".  Lower wage earning jobs are not filled by 'nationals', but by migrants. 
Title: Re: Why Europe Keeps Failing........
Post by: bridges on June 26, 2012, 12:10:20
Like Alberta, many Europeans do not take jobs that are "beneath them".  Lower wage earning jobs are not filled by 'nationals', but by migrants.

It's the same in SW Ontario.   Many greenhouses rely on migrant labour. 
Title: Re: Why Europe Keeps Failing........
Post by: Nemo888 on June 26, 2012, 13:08:24
So since people in some sh1t hole have no choice but to do anything for a few dollars we should too.  I like visiting those countries. Who wouldn't enjoy being treated like a millionaire and feeling superior about our fairness, opportunity and lack of corruption.

How would emulating Mexican labour practices be progress and how is it better than the European model?
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 26, 2012, 13:41:58
Nemo, do you realize what you are saying?

The Europeans decided they could "legislate" the good life into being without bothering to establish how they were going to pay for it. Instead, they borrowed the money in the form of ever increasing deficits and debt.

Now I am pretty sure you know someone who tried to do this on a personal basis and is facing financial hardship or even bankruptcy because they overextended on their credit cards/line of credit/borrowed against their house etc. They lived high on the hog for a while, but eventually the bills came due.

The EU and most Western nations (including Japan) did this on a mass basis, and now the bills are due as the creditors (people who bought sovereign debt in the form of government bonds and treasuries) are worrying that they have bought worthless pieces of paper. Greek debtholders will loose 60% of their investment, for example. It is all well and good to say "tough" and laugh at French bankers who dove in, but pensioners who's pension was based on bond yields will be equally punished for following the promises of the political class (and many bundled investments like pensions are not even under the control of the pensioner; you can choose what goes into an RRSP or a 401 plan, but the pension management team chooses the investment mix for your pension).

The worst part is the people who squandered the wealth will take down the people who were prudent, saved their money and did all the right things; they will face financial ruin along with everyone else because the society as a whole decided they could live beyond their means. If everyone in Canada were to be presented the bill for the $32,000 they owe right now, (one trillion in federal debt and unfunded liabilities) how many would be able to pay? If they can't pay that means $500 billion of unfunded liabilities; mostly Federal employee pensions and benefits will be wiped out, along with the banks and investors holding the $500 billion in Federal debt.

If you wish to believe that you will be isolated from this financial tsunami, you can. It may even be true if you have carefully stockpiled a bunker in the woods or are skilled in Neolithic hunter-gatherer techniques. Otherwise, we all need to figure out how to navigate the coming shakeout. As a society, we will need to find a way to pay down the debt or accept it will neve be paid and how to deal with the consequences.
Title: Re: Why Europe Keeps Failing........
Post by: George Wallace on June 26, 2012, 13:42:34
So since people in some sh1t hole have no choice but to do anything for a few dollars we should too.  I like visiting those countries. Who wouldn't enjoy being treated like a millionaire and feeling superior about our fairness, opportunity and lack of corruption.

How would emulating Mexican labour practices be progress and how is it better than the European model?

HUH?

What are you talking about?

People here find it below their station to take jobs as waiters for $20 and hour.  What does that have to do with Mexican labour practices?  What does that have to do with "people in some sh1t hole have no choice but to do anything for a few dollars"?
Title: Re: Why Europe Keeps Failing........
Post by: Nemo888 on June 26, 2012, 13:56:38
It has a lot to do with migrant temporary farm workers from those countries that come here and take jobs away from Canadians by working for peanuts.

You can get 250 applications for a DISHWAHING job that pays minimum wage in Ontario now. A friend of mine manages a restaurant and he had to argue with a Masters degree who was demanding that he could be a great dishwasher. He refused him because he thought it was beneath him and he would quit in a few months when he found something better. In what country do people refuse 20$ an hour waitering jobs?  20$ an hour times two people is median family income for a Canadian. Smack dab in the middle of the middle class.
Title: Re: Why Europe Keeps Failing........
Post by: George Wallace on June 26, 2012, 14:00:06
It has a lot to do with migrant temporary farm workers from those countries that come here and take jobs away from Canadians by working for peanuts.

You can get 250 applications for a DISHWAHING job that pays minimum wage in Ontario now. In what country do people refuse 20$ an hour waitering jobs? I want to move there.

Migrant workers are only taking jobs away from Canadians because Canadians find it below their station to take those jobs.  If Canadians filled those jobs, there would be no migrant workers.

Case in point:

You can get 250 applications for a DISHWAHING job that pays minimum wage in Ontario now.


You want $20 an hour as a waiter?  Move to Alberta.


Title: Re: Why Europe Keeps Failing........
Post by: Nemo888 on June 26, 2012, 14:05:31
No. They don't take them because the farm owner will not pay a fair wage. The farmer can't afford it because the middle man pays him in pennies while charging retailers dollars for produce.  The middle man needs to take less windfall profits and pay the farmer a fairer price so he can pay a decent wage. Instead government stepped in and allowed third world temp workers to come and do the work for almost nothing. Government meddling with market forces for the benefit of a few cronies. At least with the milk and wheat boards farmers got a fair price and didn't need third world labour to make ends meet.

Title: Re: Why Europe Keeps Failing........
Post by: George Wallace on June 26, 2012, 14:17:25
No. They don't take them because the farm owner will not pay a fair wage. The farmer can't afford it because the middle man pays him in pennies while charging retailers dollars for produce.  The middle man needs to take less windfall profits and pay the farmer a fairer price so he can pay a decent wage. Instead government stepped in and allowed third world temp workers to come and do the work for almost nothing. Government meddling with market forces. At least with the milk and wheat boards farmers got a fair price and didn't need third world labour to make ends meet.

Please provide facts, and references to all documentation to back up your above statements. 
Title: Re: Why Europe Keeps Failing........
Post by: Nemo888 on June 26, 2012, 14:43:32
Wow, that is a big job.

I don't know where to find commercial wholesale for fruit and produce auctions. The number of farmer run co op produce auctions starting up all over Ontario should tell you something. The farmers there are pretty upset at how they were treated. Go support one if you can.

Beef is pretty easy to figure out. 1483 pound fed steer is selling for roughly 108$ at auction.  You get  well over 600+ pounds of retail beef cuts from that. Maybe 110 big steaks at 8$ pound(more, I know), 1320$ and the other cuts at 5$ a pound for 2175$.

So 3495$ already. The are many cuts I did not include and the rest of the carcass is used with almost nothing thrown out. Conservatively 5000$ retail for the cow that the farmer raised and received only 108$. Not much above feed costs in a bad year.

Farmers don't get fair prices. Monopsony works like that.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on June 26, 2012, 14:54:31
Please provide facts, and references to all documentation to back up your above statements.

If this were expected of everybody on the forum, there would be a LOT of posts that would have to be reexamined.   
Title: Re: Why Europe Keeps Failing........
Post by: George Wallace on June 26, 2012, 15:04:07
If this were expected of everybody on the forum, there would be a LOT of posts that would have to be reexamined.   

I suppose, but Nemo888 seems so greatly informed as to why we have migrants taking jobs away from Canadians, I would like to see the references to where the Government has legislated that foreign labourers can work here for basically nothing. 

Nemo888 has focused on one sector and neglected all others.  Alberta has been offering jobs in all sectors for several years now, that Canadians have not been willing to fill.  There are serious shortages of labour in the Food Services industry in Alberta.  Jobs in Alberta restaurants are offering wages above minimum wage and still not enough applicants are filling them.  That is only one sector.  What of the rest?

Canadians, like many Europeans, have been spoiled.  They figure that they should have high wages, but have little personal insentive to actually work for it.

With his profound insight to this matter, through his commentary, I am sure Nemo888 has sources to back up his theories.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 26, 2012, 15:39:20
This has been examined in a number of threads (feel free to research), and I have posted several relevant articles from the National Post over the past few weeks on such topics as EI reform (where it has been discovered that Canadian workers are not going to fill jobs in their categories, while immigrant labour is being called upon to "fill the holes"), and the counterproductive supply management system, which refuses to allow a new value added yogurt company to establish itself in Ontario and buy milk, while at the same time forcing farmers to accept much less money selling the milk for animal feed.

Back when the protests against the Wheat Board were in full gear (yes, farmers were going to jail by taking their own wheat across the border to their own properties in the US to make the point), it was noted multiple times that the Wheat board was forcing farmers to accept below market prices since they were the only legal place to sell wheat. Many farmers were also switching to crops that were not under wheat board jurisdiction in order to escape.

So Nemo; historical evidence does not seem to be on your side. Things are tough, but making an emotional response that "life isn't fair" is really only a step or two away from the "occupy" movement, the Quebec "student" protests and the economic policy of the NDP. We already know life isn't fair, we need to understand how people respond to incentives and "incentivize" them to maximize their potential. Luckily there is a well known means to do so: the free market economy.
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on June 26, 2012, 21:32:03
>politicians took on too much debt

You misspelled "voters".  If voters had reliably and resolutely punished deficit spenders at the polls for the past 40+ years, we would not be in this situation.

I hope Europe stays European, too.  I think it is better to have differences between continents, cultures, and provinces.  I deplore the exodus of big welfare spenders from places they have ruined (eg. California) to places they have not ruined.  People who like to be looked after can move to Quebec or the Maritimes, or France or Greece.   People who imagine themselves to be rugged individualists can move to Alberta, or the US.  And it is always helpful to have some horrible warnings around.

Deficit spending is merely the spending of your future income.  Eventually the future becomes the present, and you have to pay for things you have already consumed.  When too many people do that at the same time, collective demand drops because everyone is spending less now in order to pay past debts.  Having government step in and acquire more debt on your behalf in order to "stimulate" economic activity above its natural level (ie. we can't spend 110% of income forever) just moves the problem a few years down the road (and increases the cost, assuming interest charges will be honoured) and is insane.

The Greeks are not to be pitied.  They are merely paying the price of what they already consumed.  They had it pretty good, so by comparison they might find it a little tight for a while.  Still, their per capita PPP is something over three times that of their neighbour, Albania.  Since no-one is calling for grants to Albania, it is OK to allow Greece to slip back at least that far.

Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 26, 2012, 21:41:43
 :goodpost:

Spot on, Brad; you are exactly right.
Title: Re: Why Europe Keeps Failing........
Post by: Nemo888 on June 27, 2012, 11:39:44
>politicians took on too much debt

You misspelled "voters".  If voters had reliably and resolutely punished deficit spenders at the polls for the past 40+ years, we would not be in this situation.

Deficit spending is merely the spending of your future income.  Eventually the future becomes the present, and you have to pay for things you have already consumed. 

The annoying part is that the next two generations will foot the bill. Not the people who ran up the debt. The ones who spent all that dosh have no qualms protecting their gold plated pensions at the cost of destroying their children's future.

 Their pension funds gave us globalization and the destruction of manufacturing.  The previous generation gave them almost free education, amazing infrastructure and tons of career opportunities. They were so greedy they even rescinded mandatory retirement AFTER all their parents retired.  The generation that gave them so much were forced to retire so they could have job opportunities.

The fair thing is to slash existing pensions and stop cutting infrastructure and education. But we are doing the opposite to appease the greediest generation in history. They will suck us all dry for a comfy retirement full of vacations and leisure. Unlike their parents who left them huge inheritances they will leave little or nothing for the next generation.

I wish the baby boomers were more like the greatest generation. They really were the greatest generation.  :salute:
Title: Re: Why Europe Keeps Failing........
Post by: Fishbone Jones on June 27, 2012, 12:07:50
No. They don't take them because the farm owner will not pay a fair wage. The farmer can't afford it because the middle man pays him in pennies while charging retailers dollars for produce.  The middle man needs to take less windfall profits and pay the farmer a fairer price so he can pay a decent wage. Instead government stepped in and allowed third world temp workers to come and do the work for almost nothing. Government meddling with market forces for the benefit of a few cronies. At least with the milk and wheat boards farmers got a fair price and didn't need third world labour to make ends meet.

You don't know what you're talking about. I deal with these guys daily.

The growers here sell directly to the retailer, there is no middle man.

I can buy the same tomatoes for less from the retailer than I can from the roadside outlet run by the green house that supplies those tomatoes to the retailer.

Migrant workers in the greenhouses make above minimum wage. How much above depends on their job and station. They also make enough to live here while working and send the majority of their wage home.

Come back when you can look beyond your communist ideals and provide some truth in your arguements.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 27, 2012, 12:14:35
The annoying part is that the next two generations will foot the bill. Not the people who ran up the debt. The ones who spent all that dosh have no qualms protecting their gold plated pensions at the cost of destroying their children's future.

 Their pension funds gave us globalization and the destruction of manufacturing.  The previous generation gave them almost free education, amazing infrastructure and tons of career opportunities. They were so greedy they even rescinded mandatory retirement AFTER all their parents retired.  The generation that gave them so much were forced to retire so they could have job opportunities.

The fair thing is to slash existing pensions and stop cutting infrastructure and education. But we are doing the opposite to appease the greediest generation in history. They will suck us all dry for a comfy retirement full of vacations and leisure. Unlike their parents who left them huge inheritances they will leave little or nothing for the next generation.

I wish the baby boomers were more like the greatest generation. They really were the greatest generation.  :salute:

 :bullshit:

I would remind you that it was, principally, the "greatest generation" that gave us Pierre Trudeau and the "culture of entitlement" for their kids, the boomers. The boomers, 20-somethings in the 1960s, voted in the same proportion that 20-somethings always vote: not many and not often. The "greatest generation" was scarred by the Great Depression, not war. It was the "greatest generation" that feared free markets more than the Soviet Union and voted, again and again, for cuts to defence spending and the steady, unrestrained growth of the welfare state. In the 1980s the "boomers" began to vote in large numbers: they elected Mulroney, then Chrétien because both promised to get deficits under control. (Both delivered: Mulroney balanced the "operating" budget (we took in more in revenue that we spent on programmes; the entire deficit was used to pay the interest on he national debt - Trudeau's legacy) and Chrétien slew the deficit dragon.) It is, largely, boomers who elect Stephen Harper.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on June 27, 2012, 12:28:59
Nemo - I seldom agree with much of what you say, and that includes your take on income distribution.  Recceguy, Brad and ERC have my full support in that regard.

However, your comment about the Baby Boomers, the generation to which I nominally belong, has much to commend in it.   That seems to set me adrift from ERC at least.

ERC:

You're right about Trudeau's antecedents - and he too was one of the "Greatest Generation" - just proving the inadequacy of statistics - but I do find the Baby Boomers to be a special case in that they proclaim both individualism and socialism. 

The really fascinating aspect of the Che Guevara set, the anti-establishment set, the Haight-Ashbury set, is the peculiar dichotomy that allows them to espouse Socialization in the public square while adhering to their fundamental credo, loudly and vociferously proclaimed during the 60's in rebellion against those same people you now praise: "Do your own thing".   Handshakes, civility and good manners were all signs of hypocrisy.  Crude, loud, vulgar and generally obnoxious displays as people "let it all hang out" and "turned on, tuned in and dropped out"  were praised.

If ever there was a libertarian generation, there it is.  Tom Wolfe's "Me Generation" is truly worthy of the epithet.

Nemo has a point.  Perhaps overstated as usual.  But he has a point.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 27, 2012, 12:40:31
Nemo - I seldom agree with much of what you say, and that includes your take on income distribution.  Recceguy, Brad and ERC have my full support in that regard.

However, your comment about the Baby Boomers, the generation to which I nominally belong, has much to commend in it.   That seems to set me adrift from ERC at least.

ERC:

You're right about Trudeau's antecedents - and he too was one of the "Greatest Generation" - just proving the inadequacy of statistics - but I do find the Baby Boomers to be a special case in that they proclaim both individualism and socialism. 

The really fascinating aspect of the Che Guevara set, the anti-establishment set, the Haight-Ashbury set, is the peculiar dichotomy that allows them to espouse Socialization in the public square while adhering to their fundamental credo, loudly and vociferously proclaimed during the 60's in rebellion against those same people you now praise: "Do your own thing".   Handshakes, civility and good manners were all signs of hypocrisy.  Crude, loud, vulgar and generally obnoxious displays as people "let it all hang out" and "turned on, tuned in and dropped out"  were praised.

If ever there was a libertarian generation, there it is.  Tom Wolfe's "Me Generation" is truly worthy of the epithet.

Nemo has a point.  Perhaps overstated as usual.  But he has a point.


No he doesn't, nor do you. The "boomers" may have been, maybe still are hypocritical but they neither asked for nor voted for the "culture of entitlement;" their parents, the "greatest generation" did that, for the reason I stated: the Great Depression was  a much more 'defining' experience for most Canadians than was World War II. When confronted with economic realities, in the early 1980s, as they entered real voting age (rather than the legal one), they voted for fiscal conservatism, even as they remained committed to social liberalism. They ... you, actually ... the boomers, were/are indeed  "crude, loud, vulgar and generally obnoxious," and they are the most "libertarian generation" yet, and they preach fiscal responsibility while feeling "entitled to their entitlements." But that just makes them:

1. Human; and

2. Not to blame for Trudeau's horrible legacy - that blame lies with the "greatest generation."
Title: Re: Why Europe Keeps Failing........
Post by: Sythen on June 27, 2012, 12:46:51

No he doesn't, nor do you.

I might be wrong, but I think Kurkhill meant Nemo had a point about the Me Generation.. Basically the "Occupy" and Montreal student protester generation. At least that's how I read it.. And also, ERC, you had a double post earlier :)
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 27, 2012, 12:56:42
I might be wrong, but I think Kurkhill meant Nemo had a point about the Me Generation.. Basically the "Occupy" and Montreal student protester generation. At least that's how I read it.. And also, ERC, you had a double post earlier :)


Thanks, double post removed. I plead old age and tired eyes.

My argument with Kirkhill is when he said that Nemo88's "comment about the Baby Boomers, the generation to which I nominally belong, has much to commend in it." I disagree.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on June 27, 2012, 13:02:53
If we all have the same counter productive but personally enriching rules we can have a decent lifestyle. No 70 hour work weeks, mat/pat leave, ample vacation to enjoy family and friends, sick days, no child labour and all the other things that were common practices before the evil spectre of socialism infected Europe. Changing the fundamentals of the social contract because politicians took on too much debt and punishing the following generations does not sound fair to me. Slash pensions on those who created the problem.

Or we could rush to the bottom to compete with defacto slave labour in Asia until we have no middle class left.  Eventually people in that hyper captialist system judge all their relationships by profitability. Welcome to Toronto. Better off moving to a small town up North where people are poor but at least they are not all jerks yet.  Where the entire town shuts down for hunting season and no one ever goes hungry at Christmas. A place where people don't judge people primarily by money.

I hope Europe stays European. Eating great food, friends, family and siestas are better than the rat race I am in.  Why would you hope that they have it as crappy as us?  Maybe we should become more like them.

I agree with Nemo888 on a couple of points he/she made, by my reading at least.  These things simply have to do with a different underlying philosophy:

-One of the dangers of capitalism is that everything is judged solely on financial profitability, and a lot of people's prospects and QOL seem to be diminished as a result.  I'd personally rather have a more balanced system where the public good remains a factor - not only "incentivizing" people to maximize their potential, as someone else said.  As if the only reason everyone isn't rich were that they simply aren't ambitious enough.
 
-Instead of "racing to the bottom" and casting aside the benefits like pension and vacation time that so many in our society don't even have yet (although I suspect many on this forum do), why don't we bring the bottom up?   
Title: Re: Why Europe Keeps Failing........
Post by: GAP on June 27, 2012, 13:10:19
The difficulty is the application of "bringing the bottom up"................

Many assume that this means you take from the top and give to the bottom.

You have just taught the bottom that no more effort need be expended except to hold out their hands.

If you want to provide the opportunities, training and incentive to move the bottom up, that might be feasible, but in the process the message must get across that they are not entitled to it, they must work for it.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on June 27, 2012, 13:11:18
The difficulty is the application of "bringing the bottom up"................

Many assume that this means you take from the top and give to the bottom.

You have just taught the bottom that no more effort need be expended except to hold out their hands.

If you want to provide the opportunities, training and incentive to move the bottom up, that might be feasible, but in the process the message must get across that they are not entitled to it, they must work for it.

Again, perpetuating the view that the only reason some people don't have pensions, adequate vacations or a living wage is that they're simply not working hard enough.  That strains credulity, to say the least. 
Title: Re: Why Europe Keeps Failing........
Post by: Sythen on June 27, 2012, 13:11:50
As if the only reason everyone isn't rich were that they simply aren't ambitious enough.


Why should everyone be rich? In reality, there is only so much capital out there to be earned. There isn't enough for everyone to be Bill Gates.

Quote

-Instead of "racing to the bottom" and casting aside the benefits like pension and vacation time that so many in our society don't even have yet (although I suspect many on this forum do), why don't we bring the bottom up?

I think (and I might be wrong) that companies are required by law to provide vacation pay? Heck, even when I was a kid and worked at McDonald's we got vacation, so not really sure what you mean there. Pensions, that's another story.

Bring the bottom up at the expense of who? I don't make a ton of money.. Heck, I'm a Commissionaire making less than $15/hour. But I have a nice apartment near downtown Ottawa, a nice car and enough money to enjoy myself within reason. I could go crazy and go to the casino or peelers every week end, but instead I invest in my RRSP's, etc so I am basically paying for my own pension now. I would NOT want others to pay for my recreation, because if given more money right now, that is exactly where it would go.. Some choose to spend theirs on recreation instead of investing and then complain when they don't have enough when they reach retirement age.

Now there are people who slip through the cracks, and get messed over by chance or circumstance, and that sucks for them.. But they are not my responsibility. When I eventually get married and have kids, then my money will go to ensuring their futures and health, not towards someone I don't know.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on June 27, 2012, 14:37:14
Why should everyone be rich? In reality, there is only so much capital out there to be earned. There isn't enough for everyone to be Bill Gates.

I misspoke there - what I meant was, having enough money to live on. 

Quote
I think (and I might be wrong) that companies are required by law to provide vacation pay? Heck, even when I was a kid and worked at McDonald's we got vacation, so not really sure what you mean there.
   

Unless I'm mistaken, the minimum for a F/T employee is 10 days a year - not very much if you think about it, especially if you're accustomed to having three times that.  And the more companies reduce their salaried positions in favour of terms and contracts, the more people don't have any paid vacation at all, or other spiffy benefits like drug plans, dental care & eyeglasses.

Quote
Bring the bottom up at the expense of who? I don't make a ton of money.. Heck, I'm a Commissionaire making less than $15/hour. But I have a nice apartment near downtown Ottawa, a nice car and enough money to enjoy myself within reason. I could go crazy and go to the casino or peelers every week end, but instead I invest in my RRSP's, etc so I am basically paying for my own pension now. I would NOT want others to pay for my recreation, because if given more money right now, that is exactly where it would go.. Some choose to spend theirs on recreation instead of investing and then complain when they don't have enough when they reach retirement age.

Not sure where the part about others paying for your recreation came from.  I don't think anyone but YOU should pay for your recreation.   :nod:   If you've worked as a Commissionaire your whole life (as opposed to being, say, ex-military), congratulations to you for saving your pennies.  Either way, what I'm talking about is all the people working at McJobs or intermittent contracts or not working at all, because of layoffs and other circumstances beyond their control ... we may say they should work hard and rise above it, but then so many of us patronize the Tim Hortons of the world, imagine the hue and cry if there were nobody to hand us our double-double in the morning. 

Quote
Now there are people who slip through the cracks, and get messed over by chance or circumstance, and that sucks for them.. But they are not my responsibility. When I eventually get married and have kids, then my money will go to ensuring their futures and health, not towards someone I don't know.

That's the difference between our philosophies (yellow colour added by me).  I think there must be a way to take care of each other in the greater sense to a certain basic extent, including people I don't know, and still prosper as a society.   That may sound idealistic to some ... & yep, that's the whole point.   :nod:
Title: Re: Why Europe Keeps Failing........
Post by: GAP on June 27, 2012, 15:01:54
  I think there must be a way to take care of each other in the greater sense to a certain basic extent, including people I don't know, and still prosper as a society.   That may sound idealistic to some ... & yep, that's the whole point.   

Ah....the social safety net that keeps getting stronger and stronger until it is strangling society with it's demands and costs.

Medicare was a great program when it came in. It guaranteed everyone BASIC health care. Then they added more services, then more still until today it consumes 40+ % of provincial budgets, and is comprised on entitled little empires fighting among each other for more and more recognition/budget/etc. .

Welfare rolls are comprised of a good percentage (not sure of #) of generational recipients. The rules for denying welfare are so convoluted and getting more so, all in the name of no one being left behind.

We are not our brother's keeper. We should help the needy, not the lazy and greedy.

Title: Re: Why Europe Keeps Failing........
Post by: Sythen on June 27, 2012, 15:15:07
I misspoke there - what I meant was, having enough money to live on. 

Minimum wage is enough to live on. Just not very comfortably. You might see it as patronizing, but if you are a hard worker then you don't work for minimum wage unless you're just entering the work force. Everyone starts at the bottom.

Quote
Unless I'm mistaken, the minimum for a F/T employee is 10 days a year - not very much if you think about it, especially if you're accustomed to having three times that.  And the more companies reduce their salaried positions in favour of terms and contracts, the more people don't have any paid vacation at all, or other spiffy benefits like drug plans, dental care & eyeglasses.

If you have 30 paid vacation days a year, then you're a government employee and I fully support cutting that back as its excessive in my eyes. No private sector job would give even close to that. 10 days paid vacation is fine. Its what I currently get, and when you take in to account all the stat days you get off, then it adds up to a lot more. If you don't get the benefits from your work, pay into an insurance plan then. Again, you are not my responsibility. You want my taxes, and as I already said I don't make a lot to begin with, to pay for your care so you can spend your own money on recreation (and I use this term loosely, I include anything that isn't a necessity, including internet connections, new cell phones, etc..) If you can't afford these things, there are many government funded groups that will help you write up a budget. As the old saying goes, poor planning on your part does not constitute an emergency on my part.

Quote
If you've worked as a Commissionaire your whole life (as opposed to being, say, ex-military), congratulations to you for saving your pennies.  Either way, what I'm talking about is all the people working at McJobs or intermittent contracts or not working at all, because of layoffs and other circumstances beyond their control ... we may say they should work hard and rise above it, but then so many of us patronize the Tim Hortons of the world, imagine the hue and cry if there were nobody to hand us our double-double in the morning.

As I said earlier, unless you're just starting out or have made major mistakes in your life, you are not working for minimum wage if you're a hard worker. If there was a huge demand for people to serve us our coffee in the morning, the job would pay a lot more. Its called the free market. If no one was willing to work the job, they'd need to offer more money to lure people to the positions, which would in the end make coffee more expensive. But let's face it, even if coffee costed $4 for a large, people would still be lined up to get them.

Quote
That's the difference between our philosophies (yellow colour added by me).  I think there must be a way to take care of each other in the greater sense to a certain basic extent, including people I don't know, and still prosper as a society.   That may sound idealistic to some ... & yep, that's the whole point.   :nod:

We do take care of each other in the greater sense. I fully support my taxes paying for good roads and infrastructure, a well funded police and fire departments and a fully operational armed forces. That way, you are reasonably safe, have the ability to travel to work and don't need to really worry about war coming to Canada. Everything you do within that blanket of security that is provided is your choice. Sometimes people get lucky and catch a great break and rise really far.. But most people get to where they are by how much effort they put in.

EDIT: Forgot to add free basic education to my list, which means everyone starts out on equal footing, more or less.
Title: Re: Why Europe Keeps Failing........
Post by: Bruce Monkhouse on June 27, 2012, 15:53:44
If you have 30 paid vacation days a year, then you're a government employee and I fully support cutting that back as its excessive in my eyes. No private sector job would give even close to that. 10 days paid vacation is fine.


I have a friend who has worked at the same Tim Horton's for a little over 15 years now and she gets 30 days paid vacation while I, as one of those evil Govt. employees, get 25 after doing this job for over 23 years.

Just like some of the other folks on this site who think Govt. employee's are the root of all evil,..you are sadly mistaken and full of ..........................stuff.

Title: Re: Why Europe Keeps Failing........
Post by: Sythen on June 27, 2012, 15:56:32

I have a friend who has worked at the same Tim Horton's for a little over 15 years now and she gets 30 days paid vacation while I, as one of those evil Govt. employees, get 25 after doing this job for over 23 years.

Just like some of the other folks on this site who think Govt. employee's are the root of all evil,..you are sadly mistaken and full of ..........................stuff.

Unless your friend is upper management, I'm gonna call BS on this. I know people who have worked at Tim Hortons for several years (like 5 or 6) who were getting 10, the same as most McJobs, as they're called. When I worked at McDonald's, I was a supervisor. I still only got 15.
Title: Re: Why Europe Keeps Failing........
Post by: Bruce Monkhouse on June 27, 2012, 15:59:11
She is the manger of the Tim's.............6 weeks vacation.
Title: Re: Why Europe Keeps Failing........
Post by: Bruce Monkhouse on June 27, 2012, 16:00:43
A "supervisor" at McD??.....would that be the tomato or the lettuce supervisor since I believe everyone there holds a 'supervisor' title.
Title: Re: Why Europe Keeps Failing........
Post by: Sythen on June 27, 2012, 16:07:33
A "supervisor" at McD??.....would that be the tomato or the lettuce supervisor since I believe everyone there holds a 'supervisor' title.

That might be true now, but not when I worked there. There was Crew, which was the basic workers, Crew Trainer which was essentially senior Crew and no benefits aside from training others. Then there was supervisors (which included shift and training supervisors) and then there was a single manager who ran the store. Unless working Mon-Fri during the day shift, a supervisor would be the highest "ranking" person present. Nice try at a personal attack though.

And I will still call BS on your friend getting 6 weeks leave.. Trying to find it on their website, but can't find how many days they get.

EDIT: Further to my last, actually just called a local Tim Hortons and the person who answered said management get 20 days. So I will stand by what I said, no private company, unless you're like the CEO or something similar gets 6 weeks vacation.
Title: Re: Why Europe Keeps Failing........
Post by: Bruce Monkhouse on June 27, 2012, 16:55:13


Just reconfirmed with this person,................she gets 5 weeks paid vacation.[25 days]
 She also gets 2 days off "in the bank" for working stat days and that was her "6th week" that she originally said to me.

So the same as the evil Govt. employee even with less time on the job..............but better stat day options.




Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on June 27, 2012, 23:27:09
A couple of times I linked to a Fred Reed (Fred On Everything) column about healthcare, in which he makes the basic point: some people simply can not or will not plan ahead, even if they had the kind of earning power to cover all of life's needs and privileges (their labour - what they are capable of doing in a unit of time - simply isn't worth much to anyone, and socialists are frantically devoted to removing whatever small dignity they can obtain through work by pricing it out of range with minimum wages).  Life stuck them with weak faculties and/or motivation, and there is nothing they can do to overcome that.  And what are we to do about that?  We can leave them to their own limited prospects - in which case we had damn well better look our indifference in the eye for what it is - or accept the burden of funding/subsidizing their existence.

However, that dependent population should be only a small fraction of the total population.  Where I see the problem is that there are too many university-capable people who have become protected species in public service, or are all but guaranteed some sort of sweet spot in private enterprise because we have over-regulated life.  And there are too many who think the safety net has to be wide enough to be a hammock, in the spirit of "equal benefit".
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on June 28, 2012, 01:05:10

....They ... you, actually ... the boomers, were/are indeed  "crude, loud, vulgar and generally obnoxious," ....

To the quick Sir, to the quick.  ;D

The boomers... we,actually..... may not have instituted the culture of entitlement but they/we certainly have taken full advantage of it. 

I will also admit that the "greatest generation" had a spotty record on a variety of issues - generating communists and fascists along with democrats.

As to the sudden increase in boomers sensitivity to politics and more conservative voting record.... doesn't that come with age?

Nemo does overstate....  He always does.  We are not evil incarnate nor, unfortunately, are we all Robber Barons - I would enjoy that status.   But, in my opinion, my generation has taken greater licence with mores, institutions and standards, and shown less respect for history than have the previous three or four generations at least.

And in that loss of contact with the past, I believe, lie many of the current problems.



Title: Re: Why Europe Keeps Failing........
Post by: Fishbone Jones on June 28, 2012, 02:20:21

If you have 30 paid vacation days a year, then you're a government employee and I fully support cutting that back as its excessive in my eyes.

I work for the Provincial gov't and get 15 vacation days a year.

Once more you're spouting generalized bullshit.

As is want of the type trying to make arguments from something they know nothing about.
Title: Re: Why Europe Keeps Failing........
Post by: Sythen on June 28, 2012, 02:28:49
I work for the Provincial gov't and get 15 vacation days a year.

Once more you're spouting generalized bullshit.

As is want of the type trying to make arguments from something they know nothing about.

No where did I say every government employee gets 30 days. Thanks for trying to put words in my mouth though. If I actually cared more, I am betting it wouldn't be hard to find a sunshine list equivalent for vacation days. And should I post a link to the article about government employees averaging 18 sicks days a year? I don't know you at all, so don't know your personal situation.. But do you really want to try to try to compare private sector and public sector perks? Government employees have it VERY good compared to equally educated public sector.
Title: Re: Why Europe Keeps Failing........
Post by: Fishbone Jones on June 28, 2012, 02:37:51
No where did I say every government employee gets 30 days. Thanks for trying to put words in my mouth though. If I actually cared more, I am betting it wouldn't be hard to find a sunshine list equivalent for vacation days. And should I post a link to the article about government employees averaging 18 sicks days a year? I don't know you at all, so don't know your personal situation.. But do you really want to try to try to compare private sector and public sector perks? Government employees have it VERY good compared to equally educated public sector.

CAW get better than me. Teachers get better than me. A whole host of NGO workers do better than me.

I also don't get anywhere near half of those 18 sick days a year.

More generalised bullshit from you trying to paint all with the same brush and not really having any real world experience of what the frig you're talking about.

BTW, go for it with your 'Sunshine List' cause it doesn't include me.

A Government worker.
Title: Re: Why Europe Keeps Failing........
Post by: Sythen on June 28, 2012, 02:52:28
CAW get better than me. Teachers get better than me. A whole host of NGO workers do better than me.

I also don't get anywhere near half of those 18 sick days a year.

More generalised bullshit from you trying to paint all with the same brush and not really having any real world experience of what the frig you're talking about.

BTW, go for it with your 'Sunshine List' cause it doesn't include me.

A Government worker.

For every private sector job that has it better than you, want to guess how many can be named that are far below? Whether or not you personally get to those 18 days, lots do and far past to get the average up that far. Where can you work outside the government to keep your job with stats like that?

I didn't paint everyone with the same brush and even stated:

Quote
No where did I say every government employee gets 30 days.

and

Quote
I don't know you at all, so don't know your personal situation

And btw, public school teachers are government employees. So again, stop putting words into my mouth, stop being so defensive and calm down. You're obviously mad.
Title: Re: Why Europe Keeps Failing........
Post by: Fishbone Jones on June 28, 2012, 03:19:33
So again, stop putting words into my mouth, stop being so defensive and calm down. You're obviously mad.

I'm not mad, just flabergassted and trying to devolve the misinformation that uneducated people are trying to perpetuate upon other hard working people, simply because they happen to hold a goverments job.

A federal government job that, btw, they are also likey to be holding. (https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fimages1.wikia.nocookie.net%2F__cb20090424164456%2Flyricwiki%2Fimages%2F8%2F89%2FDiggin_a_hole.gif&hash=1d9bdac7f058a188fb21210735c4b596)
Title: Re: Why Europe Keeps Failing........
Post by: Sythen on June 28, 2012, 04:08:23
I'm not mad, just flabergassted and trying to devolve the misinformation that uneducated people are trying to perpetuate upon other hard working people, simply because they happen to hold a goverments job.

A federal government job that, btw, they are also likey to be holding. (https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fimages1.wikia.nocookie.net%2F__cb20090424164456%2Flyricwiki%2Fimages%2F8%2F89%2FDiggin_a_hole.gif&hash=1d9bdac7f058a188fb21210735c4b596)

You're taking this discussion far too personally. I have no problem with government employees personally. There are necessary jobs within the public sector. No where will I ever advocate for no public sector jobs. And no where have I attacked the individual workers. I will never blame someone for working for a living. My problem is a lot of public sector jobs are vastly overpaid with unrealistic benefits. I don't even really blame the unions, as its their job to get the most they possibly can. I blame cowardly or inept politicians for allowing it to get to this point.

As for your last sentence, if that's directed at me.. No. I wish I had a government job. Maybe one day I will. And even while working for the government, my opinion won't change. If someone wants to pay me double what the work I am doing should pay, I am not gonna turn down the money. But when I do finally get a pay cut/job cut/benefits cut due to the overspending, I also wouldn't be surprised.
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on June 28, 2012, 09:06:18
We can't all have government jobs, any more than we can set the minimum wage arbitrarily at $30/hr and all live well.  That is why public sector bargaining should never have been instituted.  Although economic growth as a whole is not a zero-sum game, the division of the government's annual "pie" is.  If politicians had the backbone to leave public workers out on strike for 6-12 months to hold compensation creep down to match basic inflation, public sector bargaining would be OK.  But there is no such will.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on June 28, 2012, 09:53:56
Life stuck them with weak faculties and/or motivation, and there is nothing they can do to overcome that.  And what are we to do about that?  We can leave them to their own limited prospects - in which case we had damn well better look our indifference in the eye for what it is - or accept the burden of funding/subsidizing their existence.

However, that dependent population should be only a small fraction of the total population.  Where I see the problem is that there are too many university-capable people who have become protected species in public service, or are all but guaranteed some sort of sweet spot in private enterprise because we have over-regulated life.  And there are too many who think the safety net has to be wide enough to be a hammock, in the spirit of "equal benefit".

I just want to make sure I understand ... are you saying that all (or even most) people who need the safety net, need it because they have weak faculties and/or motivation?
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 28, 2012, 11:09:01
I just want to make sure I understand ... are you saying that all (or even most) people who need the safety net, need it because they have weak faculties and/or motivation?


I'm not putting words in anyone's mouth, but, surely, obviously, some "people who need the safety net, need it because they have weak faculties and/or motivation." There is a question of: how many are they and how much do they abuse, as opposed to need, that net?

The net is, arguably, too fine ~ almost nothing (no one) slips through ~ and too high ~ people fall into it before they have real 'need.' Maybe if the net was more coarse and 'lower' (closer to the disaster level) then it would be cheaper and still catch everyone with a real need.

I like to think I am a utilitarian (greatest good for the greatest number and all that). In my opinion the social safety net fails the utility test: it provides GREAT 'good' to a relatively small number but at a cost that disadvantages the greatest number because the cost of it deprives the greatest number of an opportunity to make the best use of their own, hard earned resources. I'm not suggesting we should all be mean or niggardly, but I am suggesting we should be careful with our money. Further: the government or society or whatever has no money of its own - it uses yours and mine.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on June 28, 2012, 14:36:12
Further: the government or society or whatever has no money of its own - it uses yours and mine.

Obviously.  :)  I'm sure you didn't mean that in a patronizing or insulting way.

I'd far rather see my tax money used for the public good, speaking in general terms, than for certain "perks" and wastage that it's been used for over the years.  I feel an ethical sense of responsibility toward our shared fate, and have no problem contributing to that, financially.  This is not the same as encouraging it to be taken advantage of.   There's always a danger, though, of setting a lot of truly needy people adrift, in the effort to catch a few idlers.   Striking a balance is probably the best we can aim for. 
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on June 28, 2012, 16:04:13
Obviously.  :)  I'm sure you didn't mean that in a patronizing or insulting way.

I'd far rather see my tax money used for the public good, speaking in general terms, than for certain "perks" and wastage that it's been used for over the years.  I feel an ethical sense of responsibility toward our shared fate, and have no problem contributing to that, financially.  This is not the same as encouraging it to be taken advantage of.   There's always a danger, though, of setting a lot of truly needy people adrift, in the effort to catch a few idlers.   Striking a balance is probably the best we can aim for.


I didn't intend to be patronizing, but I can see that it might look that way. I was trying to end the "utilitarian" explanation by affirming that it isn't society that pays the bills, it's you and me and there are 'opportunity costs' associated with those payments.

You'll get no argument from me about "an ethical sense of responsibility toward our shared fate" and I, too, have no problems paying for it. But: I want it to be efficient effective, especially cost effective; opportunity costs again.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 28, 2012, 17:06:50
And the most efficient way to take care of the truly sick and unfortunate is for you, personally, to do so. You can choose whoever is needful according to your list, and you can help them according to what you think best and using the resources you deem appropriate.

Next best is local, community or church based charities, you can pool your resources and you still have a fair amount of control over the process (if you want to). Larger, impersonal secular charities (especially national level ones) have much less access for you as an individual to audit their activities.
 
And there lies the rub; "if you want to". Far too many people think that if they just write a cheque it is enough, most people could not tell you what % of their donation actually reaches the intended recipient and how much gets eaten in administration, fundraising etc. For those who think charity is forcing others to contribute to their cause, the fact that they have gotten "x" amount of government dollars to support a worthy cause is sufficient; they seemingly have no interest in what happens to that money, not the perverse incentives it causes (do you really think a bureaucracy devoted to "solving" poverty would be interested in actually eliminating poverty and thus their reason for existence and annual budget?). The moral superiority they achieve for "helping" in this manner is their incentive.
Title: Re: Why Europe Keeps Failing........
Post by: Nemo888 on June 28, 2012, 17:56:55
Individuals can't build a school, manage roads, airline safety, stand up an army or police force.

Your argument that individuals should do it  is juvenile.

Title: Re: Why Europe Keeps Failing........
Post by: SeaKingTacco on June 28, 2012, 23:32:42
Nemo,

If you had been paying attention at all, Thucydides was talking about charity, not about core governmental responsibilities.

Or do you just enjoy being deliberately obtuse?
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on June 29, 2012, 02:20:55
Individuals can't build a school, manage roads, airline safety, stand up an army or police force.

Your argument that individuals should do it  is juvenile.

Nemo:

Notwithstanding the discussion about whether indivduals can do the things you list,individuals have done all of them in the past and continue to do them today.  Even here in Canada.

In fact most of the institutionalized services you describe started out as privare ventures.
Title: Re: Why Europe Keeps Failing........
Post by: Nemo888 on June 29, 2012, 06:44:25
It's possible. Just inefficient, wasteful of resources, geographically limited and prone to logistical duplication in some areas while other areas get no service at all.

It also carries some very heavy political implications. By the individualist theory democracy is your dollars. One dollar, one vote. That produces a plutocratic fascist dictatorship. I prefer participatory democracy with all it's flaws.

Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on June 29, 2012, 08:59:06
If you want inefficient and wasteful, consider a proliferation of government offices to provide a service, even in regions of low population where the service isn't anywhere near 100% busy.

I prefer representative democracy.  Participatory democracy leads to Californication.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on June 29, 2012, 09:46:37
I think we should hire some professionals to do some of these jobs, while the rest of us are busy working at our other jobs... they can be our agents, if you will.  We can call them our "government". 
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on June 29, 2012, 21:05:18
I do hire professionals to do things for me.  I call them "contractors" and "mechanics" and "lawyers" and "accountants" and so forth.  They freely post their rates and compete with each other, primarily on the bases of quality and cost.  Generally I get more of one at the expense of the other.

What I don't do is allow a third party to set the terms of payment between me and the professionals, especially when that third party occasionally is composed of a faction ideologically committed to knitting the hairs of its nose to the asses of the leaders of the professionals' "movement".
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on June 29, 2012, 21:33:16
I do hire professionals to do things for me.  I call them "contractors" and "mechanics" and "lawyers" and "accountants" and so forth.  They freely post their rates and compete with each other, primarily on the bases of quality and cost.  Generally I get more of one at the expense of the other.

What I don't do is allow a third party to set the terms of payment between me and the professionals, especially when that third party occasionally is composed of a faction ideologically committed to knitting the hairs of its nose to the asses of the leaders of the professionals' "movement".


Agreed across the board Brad.

The Government is "hired" to supply services under a least cost formulation.  Typically that involves qualified personnel: ie. people wth a track record, or, failing that, certifictions.
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on June 29, 2012, 22:52:15
To go further, the proper business model for government to follow is Walmart.
Title: Re: Why Europe Keeps Failing........
Post by: Danjanou on June 30, 2012, 00:16:22
To go further, the proper business model for government to follow is Walmart.

Price cutting, ugly customers in spandex, outsourcing to China, and cranky old people in vests covered with pins at the entrance, yeah that works for me 8)
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on June 30, 2012, 03:12:35
Price cutting, ugly customers in spandex, outsourcing to China, and cranky old people in vests covered with pins at the entrance, yeah that works for me 8)

That can describe many government offices right now!  ;)
Title: Re: Why Europe Keeps Failing........
Post by: Nemo888 on June 30, 2012, 11:15:37
Price cutting, ugly customers in spandex, outsourcing to China, and cranky old people in vests covered with pins at the entrance, yeah that works for me 8)

Sounds like the Pet. All the junk at  Canex is from China and probably many parts in our equipment if rumours are true about fake replacement components.
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on June 30, 2012, 11:45:53
I find I am remarkably indifferent to the attire of other shoppers and the decor of the store.  To the point: I don't enjoy well-attired customers and a well-appointed store enough to pay more for the privilege.  I'll go to the beach if I want some scenery.  I actually have read blog posts by people who are too snobby (really, there's no other word for it) to shop at Walmart.  Since much of my clothing came from K-Mart in the 1970s, I suppose I grew up conditioned to be indifferent.

But what I meant to highlight is: unrelenting pressure on suppliers to reduce costs, and staying out of everything except the core enterprise(s) of the organization.
Title: Re: Why Europe Keeps Failing........
Post by: SeaKingTacco on June 30, 2012, 11:47:11
Sounds like the Pet. All the junk at  Canex is from China and probably many parts in our equipment if rumours are true about fake replacement components.

Do you enjoy being this unhappy?
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on June 30, 2012, 13:01:22
a) The glass is half empty
b) The glass is half full
c) The glass is twice as large as it needs to be
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on June 30, 2012, 14:05:30
a) The glass is half empty
b) The glass is half full
c) The glass is twice as large as it needs to be
d) The glass only needs to be filled up half as often
e) I can drink faster.
Title: Re: Why Europe Keeps Failing........
Post by: ModlrMike on June 30, 2012, 14:34:15
a) The glass is half empty
b) The glass is half full
c) The glass is twice as large as it needs to be

d) The glass only needs to be filled up half as often
e) I can drink faster.

f) The 1% have stolen half the contents of the glass.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on July 01, 2012, 07:33:33
Two articles caught my attention today (it's raining in HK  :'(  ): one by Martin Wolf in The Financial Times (http://www.ft.com/intl/cms/s/0/614df5de-9ffe-11e1-94ba-00144feabdc0.html#axzz1vBXSHXyV) and the other by Niall Ferguson in Newsweek (http://www.thedailybeast.com/newsweek/2012/05/13/niall-ferguson-will-europe-act-to-avoid-an-economic-cataclysm.html). Both aim to explain what's happening in Europe but both, it seems to me are more prescriptive than explanatory and both appear to prescribe the same harsh remedy: union.

It seems to me that the EU has been, broadly, a runaway success story. The European civil wars that dominated 20th century history are over: Germany failed to unite Europe by force but, now, as Ferguson said, Germany risks losing all it has gained - and make no mistake Germany is the big winner in the EU - by being timid and isolationist. It is time to save the euro (€)  the EU itself by going the next step: a confederation. Some countries, notably the UK but, likely, also Denmark and Norway and Switzerland (which are not even in the EU) will not wish to join the new union but they will wish to revise the European Free Trade Area and secure a full free trade deal with the union.

But isn't the EU already a union? Yes, but not a full one; that's why it can even consider kicking Greece out of the Eurozone and that's why it cannot have sane, sensible economic policies. What else must they do? First they need to make themselves look a lot more like Canada: a very loose, highly decentralized federation but one in which a single, sovereign government sets economic (fiscal and monetary) policy, trade and foreign policy and even defence policy.

I would suggest that the new Union of European States (or whatever one wants to call it) should be even looser than Canada. The member states should have full control over their social policies and programmes - but they must be able to fund them through their own state taxes and through a system of transfer payments copied, in aim but but not in too much detail, from Canada. They must pay taxes to the new, federal superstate for areas of federal responsibility, which includes M. Hollande's call for growth because, right now, the EU/Eurozone cannot "do" growth - austerity is the only course open - because it has no resources of its own. Nations should retain their "own" armed forces but some fixed amount (say 75% of manning levels) must be assigned to be "under command" of the superstate's MOD. (It must be recognized that states have legitimate internal security requirements that requires state level "national guards," but hundreds of thousands of European men and women must be enlisted in national ships and units (flying squadrons and wings, regiments, brigades, divisions and even corps) which will serve under a combined command.) (NATO will have to die.) The superstate will be big, strong and rich and able to pursue a strategy comparable to, say, America's or China's.

Oh, and since the new superstate will set foreign and defence policy I am about 99.99% certain that the French nuclear forces are gone.

Thus, I see a three level structure for Europe:

1. European Free Trade Group: the new European superstate plus Britain, Denmark, Iceland, Ireland, Norway and Switzerland;

2. Independent states, which includes the new European superstate and all other states in Europe including the ones mentioned above plus Russia, Ukraine, Turkey, etc; and

3. "Member states" of the European superstate which still have "national" identities, are likely UN members, maybe even have "national" passports, but are no longer independent in economic, foreign or defence policies.

I'm pretty sure the Germans don't want it and French will hate it, but ...


And UK Prime Minister David Cameron may be thinking along similar lines in this article, which is reproduced under the Fair Dealing provisions of the Copyright Act from the Sunday Telegraph:

http://www.telegraph.co.uk/news/politics/david-cameron/9367479/David-Cameron-We-need-to-be-clear-about-the-best-way-of-getting-what-is-best-for-Britain.html
Quote
David Cameron: We need to be clear about the best way of getting what is best for Britain
David Cameron says he will consider a referendum on Britain's future relationship with Europe, but only when the time is right.

It is vital for our country — for the strength of our economy, for the health of our democracy and for the influence of our nation — that we get our relationship with Europe right.

We need to be absolutely clear about what we really want, what we now have and the best way of getting what is best for Britain. We need to answer those questions before jumping to questions about referendums.

I am not against referendums in our parliamentary democracy. Parliament is elected to make decisions and be accountable, but when powers are transferred it is right to ask the people. That is why we will ensure the Scottish people can hold a referendum having elected a government on a mandate to do just that.

I am also not against referendums on Europe. The last government should have held a referendum on the Lisbon Treaty. They didn’t, so this Government put in place a referendum lock so that no government can ever again pass powers from Britain to Brussels without first asking the British people.

But back to the prior questions: what we want and how we get it.

As a trading nation Britain needs unfettered access to European markets and a say in how the rules of that market are written.

The single market is at the heart of the case for staying in the EU. But it also makes sense to co-operate with our neighbours to maximise our influence in the world and project our values of freedom and democracy.

Here Britain makes the running in the EU, so I don’t agree with those who say we should leave and therefore want the earliest possible in/out referendum. Leaving would not be in our country’s best interests.

An “in” vote too would have profound disadvantages. All further attempts at changing Britain’s relationship with Europe would be met with cries that the British people had already spoken.

Yet the fact is the British people are not happy with what they have, and neither am I. That’s why I said on Friday that the problem with an in/out referendum is that it offers a single choice, whereas what I want — and what I believe the vast majority of the British people want — is to make changes to our relationship.

So what is wrong with what we’ve got? Put simply, for those of us outside the eurozone, far from there being too little Europe, there is too much of it. Too much cost; too much bureaucracy; too much meddling in issues that belong to nation states or civic society or individuals. Whole swathes of legislation covering social issues, working time and home affairs should, in my view, be scrapped.

The Coalition parties will have different views on this, so we will be reviewing the balance of the EU’s competences, to provide a national audit of what the EU currently does and its implications for our country.

Finally, and vitally, how do we maximise the chances of actually getting what we want?

First, we need to recognise that Europe is changing — and fast . The single currency is driving a process that will see its members take more and more steps towards fuller integration. They are necessary if the euro is to survive, but mean that the EU and relationships within it will change. We have shown not only that we can stay out of that integration, but that we can also get out of things — such as bail-out funds — that we don’t like.

At Friday’s summit we ensured that the key parts of banking union would be done by the European Central Bank for eurozone members and not for us. We won’t stand behind Greek or Portuguese banks, and our banks will be regulated by the Bank of England, not the ECB.

There is more to come where we can take forward our interests, safeguard the single market and stay out of a federal Europe. Those who say we would never say “no” were proved wrong by my veto last December. And those who instead say we risk giving up all influence are also wrong.

Two of the last big decisions about European institutions have gone our way: we have a British head of the European Bank for Reconstruction and Development and a home in London for important parts of the new EU patent court.

Second, let us start to spell out in more detail the parts of our European engagement we want and those that we want to end. While we need to define with more clarity where we would like to get to, we need to show tactical and strategic patience. The eurozone is in crisis which needs to be resolved, and we are in a Coalition government during this parliament.

Nevertheless I will continue to work for a different, more flexible and less onerous position for Britain within the EU.

How do we take the British people with us on this difficult and complicated journey? How do we avoid the wrong paths of either accepting the status quo meekly or giving up altogether and preparing to leave? It will undoubtedly be hard, but taking the right path in politics often is.

As we get closer to the end point, we will need to consider how best to get the full-hearted support of the British people whether it is in a general election or in a referendum.

As I have said, for me the two words “Europe” and “referendum” can go together, particularly if we really are proposing a change in how our country is governed, but let us get the people a real choice first.


It sounds like Cameron wants to move Britain into the outer ring ... an area in which some non EU members (Norway and Switzerland) might find a "home."
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on July 01, 2012, 10:39:32
Every toilet is shaped like a ring.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on July 01, 2012, 11:18:59
Every toilet is shaped like a ring.

Exactly ...

In another (political) context I have often used a gravity well to illustrate the problem that most people, nation-states and cultures face.

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fwww.musicalgeometry.com%2Fwp-content%2Fuploads%2F2012%2F03%2Fgravitywell31.png&hash=2fab2df1d5434f3df9af313b34c07d1f)

My thesis is that everyone/everything enters the gravity well at the top and begins to circle. Most people, nation-states and cultures act like a star or planet (or a coin if you are in a science museum), they slowly, at first, but surely, drop farther and farther into the well, eventually disappearing into human history's own black hole. Some, however, have their own source of energy - maybe it's finite: think station keeping fuel on a satellite - which they can use to stay near the top of the well while others sink to the bottom.

It seems to me that Prime Minister Cameron wants Britain to use whatever energy it has left to continue orbiting in that outer ring, near the top of the well while others (Greece, Spain, Portugal, Italy and France) shed their energy as they fall towards the bottom/centre ~ your toilet.
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on July 01, 2012, 17:20:19
Are we old enough to be this cynical?
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on July 01, 2012, 17:56:17
Are we old enough to be this cynical?


I am ...   :'(  ... sadly.

Anyway, I'm not sure I'm cynical; maybe I'm just realistic. My life experience, all over the world in 70 years, says that a lot of people and places (nation states) have failed, are failing and will fail. I've said before that culture matters and some of us were born lucky, born into strong, sophisticated, energetic and entrepreneurial cultures; others were unlucky and were born into illiberal societies (neither good liberals, like us Anglo Saxons, nor good conservatives, like some East Asians) which are likely to go down the gravity well/toilet.
Title: Re: Why Europe Keeps Failing........
Post by: Bruce Monkhouse on July 01, 2012, 19:47:17
To go further, the proper business model for government to follow is Walmart.

You think government's should expand??
That's so unlike you Mr. Sallows.
Title: Re: Why Europe Keeps Failing........
Post by: GAP on August 08, 2012, 12:32:02
Gee.....the only thing lacking is a NDP logo with this guy......

Indigestion for ‘les Riches’ in a Plan for Higher Taxes
Article Link (http://www.nytimes.com/2012/08/08/business/global/frances-les-riches-vow-to-leave-if-75-tax-rate-is-passed.html?_r=3&hpw)
 
PARIS — The call to Vincent Grandil’s Paris law firm began like many others that have rolled in recently. On the line was the well-paid chief executive of one of France’s most profitable companies, and he was feeling nervous.

 President François Hollande is vowing to impose a 75 percent tax on the portion of anyone’s income above a million euros ($1.24 million) a year. “Should I be preparing to leave the country?” the executive asked Mr. Grandil.

The lawyer’s counsel: Wait and see. For now, at least.

“We’re getting a lot of calls from high earners who are asking whether they should get out of France,” said Mr. Grandil, a partner at Altexis, which specializes in tax matters for corporations and the wealthy. “Even young, dynamic people pulling in 200,000 euros are wondering whether to remain in a country where making money is not considered a good thing.”

A chill is wafting over France’s business class as Mr. Hollande, the country’s first Socialist president since François Mitterrand in the 1980s, presses a manifesto of patriotism to “pay extra tax to get the country back on its feet again.” The 75 percent tax proposal, which Parliament plans to take up in September, is ostensibly aimed at bolstering French finances as Europe’s long-running debt crisis intensifies.

But because there are relatively few people in France whose income would incur such a tax — an estimated 7,000 to 30,000 in a country of 65 million — the gains might contribute but a small fraction of the 33 billion euros in new revenue the government wants to raise next year to help balance the budget.

The French finance ministry did not respond to requests for an estimate of the revenue the tax might raise. Though the amount would be low, some analysts note that a tax hit on the rich would provide political cover for painful cuts Mr. Hollande may need to make next year in social and welfare programs that are likely to be far less popular with the rank and file.

In that regard, the tax could have enormous symbolic value as a blow for egalité, coming from a new president who has proclaimed, “I don’t like the rich.”
More on link
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on August 12, 2012, 15:32:47
A prediction from over a decade ago comes true. Odd how Keynesyans never seem to be able to predict these things?

http://canadiancincinnatus.typepad.com/my_weblog/2012/08/europe-is-experiencing-the-crisis-that-milton-friedman-predicted-12-years-ago.html

Quote
Europe is experiencing the crisis that Milton Friedman predicted 12 years ago

Some lowlights from a doom-and-gloom BBC report on economic conditions in the eurozone:

“The yield on Spanish 10-year bonds, which are taken as a strong indicator of the interest rate the government would have to pay to borrow money, rose above 7%, while Italian bond yields rose to 6.1%.

Yields above 7% are considered to be unsustainable in the long term.”

“But, as BBC Europe correspondent Chris Morris says, by sending its borrowing costs higher, the markets are sending a message to the eurozone that plans to help Spain are not convincing.”

In the year 2000, at a Bank of Canada conference, the great economist Milton Friedman had this to say about the then-forming currency:

“I think the euro is in its honeymoon phase. I hope it succeeds, but I have very low expectations for it. I think that differences are going to accumulate among the various countries and that non-synchronous shocks are going to affect them. Right now, Ireland is a very different state; it needs a very different monetary policy from that of Spain or Italy. On purely theoretical grounds, it’s hard to believe that it’s going to be a stable system for a long time. …

If we look back at recent history, they’ve tried in the past to have rigid exchange rates, and each time it has broken down. … So the verdict isn’t in on the euro. It’s only a year old. Give it time to develop its troubles.”

Over a decade later, the “troubles” are at hand.

P.S. Notice how Friedman zeros in on Ireland, Spain and Italy.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on August 13, 2012, 08:21:18
Two articles caught my attention today (it's raining in HK  :'(  ): one by Martin Wolf in The Financial Times (http://www.ft.com/intl/cms/s/0/614df5de-9ffe-11e1-94ba-00144feabdc0.html#axzz1vBXSHXyV) and the other by Niall Ferguson in Newsweek (http://www.thedailybeast.com/newsweek/2012/05/13/niall-ferguson-will-europe-act-to-avoid-an-economic-cataclysm.html). Both aim to explain what's happening in Europe but both, it seems to me are more prescriptive than explanatory and both appear to prescribe the same harsh remedy: union.

It seems to me that the EU has been, broadly, a runaway success story. The European civil wars that dominated 20th century history are over: Germany failed to unite Europe by force but, now, as Ferguson said, Germany risks losing all it has gained - and make no mistake Germany is the big winner in the EU - by being timid and isolationist. It is time to save the euro (€)  the EU itself by going the next step: a confederation. Some countries, notably the UK but, likely, also Denmark and Norway and Switzerland (which are not even in the EU) will not wish to join the new union but they will wish to revise the European Free Trade Area and secure a full free trade deal with the union.

But isn't the EU already a union? Yes, but not a full one; that's why it can even consider kicking Greece out of the Eurozone and that's why it cannot have sane, sensible economic policies. What else must they do? First they need to make themselves look a lot more like Canada: a very loose, highly decentralized federation but one in which a single, sovereign government sets economic (fiscal and monetary) policy, trade and foreign policy and even defence policy.

I would suggest that the new Union of European States (or whatever one wants to call it) should be even looser than Canada. The member states should have full control over their social policies and programmes - but they must be able to fund them through their own state taxes and through a system of transfer payments copied, in aim but but not in too much detail, from Canada. They must pay taxes to the new, federal superstate for areas of federal responsibility, which includes M. Hollande's call for growth because, right now, the EU/Eurozone cannot "do" growth - austerity is the only course open - because it has no resources of its own. Nations should retain their "own" armed forces but some fixed amount (say 75% of manning levels) must be assigned to be "under command" of the superstate's MOD. (It must be recognized that states have legitimate internal security requirements that requires state level "national guards," but hundreds of thousands of European men and women must be enlisted in national ships and units (flying squadrons and wings, regiments, brigades, divisions and even corps) which will serve under a combined command.) (NATO will have to die.) The superstate will be big, strong and rich and able to pursue a strategy comparable to, say, America's or China's.

Oh, and since the new superstate will set foreign and defence policy I am about 99.99% certain that the French nuclear forces are gone.

Thus, I see a three level structure for Europe:

1. European Free Trade Group: the new European superstate plus Britain, Denmark, Iceland, Ireland, Norway and Switzerland;

2. Independent states, which includes the new European superstate and all other states in Europe including the ones mentioned above plus Russia, Ukraine, Turkey, etc; and

3. "Member states" of the European superstate which still have "national" identities, are likely UN members, maybe even have "national" passports, but are no longer independent in economic, foreign or defence policies.

I'm pretty sure the Germans don't want it and French will hate it, but ...


There are drawbacks to this proposal and the Good Grey Globe's John Ibbittson, working from articles in the Economist (http://www.economist.com/node/21560269), gives them in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/news/politics/why-germany-shuns-canadas-debt-model/article4478005/
Quote
Why Germany shuns Canada’s debt model

JOHN IBBITSON
The Globe and Mail

Published Sunday, Aug. 12 2012

Angela Merkel may be thinking about the Canadian example right now, and not in a good way.

The German Chancellor will be in Canada on Wednesday and Thursday for talks with Prime Minister Stephen Harper about a proposed Canada-European Union free trade agreement. They will also, of course, discuss the state of things in Europe. That is where the unhappy Canadian precedent comes in.

Many observers expect the chronic European debt crisis to become acute this fall. Push could come to shoved-out-of-the-euro for Greece. Spain and Portugal are also increasingly insolvent. Ireland continues to struggle, and Italy can’t meet its deficit-reduction targets because of a worsening recession.

To prevent a possible collapse of the euro zone, a growing number of European economists and politicians are calling for the mutualization of debt. In essence, at least some of the debt of the nations in the euro zone would be pooled, with the richer countries guaranteeing the loans and helping to pay them down.

Ms. Merkel is strongly resisting the idea, and with good reason. Germany and other northern European “have” states could end up bleeding money year after year to “have not” states in southern Europe. The euro zone could become, in effect, a mirror image of Canadian federalism, with the Mediterranean playing the role of Quebec and the Maritimes.

The various rescue packages that have been put together to solve the crisis, however ineffective they might be, at least come with conditions. In exchange for loans and guarantees, indebted governments are expected to balance their budgets by cutting social programs, laying off public-sector workers, and loosening regulations in order to encourage private enterprise.

By mutualizing debt, the conditions attached to the loans could be weakened or disappear. Countries such as Germany that keep their entitlements in line with tax revenues would annually subsidize governments that spend money on things they can’t afford.

Much the same thing happens in Canada. It’s called equalization. The federal government sends transfers to poorer provincial governments, which spend the money on social programs that would otherwise be beyond their means. Some of those programs – such as Quebec’s daycare and tuition subsidies – are more generous than programs in provinces that don’t qualify for transfers. This is exactly what German taxpayers are warning Mr. Merkel they won’t put up with.

And once debt is pooled, entitlements become pooled as well. Everyone in the euro zone would come to expect certain basic levels of heath care, education and other social services, whether or not they could pay for them, just as Canada’s Constitution guarantees a similar basic level of services across the country.

The Economist warns of exactly such a danger in this week’s issue. “A transfer union across the existing single currency zone based on the Canadian model would seek to make governments’ revenues more equal,” its writers predict. They estimate such a system would cost Germany the equivalent of 3 per cent of GDP annually.

Sounds about right. Ontario loses an estimated 2 per cent of its GDP each year in transfers to other provinces, according to a recent Ontario government report, while Alberta pays considerably more.

But no one has the power to compel have-not provinces to balance their budgets and trim their spending or face a cut-off in transfers. Only the governments themselves and the bond-rating agencies that assess their lending risk have any real say.

Quebec’s debt currently sits at about 55 per cent of the province’s gross domestic product. If Parti Québécois Leader Pauline Marois had her way and Quebec became an independent nation, assuming along the way its share of the national debt, the new country would start life with a debt-to-GDP ratio of just under 100 per cent, instantly making it one of the world’s most indebted countries.

No wonder Ms. Merkel shuns the notion of mutualization of debt. It’s too reminiscent of one Canadian example other countries might wish to avoid.


First, Europe: There are only two options:

1. Adopt a structure which is, fundamentally, along the lines I described - the countries that want (need) to remain in the Eurozone surrender some fiscal sovereignty so that, de jure they cannot ruin their own economies for their own domestic political purposes; or

2. As the Economist advocates (http://www.economist.com/node/21560252), push Greece out of the Eurozone sooner rather than later - but Portugal, maybe Ireland, Spain, even Italy and, eventually, France (and maybe some others) will follow them out leaving a Eurozone of only a handful of countries centred on Finland, Germany and the Netherlands.

Second, Canada: we must, eventually, reform equalization so that it pushes 'have not provinces' to manage their internal economies in a responsible manner. I accept that equalization is enshrined in the Constitution, as are provincial rights to manage their own affairs, but Ottawa controls the equalization rules and, sooner or later, Canadians will demand a system that gets fiscal responsibility for equalization payments.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on August 13, 2012, 10:01:52
I see the break coming along different lines:

The UK withdraws from the EU and regains its focus on the Anglosphere (Lord Black wrote something  along these lines in this weekends National Post (http://fullcomment.nationalpost.com/2012/08/10/conrad-black-the-u-k-s-olympic-crossroads-reflections-on-the-commonwealth/)

The "EU" is centered on Germany and encompasses most of the northern European and Nordic States

A southern tier of "Latin" nations centered on France

Eastern European nations (former Warsaw Pact) centered on Poland; united by a desire to be independent of both Germany and Russia

The prescriptions for Union generally fail to take national aspirations into account; the Germans may like being the "winners" of the EU sweepstakes but are not keen to pay for the losers; French aspirations for the leadership of Europe are running up against harsh fiscal realities so they may be content to lead the "Latin" Zone, while Eastern Europe has a long history fo being dominated by either Germany or Russia and are probably not keen to repeat the experience.

The Balkens will probably remain fractured between the EU and Russian spheres of influence, and Turkey is moving in its own direction (disturbingly flirting with the idea of a new Ottoman Empire).
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on August 13, 2012, 15:45:15
Quote
By a convention dated 23 December 1865,[1] France, Belgium, Italy, and Switzerland formed the Latin Monetary Union and agreed to change their national currencies to a standard of 4.5 grams of silver or 0.290322 gram of gold (a ratio of 15.5 to 1) and make them freely interchangeable

Quote
The Latin Monetary Union (LMU) was a 19th century attempt to unify several European currencies into a single currency that could be used in all the member states, at a time when most national currencies were still made out of gold and silver. It was established in 1865 and disbanded in 1927.

Courtesy of Wikipedia (http://en.wikipedia.org/wiki/Latin_Monetary_Union)


Conversely there was the Zollverein (http://en.wikipedia.org/wiki/Zollverein#Timeline), a German customs and excise regime (Free Trade Area) - a much more successful exercise.



Here's a very interesting summary  (http://www.guardian.co.uk/world/2001/dec/10/euro.eu) of monetary unions.

Note that the Latin and Scandinavian unions, not to mention the British and the US, all came under stress when they bumped up against the fixed rates of the gold standard. 

When the gold standard fell apart so did the monetary unions.

Curiously, in my opinion, all of this Euro-Angst over exchange rates comes at the very moment when they matter least.  With a smartphone and access to the current exchange rates I can make an agreement over the net for any good or service in any currency and know exactly what it is costing me in any other currency instantly.

Banks, traveller's cheques, money orders, bearer bonds, cash, ATMs?  Who needs 'em?
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on August 14, 2012, 21:57:47
Kirkhill, I hope that you are correct in thinking that modern banking technology and communications will eliminate or at lease severely reduce the "gatekeeper" powers of central bankers and the banking industry in general, since history tells us a very different story:

http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/08/13/what-the-habsburg-empire-can-tell-us-about-breaking-up-the-euro-zone/

Quote
What the Habsburg Empire can tell us about breaking up the euro zone
Posted by Brad Plumer on August 13, 2012 at 3:49 pm
 
For the past week, much of Germany has gone on vacation—including Chancellor Angela Merkel—which means that the crisis in the euro zone has been put on temporary hold until Wednesday. Oh, sure, Spain is still in trouble and the continent is mired in recession and it’s not clear whether European Central Bank chief Mario Draghi’s plan to hold the euro zone together will even work. But, for the time being, the panicky headlines have gone into remission.

So, we’ll just have to occupy ourselves with this dire policy brief (pdf) from Anders Åslund of the Peterson Institute for International Economics. Like many analysts, Åslund believes that a dissolution of Europe’s currency union would be utterly disastrous. But he thinks that breaking up the euro would be far more disastrous than most economists assume. To explain, he takes a short jaunt through history.

His paper starts by noting that there have been plenty of currency unions in Europe over the past century. Czechoslovakia was technically a currency union that broke up (relatively painlessly, it turned out). But the three examples most relevant to the euro crisis, Åslund argues, are the breakup of the Habsburg Empire in Austria-Hungary in 1918, the dissolution of the Soviet Union in 1991, and the breakup of Yugoslavia. All of those were total economic fiascos:

All three ended in major disasters, each with hyperinflation in several countries. In the Habsburg Empire, Austria and Hungary faced hyperinflation. Yugoslavia experienced hyperinflation twice. In the former Soviet Union, 10 out of 15 republics had hyperinflation.

The combined output falls were horrendous, though poorly documented because of the chaos. Officially, the average output fall in the former Soviet Union was 52 percent, and in the Baltics it amounted to 42 percent. According to the World Bank, in 2010, 5 out of 12 post-Soviet countries—Ukraine, Moldova, Georgia, Kyrgyzstan, and Tajikistan—had still not reached their 1990 GDP per capita levels in purchasing power parities. Similarly, out of seven Yugoslav successor states, at least Serbia and Montenegro, and probably Kosovo and Bosnia-Herzegovina, had not exceeded their 1990 GDP per capita levels in purchasing power parities two decades later. Arguably, Austria and Hungary did not recover from their hyperinflations in the early 1920s until the mid-1950s.

Many economists have dismissed these examples as irrelevant, Åslund writes, by arguing that these were all very different situations from the current euro zone. After all, the former Yugoslavia was wracked by war. The post-Soviet economies were going through wrenching changes in the transition away from communism. Surely no one thinks Germany would have the same problems as post-Soviet Russia, right?

Yet Åslund argues that these examples are surprisingly relevant. Those three currency unions all involved a centralized payments system that had built up large imbalances and were then disrupted by a chaotic exit. Once the currency unions started coming undone, there was no mechanism for an orderly exit. New national banks formed and quickly started issuing their own currency, and the competition between banks generated hyperinflation. It’s not hard, Åslund writes, to envision a similar scenario for the breakup of the euro.

Estimates of how gruesome a euro crack-up would be seem to vary widely. Citigroup’s Willem Buiter says a euro zone split would “trigger a global depression that would last for years, with GDP likely to fall by more than 10 per cent.” Others suggest even bigger losses, with an economic collapse of up to 9 percent in the first year alone. But Åslund wonders if these estimates might even be too optimistic. Because the euro zone’s centralized banking system has no mechanism for allowing countries to leave, he argues, a breakup is likely to trigger the sort of hyperinflation that plagued the Habsburgs, the Soviet Union and Yugoslavia.

In fact, he argues, if even one country left — whether a troubled country like Greece or rich country like Finland — that would trigger a chain reaction that would eventually split the whole euro zone: “The exit of any single country from the EMU, at the present time when large imbalances have been accumulated, would likely lead to a bank run, which would cause the EMU payments system to break down and with it the EMU itself.”

Bad news. In the end, Åslund argues, if euro zone members really, absolutely have to split up, they should do so as quickly as possible, and everyone should act together at once. Unfortunately, that’s unlikely — any breakup would inevitably be a slow, reluctant process. And that’s the worst of all worlds, since it would involve competing currencies causing havoc in the areas that are still using the euro.

So, Åslund concludes, “the Economic and Monetary Union must be maintained at almost any cost.” Fixing the euro zone’s structural problems won’t be easy. But they might be preferable to ending up like the Habsburgs. Something for Merkel to consider, perhaps, when she returns from vacation on Wednesday to deal with the ongoing euro crisis.

One alternative that everyone absolutly refuses to consider is just the opposite; provide a mechanism for a clean break and exit from the EUzone so a chain reaction is not triggered by the exit (voluntary or not) of one of the member nations.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on August 15, 2012, 01:54:46
Thucydides, I wouldn't be betting on any of my predictions.  I have trouble enough accepting responsibility for the effect of my actions on my family....

My comments about the need for banking refers more to the "morning after the night before" than it does the party itself.

I don't disagree that the breakup will be horribly messy and unpredictable in its consequences.  But after a period of time I anticipate that everybody will settle down after they get used to the situation as it exists - when they stop perceiving a crisis (the Eurocrisis has been going on for four years now...is it still a crisis?). 

My comments referred not the "hunt and seek" period of crisis in the control system but the normal "stable" control phase.

I don't suggest the banks will disappear - just that the need for them will be diminished.

(There's alway going to be some chap name of MacIsaac going to make a penny off of unwary Englishmen).
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on August 17, 2012, 10:25:35
We talk about how debtor nations may have to be pushed out of the EUzone, but what happens when the smaller, wealthier nations bail because they no longer wish to pay for bailouts (or suspect they will be shafted WRT getting their equity back)? Quebec and the "Blue" American States might take note of this scenario as well:

http://www.telegraph.co.uk/finance/financialcrisis/9480990/Finland-prepares-for-break-up-of-eurozone.html

Quote
Finland prepares for break-up of eurozone
Finland is preparing for the break-up of the eurozone, the country’s foreign minister warned today.
 
Erkki Tuomioja, Finland's foreign minister: "We have to face openly the possibility of a euro-break up".
By Ambrose Evans-Pritchard, in Helsinki
9:00PM BST 16 Aug 2012

The Nordic state is battening down the hatches for a full-blown currency crisis as tensions in the eurozone mount and has said it will not tolerate further bail-out creep or fiscal union by stealth.

“We have to face openly the possibility of a euro-break up,” said Erkki Tuomioja, the country’s veteran foreign minister and a member of the Social Democratic Party, one of six that make up the country’s coalition government.

“It is not something that anybody — even the True Finns [eurosceptic party] — are advocating in Finland, let alone the government. But we have to be prepared,” he told The Daily Telegraph.

“Our officials, like everybody else and like every general staff, have some sort of operational plan for any eventuality.”

Mr Tuomioja’s intervention is the bluntest warning to date by a senior eurozone minister. As he discussed the crisis, the minister had a copy of the Economist on his desk. It had a picture of Angela Merkel, the German Chancellor, reading a fictitious report entitled “How to break up the euro”, with a caption: “Tempted, Angela?”

“This is what people are thinking about everywhere,” said Mr Tuomioja. “But there is a consensus that a eurozone break-up would cost more in the short-run or medium-run than managing the crisis.

“But let me add that the break-up of the euro does not mean the end of the European Union. It could make the EU function better,” he said, describing the dash for monetary union in the 1990s as a vaulting political leap in defiance of economic gravity. Finland has emerged as the toughest member of the eurozone’s creditor bloc as it tries to hold together a motley coalition. It has insisted on collateral from both Greece and Spain in exchange for rescue loans.

The coalition government is on thin ice as voters peel away to eurosceptic parties. The True Finns shattered the political order in last year’s election with 19pc support. “Taxpayers here are extremely angry,” said Timo Soini, the True Finn leader.

“There are no rules on how to leave the euro but it is only a matter of time. Either the south or the north will break away because this currency straitjacket is causing misery for millions and destroying Europe’s future.

“It is a total catastrophe. We are going to run out of money the way we are going. But nobody in Europe wants to be first to get out of the euro and take all the blame,” he said.

Like other member states, Finland has a veto that could be used to block any new bail-out measures. However, unlike some states, its parliament would have to approve each future measure of the eurozone rescue, including a full bail-out of Spain.

The issue of euro break-up may come to a head in October as EU-IMF Troika inspectors report back on Greek bail-out compliance. Pleas from Athens for two extra years to stretch out its austerity regime have run into fierce resistance from creditor powers.

“It is up to Greeks whether they want to stay in the euro,” said Mr Tuomioja. “We cannot force Greece out. We can cut off lending and that would lead to a default. Then we could speculate whether that would entail getting out of the euro. Nobody knows if it could be contained,” he said. Mr Tuomioja said Finland would block attempts to strip the European Stability Mechanism (ESM) or bail-out fund of its senior status at the top of the credit ladder, a move that could greatly complicate efforts to lure investors back into Spanish and Italian bonds. “The ESM loans have priority. That is a red line for us. We are very concerned that the rules of the ESM seem to be changing.”

He voiced deep suspicion of plans by a “gang of four” EU insiders — including the European Central Bank’s Mario Draghi — to ensnare member states into some form of fiscal union. “I don’t trust these people,” he said.

Mr Draghi said two weeks ago that the issue of seniority would be “addressed” as part of his twin-pronged plan for the ECB and ESM to buy bonds in concert. A number of EU leaders and officials claimed there had been a deal on the ESM’s seniority status at an EU summit in late June. Finland, Holland, and Germany all deny this.

The warnings on the ESM were echoed by Miapetra Kumpula-Natri, chairman of the Finnish parliament’s Grand Committee on Europe, who said bail-out fatigue is nearing its limit.

“Our law passed this summer says the ESM has the same priority as the IMF. There was a clear understanding on this. Any change would require a new law passed by the whole parliament, and this would be very difficult because the risks would be much higher.”

The issue of EU senior status has become an extremely sensitive one for markets after the ECB and EU creditors refused to share losses from Greece’s debt restructuring, in which pension funds, insurers, and banks lost 75pc.

Critics say the Greek deal set a fatal precedent, triggering further capital flight from Spain and Italy.

Mrs Kumpula-Natri said Finland can be pushed only so far. “There is a feeling on the street that there has to be a limit. I can’t say whether it is 10pc of GDP, or what. It’s not written. But it is obvious that a small country can’t help big countries eternally.”
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on August 17, 2012, 15:54:25
(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fdevioustheatre.com%2Fassets%2FScratcher-Mexican-Stand-Off.jpg&hash=f2f854a2283151b3a31d85b8ff11d3d5)


Finland's vision of Europe.

Except there are 27 players all wondering whose finger is going to get tired first.

And who is to say the Finn's aren't wrong?

The good news for them is that they have been around for a good long time, have got excellent records and have been in economic unions before.....And they're still here.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on August 29, 2012, 18:01:13
Topic: Why Europe Keeps Failing........

This article, reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail, might provide some of the answers:

http://www.theglobeandmail.com/report-on-business/international-business/european-business/france-earmarks-23-billion-to-tackle-joblessness/article4508238/
Quote
France earmarks €2.3-billion to tackle joblessness

HUGH CARNEGY
PARIS — Financial Times

Published Wednesday, Aug. 29 2012

France’s socialist government is to spend €2.3-billion next year to combat youth unemployment, despite its need to find more than €30-billion in savings to meet its European commitments to reduce its budget deficit.

The plan to create 100,000 jobs in 2013 was revealed as Jean-Marc Ayrault, prime minister, made an unprecedented appearance at the annual conference of Medef, France’s employers’ federation, as he sought to reassure business leaders concerned by his government’s tax and industrial policies.

With economic growth stalled for the past nine months and only a weak recovery forecast over the next year, the extra spending will add to the already hefty burden facing the government in meeting its pledge to reduce the budget deficit to 3 per cent of gross domestic product next year.

Mr. Ayrault offered no indication that he would shift the planned balance of savings away from tax increases, as demanded by Medef. But he said the government was committed to addressing France’s declining industrial competitiveness, signalling that it would respond to industry calls for action to reduce the high cost of labour in France, although he gave no details.

“To carry weight in Europe and the world, France must become again sustainably competitive. It means businesses must be strong and able to create jobs,” he said.

Laurence Parisot, the head of Medef, said she was encouraged by Mr. Ayrault’s appearance, but said the issue was putting reforms into action.

The severe economic challenges facing François Hollande, president, were underlined when the leader of the country’s biggest trade union called for demonstrations in cities across France in October “in defence of industrial employment.”

Bernard Thibault, leader of the CGT union, said the government must choose between union demands for more employee protection and the demands of Medef for more labour market flexibility.

“The government must decide. It is out of the question for us to countenance that workers must accept more flexibility,” he said.

With unemployment growing rapidly and set to exceed 10 per cent of the work force, the government moved on Wednesday to fulfil one of Mr. Hollande’s main election promises by agreeing to a program for “employment of the future” that will see the state finance 75 per cent of the cost of 100,000 new jobs next year and 50,000 in 2014.

The jobs will be for those aged between 16-25 with low qualifications, concentrated in areas of high social deprivation and low employment.

It was the second spending measure announced in two days after the government’s commitment on Tuesday to spend €300-million in financing its share of a €0.06 per litre cut in fuel pump prices. The cost is to be shared equally with the fuel industry.

Despite growing concern among independent economists about the government’s ability to hit the deficit target, Mr. Ayrault reiterated in his speech to thousands of Medef members gathered outside Paris that it would do so based on an equal split between tax increases and spending cuts. The savings required are expected to be at least €33-billion, an unprecedented figure for France.


So France must, so it and Germany say, cut €33 Billion next year and find €2.3 Billion more for "job creation." If they really want to create 100,000 new jobs then experience everywhere else in the world would seem to suggest that they need to spend $(US)10 Billion, which is about €8 Billion.

I think that, next year, the French will pump several billion € into ill-conceived "job creation" schemes, but I really, seriously doubt that France will cut much of anything, promises agreements or not: they are lying to the Germans, lying to the Dutch, lying to the Finns and lying to themselves ~ and that's why Europe keeps failing.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 02, 2012, 12:48:56
Part 1 of 3

More on this, this time from Timothy Garton Ash (http://www.sant.ox.ac.uk/people/gartonash.html) in a long article which is reproduced under the Fair Dealing provisions of the Copyright Act from Foreign Affairs:

http://www.foreignaffairs.com/articles/138010/timothy-garton-ash/the-crisis-of-europe?page=show
Quote
The Crisis of Europe
How the Union Came Together and Why It’s Falling Apart

By Timothy Garton Ash

September/October 2012

May 10, 1943: German forces are destroying the Warsaw ghetto. Facing armed resistance from Polish Jewish fighters, they set fire to it house by house, burning some inhabitants alive and driving others out from the cellars. "Today, in sum 1,183 Jews were apprehended alive," notes the official report by the SS commander Jürgen Stroop. "187 Jews and bandits were shot. An indeterminable number of Jews and bandits were destroyed in blown-up bunkers. The total number of Jews processed so far has risen to 52,683." An appendix to this document contains the now-famous photograph of a terrified small boy in an outsize cloth cap, his hands held high in surrender. Marek Edelman, one of very few leaders of the Warsaw ghetto uprising to survive, concluded a memoir published immediately after the war with these words: "Those who were killed in action had done their duty to the end, to the last drop of blood that soaked into the pavements. . . . We, who did not perish, leave it up to you to keep the memory of them alive -- forever."

Fast-forward exactly 60 years, to May 10, 2003, a month before Poland holds a referendum on whether to join the European Union. At a "yes" campaign rally in Warsaw, a banner in Poland's national colors, red and white, proclaims, "We go to Europe under the Polish flag." Outside the rebuilt Royal Castle, a choir of young girls in yellow and blue T-shirts -- echoing the European flag's yellow stars on a blue background -- breaks into song. To the music of the EU's official anthem, which is drawn from the final movement of Beethoven's Ninth Symphony, they sing, in Polish, the words of the German poet Friedrich Schiller's "Ode to Joy." Soon these young Poles will be able to move at will across most of a continent almost whole and free, to study, work, settle down, marry, and enjoy all the benefits of a generous European welfare state, in Dublin, Madrid, London, or Rome. "Be embraced, ye millions! This kiss to the entire world! Brothers, a loving father must live above that canopy of stars!"

To understand how a predicted crisis of European monetary union became an existential crisis of the whole post-1945 project of European unification, you have to see Europe's unique trajectory from one May 10 to the other. Both the memories of World War II and the exigencies of the Cold War drove three generations of Europeans to heights of peaceful unification that were unprecedented in European history and unmatched on any other continent. Yet that project began to go wrong soon after the fall of the Berlin Wall, as western European leaders hastily set course for a structurally flawed monetary union.

While many governments, companies, and households piled up unsustainable levels of debt, young Europeans from Portugal to Estonia and from Finland to Greece came to take peace, freedom, prosperity, and social security for granted. When the bubble burst, it left many feeling bitterly disappointed and led to excruciating divergences between the experiences of different nations. Now, with the current crisis still unresolved, Europe lacks most of the motivating forces that once propelled it toward unity. Even if a shared fear of the consequences of the eurozone's collapse saves it from the worst, Europe needs something more than fear to make it again the magnetic project it was for a half century. But what can that something be?

WAR ON THE MIND

Historians have identified many factors that contributed to the process of European integration, including the vital economic interests of European nations. Yet the single most important driving force across the continent was the memory of war. Among those parading down the streets of Warsaw in May 2003 was the bearded professor Bronislaw Geremek, who, as a ten-year-old Polish Jewish boy, had seen the Warsaw ghetto burning before his eyes. It was no accident that he became one of Poland's most ardent advocates of European integration, as a leader of the Solidarity movement, the Polish foreign minister, and then a member of the European Parliament.

To be sure, the Warsaw ghetto survivor, the Nazi soldier, the British officer, the French collaborator, the Swedish businessman, and the Slovak farmer had very different wars. Yet from all their throats rose the same passionate cry: "Never again!" For all the differences in national and subnational experiences across a hugely diverse continent, the historian Tony Judt could still title a history of Europe that covers the 60 years up to 2005 with a single word: Postwar. In this respect, if in no other, the European Union's favorite catch phrase, "Unity in diversity," was strictly accurate.

Those memories played an important role for those British Conservatives, most of them World War II veterans, who took the United Kingdom into the European Economic Community, the precursor to the European Union, in 1973. But above all, personal experience motivated those continental Europeans, up to and including French President François Mitterrand and German Chancellor Helmut Kohl, who created the EU of today. In a conversation I had with him after German reunification, Kohl delivered a line I will never forget. "Do you realize," he asked, "that you are sitting opposite the direct successor to Adolf Hitler?" As the first chancellor of a united Germany since Hitler, he explained, he was profoundly conscious of his historical duty to do things differently.

European integration has rightly been described as a project of the elites, but Europe's peoples shared these memories. When the project faltered, as it did many times, the elites' reaction was to seek some way forward, however complicated. Until the 1990s, when the custom of holding national referendums on European treaties began to spread, Europeans were seldom asked directly if they agreed with the solutions found, although they could periodically vote in or out of office the politicians responsible for finding them. Nonetheless, it is fair to say that for about 40 years, the project of European unification could rely on at least a passive consensus among most of Europe's national publics.

These 40 years were those of the Cold War, the other conflict that shaped the EU. From the 1940s through the 1970s, a central argument for Western European integration was to counter the Soviet threat, visible for all to see in the presence of the Red Army in East Germany and divided Berlin. Beside the memories of Europe's own self-inflicted barbarism, there were, so to speak, the barbarians at the gate. Soviet leaders from Joseph Stalin to Leonid Brezhnev should be awarded posthumous medals for their service to European integration.

Cold War competition also goes a long way to explaining why the United States lent such strong support to European unification, from the Marshall Plan of the 1940s to the diplomacy surrounding the reunification of Germany and the dissolution of the Soviet Union in 1989-91.

For the half of Europe stuck behind the Iron Curtain -- what the Czech writer Milan Kundera called "the kidnapped West" -- the will to "return to Europe" went hand in hand with the struggle for national and individual freedom. The growing prosperity of Western Europe had a magnetic effect on those who saw it, whether at first hand or on Western television.

It is the most elementary historical fallacy to suggest that an event was caused by one that occurred after it, yet something that was only to happen in 1992 was a contributing cause of the velvet revolutions of 1989. The target year 1992, the widely trumpeted deadline that the European Economic Community had given itself for completing its single market, conveyed an urgent sense of being left ever-further behind, not just to the peoples of Eastern Europe but also to reform-minded Soviet-bloc leaders, including Mikhail Gorbachev.

This brings us to the last great motor of European integration until the 1990s: West Germany. The West Germans, both the elites and a large part of the populace, demonstrated an exceptional commitment to European integration. They did this for two very good reasons: because they wanted to, and because they had to. They wanted to show that Germany had learned from its terrible pre-1945 history and wished to rehabilitate itself fully in a European community of values, even to the point of surrendering much of its own sovereignty and national identity. Having been the worst Europeans, the Germans would now be the best. (As a joke at the time went, if someone introduced himself just as "a European," you knew immediately that he was German.) But they also had a hard national interest in demonstrating that European commitment, for only by regaining the trust of their neighbors and international partners (including the United States and the Soviet Union) could they achieve their long-term goal of German reunification. As Hans-Dietrich Genscher, the former West German foreign minister, once observed, "The more European our foreign policy is, the more national it is." West German Europeanism was not simply instrumental -- it reflected a real moral and emotional engagement -- but nor was it purely idealistic.

After the two German states were reunited in 1990, many observers wondered whether what was essentially an expanded West Germany would continue this extraordinary commitment to European integration. Well before the crisis of the eurozone broke, the answer was already apparent. Reunited Germany had become what some participants in the post-Wall debate called a "normal" nation-state -- a "second France," in the commentator Dominique Moïsi's striking phrase. Like France, the new Germany would pursue its national interests through Europe whenever possible, but on its own when it deemed it necessary -- as it did, for example, when securing its energy needs bilaterally with Russia, notably in the Nord Stream gas pipeline deal of 2005. Its leaders, in Berlin now, not Bonn, would still try to be good Europeans, but they would no longer open the checkbook so readily if Europe called.

THE BIRTH OF A MALFORMED UNION

The immediate origins of the malformed currency union that is at the epicenter of today's European crisis also lie in the tempestuous moment of German reunification and its aftermath. Following the fall of the Berlin Wall on November 9, 1989, Mitterrand, alarmed by the prospect of German reunification, pushed hard to pin Kohl down to a timetable for what was then called economic and monetary union. That proposal had already been elaborated to help the European Economic Community complete its single market and address the difficulty of managing exchange rates within it. Mitterrand's general purpose was to bind a united Germany, if united those two Germanies really must be, into a more united Europe; his specific purpose was to enable France to regain more control over its own currency, and even win some leverage over Germany's.

In a remarkable conversation with Genscher, the West German foreign minister, on November 30, 1989, Mitterrand went so far as to say that if Germany did not commit itself to the European monetary union, "We will return to the world of 1913." Meanwhile, Mitterrand was stirring up British Prime Minister Margaret Thatcher to sound the alarm as if it were 1938. According to a British record of their private meeting at the crucial Strasbourg summit of European leaders in December 1989, Mitterrand said that "he was fearful that he and the Prime Minister would find themselves in the situation of their predecessors in the 1930s who had failed to react in the face of constant pressing forward by the Germans."

David Marsh, the best chronicler of the euro's history, concludes that the "essential deal" to proceed with monetary union was done at Strasbourg. Tough negotiations followed, and exactly two years later a treaty was agreed on in the small Dutch city of Maastricht, setting the basic terms of what would become today's eurozone. It is too simplistic to characterize this as a straight tradeoff: "the whole of Deutschland for Kohl, half the deutsche mark for Mitterrand," as one wit quipped at the time. But Germany's need for its closest European allies -- above all, France -- to support its national reunification had a decisive influence on both the timetable and the design of Europe's monetary union.

To be sure, Kohl was a deeply committed European. He never tired of repeating that German and European unification were "two sides of the same coin." So now, he told U.S. Secretary of State James Baker three days after the Strasbourg summit, he had even agreed to a European monetary union. What stronger proof could he offer of Germany's European credentials? Kohl "took this decision against German interests," the German minutes of that meeting record him telling Baker. "For example, the president of the Bundesbank was against the present development. But the step was politically important, since Germany needed friends." As one does, when one is trying to unite Germany without blood and iron.

The design of the resulting monetary union can also be understood, like so much else in the history of European integration, as a Franco-German compromise. At the insistence of Germany, and especially of the Bundesbank, the European Central Bank would be a Bundesbank writ large, fiercely independent of governments (unlike in the French tradition) and devoted with Protestant fervor to the one true god of price stability (lest the Weimar nightmare of hyperinflation return). To his credit, Kohl wanted the monetary union to be complemented by a fiscal and political union, so there could be control of public spending and coordination of economic policy among the states, and more direct political legitimation of the whole enterprise. "Political union is the essential counterpart to economic and monetary union," he told the Bundestag in November 1991. "Recent history, not only in Germany, teaches us that it is absurd to expect in the long run that you can maintain economic and monetary union without political union."

But France was having none of that. The point was for it to gain some control over Germany's currency, not for Germany to gain control over France's budget. So the discussion of a fiscal union withered away into a set of "convergence criteria," which required would-be members of the monetary union to keep public debt under 60 percent of GDP and deficits under three percent.

Thus, in the Sturm und Drang of the largest geopolitical change in Europe since 1945, a sickly child was conceived. Most Germans opposed giving up their treasured deutsche mark. But they would not be asked; the West German constitution did not envisage referendums. Kohl had no intention of changing that. Alexandre Lamfalussy, the head of the European Monetary Institute, the precursor to the European Central Bank, later recalled telling him, "I don't know how you will get the German people to give up the D-Mark." Kohl's reply: "It will happen. The Germans accept strong leadership."

In France, meanwhile, the Maastricht Treaty scraped through in a September 1992 referendum with a yes vote of just over 50 percent. The passive consensus for further steps of European integration, advancing ever closer to the heart of national sovereignty, was beginning to break down even in heartlands of the postwar project.

End of Part 1

Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 02, 2012, 12:50:48
Part 2 of 3

Quote
A CRISIS FORETOLD

With a hat tip to Gabriel García Márquez, a history of Europe's monetary union could be called Chronicle of a Crisis Foretold. By the time the eurozone's 11 founding member states were preparing to introduce a common currency on January 1, 1999, most of the problems that would beset the euro a decade later had been predicted.

Critics at the time questioned how a common currency could work without a common treasury, how a one-size-fits-all interest rate could be right for such a diverse group of economies, and how the eurozone could cope with economic shocks that varied from region to region -- what economists call "asymmetric shocks." For Europe had neither the labor mobility nor the level of fiscal transfers between states that characterized the United States.

"Since 1989, we have seen how reluctant West German taxpayers have been to pay even for their own compatriots in the east," noted one article in these pages in 1998. "Do we really expect that they would be willing to pay for the French unemployed as well?" Reporting a widespread view that the monetary union would face a crisis sooner rather than later, and that this would catalyze the necessary political unification, the author cautioned, "It is a truly dialectical leap of faith to suggest that a crisis that exacerbates differences between European countries is the best way to unite them."

Since I was that author, I should add that I did not anticipate three important things. First, I did not expect that the monetary union would flourish for so long. For nearly a decade, the euro appeared to be strong, edging up toward the dollar as a global trading and reserve currency. For businesses, it removed the risk of exchange-rate fluctuations inside the eurozone. For the rest of us, it was a delight to be able to travel from one end of the continent to the other without having to change currencies. To visit Dublin, Madrid, or Athens was to see cities booming as never before. Small wonder that in 2003 those young Poles sang Schiller's "Ode to Joy" at the prospect of joining the happy Irish, Spaniards, and Greeks. And I, like others sympathetic to the project, was lulled into a false sense of security.

Because the crash came later than originally expected, it was worse when it came. Over time, enormous imbalances had built up between the core, mainly northern European countries (above all, Germany), and the peripheral, mainly southern European countries (especially Portugal, Ireland, Italy, Greece, and Spain, which have sometimes been unkindly labeled "the PIGSs").

To be sure, the initial shocks that started the earthquake came from outside Europe, in the U.S. subprime mortgage market. In this sense, the travails of the eurozone are part of a broader crisis of Western financial capitalism.

Yet the second thing we did not fully anticipate in the 1990s was the extent to which the eurozone would generate its own asymmetric shocks. Whereas Germany, still staggering under the financial burden of German reunification, impressively massaged down its labor costs, trimmed its welfare spending, and became competitive again, many of the peripheral countries allowed their unit labor costs to soar.

While Germany and some other northern European countries maintained fiscal discipline and moderate levels of debt, many of the peripheral countries went on the mother of all binges. In some places, such as Greece, it was public spending that skyrocketed; in others, such as Ireland and Spain, it was private spending. The open sesame to both kinds of excess was the same: governments, companies, and individuals could borrow at unprecedentedly low interest rates thanks to the credibility that eurozone membership lent their countries. In effect, Greece, which had snuck into the eurozone in 2001 with the aid of falsified statistics, could borrow almost as if it were Germany.

When, therefore, Germany was asked to help bail out those countries, German voters were understandably indignant. Why should we work even harder and retire even later, they asked, so these feckless Greeks, Portuguese, and Italians can retire earlier than we do and go sun themselves on the beach? "Sell your islands, you bankrupt Greeks," snorted Bild, Germany's largest tabloid, in October 2010.

The Germans had a good point: they had demonstrated remarkable prudence; the peripheral countries had not. But there was another side to the story. The moment the Stability and Growth Pact (the formalized successor to the convergence criteria) was revealed to be toothless was when Germany itself, along with France, violated the deficit limit of three percent of GDP in 2003-4. The penalties envisaged in the pact were not even enforced.

Moreover, Germany had fared so well partly because the peripheral countries had fared so badly. The peripheral eurozone countries could no longer compete with Germany on price by devaluing their own national currencies, and part of their binge spending went to buying more BMWs and Bosch washing machines. The euro also enabled German exporters to price their goods more competitively in markets such as China. (One study, by Nathan Sheets and Robert Sockin of Citigroup, estimated that Germany's lower real exchange rate, courtesy of the euro, has lifted its real trade surplus by about three percent of GDP annually.) As the economist Martin Feldstein noted in these pages, in 2011 Germany's $200 billion trade surplus roughly equaled the rest of the eurozone's combined trade deficit. Germany was to Europe what China is to the world: the exporter that requires others to consume.

In addition, Germany and other northern European countries with current account surpluses recycled those surpluses partly by lending to Greeks, Irish, Portuguese, and Spaniards. So when Germany bailed out the peripheral eurozone countries, it was also bailing out its own banks.

The third element few foresaw in the 1990s was the spiraling scale, speed, and folly of global financial markets. Most egregious, bond markets contributed to the burgeoning imbalances by mispricing sovereign risk in general and the differential risk between various eurozone government bonds in particular. Despite the presence of a "no bailout" clause in the Maastricht Treaty, bond traders acted as if the risk associated with lending to the Greek or Portuguese governments was only fractionally higher than that of lending to Germany or the Netherlands.

When belief in the solidity of the eurozone began to collapse, soon after its tenth birthday, the markets plunged to the other extreme. Again and again, they punished eurozone leaders' belated half measures with soaring bond yield spreads, so that country after country found its borrowing costs whizzing upward. At interest rates of five to eight percent, it becomes very difficult for a government to sustain its debt burden, even with the most exemplary German-style fiscal discipline and structural reform. There was only so much that even the wisest and most economically responsible leaders, such as Italian Prime Minister Mario Monti, could ask of their own people.

EUROPE'S DYSFUNCTIONAL TRIANGLE

Structurally, Europe now finds itself caught in a dysfunctional triangle, between national politics, European policies, and global markets. Ever since the European Coal and Steel Community was founded, in 1951, integration has proceeded through the development of common European policies: from those on agriculture, fisheries, and trade, all the way to monetary policy. The democratic politics of the EU have, however, remained stubbornly national.

While the volcanic magma was heating up under the outwardly calm crust of the eurozone, European leaders spent much of this century's first decade engaged in an ambitious attempt to write what some called a constitution for Europe. To cope with both the deepening of the EU, through monetary union, and its widening, through the historic enlargement to eastern Europe, they proposed a new set of institutional arrangements for the EU's 27 states (since 2007) and 500 million people. But in referendums, voters in France and the Netherlands rejected even a watered-down version of these lofty plans. "The nations don't want it," commented Geremek, that passionate but also realistic European, shortly before he died in 2008.

So the mountain labored again, and brought forth a mouse. The Treaty of Lisbon, which came into force in 2009, did give more powers to the directly elected European Parliament. But decision-making in today's EU still consists mainly of national politicians cutting deals behind closed doors in Brussels. And the politics and media they worry about are national, not European. There are Europe-wide political groupings, based on those in the European Parliament, but there are no truly European politics. The average turnout for elections to the European Parliament has declined with every vote since direct elections began in 1979. Although there are some good Europe-wide media outlets, watched and read by a happy few, there is no broader European public sphere.

The French historian Ernest Renan said that a nation is "an everyday plebiscite." Well, today's EU has an election almost every day, but these are national elections, conducted in different languages and in national media. Increasingly, the election campaigns feature parties that blame the country's current travails on other European nations, or on the EU itself, or on both. Visiting Maastricht earlier this year -- a city now a little worried about its place in the history books -- I was told how the anti-immigrant and anti-Islamic Dutch populist Geert Wilders has redirected his political fire against "Europe." That's where he thinks the votes are now.

At the same time, panicky global markets instantly impinge on both European policies and national politics. As country after country finds its credit rating cut and its borrowing costs going through the roof, governments tremble and call yet another emergency summit in Brussels. As the clock ticks into the early hours, exhausted national leaders are torn between their terror of what the markets will do to them when trading opens the next morning and their terror of what their national media, coalition partners, parliaments, and voters will do to them when they get back home.

As soon as the meeting ends, each leader will dash out from the conference room to brief his or her own national media, so that every time, there is not just one version of a European summit but 27 different ones -- plus a 28th, the implausibly irenic conclave described by the EU's own clutch of institutional heads. This is Europe's political Rashomon, with 28 conflicting versions of the same event delivered in 23 languages. It is an odd way to run a continent

THE MISSING INGREDIENTS

Europe's monetary union was a bridge too far -- meaning not a bridge that should never have been crossed but a bridge that was crossed too soon, before Europe was strategically prepared to defend it. To be sure, carrying on for another decade or two with a system of fixing the margins within which exchange rates could fluctuate -- the so-called Exchange Rate Mechanism -- would have been demanding. But it is hard to disagree with this retrospective judgment by the economic commentator Martin Wolf: "Consider how much better off Europe would have been if the exchange rate mechanism had continued, instead, with wide bands."

We also have to consider other roads not taken. What if, instead of introducing the euro, Europe had deepened its still-far-from-complete single market? What if the whole EU had concentrated on improving its competitiveness, as Germany did so impressively, and not merely paid lip service to that goal in a catalog of good intentions called "the Lisbon agenda"? What if it had used this time to develop a more effective foreign policy? But regret is futile. An old and now politically incorrect English joke has an American couple arriving at a crossroads, deep in the Irish countryside, and asking a tweed-clad farmer the way to Tipperary. "If I were you," says the Irishman, "I wouldn't start from here." Yet here is where we are.

At the end of June this year, the EU held yet another "save the euro" summit -- by a rough count, the 19th of the crisis. Germany said it would allow special European funds to be used to help imperiled Spanish banks, and the eurozone states resolved to create a single banking supervisory structure run by the European Central Bank. Although nobody noticed, the summit communiqué was a reminder of useful things the EU continues to do. For example, European leaders reached agreement on a unitary European patent system, which is expected to lower patenting costs for European companies by as much as 80 percent. They also decided to open accession negotiations with Montenegro, a newly independent state that just 13 years ago was still embroiled in the wars of former Yugoslavia.

As of this writing, no one knows how the euro saga will end. The possibilities include a total, disorderly collapse of the eurozone, a continued muddling through, and, most optimistically, systemic consolidation into a genuine fiscal and political union. Yet even if the eurozone crab-marches toward a political union, it will still have to generate the solidarity among its citizens necessary to underpin it, a degree of European compatriotism that does not yet exist. Another open question is how a more united eurozone core, which would itself contain creditor and debtor nations with very different perspectives, would relate institutionally and politically to EU member states not in the zone, such as the United Kingdom, Sweden, and Poland.

According to one projection by analysts at ING, a total collapse of the eurozone could cause GDP to fall by more than ten percent over two years in all the leading European economies, including Germany. Coming on top of the hardships already endured, that could lead to dangerous political radicalization. (Unlike in the 1930s, such radicalization, to the far right and the far left, has been remarkably limited so far, even in Greece -- a tribute to the resilience of contemporary European democracies.) But even if the eurozone falls apart, there will still be a place called Europe and probably a set of institutions called the European Union. And there will be a new yet also familiar historic challenge for Europeans: to pick themselves up from the ruins and rebuild.

Today's crisis is the greatest test yet of what has been called "the Monnet method" of unification, after Jean Monnet, a founding father of European integration. Monnet proposed moving forward, step by step, with technocratic measures of economic integration, hoping that these would catalyze political unification -- not least through moments of crisis. "Crises are the great unifier!" he once explained. Yet even in the first 40 years of European integration, crises sometimes pulled Europe together and sometimes did not. If they tended more often to promote unity than division, that was in large part thanks to wartime memories and Cold War imperatives. So where are the drivers of integration now? Go back down the list.

A single market of 500 million consumers remains a powerful economic attraction for most European countries. However, it no longer seems as evident as it once did that Europe brings steadily growing prosperity and welfare to all its citizens. Exporting nations, especially Germany, and global service providers, such as the United Kingdom, are increasingly looking to emerging markets, where the growth is.

Unlike during the Cold War, there is no obvious external threat in Europe's front yard. Try as he might, Vladimir Putin just does not match up to Stalin, or even Brezhnev. Could China step into that role? Without stigmatizing China as an enemy, the most compelling new rationale for European unification is indeed the rise of non-Western great powers: China, mainly, but also India, Brazil, and South Africa.

One cannot simply extrapolate from current economic and demographic trends, but in any likely world of 2030, even Germany will be a small to medium-sized power. Then, the only effective way to defend the freedoms and advance the shared interests of all Europeans will be to act together and speak with one voice. Intellectually, this argument is persuasive. But emotionally, to sway a wider public, it does not compare with the visible presence of the Red Army at the heart of Europe.

If Russia no longer fits the bill for an external threat, the United States no longer plays the part of active external supporter. Already in 2001, President George W. Bush could ask, in a private meeting, "Do we want the European Union to succeed?" Part of his administration, at least in his first term, was inclined to answer no. President Barack Obama would definitely answer yes, but until the eurozone crisis threatened the U.S. economy, and hence his reelection prospects, it was hardly a priority. His administration has taken Europe as it has found it and dealt pragmatically with Brussels or with individual countries -- whatever worked. Its geopolitical focus has been on China and Asia more generally, not Russia and Europe.

Conceivably, the United States' attitude could change if China really came to be seen as the new Soviet Union, a global geopolitical threat to the West. Then one option would be for Washington to seek a closer strategic partnership with a more united Europe, including, for example, a transatlantic free-trade area. Old Europe and its cousins across the water would work toward what Édouard Balladur, the former French prime minister, has imagined as a "Western Union." But there is scant evidence of such thinking at the moment. Rather, both the United States and Europe are making their own tense accommodations with China.

Another past driver of integration, eastern European yearnings, still has some traction today. Eastern Europeans have more recent memories than other Europeans do of dictatorship, hardship, and war. Many appreciate the new freedoms they enjoy in the EU; for some, belonging to the same club as western Europeans is the realization of a centuries-old dream. One Polish economist explains why Poland still aspires to join the eurozone thus: "We want to be on board the ship, even if it is sinking!" Of course, they would rather the ship stays afloat. Last fall, in a speech in Berlin, Radoslaw Sikorski, the Polish foreign minister, memorably observed, "I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity."

End of Part 2

Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 02, 2012, 12:52:38
Part 3 of 3

Quote
EUROPEAN GERMANY, GERMAN EUROPE

Germany is the key to Europe's future, as it has been, one way or another, for at least a century. The irony of unintended consequences is especially acute here. If Kohl was the first chancellor of a united Germany since Hitler, François Hollande is the first Socialist president of France since Mitterrand, and it is Mitterrand's legacy he has to wrestle with. Monetary union, the method through which Mitterrand intended to keep united Germany in its proper place -- co-driver with France, but still deferential to it -- has ended up putting Germany at the wheel, with France as an irate husband flapping around in the passenger seat ("Turn left, Angela, turn left!").

At the time of German reunification, German politicians never tired of characterizing their goal in the finely turned words of the writer Thomas Mann: "Not a German Europe but a European Germany." What we see today, however, is a European Germany in a German Europe. This Germany is an exemplary European country: civilized, democratic, humane, law-abiding, and (although Mann might not have rated this one) very good at soccer. But the "Berlin Republic" is also at the center of a German Europe. At least when it comes to political economy, Germany calls the shots. (The same is not true in foreign and defense policy, where France and the United Kingdom are more important.) This is not a role Germany sought; leadership has been thrust upon it.

Moreover, if the need to win support for German reunification drove Kohl to accept European monetary union on a tight timetable, and without the political union he thought essential to sustain it, German reunification has changed the German attitude to the European project. The very same set of closely linked historical developments that has now produced, 20 years on, the need for a special German contribution to Europe has in the meantime reduced both the country's idealistic desire and its instrumental need to offer that contribution.

Were he still chancellor, Kohl would surely insist that the euro must be saved by moving decisively toward a political union. Merkel and her compatriots have reacted very differently, reluctantly doing the minimum needed to prevent collapse. The modest and plain-speaking Merkel is in many ways the personification of the civic, modern European virtues of this new Germany. She is also a brilliant and ruthless domestic political tactician. Whatever her personal convictions, she knows she faces what may be called the four Bs: the Bundestag (the lower house of the national parliament, from which Germany's most pro-European politicians have largely migrated to the European Parliament, another unintended consequence of that well-intended institution), the Bundesverfassungsgericht (the country's constitutional court, deliberately established after 1945 to be a U.S.-style check on a leader's power), the Bundesbank (still very influential in the German debate), and, last but by no means least, the populist tabloid Bild.

Many Germans resent the idea of bailing out Greeks and Spaniards and recall that they were given no say on Kohl's decision to give up the deutsche mark. In a German opinion poll conducted in May 2012, no less than 49 percent of respondents said it had been a mistake to introduce the euro. So far, the benefits they have derived from the euro have not been adequately explained. Yet this European Germany is a free country, open to argument, and some are now making the attempt.

MEMORY, FEAR, AND HOPE

The greatest single driving force of the European project since 1945, personal memories of war, has disappeared. Where individual memory fades, collective memory should step in. Remember Edelman's appeal: "We, who did not perish, leave it up to you to keep the memory of them alive -- forever." Yet most young Europeans' consciousness of their continent's tortured history is shallow. Their formative experiences have been in a Europe of peace, freedom, and prosperity. Even younger eastern Europeans from states such as Estonia, which did not exist on most maps just 22 years ago, have come to take these hard-won achievements for granted. In this sense, the deepest problem of the European project is the problem of success.

Over the last decade, European peoples with historical complexes about being consigned to the periphery of Europe felt themselves to be at last entering the core. Eastern Europeans joined the EU. Southern Europeans thought they were flourishing in the eurozone. In Athens, Lisbon, and Madrid, there was a sense of a leveling up of European societies, of a new, not merely formal equality among nations.

Now that illusion has been shattered. In Greece, the homeless line up at soup kitchens, pensioners commit suicide, the sick cannot get prescription medicines, shops are shuttered, and scavengers pick through dustbins -- conditions almost reminiscent of the 1940s. In Spain, every second person under the age of 25 is unemployed; across the eurozone, the average is nearly one in four. But the pain is unevenly spread. In Germany, youth unemployment is comfortably under ten percent. There is a new dividing line across Europe, not between east and west but between north and south. Now, and probably for years to come, it will be a very different experience to be a young German or a young Spaniard, a young Pole or a young Greek.

Think back to those two May 10 moments in Warsaw. Someone whose formative teenage experience was of the terrors of 1943 would find today's crisis shocking, but still not half as bad as what he remembered -- and he would insist that Europe must never fall back to that. The teenager of 2003 has a different mental lens: this is terrible, she thinks, and not what she was led to expect.

Europeans such as Geremek and Kohl witnessed Europe tear itself apart, and then dedicated themselves to building a better one. The generation of Spain's indignados, young protesters who have rallied across the country since May 2011, grew up in that better Europe, and have now been thrown backward. The trajectory of those who were, say, 15 years old in 1945 went from war to peace, poverty to prosperity, fear to hope. The trajectory of those who were 15 in 2003, especially in the parts of the continent now suffering the most, has arched in the opposite direction: from prosperity to unemployment, convergence of national experiences to divergence, hope to fear.

Could this very discontent provide the psychological basis for a popular campaign to save Europe? The signs are not promising. Popular movements have arisen during the crisis, but they have pointed in other directions. One of the largest was against the Anti-Counterfeiting Trade Agreement, which many young Europeans saw as a threat to their online freedom. The indignados of all countries, Europe's counterparts to the Occupy Wall Street movement, rail against bankers, politicians, and baby boomers, whom they see as having stolen their future. An interview-based survey of activists in these diverse campaigns, coordinated by Mary Kaldor and Sabine Selchow of the London School of Economics, found that the EU is either invisible among them or viewed somewhat negatively.

Fear should not be underestimated as a motivating force in politics. When, in a repeat election this June, the Greeks narrowly voted for parties that were serious about keeping the country in the eurozone, the Swiss cartoonist Patrick Chappatte drew a weary-looking man standing next to a ballot box in the shadow of the Acropolis and exclaiming, "Good news! Fear triumphed over despair." Adapting a famous phrase of U.S. President Franklin Roosevelt, one might almost say that today Europe has nothing to put its hope in but fear itself.

The fear of collapse, the Monnet-like logic of necessity, the power of inertia: these may just keep the show on the road, but they will not create a dynamic, outward-looking European Union that enjoys the active support of its citizens. Without some new driving forces, without a positive mobilization among its elites and peoples, the EU, while probably surviving as an origami palace of treaties and institutions, will gradually decline in efficacy and real significance, like the Holy Roman Empire of yore. Future historians may then identify some time around 2005 as the apogee of the most far-reaching, constructive, and peaceful attempt to unite the continent that history has ever seen.


Here's the rub: the European "illusion has been shattered. In Greece, the homeless line up at soup kitchens, pensioners commit suicide, the sick cannot get prescription medicines, shops are shuttered, and scavengers pick through dustbins -- conditions almost reminiscent of the 1940s. In Spain, every second person under the age of 25 is unemployed; across the eurozone, the average is nearly one in four. But the pain is unevenly spread. In Germany, youth unemployment is comfortably under ten percent. There is a new dividing line across Europe, not between east and west but between north and south. Now, and probably for years to come, it will be a very different experience to be a young German or a young Spaniard, a young Pole or a young Greek ... [and] the EU, while probably surviving as an origami palace of treaties and institutions, will gradually decline in efficacy and real significance, like the Holy Roman Empire of yore. Future historians may then identify some time around 2005 as the apogee of the most far-reaching, constructive, and peaceful attempt to unite the continent that history has ever seen."

So, I guess we should look at Europe in the early-mid 17th century (say 1625 to 1650) if we want to understand Europe in the early 21st century.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on September 02, 2012, 13:44:48
1625 to 1650 you say?

The fall of La Rochelle to the suppression of the Frondes?  The era that saw Cromwell lop off Charlie the First's head?  The era supervised by Richelieu that set the character of that great democrat Louis Bourbon, the Sun King and split Europe between free trading individualists and centralizing statists.

If this isn't the best place to start "on the road to Tipperary" where does this starting point lead?.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 02, 2012, 14:11:37
1625 to 1650 you say?

The fall of La Rochelle to the suppression of the Frondes?  The era that saw Cromwell lop off Charlie the First's head?  The era supervised by Richelieu that set the character of that great democrat Louis Bourbon, the Sun King and split Europe between free trading individualists and centralizing statists.

If this isn't the best place to start "on the road to Tipperary" where does this starting point lead?.


Yep! That's what Timothy Garton Ash seems to be suggesting: that the newly United Europe reached its apogee in the last decade just as, arguably, the Holy Roman Empire reached its circa 1612, when Emperor Rudolph died and when the Thirty Years War became inevitable.

I'm not suggesting it (21st century Europe) will so violent nor even that, à la the HRE's defeat of the Turks late in the 17th century, Europe will be useless; just that what has passed wil not, cannot be regained and we - Europeans or not - are unlikely to like what comes next.

For the record: I see a multi-tiered Europe:

4. A big, loosely united Europe, something far less than the current EU, maybe more like the 47 member Council of Europe;

3. A big (relatively) Free Trade Area - about the size of the current EU +/- a couple of members;

2. A smaller, more closely united Europe - a free trade and free movement of people area; and

1. A fully united Europe - with a common currency and a fairly common, at least well coordinated, foreign policy.

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fwwcdn.weddingwire.com%2Fstatic%2Fvendor%2F20001_25000%2F24916%2Fthumbnails%2F600x600_1225151326687-wa6.jpg&hash=c19a717f4d754fdb8a6eefb8d7f71802)

Is there a fifth, top tier, I wonder? Just Germany atop the heap, just a little bit more equal than the others?

Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on September 02, 2012, 15:06:22
Just thinking about some of the concurrent activities of that era ERC.

Covenanters and Puritans.  Dressing all in black.  Banning alcohol, dances and theatres.  Burning witches.  Kind of like the Arab Spring don't you think?

The excesses of that era led to the Enlightenment.

Is "Europe" sufficiently available to the Arab Mediterranean that the two culture clashes become one and you get your push to an early Arab  Enlightenment?  And Turkic Enlightenment as well for that matter - Autocracy has been the default position of the Steppes and Moscow for quite a while as well.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 12, 2012, 08:56:31
Two articles caught my attention today (it's raining in HK  :'(  ): one by Martin Wolf in The Financial Times (http://www.ft.com/intl/cms/s/0/614df5de-9ffe-11e1-94ba-00144feabdc0.html#axzz1vBXSHXyV) and the other by Niall Ferguson in Newsweek (http://www.thedailybeast.com/newsweek/2012/05/13/niall-ferguson-will-europe-act-to-avoid-an-economic-cataclysm.html). Both aim to explain what's happening in Europe but both, it seems to me are more prescriptive than explanatory and both appear to prescribe the same harsh remedy: union.

It seems to me that the EU has been, broadly, a runaway success story. The European civil wars that dominated 20th century history are over: Germany failed to unite Europe by force but, now, as Ferguson said, Germany risks losing all it has gained - and make no mistake Germany is the big winner in the EU - by being timid and isolationist. It is time to save the euro (€)  the EU itself by going the next step: a confederation. Some countries, notably the UK but, likely, also Denmark and Norway and Switzerland (which are not even in the EU) will not wish to join the new union but they will wish to revise the European Free Trade Area and secure a full free trade deal with the union.

But isn't the EU already a union? Yes, but not a full one; that's why it can even consider kicking Greece out of the Eurozone and that's why it cannot have sane, sensible economic policies. What else must they do? First they need to make themselves look a lot more like Canada: a very loose, highly decentralized federation but one in which a single, sovereign government sets economic (fiscal and monetary) policy, trade and foreign policy and even defence policy.

I would suggest that the new Union of European States (or whatever one wants to call it) should be even looser than Canada. The member states should have full control over their social policies and programmes - but they must be able to fund them through their own state taxes and through a system of transfer payments copied, in aim but but not in too much detail, from Canada. They must pay taxes to the new, federal superstate for areas of federal responsibility, which includes M. Hollande's call for growth because, right now, the EU/Eurozone cannot "do" growth - austerity is the only course open - because it has no resources of its own. Nations should retain their "own" armed forces but some fixed amount (say 75% of manning levels) must be assigned to be "under command" of the superstate's MOD. (It must be recognized that states have legitimate internal security requirements that requires state level "national guards," but hundreds of thousands of European men and women must be enlisted in national ships and units (flying squadrons and wings, regiments, brigades, divisions and even corps) which will serve under a combined command.) (NATO will have to die.) The superstate will be big, strong and rich and able to pursue a strategy comparable to, say, America's or China's.

Oh, and since the new superstate will set foreign and defence policy I am about 99.99% certain that the French nuclear forces are gone.

Thus, I see a three level structure for Europe:

1. European Free Trade Group: the new European superstate plus Britain, Denmark, Iceland, Ireland, Norway and Switzerland;

2. Independent states, which includes the new European superstate and all other states in Europe including the ones mentioned above plus Russia, Ukraine, Turkey, etc; and

3. "Member states" of the European superstate which still have "national" identities, are likely UN members, maybe even have "national" passports, but are no longer independent in economic, foreign or defence policies.

I'm pretty sure the Germans don't want it and French will hate it, but ...


And now Jose Manuel Barroso, president of the European Commission advocates a "federation of nation states" and, explicitly, for member to "surrender sovereignty" in exchange for prosperity protection from bankruptcy/default. This video (http://www.theglobeandmail.com/report-on-business/video/video-barroso-calls-for-federation-of-nation-states/article4538398/) shared under the Fair Dealing provisons of the Copyright Act from the Globe and Mail gives the pertinent excerpt from his address.

Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on September 12, 2012, 09:08:55
European union is a "progressive" and "transnational" project.  Progressives and transnationalists prefer to ignore limitations (eg. constitutional) on what they wish to do.  There will not be any restraint on the slow erosion of whatever sovereignty states are promised in order to entice them into a union, and prosperous and industrious minorities will be increasingly made to bear the burden of providing for all.  The erosion and imbalance between those who are mostly receivers of entitlements and those who are mostly providers will eventually spark war.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 12, 2012, 09:37:33
European union is a "progressive" and "transnational" project.  Progressives and transnationalists prefer to ignore limitations (eg. constitutional) on what they wish to do.  There will not be any restraint on the slow erosion of whatever sovereignty states are promised in order to entice them into a union, and prosperous and industrious minorities will be increasingly made to bear the burden of providing for all.  The erosion and imbalance between those who are mostly receivers of entitlements and those who are mostly providers will eventually spark war.


I don't disagree, Brad, but I think it might look a bit like Canada a few decades in the past: a rich, industrious, or, at least, industrialized centre sucked labour, talent and resources from the peripheries and got richer exporting manufactured goods back to the peripheries. We avoided a "hot" war ~ but we still endure a national "cold war" caused, in part, by resentment of "opportunities lost."
Title: Re: Why Europe Keeps Failing........
Post by: Haletown on September 12, 2012, 09:44:22
Soner or later, economic reality always trumps any progressive transnational plans.

"For much of the previous decade, Spain was one of the most stable economies in Europe.  On the surface it experienced stable growth and managed to keep the national debt below that of its neighbors; in some years, Spain experienced budget surpluses, allowing the country to pay down some of its debt.  However, underneath this veneer, other factors were in play. 

In 1999 and 2000, when Spain adopted the euro as its currency, interest rates fell to historic lows as the European Central Bank (similar to the U.S. Federal Reserve) made money easily available.  So Spain's banks, its property developers, and the everyday home-buyers (with prodding from the government) embarked on a frenzy of commercial and residential building and buying.  From 1996 to 2007, Spanish property values tripled.
Spain has a massive social safety net which accounts for a vast a majority of its government spending -- spending that absorbs nearly 46% of the country's annual economic output or GDP.  Further, the nation's unfunded long-term social commitments account for more than 15 times its yearly GDP.  Despite this, the Spanish government embarked on one of the most ambitious green energy programs in Europe, pouring untold billions of euros into solar and wind energy.

In the meantime, because of rigid labor laws, union influence, and government regulations which prevent wage reductions and mandate ever-increasing benefits, the Spanish unit labor cost has risen by 40% (as compared to Germany), making Spanish industry uncompetitive.  Many have, by necessity, moved their operations overseas.  Nonetheless, large-scale immigration, much of it illegal, continued unabated through 2008, further exacerbating the cost of government."


Read more: http://www.americanthinker.com/2012/09/how_the_financial_collapse_would_happen_in_an_obama_second_term.html#ixzz26G6zJvnS
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on September 12, 2012, 23:39:47
Canada, notwithstanding its regional cultural differences, is by comparison to Europe a paragon of homogeneity.  Nevertheless, I am curious to see how much money can be transferred away from Germans before they rebel.
Title: Re: Why Europe Keeps Failing........
Post by: FoverF on September 13, 2012, 10:00:44
Europe keeps failing because they honestly believe that spending more money than you have is a fundamental human right. Every new entitlement ever created becomes an inalienable obligation, and any cut in any spending is an injustice.

Europe will eventually fail in a grander sense, because Germany will run out of Nazi-guilt, and stop paying for everyone else's excess.

I think it really is that simple.


Greece is drowning in government debt. It has become the world's foremost example of profligate and uncontrolled government spending, and the Greek people are rioting in the streets AGAINST budget cuts. They openly advocate defaulting on their debts, and demand a continuation of deficit spending.

Let me re-iterate that: They want to renege on their debts, and then continue borrowing more money. Actual grown-ups, with jobs, will tell you that this is what they think the government should do. I'd say it's the majority opinion in the PIIGS states. Burn the people who lent you money, and then ask for more money.

Forget about parallels to the Merovingian kings, or the collapse of the Lithuanian empire. The dominant political force in Europe is stupid people who are demanding that their elected representatives do stupid things, because they want to get stuff without paying for it.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on September 13, 2012, 12:42:38
FoverF:

I agree with your point.  I would add though that the society has grown up from roots where the world was divided between those that had money and those that didn't.  A couple of centuries of revolutionary politics and those that didn't have money now have the means to force those that do have it to hand it over.  They still don't Grok the fact that money only is a means of expressing effort. If you want new money then you must put in new effort.  Beyond that all you are doing is stealing from those that put in the effort.

Sometimes the money is stolen by rich people.  Sometimes the money is stolen by poor people.  Either way, a society where money is stolen from those exerting themselves will eventually cause those people to quit trying or move.   Lots of Europeans have moved over that revolutionary period. The rest have quit trying.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on September 13, 2012, 12:49:40
Let me re-iterate that: They want to renege on their debts, and then continue borrowing more money. Actual grown-ups, with jobs, will tell you that this is what they think the government should do. I'd say it's the majority opinion in the PIIGS states. Burn the people who lent you money, and then ask for more money.

Forget about parallels to the Merovingian kings, or the collapse of the Lithuanian empire. The dominant political force in Europe is stupid people who are demanding that their elected representatives do stupid things, because they want to get stuff without paying for it.

Or... maybe they are of the impression that there's some waste that should be cut first, before cutting the salaries and pensions of the working poor.  In the few TV & newspaper pieces I've seen of people being interviewed on the street, it seems to run more along those lines, frankly. 

While we're certainly entitled to our outsiders' perspective, it would be interesting to know what Greek commentators and analysts are saying on the matter as well.
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on September 13, 2012, 19:24:24
Progressives keep ridiculing the notion that there is any "fraud and waste" in significant amounts from which to find savings.  Take them at their word; go straight for the programs in their entirety.
Title: Re: Why Europe Keeps Failing........
Post by: FoverF on September 14, 2012, 09:56:06
Or... maybe they are of the impression that there's some waste that should be cut first, before cutting the salaries and pensions of the working poor.  In the few TV & newspaper pieces I've seen of people being interviewed on the street, it seems to run more along those lines, frankly. 

While we're certainly entitled to our outsiders' perspective, it would be interesting to know what Greek commentators and analysts are saying on the matter as well.

None of this changes the facts that:
1) They do not want to repay their government debt
2) They want to continue running a deficit

If they felt that there were opportune places to cut spending first, they ought to have voted for a party espousing that principle in one of the several elections they've had since their economic situation became untenable. Instead, none of the parties elected into the governing coalition in Greece have proposed a balanced budget for any point in the foreseeable future.

And while it's an outsider's perspective on Greece, I have recently visited Greece, and I have been living in a PIIGS state for the last 4 years.

There ARE massive amounts of waste in every department of these governments. But the bureaucrats are too incompetent to implement rational cuts on their own, and the elected officials have no stomach to make them, because the electorate that voted them in are too self-righteously entitled to consider any reduction in what they receive. And so cuts are dispensed in politically convenient, but ill-considered and ineffective ways.

I'll give you some examples from Ireland, where I live.

Senior doctors are the one profession without whom the healthcare system absolutely could not function, and their availability is the biggest single factor in how long it takes someone to get in and out the door. Any reduction in their numbers results in a reduction of service to the public, and they account for less than 4% of the health care budget. But nobody is going to cry over the lost wages of that greedy elite, right? So their pay has been cut by 30-50%, huge numbers of them left, with the net result of reducing the healthcare budget by about 1%. Last year less than 50% of med school graduates stayed in the country. But it's been massively publicly popular. The next proposal on the healthcare budget is to make further reductions in  their pay as its' main priority. This is pretty much the definition of politically convenient, ill-considered, and ineffective.

There have been massive funding cuts to the police. A recent scandal involved a woman who called the police to report that her home was broken into, only to have the police officer say that he could only come out to investigate if the woman came and picked him up, because the station did not currently have a car assigned and he had ridden his bicycle to work. A recently-murdered IRA big wig had a public funeral in the middle of Dublin the other day. Masked gunmen were in procession behind his casket, and fired a volley of shots during the funeral, in the middle of the city, in broad daylight, in front of news cameras, and all with complete impunity from the police. These are wanted murderers walking around in public with firearms in the middle of the capital city, and the police don't dare do a thing about it. And their budget is going down from here.

Meanwhile the government signed a binding labour-relations agreement that ring-fenced all public employee positions, pay, and benefits. Meaning no cuts of any significant can be made to payroll in the civil service. The amount that was ring-fenced by this agreement was larger than all government revenues. Meaning that the government could cut every single non-payroll related budget item down to zero, and would still run a significant deficit. Welfare payments have not been decreased. I can't rent a shoebox in Dublin for less than 1000 euro per month, because that's the basic housing allowance for someone on social support. Meaning that nobody will ever ask less than 1000 euro because they know that even single moms on welfare can afford that. In Ireland you can be paid as a full-time job to be a 'carer' for somebody in your family with a disability. Now that sounds like a fantastic idea in principle to me, it keeps people out of institutions that don't need to be there. But the flip side is that every 3rd or 4th person you meet is a 'full time carer' for someone, being paid a full time wage by the state to do something that they should be doing anyway. And the person for whom they are caring is also getting full state benefits as well. And half the time they just use granny's savings/welfare/pension to put her in private nursing home anyways, and pocket the rest of the cash. There has been absolutely ZERO talk by anyone of any political party towards ending (or even reducing) any of these entitlements. No major political party has ever even suggested balancing the budget.

This is the reality of living in Europe today.

Europe's solution to these problems are things like the European Stability Mechanism. Markets won't lend money to the Irish government any more, and so the European Central Bank created a fund (borrowed from Germany and Finland) that could be lent to indebted countries. This is literally and seriously discussed by commentators and analysts as if it is the viable solution to the Eurozone crisis. Because the problem, apparently, was that European nations couldn't borrow enough money. At least in America when they increase the debt cap, people realize that it is only making things worse and is not a long-term solution. Europe as a whole is still convinced that this is just a temporary problem of liquidity, not solvency.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on September 14, 2012, 10:14:07
Fascinating insights, FoverF - thank you for sharing them.  I will raise a question with the part I've put in yellow here:

But the flip side is that every 3rd or 4th person you meet is a 'full time carer' for someone, being paid a full time wage by the state to do something that they should be doing anyway.

Maybe I've misunderstood - are you suggesting that people who hold full-time jobs outside the home should also be full-time caregivers to their disabled relatives?  Out of a sense of familial responsibility?  If not, who is it that you believe should be caring for these folks, and how would that care be paid for?

No major political party has ever even suggested balancing the budget.

 :nod:  Obviously unsustainable.  How long before this is realized, and at what cost...
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 14, 2012, 10:23:18
Fascinating insights, FoverF - thank you for sharing them.  I will raise a question with the part I've put in yellow here:

Maybe I've misunderstood - are you suggesting that people who hold full-time jobs outside the home should also be full-time caregivers to their disabled relatives?  Out of a sense of familial responsibility?  If not, who is it that you believe should be caring for these folks, and how would that care be paid for?

 :nod:  Obviously unsustainable.  How long before this is realized, and at what cost...


That, the bit highlighted in yellow is the Confucian ideal and is at the root of one of the political debates in China, today. The new left, led by Hu Jintao, has introduced some, very limited social welfare supports - not many and very carefully means tested - and they are too much for the right wing of the Chinese Communist Party, the faction formerly led by Jiang Zemin. Part of the reason for the downfall of Bo Xilai appears to have been that he favoured even more social services and the opposition to that - from all factions - was not economic, it was philosophical: it flew in the face of the Confucian ideals which animate much, maybe evn most of Chinese society.
Title: Re: Why Europe Keeps Failing........
Post by: Technoviking on September 14, 2012, 10:42:27
...Germany atop the heap, just a little bit more equal than the others?
Nazism aside, I'm wondering aloud what the European Economy was like from ~1940 - 1944....
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 14, 2012, 11:02:16
Nazism aside, I'm wondering aloud what the European Economy was like from ~1940 - 1944....


On its knees, literally. Britain and Germany were both broke ~ even with what it had looted from the rest of Europe the Germans could only fight by denying their people almost everything, even adequate food. It was only a matter of time before starvation became a reality - as it almost did in the winter of 1945/46 even with massive allied food aid. Britain had much better credit but that is what it was using to feed itself. By the end of the war Britain's national debt stood at 200% of GDP, a figure not seen since the end of Napoleonic Wars, which Britain both fought and financed. Britain's war loans to the USA were not paid off until 2006! Germany had no national debt because it had no credit since 1931 ~ there were debts on some books but they were, as a matter of practical necessity, all forgiven, including potential reparations (some Greeks claim they are "owed" $75 - 100 Billion by Germany for World War II reparations). Most of the rest of Europe had been looted by Germany and most if it started the winter of 1945/46 with no debts but no money, either.

Title: Re: Why Europe Keeps Failing........
Post by: Technoviking on September 14, 2012, 11:11:21
Britain and Germany I understand were on their knees, especially Germany at the end of the war, with its economy and infrastructure shattered (literally and figuratively).

But, again, just for the sake of argument, if Alien Space Bats* had intervened and the war ended on 21 June 1941 (a day prior to the invasion of the USSR by Germany), what would a "unified" Europe looked like, say by 1951, after ten years of economic policy directed from Berlin?  (Yes, the UK is still the UK, and I'm talking "Europe" to include Norway, Denmark, the low countries, France, Italy (which included Albania), Greece, Romania, Bulgaria, Hungary, Slovakia (the "Czech" part was amalgamated into the German Empire, along with Austria) and half of Poland up to the Bug river.)

(*Alien Space Bats is an internet-ism to establish a fantasy world in which, for the sake of argument, one wishes to make a point)

I'm not trying to make a point, i'm trying to understand.



Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 14, 2012, 11:33:31
Relieved of the costs of war and "owning" a slave empire Germany would have appeared to be on "easy street," but its ability to exploit its industrial base, very much undamaged, and its well educated population would have required something which, it seems to me, the NAZIs would not be inclined to allow: social and economic freedom.

The German "rulers" would have freed the German industrialists to make and sell whatever they could but they, the industrialists, would face HUGE difficulties in finding markets beyond the continent.

America would be a formidable and fierce competitor and, since I'm assuming that the same aliens stay Japan's hand, it, with Britain, would have control of the global sea lines of communications. Hitler's Europe, circa 1942 would look a lot like Napoleon's Europe circa 1812: big, populous, industrious but unable to prosper, in fact falling deeper and deeper into decline, because it could not trade beyond its borders. Napoleon was beaten, by about 1805, by a British naval blockade that strangled his economy ~ his continental system could not sustain itself. Hitler would have been beaten by an equally effective blockade caused by America and Britain having monopolized all the major markets.
Title: Re: Why Europe Keeps Failing........
Post by: Technoviking on September 14, 2012, 11:35:12
Relieved of the costs of war and "owning" a slave empire Germany would have appeared to be on "easy street," but its ability to exploit its industrial base, very much undamaged, and its well educated population would have required something which, it seems to me, the NAZIs would not be inclined to allow: social and economic freedom.

The German "rulers" would have freed the German industrialists to make and sell whatever they could but they, the industrialists, would face HUGE difficulties in finding markets beyond the continent.

America would be a formidable and fierce competitor and, since I'm assuming that the same aliens stay Japan's hand, it, with Britain, would have control of the global sea lines of communications. Hitler's Europe, circa 1942 would look a lot like Napoleon's Europe circa 1812: big, populous, industrious but unable to prosper, in fact falling deeper and deeper into decline, because it could not trade beyond its borders. Napoleon was beaten, by about 1805, by a British naval blockade that strangled his economy ~ his continental system could not sustain itself. Hitler would have been beaten by an equally effective blockade caused by America and Britain having monopolized all the major markets.
Thank you! 

(As you can tell, I know very little about economics, but I *do* know what a Panzer Division was all about.....something about priorities)  :D


Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on September 14, 2012, 11:45:42
I'm going to try for the trifecta and suggest that the third datum point on the European trend line is the Sun King Louis IV and his effort to establish a Parisian hegemony.  He too broke the bank and the only way he could finance operations was by continually expanding by offering his subjects more opportunities to loot the neighbours and then taking ever increasing portions of that loot from his subjects.  Repeat ad nauseam.

The Europeans don't have a problem with central planning.  They have a problem with thick heads.  Apparently brickwalls don't inflict enough pain on them.


 :brickwall:   ???
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on September 14, 2012, 23:58:19
Just reviewing the various suggested ways to slice and dice Europe post EU; it seems to me that there is far too much emphasis on how the continent would be sliced economically and less on how cultural and even military priorities would factor in.

Consider:

1. England will continue to operate on the periphery of Europe (as always) but could now reach out with more confidence to the Commonwealth, the developing world and especially the BRIC's using the leverage of the City's global banking infrastructure and ability to operate as an oceanic power.

2. Northern Europe, centered on Germany and backed by Protestant cultural values. They no longer wish to pay the freight for others (and indeed find it immoral), so are either the core or the residue of the EUzone (depending on how you look at it)

3. Southern Europe, centered on France. Less cohesive than Northern Europe and falling behind after the aftermath of the debt crisis, but still attached to Europe through trade (especially tourism). One recurring theme in Southern European politics in this future will be unassimilated populations of mainly Islamic migrants who are seen as being a drain on already depleted treasuries.

4. Eastern Europe, centered on Poland. These former Warsaw Pact nations are wary of both Northern Europe and Russia, seeking to retain freedom of action and not to become an economic colony of the Europeans or the Russians.

"Others". Europe is divided among many lines, and there will be nations like Ireland, which is literally an outlier, Belgium and Austria, which straddles the North/South divide, Switzerland, which will wish to retain its age old neutrality and the former Balkan nations which are culturally split between the Catholic, Orthodox and Islamic spheres that will not fall neatly into any of the blocks, and may become "prizes" for the blocks to extend influence and markets, or places to avoid, as going in there will get you burned. Depending on how far you want to reach, the Ukraine is culturally split along the Dnieper River between the Catholic "west" and Orthodox "east", marking the possible Eastern border of "Europe"

The future of Europe will not be nice and neat.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on September 18, 2012, 10:37:35
I'd say all of the Scandinavian countries could be considered outliers too, not just the obvious one of Iceland.  It's not a given that they would align themselves with Germany & Benelux.     

The more things change...   
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 18, 2012, 22:39:25
And, according to this article (http://www.bloomberg.com/news/2012-09-18/imf-to-put-argentina-on-path-toward-censure-over-economic-data.html) in Bloomberg, "Argentina is on track to be the first country ever censured by the International Monetary Fund for not sharing accurate data about inflation and the economy ... The IMF’s board of directors, meeting yesterday in Washington, gave the country until Dec. 17 to respond to concerns about the quality of its official data, it said today in an e-mailed statement. If the deadline is missed, the board can issue a declaration of censure, a warning that has never been used and which means sanctions may be applied if the concerns aren’t addressed."

So, Argentina will become an honourary European state.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 20, 2012, 18:47:39
The Wall Street Journal reports (http://online.wsj.com/article/SB10000872396390444032404578008521228332116.html?mod=rss_economy) that a "Fight Looms Over Greece Bailout Plan."

Quote
A confrontation is brewing among Greece's international creditors over who will provide the financing needed to keep the country afloat.

A report by international inspectors, due in October, will state how big the funding shortfall is in Greece's €173 billion ($226 billion) bailout program, but European officials say it is far too big for Greece to close on its own.

That means either the International Monetary Fund, the European Central Bank, or euro-zone governments such as Germany will have to make painful concessions to ease Greece's debt-service burden, in order to avoid a Greek bankruptcy ...

Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 21, 2012, 11:43:19
And more bad news, this time it's Italy (https://www.economy.com/home/login/ds_proLogin_4.asp?script_name=/dismal/pro/blog.asp&cid=234259&refsite=twitter&tkr=1209211041) and Moody's says:

Quote
Italy Forecasts a Bigger Budget Deficit
   
By Tomas Holinka in Prague

September 21, 2012

The Italian government boosted its budget deficit forecast to 2.6% of GDP for this year, from the 1.7% expected in April, amid a deepening recession. Italy’s GDP will likely contract 2.2% in 2012, twice the April government forecast ...
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 26, 2012, 08:58:27
In the category of unintended consequences, this report, which is reproduced under the Fair Dealing provisions of the Copyright Act from Reuters (UK), suggests that the European Central Banks proposal to increase its own regulatory power within the Eurozone could cause a (fatal?) split within the broader EU:

My emphasis added
http://uk.reuters.com/article/2012/09/26/uk-eu-banks-idUKBRE88P0NJ20120926
Quote
European lawmakers warn of banking union split

(Reuters) - Creation of a banking union to help resolve the euro zone debt crisis could lead to a split within the wider European Union, lawmakers in the European Parliament warned during a debate that laid bare the extent of tensions in the bloc.

Brussels proposed earlier this month that the European Central Bank (ECB) take charge of supervising all banks in the euro currency zone, as a first step towards creating a banking union under which euro zone countries would eventually jointly back their lenders.

However, the plan has sparked concerns among the 10 EU countries which do not use the euro that they will be indirectly affected by the ECB's new supervisory powers and put at a competitive disadvantage, whether they join the scheme or not.

Legally, the European Parliament will have no say in writing much of the legislation for a banking union. But it has powers to amend other important financial regulations and can exert influence to change or even delay the new regime.

"What's the point of having a single supervisory mechanism (for the euro zone) when you have the UK with its 60 percent of the financial market not involved?" said Werner Langen, a German lawmaker, in the debate on Wednesday.

"Instead of a single supervisory mechanism, we have a division of Europe, a very explosive division."

Langen's views were echoed throughout the debate of the parliament's influential economic and monetary affairs committee, where members from around Europe voiced conflicting views about the shape of a banking union.

"What we don't want to do here is split the EU down the middle," said Wolf Klinz, a German member of parliament. "What we don't want to see is that the British push themselves into a corner where they have a referendum and they say ... that's enough for us."

BETTER CONTROL

A banking union, which would aim to restore confidence in an industry that has been battered by crisis for nearly five years, has three major steps: the ECB takes over monitoring euro zone banks and others that sign up; a single fund is created to close down and settle the debts of failed banks; and a comprehensive scheme to protect savers' deposits is established.

As well as building the foundation for better control of banks, the union would be important because it should allow the euro zone's rescue fund, the European Stability Mechanism (ESM), to directly inject much-needed capital into banks, such as those in Spain.

"We are under time pressure," said Sven Giegold, a German member of the parliament, who also flagged concerns about a two-tier scheme damaging those countries on the outside. "The banking union ... is linked to access to the ESM."

This pledge, made by euro zone leaders in June, appears to be unravelling, however, after Germany, the Netherlands and Finland drew a distinction between future banking problems and "legacy" difficulties - which could mean that problem banks in Spain and Ireland remain the states' responsibility.

"This proposal is to allow for the direct recapitalisation of Spanish banks because Spain doesn't want to put in a normal application (for aid)," said Langen, who is a member of the CDU, the same political party as German Chancellor Angela Merkel.

"The whole European system of banking supervision is being turned on its head for the sake of Spain. As this thing has been turned on its head, we need to turn it back again," Langen said.

SUPERVISORY REACH

The debate underscored a central problem of the union - that it could drive a wedge between those countries inside the scheme and those outside, whose banks may suffer as a result.

Swedish Finance Minister Anders Borg has said he would not accept ECB oversight of Nordea, the Nordic region's biggest bank, as long as his country remains outside a banking union. Nordea has its headquarters outside the euro zone in Stockholm, but has major operations in Finland, the sole Nordic country to use the common currency.

While Britain will stay outside the scheme, many international banks in London - ranging from HSBC to Citi - have operations in the euro zone that will be affected by the ECB's new supervisory reach.

London is worried that the ECB, emboldened by its new powers, will demand regulation that could undermine the city's position as Europe's financial capital.

Some believe that the European Banking Authority (EBA), set up to coordinate the supervision of banks in response to the financial crisis and which is run by regulators from across the European Union, could act as a counterbalance.

The European Commission has already suggested a special voting mechanism among EU regulators as a counterweight to the power of those in the euro zone.

"Countries should be lured in, tempted in - it should be made difficult for a country to refuse," said Giegold, who will play a leading role in talks about the plan.

"The system should be so attractive that everyone will want to join," Giegold said, in an appeal which is likely to be ignored in London.

The close ties between some troubled governments and the banks they supervise - and on which they also rely to buy their debt - have dragged both ever-deeper into crisis.

A banking union would break this link by making the policing of banks supranational and establishing central schemes paid into collectively to cover the costs of closing failed lenders and protecting savers' deposits.

(Editing by David Stamp and David Holmes)


Oops!

And, "oops" offers a chance to comment on Southern Europe (which includes France) in general: (https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fannetaintor.com%2Fcart%2Fimages%2Fmagnets-oops-i-spent-the-grocery-money-on-shoes-agai.jpg&hash=92350f1daf6087cec26d6989bd5f7a61)
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 26, 2012, 16:15:50
And it gets worse and worse according to an article (http://business.financialpost.com/2012/09/26/is-europes-bank-rescue-plan-unravelling/?utm_source=dlvr.it&utm_medium=twitter) in the National Post wich says, in part:

http://business.financialpost.com/2012/09/26/is-europes-bank-rescue-plan-unravelling/?utm_source=dlvr.it&utm_medium=twitter
Quote
Efforts by eurozone countries to agree on how to recapitalise struggling banks appeared to be in disarray on Wednesday with conflicting interpretations of what was agreed by EU leaders at a summit barely three months ago.

The dispute between four AAA-rated eurozone countries on one hand – German, Finland, the Netherlands and Austria – and indebted states such as Ireland and Spain on the other, threatens to undo or severely set back efforts to allow banks to be directly recapitalised by the eurozone’s rescue fund.
...
Germany, Finland and the Netherlands gave rise to the confusion with a joint statement on Tuesday setting out the conditions under which they would be prepared to allow the rescue fund, called the ESM, to recapitalise banks.

But rather than sticking to the wording from the summit in June, when countries agreed that the ESM would be able to directly recapitalise banks once an “effective single supervisory mechanism is established”, the three countries added an extra stipulation in their statement saying:

“The ESM can take direct responsibility of problems that occur under the new supervision, but legacy assets should be under the responsibility of national authorities.”
...
But the broader issue is that EU member states often struggle to communicate with one voice or agree on how to interpret their own agreements, creating confusion in financial markets and beyond, which will always tend to exacerbate the very crisis they are trying to resolve.
Title: Re: Why Europe Keeps Failing........
Post by: GAP on September 26, 2012, 16:38:11
I keep getting the impression that this whole financial crisis is going to deflate like a burst balloon....all it would take is for one of the PIGGS to renege on the deal....
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 26, 2012, 16:45:54
I think the Eurozone faces two impossible choices:

1, Quickly, almost immediately, move to greater integration, which, de facto means that Greece, Portugal, Spain, Italy and France surrender sovereignty ~ there would be blood on the streets; or

2. Accept a Greek default, followed by a Portuguese default, followed by a Spanish default which will plunge Europe - indeed the whole world - into a recession that will make 2008 look like fun.

I'm not sure which is worse ... but my banker and I prefer European blood on European streets to another, wholly preventable, Great Recession.
Title: Re: Why Europe Keeps Failing........
Post by: Sythen on September 26, 2012, 16:53:53
but my banker and I prefer European blood on European streets to another, wholly preventable, Great Recession.

Usually agree with you on most things you say, but this I hope was meant as a joke I am missing? I understand that it will be better for your investments and such, but what kind of place will Europe be after the blood is mopped up? And will it end up being your grandkids, or great grandkids blood in those same European streets when the next charismatic figurehead tries to take power?
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 26, 2012, 17:07:12
Usually agree with you on most things you say, but this I hope was meant as a joke I am missing? I understand that it will be better for your investments and such, but what kind of place will Europe be after the blood is mopped up? And will it end up being your grandkids, or great grandkids blood in those same European streets when the next charismatic figurehead tries to take power?


I'm only half joking, actually a little less than half ... I think the human effects of another Great Recession would also be very, very ugly, and not just in Europe. Remember: the last great European unpleasantness (1939-45) was, in some large measure, a consequence of the Great Depression. Sometimes a little rioting and bloodshed is cathartic and gets people to focus on real solutions.

Title: Re: Why Europe Keeps Failing........
Post by: Sythen on September 26, 2012, 17:12:36
Sometimes a little rioting and bloodshed is cathartic and gets people to focus on real solutions.

And sometimes it leads down a much darker path. Unfortunately, you're probably right when it comes to the "impossible choices" Europe has. The future is so depressing, sometimes wish I could tune out what's happening in the world, but I am addicted to reading the news lol.
Title: Re: Why Europe Keeps Failing........
Post by: Technoviking on September 26, 2012, 17:39:34
I'm not sure which is worse ... but my banker and I prefer European blood on European streets to another, wholly preventable, Great Recession.

Maybe we can urge Germany go give it a fourth go?   >:D
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 26, 2012, 17:48:35
Maybe we can urge Germany go give it a fourth go?   >:D


I suspect that, this time, some Germans are saying, quietly and just to themselves: "Hmmm, if we just wait, quietly, it will all fall into our hands, from the Atlantic to the North tip of Finland and to the Black Sea ~ almost all of traditional Europe united under German rule guidance.

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fwww.patria-sokol.de%2Fimages%2Faufkleber%2F21-415.gif&hash=d0cdb4fef17655153da22efe176e1c2b)
Title: Re: Why Europe Keeps Failing........
Post by: kevincanada on September 28, 2012, 11:50:23
You guys are speaking as if we came out of recession? Our growth versus inflation numbers are almost the same, that took 4 years just to stabilize.  I've had my business since 2006 I can honestly tell you I do not make the money I was earning 5 years ago.  My bills have gone up, and my income down.  I am pestered at least weekly for people looking for jobs.  Presently we are finally not loosing jobs faster than we can make them.

Our outlook makes me hopeful, I really l like the bold of move of Finance Minister Flaherty.  Making it harder to get mortgages has nuked the home sales market sales down 66% in August in Toronto.  Bad for banks and and Realtors, as this redirects 10's of billions of dollars annually into other area's and debt repayment on the consumer level will improve, thereby allowing more money for other things, like cars, computers, your kids school soccer team uniform etc.  All helpful for job creation.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on September 28, 2012, 11:56:27
You guys are speaking as if we came out of recession? Our growth versus inflation numbers are almost the same, that took 4 years just to stabilize.  I've had my business since 2006 I can honestly tell you I do not make the money I was earning 5 years ago.  My bills have gone up, and my income down.  I am pestered at least weekly for people looking for jobs.  Presently we are finally not loosing jobs faster than we can make them.

Our outlook makes me hopeful, I really l like the bold of move of Finance Minister Flaherty.  Making it harder to get mortgages has nuked the home sales market sales down 66% in August in Toronto.  Bad for banks and and Realtors, as this redirects 10's of billions of dollars annually into other area's and debt repayment on the consumer level will improve, thereby allowing more money for other things, like cars, computers, your kids school soccer team uniform etc.  All helpful for job creation.


Kevin, that is both a very valid and a very good point. We are, technically "out" of the recession and, therefore, technically in the "recovery" ~ but recoveries normally take months, not years and years and the kind of growth we have seen for the past few years is too anemic to be, fairly, described as a "recovery."

Like you, I think Minister Flaherty has us on the right track but you will notice that he is only promising trouble ahead - from Europe, from the USA, even from Asia.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 01, 2012, 19:02:15

The Greeks, no matter which party wins, cannot spend what they cannot borrow and what they cannot borrow, because no one will buy their bonds - no matter what the premium is - are euros.

My guess: 1) Greeks elect one of the lunatic parties; 2) Greece exits the euro; consequently 3) Greece leave the EU; and 4) Greek 'democracy' collapses - a military coup ensues ...

Turkey smiles ...


I have posited, elsehwre on Amy.ca, that Turkey might be setting itself up to abandon NATO and Europe and reach for regional power.

Now Walter Russell Mead suggests that Prime Minister Erdogan is, indeed, finished with Europe:

http://blogs.the-american-interest.com/wrm/2012/10/01/erdogan-to-the-eu-who-needs-you-anyway/
Quote
Erdogan to the EU: Who Needs You Anyway?

1 October 2012

In a sign of Europe’s relative decline in the world, Turkish Prime Minister Recep Erdogan did not mention Turkey’s EU accession plans during his party’s most recent congress this past Sunday. Today’s Zaman reads the tea leaves:

        Not mentioning such major political goals as reforms and EU membership was indeed attention-grabbing,
        and the prime minister notably saluted countries from Australia to Brazil and Japan to Canada
        while not naming any European country.

Gone are the days when European leaders would wring their hands over whether or not to let Turkey into their club. No longer are the Turks peering over Europe’s fences hopefully and longingly. With wave after wave of crisis battering the EU, Turkey has to be wondering why it should even bother pretending they want to join. Today’s Turkey is an economic success story and is increasingly flexing its muscles in its own back yard.  Who needs Europe?

This is a historic shift—and one that Europeans will very likely soon come to rue.


Watch Turkey; it matters.
Title: Re: Why Europe Keeps Failing........
Post by: Technoviking on October 01, 2012, 21:11:22
Watch Turkey; it matters.

Do they strive to dominate, as they did 100 years ago?

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fupload.wikimedia.org%2Fwikipedia%2Fcommons%2F1%2F16%2FOttoman_Empire_1914_h.PNG&hash=a742812c15751b0c8eeb0d092eafc4f6)


Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 01, 2012, 21:19:47
Maybe they're looking a bit farther back ...

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fwww.allaboutturkey.com%2Fimg%2Fottoman-empire-1580.gif&hash=20e7ef107ebb66eaee287f91f1d3479e)
Title: Re: Why Europe Keeps Failing........
Post by: Technoviking on October 01, 2012, 22:22:29
Maybe they're looking a bit farther back ...

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fwww.allaboutturkey.com%2Fimg%2Fottoman-empire-1580.gif&hash=20e7ef107ebb66eaee287f91f1d3479e)

I was going to post that as the model, but that would imply that they would inherit Greece, and all its troubles.  You know the old mantra: never interrupt your (adversary) when he's making a mistake.  So, with a toe-hold on Europe, perhaps as Lord of Arabia, and all the resources there, ruled with an iron hand, of course.


So, on the left is Europe, which is a buffer for their real interests, on the right, in Asia Minor:
(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fsphotos-g.ak.fbcdn.net%2Fhphotos-ak-ash4%2F207027_10150151447366232_1996645_n.jpg&hash=3b6458a90e2a70c2c15a13c29b3d4c1d)
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 04, 2012, 13:48:22
Here in three parts is a long but very informative article by Timothy Garton Ash (http://www.sant.ox.ac.uk/people/gartonash.html) which is reproduced under the Fair Dealing provisions of the Copyright Act from Foreign Affairs and which, I think, goes a long way to explaining why Europe is in the mess it is in:

 Part 1 of 3

http://www.foreignaffairs.com/articles/138010/timothy-garton-ash/the-crisis-of-europe?page=show
Quote
The Crisis of Europe
How the Union Came Together and Why It’s Falling Apart

By Timothy Garton Ash

September/October 2012

May 10, 1943: German forces are destroying the Warsaw ghetto. Facing armed resistance from Polish Jewish fighters, they set fire to it house by house, burning some inhabitants alive and driving others out from the cellars. "Today, in sum 1,183 Jews were apprehended alive," notes the official report by the SS commander Jürgen Stroop. "187 Jews and bandits were shot. An indeterminable number of Jews and bandits were destroyed in blown-up bunkers. The total number of Jews processed so far has risen to 52,683." An appendix to this document contains the now-famous photograph of a terrified small boy in an outsize cloth cap, his hands held high in surrender. Marek Edelman, one of very few leaders of the Warsaw ghetto uprising to survive, concluded a memoir published immediately after the war with these words: "Those who were killed in action had done their duty to the end, to the last drop of blood that soaked into the pavements. . . . We, who did not perish, leave it up to you to keep the memory of them alive -- forever."

Fast-forward exactly 60 years, to May 10, 2003, a month before Poland holds a referendum on whether to join the European Union. At a "yes" campaign rally in Warsaw, a banner in Poland's national colors, red and white, proclaims, "We go to Europe under the Polish flag." Outside the rebuilt Royal Castle, a choir of young girls in yellow and blue T-shirts -- echoing the European flag's yellow stars on a blue background -- breaks into song. To the music of the EU's official anthem, which is drawn from the final movement of Beethoven's Ninth Symphony, they sing, in Polish, the words of the German poet Friedrich Schiller's "Ode to Joy." Soon these young Poles will be able to move at will across most of a continent almost whole and free, to study, work, settle down, marry, and enjoy all the benefits of a generous European welfare state, in Dublin, Madrid, London, or Rome. "Be embraced, ye millions! This kiss to the entire world! Brothers, a loving father must live above that canopy of stars!"

To understand how a predicted crisis of European monetary union became an existential crisis of the whole post-1945 project of European unification, you have to see Europe's unique trajectory from one May 10 to the other. Both the memories of World War II and the exigencies of the Cold War drove three generations of Europeans to heights of peaceful unification that were unprecedented in European history and unmatched on any other continent. Yet that project began to go wrong soon after the fall of the Berlin Wall, as western European leaders hastily set course for a structurally flawed monetary union.

While many governments, companies, and households piled up unsustainable levels of debt, young Europeans from Portugal to Estonia and from Finland to Greece came to take peace, freedom, prosperity, and social security for granted. When the bubble burst, it left many feeling bitterly disappointed and led to excruciating divergences between the experiences of different nations. Now, with the current crisis still unresolved, Europe lacks most of the motivating forces that once propelled it toward unity. Even if a shared fear of the consequences of the eurozone's collapse saves it from the worst, Europe needs something more than fear to make it again the magnetic project it was for a half century. But what can that something be?

WAR ON THE MIND

Historians have identified many factors that contributed to the process of European integration, including the vital economic interests of European nations. Yet the single most important driving force across the continent was the memory of war. Among those parading down the streets of Warsaw in May 2003 was the bearded professor Bronislaw Geremek, who, as a ten-year-old Polish Jewish boy, had seen the Warsaw ghetto burning before his eyes. It was no accident that he became one of Poland's most ardent advocates of European integration, as a leader of the Solidarity movement, the Polish foreign minister, and then a member of the European Parliament.

To be sure, the Warsaw ghetto survivor, the Nazi soldier, the British officer, the French collaborator, the Swedish businessman, and the Slovak farmer had very different wars. Yet from all their throats rose the same passionate cry: "Never again!" For all the differences in national and subnational experiences across a hugely diverse continent, the historian Tony Judt could still title a history of Europe that covers the 60 years up to 2005 with a single word: Postwar. In this respect, if in no other, the European Union's favorite catch phrase, "Unity in diversity," was strictly accurate.

Those memories played an important role for those British Conservatives, most of them World War II veterans, who took the United Kingdom into the European Economic Community, the precursor to the European Union, in 1973. But above all, personal experience motivated those continental Europeans, up to and including French President François Mitterrand and German Chancellor Helmut Kohl, who created the EU of today. In a conversation I had with him after German reunification, Kohl delivered a line I will never forget. "Do you realize," he asked, "that you are sitting opposite the direct successor to Adolf Hitler?" As the first chancellor of a united Germany since Hitler, he explained, he was profoundly conscious of his historical duty to do things differently.

European integration has rightly been described as a project of the elites, but Europe's peoples shared these memories. When the project faltered, as it did many times, the elites' reaction was to seek some way forward, however complicated. Until the 1990s, when the custom of holding national referendums on European treaties began to spread, Europeans were seldom asked directly if they agreed with the solutions found, although they could periodically vote in or out of office the politicians responsible for finding them. Nonetheless, it is fair to say that for about 40 years, the project of European unification could rely on at least a passive consensus among most of Europe's national publics.

These 40 years were those of the Cold War, the other conflict that shaped the EU. From the 1940s through the 1970s, a central argument for Western European integration was to counter the Soviet threat, visible for all to see in the presence of the Red Army in East Germany and divided Berlin. Beside the memories of Europe's own self-inflicted barbarism, there were, so to speak, the barbarians at the gate. Soviet leaders from Joseph Stalin to Leonid Brezhnev should be awarded posthumous medals for their service to European integration.

Cold War competition also goes a long way to explaining why the United States lent such strong support to European unification, from the Marshall Plan of the 1940s to the diplomacy surrounding the reunification of Germany and the dissolution of the Soviet Union in 1989-91.

For the half of Europe stuck behind the Iron Curtain -- what the Czech writer Milan Kundera called "the kidnapped West" -- the will to "return to Europe" went hand in hand with the struggle for national and individual freedom. The growing prosperity of Western Europe had a magnetic effect on those who saw it, whether at first hand or on Western television.

It is the most elementary historical fallacy to suggest that an event was caused by one that occurred after it, yet something that was only to happen in 1992 was a contributing cause of the velvet revolutions of 1989. The target year 1992, the widely trumpeted deadline that the European Economic Community had given itself for completing its single market, conveyed an urgent sense of being left ever-further behind, not just to the peoples of Eastern Europe but also to reform-minded Soviet-bloc leaders, including Mikhail Gorbachev.

This brings us to the last great motor of European integration until the 1990s: West Germany. The West Germans, both the elites and a large part of the populace, demonstrated an exceptional commitment to European integration. They did this for two very good reasons: because they wanted to, and because they had to. They wanted to show that Germany had learned from its terrible pre-1945 history and wished to rehabilitate itself fully in a European community of values, even to the point of surrendering much of its own sovereignty and national identity. Having been the worst Europeans, the Germans would now be the best. (As a joke at the time went, if someone introduced himself just as "a European," you knew immediately that he was German.) But they also had a hard national interest in demonstrating that European commitment, for only by regaining the trust of their neighbors and international partners (including the United States and the Soviet Union) could they achieve their long-term goal of German reunification. As Hans-Dietrich Genscher, the former West German foreign minister, once observed, "The more European our foreign policy is, the more national it is." West German Europeanism was not simply instrumental -- it reflected a real moral and emotional engagement -- but nor was it purely idealistic.

After the two German states were reunited in 1990, many observers wondered whether what was essentially an expanded West Germany would continue this extraordinary commitment to European integration. Well before the crisis of the eurozone broke, the answer was already apparent. Reunited Germany had become what some participants in the post-Wall debate called a "normal" nation-state -- a "second France," in the commentator Dominique Moïsi's striking phrase. Like France, the new Germany would pursue its national interests through Europe whenever possible, but on its own when it deemed it necessary -- as it did, for example, when securing its energy needs bilaterally with Russia, notably in the Nord Stream gas pipeline deal of 2005. Its leaders, in Berlin now, not Bonn, would still try to be good Europeans, but they would no longer open the checkbook so readily if Europe called.

End of Part 1
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 04, 2012, 13:49:48
Part 2 of 3

Quote
THE BIRTH OF A MALFORMED UNION

The immediate origins of the malformed currency union that is at the epicenter of today's European crisis also lie in the tempestuous moment of German reunification and its aftermath. Following the fall of the Berlin Wall on November 9, 1989, Mitterrand, alarmed by the prospect of German reunification, pushed hard to pin Kohl down to a timetable for what was then called economic and monetary union. That proposal had already been elaborated to help the European Economic Community complete its single market and address the difficulty of managing exchange rates within it. Mitterrand's general purpose was to bind a united Germany, if united those two Germanies really must be, into a more united Europe; his specific purpose was to enable France to regain more control over its own currency, and even win some leverage over Germany's.

In a remarkable conversation with Genscher, the West German foreign minister, on November 30, 1989, Mitterrand went so far as to say that if Germany did not commit itself to the European monetary union, "We will return to the world of 1913." Meanwhile, Mitterrand was stirring up British Prime Minister Margaret Thatcher to sound the alarm as if it were 1938. According to a British record of their private meeting at the crucial Strasbourg summit of European leaders in December 1989, Mitterrand said that "he was fearful that he and the Prime Minister would find themselves in the situation of their predecessors in the 1930s who had failed to react in the face of constant pressing forward by the Germans."

David Marsh, the best chronicler of the euro's history, concludes that the "essential deal" to proceed with monetary union was done at Strasbourg. Tough negotiations followed, and exactly two years later a treaty was agreed on in the small Dutch city of Maastricht, setting the basic terms of what would become today's eurozone. It is too simplistic to characterize this as a straight tradeoff: "the whole of Deutschland for Kohl, half the deutsche mark for Mitterrand," as one wit quipped at the time. But Germany's need for its closest European allies -- above all, France -- to support its national reunification had a decisive influence on both the timetable and the design of Europe's monetary union.

To be sure, Kohl was a deeply committed European. He never tired of repeating that German and European unification were "two sides of the same coin." So now, he told U.S. Secretary of State James Baker three days after the Strasbourg summit, he had even agreed to a European monetary union. What stronger proof could he offer of Germany's European credentials? Kohl "took this decision against German interests," the German minutes of that meeting record him telling Baker. "For example, the president of the Bundesbank was against the present development. But the step was politically important, since Germany needed friends." As one does, when one is trying to unite Germany without blood and iron.

The design of the resulting monetary union can also be understood, like so much else in the history of European integration, as a Franco-German compromise. At the insistence of Germany, and especially of the Bundesbank, the European Central Bank would be a Bundesbank writ large, fiercely independent of governments (unlike in the French tradition) and devoted with Protestant fervor to the one true god of price stability (lest the Weimar nightmare of hyperinflation return). To his credit, Kohl wanted the monetary union to be complemented by a fiscal and political union, so there could be control of public spending and coordination of economic policy among the states, and more direct political legitimation of the whole enterprise. "Political union is the essential counterpart to economic and monetary union," he told the Bundestag in November 1991. "Recent history, not only in Germany, teaches us that it is absurd to expect in the long run that you can maintain economic and monetary union without political union."

But France was having none of that. The point was for it to gain some control over Germany's currency, not for Germany to gain control over France's budget. So the discussion of a fiscal union withered away into a set of "convergence criteria," which required would-be members of the monetary union to keep public debt under 60 percent of GDP and deficits under three percent.

Thus, in the Sturm und Drang of the largest geopolitical change in Europe since 1945, a sickly child was conceived. Most Germans opposed giving up their treasured deutsche mark. But they would not be asked; the West German constitution did not envisage referendums. Kohl had no intention of changing that. Alexandre Lamfalussy, the head of the European Monetary Institute, the precursor to the European Central Bank, later recalled telling him, "I don't know how you will get the German people to give up the D-Mark." Kohl's reply: "It will happen. The Germans accept strong leadership."

In France, meanwhile, the Maastricht Treaty scraped through in a September 1992 referendum with a yes vote of just over 50 percent. The passive consensus for further steps of European integration, advancing ever closer to the heart of national sovereignty, was beginning to break down even in heartlands of the postwar project.

A CRISIS FORETOLD

With a hat tip to Gabriel García Márquez, a history of Europe's monetary union could be called Chronicle of a Crisis Foretold. By the time the eurozone's 11 founding member states were preparing to introduce a common currency on January 1, 1999, most of the problems that would beset the euro a decade later had been predicted.

Critics at the time questioned how a common currency could work without a common treasury, how a one-size-fits-all interest rate could be right for such a diverse group of economies, and how the eurozone could cope with economic shocks that varied from region to region -- what economists call "asymmetric shocks." For Europe had neither the labor mobility nor the level of fiscal transfers between states that characterized the United States.

"Since 1989, we have seen how reluctant West German taxpayers have been to pay even for their own compatriots in the east," noted one article in these pages in 1998. "Do we really expect that they would be willing to pay for the French unemployed as well?" Reporting a widespread view that the monetary union would face a crisis sooner rather than later, and that this would catalyze the necessary political unification, the author cautioned, "It is a truly dialectical leap of faith to suggest that a crisis that exacerbates differences between European countries is the best way to unite them."

Since I was that author, I should add that I did not anticipate three important things. First, I did not expect that the monetary union would flourish for so long. For nearly a decade, the euro appeared to be strong, edging up toward the dollar as a global trading and reserve currency. For businesses, it removed the risk of exchange-rate fluctuations inside the eurozone. For the rest of us, it was a delight to be able to travel from one end of the continent to the other without having to change currencies. To visit Dublin, Madrid, or Athens was to see cities booming as never before. Small wonder that in 2003 those young Poles sang Schiller's "Ode to Joy" at the prospect of joining the happy Irish, Spaniards, and Greeks. And I, like others sympathetic to the project, was lulled into a false sense of security.

Because the crash came later than originally expected, it was worse when it came. Over time, enormous imbalances had built up between the core, mainly northern European countries (above all, Germany), and the peripheral, mainly southern European countries (especially Portugal, Ireland, Italy, Greece, and Spain, which have sometimes been unkindly labeled "the PIGSs").

To be sure, the initial shocks that started the earthquake came from outside Europe, in the U.S. subprime mortgage market. In this sense, the travails of the eurozone are part of a broader crisis of Western financial capitalism.

Yet the second thing we did not fully anticipate in the 1990s was the extent to which the eurozone would generate its own asymmetric shocks. Whereas Germany, still staggering under the financial burden of German reunification, impressively massaged down its labor costs, trimmed its welfare spending, and became competitive again, many of the peripheral countries allowed their unit labor costs to soar.

While Germany and some other northern European countries maintained fiscal discipline and moderate levels of debt, many of the peripheral countries went on the mother of all binges. In some places, such as Greece, it was public spending that skyrocketed; in others, such as Ireland and Spain, it was private spending. The open sesame to both kinds of excess was the same: governments, companies, and individuals could borrow at unprecedentedly low interest rates thanks to the credibility that eurozone membership lent their countries. In effect, Greece, which had snuck into the eurozone in 2001 with the aid of falsified statistics, could borrow almost as if it were Germany.

When, therefore, Germany was asked to help bail out those countries, German voters were understandably indignant. Why should we work even harder and retire even later, they asked, so these feckless Greeks, Portuguese, and Italians can retire earlier than we do and go sun themselves on the beach? "Sell your islands, you bankrupt Greeks," snorted Bild, Germany's largest tabloid, in October 2010.

The Germans had a good point: they had demonstrated remarkable prudence; the peripheral countries had not. But there was another side to the story. The moment the Stability and Growth Pact (the formalized successor to the convergence criteria) was revealed to be toothless was when Germany itself, along with France, violated the deficit limit of three percent of GDP in 2003-4. The penalties envisaged in the pact were not even enforced.

Moreover, Germany had fared so well partly because the peripheral countries had fared so badly. The peripheral eurozone countries could no longer compete with Germany on price by devaluing their own national currencies, and part of their binge spending went to buying more BMWs and Bosch washing machines. The euro also enabled German exporters to price their goods more competitively in markets such as China. (One study, by Nathan Sheets and Robert Sockin of Citigroup, estimated that Germany's lower real exchange rate, courtesy of the euro, has lifted its real trade surplus by about three percent of GDP annually.) As the economist Martin Feldstein noted in these pages, in 2011 Germany's $200 billion trade surplus roughly equaled the rest of the eurozone's combined trade deficit. Germany was to Europe what China is to the world: the exporter that requires others to consume.

In addition, Germany and other northern European countries with current account surpluses recycled those surpluses partly by lending to Greeks, Irish, Portuguese, and Spaniards. So when Germany bailed out the peripheral eurozone countries, it was also bailing out its own banks.

The third element few foresaw in the 1990s was the spiraling scale, speed, and folly of global financial markets. Most egregious, bond markets contributed to the burgeoning imbalances by mispricing sovereign risk in general and the differential risk between various eurozone government bonds in particular. Despite the presence of a "no bailout" clause in the Maastricht Treaty, bond traders acted as if the risk associated with lending to the Greek or Portuguese governments was only fractionally higher than that of lending to Germany or the Netherlands.

When belief in the solidity of the eurozone began to collapse, soon after its tenth birthday, the markets plunged to the other extreme. Again and again, they punished eurozone leaders' belated half measures with soaring bond yield spreads, so that country after country found its borrowing costs whizzing upward. At interest rates of five to eight percent, it becomes very difficult for a government to sustain its debt burden, even with the most exemplary German-style fiscal discipline and structural reform. There was only so much that even the wisest and most economically responsible leaders, such as Italian Prime Minister Mario Monti, could ask of their own people.

EUROPE'S DYSFUNCTIONAL TRIANGLE

Structurally, Europe now finds itself caught in a dysfunctional triangle, between national politics, European policies, and global markets. Ever since the European Coal and Steel Community was founded, in 1951, integration has proceeded through the development of common European policies: from those on agriculture, fisheries, and trade, all the way to monetary policy. The democratic politics of the EU have, however, remained stubbornly national.

While the volcanic magma was heating up under the outwardly calm crust of the eurozone, European leaders spent much of this century's first decade engaged in an ambitious attempt to write what some called a constitution for Europe. To cope with both the deepening of the EU, through monetary union, and its widening, through the historic enlargement to eastern Europe, they proposed a new set of institutional arrangements for the EU's 27 states (since 2007) and 500 million people. But in referendums, voters in France and the Netherlands rejected even a watered-down version of these lofty plans. "The nations don't want it," commented Geremek, that passionate but also realistic European, shortly before he died in 2008.

So the mountain labored again, and brought forth a mouse. The Treaty of Lisbon, which came into force in 2009, did give more powers to the directly elected European Parliament. But decision-making in today's EU still consists mainly of national politicians cutting deals behind closed doors in Brussels. And the politics and media they worry about are national, not European. There are Europe-wide political groupings, based on those in the European Parliament, but there are no truly European politics. The average turnout for elections to the European Parliament has declined with every vote since direct elections began in 1979. Although there are some good Europe-wide media outlets, watched and read by a happy few, there is no broader European public sphere.

The French historian Ernest Renan said that a nation is "an everyday plebiscite." Well, today's EU has an election almost every day, but these are national elections, conducted in different languages and in national media. Increasingly, the election campaigns feature parties that blame the country's current travails on other European nations, or on the EU itself, or on both. Visiting Maastricht earlier this year -- a city now a little worried about its place in the history books -- I was told how the anti-immigrant and anti-Islamic Dutch populist Geert Wilders has redirected his political fire against "Europe." That's where he thinks the votes are now.

At the same time, panicky global markets instantly impinge on both European policies and national politics. As country after country finds its credit rating cut and its borrowing costs going through the roof, governments tremble and call yet another emergency summit in Brussels. As the clock ticks into the early hours, exhausted national leaders are torn between their terror of what the markets will do to them when trading opens the next morning and their terror of what their national media, coalition partners, parliaments, and voters will do to them when they get back home.

As soon as the meeting ends, each leader will dash out from the conference room to brief his or her own national media, so that every time, there is not just one version of a European summit but 27 different ones -- plus a 28th, the implausibly irenic conclave described by the EU's own clutch of institutional heads. This is Europe's political Rashomon, with 28 conflicting versions of the same event delivered in 23 languages. It is an odd way to run a continent.

End of Part 2
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 04, 2012, 13:51:04
Part 3 of 3

Quote
THE MISSING INGREDIENTS

Europe's monetary union was a bridge too far -- meaning not a bridge that should never have been crossed but a bridge that was crossed too soon, before Europe was strategically prepared to defend it. To be sure, carrying on for another decade or two with a system of fixing the margins within which exchange rates could fluctuate -- the so-called Exchange Rate Mechanism -- would have been demanding. But it is hard to disagree with this retrospective judgment by the economic commentator Martin Wolf: "Consider how much better off Europe would have been if the exchange rate mechanism had continued, instead, with wide bands."

We also have to consider other roads not taken. What if, instead of introducing the euro, Europe had deepened its still-far-from-complete single market? What if the whole EU had concentrated on improving its competitiveness, as Germany did so impressively, and not merely paid lip service to that goal in a catalog of good intentions called "the Lisbon agenda"? What if it had used this time to develop a more effective foreign policy? But regret is futile. An old and now politically incorrect English joke has an American couple arriving at a crossroads, deep in the Irish countryside, and asking a tweed-clad farmer the way to Tipperary. "If I were you," says the Irishman, "I wouldn't start from here." Yet here is where we are.

At the end of June this year, the EU held yet another "save the euro" summit -- by a rough count, the 19th of the crisis. Germany said it would allow special European funds to be used to help imperiled Spanish banks, and the eurozone states resolved to create a single banking supervisory structure run by the European Central Bank. Although nobody noticed, the summit communiqué was a reminder of useful things the EU continues to do. For example, European leaders reached agreement on a unitary European patent system, which is expected to lower patenting costs for European companies by as much as 80 percent. They also decided to open accession negotiations with Montenegro, a newly independent state that just 13 years ago was still embroiled in the wars of former Yugoslavia.

As of this writing, no one knows how the euro saga will end. The possibilities include a total, disorderly collapse of the eurozone, a continued muddling through, and, most optimistically, systemic consolidation into a genuine fiscal and political union. Yet even if the eurozone crab-marches toward a political union, it will still have to generate the solidarity among its citizens necessary to underpin it, a degree of European compatriotism that does not yet exist. Another open question is how a more united eurozone core, which would itself contain creditor and debtor nations with very different perspectives, would relate institutionally and politically to EU member states not in the zone, such as the United Kingdom, Sweden, and Poland.

According to one projection by analysts at ING, a total collapse of the eurozone could cause GDP to fall by more than ten percent over two years in all the leading European economies, including Germany. Coming on top of the hardships already endured, that could lead to dangerous political radicalization. (Unlike in the 1930s, such radicalization, to the far right and the far left, has been remarkably limited so far, even in Greece -- a tribute to the resilience of contemporary European democracies.) But even if the eurozone falls apart, there will still be a place called Europe and probably a set of institutions called the European Union. And there will be a new yet also familiar historic challenge for Europeans: to pick themselves up from the ruins and rebuild.

Today's crisis is the greatest test yet of what has been called "the Monnet method" of unification, after Jean Monnet, a founding father of European integration. Monnet proposed moving forward, step by step, with technocratic measures of economic integration, hoping that these would catalyze political unification -- not least through moments of crisis. "Crises are the great unifier!" he once explained. Yet even in the first 40 years of European integration, crises sometimes pulled Europe together and sometimes did not. If they tended more often to promote unity than division, that was in large part thanks to wartime memories and Cold War imperatives. So where are the drivers of integration now? Go back down the list.

A single market of 500 million consumers remains a powerful economic attraction for most European countries. However, it no longer seems as evident as it once did that Europe brings steadily growing prosperity and welfare to all its citizens. Exporting nations, especially Germany, and global service providers, such as the United Kingdom, are increasingly looking to emerging markets, where the growth is.

Unlike during the Cold War, there is no obvious external threat in Europe's front yard. Try as he might, Vladimir Putin just does not match up to Stalin, or even Brezhnev. Could China step into that role? Without stigmatizing China as an enemy, the most compelling new rationale for European unification is indeed the rise of non-Western great powers: China, mainly, but also India, Brazil, and South Africa.

One cannot simply extrapolate from current economic and demographic trends, but in any likely world of 2030, even Germany will be a small to medium-sized power. Then, the only effective way to defend the freedoms and advance the shared interests of all Europeans will be to act together and speak with one voice. Intellectually, this argument is persuasive. But emotionally, to sway a wider public, it does not compare with the visible presence of the Red Army at the heart of Europe.

If Russia no longer fits the bill for an external threat, the United States no longer plays the part of active external supporter. Already in 2001, President George W. Bush could ask, in a private meeting, "Do we want the European Union to succeed?" Part of his administration, at least in his first term, was inclined to answer no. President Barack Obama would definitely answer yes, but until the eurozone crisis threatened the U.S. economy, and hence his reelection prospects, it was hardly a priority. His administration has taken Europe as it has found it and dealt pragmatically with Brussels or with individual countries -- whatever worked. Its geopolitical focus has been on China and Asia more generally, not Russia and Europe.

Conceivably, the United States' attitude could change if China really came to be seen as the new Soviet Union, a global geopolitical threat to the West. Then one option would be for Washington to seek a closer strategic partnership with a more united Europe, including, for example, a transatlantic free-trade area. Old Europe and its cousins across the water would work toward what Édouard Balladur, the former French prime minister, has imagined as a "Western Union." But there is scant evidence of such thinking at the moment. Rather, both the United States and Europe are making their own tense accommodations with China.

Another past driver of integration, eastern European yearnings, still has some traction today. Eastern Europeans have more recent memories than other Europeans do of dictatorship, hardship, and war. Many appreciate the new freedoms they enjoy in the EU; for some, belonging to the same club as western Europeans is the realization of a centuries-old dream. One Polish economist explains why Poland still aspires to join the eurozone thus: "We want to be on board the ship, even if it is sinking!" Of course, they would rather the ship stays afloat. Last fall, in a speech in Berlin, Radoslaw Sikorski, the Polish foreign minister, memorably observed, "I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity."

EUROPEAN GERMANY, GERMAN EUROPE

Germany is the key to Europe's future, as it has been, one way or another, for at least a century. The irony of unintended consequences is especially acute here. If Kohl was the first chancellor of a united Germany since Hitler, François Hollande is the first Socialist president of France since Mitterrand, and it is Mitterrand's legacy he has to wrestle with. Monetary union, the method through which Mitterrand intended to keep united Germany in its proper place -- co-driver with France, but still deferential to it -- has ended up putting Germany at the wheel, with France as an irate husband flapping around in the passenger seat ("Turn left, Angela, turn left!").

At the time of German reunification, German politicians never tired of characterizing their goal in the finely turned words of the writer Thomas Mann: "Not a German Europe but a European Germany." What we see today, however, is a European Germany in a German Europe. This Germany is an exemplary European country: civilized, democratic, humane, law-abiding, and (although Mann might not have rated this one) very good at soccer. But the "Berlin Republic" is also at the center of a German Europe. At least when it comes to political economy, Germany calls the shots. (The same is not true in foreign and defense policy, where France and the United Kingdom are more important.) This is not a role Germany sought; leadership has been thrust upon it.

Moreover, if the need to win support for German reunification drove Kohl to accept European monetary union on a tight timetable, and without the political union he thought essential to sustain it, German reunification has changed the German attitude to the European project. The very same set of closely linked historical developments that has now produced, 20 years on, the need for a special German contribution to Europe has in the meantime reduced both the country's idealistic desire and its instrumental need to offer that contribution.

Were he still chancellor, Kohl would surely insist that the euro must be saved by moving decisively toward a political union. Merkel and her compatriots have reacted very differently, reluctantly doing the minimum needed to prevent collapse. The modest and plain-speaking Merkel is in many ways the personification of the civic, modern European virtues of this new Germany. She is also a brilliant and ruthless domestic political tactician. Whatever her personal convictions, she knows she faces what may be called the four Bs: the Bundestag (the lower house of the national parliament, from which Germany's most pro-European politicians have largely migrated to the European Parliament, another unintended consequence of that well-intended institution), the Bundesverfassungsgericht (the country's constitutional court, deliberately established after 1945 to be a U.S.-style check on a leader's power), the Bundesbank (still very influential in the German debate), and, last but by no means least, the populist tabloid Bild.

Many Germans resent the idea of bailing out Greeks and Spaniards and recall that they were given no say on Kohl's decision to give up the deutsche mark. In a German opinion poll conducted in May 2012, no less than 49 percent of respondents said it had been a mistake to introduce the euro. So far, the benefits they have derived from the euro have not been adequately explained. Yet this European Germany is a free country, open to argument, and some are now making the attempt.

MEMORY, FEAR, AND HOPE

The greatest single driving force of the European project since 1945, personal memories of war, has disappeared. Where individual memory fades, collective memory should step in. Remember Edelman's appeal: "We, who did not perish, leave it up to you to keep the memory of them alive -- forever." Yet most young Europeans' consciousness of their continent's tortured history is shallow. Their formative experiences have been in a Europe of peace, freedom, and prosperity. Even younger eastern Europeans from states such as Estonia, which did not exist on most maps just 22 years ago, have come to take these hard-won achievements for granted. In this sense, the deepest problem of the European project is the problem of success.

Over the last decade, European peoples with historical complexes about being consigned to the periphery of Europe felt themselves to be at last entering the core. Eastern Europeans joined the EU. Southern Europeans thought they were flourishing in the eurozone. In Athens, Lisbon, and Madrid, there was a sense of a leveling up of European societies, of a new, not merely formal equality among nations.

Now that illusion has been shattered. In Greece, the homeless line up at soup kitchens, pensioners commit suicide, the sick cannot get prescription medicines, shops are shuttered, and scavengers pick through dustbins -- conditions almost reminiscent of the 1940s. In Spain, every second person under the age of 25 is unemployed; across the eurozone, the average is nearly one in four. But the pain is unevenly spread. In Germany, youth unemployment is comfortably under ten percent. There is a new dividing line across Europe, not between east and west but between north and south. Now, and probably for years to come, it will be a very different experience to be a young German or a young Spaniard, a young Pole or a young Greek.

Think back to those two May 10 moments in Warsaw. Someone whose formative teenage experience was of the terrors of 1943 would find today's crisis shocking, but still not half as bad as what he remembered -- and he would insist that Europe must never fall back to that. The teenager of 2003 has a different mental lens: this is terrible, she thinks, and not what she was led to expect.

Europeans such as Geremek and Kohl witnessed Europe tear itself apart, and then dedicated themselves to building a better one. The generation of Spain's indignados, young protesters who have rallied across the country since May 2011, grew up in that better Europe, and have now been thrown backward. The trajectory of those who were, say, 15 years old in 1945 went from war to peace, poverty to prosperity, fear to hope. The trajectory of those who were 15 in 2003, especially in the parts of the continent now suffering the most, has arched in the opposite direction: from prosperity to unemployment, convergence of national experiences to divergence, hope to fear.

Could this very discontent provide the psychological basis for a popular campaign to save Europe? The signs are not promising. Popular movements have arisen during the crisis, but they have pointed in other directions. One of the largest was against the Anti-Counterfeiting Trade Agreement, which many young Europeans saw as a threat to their online freedom. The indignados of all countries, Europe's counterparts to the Occupy Wall Street movement, rail against bankers, politicians, and baby boomers, whom they see as having stolen their future. An interview-based survey of activists in these diverse campaigns, coordinated by Mary Kaldor and Sabine Selchow of the London School of Economics, found that the EU is either invisible among them or viewed somewhat negatively.

Fear should not be underestimated as a motivating force in politics. When, in a repeat election this June, the Greeks narrowly voted for parties that were serious about keeping the country in the eurozone, the Swiss cartoonist Patrick Chappatte drew a weary-looking man standing next to a ballot box in the shadow of the Acropolis and exclaiming, "Good news! Fear triumphed over despair." Adapting a famous phrase of U.S. President Franklin Roosevelt, one might almost say that today Europe has nothing to put its hope in but fear itself.

The fear of collapse, the Monnet-like logic of necessity, the power of inertia: these may just keep the show on the road, but they will not create a dynamic, outward-looking European Union that enjoys the active support of its citizens. Without some new driving forces, without a positive mobilization among its elites and peoples, the EU, while probably surviving as an origami palace of treaties and institutions, will gradually decline in efficacy and real significance, like the Holy Roman Empire of yore. Future historians may then identify some time around 2005 as the apogee of the most far-reaching, constructive, and peaceful attempt to unite the continent that history has ever seen.

End of Part 3
Title: Re: Why Europe Keeps Failing........
Post by: bridges on October 04, 2012, 17:18:37
While we're pondering that, at the other end of the economic scale, I heard an interview on the radio this morning with an American woman who opened a cupcake shop in downtown Athens just at the beginning of the downslide.  Hamptons Cupcakes, it's called.  The place was busy.  For what it's worth, one customer observed that the cupcakes taste best with black coffee.  A few addl interesting (to me, anyway) tidbits - a few of which relate to other discussions in this thread:

-The local staff weren't familiar with cupcakes, and had to be taught how to bake them.
-The ingredients had to be modified to withstand the weather, and refrigeration has been important especially in summer.
-IAW Greek labour laws, the employees get an extra month's pay every XMas and Easter, as a bonus of sorts.
-As in the case of most other Greek businesses nowadays, those running the business have to pay cash for everything - no accounts.
-Notwithstanding the above, an owner can give any supplier a post-dated cheque, and the supplier, while waiting for the cheque-cashing date, can use that cheque as collateral for a bank loan (!).
-This owner's biggest frustration has been government offices with their requirements for forms & permits, which can change daily.  For better or worse, Greek businesses have adopted a kind of disregard for the administrative process as a result, finding ways to get things done that are legal (more or less), but not necessarily approved.  Many of them operate without permits, because it takes so long to get the paperwork done. 

The owner said that running a business in a different country with different laws has taken some getting used to, but that it's been quite successful.  She also mentioned that every Greek she's met says things like "You have an American passport - I envy you, because you can just get up and leave!  Why don't you leave?"

But it seems that in at least some sectors, it is possible to make a business thrive in Greece these days. 
Title: Re: Why Europe Keeps Failing........
Post by: daftandbarmy on October 08, 2012, 02:21:57
This, on a larger scale, could be one of the problems:

Nine in ten Scots 'living off state's patronage'

Almost nine out of 10 Scottish households take more from the public purse than they contribute in taxes thanks to a “rotten system” of state patronage, the Tory party conference will hear on Monday.

http://www.telegraph.co.uk/news/uknews/scotland/scottish-politics/9593135/Nine-in-ten-Scots-living-off-states-patronage.html
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on October 08, 2012, 08:42:45
The Swiss seem to be preparing for the worst case scenario:

http://www.zerohedge.com/news/2012-10-07/guest-post-do-swiss-know-something-rest-us-dont

Quote
Guest Post: Do The Swiss Know Something The Rest Of Us Don't?
Submitted by Tyler Durden on 10/07/2012 15:56 -0400
Via John R. Schindler of The XX Committee,

Do the Swiss know something the rest of us don’t?

Ueli Maurer, the Swiss defense minister, has been making coy statements about the European crisis getting ugly – as in really ugly, like needing armed troops to deal with it. This sounds more like Greece, where the rioting is regular and increasingly scary, than anything in Central Europe, but where the whole EU furball is headed does seem less than clear of late.

The Swiss are famous for preparing for everything and having an absolutely huge army, relative to their population, to deal with any eventuality. They maintain their special military system, based on training for nearly the whole male population but a very small active duty cadre (plus a few, tiny UN peacekeeping-type missions abroad, since the Swiss have an actually defensive defense force): the Swiss can call up over 200,000 trained troops, which is but one-third of what was on-call twenty years ago – like everyone, they have downsized as the threat has receded since the fall of the Soviet bloc – but that’s still pretty huge in Swiss terms. In America, that would mean a mobilization strength of nearly 8,000,000 for the U.S. military (it’s a hair under three million, in case you were wondering).

Minister Maurer, accompanied by whispers from the top uniformed leadership in Switzerland, is trying to raise awareness that Europe’s massive fiscal-cum-political crisis could get very unpleasant. Swiss military exercises in September, called STABILO DUE, were based on EU instability getting out of hand. The Swiss have stayed out of the EU – one more thing the very prosperous Swiss are gloating about these days – and they certainly don’t want EU problems spilling over into their peaceful little country. That the Swiss military is adding four new military police battalions to the army, to be spread around the country, indicates that the threat they have in mind is more disorder and chaos than actual invasion.

The Swiss are in the process of modernizing their military, which they have discovered is very expensive; the purchase of 22 new Saab Gripen fighters has proved a big political headache, since the Swiss are as notable for their frugality as for their military preparedness. But Minister Maurer is on firm ground when he notes that the massive decline in European militaries since 1990 has implications for today, none of them positive. When even the British have cut their army so much that, in the event of a serious crisis, there would be at most two dozen infantry battalions on hand in the UK (that’s well under 20,000 bayonets), one has to wonder if the next London “disturbances” could be kept in check if things got truly ugly. It’s commonly held by European security insiders that if the next Anders Brievik were to target Muslims, not fellow Europeans, things could get unimaginably ugly very quickly. It is difficult to see how Europe’s much smaller militaries could cope with massive civil disturbances. (And don’t ask Uncle Sam for help, since the very last thing the Pentagon wants is to get dragged into any riot suppression – particularly putting down Muslim uprisings – anywhere in Europe.)

It’s easy to dismiss the Swiss, since they are a tiny country whose military hasn’t actually fought anybody in a couple centuries. On the other hand, they managed to stay out of both of Europe’s catastrophic World Wars precisely though preparing for eventualities and maintaining a strong defensive capability. They’re clearly on to something.

Of course, what many people (including this poster) don't seem to be aware of is many European police forces have a paramilitary component, so the number of bayonets on the ground would be larger than a simple head count of the military would suggest. It still isn't that many extra bayonets in the grand scheme of things, so the overall thesis is still valid, but it does mean that , if used quickly and effectively enough, there could be enough forces on hand to smother a disturbance before it gets out of hand, providing a window of opportunity for the nation in question to do something before the next outbreak, or before there is spillover from a neighbouring country.
Title: Re: Why Europe Keeps Failing........
Post by: Retired AF Guy on October 08, 2012, 11:35:01

Of course, what many people (including this poster) don't seem to be aware of is many European police forces have a paramilitary component, so the number of bayonets on the ground would be larger than a simple head count of the military would suggest. It still isn't that many extra bayonets in the grand scheme of things, so the overall thesis is still valid, but it does mean that , if used quickly and effectively enough, there could be enough forces on hand to smother a disturbance before it gets out of hand, providing a window of opportunity for the nation in question to do something before the next outbreak, or before there is spillover from a neighbouring country.

Also, some European paramilitary police forces are equipped with aircraft and armoured vehicles (e.g. APC's, armoured cars, etc).
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 09, 2012, 06:32:51
I think the Eurozone faces two impossible choices:

1, Quickly, almost immediately, move to greater integration, which, de facto means that Greece, Portugal, Spain, Italy and France surrender sovereignty ~ there would be blood on the streets; or

2. Accept a Greek default, followed by a Portuguese default, followed by a Spanish default which will plunge Europe - indeed the whole world - into a recession that will make 2008 look like fun.

I'm not sure which is worse ... but my banker and I prefer European blood on European streets to another, wholly preventable, Great Recession.


And Prof. Dani Rodrik (Professor of International Political Economy at Harvard University’s Kennedy School of Government) agress with me in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from Project Syndicate:

http://www.project-syndicate.org/commentary/why-economic-integration-implies-political-unification-by-dani-rodrik
Quote
The Truth About Sovereignty

Oct 8, 2012

Dani Rodrik

CAMBRIDGE – In the French parliament’s recent debate on Europe’s new fiscal treaty, the country’s Socialist government vehemently denied that ratification of the treaty would undermine French sovereignty. It places “not one constraint on the level of public spending,” Jean-Marc Ayrault, the prime minister, asserted. “Budget sovereignty remains in the parliament of the French Republic.”

As Ayrault was trying to reassure his skeptical colleagues, including many members of his own party, European Commissioner for Competition Joaquin Almunia was delivering a similar message to his fellow social democrats in Brussels. To succeed, he argued, Europe must prove wrong those who believe there is a conflict between globalization and sovereignty.

Nobody likes to give up national sovereignty, least of all, it seems, politicians on the left. Yet, by denying the obvious fact that the eurozone’s viability depends on substantial restraints on sovereignty, Europe’s leaders are misleading their voters, delaying the Europeanization of democratic politics, and raising the political and economic costs of the ultimate reckoning.

The eurozone aspires to full economic integration, which entails the elimination of transaction costs that impede cross-border commerce and finance. Obviously, it requires that governments renounce direct restrictions on trade and capital flows. But it also requires that they harmonize their domestic rules and regulations – such as product-safety standards and bank regulations – with those of other member states in order to ensure they do not act as indirect trade barriers. And governments must forswear changes in these policies, lest the uncertainty itself act as a transaction cost.

This was all implicit in the European Union’s single-market initiative. The eurozone went one step further, aiming through monetary unification to eradicate fully the transaction costs associated with national currencies and exchange-rate risk.

Simply put, the European integration project has hinged on restrictions on national sovereignty. If its future is now in doubt, it is because sovereignty stands in the way once again. In a true economic union, underpinned by union-wide political institutions, the financial problems of Greece, Spain, and the others would not have blown up to their current proportions, threatening the existence of the union itself.

Consider the United States. No one even keeps track of, say, Florida’s current-account deficit with the rest of the country, although we can safely guess that it is huge (since the state is home to many retirees living off benefits that come from elsewhere).

When Florida’s state government goes bankrupt, Florida’s banks continue to operate normally, because they are under federal rather than state jurisdiction. When Florida’s banks go belly-up, state finances are insulated, because the banks are ultimately the responsibility of federal institutions.

When Florida’s workers become unemployed, they get unemployment checks from Washington, DC. And when Florida’s voters are disenchanted about the economy, they do not riot outside the state capital; they put pressure on their representatives in Congress to push for changes in federal policies. Nobody would argue that US states have an abundance of sovereignty.

The relationship between sovereignty and democracy is also misunderstood. Not all restrictions on the exercise of sovereign power are undemocratic. Political scientists talk about “democratic delegation” – the idea that a sovereign might want to tie its hands (through international commitments or delegation to autonomous agencies) in order to achieve better outcomes. The delegation of monetary policy to an independent central bank is the archetypal example: in the service of price stability, daily management of monetary policy is insulated from politics.

Even if selective limitations on sovereignty may enhance democratic performance, there is no guarantee that all limitations implied by market integration would do so. In domestic politics, delegation is carefully calibrated and restricted to a few areas where the issues tend to be highly technical and partisan differences are not large.

A truly democracy-enhancing globalization would respect these boundaries. It would impose only those limits that are consistent with democratic delegation, possibly along with a limited number of procedural norms (such as transparency, accountability, representativeness, use of scientific evidence, etc.) that enhance democratic deliberation at home.

As the American example illustrates, it is possible to give up on sovereignty – as Florida, Texas, California, and the other US states have done – without giving up on democracy. But combining market integration with democracy requires the creation of supranational political institutions that are representative and accountable.

The conflict between democracy and globalization becomes acute when globalization restricts the domestic articulation of policy preferences without a compensating expansion of democratic space at the regional/global level. Europe is already on the wrong side of this boundary, as the political unrest in Spain and Greece indicates.

That is where my political trilemma begins to bite: We cannot have globalization, democracy, and national sovereignty simultaneously. We must choose two among the three.

If European leaders want to maintain democracy, they must make a choice between political union and economic disintegration. They must either explicitly renounce economic sovereignty or actively put it to use for the benefit of their citizens. The first would entail coming clean with their own electorates and building democratic space above the level of the nation-state. The second would mean giving up on monetary union in order to be able to deploy national monetary and fiscal policies in the service of longer-term recovery.

The longer this choice is postponed, the greater the economic and political cost that ultimately will have to be paid.


Prof. Rodrik is right: political integration was implicit in the creation of the eurozone but it was, and maybe still is, too politically hard to swallow.

His trilemma is also rioght: Europe, parts of Europe, anyway, must choose between globalization, democracy, and national sovereignty: they need globalization for prosperity (which they need for social harmony/domestic peace); democracy must be non-negotiable - we have, with my living memory, seen the results of failures of democracy in Europe; that leaves sovereignty and, frankly, in the full flow of history, France, qua France, doesn't matter a damn: it can be a poor, backward sovereign state or a prosperous province of Greater Germany; it, France, is just a pimple on the prick of progress.
Title: Re: Why Europe Keeps Failing........
Post by: Technoviking on October 09, 2012, 08:21:37
France, doesn't matter a damn: it can be a poor, backward sovereign state or a prosperous province of Greater Germany; it, France, is just a pimple on the prick of progress.

Just one problem with that:

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fimg2.photographersdirect.com%2Fimg%2F16398%2Fwm%2Fpd716948.jpg&hash=ea52623635706d66bc961646b9f74a61)

Or the nation-states of Europe can re-establish their borders and deal with each other as good neighbours do: with fully functioning borders (aka "fences") and deal with each other in good faith. 
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 09, 2012, 10:34:00
Just one problem with that:

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fimg2.photographersdirect.com%2Fimg%2F16398%2Fwm%2Fpd716948.jpg&hash=ea52623635706d66bc961646b9f74a61)

Or the nation-states of Europe can re-establish their borders and deal with each other as good neighbours do: with fully functioning borders (aka "fences") and deal with each other in good faith.


The nation-states of Europe have no history of dealing with one another in good faith; the Treaty of Westphalia (1648) just recognized that fact and set some rules for moving from the normal levels of lying, cheating and stealing to the almost as normal state of outright war. Europe is a continent of peoples, not of nations, the experience of nationhood is recent, compared to, say, China, and weak. Even when there were strong, cohesive nation-states, 2,000 years ago, they were surrounded and, eventually, overcome by the peoples.

The German volk, pictured above, are just the latest to swarm over their neighbours. Only the English, the Scandinavians and the Swiss seem inclined to both protect their own borders and eschew intruding into other realms, and those are very recent tendencies (a few hundred years, only) in all cases.
Title: Re: Why Europe Keeps Failing........
Post by: GAP on October 09, 2012, 10:39:45
Quote
The German volk, pictured above, are just the latest to swarm over their neighbours

Oh....you mean what Africa is now....
Title: Re: Why Europe Keeps Failing........
Post by: FoverF on October 09, 2012, 10:59:26
Here is Europe's latest attempt to fail.

http://en.wikipedia.org/wiki/European_Stability_Mechanism

The short version:  There are a lot of countries in Europe that simply can't sell bonds. The market expects them to default, and so nobody will lend them money without demanding exorbitant interest. Which means they can't borow any more money to finance their deficits. This inability to fund their deficit spending, most European pundits will tell you, is the core of the financial crisis in Europe.

Europe's solution then, is to create a fund (provided by Germany, Finland, and Holland) to lend money to those countries which can't finance their deficits on the open bond market. This is proposed as the definitive solution to the crisis.

These experts, politicians, and economists will tell you that the basis of this crisis is the fact that these incompetent countries can't borrow ENOUGH money.  Which is, to be diplomatic, as stupid as a bucket of wet hair.


In other news,

There are plans to hold massive protests throughout the visit of Angeka Merkel to Greece. There is a huge amount of resentment against Germany in many parts of Europe these days. Naturally. Because Greece was in dire straights and asked Germany for unimaginable sums of money... which Germany reluctantly lent them... Now most Greeks want to burn them and not pay it back... so the Greeks are... mad at the... Germans?




Mr Campbell's points about sovereignty and integration are at the root of both of these. Right now in Europe you have other people responsible for your debts (integration), but they have no say in how you spend your money (sovereignty).

That's not a sound position moving forward, but it is a position from which the majority of the parties involved are refusing to move.
Title: Re: Why Europe Keeps Failing........
Post by: Technoviking on October 09, 2012, 11:24:17

The nation-states of Europe have no history of dealing with one another in good faith; the Treaty of Westphalia (1648) just recognized that fact and set some rules for moving from the normal levels of lying, cheating and stealing to the almost as normal state of outright war. Europe is a continent of peoples, not of nations, the experience of nationhood is recent, compared to, say, China, and weak. Even when there were strong, cohesive nation-states, 2,000 years ago, they were surrounded and, eventually, overcome by the peoples.
By "Nation" I mean "People":

Quote
a large body of people, associated with a particular territory, that is sufficiently conscious of its unity to seek or to possess a government peculiarly its own:


The model of a large united Europe cannot let go of the identity that many have.  Greeks are not Italians who are not French who are not German who are not Austrian who are not....and on it goes.  The history of these peoples is, of course, confusing at best, but of course the idea of even some states such as "Germany" are also fairly recent.  Having said that, the current model is failing, horribly, and not being an economist, but having somewhat of an understanding of people, you cannot force people to do anything.  Yes, it may be in France's long term interest to become a rump of say German governance, but that will never happen.  Not unless we see Schlieffen round 3...

But looking at the Swiss model, they have very strong borders.  They seem to be doing rather well for themselves, this state of four (or more) peoples.  As for the German model, they too are of several peoples (Hessians, Prussians, Saxons, Bavarians, Swabians, etc etc).  They have found a common bond ("German" in its various forms) and have proven to be a (mostly) successful experiment.

But so long as Greece etc. remain with those identities as a people, the EU will fail.  And I cannot see *any* "people" of Europe letting go of their identity anytime soon.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 09, 2012, 11:51:13
I actually agree with what the Technoviking says ... but some European countries/peoples/nations are unfit to survive in the 21st century; they have option: return to a mid 19th century standard of living, which they can afford, or surrender some (rather a lot) of their precious sovereignty to a super-state which will manage their affairs for them. There are quite a few countries on that list: Greece, of course, Portugal, Spain , Italy, maybe Ireland and France, too. Several of them share 500+ years of a common culture of social, economic and political mismanagement. Some of the Eastern European states will, I am fairly, certain march down the same path.

But, rest assured: those failing countries are not e.g. Finland and they cannot sustain e.g Dutch standards of living and social services because, unlike the Dutch or Finns, they have a cultural heritage of reliance upon some sort of benevolent higher authority rater than on their own, individual, effort. There is no benevolent higher authority - only a German led central bank that will tell how many weeks of vacation you can have each year (think less than three) and what your retirement age can be (think 67. And of course, if you are Greece or Italy or even France you can reject this ... and private automobiles and electricity in middle class homes and adequate health care and so on ... but it's your free choice.
Title: Re: Why Europe Keeps Failing........
Post by: Technoviking on October 09, 2012, 11:58:07
And of course, if you are Greece or Italy or even France you can reject this ... and private automobiles and electricity in middle class homes and adequate health care and so on ... but it's your free choice.

I think you said what I was thinking.   :cheers:


(As an aside, how long does it take you to type Technoviking ?  ;D

Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 09, 2012, 12:08:50
I think you said what I was thinking.   :cheers:


(As an aside, how long does it take you to type Technoviking ?  ;D


You should change your name to "Schrödinger's Cat," which doesn't merit as much colour ...

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fwww.egotailor.com%2Fproduct%2F10571%2Fimages%2F10571design-1.jpg&hash=5416425ffbfa1f89922b76d7e622fef0)
Schrödinger's Cat
Title: Re: Why Europe Keeps Failing........
Post by: GAP on October 09, 2012, 12:10:32
(As an aside, how long does it take you to type Technoviking ?  ;D

Just once...it's such a dog's breakfast, you only want to do it once then store it away..... :nod:
Title: Re: Why Europe Keeps Failing........
Post by: Technoviking on October 09, 2012, 12:17:01

You should change your name to "Schrödinger's Cat," which doesn't merit as much colour ...

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fwww.egotailor.com%2Fproduct%2F10571%2Fimages%2F10571design-1.jpg&hash=5416425ffbfa1f89922b76d7e622fef0)
Schrödinger's Cat


:rofl:

Title: Re: Why Europe Keeps Failing........
Post by: Tango2Bravo on October 09, 2012, 12:38:50

Europe is a continent of peoples, not of nations, the experience of nationhood is recent, compared to, say, China, and weak. Even when there were strong, cohesive nation-states, 2,000 years ago, they were surrounded and, eventually, overcome by the peoples.


How are you defining "nation" and "peoples" given you have also used the term "nation-states?" Nation-states have defined European politics for some time, certainly since the French Revolution and I would argue before that as well. Nations/peoples with an underlying consensus distinct from other nations have certainly existed for a long time in Europe. I would argue that China's sense of being a true modern nation-state is much more recent than Europe's. If you are refering to the Roman Empire as a nation-state then I think you are stretching the concept of nation-state somewhat. That was an empire.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 09, 2012, 13:54:53
How are you defining "nation" and "peoples" given you have also used the term "nation-states?" Nation-states have defined European politics for some time, certainly since the French Revolution and I would argue before that as well. Nations/peoples with an underlying consensus distinct from other nations have certainly existed for a long time in Europe. I would argue that China's sense of being a true modern nation-state is much more recent than Europe's. If you are refering to the Roman Empire as a nation-state then I think you are stretching the concept of nation-state somewhat. That was an empire.


China has seen itself as a distinct nation, in both the people and territorial sense - that's why they built that bloody wall - for about 3,500+ years. It has called itself the middle kingdom (being in between the "kingdom of heaven," above, and the barbarians, below and surrounding China) for more than 2,500 years. More important, China's neighbours and enemies have regarded it as a nation and and nation-state for just as long. It has had several civil-wars but, post the Qin emperor, the Chinese always described them as that and that speaks to China's definition of itself as a nation-state. China was as a nation and a nation-state when most Europeans were still painting themselves blue and eating with their fingers.

Rome, the kingdom and then the republic, was a well defined nation-state circa 2,500 year ago, too ~ long before it had imperial ambitions.

The modern European nation-state, living within defined borders, is, in some part, a creation of the Peace of Westphalia, but we can argue that England, France and Spain were all well defined nation-states, some holding sway over two or more peoples, for a hundred or more years before that. But as you state, some parts of Europe did not define their own nationhood until after Napoleon.

The semantics, however, do  not alter the "facts on the ground:" some modern, European nation-states are not viable in their current political and economic forms. They cannot provide their people with the services and protection that are the very essence of the nation-state.
Title: Re: Why Europe Keeps Failing........
Post by: Remius on October 09, 2012, 14:02:09
How are you defining "nation" and "peoples" given you have also used the term "nation-states?" Nation-states have defined European politics for some time, certainly since the French Revolution and I would argue before that as well. Nations/peoples with an underlying consensus distinct from other nations have certainly existed for a long time in Europe. I would argue that China's sense of being a true modern nation-state is much more recent than Europe's. If you are refering to the Roman Empire as a nation-state then I think you are stretching the concept of nation-state somewhat. That was an empire.

I think that was his point.  China has been a far more homogenised state for much longer than Europe has.  And his point is that even 2000 years ago, even under the Roman Empire, European nations were never nation states as such.  It seems that nation state status has been forced on europe more than embraced.
Title: Re: Why Europe Keeps Failing........
Post by: Tango2Bravo on October 09, 2012, 14:15:50

China was as a nation and a nation-state when most Europeans were still painting themselves blue and eating with their fingers.


And what did that do for China when modern, real nation-states from Europe arrived? What of the upheavals in China in the last century? How will their conception of nation survive when their competitive advantage, low-paid labour, starts to wonder when they will enjoy the fruits of their labour?

There were certainly what we might call states in Europe in the classical period, but I do not think that they really compare with the nation-states that arose with the industrial revolution.

In any case, my point in questioning your use of terms was focused on modern Europe. The nation-states of Europe matter more than the EU folks would care to admit. There are differences between them in how they view the world, and we cannot simply wave our hands and say that they have no history as nations or nation-states.

We'll see if the EU survives this crisis in its current form.
Title: Re: Why Europe Keeps Failing........
Post by: Tango2Bravo on October 09, 2012, 14:20:07
I think that was his point.  China has been a far more homogenised state for much longer than Europe has.  And his point is that even 2000 years ago, even under the Roman Empire, European nations were never nation states as such.  It seems that nation state status has been forced on europe more than embraced.

Who exactly forced nation-state status on the Europeans? Some came later than others, but they pretty much came up with the concept.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 09, 2012, 14:28:01
I want to keep this historical tangent alive for a bit:

First, there is nothing I can find that is especially European about the concept of nation or nation state. Both exist in our earliest historical reckoning in the Near and Middle East around 4,000 years ago and in Asia, China, anyway, at about the same time.

Second, our personal heritage tends to give us a very Eurocentric point of view. There's no shame in our European heritage but it is not the only thing that worked over the past 6,000 or so years of recorded history.

Third, while nations and nation-states are the norm, and have been for 500/1,500/3,500 (delete the numbers you don't like) years they are not the only political models that can work. I don't know how well any of the other possible models might work in the 21st century but for some peoples the nation-state is failing.
 
Title: Re: Why Europe Keeps Failing........
Post by: Remius on October 09, 2012, 14:43:16
Who exactly forced nation-state status on the Europeans? Some came later than others, but they pretty much came up with the concept.

Going back far enough (in Europe anyway), the city state was the concept that ruled.   In Greece, the Spartans and Athenians jostled for dominance wirth other city states either swearing fealty or being subjegated by the stronger city states.  The Macedonians put an end to that but Greece was still a territory of many city states, all hellenistic but ruled by Macedon.  The same way the Romans subjugated the surrounding Italian city states.  And warring with other powerful City states like Carthage for control of the mediterranean or running into "peoples" who could hardly be considered states but occupied territory.  Rome also had client puppet states or provinces.  Provinces and boundaries dictated by Rome but that had even further history as far as the land goes.  After Rome fell we see warlords and kingdoms rise, some small some large but throughout time and even more recently the maps have been drwn and redrawn.  Puppet governments to larger interests, religious seperations etc etc.  Yes Europe has done it to itself but like an oversized child, the body has grown but the maturity isn't there.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on October 09, 2012, 15:34:30

The nation-states of Europe have no history of dealing with one another in good faith; the Treaty of Westphalia (1648) just recognized that fact and set some rules for moving from the normal levels of lying, cheating and stealing to the almost as normal state of outright war. Europe is a continent of peoples, not of nations, the experience of nationhood is recent, compared to, say, China, and weak. Even when there were strong, cohesive nation-states, 2,000 years ago, they were surrounded and, eventually, overcome by the peoples.

The German volk, pictured above, are just the latest to swarm over their neighbours. Only the English, the Scandinavians and the Swiss seem inclined to both protect their own borders and eschew intruding into other realms, and those are very recent tendencies (a few hundred years, only) in all cases.

The Nation-States of Europe are a 19th Century Fiction imposed on the general populace by centralizing governments. The truer face of Europe is the loose confederation of City-States occasionally known as the Holy Roman Empire (or the Pragmatic Constantinian General Assembly).

France didn't become France until the cession of Nice to France in the 1860s.  Germany didn't become Germany until 1989.  Italy didn't become Italy until 1872.  Britain didn't become Britain until 1707 (modified up until 1921 - apparently still a work in progress).  Spain became Spain in 1492 but the Catalans, Basques and Castilians, amongst others, had very different understanding of their terms of association.  Norway and Denmark split the sheets in 1905 and the Faeroe Islanders are still looking for a better deal from Denmark.

There is a biological theory (I hope I am remembering this correctly) that suggests that the reason Africa is such a harbourage of pestilence and so difficult to cure is that as a result of it being a point of origin for so many gene pools it is extraordinarily difficult to contain diseases before they jump to a neighbouring pool, adapt to those newer genes and morph into something different.

My sense is that Europe, with its myriad isolated but interconnected valleys, each identified by a genetic, linguistic and cultural preponderance, but never able to achieve a perfect quarantine from its neighbours, is to politics what Africa is to disease.

Ideas jump from locale to locale and morph into something different.  Liberal is a case in point. Good or Bad. Fascist or Free. Wealthy or Greedy.

A very current aspect to this debate is the Merger/Takeover of EADS and BAE.

EADS = France + Germany.  It is European as long as Europe is French.  It is a Government held commercial enterprise.

BAE = UK.  It is a privately held firm that had a virtual monopoly on UK defense spending but is branching out to support other governments, to include the US.

For a European Army you need a modern equivalent of the Arsenal of Venice, if you see the world in French terms.

For a British Army you need Hiram Maxim and Armstrong.

The two visions are irreconcilable.

France and Germany could come together with the Arsenal of Venice version of EADs, primarily because Germany's "War Guilt" wouldn't let her do anything else other than accede to French demands.

Germany and Britain could come together over a "privatized" BAE model of EADs for a host of financial, cultural and historical reasons.

But the deal won't happen as a Three-Way because France and Britain can not come together.

France insists that it wants a "privatized" entity but when Britain insists that no government can hold more than 10% of the shares in the enterprise France demands a higher initial allocation with the proviso that it can buy up all "unwanted" shares at its leisure.

This would effectively mean that by fiat France could declare itself the sole producer or weapons for Europe.   A non-starter from the stand-point of the other nations both on economic and nationalist grounds.  And a very unwise policy if innovation is desired.

However, Colbert would have approved, as would Louis XIV and Napoleon.

In the words of that fine Frankish phrase: "Ordnung Muss Sein".





Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on October 09, 2012, 21:35:19
The idea of a "nation" and a "people" are very fluid. I had some first hand experience (as did many of you) in former Yugoslavia, where large swaths of territory were fought over because the "people" living there felt they belonged to a different "nation" than the one that claimed sovereignty over the region. To a lesser extent, we also see something similar in Afghanistan; most people there do not see themselves as Afghans but rather Pashtuns, Hazara and so on. Even our own home is riven by various forms of tribalism, ranging from regional sub groupings like ""Capers" and "Newfoundlanders" to provincial tribes (Quebec) to superregional groupings like "the West".

When the political boundaries are not aligned with the populations, trouble could erupt unless the people have some belief that transcends their tribal affiliations. The American Creed is one such belief, and probably the strongest in any modern heterogeneous nation-state. Samuel Huntington spoke pf this in his book "Who are we?", and Robert Kaplan had an ironic comment in "Balkan Ghosts", where he pointed out all everyone wanted was a return top their "historic" borders, but defining the borders as being those at the height of their local kingdom or Empire.

Quote
I believe in the United States of America, as a government of the people, by the people, for the people; whose just powers are derived from the consent of the governed; a democracy in a republic; a sovereign Nation of many sovereign States; a perfect union, one and inseparable; established upon those principles of freedom, equality, justice, and humanity for which American patriots sacrificed their lives and fortunes.

I therefore believe it is my duty to my country to love it, to support its Constitution, to obey its laws, to respect its flag, and to defend it against all enemies.

    
— William Tyler Page, The American's Creed
Title: Re: Why Europe Keeps Failing........
Post by: Tango2Bravo on October 10, 2012, 07:37:17
Thucydides,

How are you using nation and people? For this discussion I use 'state' to refer to a sovereign political entity. A nation refers to a group with a common culture, identity, language and world view. A nation state is what you get when a state consists of a single dominant nation.

Europe has many nations and is primarily made up of nation states. I think that
European nations are more distinct and enduring than European Unionists would like to believe. A state needs some form of underlying consensus to be effectively governed. The lack of such an underlying consensus within the EU is evident in the Greek resistance to outside austerity measures.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 10, 2012, 15:23:38
Back to immediate term economics in this report which is reproduced under the Fair Dealing provisions of the Copyright Act from The American Interest/Via Meadia (Walter Russell Mead's Blog):

http://blogs.the-american-interest.com/wrm/2012/10/10/latest-eu-failure-deficit-targets/
Quote
Latest EU Failure: Deficit Targets

October 10, 2012

A new IMF report showing that few European countries are expected to hit their target levels of budget deficits is adding fuel to the fires slowly consuming any remaining confidence in the policy pronouncements of European leaders. Shortly after agreeing to new deficit targets for 2013, few countries are on track to meet these targets even after serious budget cuts due to the faltering European economy, the IMF reports.

The list of affected countries includes usual offenders like Greece and Spain, where deficits are nearly two percentage points higher than the target, but also includes newer faces such as France and the Netherlands.

And it is difficult to see a policy fix to this problem, as many analysts now warn that any steps taken to meet these targets may end up making things worse by crippling the economy further. The WSJ reports:

     Pursuing more cuts to hit next year’s deficit targets would further roil Europe’s political waters and test the powers of these governments to push more austerity through restive national
     parliaments. The European Commission, the EU’s executive arm, is set in the coming weeks to review national austerity programs, making its own determination about whether the programs
     will hit the budget targets. If the commission believes the numbers don’t add up, it will discuss with other EU governments in the coming months whether to seek further cuts or relax the
     2013 targets for the governments in question.

This news is depressing enough on its own, but more depressing is the frequency with which the confident forecasts and carefully negotiated agreements of European leaders turn out to be worthless trash.  Is any sentient being on planet Earth when yet another European agreement and policy consensus turns out to be a tissue of lies and false hopes? Does a solitary person anywhere believe one word EU leaders say about the state of their economies?

Can anybody anywhere on earth recall such a train of stupid policy decisions, foolish assumptions and failed fixes as the member countries of the eurozone have made since Francois Mitterand demanded the establishment of a single European currency as the price for German unification?
Title: Re: Why Europe Keeps Failing........
Post by: Colin P on October 10, 2012, 16:30:54
Hmmm think I should buy acreage in Nevada, run a railhead to it and start buying up AFV's, vehicles , spare parts and aircraft from European countries selling off their armies.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 11, 2012, 09:27:59
And new Anglo-French tensions appear, this time over fishing according to a report (http://www.bbc.co.uk/news/uk-england-19907813#TWEET264813) from BBC News. The report quotes UK Liberal Democrat Transport Minister Norman Baker, who is MP for Lewes, as saying: "So far unverified reports suggest that up to 40 French boats surrounded five British vessels who appeared to be fishing legally, albeit in French waters ... that looks like premeditation and attempt to intimidate."

Aren't the Europeans wonderful? So entertaining!

Title: Re: Why Europe Keeps Failing........
Post by: Technoviking on October 11, 2012, 10:53:12
Aren't the Europeans wonderful? So entertaining!
That's one way to describe them...
Title: Re: Why Europe Keeps Failing........
Post by: Old Sweat on October 11, 2012, 11:16:34
That wouldn't even get a twitch out of Drake's Drum!

   "Take my drum to England, hang it by the shore,
    And strike it when your powder's running low;
    If the Dons sight Devon, I'll quit the port of
    heaven, and drum them up the channel as we
    drummed them long ago."
                                Sir Henry John Newbolt 1862-1938
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on October 11, 2012, 11:22:00
And new Anglo-French tensions appear, this time over fishing according to a report (http://www.bbc.co.uk/news/uk-england-19907813#TWEET264813) from BBC News. The report quotes UK Liberal Democrat Transport Minister Norman Baker, who is MP for Lewes, as saying: "So far unverified reports suggest that up to 40 French boats surrounded five British vessels who appeared to be fishing legally, albeit in French waters ... that looks like premeditation and attempt to intimidate."

Aren't the Europeans wonderful? So entertaining!

And continually giving the lie to the myth of the pacifist European.

Contain Europeans within their national boundaries and deprive them of an army and they turn on each other like rats in box - with the exception that they seem to take more pleasure in the bloodshed than the rats do.

Channel that enjoyment into a proper army, or even a decent police force, and before you can say Putsch they are organizing a reforming mission to improve their neighbours or assist them on their way to paradise.

The frivolity never ends.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on October 11, 2012, 16:40:27
Thucydides,

How are you using nation and people? For this discussion I use 'state' to refer to a sovereign political entity. A nation refers to a group with a common culture, identity, language and world view. A nation state is what you get when a state consists of a single dominant nation.

Europe has many nations and is primarily made up of nation states. I think that
European nations are more distinct and enduring than European Unionists would like to believe. A state needs some form of underlying consensus to be effectively governed. The lack of such an underlying consensus within the EU is evident in the Greek resistance to outside austerity measures.

I'm probably using people the way you are using nation, and nation the way you are using State. to restate the argument then, most States that have large groups of disparate nations within need some sort of overarching idea to bin them together. I notice that the glue isn't all that strong in some places, there is a distint divide between Northern and Southern Italy, for example, and Spain is still made up of very distinct regions, despite being unified in the Reconquista during the 1400's. We have seen the greatest slippage in the States of Eastern Europe, for example the partitioning of Czechoslovakia as a peaceful example, and the violent disintegration of Yugoslavia at the other extreme. Many of the conflicts that are bubbling or boiling over in the Middle East are also driven by "nations" (although in this case I would preffer people, since sectarian divisions can split peoples of similar ethnic or regional backgrounds).

Ominous stressor are appearing in Europe, as the economic situation deteriorates and large pockets of unassimilated peoples (or nations) exist within the boundaries fo the various states of Europe, many of whome share little in the way of the values of their neighbours.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 12, 2012, 07:28:00
A contrarian view from Christine Legarde (http://www.forbes.com/profile/christine-lagarde/), Managing Director of the International Monetary Fund, or, at least, a contrarian view of what she said in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/globe-investor/investment-ideas/breaking-views/europe-must-realize-austerity-doesnt-work/article4607683/
Quote
Europe must realize austerity doesn’t work

PIERRE BRIANÇON
Reuters Breakingviews

Published Thursday, Oct. 11 2012

The Greek economy has shrivelled to three quarters of what it was three years ago, before embarking on its successive turnaround-cum-bailout plans. Euro zone governments keep contributing religiously to their own recession by forcing ever higher degrees of pain on their sick economies.

Spain is slashing public spending and wonders why its gross domestic product is shrinking as well. Britain is slowly sinking under the mindless policies of austerity without perspective. Meanwhile, central bankers keep pushing for ever stricter fiscal discipline, under the eternal slogan of ideologues throughout centuries: “There’s no other way.”

From the unlikely corner of the International Monetary Fund now comes a call to reason: Stop the madness. There’s a time for cuts and a time for growth – but these cannot be done simultaneously.

Christine Lagarde, the IMF managing director, called for less front-loaded austerity this week. The Fund had given a more numbers-filled version of the same prescription earlier in its annual report, indicating that it had been wrong, more or less, in its previous estimates of austerity’s impact on growth. The consequences of brutal fiscal shrinking are more severe than it estimated – as revealed by the past years’ record.

Ms. Lagarde is right, although she would be more credible if she hadn’t once been just another European austerity cheerleader during her five years as France’s finance minister. So her current statements seem to reflect the position of her organization more than her own.

The problem is that no European leader dares say the same thing. It would take a bold finance minister today to go to a euro zone meeting and state calmly that fiscal discipline is for good times, not bad. Some are afraid of Germany, others fear markets.

Meanwhile it is left to the IMF’s economists to state the obvious. The record is clear. Austerity hasn’t worked. There’s little hope it will. Let’s first work on growth. Then we’ll be virtuous.


This is the normal Keynesian debate: virtue (cuts), to get the fiscal house in order, or stimulus (spending), in the hope that growth will result and, with it, fiscal room to grow one's way out of debt?

Tradition, since 1933, has favoured stimulus and, by and large, it has worked ~ but, and it is a big, HUGE BUT, few countries have ever followed through with Keynes' prescriptions and, when times are good, cut back and restored virtue; consequently, upwardly spiraling spending, especially on entitlements, has become a permanent characteristic of all Western countries until, as now, some, rather a lot of virtue is urgently needed.

Unlike what Mme. Legarde is reported to have said, I'm not convinced that "austerity hasn't worked." It's not clear to me that enough austerity has been applied for long enough to measure its effects. What is clear to me is that Europeans, specially spendthrift, entitled Southern (Latinate) Europeans have had enough of austerity and they want stimulus.


(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fedschultzmsnbc.files.wordpress.com%2F2011%2F04%2Fgimme.jpg%3Fw%3D640&hash=3a4f58f31cd1afeeeca75a13d8784b78)
Latinate Europe in 2012
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on October 12, 2012, 10:23:56
ERC:

Shouldn't the prescription for Europe be the same as that for China and the US?

While I was a youngster my mother tried very hard to encourage greenery in the house.  Unfortunately she didn't inherit her father's green thumb.  The only thing that grew was a particularly hardy fern.  It grew when she overwatered it.  It grew when she underwatered it.  It didn't grow prettily.  It defied all attempts to turn it into a bush.  It grew rattily in whatever direction it could.  It could not be controlled.  It did not thrive but it would not die.

She named that plant. For some personally obscure reason she called it "Let Glasgow Flourish".

My own sense is that governments of all stripes should follow that sage advice and "Let their people flourish".

They should stop working so hard and just let people get on and do things.  I don't care what.  I don't even really care that some things will be illegal, or that people will harm themselves or will even harm others.  In poor economic times all those things will happen anyway.  The surest cure for them is prosperity.

I have seen government attempts to create the ideal society.  I have seen business incubators and research parks and industrial parks with every conceivable advantage known to man and nothing revolutionary emerges from them.

Equally I have seen prosperity emerge from the rough edge of nowhere where every muddy open space ( I was going to say street corner but there were no corners nor were there any streets) housed a "coffee kiosk" the size of a British telephone booth. Those booths supplied not only your coffee but also any intoxicant known to man and the personal services of the attractive young lady inside.  There was the occasional knife fight in the public space but by and large people were way too busy attending to their business to be bothered about much else than making money.

The sure sign that the end is nigh is the paving of streets.

This usually happens when the busy businessmen (and women) discover they have time on their hands due to a lack of business.  The shortfall comes as a result of increased competition and decreased supply of raw materials.  Thoughts turn away from making money to spending money.

With that change muddy paths become paved streets.  Open spaces are policed.  And the hookers walk away from their kiosks.

If politicians really want to see their countries flourish then they should stop trying so hard.

The problem isn't whether the government taxes too much or it spends too little.  It is that it regulates at all. 

The only cure for Europe's ills, and China's ills, and the US's ills, is to do the Reagan thing and stop regulating.  You can't both bleed and feed a patient simultaneously and expect it to flourish.  There can come a time when it is necessary to both stop bleeding, and, more radically, stop feeding it and just let the patient seek out its own course.

The number of coffee kiosks will tell you when the patient is sufficiently healthy that you can start bleeding it again.


PS:

Edinburgh is the heart of the rational enlightenment with its planned streets and drained lochs. That attracted the likes of Voltaire.

Glasgow was the home of the Tobacco Lords.  These were smugglers and rum runners and slavers that made their money selling contraband American tobacco to the French and black slaves, bought from Arab slavers, to the Americans.  Glasgow attracted the starving riff raff from the highlands and islands and put them to work in factories and shipyards.  The workers suffered bow legs from rickets, cirrhosis of the liver and black lung and occsionally were short some chunk of their body or other.  They were stunted, runty wee versions of their highland cousins that gained the respect of the government's enemies when dressed in scarlet.  But the Glaswegians had big families.  And Glasgow flourished.

Glasgow flourished and Edinburgh could afford to build streets to attract Voltaire away from the salons of Paris for a couple of weeks of vacation.






Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 12, 2012, 12:51:00
ERC:

Shouldn't the prescription for Europe be the same as that for China and the US?

While I was a youngster my mother tried very hard to encourage greenery in the house.  Unfortunately she didn't inherit her father's green thumb.  The only thing that grew was a particularly hardy fern.  It grew when she overwatered it.  It grew when she underwatered it.  It didn't grow prettily.  It defied all attempts to turn it into a bush.  It grew rattily in whatever direction it could.  It could not be controlled.  It did not thrive but it would not die.

She named that plant. For some personally obscure reason she called it "Let Glasgow Flourish".

My own sense is that governments of all stripes should follow that sage advice and "Let their people flourish".

They should stop working so hard and just let people get on and do things.  I don't care what.  I don't even really care that some things will be illegal, or that people will harm themselves or will even harm others.  In poor economic times all those things will happen anyway.  The surest cure for them is prosperity.

I have seen government attempts to create the ideal society.  I have seen business incubators and research parks and industrial parks with every conceivable advantage known to man and nothing revolutionary emerges from them.

Equally I have seen prosperity emerge from the rough edge of nowhere where every muddy open space ( I was going to say street corner but there were no corners nor were there any streets) housed a "coffee kiosk" the size of a British telephone booth. Those booths supplied not only your coffee but also any intoxicant known to man and the personal services of the attractive young lady inside.  There was the occasional knife fight in the public space but by and large people were way too busy attending to their business to be bothered about much else than making money.

The sure sign that the end is nigh is the paving of streets.

This usually happens when the busy businessmen (and women) discover they have time on their hands due to a lack of business.  The shortfall comes as a result of increased competition and decreased supply of raw materials.  Thoughts turn away from making money to spending money.

With that change muddy paths become paved streets.  Open spaces are policed.  And the hookers walk away from their kiosks.

If politicians really want to see their countries flourish then they should stop trying so hard.

The problem isn't whether the government taxes too much or it spends too little.  It is that it regulates at all. 

The only cure for Europe's ills, and China's ills, and the US's ills, is to do the Reagan thing and stop regulating.  You can't both bleed and feed a patient simultaneously and expect it to flourish.  There can come a time when it is necessary to both stop bleeding, and, more radically, stop feeding it and just let the patient seek out its own course.

The number of coffee kiosks will tell you when the patient is sufficiently healthy that you can start bleeding it again.


PS:

Edinburgh is the heart of the rational enlightenment with its planned streets and drained lochs. That attracted the likes of Voltaire.

Glasgow was the home of the Tobacco Lords.  These were smugglers and rum runners and slavers that made their money selling contraband American tobacco to the French and black slaves, bought from Arab slavers, to the Americans.  Glasgow attracted the starving riff raff from the highlands and islands and put them to work in factories and shipyards.  The workers suffered bow legs from rickets, cirrhosis of the liver and black lung and occsionally were short some chunk of their body or other.  They were stunted, runty wee versions of their highland cousins that gained the respect of the government's enemies when dressed in scarlet.  But the Glaswegians had big families.  And Glasgow flourished.

Glasgow flourished and Edinburgh could afford to build streets to attract Voltaire away from the salons of Paris for a couple of weeks of vacation.


While I don't disagree with you, my highland friend, I recognize that "we" - the big WE that even includes Beijing - have decided that we cannot and will not o the "Reagan thing" any more. I was surprised, two years ago, at just how much the Chinese Government changed since Hu Jintao took over - it now intrudes, in an most unConfcian manner, into the private lives of the Chinese; it's not just minimum wages that went up, despite much hand-wringing from the new right, it is a whole range of new social services for e.g. the elderly - nothing even remotely like what we have, but shocking for China, and new banking and commercial regulations to protect consumers - once again, nothing like North America or Europe but, until now, unheard of in China. Next thing you know the Chinese will start to be treated like Hong Kong people, or Taiwanese or, <gasp> even Singaporeans. But, my point is that the sorts of raw, blood red, tooth and claw capitalism that I agree will work is fast disappearing, everywhere.

China is still like Britain was 200 years ago and like America 150 years ago: full of opportunities for the risk takers; hellish for the weak and timid; Hong Kong is like New York and London 25 years ago: there are massive fortunes being made within the "rules," such as they are; Singapore is where we mostly want to end up: rich, safe and secure ... and told what to do and what to think, all day, every day, by a benevolent government.
 
Title: Re: Why Europe Keeps Failing........
Post by: bridges on October 12, 2012, 13:34:15
But, my point is that the sorts of raw, blood red, tooth and claw capitalism that I agree will work [for whom?  -b.] is fast disappearing, everywhere.

China is still like Britain was 200 years ago and like America 150 years ago: full of opportunities for the risk takers; hellish for the weak and timid; Hong Kong is like New York and London 25 years ago: there are massive fortunes being made within the "rules," such as they are; Singapore is where we mostly want to end up: rich, safe and secure ... and told what to do and what to think, all day, every day, by a benevolent government.

[inserts & colours mine]   Surely these are not the only two options ... a society where the lucky or most ambitious end up with the spoils & everyone else is condemned to poverty, or a society where the sick & elderly are taken care of but the rest of us (while we're waiting to get to one of those conditions) are under someone's thumb.  Sounds like a false dichotomy to me.  At any rate, I suspect the answer lies in the middle ground, between the constant push-and-pull of those who want to make money and those who want to take care of others.  I believe that our society has the resources and smarts to make both possible, without one being at the expense of the other.

As an aside, I have a couple of friends who are native Singaporeans & still live there - they are hardly told what to think, by anyone.  Unless it's really a government operative infiltrating our communications unbeknownst to me... hmm...  :Tin-Foil-Hat: 
Title: Re: Why Europe Keeps Failing........
Post by: bridges on October 12, 2012, 13:42:09
In its awarding of the Nobel Peace Prize to the European Union earlier today, the Norwegian Nobel Committee seems to have taken a long view of things.  Perhaps this current crisis, too, shall pass. 
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 12, 2012, 13:54:34
[inserts & colours mine]   Surely these are not the only two options ... a society where the lucky or most ambitious end up with the spoils & everyone else is condemned to poverty, or a society where the sick & elderly are taken care of but the rest of us (while we're waiting to get to one of those conditions) are under someone's thumb.  No, not the only model ... but it is the model that will produce the desired results, adequate prosperity for most (greatest good for the greatest number, etc) in the minimum time. Sounds like a false dichotomy to me.  At any rate, I suspect the answer lies in the middle ground, between the constant push-and-pull of those who want to make money and those who want to take care of others.  BUT: the people who make the money must, first, agree to surrender some of it (pay taxes) to care for those who, as a Confucian would say, should care for themselves. BUT, again, sometimes -witness North America circa 2012 - many, many people do not want to surrender even as much as they do now to care for the "undeserving poor." I believe that our society has the resources and smarts to make both possible, without one being at the expense of the other. That is what about 40% of Canadians believe, 35% disagree and 25% are honest enough to admit they don't know.

As an aside, I have a couple of friends who are native Singaporeans & still live there - they are hardly told what to think, by anyone.  Unless it's really a government operative infiltrating our communications unbeknownst to me... hmm...  :Tin-Foil-Hat: I too have some Singaporean friends and I have spent some time there. Singapore is a unique society, one that actually propagates a "code of values:"

          Nation before community and society above self: Putting the interests of society ahead of the individual.
          Family as the basic unit of society: The family is identified as the most stable fundamental building block of the nation.
          Community support and respect for the individual: Recognises that the individual has rights, which should be respected and not light encroached upon.
          Encourages the community to support and have compassion for the disadvantaged individual who may have been left behind by the free market system.
          Consensus, not conflict: Resolving issues through consensus and not conflict stresses the importance of compromise and national unity.
          Racial and religious harmony: Recognises the need for different communities to live harmoniously with one another in order for all to prosper.

That's an official, government, statement of values that is taught in every school and serves as a guide for e.g. the civil service. But, many, most I think, Canadians would happily exchange Canadian liberalism and our loose values for Singapore's imposed values, prosperity, and highly developed welfare state.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on October 12, 2012, 14:13:19
ERC, a minor point of correction:

Although I have worn the Campbell tartan, also known as Government tartan, my forebears wore the Grey Breeks of Marr and stood against the Tcheuchters.  They would have called me a Sassenach, not incorrectly.

But back to the debate.


bridges:

The ideal is to keep between the white lines.  Machiavelli offered useful advice to the Medicis to that end.  Basically the advice was to stroke the masses so that you can feed them and bleed them simultaneously and thus the Prince can keep him and his in the style to which they become accustomed.

The problem is eventually the Prince screws up and/or the masses get wise (The Emperor Has No Clothes!).

When the Prince screws up the system fails, everybody dies and we get to start all over again from scratch.  This time without the benefit of clergy or Princes.

You are back to raw, blood red, tooth and claw capitalism, will ye, nill ye.

So the Prince might as well accept the inevitable  and acquiesce with the greatest good grace possible and follow the advice given to timorous young Victorian wives: "Lie back and think of England".

Come the morning you might be surprised to discover you enjoyed the experience.  At very least you are most likely to discover, as I note below, that you're still here.  (Edit: apparently the tag line, which used to grace my postings,  "And we're still here" is NOT still there - there's a lesson in that somewhere I am sure.)

The alternative, for the screwed up Prince that decides to challenge the masses, is likely to be a lot less pleasant.

The secret to retaining control is to always let the other guy think that he is in charge.  That is why, given ERC's succinct summary of China, Hong Kong and Singapore, I prefer Hong Kong's long term prospects over either of the others.

Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on October 12, 2012, 14:26:35
I suspect a lot of French blood in the Nobel Peace Prize Committee.

They have always been careful of their honour and demanded futile gestures to preserve their own self love while staying alive.

The Germans were never that afflicted. They actually believed in Death before Dishonour.

The Brits believed that honour was appropriate but like everything else should be managed moderately, especially if it a meant a loss in revenues.

As for the Italians....they gave up worrying about honour a couple of millenia ago.  Pass the Chianti.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 12, 2012, 14:30:09
ERC, a minor point of correction:

Although I have worn the Campbell tartan, also known as Government tartan, my forebears wore the Grey Breeks of Marr and stood against the Tcheuchters.  They would have called me a Sassenach, not incorrectly.

But back to the debate.


bridges:

The ideal is to keep between the white lines.  Machiavelli offered useful advice to the Medicis to that end.  Basically the advice was to stroke the masses so that you can feed them and bleed them simultaneously and thus the Prince can keep him and his in the style to which they become accustomed.

The problem is eventually the Prince screws up and/or the masses get wise (The Emperor Has No Clothes!).

When the Prince screws up the system fails, everybody dies and we get to start all over again from scratch.  This time without the benefit of clergy or Princes.

You are back to raw, blood red, tooth and claw capitalism, will ye, nill ye.

So the Prince might as well accept the inevitable  and acquiesce with the greatest good grace possible and follow the advice given to timorous young Victorian wives: "Lie back and think of England".

Come the morning you might be surprised to discover you enjoyed the experience.  At very least you are most likely to discover, as I note below, that you're still here.  (Edit: apparently the tag line, which used to grace my postings,  "And we're still here" is NOT still there - there's a lesson in that somewhere I am sure.)

The alternative, for the screwed up Prince that decides to challenge the masses, is likely to be a lot less pleasant.

The secret to retaining control is to always let the other guy think that he is in charge.  That is why, given ERC's succinct summary of China, Hong Kong and Singapore, I prefer Hong Kong's long term prospects over either of the others.

Machiavelli was right, and so was Keynes, but ... the way we "feed and bleed" the masses is through public works not entitlements. The old, conservative, saw that "the best social programme is a job" is very, very true. Plus, as we are learning in Europe and America, entitlements are hard, often too hard, to change or slow, much less stop. We, in the entitled West, have gone "welfare mad." No one must fail or suffer too much, even if they bring failure and suffering down on their own heads. That's madness. There is, I suggest, nothing much that can ever be done to, either:

1. Adequately tax the top 1% of society; or

2. Help the bottom 1%.

That doesn't mean we should stop trying but we ought not to hope that we can succeed.

Those of us in the remaining 98% can and should, however, work hard, pay our fair share, help those who, through no fault of their own, cannot keep up with even our minimal standards and save for our own comfort. To do that we need, broadly, to be left alone to use our labour and private property for our own benefits, not the governments'. The care of the poor, the helpless, the sick and weak should to the greatest extent possible, be a private matter - supported, through tax breaks, by the community at large; the state should act only when charity is, demonstrably, unwilling or unable to do so. But, we will not get (back) to that "happy" state, where we were as recently as the 1930s, because our "welfare madness" is too deeply entrenched ... or maybe not, maybe we will see, in 2020, in Greece and Spain, how people cope when governments will not, because they cannot, help.
Title: Re: Why Europe Keeps Failing........
Post by: bridges on October 12, 2012, 15:29:32
Singapore is a unique society, one that actually propagates a "code of values:"

          Nation before community and society above self: Putting the interests of society ahead of the individual.
          Family as the basic unit of society: The family is identified as the most stable fundamental building block of the nation.
          Community support and respect for the individual: Recognises that the individual has rights, which should be respected and not light encroached upon.
          Encourages the community to support and have compassion for the disadvantaged individual who may have been left behind by the free market system.
          Consensus, not conflict: Resolving issues through consensus and not conflict stresses the importance of compromise and national unity.
          Racial and religious harmony: Recognises the need for different communities to live harmoniously with one another in order for all to prosper.

That's an official, government, statement of values that is taught in every school and serves as a guide for e.g. the civil service. But, many, most I think, Canadians would happily exchange Canadian liberalism and our loose values for Singapore's imposed values, prosperity, and highly developed welfare state.

Interesting.  Thanks for this.

It could be said that we, too, propagate a code of values in our constitution, Charter of Rights & Freedoms, etc.   Does the statement of values from Singapore come from the current government only, or from the country's laws & constitution?  I wonder if it was derived at least in part from public input.  Do you see it as having a greater influence on their society than our constitution & Charter do on ours?

Kirkhill,

Ah, that "lie back and think of England" thing again!  Even as a metaphor, I'm not sure we need to screw people for society to prosper.   ;)

Machiavelli was right, and so was Keynes, but ... the way we "feed and bleed" the masses is through public works not entitlements. The old, conservative, saw that "the best social programme is a job" is very, very true. Plus, as we are learning in Europe and America, entitlements are hard, often too hard, to change or slow, much less stop. We, in the entitled West, have gone "welfare mad." No one must fail or suffer too much, even if they bring failure and suffering down on their own heads. That's madness. There is, I suggest, nothing much that can ever be done to, either:

1. Adequately tax the top 1% of society; or

2. Help the bottom 1%.

That doesn't mean we should stop trying but we ought not to hope that we can succeed.

Those of us in the remaining 98% can and should, however, work hard, pay our fair share, help those who, through no fault of their own, cannot keep up with even our minimal standards and save for our own comfort. To do that we need, broadly, to be left alone to use our labour and private property for our own benefits, not the governments'. The care of the poor, the helpless, the sick and weak should to the greatest extent possible, be a private matter - supported, through tax breaks, by the community at large; the state should act only when charity is, demonstrably, unwilling or unable to do so. But, we will not get (back) to that "happy" state, where we were as recently as the 1930s, because our "welfare madness" is too deeply entrenched ... or maybe not, maybe we will see, in 2020, in Greece and Spain, how people cope when governments will not, because they cannot, help.

Then things like roads, food inspectors, defence, immigration controls, etc. etc., all supported by whom - charity?  I always thought our taxes were, at least in principle, meant to pay for things that we, as a society, have agreed should happen, and we're basically employing the government to make it so on our behalf.  That would be for the benefit of all of us, not for the benefit of the government.  I know that's the ideal, and there's also much waste and self-serving policy implementation, but I'm not sure that means we should throw out the state as an actor in our society. 

And as for private charity, there is much already - I know this from looking at my own tax returns.  Unfortunately it's often not enough - just ask anyone working at the food bank, SPCA, cancer society, what-have-you.  If the only people who support these requirements financially are the ones with the means & motivation to do so privately, a lot of things in our society that we consider important wouldn't get done. 

On the other hand - maybe we should do this:
http://www.basicincome.com/ 
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 12, 2012, 15:42:56
Interesting.  Thanks for this.

It could be said that we, too, propagate a code of values in our constitution, Charter of Rights & Freedoms, etc.   Does the statement of values from Singapore come from the current government only, or from the country's laws & constitution?  I wonder if it was derived at least in part from public input.  Do you see it as having a greater influence on their society than our constitution & Charter do on ours?



This came in 20 or maybe 25 years ago, I think. I recall hearing rather a lot about it in the early to mid 1990s. It was a government initiative but I don't think it is a constitutional provision; at least a quick look at the Constitution of Singapore doesn't reveal it.

Again a few years decades ago it was hotly debated ~ not that it, a 'statement of values,' should or not not be promulgated but, rather, what should or should not be in it. My (somewhat vague) recollection is that the compromise gave the Confucians most, but not nearly all of what they wanted, but threw a couple of bones to the liberal Indians and Westerners.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on October 12, 2012, 15:45:05
ERC, and bridges:

I take your point and I can agree with desire and the intent. We should care for our neighbour, both on compassionate grounds and on the same grounds proposed by Machiavelli. After a fashion our society has made us all both supplicants and Princes. And as aspiring Kings we can agree with Mel Brooks that it is good to be King (not to mention doing our best to protect our phoney baloney jobs). Consequently it is in our own enlightened self-interest to keep the masses content.   I think ERC and I can both agree on that.  I think bridges might be a bit young to be sufficiently cynical and still trusts to the goodness of human nature.

However.

While I agree with the sentiment, and generally I consider myself an optimist with respect to human nature, I am less sanguine about short term prospects and fear a more sanguine society.  The world is full of societies that were doing quite nicely thank you and are now fly blown hell-holes. 

When you look at a graph of any process that is "in control" it is important to keep the timescale in mind.  With a large enough scale any process can be seen as a straight line, as you well know.  But in the short term the controllers are hunting and seeking all over the place and give proximate observers matching flutters.

You bring up the Depression.  I missed the Depression but my parents didn't.  They and their parents lived it.  Their experiences shaped my life.  They are all dead and buried now.  My children never knew them.  The Depression is as distant to them as WWI, the Crimea and the War of 1812.  It doesn't resonate at all.  They now get to relearn the lessons of the Depression all over again.

Three score and ten is the typical allotment of time.  I believe that it is also the time it takes for a society to renew itself and eliminate its connections to the past and the society passes from peak to valley.  Institutions can moderate some of that effect, carrying over tribal or corporate memories, but those are never as potent as personal experience. Recovery to peaks are possible but they are often merely fading echoes.  After a couple of centuries,  210 years or three 70 year cycles, the echoes become inaudible and society has got no sense of how the achieved their past glories, nor how they achieved their current predicament.

I see no reason why Greece and Spain can't end up like Afghanistan.  Yugoslavia almost did.  And Europe and America have run out of money and energy to mount the effort necessary to stabilize similar situations.  How long before the Greeks decide that they are really Turks (All those on the eastern Aegean shores have been in the past) and the Castillians lose their grip on the Catalans and the Basque (or can't hold off the Moroccans anymore)?

The good news is that our situation is analogous to a never ending roller coaster.  There are ups and downs and plenty of thrills but nothing catastrophic happens.  The bad news is, as far as I am concerned: I don't like roller coasters.

We continue to survive but there is little to suggest we will always enjoy, or even understand, the trip.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 12, 2012, 15:46:51
...
Then things like roads, food inspectors, defence, immigration controls, etc. etc., all supported by whom - charity?  I always thought our taxes were, at least in principle, meant to pay for things that we, as a society, have agreed should happen, and we're basically employing the government to make it so on our behalf.  That would be for the benefit of all of us, not for the benefit of the government.  I know that's the ideal, and there's also much waste and self-serving policy implementation, but I'm not sure that means we should throw out the state as an actor in our society. 



That's not what I said. It is Keynesian stimulus that is being misapplied to entitlements rather than confined to public works. There is, of course, a role for the state - the question is how big and how broad? My guess is that you and I disagree: I say "not much" and narrowly confined to a (relatively) few areas. I'm guessing you want a big, activist state.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on October 12, 2012, 15:59:46
Interesting.  Thanks for this.

It could be said that we, too, propagate a code of values in our constitution, Charter of Rights & Freedoms, etc.   Does the statement of values from Singapore come from the current government only, or from the country's laws & constitution?  I wonder if it was derived at least in part from public input.  Do you see it as having a greater influence on their society than our constitution & Charter do on ours?

Kirkhill,

Ah, that "lie back and think of England" thing again!  Even as a metaphor, I'm not sure we need to screw people for society to prosper.   ;)

Then things like roads, food inspectors, defence, immigration controls, etc. etc., all supported by whom - charity?  I always thought our taxes were, at least in principle, meant to pay for things that we, as a society, have agreed should happen, and we're basically employing the government to make it so on our behalf.  That would be for the benefit of all of us, not for the benefit of the government.  I know that's the ideal, and there's also much waste and self-serving policy implementation, but I'm not sure that means we should throw out the state as an actor in our society. 

And as for private charity, there is much already - I know this from looking at my own tax returns.  Unfortunately it's often not enough - just ask anyone working at the food bank, SPCA, cancer society, what-have-you.  If the only people who support these requirements financially are the ones with the means & motivation to do so privately, a lot of things in our society that we consider important wouldn't get done. 

On the other hand - maybe we should do this:
http://www.basicincome.com/

bridges: I am not saying we SHOULD throw out the state as an actor.  I am merely suggesting that if those that act for the state don't learn to give the nation its head from time to time then the state will become impotent due to circumstances and will no longer be an actor.  At that point people will fall back on to those things that have always worked:

Hard work
Graft
Charity (with charity beginning at home).

I don't want the state to disappear.  I want the state to hang around for another couple of decades at least.  That enlightened self-interest thing.


A final analogy.

I am poor at many things. One of the many things I am poor at is riding horses.  However I have managed to dismount more often on my own terms than on the horse's terms.  That came from experience.  Early on I had a reluctant horse finally break into the gallop I had been urging on it.  It bolted.  I fought to bring it back into control.  It rebelled and ejected me.

 Later on I repeated the exercise.  This time I gave the horse its head and let it go wherever it wanted to go.  I just clung on for dear life and kept my head down below the level of its shoulders as is dodged under trees.  Eventually it got tired and I brought it back to the rest of the group I was with.  I dismounted on my terms.

The third time I learned to better gage the mettle of the animal and not urge on it a course of action that it didn't want to pursue.  Something to the effect of never giving an order you don't expect to be obeyed.

And yes,  I really do believe that life is that simple. 
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 13, 2012, 09:00:25
The Nation-States of Europe are a 19th Century Fiction imposed on the general populace by centralizing governments. The truer face of Europe is the loose confederation of City-States occasionally known as the Holy Roman Empire (or the Pragmatic Constantinian General Assembly).

France didn't become France until the cession of Nice to France in the 1860s.  Germany didn't become Germany until 1989.  Italy didn't become Italy until 1872.  Britain didn't become Britain until 1707 (modified up until 1921 - apparently still a work in progress).  Spain became Spain in 1492 but the Catalans, Basques and Castilians, amongst others, had very different understanding of their terms of association.  Norway and Denmark split the sheets in 1905 and the Faeroe Islanders are still looking for a better deal from Denmark.

There is a biological theory (I hope I am remembering this correctly) that suggests that the reason Africa is such a harbourage of pestilence and so difficult to cure is that as a result of it being a point of origin for so many gene pools it is extraordinarily difficult to contain diseases before they jump to a neighbouring pool, adapt to those newer genes and morph into something different.

My sense is that Europe, with its myriad isolated but interconnected valleys, each identified by a genetic, linguistic and cultural preponderance, but never able to achieve a perfect quarantine from its neighbours, is to politics what Africa is to disease.

Ideas jump from locale to locale and morph into something different.  Liberal is a case in point. Good or Bad. Fascist or Free. Wealthy or Greedy.

A very current aspect to this debate is the Merger/Takeover of EADS and BAE.

EADS = France + Germany.  It is European as long as Europe is French.  It is a Government held commercial enterprise.

BAE = UK.  It is a privately held firm that had a virtual monopoly on UK defense spending but is branching out to support other governments, to include the US.

For a European Army you need a modern equivalent of the Arsenal of Venice, if you see the world in French terms.

For a British Army you need Hiram Maxim and Armstrong.

The two visions are irreconcilable.

France and Germany could come together with the Arsenal of Venice version of EADs, primarily because Germany's "War Guilt" wouldn't let her do anything else other than accede to French demands.

Germany and Britain could come together over a "privatized" BAE model of EADs for a host of financial, cultural and historical reasons.

But the deal won't happen as a Three-Way because France and Britain can not come together.

France insists that it wants a "privatized" entity but when Britain insists that no government can hold more than 10% of the shares in the enterprise France demands a higher initial allocation with the proviso that it can buy up all "unwanted" shares at its leisure.

This would effectively mean that by fiat France could declare itself the sole producer or weapons for Europe.   A non-starter from the stand-point of the other nations both on economic and nationalist grounds.  And a very unwise policy if innovation is desired.

However, Colbert would have approved, as would Louis XIV and Napoleon.

In the words of that fine Frankish phrase: "Ordnung Muss Sein".


The Good Grey Globe's European business correspondent, Eric Reguly (http://www.theglobeandmail.com/authors/eric-reguly), agrees with friend Kirkhill in this column which is reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/report-on-business/international-business/european-business/money-politics-and-fear-what-the-bae-eads-fiasco-says-about-europe/article4609492/
Quote
Money, politics and fear: What the BAE-EADS fiasco says about Europe

ERIC REGULY
ROME — The Globe and Mail

Published Friday, Oct. 12 2012

They do business differently in Europe.

Take the proposed €35-billion ($44-billion) merger of Britain’s BAE and the Franco-German EADS (owner of Airbus), a deal that would have created the world’s biggest defence and aerospace player.

There was some industrial logic to the merger – the launch of a formidable rival to America’s Boeing – even if the idea seemed a bit rushed.

But the merger was doomed the moment it was conceived and it was euthanized on Wednesday.

What went wrong?

Blame the political agenda in Paris, Berlin and London. The rights and independence of the executives and the shareholders were quickly buried under an avalanche of fears that the head office would be in the wrong country; there would be too much state control, or too little; jobs would disappear in one country and pop up in another; and industrial decision-making left entirely in the hands of management and owners risked damaging national agendas and the preservation of national corporate champions.

And so on. The whole affair descended into what’s-in-it-for-me political bedlam.

Now you know why it’s taking so long to fix the euro crisis. Based on the BAE-EADS fiasco, the euro zone will be extinct by Christmas.

Political interference is inevitable in any important industry in any country – note that Stephen Harper’s government killed BHP Billiton’s takeover of Potash Corp. of Saskatchewan two years ago and the Chinese were given the bum’s rush when they tried to buy Californian oil company Unocal (now part of Chevron) in 2005. But the degree of political interference in Europe is off the charts by North American standards and has reached the point where it is doing more harm than good. While governments see state influence or outright control as an agent of industrialization, the opposite is more likely the case as short-term political goals displace long-term strategy.

The BAE-EADS merger attempt shows that state capitalism is alive and well in Europe, especially in France and Germany, whose governments were lobbying for a collective 27 per cent stake in the enlarged group while Britain was lobbying for those same stakes to be eliminated. It has always been thus and for many decades, it more or less worked. After the Second World War, governments from Britain to Italy used state-controlled companies and national projects – from building the world’s best highways and nuclear reactors to wet-nursing the auto makers and aerospace companies – to revive the destroyed continent.

Along the way, there were spasms of state sell-offs, notably in Britain under the privatization-mad Maggie Thatcher, and there is no doubt the role of the state has declined throughout Europe since the 1990s. But it has far from disappeared. France remains the biggest advocate of using equity stakes, proxies and yes men to influence entire industries. It still has a minority stake in Air France-KLM, one of the world’s biggest airlines, controls the nuclear industry (in good part through Areva) and has a 15-per- cent stake in EADS and wanted no less than 13.5 per cent in the enlarged company if the merger had gone ahead. It is the biggest shareholder in GDF-Suez, the electricity utility and power generator with more than 230,000 employees.

State influence in big industries seems to have done France no favours in recent years. The ailing auto industry is one sorry example. French auto maker Renault was controlled by the government until 1996, when it was privatized. But the government could not resist hanging on to a 15-per-cent stake, presumably to protect France’s national interests in a high-value-added industry. Renault has lost almost 70 per cent of its value in the last five years. So much for protecting the taxpayer.

Renault’s rival, Peugeot Citroën, has no government ownership. Still, Paris delights in telling it what to do. French President François Hollande and his ministers were enraged when Peugeot announced it would shutter its Aulnay factory near Paris at a cost of 6,000 jobs. Mr. Hollande described the closing as “unacceptable” (though it is now going ahead). Peugeot has lost 90 per cent of its value in five years.

Car production in France, meanwhile, is in free fall. In 2005, it peaked at 3.5 million; last year, it was 2.3 million.

Air France is in trouble too. It lost €895-million in the three months to June, partly because it has lagged its rivals in cutting labour costs. The state influence over the company no doubt has something to do with this. Meanwhile, the airline has come under pressure from the French parliament to order planes from EADS-owned Airbus instead of rival Boeing. Air France has lost 80 per cent of its value in five years.

While a huge variety of factors have conspired to push down the values of these French companies, state control or meddling has not worked in their best interests. BAE and EADS might well survive, even thrive, on their own. Or they may not. Turning Boeing into a diversified military and civil aviation company worked wonders for the U.S. giant. Politics denied BAE and EADS the right to try the same thing. Short-term strategies usually work against long-term interests, as any good investor knows.


"State capitalism" is a myth. The state is involved in capitalism, it builds goods (e.g. roads and schools) and services (e.g. tariff and tax collecting) which, in their turn, are broadly productive, but the idea that "state owned enterprises" are in some way "capitalist" is wrong-headed. Some state owned enterprises are successful - this is, in all cases, more a matter of good luck and circumstances than good management. As a general rule each and every state owned enterprise, of any and all kinds, is inefficient. That even applies to things which ought to be, for the very best public policy reasons, state monopolies (the armed forces, for example). Put generally: any private enterprise can do anything - saving lives in hospitals or taking lives on a battlefield - better than any government agency. And that applies without regard to race, creed or culture ~ a private hospital in Kuala Lumpur Malaysia is more efficient than a public hospital in Kingston, Ontario. the reason is simple: management. Any private enterprise is immune to the political consideration which must drive even, for example, military decisions. Thus public decision making is, always and everywhere, hobbled by factors which guarantee inefficiency, ineptitude and corruption. That is not to say that some private enterprise are not inefficient, inept and corrupt but the market is able, very quickly and cleanly, to remove them from the equation - so long as governments do not intrude to "champion" inefficient, inept and corrupt favourites, e.g. BAE, Boeing, EADS or Locheed Martin, none of which could compete in a free market without massive government supports.

But, "state capitalism," real or not, is very, very popular in most illiberal societies, of which France is a prime example. State capitalism is also popular is some conservative societies - consider Hong Kong's and Singapore's very large ($200± Billion (US)) sovereign wealth funds, and even in some liberal ones - one Canadian province (Alberta) and several US states, including Alaska and Texas, have sovereign wealth funds.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on October 13, 2012, 10:01:52
Just an interesting note to the idea that government provides food inspectors; despite a reported 47 "food inspectors" on the job (according to a CBC radio report I was listening to in the car a few days ago); the Excel meat packing plant was able to ship tens of thousands of units of meat potentially contaminated by E-Coli across North America.

If that level of government inspection is that effective, then perhaps we should be seriously rethinking and redefining what we want and expect as "government services".

BTW, the grab bag mentioned upthread is the usual conflation of thigs governments "should" do (Police, Military, Courts of Law) and things that the private sector has done since time immemorial (roads, bridges, hospitals, education). There are arguments to having governments do some of these things as well (military roads and hospitals, for example), but also counter arguments and examples of why governments should NOT do these things (bridges to nowhere, dismal public school results compared to private school results etc.)
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 13, 2012, 10:14:00
Just an interesting note to the idea that government provides food inspectors; despite a reported 47 "food inspectors" on the job (according to a CBC radio report I was listening to in the car a few days ago); the Excel meat packing plant was able to ship tens of thousands of units of meat potentially contaminated by E-Coli across North America.

If that level of government inspection is that effective, then perhaps we should be seriously rethinking and redefining what we want and expect as "government services".

BTW, the grab bag mentioned upthread is the usual conflation of thigs governments "should" do (Police, Military, Courts of Law) and things that the private sector has done since time immemorial (roads, bridges, hospitals, education). There are arguments to having governments do some of these things as well (military roads and hospitals, for example), but also counter arguments and examples of why governments should NOT do these things (bridges to nowhere, dismal public school results compared to private school results etc.)


Several years ago, in my 'second career,' I was involved in the standards business. Our industry was very much in favour in soft monitoring of standards: the industry, we suggested to government, was quite able to monitor itself - if government would just be kind enough to promulgate standards with which we agreed. Government did promulgate fully acceptable (to the industry) standards but we were chronically unable, from the get go, to police ourselves. It was, simply, too expensive. To every single company standards was a 'cost,' and, most often a 'cost' that could be cut. In no time at all our industry members were failing even the loose audits required by government. My guess is that the same thing happened in XL Foods: there are standards, XL has internal inspectors but there are too few inspectors and they do too little and there is nothing but an audit by government which only "sees" problems after they occur. There are some things that cost a lot but which produce good, public value for money - food and water inspections are amongst them; maybe we need to accept that the corporation, any enterprise that accounts for its inputs, cannot be expected to police itself and, when public health and safety are an issue, the community should be prepared to pay for a public service, through either direct taxes or fees which flow through to the consumer in the form of higher prices. The former is more efficient, the latter is more 'fair' (vegetarians don't have to pay for meat inspections, etc).
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on October 13, 2012, 12:24:58
B students are good employees.  They are hard working and easy to come by as they make up such a large proportion of the population.  In any organization they are going to predominate in middle management and supervisory roles. 

Let's assume that these people make up 50% of the decision makers in the organization.
Let's further assume that the rest of the organization is going to actively implement their decisions as they intended their decisions to be implemented.
In other words everybody outside of management acts in perfect good faith, with absolute understanding of the plan and implements the plan exactly as intended.

But B students are wrong on just about everything 60 to 80% of the time Edit: Make that 20 to 40% of the time and chalk this one up to the work of just another B student working on his first coffee of the day :facepalm:.

Why is it reasonable to expect that any organization or agency is going to be more than 70% efficient?

I've seen many companies making good money with 70% efficiencies.  Equally I have seen good companies destroyed in rabid quests for the elusive 95%.  The quest for the 95% level usually occurs when the company's market share plummets due to external circumstances and the profits evaporate.  The next step is to drag in the MBAs to cut costs and improve efficiencies.

The usual result is that after numerous MBAs have been appointed to management, and others hired on 3 month, 6 month and 2 year contracts,  and all parties concerned have shiny new offices, with really neat toys, gadgets and gizmos.....(sorry,  bitterness is a hard habit to break  ;D)....back on topic.... the usual result is that  the B students leave, are terminated or are sold off and the dregs of what used to be a thriving company goes broke.

The conclusion I have drawn is that if your business plan can't sustain operations at the 70% efficiency level then you are doomed from the get go.  That means that you learn to live with 30% screw ups and under utilized capacity.  It is better to have a happy organization humming along at 70% than it is an unhappy one struggling to keep up a 95% level. 

In the real world I implement this in my advice to customers.  If you have time on your hands and you only intend to operate 1 shift a week (40 hours out of 168 = 25% efficiency) or even 2 shifts a week (50% efficiency) then by all means just buy a single process line.

But if you aspire to 24x7 operations then you need to buy three lines with the capacity that will allow each one to chug along steadily at 66% of their design capacity.  Then when one line goes down the other two pick up the slack for a short period by operating at 100% efficiency.

3 x 66% = 2 x 100%.

Japanese companies generally don't take my advice.

They buy 10 units at 10% of capacity and suffer the capital cost penalty to install them all.  (A 10 kW motor doesn't cost 10% as much as a 100 kW motor but both cost the same  to install).

But if they lose 1 unit off line they can continue operating with 90% capacity.

Their operations have a higher efficiency but their capital is less efficient.

Redundancy.   It is a good thing.

Worst Business Plan Ever?

Aspire to monopoly with a single production line operating at 95% efficiency.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on October 13, 2012, 15:17:24
The problem with XL foods wasn't so much that their internal audits and inspection was inefficient, but rather that a huge overlayer of government food inspectors did nothing to stop this. Remember the 47 inspectors were reported to have been working the plant while this happened (but now 50 inspectors have arrived to audit the plant before it reopens). Assuming no overlap, we are paying for an additional 97 people to keep our food safe, 47 or whom are demonstrably deficient in doing their jobs. Of course, this isn't news, really. Remember the Walkerton water scandal? It was perpetrated by two government employees who simply failed to do any water quality testing and sent forged results in to the Ministry. Of course, the Ministry never did any audits or inspections of these two (or anyone else, for that matter) during the long period they were working there...
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on October 16, 2012, 00:35:27
More on how the Swiss are preparing:

http://reason.com/blog/2012/10/15/switzerland-may-have-to-deploy-troops-in

Quote
Switzerland May Have to Deploy Troops in Response to Euro Crisis
Ed Krayewski|Oct. 15, 2012 2:02 pm

Coming on the heels of the European Union  being awarded the Nobel Peace Prize is the news that Switzerland is preparing its military to respond to possible escalations of violence related to the Euro crisis. "I can’t exclude that in the coming years we may need the army," Switzerland’s defense minister, Ueli Maurer was quoted as saying.  NBC News also reported Maurer questioned how long “money alone” could quell the crisis. The Swiss Defense Ministry is not ruling out deploying troops:

“It's not excluded that the consequences of the financial crisis in Switzerland can lead to protests and violence,” a spokesperson told CNBC.com. “The army must be ready when the police in such cases requests for subsidiary help.”

It doesn’t appear that the Swiss are taking this as a too-far-removed possibility:

It launched the military exercise “Stabilo Due” in September to respond to the current instability in Europe and to test the speed at which its army can be dispatched. The country is not a member of the union or among the 17 countries that share the euro.

Swiss newspaper Der Sonntag reported recently that the exercise centered around a risk map created in 2010, where army staff detailed the threat of internal unrest between warring factions as well as the possibility of refugees from Greece, Spain, Italy, France, and Portugal.
Switzerland, which did not join the United Nations until 2002, by a referendum that only narrowly passed, has not been in a state of war since the Treaty of Paris in 1815, a treaty predating even some of the modern nation-states now in crisis in the European Union, which the Swiss also have no plans to join. In his foreign policy address last week, Mitt Romney ruled out the possibility of war in Europe thanks to the Marshall plan. Reason’s Matthew Feeney pointed out Romney’s right, even if only because few countries in Europe are even capable of waging a war. Whether they’re capable of resolving their crisis except through “money alone” remains an open question, as Switzerland’s maneuvers highlight.
Title: Re: Why Europe Keeps Failing........
Post by: PrairieThunder on October 16, 2012, 00:52:58
More on how the Swiss are preparing:

http://reason.com/blog/2012/10/15/switzerland-may-have-to-deploy-troops-in

So like Denmark... who did not adopt the Euro and are largely unaffected by this crisis... Why does Switzerland then have a "Financial Crisis" or is it just bad wording?

Anyways, pretty interesting that they had to run the Army through exercises in case of civil unrest. Apart from when the Swiss Army got in trouble for accidentally wandering into Lichtenstein... this is probably the only serious event they may have to face since... WW2 maybe?
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 16, 2012, 09:21:12
More, reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail, on the pressing need for more, deeper, integration of parts of Europe:

http://www.theglobeandmail.com/report-on-business/international-business/european-business/germanys-schaeuble-urges-big-leap-forward-in-euro-integration/article4615004/
Quote
Germany’s Schaeuble urges big leap forward in euro integration

GERNOT HELLER
ABU DHABI — Reuters

Published Tuesday, Oct. 16 2012

German Finance Minister Wolfgang Schaeuble has called for a great leap forward in European integration ahead of a summit of EU leaders, urging the creation of a new commissioner with power over budgets and reform of European Parliament decision-making.

Mr. Schaeuble, a longtime advocate of closer EU integration who is not shy about voicing his personal views, said he had spoken with Chancellor Angela Merkel about his proposals and that she was “somewhat more cautious”.

“We must now make bigger steps in the direction of a fiscal union,” Mr. Schaeuble told reporters on his way back from a trip to Asia. “We must use this chance.”

He said a new “currency commissioner” should have the power to reject national budgets that were not in line with the euro zone’s strict fiscal criteria, without specifying whether such a figure should have the power to impose penalties.

The model for the position would be the bloc’s competition commissioner, who Mr. Schaeuble said was “feared in the whole world”.

He also called for more flexible voting arrangements in the European Parliament to accommodate closer integration between euro zone states.

European officials are looking for ways to boost the democratic legitimacy of their drive towards a closer union, but have run up against the dilemma that the European Parliament includes countries from outside the euro zone.

“In the European Parliament lawmakers only from countries directly affected by a given issue should vote on it,” Mr. Schaeuble said.

Such a reform would accelerate the trend towards a two-speed Europe, with the euro zone as an inner core.

Some of Mr. Schaeuble’s ideas are likely to stir unease even within the euro zone, where countries such as France are reluctant to surrender more sovereignty to EU institutions.

Weaker economies such as Greece, reeling from German-backed austerity programs, will also be wary of entrenching the power of outsiders to run their financial affairs.

A previous proposal from Mr. Schaeuble for a “Sparkommissar”, or savings commissioner, was quietly dropped after it stirred fury in recession-mired Greece and got a cool reception from Germany’s other European partners.

Undaunted, Mr. Schaeuble said it was important to build momentum for greater fiscal and political integration, saying the bloc could launch a convention by December if it made good progress.

Ms. Merkel has previously said she would like the EU’s December summit to agree a concrete date for the start of a convention.

The idea recalls the 100-plus strong gathering of EU lawmakers set up in 2001 – inspired by the Philadelphia Convention that led to the adoption of the U.S. federal constitution – charged with preparing a European charter.

The document that emerged was rejected by French and Dutch voters in 2005 and a watered down version ended up forming the basis of the EU’s Lisbon Treaty, which is in force today.

Many member states, recalling the lengthy disputes and setbacks that preceded the Lisbon treaty’s entry into force, are reluctant to embark on another process of institutional reform.

But Germany believes a much closer fiscal and political union is needed to ensure the success of painful economic reforms and the long-term survival of the euro currency.

“We need a lasting solution,” Mr. Schaeuble said.


Herr Schaeuble's "lasting solution" will:

1. Drive Britain farther out to the periphery of the EU;

2. Promote unions within the Union and unions that might even extend beyond the Union to include e.g. Norway and Switzerland; and

3. Terrify France, Italy and Spain.

BUT: I think he's on the right track - see my layer cake (http://forums.army.ca/forums/index.php/topic,103357.msg1169397.html#msg1169397) model - and that nationalism, which I recognize is a mighty, powerful force, will have to give way to economics.
Title: Re: Why Europe Keeps Failing........
Post by: Tango2Bravo on October 16, 2012, 09:29:01
Nationalism still matters. It may drive some folks crazy economics will sometimes take a back seat or at least be moderated by nationalist concerns. It may seem vulgar or stupid, but it speaks to the concept of underlying consensus.

I do not think that Europeans have enough underlying consenus on politics to integrate or unify. Germany and France would like to play regional hegemon by working in concert from a leadership position, but the outlying regions will not want to play along if it means austerity. This will mean some tough choices, for sure, but do not discount the power of nationalism.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on October 16, 2012, 15:50:55
You really can't make this stuff up. If this is implemented, Swiss soldiers will be facing hordes of illiterate French trying to cross the border. The mindset behind this is profiled in the "Deconstructing Progressive Thought" thread:

http://online.wsj.com/article/SB10000872396390443675404578058301483391978.html?mod=WSJ_Opinion_LEFTTopBucket

Quote
France to Ban Homework. Really.
In the name of social justice and equality, François Hollande wants all learning done in school.

François Hollande has a bold new plan to tackle social injustice and inequality in France: ban homework. Introducing his proposals for education reform last week at the Sorbonne, the French president declared that work "must be done in the [school] facility rather than in the home if we want to support the children and re-establish equality."

Banning out-of-school assignments would put France on the cutting edge of pedagogical fashion, though it wouldn't be entirely unprecedented. An elementary school in Maryland recently replaced homework with a standing order for 30 minutes a day of after-school reading. A German high school is also test-running a new homework ban, after an earlier reform lengthened the school day and crowded out time for extra-curriculars such as sports or music.

These small-scale experiments aim to give students more freedom to excel on their own initiative. Mr. Hollande wants just the opposite. As Education Minister Vincent Peillon told Le Monde, the state needs to "support all students in their personal work, rather than abandon them to their private resources, including financial, as is too often the case today." The problem, in other words, isn't with homework per se. It's that some homes are more conducive to homework than others.

Here we begin to wonder: Are the French losing their mind? Fortunately not. More than two-thirds of the country would oppose the ban, according to an Ifop poll, so there's hope that even in the land of égalité there's some recognition that state power cannot equalize everything. It's also reassuring to know that a majority of French adults believe there's something to be said for instructing children in the need for personal initiative and responsibility, regardless of excuses or circumstances.

Mr. Hollande, however, remains out of step. At the Sorbonne, he stressed that school is where "the child becomes the citizen of the future." Perhaps his ideas about homework say something about the kind of citizens of the future he wishes to see.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on October 16, 2012, 17:51:55
Quote
Switzerland May Have to Deploy Troops in Response to Euro Crisis
Ed Krayewski|Oct. 15, 2012 2:02 pm

Coming on the heels of the European Union  being awarded the Nobel Peace Prize is the news that Switzerland is preparing its military to respond to possible escalations of violence related to the Euro crisis. "I can’t exclude that in the coming years we may need the army," Switzerland’s defense minister, Ueli Maurer was quoted as saying.  NBC News also reported Maurer questioned how long “money alone” could quell the crisis. The Swiss Defense Ministry is not ruling out deploying troops:

“It's not excluded that the consequences of the financial crisis in Switzerland can lead to protests and violence,” a spokesperson told CNBC.com. “The army must be ready when the police in such cases requests for subsidiary help.”

It doesn’t appear that the Swiss are taking this as a too-far-removed possibility:

It launched the military exercise “Stabilo Due” in September to respond to the current instability in Europe and to test the speed at which its army can be dispatched. The country is not a member of the union or among the 17 countries that share the euro.

Swiss newspaper Der Sonntag reported recently that the exercise centered around a risk map created in 2010, where army staff detailed the threat of internal unrest between warring factions as well as the possibility of refugees from Greece, Spain, Italy, France, and Portugal.
Switzerland, which did not join the United Nations until 2002, by a referendum that only narrowly passed, has not been in a state of war since the Treaty of Paris in 1815, a treaty predating even some of the modern nation-states now in crisis in the European Union, which the Swiss also have no plans to join. In his foreign policy address last week, Mitt Romney ruled out the possibility of war in Europe thanks to the Marshall plan. Reason’s Matthew Feeney pointed out Romney’s right, even if only because few countries in Europe are even capable of waging a war. Whether they’re capable of resolving their crisis except through “money alone” remains an open question, as Switzerland’s maneuvers highlight.

When does a riot you can't suppress become a war?  How much organization and money do you need for sticks, bricks and axes?

Romney is probably right that the Europeans won't be dropping bombs on each other, they can't afford the gas for their F16s, but you don't need F16s to fight a war.  The worst wars are fought with sticks and bricks.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 18, 2012, 18:19:48
And just when you thought it couldn't get worse we have this bit of comedy farce from Brussels, reproduced under the Fair Dealing provisions of the Copyright Act from The American Interest/Via Meadia:

http://blogs.the-american-interest.com/wrm/2012/10/18/europe-steps-back-in-the-clown-car/
Quote
Europe Steps Back in the Clown Car

October 18, 2012

Walter Russell Mead

With EU ministers preparing for a major summit on Thursday, all eyes are on the latest plan to save the euro: unified supervision of Eurozone banking. There’s only one problem: the plan is probably illegal. As the FT reports, a top secret body of legal experts has advised EU finance ministers that current European treaties do not allow the creation of such a body:

          The legal service concludes that without altering EU treaties it would be impossible to give a bank supervision board within the ECB
          any formal decision-making powers as suggested in the blueprint drawn up by the European Commission.

          Those non-eurozone countries that want to opt into the bank supervision regime would also be legally unable to vote on any ECB decisions –
          a key demand of countries such as Sweden and Poland.

This is particularly problematic where Germany is concerned. Berlin was already skeptical of the plan, and reports like this give the Germans a convenient out, if they choose to use it:

          In addition to spelling out the legal limitations facing eurozone “outs”, the adviser’s opinion will add to German concerns over the independence of
          the ECB monetary arm, as it casts doubt over establishing a separate decision-making process for supervision.

          Berlin’s demand for more voting clout on supervision matters is also undermined.

This report has thrown yet another wrench into what has been a painfully slow process, and European bureaucrats are already scrambling to cobble together crazy-quilt, Rube-Goldberg-type workarounds. Unfortunately for Europe, it’s not clear than these will work, and they are further complicating what is already an extraordinarily complex task. In the meantime, negotiations will likely drag on for months or more, especially as the Germans aren’t thrilled with the whole idea.

It looks like Europeans will have to wait a little bit longer for their rescue. At least they’re used to waiting by now.

 :rofl:
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on October 18, 2012, 18:48:15
Maybe Schaeuble und Merkel are playing a cannier game than we give them credit.

Britain is praying that Europe goes away but the Europeans don't end up blaming Britain (Faint Hope! Britain will be blamed).

If the Jerries wanted Europe to disappear while not having the luxury of sitting on the sidelines like Britain then a sure cure would be to be the Super-European.  If the French and Brussels want to go Fast, Deep and Hard then the Jerries will go Faster, Deeper, Harder.  And when the Pips start to Squeak?
Ignore them and continue driving on, following the French plan (Brussels is merely a Walloon colony in the heart of a properly Germanic country) and wait until something gives.

Wear your Mack and Boots and bring an umbrella.....  :)
Title: Re: Why Europe Keeps Failing........
Post by: Colin P on October 19, 2012, 14:09:16
The problem with XL foods wasn't so much that their internal audits and inspection was inefficient, but rather that a huge overlayer of government food inspectors did nothing to stop this. Remember the 47 inspectors were reported to have been working the plant while this happened (but now 50 inspectors have arrived to audit the plant before it reopens). Assuming no overlap, we are paying for an additional 97 people to keep our food safe, 47 or whom are demonstrably deficient in doing their jobs. Of course, this isn't news, really. Remember the Walkerton water scandal? It was perpetrated by two government employees who simply failed to do any water quality testing and sent forged results in to the Ministry. Of course, the Ministry never did any audits or inspections of these two (or anyone else, for that matter) during the long period they were working there...

that's assuming the Inspectors had the training, the authority and the support of their department to do anything. As a regulator you very quickly learn that you better have the support of your bosses before you carry out any enforcement action, no matter how warrented it is. Otherwise you will find your legs cut out from under you and any authority you had with the company is underminded.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on October 19, 2012, 19:18:09
that's assuming the Inspectors had the training, the authority and the support of their department to do anything. As a regulator you very quickly learn that you better have the support of your bosses before you carry out any enforcement action, no matter how warrented it is. Otherwise you will find your legs cut out from under you and any authority you had with the company is underminded.

And shortly thereafter you quit your job in Whitby and move to the wide open spaces of Calgary........
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 28, 2012, 13:00:31
Here, reproduced in a report which is shared under the Fair Dealing provisions of the Copyright Act from Quartz, is why Europe keeps failing:

http://qz.com/20725/leaked-lagarde-list-of-alleged-tax-dodgers-including-greek-politicians-key-business-leaders-and-some-housewives/
Quote
“Lagarde List” of alleged Greek tax dodgers emerges. First prosecution: journalist who published it

By Stephanie Gruner Buckley

The plot thickens.

On Saturday, a Greek journalist leaked a list, he says, are the roughly 2,000 names of Greeks with substantial holdings in a Swiss bank account—the infamous Lagarde List. The list had gone suspiciously missing for two years after first being handed over to Greece’s then finance minister, Giorgos Papaconstantinou, by the IMF’s Christine Lagarde, then finance minister of France.

The missing list, which re-emerged earlier this month, is being investigated by Greek officials. They’re also trying to get to the bottom of why the people listed, possible tax dodgers with holdings worth more than a billion euros, were never investigated. It’s a strange fact considering how badly Greece needs the money.

On Oct. 27, an enterprising journalist, Kostas Vaxevanis, published the list in his weekly magazine Hot Doc. His list contains politicians including Giorgos Voulgarakis, the speaker of the Parliament and a member of Prime Minister Antonis Samaras center-right party. He denies having any overseas bank accounts.

Also on the list are Finance Ministry employees, businesspeople, doctors, lawyers, actors and some women identified as housewives, all of whom allegedly moved big sums of money into an HSBC account in Switzerland.

It remains unconfirmed whether the names leaked in the magazine are the same as the names on the original Lagarde list, but the leak has already led to one prosecution: Authorities duly issued an arrest warrant for Vaxevanis for violating the privacy of those listed. Vaxevanis wrote on Twitter that he has been arrested:

Μπαίνουν στο σπίτι με εισαγγελέα τωρα. Με συλλαμβάνουν. Διαδωστε—
Kostas.Vaxevanis (@KostasVaxevanis) October 28, 2012

Google Translate say that the Greek text is: "They enter the house with prosecutors now. By arresting. Spread-" which I take to mean "They, the police and prosecutors, are in my house now. I am being arrested. Spread the word!"

Do we have a "let's shoot the messenger" symbol?
Title: Re: Why Europe Keeps Failing........
Post by: GAP on October 28, 2012, 13:17:19
Strange how they react when the truth hits home...... ::)
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on October 29, 2012, 07:48:02
There has been, over the past several days, a flurry of job offers from the European central Bank (ECB), mostly for Greek and Spanish speaking lawyers, e.g. this (https://jobs.ecb.int/sap/bc/webdynpro/sap/hrrcf_a_posting_apply?PARAM=cG9zdF9pbnN0X2d1aWQ9NDdEQjg5NTBDQzlCOTYyOUUxMDAwMDAwQUMxMjA5QTAmY2FuZF90eXBlPUVYVA%3D%3D&sap-client=100&sap-language=EN), which some economists in the Twitterverse find ominous.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on November 01, 2012, 13:01:43
And the hits just keep on coming, according to this piece which is reproduced under the Fair Dealing provisions of the Copyright Act from the Financial Times:

http://www.ft.com/intl/cms/s/3/189859f8-2422-11e2-9509-00144feabdc0.html#axzz2AzDlWw7w
Quote
Greece – own goals

November 1, 2012

Greece and its creditors are well into extra time; so far Athens has scored all the goals, mostly in its own net. Its 2013 budget shows that the country’s continuing economic depression renders every fiscal target unachievable, whether the debt ratio, the primary surplus or privatisation revenues. Political factors at work in both Germany and Greece mean the existing half-hearted “rescue” will probably be extended by up to two years – at a cost of another €30bn in financial aid. But make no mistake. Another Greek debt write-off is coming. It’s just a question of when.

The extent to which Greece keeps missing its targets is starting to beggar belief. For example, the budget projects that the country’s debt will be a few basis points short of 190 per cent of gross domestic product next year – 10 percentage points higher than forecast a month ago. Moreover, getting parliament to approve the budget and its attendant structural and fiscal reforms next week will be tough: the coalition is bitterly divided on the measures.

There are excellent reasons for not giving Athens any immediate relief from its thankless task, however. Greece achieves structural and fiscal reform only under intense external pressure. Offering a premature writedown would remove that pressure and set a troubling example for other highly indebted countries. Ireland’s debt to GDP ratio is climbing towards 120 per cent, for example; Italy’s is already there.
It is hard to see Greece coming out from under its mountain of debt for at least a decade. So political factors may eventually make another write-off both necessary and feasible. That will have to involve official creditors including the European Central Bank: after all, they own most of the outstanding debt. Germany is opposed, for now. But policy makers keep having to change the rules in the middle of the game with Greece. There is no reason to stop now.

Copyright The Financial Times Limited 2012.


It is hard to blame the Greek politicians; they are being asked to tell their people, the voters, to pay more - probably a lot more - in taxes, for less - assuredly a lot less - in government services, and, simultaneously, to work harder at their jobs (for those who have a job) for a smaller pay cheque which will buy far less at the shops.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on November 06, 2012, 07:39:17
The Socialist government of France gets a warning from the IMF. Regular readers of my posts will notice a certain refrain....

http://www.telegraph.co.uk/finance/financialcrisis/9656984/IMF-warns-over-taxed-France-risks-slipping-behind-Italy-and-Spain.html

Quote
IMF warns over-taxed France risks slipping behind Italy and Spain

The International Monetary Fund has told France to take urgent measures to head off national economic decline, warning that the country risks being left behind as southern Europe embraces reform.

By Ambrose Evans-Pritchard

7:26PM GMT 05 Nov 2012

Throwing the guantlet at the feet of the Socialist president Francois Hollande, the IMF said rising tax rates are undermining France as a place "to work and invest" and leading to a "significant loss of competitiveness".

"There is a risk it will get worse if France does not adapt at the same pace as its trading partners in Europe, notably Italy and Spain," it said.

The IMF challenge had an added piquancy coming from a body headed by France's Christine Lagarde, widely touted as the next Gaulliste leader and a future rival for the French presidency.

The warning came as French industrialist Louis Gallois delivered a long-awaited report to Mr Hollande calling for "shock therapy" to stop the national rot, with drastic cuts in business payroll taxes to claw back loss ground against Germany and other EMU states.

Mr Gallois, ex-head of the EADS aerospace group and a revered figure in France, said all parties need to unite in a patriotic push to save the nation.
Related Articles
   
His report listed 22 measures. These include a €30bn cut in payroll levies, worth 1.5pc of GDP, to be offset by a higher VAT and other consumption taxes. The aim is to reduce the "tax wedge", or tax share of labour costs. This has risen to 50pc, among the world’s highest.

Mr Gallois called for a state bank to channel cheap credit to exporters, a subsidy likely to raise the eyebrows of the EU’s competition police.

Much of the report is a slap in the face for Mr Hollande who cut VAT in June to protect buying power and has just raised company taxes yet further in the 2013 budget. He is facing a nationwide revolt by business leaders.

Arnaud Montebourg, the production revival minister, vowed to study the report with "respect", acknowledging that France faces a national emergency.

French industry has been losing 60,000 jobs a year for a decade, cutting manufacturing to 12pc of GDP - the same as Britain. This has become a neuraligic issue over recent months with a string of high-profile plant closures and a state rescue for Renault, which saw car sales crash 26pc in October.

"The socialist government is not ready to confront the unions or reform the French economy funadamentally," said professor Eric Dor from IESEG School of Management in Lille.

"We are wasting years. Unlike Germany, we don’t compete well in hi-tech areas and we face competition from Italy and Spain as they cut unit labour costs. The government is in denial about this," he said.

France’s share of world exports has fallen to 3pc from 6.3pc in 1990, losing ground against Spain, Beglium, and Holland, as well as Germany. The trade balance has switched from surplus of 2.5pc of GDP to a deficit of 2.4pc over the last twelve years.

While Germany squeezed wages in the early EMU years to gain an edge, France let unit labour costs ratchet upwards to €35.30 an hour. This is now 10pc above German levels. The IMF said much of French industry is in "low to medium-tech products" that face rivals in Asia.

Gaulliste deputy Jacques Myard said it is too late for France to claw back the lost ground within EMU. "Only a devaluation of 30pc against Germany can restore the competitiveness of French firms and provide the necessary shock. We have to confront the real issue, which is that the euro is strangling the French economy. We have to leave. All else is just waffle," he said.

Free market critics say France’s root problem is a Leviathan state - now 56pc of GDP, higher than Denmark - combined with cossetted welfare and early retirement. Just 40pc of those aged 55 to 64 are in work, compared with 57.7pc in Germany.

Mr Gallois was careful not to criticise the sacred modèle français. He also dropped his call for shale gas development after the Greens said it would "absolutely violate" the party’s post-election deal with Mr Hollande.

Dominique Barbet from BNP Paribas said faiure to exploit France abundant shale reserves may prove as costly mistake as nuclear power plants age and French electricity prices climb towards EU levels. "The loss of this comparative advantage threatens the existence of entire energy-intensive manufacturing sectors, such as aluminium, glass, and steel," he said.

Mr Hollande promised "tough decisions" when he unveils his own reform package on Tuesday.

Mr Dor said the president had better deliver. "If he refuses to act, the markets will act for him. Perhaps that is the sort of shock that it will take."
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on November 06, 2012, 09:00:30
Someone please tell the IMF to be quiet.  The shortest path to recovery will be followed by most nations only if one or two countries are willing to serve as most horrible examples.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on November 09, 2012, 01:48:12
Greek society fall off the rails. A look at the future of the rest of the PIIGS?

http://www.foxnews.com/world/2012/11/01/ripped-apart-by-financial-crisis-greek-society-in-free-fall/?intcmp=obnetwork

Quote
Ripped apart by financial crisis, Greek society in free-fall
Published November 01, 2012
Associated Press

ATHENS, Greece –  A sign taped to a wall in an Athens hospital appealed for civility from patients. "The doctors on duty have been unpaid since May," it read, "Please respect their work."

Patients and their relatives glanced up briefly and moved on, hardened to such messages of gloom. In a country where about 1,000 people lose their jobs each day, legions more are still employed but haven't seen a paycheck in months. What used to be an anomaly has become commonplace, and those who have jobs that pay on time consider themselves the exception to the rule.

To the casual observer, all might appear well in Athens. Traffic still hums by, restaurants and bars are open, people sip iced coffees at sunny sidewalk cafes. But scratch the surface and you find a society in free-fall, ripped apart by the most vicious financial crisis the country has seen in half a century.
It has been three years since Greece's government informed its fellow members in the 17-country group that uses the euro that its deficit was far higher than originally reported. It was the fuse that sparked financial turmoil still weighing heavily on eurozone countries. Countless rounds of negotiations ensued as European countries and the International Monetary Fund struggled to determine how best to put a lid on the crisis and stop it spreading.

The result: Greece had to introduce stringent austerity measures in return for two international rescue loan packages worth a total of €240 billion ($313 billion), slashing salaries and pensions and hiking taxes.

The reforms have been painful, and the country faces a sixth year of recession.

Life in Athens is often punctuated by demonstrations big and small, sometimes on a daily basis. Rows of shuttered shops stand between the restaurants that have managed to stay open. Vigilantes roam inner city neighborhoods, vowing to "clean up" what they claim the demoralized police have failed to do. Right-wing extremists beat migrants, anarchists beat the right-wing thugs and desperate local residents quietly cheer one side or the other as society grows increasingly polarized.

"Our society is on a razor's edge," Public Order Minister Nikos Dendias said recently, after striking shipyard workers broke into the grounds of the Defense Ministry. "If we can't contain ourselves, if we can't maintain our social cohesion, if we can't continue to act within the rules ... I fear we will end up being a jungle."

CRUMBLING LIVING STANDARDS

Vassilis Tsiknopoulos, runs a stall at Athens' central fish market and has been working since age 15. He used to make a tidy profit, he says, pausing to wrap red mullet in a paper cone for a customer. But families can't afford to spend much anymore, and many restaurants have shut down.
The 38-year-old fishmonger now barely breaks even.

"I start work at 2:30 a.m. and work 'till the afternoon, until about 4 p.m. Shouldn't I have something to show for that? There's no point in working just to cover my costs. ... Tell me, is this a life?"

The fish market's president, Spyros Korakis, says there has been a 70 percent drop in business over the past three years. Above the din of fish sellers shouting out prices and customers jostling for a better deal, Korakis explained how the days of big spenders were gone, with people buying ever smaller quantities and choosing cheaper fish.

Private businesses have closed down in the thousands. Unemployment stands at a record 25 percent, with more than half of Greece's young people out of work. Caught between plunging incomes and ever increasing taxes, families are finding it hard to make ends meet. Higher heating fuel prices have meant many apartment tenants have opted not to buy heating fuel this year. Instead, they'll make do with blankets, gas heaters and firewood to get through the winter. Lines at soup kitchens have grown longer.

At the end of the day, as the fish market gradually packed up, a beggar crawled around the stalls, picking up the fish discarded onto the floor and into the gutters.

"I've been here since 1968. My father, my grandfather ran this business," Korakis said. "We've never seen things so bad."
Tsiknopoulos' patience is running out.

"I'm thinking of shutting down," he said, "I think about it every day. That, and leaving Greece."

JUSTICE

On a recent morning in a crowded civil cases court in the northern city of Thessaloniki, frustration simmered. Plaintiffs, defendants and lawyers all waited for the inevitable — yet another postponement, yet another court date.

Greece's sclerotic justice system has been hit by a protracted strike that has left courts only functioning for an hour a day as judges and prosecutors protest salary cuts.

For Giorgos Vacharelis, it means his long quest for justice has grown longer. Vacharelis' younger brother was beaten to death in a fairground in 2003. The attacker was convicted of causing a fatal injury and jailed. The family felt the reasons behind the 24-year-old's death had never been fully explained, and filed a civil suit for damages. Nearly 10 years later, Vacharelis and his parents had hoped the case would finally be over.
But the court date they were given in late September got caught up the strike. Now they have a new date: Feb. 28, 2014.

"This means more costs for them, but above all more psychological damage because each time they go through the murder of their relative again," said Nikos Dialynas, the family's lawyer.

Vacharelis and his family are in despair.

"If a foreigner saw how the justice system works in Greece, he would say we're crazy," said the 35-year-old.
"Each time we come to court we get even more outraged," he said. "We see a theater of the absurd."

VIGILANTES

In September, gangs of men smashed immigrant street vendors' stalls at fairs and farmers' markets. Videos posted on the Internet showed the incident being carried out in the presence of lawmakers from the extreme right Golden Dawn party. Formerly a fringe group, Golden Dawn — which denies accusations it has carried out violent attacks against immigrants — made major inroads into mainstream politics. It won nearly 7 percent of the vote in June's election and 18 seats in the 300-member parliament. A recent opinion poll showed its support climbing to 12 percent.
Immigrant and human rights groups say there has been an alarming increase in violent attacks on migrants. Greece has been the EU's main gateway for hundreds of thousands of illegal migrants — and foreigners have fast become scapegoats for rising unemployment and crime.
While there are no official statistics, migrants tell of random beatings at the hands of thugs who stop to ask them where they are from, then attack them with wooden bats.

Assaults have been increasing since autumn 2010, said Spyros Rizakos, who heads Aitima, a human rights group focusing on refugees. Victims often avoid reporting beatings for fear of running afoul of the authorities if they are in the country illegally, while perpetrators are rarely caught or punished even if the attacks are reported.

"Haven't we learned anything from history? What we are seeing is a situation that is falling apart, the social fabric is falling apart," Rizakos said. "I'm very concerned about the situation in Greece. There are many desperate people ... All this creates an explosive cocktail."

In response to pressure for more security and a crackdown on illegal migration, the government launched a police sweep in Athens in early August. By late October, police had rounded up nearly 46,000 foreigners, of whom more than 3,600 were arrested for being in the country illegally.
Police say that in the first two months of the operation, there was also a 91 percent drop in the numbers of migrants entering the country illegally along the northeastern border with Turkey, with 1,338 migrants arrested in the border area compared to 14,724 arrested during the same two months in 2011.

HEALTHCARE

At a demonstration by the disabled in central Athens, tempers were rising.

Healthcare spending has been slashed as the country struggles to reduce its debt. Public hospitals complain of shortages of everything from gauzes to surgical equipment. Pharmacies regularly go on strike or refuse to fill subsidized social security prescriptions because government funds haven't paid them for the drugs already bought. Benefits have been slashed and hospital workers often go unpaid for months.
And it is the country's most vulnerable who suffer.

"When the pharmacies are closed and I can't get my insulin, which is my life for me, what do I do? ... How can we survive?" asked Voula Hasiotou, a member of an association of diabetics who turned out for the rally.

The disabled still receive benefits on a sliding scale according to the severity of their condition. But they are terrified they could face cuts, and are affected anyway by general spending cuts and the pharmacy problems.

"We are fighting hard to manage something, a dignified life," said Anastasia Mouzakiti, a paraplegic who came to the demonstration from the northern city of Thessaloniki with her husband, who is also handicapped.

With extra needs such as wheelchairs and home help for everyday tasks such as washing and dressing, many of Greece's disabled are struggling to make ends meet, Mouzakiti said.

"We need a wheelchair until we die. This wheelchair, if it breaks down, how do we pay for it? With what money?"
___
Costas Kantouris in Thessaloniki, Greece contributed to this story.


Read more: http://www.foxnews.com/world/2012/11/01/ripped-apart-by-financial-crisis-greek-society-in-free-fall/?intcmp=obnetwork#ixzz2BhXxOQue
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on November 09, 2012, 20:59:12
Seems like a high price to pay just to get subsidized luxury autos from Germany.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on November 15, 2012, 07:49:54
And The Telegraph reports (http://www.telegraph.co.uk/finance/debt-crisis-live/9679140/Debt-crisis-Eurozone-in-double-dip-recession-live.html) that the Eurozone has slipped back into recession, despite some, modest growth in Germany.

_____
Mods: if you don't think Europe's economy is a "defence and security" issue then I'm uncertain that you understand what either "defence" or "security" are all about.
Title: Re: Why Europe Keeps Failing........
Post by: Infanteer on November 15, 2012, 17:20:28
Mods: if you don't think Europe's economy is a "defence and security" issue then I'm uncertain that you understand what either "defence" or "security" are all about.

The staff is currently engaged is some maintenance of the site and there will be some stuff moving around while we get things into the right fit - there is no need for a junk punch like that.  If you disapprove that much you can throw your hat in the ring to deal with the daily flow of report to mod emails.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on November 15, 2012, 17:44:40
The staff is currently engaged is some maintenance of the site and there will be some stuff moving around while we get things into the right fit - there is no need for a junk punch like that.  If you disapprove that much you can throw your hat in the ring to deal with the daily flow of report to mod emails.


You're right, Infanteer and I apologize.

My outburst was a reaction to having to search about for a thread I think is both important and germane and to finding it in Radio Chatter, alongside "Restaurant Reviews" while 3 people killed in shooting near Texas A&M University (http://forums.army.ca/forums/index.php/topic,107069.0.html) remained in the "International Defence and Security" page.
Title: Re: Why Europe Keeps Failing........
Post by: Infanteer on November 15, 2012, 18:08:17
We're getting there; neither Rome nor the Defence and Security forum were built in a day.  The intent is to reduce the signal:noise ratio a bit by giving the right threads more heat and light by weeding the garden.  By all means, report to mod any of the banal threads that, appropriately, belong in Radio Chatter.
Title: Re: Why Europe Keeps Failing........
Post by: busconductor on November 19, 2012, 14:26:17
The Politica Left (not left-of-centre) has  embarked on a scurrilously libelous spree aiming them at Center-Right governments that impose austerity measures by way of portraying them evil or horrendously greedy. Austerity measures do not abolish the minimum wage. Social safety nets are still in place with respect to basic needs. The bad name of 'austerity' has convoluted the minds of the voting  masses such as that by invoking the word is already presumption of ill-intent giving no space to argue their merits.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on November 19, 2012, 19:22:20
More, reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail, on the pressing need for more, deeper, integration of parts of Europe:

http://www.theglobeandmail.com/report-on-business/international-business/european-business/germanys-schaeuble-urges-big-leap-forward-in-euro-integration/article4615004/

Herr Schaeuble's "lasting solution" will:

1. Drive Britain farther out to the periphery of the EU;

2. Promote unions within the Union and unions that might even extend beyond the Union to include e.g. Norway and Switzerland; and

3. Terrify France, Italy and Spain.

BUT: I think he's on the right track - see my layer cake (http://forums.army.ca/forums/index.php/topic,103357.msg1169397.html#msg1169397) model - and that nationalism, which I recognize is a mighty, powerful force, will have to give way to economics.


And, in the matter of "driving Britain farther out to the periphery, the Economist discusses what is, apparently, common knowledge, in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from that newspaper:

http://www.economist.com/news/europe/21566649-rest-european-union-wants-britain-inbut-not-any-cost-europes-british-problem?fsrc=scn/tw/te/pe/europesbritishproblem
Quote
Europe’s British problem
The rest of the European Union wants Britain in—but not at any cost

Nov 17th 2012 | from the print edition

ARE the British leaving the European Union? Hardly a conversation passes in Brussels without somebody asking. Britain’s friends are alarmed, some rivals gleeful. For the EU as a whole, the prospect of “Brixit” compounds the uncertainty of the euro crisis. Angela Merkel, the German chancellor, says she cannot imagine the EU without Britain. But Michel Rocard, a former French prime minister, speaks for many when he says that “the United Kingdom, which has blocked all progress on European integration since 1972, has distanced itself from the euro zone. Let’s take advantage of that.”

In many ways, the British have only ever been half-in; they are not part of the euro or the Schengen passport-free travel zone. The prime minister, David Cameron, says that he wants to stay in the EU and its single market (and one day to renegotiate Britain’s membership). But some moves give the impression that Britain is on its way out. Its plan to opt out of big chunks of justice and police co-operation is one example. Another is Mr Cameron’s threat to veto the EU’s next budget unless it is frozen. Most worrying is the drumroll of Eurosceptic MPs seeking an in-or-out referendum. A parliamentary vote calling for the EU budget to be cut suggests that Mr Cameron does not control his Tory backbenchers, and that the Labour Party is ready to exploit anti-EU sentiment.

The rest of the union is in flux, not least because the euro crisis is forcing the pace of political integration. This creates a dangerous cocktail of resentment and unpredictability, and raises the prospect that Britain could find itself outside the EU by error if not by design. Two summits—one on November 22nd to decide the budget, and another on December 13th to forge a euro-zone banking union—may determine whether the EU moves towards a new kind of “variable geometry”, or Britain drifts away altogether.

A benign scenario would see EU leaders do a budget deal, clearing the air for one on banking union. This is the first real test of how to balance the integration of the 17 euro “ins” with the interests of the ten “outs”, particularly the integrity of the single market of 27. Countries want to place the euro-zone’s banks under a single supervisor (the European Central Bank) while reassuring Britain that it will not be outvoted in the European Banking Authority, which sets common rules.

Meanwhile, Mr Cameron’s “balance of competences” review will assess the distribution of power between London and Brussels, reporting in 2014. Around that time the European Commission should be setting out its vision of a new treaty, which may include some powers to be repatriated. Mr Cameron, if re-elected, could negotiate the “new settlement” that he seeks and put it to a referendum, perhaps in 2015 or 2016.

British ministers say they want a calm and “grown-up” conversation about the future of the EU. But they may not have that luxury. Much can go wrong, starting with the negotiation over the budget for 2014-20. Britain is the most hawkish country, demanding a real-terms freeze based on spending in 2011. But under pressure from MPs for a cut, Mr Cameron’s opening bid may now be his maximum concession. A prolonged stalemate could see the EU budget being rolled over yearly. This would cost Britain more than it wants, and irritate its partners: multi-year projects in eastern Europe would be disrupted, and other net contributors would lose the temporary rebates they now enjoy.

Recrimination over a failed budget could poison the banking talks. An isolated Britain might be tempted to veto the single supervisor. Eurocrats are ready then to push for “enhanced co-operation” that allows nine or more members to seek deeper integration. This could be explosive. Forget sober reflection: Mr Cameron could even be forced to concede an immediate referendum. And other bad scenarios abound. Perhaps the euro will collapse, bringing down the EU with it. Or perhaps the euro will survive, and use its combined weight to push the British around.

Hold your nerve

Still it is hard to see the British, awkward as they are, completely outside the EU. The Germans don’t want to be left alone with the protectionist French; the weakened French, on balance, want the British to counterbalance the mighty Germans; smaller countries don’t want to be crushed in a Franco-German vice. The Americans want their British ally to stay in. And what would be left of the EU’s foreign-policy ambitions without the global diplomatic network and armed forces of the British?

All this may stop events from spinning out of control. Even so, Britain may find European leaders less willing to accommodate its demands in any renegotiation than it thinks. Many see Britain as trying to protect the City, which is hardly popular. The French say repatriating social and employment laws would give Britain an unfair advantage. Even friends in northern liberal countries think Britain goes too far in trying to create an à la carte membership. “You cannot just pick the raisins out of the bun,” says one.

Several factors are reducing Britain’s bargaining power. First is the accumulated resentment of past battles. Second, Germany may feel less necessity to keep the British in, now that their troops no longer defend its borders. Third, unlike Britain, most of the outs want to stick close to the euro zone. Fourth, a looming Brixit makes even friendly countries less willing to line up with the Brits. Most important, most leaders think resolving the euro crisis must take priority over British demands—and they resent Britain’s attempts to exploit the euro crisis for its own ends.

A year ago most EU countries sidestepped Mr Cameron’s misconceived veto of the “fiscal compact”, a treaty to tighten budget discipline. They will do so again if they have to. This may not matter to those wanting Britain out of the EU, but those who still want the best deal for Britain need to keep cool heads.

Economist.com/blogs/charlemagne


The Brits, broadly, as I understand them, want to be in Europe - just not too far in.

Issues that will drive the Brits out include sovereignty over currency/monetary policy, foreign policy, civil rights and the legal system.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on November 20, 2012, 01:29:33
ER:

There is always a Continental faction in Britain.  Historically they tended to be found amongst the Upper Classes and the Church but recently, (since the French Revolution  ;D )  they have been joined by the Internationalist set. 

Most Brits have little time for the Continent except as a place to trade and vacation.  They are not OF Europe nor do they wish to be IN Europe.  What they do want is to trade with Europe. 

Switzerland and Norway, together with EFTA, continue to be, IMO, the best starting points for British relations with Europe.

Title: Re: Why Europe Keeps Failing........
Post by: B.Dias on November 20, 2012, 02:51:49
So.. Greece and their "Facist" party eh? Has quite a few seats...
Title: Re: Why Europe Keeps Failing........
Post by: busconductor on November 20, 2012, 12:52:14
So.. Greece and their "Facist" party eh? Has quite a few seats...

Either you have a misconception of labels or you are deliberately trying to confuse things just the way Stalin and Lenin labelled their violent revolutionary party as Social Democrats (left-of-centre). Socialists are Leftists. Fascists are socialists or national socialists. They nationalize  basic industries like energy, hydro and the like. Adolf Hitler not only nationalized basic industries but defense as well. Center-Right politicians invoke democratic capitalism.They are contented legislating for social safety nets. The farthest center-right ideologues can go is left-of-centre. Are you a socialist or somebody who falls withing the meaning of Socialist or Fascist? Or are you communist, closet socialist hence, fascist or worse than a fascist? No offense. If a mob of activists were standing in front of me and you label me fascist just because I am center-right, chances are these ideologues of socialist mobocracy are going to kill me  only because one intentionally confuses things up. No offense. Just the gravity of the offenses of Lenin in his social democrat thing. I can give you one example of a communist who labels center-right  politicians, 'fascist'..Chairman of the Communist Party of the Philippines and Philippines is a democratic capitalist economy.
Title: Re: Why Europe Keeps Failing........
Post by: B.Dias on November 20, 2012, 22:00:53
Whoa, uhh..
I put "fascist" in quotations because I always have been hearing for the last few months that there is a "fascist-like" party in Greece.
http://en.wikipedia.org/wiki/Golden_Dawn_(Greece)
http://www.dailymail.co.uk/news/article-2219374/Greece-today-A-Fascist-party-black-shirts-smashing-migrants-homes-Swastikas-streets.html

Mhmm..
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on November 20, 2012, 22:08:24
Europeans have a problem with political categorization.  They keep confusing generic aspects which can befall any system of government, such as xenophobia or militarism, with particular systems of government which have exhibited those generic aspects in the past.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on November 21, 2012, 07:48:30
An interesting take by the authoritative Financial Times, in this analysis which is reproduced under the Fair Dealing provisions of the Copyright Act from that newspaper:

http://blogs.ft.com/the-world/2012/11/france-and-the-downgrade/#axzz2Cr7nO3c9
Quote
France and the downgrade

Gideon Rachman

November 20, 2012

The French reaction to Moody’s downgrade of the country’s credit-rating has been studiedly cool. Pierre Moscovici, the finance minister, dismissed Moody’s move as a reaction to yesterday’s news – in other words, it’s all Sarko’s fault, and things have changed.

Le Monde confines its reaction to the Economy pages, where an analyst remarks – “Le timing est très surprenant.” (And so is the use of the franglais word, “timing” – is there no decent French alternative?)

Yet behind this display of sang froid lurks real anxiety.

That anxiety was on full display in the fierce official reaction to this week’s Economist cover story, which proclaimed that France is the “time-bomb at the heart of Europe.” To be fair, the contents of the report were rather less explosive than the headline. But it’s the headline that counts, and the magazine was given the honour of being denounced by the French prime minister, the finance minister and the head of the employers’ association. I think it would have been rather cooler for the French just to have loftily ignored the report.

The most substantive French criticism of The Economist and other doom-mongers is that they are out-of-date. President Hollande has just moved to reduce the cost of social charges to employers. And the Gallois report has just come up with all sorts of proposals to boost French competitiveness.

Still, on a recent trip to Paris, I found leading French businessmen unconvinced by all this. (And, it should be noted, that what people like this say in private is often strikingly at variance with their public pronouncements, since there is an understandable reluctance to run down France, on-the-record). One said that the cuts in social charges were a good start, but no more – “It’s like deciding to stop banging your head against the wall.”

As for the Gallois report: first, it’s by no means clear that the Hollande government will implement its major recommendations. Second, one of my interlocutors argued that the report is not all its cracked up to be anyway. He says that both Gallois and the Hollande government neglect the services sector which accounts for over 80% of the economy, in favour of industry. “They have a vision of a country that is covered in factories. They are obsessed by manufacturing. Still, that is an improvement on Chirac who was obsessed by agriculture.”

So, if this analysis is right, French official thinking has moved from the eighteenth to the nineteenth century. It’s progress – but is it fast enough?


I have long maintained that the Economist is correct and it is France, not Italy or Spain or the small fry, that will bring Europe crashing down into fiscal failure and, possibly, back into the all too familiar, traditional model of internecine warfare.

I am reminded of a famous quip attributed to, but never confirmed by British soldier and diplomat Pug Ismay: "NATO," he opined and the rest of the European superstructure he implied, "is here to keep the Reds out, the Yanks in, the French up and the Germans down." There was and still is more than a grain of truth in that and I think that e.g. Acheson and St Laurent, amongst others, knew it when they designed the thing.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on November 21, 2012, 08:49:19
The Globe and Mail reports (http://www.theglobeandmail.com/report-on-business/economy/economy-lab/after-latest-round-of-bailout-talks-greece-still-in-limbo/article5517146/) on IMF Managing Director Christine Lagarde's plea for a debt solution which is “rooted in reality and not wishful thinking.” Mme. Lagarde, like Mohamed El-Erian in the Financial Times (http://blogs.ft.com/the-a-list/2012/11/21/on-greece-europe-should-listen-to-the-imf/#axzz2Cr7nO3c9), wants OSI - Official Sector Involvement. OSI involves the write-off of Greek sovereign debt held by e.g. the European Central Bank and the German treasury. But the Eurozone says it's off the table. So long as the Eurozone political view prevails the whole Eurozone fiscal project experiment is in peril. Self inflicted wound.
Title: Re: Why Europe Keeps Failing........
Post by: milnews.ca on November 21, 2012, 09:04:41
I am reminded of a famous quip attributed to, but never confirmed by British soldier and diplomat Pug Ismay: "NATO," he opined and the rest of the European superstructure he implied, "is here to keep the Reds out, the Yanks in, the French up and the Germans down." There was and still is more than a grain of truth in that and I think that e.g. Acheson and St Laurent, amongst others, knew it when they designed the thing.
This brings to mind this tidbit from "Yes, Minister" (http://en.wikiquote.org/wiki/Yes,_Minister#Episode_Five:_The_Writing_on_the_Wall)
Quote
.....     Sir Humphrey: Minister, Britain has had the same foreign policy objective for at least the last five hundred years: to create a disunited Europe. In that cause we have fought with the Dutch against the Spanish, with the Germans against the French, with the French and Italians against the Germans, and with the French against the Germans and Italians. Divide and rule, you see. Why should we change now, when it's worked so well?

    Hacker: That's all ancient history, surely?

    Sir Humphrey: Yes, and current policy. We 'had' to break the whole thing [the EEC] up, so we had to get inside. We tried to break it up from the outside, but that wouldn't work. Now that we're inside we can make a complete pig's breakfast of the whole thing: set the Germans against the French, the French against the Italians, the Italians against the Dutch. The Foreign Office is terribly pleased; it's just like old times.

    Hacker: But surely we're all committed to the European ideal?

    Sir Humphrey: [chuckles] Really, Minister ....
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on November 21, 2012, 12:29:26
This brings to mind this tidbit from "Yes, Minister" (http://en.wikiquote.org/wiki/Yes,_Minister#Episode_Five:_The_Writing_on_the_Wall)

Now if only we could get the Cevennes and the Ardennes taking pot-shots at each other again we would really be back to the good old days.  :nod:
Title: Re: Why Europe Keeps Failing........
Post by: busconductor on November 25, 2012, 12:59:01
A classic example of a country who experienced advanced progress and development is Singapore. First, she opened her economy to foreign investments. Second, she slashed taxes. Third, he abolished the right to strike and collective bargaining. While she was experiencing progress, revenues were slowly distributed to welfare recipients. Now that she collects 20 billion in surplus revenues every year, welfare recipients are now refusing to make use of them invoking excess or too much welfare.

If we are going to invoke Singapore as model, we can build a case against the Communist Party of Canada for libel given the fact that minimum wage laws are respected, welfare programs are still in place, there is Medicare or universal health care. Economic sabotage in the form of illegal strikes, illegal slowdowns and irrational collective bargaining can also be invoked in a case of libel. The aggravation that the Harper government experienced, caused by radical demonstrations and violent rallies can give the Auditor General and the Prosecutor valid evidence to build a case of economic sabotage against the perpetrators. Just speaking my mind. :salute:
Title: Re: Why Europe Keeps Failing........
Post by: Fishbone Jones on November 25, 2012, 17:26:27
A classic example of a country who experienced advanced progress and development is Singapore. First, she opened her economy to foreign investments. Second, she slashed taxes. Third, he abolished the right to strike and collective bargaining. While she was experiencing progress, revenues were slowly distributed to welfare recipients. Now that she collects 20 billion in surplus revenues every year, welfare recipients are now refusing to make use of them invoking excess or too much welfare.

If we are going to invoke Singapore as model, we can build a case against the Communist Party of Canada for libel given the fact that minimum wage laws are respected, welfare programs are still in place, there is Medicare or universal health care. Economic sabotage in the form of illegal strikes, illegal slowdowns and irrational collective bargaining can also be invoked in a case of libel. The aggravation that the Harper government experienced, caused by radical demonstrations and violent rallies can give the Auditor General and the Prosecutor valid evidence to build a case of economic sabotage against the perpetrators. Just speaking my mind. :salute:

You recognise anyone here? http://www.youtube.com/watch?v=dTO_fpa_diM&feature=related (http://www.youtube.com/watch?v=dTO_fpa_diM&feature=related)

Just wonderin'

Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on November 25, 2012, 17:38:26
Since I could not avoid seeing busconductor's post, I feel in necessary to correct his statement. Trade unions were not banned in Singapore, but back, in the late 1960s, their ability to "bargain" for such matters as promotion, transfer, employment, dismissal, retrenchment, and reinstatement, issues that accounted for most earlier labor disputes, were severely curtailed. The National Trade Union Congress in Singapore, its version of the Canadian Labour Congress, has 60+ members unions.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on November 26, 2012, 09:52:57
Here, reproduced under the Fair Dealing provisions of the Copyright Act from Project Syndicate, is an opinion piece about how to stop/i] the failures, with which I heartily agree:

http://www.project-syndicate.org/blog/the-money-is-gone--the-war-is-over-by-stefano-casertano
Quote
The Money Is Gone, the War Is Over

Stefano Casertano

Nov. 26 2012

Stefano Casertano, a senior fellow at the Brandenburg Institute for Society and Security (www.bigs-potsdam.org), is a columnist for The European, Linkiesta.it, and Finanza & Mercati.

A monetary war has been fought in the Eurozone and Greece has lost. It's in the best interest of the Greek people and of the rest of Europe to cancel the country's debt and organize its exit from the common currency.

Greek opinions about Germans are changing. When "austerity measures" were first imposed, Greek newspapers and posters infamously depicted Chancellor Merkel as a Nazi leader. But the reaction has lately become more sophisticated: now we hear that Germans want to pursue a strict interpretation of Protestant ethics (which knows no redemption on earth) and punish the Greek people.

But when you ask Germans, they don't feel like they're punishing Greece. Instead, the German version of the story is that the beautiful Mediterranean country has been afforded plenty of chances to reform itself. Moreover, Germans argue, the original sin lies with the Greeks as well: Athens keenly insisted on entering the Euro and used a bit of accounting magic to meet requirements. If the country fails, it's certainly not Germany's fault.

Reconciliation between those two positions seems impossible – as is true in most cases when somebody owes money to somebody else and the latter cannot pay.

But to overcome this precarious situation, we ought to distinguish between moralism and pragmatism. Let's go for the moral argument first: there are a few facts that we should recognize. Yes, the Euro was a poorly planned endeavor. The idea that Greece and Germany could become part of the same monetary and economic zone was crazy. Yes, fifteen years ago it was cool to be inside the Eurozone, and if you weren't, you were either a loner (Switzerland), controlled a lot of oil money (Norway), or had a big financial sector (Great Britain). Yes, the responsibility for the entrance of weak economies into the Eurozone also lies with the strong economies who allowed standards to slip. It's like a professor who allows a cheating student to pass the exam. When the cheating is revealed, the professor responds: "Yes, but he _really_ wanted to pass." Which leads us to the final "yes" fact: yes, it's not all Greece's fault that the country entered the Eurozone and now finds itself in a difficult situation.

In the end, the main response to the moral argument is: who cares? Who cares about why and how Greece entered the Eurozone? Who cares about state accountants tip-tapping on Excel fifteen years ago? Does this discussion make tomorrow's solutions more likely? Surely not. Let's leave this question for beach conversations during your next vacation to Greece after a couple of ouzos (no ice, please!).

We must move beyond trying to find scapegoats; please. At least in this regard, Europe should display unity: the mess is a genuine European mess, which means that it affects all of us.

Unfortunately (at least for German taxpayers), there is another set of considerations to be made, and they're all starting with an emphatic "no." The first one is probably the most important: no, we are never going to get all the money back that was lent to Greece. This isn't a pessimistic opinion but simple math: the Greek economy is collapsing. Even the IMF forecasts cannot keep pace with the decline of Greek GDP. Whenever a new PDF is posted online, the Greek economy has already contracted again. No, austerity does not work. No, it will never work.

Greece is no Northern country. Pay cuts and tax increases usually lead to popular discontent that makes reforms less likely. This is a story that Germany is actually quite familiar with: German welfare reforms in 2004 were financed through budget deficits, not through cuts. Until 2004, the Italian economy had been growing faster than Germany's economy – someone even published a book about "The Fall of a Superstar," and people believed it. Since the implementation of the reforms, Germany has experienced faster growth than its peers.

For Greece, it is now too late. But since we won't see our money back anyway, maybe an easier solution becomes possible. I'm talking about the choice between "deep crisis" and "apocalypse." One scenario would be the continued enforcement of austerity. The second scenario would be the pardoning of debt. I'm just not quite sure which term applies to which scenario. Let's give it some thought.

If debt is pardoned, lenders lose money. That would set a bad example for Italy and Spain (and, _bienvenue au club_, France). But the debt pardon would also allow the Greeks to really do something differently. They could return to the Drachma and would cease to be frontpage material in European newspapers. Greece could also avert the destruction of opportunities for several generations of Greeks. And the islands of Santorini and Mykonos would become cheap again (well, maybe not Mykonos).

If debt is not pardoned, lenders lose money as well. Greece would then become a geopolitical mess adjacent to the Balkans (which has historically never worked out well). Unemployment and organized crime would flourish. The country could still hope for a bailout from China – which could invest money to reform Greece and exploit its riches.

So we're still not quite sure which scenario is the debt crisis and which one is the apocalypse. In both cases, we lose our money. In the second case, not only do we lose money, China also stands to gain it. That seems unwise to me. Why should we let other geopolitical powers benefits from Greece's weakness? Would it not be more wise to help Greece exit the Euro, pardon its debt, and aid economic reconstruction?

These are harsh words. But reality is harsh, too: the Eurozone has fought a monetary war, and Greece has lost. We cannot punish the country any further. After World War II, the United States spent all its efforts to rebuild West Germany and Italy to prevent the Soviet Union from doing the job for them. China is no evil empire in the Soviet sense, but I'd still be happy if Greece stayed inside the sphere of influence of the old continent.


My, sad, guess is that none of Portugal and Spain, in the near term, Italy, in the mid term, and France, in the long term, can qualify to share a currency with e.g. Finland, Germany and the Netherlands. They, like Greece, all fudged their accounting - and still do so - in the interests of short term gains. The Northern Europeans (a cultural rather than a geographic expression) are not only tired of carrying the Southern Europeans, they no longer have the fiscal capacity to do so, in the long term. China is a bit of a red herring (pun intended); it may or may not invest in Greece, it may or may not "buy" a seaport, it will, however, be wary of venturing so far from "home" and any investments it does make are likely to be grounded in sound economics, not expansionism.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on November 26, 2012, 14:48:50
A controlled drawdown by announcing a series of agreed upon "haircuts" for the various debtor nations will be tough going (investors will see their assets decline by perhaps 60%, and many private investors may never be able to recover from that), but it is either that or a wave af uncontrolled defaults across the EUzone and spreading quickly across the globe as the collapse of the EUzone takes down international trade and trading partners.

Of course, the same sorts of arguments can be made about Canada, the United States and many other nations as well. A graphic on today's National Post (26 Nov 2012) shows just how bad the situation has gotten in Canada with various provincial debts, and there is no graphic that I have found which includes unfunded liabilities like pensions and benefits.

The other takeaway is that the situation after the reset needs to include a very strong mechanism to ensure this does not happen again. The United States blew its commanding economic position with the introduction of the "Great Society" programs in the 1960's, entitlement spending grew like a cancer and now the US is $16 trillion dollars in debt, so they brought themselves down in less than a single lifetime.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on November 28, 2012, 08:27:59
There is a tiny, maybe only temporary, flash of good news from Ireland: retail sales are up, measurably, both month-over-month (1.7%) and, by a larger percentage, year-over-year (3.1%).
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on November 28, 2012, 15:18:16
A writer comments on the growth of the EU and decline of Nationalism in the FT. I would take exception to his rather narrow conception of Nationalism (even the Ancient peoples had a form of Nationalism based on ethnic identiy and local; the Greek City States, for example) and wonder just how well the model of local autonomy coupled to a super national entity would work (The Holy Roman Empire would be an example of poor integration, and the wide variety of German States and Principalities prior to Prussia uniting them suggests the possible end state of such an experiment. "These United States" was an exception mostly due to the very similar ethnic and cultural backgrounds of the settlers prior to the Revolution:

http://www.readability.com/read?url=http%3A//www.ft.com/intl/cms/s/2/34783668-3370-11e2-aa83-00144feabdc0.html%23axzz2Cw7aYKtw

Quote
A question of identity
By Simon Kuper
The nation-state is shrinking to just a flag, some sports teams and a pile of debts
©Luis Grañena

“The hour has come to exercise our right to self-rule,” says Artur Mas, Catalonia’s president, sounding like a 19th-century statue of a nationalist hero on horseback. Catalans vote on Sunday in what amounts to a referendum on independence from Spain. Scots are galloping down the same road: they vote on independence in 2014. And Flemish nationalists won big last month in Belgian local elections that you may have missed. If these characters get their way, the map of western Europe will undergo its first changes since Ireland became independent in 1922.

It’s a pity Eric Hobsbawm died in October, aged 95. The jazz-loving Marxist historian was the man on nationalism in Europe, but he’s missing what may be the continent’s final nationalist episode. Today’s secessionist movements don’t betoken the rise of nationalism in Europe. Rather, they betoken almost the exact opposite: the waning of the nation-state. Mas et al aim to ditch old redundant nation-states in order to create new redundant nation-states. The history of nationalism in Europe looks to be creaking to an end.

I view nationalism as an outsider. Living in Paris with my American wife and my British passport, supporting Holland at football and South Africa at cricket, I’m baffled that anyone would want to die for their country. And, in fact, for most of history they didn’t. Nationalism – the notion that people who shared a culture and language should govern themselves in one state – is a fairly new idea. To quote the opening words of Elie Kedourie’s book Nationalism: “Nationalism is a doctrine invented in Europe at the beginning of the nineteenth century.”
Hobsbawm and another great thinker on nationalism, Ernest Gellner, largely agree with that. Nationalism scarcely existed before the industrial revolution. Let’s be frank: the 13th-century “Scots” in Mel Gibson’s Braveheart were not motivated by anything resembling modern nationalism.
More

The key change, says Gellner, came when people moved from farms to cities. Their new jobs often required some education. Meanwhile a bureaucracy arose to administer the new schools, railways and armies. For the first time, most people had to be literate. The crucial question then became: in which language? If you were Czech, say, living in the Austro-Hungarian empire, you wanted that language to be Czech.
In short, nationalism arrived relatively late. “Catalanism as a (conservative) cultural-linguistic movement can hardly be traced back further than the 1850s …” wrote Hobsbawm. “The language itself was not authoritatively standardised until the twentieth century.” He thinks it was only General Franco’s later crude attempts to suppress Catalanism that made Catalan a strong identity.

While Europeans were still fighting wars, the nation-state provided defence. The Scots-English union derived much of its emotional meaning from two world wars. The period 1918-50 was “the apogee of nationalism”, says Hobsbawm.

But later the thing declined. New technologies created a supranational world: cheap flights, international financial markets, the internet and cable TV channels that helped teach the young generation the new global language of English. In the 19th century, mastery of the national language was your ticket into the elite; now, in a country such as Turkey, the elite is increasingly educated in English.
. . .
Many national governments in western Europe have forfeited their best tools: national borders, currencies and wars (no fighting in this region since May 1945). They committed to free trade. Inevitably, then, the nation-state began withering away. Belgium in 2010-11 went 541 days without a national government – effectively becoming a failed state – and hardly anyone noticed.
The nation-state is shrinking to just a flag, some sports teams and a pile of debts. Catalans, Scots and Flemings might as well get out. They just shouldn’t think their own little states will be more use. They appear aware of this. They game-plan is to couple glorious nationhood with the European superstate. When Scots and Catalans realised the European Union might not admit them, they cooled on independence.

In fact, the EU’s recent rise exemplifies the demise of nationalism. During the economic crisis, the EU has been morphing into something of a federal state: central control over national budgets, European bailouts, perhaps banking union. Europeans have sulked, but they’ve mostly accepted this.
That doesn’t mean they love the EU. Nobody ever ran into the street drunk, waving the European flag. The emotional choice now isn’t between nation and Europe. Rather, people are gradually replacing nationalism with an array of transnational loyalties. Someone might identify with the global community of English-speakers, or as a Londoner, black person, Muslim, Justin Bieber fan, member of the global elite, or possibly all these things. Most people also still identify with a nation, but that’s becoming just one identity among many.

Catalans, Scots and Flemings probably won’t secede. But if they did, they might soon wish they were still prancing around reciting historical grievances and blaming other people for their problems. Hobsbawm, as a Marxist, would have known how to describe this last hurrah of nationalism in Europe: history repeating itself as farce.

simon.kuper@ft.com
Title: Re: Why Europe Keeps Failing........
Post by: busconductor on November 28, 2012, 16:37:11
Since I could not avoid seeing busconductor's post, I feel in necessary to correct his statement. Trade unions were not banned in Singapore, but back, in the late 1960s, their ability to "bargain" for such matters as promotion, transfer, employment, dismissal, retrenchment, and reinstatement, issues that accounted for most earlier labor disputes, were severely curtailed. The National Trade Union Congress in Singapore, its version of the Canadian Labour Congress, has 60+ members unions.

If I stood to be corrected then the more should the Conservative government cut taxes and  impose austerity measures. The Political Left needs to be "jolted". Nobody else can understand them but themselves. The argument that Singapore's trade unions are "reactionary" in contrast to a "more reactionary" Philippine or Canadian trade union which is often invoked by communists and the Political Left for lack of luster and bombastic speeches, illegal strikes and work stoppages and slowdowns should be confronted with belt-tightening measures with respect to generosities afforded by the government through doctored acquittals in court in exchange for cooperation with the police state, etc. They become more emboldened committing violence in the workplace, rallies and demonstrations. Strictly apply the laws on them. Fine them or jail them for mere violation of their rally permits, illegal parkings, littering, etc..I think that would solve the problem rather than beat them with rattan sticks for mere littering just like what they do in Singapore.My 1 cent opinion and with due respect,Sirs!
Title: Re: Why Europe Keeps Failing........
Post by: Good2Golf on December 01, 2012, 10:26:43
Folks seem focused on Greece and its potential (inevitable?) return to the Drachma...possibly Portugal, Italy and France to follow respectively to their own ore-EZ currencies.  What if the Germans see the light, realize that maybe the UK was on to something way back, and figure that it might not be such a bad thing going arm's length to the EZ and themselves return to the Deutche Mark?
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on December 01, 2012, 20:41:31
The EU is actually a good idea under the correct circumstances and proper administration. Since neither condition obtained for most of Southern Europe, then they should either leave or get the boot. Maybe they can join the "Francozone" administered from Paris.

So long as Germany ensures its partners actually follow the rules, a Northern European EUzone is both possible and desirable. Of course, given the conditions needed, the potential EUzone partners may choose not to become very junior partners to Germany.
Title: Re: Why Europe Keeps Failing........
Post by: Old Sweat on December 01, 2012, 21:05:37
So long as Germany ensures its partners actually follow the rules . . .

That didn't work all that well in the first half of the 20th century.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on December 01, 2012, 21:20:25
I'd only go so far as agreeing EFTA was/is a good idea.

The EU is a modern incarnation of a very ancient idea.  And it was a crap idea then.   :)
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on December 02, 2012, 08:38:43
Here, reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail, is a fairly direct answer, in so far as Europe minus a very small handful of exceptional countries is concerned:

http://www.theglobeandmail.com/report-on-business/international-business/european-business/tech-drives-nails-into-coffins-of-europes-weak-economies/article5856181/
Quote
Tech drives nails into coffins of Europe’s weak economies

ERIC REGULY
ROME — The Globe and Mail

Last updated Saturday, Dec. 01 2012

Suppose Greece, Portugal and Spain had zero debt. Would they thrive?

Unlikely. This feckless trio was on a downward economic spiral well before the so-called debt crisis ruined their parties. Yes, they were growing, but it was a phony growth, propelled by credit-fuelled consumption, cheapo money and the deluded belief that flipping houses was the route to BMWs, Brioni suits and beach holidays.

Blame, in part, technology. The dud countries in the European Union, were, and are, losing the race against the machines. Their workers are being replaced by technology and the survivors are not inventing enough of their own technology to keep the economy rolling forward.

This is the dirty secret of the agonizing EU, International Monetary Fund and European Central Bank effort to spare the wrecked EU economies from destruction. Their fix-it playbook depends largely on financial engineering – interest rate reductions here, debt maturity extensions there. On the off chance that the whole messy exercise in voodoo economics works, in the sense that budget deficits are eliminated and national debt loads come down to non-absurd levels, then what? If the post-crisis plan calls for a romp back to their old economic models, the EU and the euro are truly doomed because those models no longer work.

Technology is having a devastating effect on employment, which in itself is not new. What is new is that the job destruction everywhere among low-skilled workers seems on the verge of being repeated among white-collar jobs. That is the theory of Erik Brynjolfsson and Andrew McAfee, digital economy specialists at MIT and authors of Race Against the Machine, a book about the digital revolution and how it is reshaping employment and entire economies.

Technology has been displacing jobs since the Industrial Revolution, but the lost jobs were more or less replaced with new jobs. Take agriculture. As farms became mechanized with the arrival of tractors and harvesters, farm employment plummeted. At the end of the 19th century, half of Americans worked on farms. By 2000, only one in 50 Americans worked on farms, according to a Foreign Policy article called The Third Industrial Revolution, by David Rothkopf. Over the same period, the proportion of Americans employed in services went from less than a third in 1900 to 80 per cent.

About 30 years ago, something ugly started to happen, according to Messrs. Brynjolfsson and McAfee: Wages of unskilled workers began to drop as the machines gained momentum. The lower pay, however, did make workers more competitive with technological rivals. Now, with technology so cheap, ubiquitous, powerful and adaptive – 3D printing has the potential to turn your home into a manufacturing site – skilled workers are coming under threat.

Mr. Brynjolfsson and Mr. McAfee aver “technological unemployment is emerging as a real and persistent threat to middle-class employment.”

Brian Subirana, an information systems affiliate professor at MIT who is now based in Barcelona, uses the GPS – global positioning system – to illustrate technology’s threat on the cab driving profession. Not long ago, cabbies (at least the European ones) were highly trained. In Britain, aspiring cabbies spent years on “The Knowledge” – memorizing streets and routes so they could navigate the city without a map. Then came the GPS and, suddenly, anyone anywhere could get in the taxi game. The barriers to entry have been shattered.

Ditto in higher paying careers, such as design and architecture. Want a new kitchen? Go to IKEA with room measurements and one can be designed on a computer screen in minutes and delivered to your house and installed not long later. “The need for people is decreasing,” Mr. Subirana says. “Technology can be much better than people.”

Which brings us to Greece and the other ailing EU countries. Greece especially is cursed with a highly undiversified economy that is dominated by tourism, shipping, agriculture, textiles and some industrial products, but not many. Employment in each of them, with the possible exceptions of tourism and shipping, are highly vulnerable to technological advances. Greece’s unemployment rate – 25 per cent nationally, a stunning 57 per cent among youth – climbs by the minute because of recession and austerity. But it is also climbing because traditional industries need fewer employees.

Somehow, some time, Greece’s financial horror show will come to an end, through default, exodus from the euro zone or a massive sovereign debt writedown by public and private bondholders. That would give Greece a fresh start, at least on paper. But to what end?

Greece has a rapidly aging population. Many, perhaps most, of its best and brightest, have fled the country. The country’s infrastructure and universities are falling apart and would take decades to rebuild. Athens does have a technology cluster, known as Corallia, but it is small and struggling to stay alive. But most of all, Greece is saddled with industries where the employment trend is downward, thanks to technology.

To be sure, technology is killing jobs all over the planet. But in some countries, like the U.S. and Germany, it is also creating new jobs and industries through sheer entrepreneurial drive. Where would the American economy be without Apple, Amazon, Facebook, Google, eBay and all their small wannabes? Greece has to find a second act once it gets rid of its debt. But other than turning the entire country into retirement home for the sun-seeking wrinklies, the options look scant.


The handful of countries that are able to exploit technology to create "new" jobs share a few common traits:

1. They are not illiberal ~ some, like Japan and Singapore are deeply conservative and others, like Finland and the USA are very liberal but it appears to me that the more illiberal traits a country possesses - generally displaying a fondness for statist solutions that promote equality of outcomes at the expense of opportunity, which reward failure and punish success, and which are suspicious of private property (read Ontario and Quebec in 2012) - then the less likely it is to survive in the 21st century as anything other than a colony of some sort;

2. They have a well educated population; and

3. In part to counter the top, negative attribute, they have efficient, effective "social welfare" regimes that includes cost effective medical care for all.

Title: Re: Why Europe Keeps Failing........
Post by: busconductor on December 02, 2012, 13:36:18
I not saying that this 'guy owes me for what.. or whatever'. But to tell you the truth I "lose sleep" over Canada's debt burden. If only nobody would raise he** if Parliament Hill passes legislation imposing additional 300 dollars to every middle class citizen to pay the debt, I won't mind. The threats of not having been able to pay the national debt should be the concern of the Liberals, NDP and the Communist Party of Canada. Given that Communist Party of Canada has a history of economic sabotage and that they parrot the same lines as those of the NDP and Liberal Party, I would conclude that these political parties don't wish Canada well. No matter how unpopular balance budget legislation is, the Conservatives would not play that kind of rabble rousing like what the Liberals  do and slug it out with them. These things only prove that the Conservatives mean well. My two cent opinion an with due respect sirs!
Title: Re: Why Europe Keeps Failing........
Post by: Fishbone Jones on December 02, 2012, 14:32:40
 ::)
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on December 02, 2012, 21:03:00
>if Parliament Hill passes legislation imposing additional 300 dollars to every middle class citizen to pay the debt, I won't mind.

We had surtaxes before; I suppose we could have them again.  But surtaxes aren't really necessary unless we lack fiscal discipline.
Title: Re: Why Europe Keeps Failing........
Post by: Fishbone Jones on December 02, 2012, 21:29:14
Let's stay on track.

The thread is about Europe.

Staff
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on December 03, 2012, 06:10:33
"Fail by example" might be a useful motto for the Eurozone.

Rather than actually try to address its own, serious problems Christian Noyer, the governor of the Banque de France, wants the EU to rig the rules against the UK according to this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Financial Times:

http://www.ft.com/intl/cms/s/0/736bd72a-3c9a-11e2-a6b2-00144feabdc0.html#axzz2DyuTHcxZ
Quote
UK’s euro trade supremacy under attack

By Josh Noble in Hong Kong and Alex Barker in Brussels

December 2, 2012

The City of London should be deposed as the euro’s main financial centre so the single currency club can “control” most financial business in the eurozone, France’s central bank governor has said.

Christian Noyer of the Banque de France said there was “no rationale” for allowing the euro area’s financial hub to be “offshore”, in a blunt assessment that will fan UK concerns over EU rules being rigged against it.

“Most of the euro business should be done inside the euro area. It’s linked to the capacity of the central bank to provide liquidity and ensure oversight of its own currency,” Mr Noyer told the Financial Times while touring Asia to promote Paris as a renminbi trading centre.

“We’re not against some business being done in London, but the bulk of the business should be under our control. That’s the consequence of the choice by the UK to remain outside the euro area.”

Mr Noyer is an influential voice on the European Central Bank governing council and his comments will revive Britain’s worst fears of a plot to shift the centre of gravity for financial services from the City to the continent.
The intervention comes at the start of a potentially fraught week of EU diplomacy, where London will again demand financial services safeguards against the political clout of a more integrated eurozone.

EU ministers meet in Brussels on Tuesday to broker a deal on giving the ECB sweeping powers to supervise banks, in the first leg of a banking union that will not include Britain.

Some senior diplomats think a breakthrough is possible. But big differences remain, including over the ECB’s remit over German savings banks. Mr Noyer argues it is small lenders that have posed the biggest problems in the eurozone. “The banking union should cover all banks, otherwise it’s useless,” he said.

George Osborne, the UK chancellor, backs the principle of a banking union for the eurozone but he will insist on voting reforms to stop the new bloc imposing its rules on those outside.

His demand for a minimum number of “outs” to back any decision at the European Banking Authority, an agency that sets technical standards across the EU, are strongly resisted by a French-led group that regard it as an effective UK veto.

In a sign of the challenges ahead, Anders Borg, the Swedish minister of finance, is also warning that the current package is unacceptable because it is unfair to non-eurozone countries, whether they want to join or remain outside the banking union.

Since the creation of the single currency, the City has served as its main financial hub. More than 40 per cent of worldwide euro foreign-exchange is handled in London, a bigger share than the eurozone combined.

As a result, London is acutely sensitive to any alleged discrimination across the EU single market. Britain last year sued the ECB over its “location policy” for clearing houses, which if enforced would require critical parts of London’s financial infrastructure to decamp to the euro area.

France strongly supports the policy on grounds of financial stability. The ECB argues such essential business should be done in the euro area so that liquidity support can be guaranteed when needed and crises are not handled by multiple central banks with conflicting interests.

Copyright The Financial Times Limited 2012.


I happen to think a single € central bank is a good idea. It should be in Berlin and governed by a board representing only those countries that are in full compliance with all the terms of the Maastricht Treaty (1992), that would mean that about five of the Eurozone's 17 members could serve on the Board of Governors and France would not be amongst them.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on December 05, 2012, 00:06:30
One might also ask why anyone would choose to do their financial business outside of "The City", when London has a huge and well developed financial infrastructure that has been growing and evolving since the "Big Bang" of the 1980's?

Being frog marched into another financial exchange is hardly incentive for business to invest, take risks and otherwise grow wealth.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on December 21, 2012, 18:34:00
Will France be the first EU nation to go over the fiscal cliff? The size of the French economy means this could have far more serious consequences than the collapse of the Greek economy or most of the other PIIGS (Spain is also worrisome, since its economy is much larger than the others in that club). Fran ce isn't the only nation plagued by this, unfunded public service pension liabilities in the U nited States is estimated to be $2 trillion dollars:

http://blogs.the-american-interest.com/wrm/2012/12/20/sacre-bleu-the-collapse-of-french-pensions/

Quote
Sacre Bleu! The Collapse of French Pensions

American states aren’t the only ones facing major pension crises. France’s pension system now has a deficit of €14 billion, and it is expected to rise to €18.8 billion by 2017 unless significant changes are made.

Reforms put in place under former President Nicolas Sarkozy to raise the retirement age and increase pension contributions were supposed to put the program in shape by 2020, but they have been counteracted by a sputtering European economy and years of slow growth. Now French pensions are in worse shape than ever.

Yet despite these dire predictions, the Hollande government is completely unwilling to make changes, as The FT reports:

Mr Hollande, who is expected to convene talks on the issue with employers and trade unions in the new year, is likely to be reluctant to raise the retirement age. But the alternatives of increasing pension contributions, favoured by the unions, cutting pension payments or raising the number of years of contributions required to qualify are also unpalatable.

Medef, the employers’ federation, called this week for the minimum retirement age to be raised to 63 and the contributions’ period to be upped to 43 years. It opposes any increase in contribution costs for employers or employees.

The scenarios set out by COR, the pensions’ council, showed that unemployment would have to be more than halved from its present level to 4.5 per cent and productivity growth increased to 1.8 per cent to bring the pension system back into surplus by 2060; if unemployment averaged 7 per cent and productivity growth 1.3 per cent, the deficit would widen to more than €60bn in the same period.

France is between a rock and a hard place. French public debt is almost 90 percent of GDP, and the French people are unwilling to give up any more, even though France’s average retirement rate is lower than elsewhere in Europe. Sarkozy’s original reforms met with large protests, and any change in the retirement age by Hollande is likely to engender a similar reaction.

As in America, years of disastrous blue policies and overgenerous pension promises are finally catching up with France. Now  policymakers are left with with a depressing choice: renege on promises to workers or watch the system go broke. Hollande has made it clear that he doesn’t want to do anything that could be seen as an attack on the workers, but he may have no choice. When the money isn’t there, it isn’t there.
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on December 23, 2012, 02:14:05
Well, Spain is in even more trouble (if that was even possible). As pointed out, even if Catelonia simply pushed for lower taxes it will crush the Spanish government's plans for recovery (although like most places practiceing "austerity", they are not cutting spending nearly enough and rather than lowering taxes in concert with the spending cuts to stimulate the economy, they are raising taxes). One nasty comment on Instapundet suggested that the end result would be to make Germany pay more, but what will happen when the Germans refuse to pay any more bailout monies?

http://www.thedailybeast.com/articles/2012/12/19/homage-to-catalonia.html

Quote
Homage to Catalonia
by Megan McArdle Dec 19, 2012 1:42 PM EST

Catalonian secession grows more plausible. That's bad news for the Spanish government.

There have been fitful mutterings about Catalonia, the region of Spain where Barcelona is, seceding from Spain.  Walter Russell Mead sums up the latest developments: 

Madrid did its best to spin the results of the Catalonia election as a defeat for the secessionists, but as we predicted, the new Catalan coalition has united behind the demand for an independence referendum that Madrid says is illegal.

This won’t help Spain, and it won’t help the euro. It is, however, good for the coalition partners in Catalonia, who have shrewdly set a far-away date for the referendum. This will allow Catalonia to extract the maximum level of concessions from both Madrid and Brussels as Europe’s power brokers struggle to avoid a destabilizing crisis in a major EU economy.

Blackmail Madrid as long as possible, and keep the referendum threat real: This is a smart strategy and one that will be hard to beat. Madrid is now backed into a corner: If it squeezes Catalonia, the prospect of secession increases, investors flee all of Spain, and the euro itself comes under pressure. 

Catalonia is the richest part of Spain.  If it goes, Spain's tax base shrinks dramatically.  If it doesn't go, but merely uses the threat to get lower taxes and more help with its own very large debts, Spain's fiscal picture still looks a great deal bleaker.  Which means, in turn, that Germany is going to have to pony up a lot more money. 

Europe's fiscal crisis keeps developing in completely unexpected ways.  The only thing that's really predictible is that the solutions will cost more, and work less well, then even the pessimists project.

Like The Daily Beast on Facebook and follow us on Twitter for updates all day long.

Megan McArdle is a special correspondent for Newsweek and The Daily Beast covering business, economics, and public policy. A former senior editor at The Atlantic and writer for The Economist, Megan has a diverse work history including three small startups and a disaster recovery firm at Ground Zero.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on January 03, 2013, 13:14:55
Sorta still on topic:

Arguing for a flat tax from a different direction. High tax rates and tax and regulatory uncertainty changes people's economic behaviour (to maximize their wealth, not increase the Government's take). Real life examples include all those US States that tried to impliment a "millionaire tax", the UK which saw tax receipts drop as higher tax rates were introduced and now France:

http://reason.com/archives/2012/12/23/taxpayers-arent-stationary-targets/print
Quote
Taxpayers Aren't Stationary Targets
Sheldon Richman|Dec. 23, 2012 8:00 am

Actor Gérard Depardieu's decision to flee France for Belgium to avoid a 75 percent marginal tax rate on incomes above $1.3 million sends a message we here in America should heed: Those who are singled out for tax increases are not stationary targets. The means of avoiding and evading the taxman are legion.


Now the Twittervserse and mainstream media are full of reports that "Putin gives sanctuary to celebrity tax refugee Depardieu." (http://www.theglobeandmail.com/news/world/morning-briefing-putin-gives-sanctuary-to-celebrity-tax-refugee-depardieu/article6891044/)

Now I will not claim to be able to guess at the inner workings of M. Depardieu's intellect (if such a thing even exists) but my understanding is he went from France to Belgium to avoid confiscatory taxes and now he accepts citizenship from a state that confiscates not just your wealth but your private property, too?  :facepalm:  We need a "dumbass" emoticon.
   
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on January 04, 2013, 23:19:09
Although I find M Depardieu's decision to accept Russian citizenship rather odd for the same reasons Edward does, there is an underlying logic to the process:

French top marginal tax rate = 75%
Belgium top marginal tax rate = 60%
Russian flat tax = 13%

That an entertainer has left to avoid higher taxes is hardly new or even surprising. Consider that many English entertainers did not live or work in the UK between the end of the second World War and the Thatcher era since their marginal tax rate was very high (I seem to recall up to 90%, many of them would have lived on a government allowance), and Irish band U2 has been roundly criticized for moving from Ireland to a lower tax environment in the Netherlands as well.

Depardieu's move is probably a means for Putin to poke the French in the eye and extol the virtues of Russia as a place to invest more than a fully calculated move on the actor's part.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on January 17, 2013, 16:43:06
Here, reproduced under the Fair Dealing provisions of the Copyright Act from the Financial Times, is an excellent article explaining why the UK can, should, even must leave the EU:

http://www.ft.com/intl/cms/s/0/50646880-5fd8-11e2-8d8d-00144feab49a.html#axzz2IFog5L4x
Quote
Passionate European’s case for leaving

By Simon May (http://www.kcl.ac.uk/artshums/depts/philosophy/people/staff/associates/visit/may/index.aspx)

January 16, 2013

It is irresponsible to ask a country to renew vows to a marriage it cannot abide, writes Simon May

For a passionate European there is now a strong case for Britain to leave the EU. By passionate European, I mean someone who sees the EU, for all its absurdities, as the noblest of postwar political projects – one that must and will lead to a federation, probably of a loose, Swiss kind, with a directly or indirectly elected president and a European Parliament with teeth. Someone who would love Britain to support this, but who realises it never will.

Why want a federal Europe? To create a powerful political centre, based on the supranational rule of law supervised by an independent court of justice, which can be the ultimate focus of loyalty for nations that have lived under dictatorship and whose memories of its horrors cannot be erased.

The euro crisis is a fillip to this process, despite the error of including southern “Club Med” nations from the outset. Even if they leave the single currency, they will not stand aside from a banking union, not to mention other federalising moves.

The process is far from over. The fundamental mission of the EU – to inspire and attract the loyalty of democracies, whether or not they join as full members – will continue on account of its supranational law and the cohesion this brings.

No postwar British prime minister has accepted this moral case for federalism. Even Edward Heath, the most pro-European, had no vision for Britain in Europe beyond entry.

It is irresponsible to ask, yet again, a country with virtually no interest in such a development to renew its vows to a marriage whose very purpose it cannot abide. And it is irresponsible to the rest of the EU – especially the core countries of Germany, Benelux, Italy and even France – which have a profound need to develop into a confederation.

Yet, oblivious to the incompatibility of British and most continental visions, the old “pragmatic” case for UK membership is trotted out: the EU offers our exporters the single market and our nation crucial influence in the world.

But Britain will continue to have access to the EU market if it leaves – just as Switzerland does, a country that also sends about half its exports to the EU. Competitiveness, not market access, is Britain’s problem. It has the same access as Germany to the vast Chinese and US markets but is far less successful in both. Switzerland, with a population smaller than the English Midlands, exports almost as much to Germany from outside the EU as Britain does from within it.

What about influence? Will Britain outside the EU become a nobody? In global trade talks it will suffer most, though the bloc will have strong reasons to co-opt Britain, for example in free trade talks with the US. Beyond trade, it is anyway hard to think of a significant global problem over which the EU has exerted decisive influence, from the Israeli-Arab dispute and Bosnia to Russia’s regional conflicts. As to sanctions and other instruments of trade policy, Britain can join EU action, say towards Iran, from the outside almost as well as from within.

Besides, most major UK foreign interventions have been as a US sidekick – most recently in Afghanistan, Iraq and Libya. Can one imagine the US, whatever its warnings to Britain not to leave the union, saying to its number one European military ally: “No, we can’t accept your help in Iraq or Libya if you aren’t in the EU”?

But how can a pro-European bring himself to think Britain should leave? Because if Britain (ironically, given its own commitment to liberty) repudiates the moral case for the EU, its membership is demoralising both to the country and to the EU.

The fudge yet again being urged on Britain by pro-Europeans in all UK parties, the CBI employers’ body and now the US, will not go on working. The fall of the Berlin Wall, the resurgence of Germany and the deepening weakness of France have changed everything. We are heading for a federal Europe, whether or not the euro ends up as a northern enclave around Germany. Paradoxically, the end of the communist threat to Europe has turned out to be a more powerful spur to its integration than Soviet aggression. From now on, federalism is for real – which is why pressure from the US on Britain to stay in the EU is unwise.

There must be a referendum on UK membership, and the only honest choice is in or out. Since Britain will never feel comfortable in a federal project – any more than it would as the 51st US state – it should leave this unnatural marriage, which regularly tears apart its main political parties, and find a role fit for its lonesome, imaginative and tactically adroit self.

Both the US and EU need Britain as an ally, and it will have a bright future as a semi-independent broker in world affairs. The greatest advance in Middle East peace for decades – the 1993 Oslo accords – was brokered by Norway, precisely because of its independence. If Norway can do it, Britain can do it in spades.

The writer is visiting professor of philosophy at King’s College London and was a cabinet member in the European Commission


And that, it seems to me, fairly makes the case for a referendum followed by an amicable withdrawal.


Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on January 17, 2013, 17:06:19
"And it is irresponsible to the rest of the EU – especially the core countries of Germany, Benelux, Italy and even France – which have a profound need to develop into a confederation."

Churchill's observation notwithstanding (neither Holy, Roman nor an Empire) the HRE lasted for better than 800 years as a political entity.   It amalgamated Franks, Saxons, Burgundians, Lombards and Goths in a loose confederation nominally led by pragmatic "Emperors".  Switzerland is its modern heir.

Cities, states, treaties and borders came and went but the entity survived.  Regardless of its neighbours.

If the Europeans can do as well as they did with the HRE they won't be doing badly.

And as May said, or implied, Britain's lack of a dictatorship in the last 300 years puts Britons in a different mindset than your average Continental.  Especially as so many of the modern, and successful Brits are Continental DPs that escaped those self-same dictators.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on January 23, 2013, 00:18:28
More on why the UK should or might have to leave the EU in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from Foreign Affairs:

http://www.foreignaffairs.com/articles/138768/r-daniel-kelemen/saving-the-euro-dividing-the-union?page=show
Quote
Saving the Euro, Dividing the Union
Could Europe's Deeper Integration Push the United Kingdom Out?

R. Daniel Kelemen

January 21, 2013

_____________________________________________________________________
The collapse of the eurozone no longer seems likely, thanks to its members' decisions to coordinate their fiscal policies more closely. But it is exactly that tighter integration that has made many Euro-skeptic Brits want to opt out of the EU altogether.

R. DANIEL KELEMEN is Professor of Political Science and Director of the Center for European Studies at Rutgers University. He is the author of Eurolegalism: The Transformation of Law and Regulation in the European Union.
______________________________________________________________________

In an article I wrote last May, I argued that Europe's future would be defined by a "new normal." The road to economic recovery would be long and painful, but thanks to aggressive intervention by the European Central Bank and the new continent-wide governance structures being put in place, the eurozone's collapse was no longer a serious risk. The credit ratings agencies now seem to agree. The year 2012 ended with Standard & Poor's upgrading its assessment of Greek sovereign debt. Last week, Fitch declared that the odds of a eurozone breakup are now "very unlikely." Although record unemployment persists in the periphery of the common currency area and growth prospects have dimmed for Germany and other core countries, there is a growing consensus that the worst may be over.

Instead of unraveling, as so many skeptics had predicted, European countries responded to the economic crisis by taking significant steps toward deepening their integration. The continent's leaders granted EU institutions greater control over the fiscal policy of member states, ratified a fiscal compact, and reached an agreement on the outlines of a banking union. European Central Bank President Mario Draghi emphasized the bank's commitment to do "whatever it takes" to save the common currency.

But this incremental deepening of European integration may come at a cost: Not all 27 member states want to be part of a closer union -- least of all the United Kingdom. Talk of a "Grexit" from the euro has been replaced by talk of "Brexit" -- a British exit -- from the European Union itself. Euro-skepticism in the United Kingdom has reached historic heights. The U.K. Independence Party, which is committed to London's leaving the EU, has overtaken the Liberal Democrats as the third most popular party. Recent polls suggest that a majority of British residents favor an exit. British Prime Minister David Cameron, facing enormous pressure from Euro-skeptic backbenchers in his own party, will soon deliver a major speech on the United Kingdom's relationship with the EU. He is likely to call for the repatriation of powers from the EU in areas such as social policy, employment, and justice, and promise a national referendum on a "new deal" with Europe. Meanwhile, many leaders on the continent are tiring of Cameron's anti-European rhetoric and his demands for special treatment and opt-outs.

As the EU takes steps to strengthen its economic and political union, it is likely to drive a deeper wedge between core eurozone states and member states outside of the common currency that are unwilling to go along. Officials in Brussels have suggested that tensions caused by tighter coordination in the common currency area can be addressed by developing new forms of what is known as two-speed or multi-speed integration, whereby core groups of countries move ahead with deeper union on certain policies, while others opt out. Although this flexible approach has worked in the past, including for the establishment of the eurozone itself, there are reasons to believe it may be less tenable today as the EU moves toward an unprecedentedly close economic, fiscal, and political union. Flexible, à la carte approaches will not by themselves resolve the tensions between the countries committed to deepening their union and those refusing to take part.

The eurozone's troubles no longer qualify as a crisis, an unstable situation that could either quickly improve or take a dramatic turn for the worse. They are, instead, a new normal -- a painful situation, to be sure, but one that will last for years to come. Citizens, investors, and policymakers should let go of the idea that  there is some magic bullet that could quickly kill off Europe's ailments. By the same token, despite the real possibility of Greek exit, the eurozone is not on the brink of collapse. The European Union and its common currency will hold together, but the road to recovery will be long.

It has been nearly two and a half years since the incoming socialist government in Greece revealed the extent to which its predecessor had accumulated debt, precipitating an economic storm that has left slashed budgets, collapsed governments, and record unemployment in its wake. With each dramatic turn, observers have anticipated the story's denouement. But again and again, a definitive resolution -- either a policy fix or a total collapse -- has failed to emerge.

The truth is that there are no quick escapes from the eurozone's predicament. Divorce is no solution. Although some economists suggest that struggling countries on the periphery could leave the euro and return to a national currency in order to regain competitiveness and restore growth, no country would willingly leave the eurozone; doing so would amount to economic suicide. Its financial system would collapse, and ensuing bank runs and riots would make today's social unrest seem quaint by comparison. What is more, even after a partial default, the country's government and financial firms would still be burdened by debt denominated largely in euros. As the value of the new national currency plummeted, the debt would become unbearable, and the government, now outside the club, would not be able to turn to the eurozone for help.

Some economists go further and argue that countries on Europe's periphery could thrive outside the euro straitjacket. This is equally unconvincing. Southern European countries' economies suffer from deep structural problems that predate the euro.  Spanish unemployment rates fluctuated between 15 and 22 percent throughout most of the 1990s; Greece has been in default for nearly half of its history as an independent state. These countries are far more likely to tackle their underlying problems and thrive inside the eurozone than outside it.

Others have suggested that Germany and other core countries -- weary of funding endless bailouts -- might abandon the euro. That is even less plausible. Germany has been the greatest beneficiary of European integration and the common currency. Forty percent of German exports go to eurozone countries, and the common currency has reduced transaction costs and boosted German growth. An unraveling of the eurozone would devastate German banks, and any new German currency would appreciate rapidly, damaging the country's export-led economic model.

A number of policy reforms may improve economic conditions in the eurozone, but none offers a panacea. Eurobonds, increased investment in struggling economies through the European Investment Bank and other funds, stricter regulations of banks, a common deposit insurance system, a shift from budget cuts to structural reforms that enhance productivity and encourage private-sector job creation -- all of these could improve Europe's economic situation and should be implemented.

But none of these measures would quickly restore growth or bring employment back to pre-crisis levels. That is because they do not address Europe's central economic problem: the massive debt accumulated by the periphery countries during last decade's credit boom. The 2000s saw a tremendous amount of capital flow from the northern European countries to private- and public-sector borrowers in Greece, Ireland, Portugal, and Spain. Germany and other countries with current account surpluses flooded the periphery with easy credit, and the periphery gobbled it up. This boosted domestic demand and generated growth in the periphery but also encouraged wage inflation that undermined competitiveness and left massive debt behind. As the economists Carmen Reinhart and Kenneth Rogoff have pointed out, when countries suffer a recession caused by a financial crisis and debt overhang, they take many years to recover.

With both breakup and immediate solutions off the table, then, the eurozone is settling into a new normal. As the union slowly digs itself out of the economic pit, it is important to recognize that its system of economic governance has already been fundamentally transformed over the past two years.

First, the eurozone has, at least in practice, done away with its founding documents. In any monetary union in which states retain the autonomy to tax, spend, and borrow, there is a risk that some countries' excessive borrowing could threaten the value of the common currency. Recognizing this, the euro's creators drafted the Stability and Growth Pact and the "no bailout" clause in the Maastricht Treaty. The SGP placed legal restrictions on member-state deficit and debt levels, and the no-bailout clause forbade the European Union or individual member states from bailing out over-indebted states to avoid moral hazard.

The Maastricht governance regime is dead. The SGP was never strictly enforced, and when the crisis hit, the European Union tossed aside the no-bailout clause. Fearing contagion, it extended emergency loans to Greece, Ireland, and Portugal and set up a permanent bailout fund -- the European Stability Mechanism (ESM) -- which will be up and running this summer.

Having broken the taboo on bailouts, Europe had to find a way to limit the moral hazard of states turning again and again to the European Union for aid. EU lawmakers introduced the so-called six-pack legislation, which strengthened the European Commission's ability to monitor member states' fiscal policies and enforce debt limits. Twenty-five EU member states signed a fiscal compact treaty, which committed them to enshrining deficit limits into national law. Only those states that eventually ratify the treaty will be eligible for loans from the ESM.

Such legal provisions alone will not overcome the moral hazard, but they have been accompanied by evolution in bond markets, which now distinguish between the debt of healthy governments in the core and weak ones on the periphery. For the first decade of the euro's young life, bond markets priced the risk associated with the peripheral economies' bonds nearly the same as that associated with German ones. Today, the yield spreads are substantial and increase at the first sign of heightened risk. And by forcing private investors to take a nearly 75 percent loss on Greek bonds in conjunction with the second Greek bailout in February 2012, European leaders made clear that private bondholders should not expect bailouts to cover their losses, too. Now, more vigilant bond markets will police governments that run up unsustainable deficits or whose banking sectors grow fragile.

The second major structural change is that the European Central Bank -- legally prohibited from purchasing any member state's debt -- has thrown its rules aside and directly purchased billions in Greek, Irish, Italian, Portuguese, and Spanish bonds. Moreover, the ECB has indirectly financed billions more loans through its long-term refinancing operation, which extended over a trillion euros in low-interest loans to commercial banks.

ECB President Mario Draghi has repeatedly insisted that the bank is not engaging in "monetary financing" of member-state debts. If I were an Italian president of a central bank located in Frankfurt with a mandate designed by German inflation hawks, I would say that, too. But in practice, the ECB has shown itself to be far more flexible than many had anticipated. It has revealed, quite simply, that it will not oversee the demise of the currency that justifies its existence.

This new system of eurozone governance is more sustainable than the pre-crisis regime set in place by the Maastricht Treaty. It will withstand a Greek exit, for example. If Greece refuses to adhere to the terms of its bailout package and is forced out of the eurozone in the coming weeks, the ECB will likely scramble to stop contagion, but it will not be faced with the entire system's collapse. Meanwhile, by standing firm on Greece, the European Union will have further demonstrated that the conditions attached to its bailouts are serious, motivating other states to stick to their reform programs.

Greece's exit from the eurozone would be a catastrophe for Greece and a trauma for Europe, but it would not change the fundamentals of the post-2008 eurozone governance regime, which will still be based on stronger fiscal surveillance, more robust enforcement procedures, more vigilant bond markets, and a more activist central bank. With such a system in place, and with their commitment to fiscal discipline established, EU leaders will now face the slow, difficult tasks of adjustment and structural reform. And those burdens must be shared by all. It is understandable that Germany and the ECB initially demanded austerity as the condition for bailouts, but this one-sided approach has driven peripheral economies deeper into recession. Moving forward, austerity, wage reductions, and structural reform on the periphery must be coupled with public spending and wage increases in Germany, which will boost demand. There will be no quick fix, but the eurozone will recover, slowly but surely.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on January 23, 2013, 08:31:26
And the UK's Prime Minister David Cameron begins the long, complex dance on a high-wire that will be required to either make the EU acceptable to the UK or pave the way for "Brixit" (British exit) according to this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Gobe and Mail:

http://www.theglobeandmail.com/news/world/cameron-promises-britain-straight-choice-on-leaving-european-union/article7652837/
Quote
Cameron promises Britain straight choice on leaving European Union

PAUL WALDIE
London — The Globe and Mail

Published Wednesday, Jan. 23 2013

British Prime Minister David Cameron is hoping he has found a solution to solve the seemingly never ending question of Britain’s position in the European Union.

In a long-awaited speech on Britain’s future in the EU, Mr. Cameron announced Wednesday that he will try to renegotiate the terms of the country’s membership and then hold a public referendum on the new arrangement. However, none of that will happen until after the next election in 2015 and only if Mr. Cameron remains Prime Minister.

“It is time for the British people to have their say,” Mr. Cameron said. “It will be a very simple in-or-out choice, to stay in the EU on these new terms or come out altogether.”

Mr. Cameron acknowledged that Britain’s place in the 27-member EU has become increasingly contentious in recent months partly because of the ongoing recession and problems in the euro zone. Roughly 100 Conservative MPs have been pushing for changes to the EU treaty and a referendum. The United Kingdom Independence Party, Ukip, has also risen sharply in the polls lately by campaigning on pulling Britain out of the EU.

“Today public disillusionment with the EU is at an all-time high,” Mr. Cameron said. “The result is that democratic consent for the EU in Britain is wafer thin.”

Mr. Cameron said he wants to see a “more flexible, more adaptable, more open” European Union where some powers flow back to member countries. “Countries are different. They make different choices. We cannot harmonize everything,” he said. He added that his government is undertaking a kind of audit of EU powers and whether they should remain applicable to Britain. “Nothing is off the table,” he said.

Under his plan, after the next election in 2015 the government would attempt to negotiate a new “settlement” for Britain in the EU and then put that new agreement to voters in a referendum. That vote would be held within the first half of the government’s five-year mandate.

In the speech, Mr. Cameron tried to address critics who argue that other EU members will be reluctant to negotiate changes that only apply to Britain. They say the EU is already going through a round of treaty changes and that whatever reforms are made should apply to all members, not just one. Mr. Cameron said the EU will be stronger if it addresses the needs of member states. And he said many other countries want changes too.

He also took on those who argue Britain should simply hold a referendum now, without trying to negotiate changes. That would be a “false choice,” he said, because the EU is in a state of flux. This is not the time to make such a monumental decision, he added. “If we left the EU it would be a one-way ticket, not a return.”

Mr. Cameron stressed that Britain is better off inside a reformed European Union and he added that he is optimistic changes to the treaty can be made. However, he was not clear what would happen if Britain cannot negotiate enough changes and whether that would force him to campaign for the No side in a referendum.

The move carries big political risks for Mr. Cameron. The issue of Britain’s position within the EU has dragged on for months, made worse by economic troubles that some blame on excessive EU regulation. Further uncertainty won’t help and may not quell rising opposition to Europe. Other world leaders, including U.S. President Barack Obama, have also urged Mr. Cameron to keep Britain within the EU.

Labour Leader Ed Miliband also criticized Mr. Cameron for catering to political dissent within his own party instead of leading the country.

“This speech by David Cameron will define him as a weak Prime Minister, being driven by his party, not by the national economic interest,” Mr. Miliband said. “Everyone knows that the priority for Britain is the jobs and growth that we need. We have had warning after warning from British business about the dangers of creating years of uncertainty for Britain. This speech will do nothing for a young person looking for work, for a small business worried about a loan, for the family whose living standards are squeezed.”

Mr. Cameron’s Conservatives are also in a coalition government with the Liberal Democrats who have come out against changing the EU treaty and a referendum. It’s not clear how the two parties would address the issue if they formed another coalition government after the next election. Mr. Cameron said he is hoping for a Conservative majority but added that “If I am Prime Minister this will happen.”


I will repeat what I have said, earlier, about "layers": the EUI needs to redefine itself as a layered organization: the top layer will be countries bound by a real, working currency union; the second layer will involve countries who use the common currency but have no say in the operation of the central bank because, most likely, they are unable to conform to the monetary policy snake of budget deficits, inflation rates, etc; the third layer will consist of countries that are members of a customs union and a "free" border agreement (the Schengen Agreement); the fourth layer will be countries that only subscribe to the customs union; and the fifth layers will countries that have free trade arrangements with the customs union but are outside of the formal body. Britain probably wants to be in the fourth or fifth layer but many other EU members want only a three layer "cake," and will insist that Britain move up or out.

Canada should, now, take steps to assure Britain that if it leaves the EU it will still have the, at least, full benefits of any Canada/EU free trade deal and that Canada will remain a firm friend and ally.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on January 24, 2013, 08:47:01
And here is the very necessary counterpoint, by Timothy Garton Ash, which is reproduced under the Fair Dealing provisions of the Copyright Act from the Guardian:

http://www.guardian.co.uk/commentisfree/2013/jan/23/why-britain-stay-europe-cameron-speech
Quote
From outside, it's clear why Britain has to stay in Europe
Cameron's speech could have been a lot worse, but five years of anxious uncertainty are bad news for Europe and the world

Timothy Garton Ash
The Guardian

Wednesday 23 January 2013

So now we know: Europe will be roiled by internal turmoil for another five years. While Germany, France and others wrestle to build a stronger core Europe around the eurozone, David Cameron's Conservatives, if elected in 2015, will try to renegotiate the terms of Britain's membership in the whole EU club and then put that "new settlement" to the British people in an "in or out" referendum by the end of 2017.

World, you have been warned. Europe as an economic giant? Yes, still. Europe as a strong force in a new multipolar world? Postponed to the Greek calends – and now to the British ones as well. Whether you are watching from India, China, Russia, America or Brazil, you can forget that prospect for the foreseeable future. In fact, most people in those countries already have.

But first, what of the speech itself? Well, it could have been a lot worse. As a pro-European who has argued that Britain should hold an "in or out" referendum in the next parliament, once the shape of eurozone-Europe and the results of any attempted renegotiation of the terms of Britain's membership are known, I can hardly complain if the British prime minister plumps for exactly that. While much of the phrasing was patently crafted to please Eurosceptics, some of his criticisms of today's EU are also justified.

Above all, the peroration of the speech was as clear, eloquent and forceful an argument for Britain staying in the EU, on clearsighted, hard-nosed Palmerstonian grounds of national interest, as you could hope to hear from a leader of today's Conservative party. Those last minutes, between about 8.35am and 8.45am London time, confirmed me in a view that I have taken against nervous British pro-Europeans for some time: when it comes to the point, the British people will vote to stay in the EU.

Yet they also confirmed the futility of this entire strategy. For those basic arguments of national interest for Britain to stay in the EU will remain true, however paltry the results of any formal renegotiation after 2015. In fact, since Europe is a permanent negotiation, Britain would get a better deal if it remained fully involved and committed all the time.

If other EU member states agree on nothing else, they agree on this: Britain should not be given any major new exceptions from the rules of the whole club. Now they will concede even less. If EU politics were a game of bridge, Cameron has just effectively thrown away his strongest ace: the credible threat of Britain leaving. Germany and other free-market north Europeans would not really want to be left alone with the southerners. Even France would be ambivalent, since Britain is the only other European country with a serious tradition of projecting hard power – as most recently in Libya.

It's also bad for Europe. Some of the good reforms Cameron is preaching at continental Europeans are now even less likely to happen since, whatever he says, our partners all feel that he is batting for Britain not for Europe. In a rare and revealing stumble by this otherwise accomplished speaker, when he was arguing for his preferred option of a new reform treaty for the whole of the EU, he said: "But if there is no appetite for a new treaty for us [pause, stumble] … for us all." Freudian slip or Thatcherite one: that's what most continental Europeans think he subconsciously means.

And yet, even though it would have been better for Europe to carry on without this added diversion to the core problems of the whole project, a referendum would have come sooner or later anyway. With the stakes raised like this, it will be hard for other parties to refuse the British people a direct choice. As a nice Polish phrase has it: we have to swallow this frog.

Meanwhile, the world will yawn its way through five more years of euroshemozzle. And it will deal with Europe as it finds it: economic giant, political hydra-head.

Like Reading Lolita in Tehran, watching Cameron in Mumbai has been a surreal experience. Here I am, surrounded by the afterlife of British colonialism at its most grandiloquent – the monumental Gateway to India, built in Bombay harbour to celebrate the visit of the King-Emperor George V in 1911, colonial-style tearooms fluttering with now Indian talk of "tiffin" and "chaps". And there, on the television screen, a hundred years later, is a vaguely viceregal British prime minister who nonetheless feels it necessary to explain, to what was once the party of empire, why Britain really should not opt to be an offshore Switzerland, a Norway without the oil or the Greater Cayman Islands.

And the Indians, those at the top of the pile who are now prosperous and sophisticated representatives of one of the 21st-century's great emerging powers, how do they view this distant political gymkhana? Mainly not at all. Indian acquaintances confirm my impression that the speech did not make the news bulletins of the main local channels. Indians have their own politics to worry about, and their own problems: India's poverty makes hard-hit Greece look like paradise. But beyond that, they view Britain's agonising about its place in the world with mixed feelings.

One hears of a liking for London as a place to live and do business; of admiration for UK universities (if only the Cameron government's misbegotten student visa squeeze does not prevent their children studying there); of some attachment to British traditions of literature, good government and common law (a shipping merchant here tells me he makes contracts with Chinese partners under English law).

But there is absolutely no echo of the neo-Tory idea that a strategic special relationship between Britain and India, Britain and the whole Commonwealth, could be any substitute for Britain's place in Europe, and India's relationship with Europe as a whole. India, like Britain, will pursue its own national interest, starting in its own neighbourhood. If Cameron doesn't know that already, he will hear it again on his planned second official visit to India next month.

Ultimately the point is this. History has dealt Britain an amazing hand. Though a shadow of its former imperial self, the country has unique ties to Europe, to the United States, to the rest of the English-speaking world, and to quite a few other places (for instance, in Latin America) as well: spades, hearts, diamonds and clubs. Who but an idiot would throw away one of his (or her) strongest suits? And we Brits are not idiots, are we? Are we?


I suspect that Garton is correct - in the near term, but the Eurosceptics are both right, in the long term, and more likely to win a referendum since no deal that Cameron can extract from the EU will be good enough for most Britons.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on January 27, 2013, 13:17:47
The topic is: "Why Europe Keeps Failing ..." Maybe the answer is that they keep trying to avoid the hard but necessary problems and look for simple albeit irrelevant course of action. See this article which is reproduced under the fair Dealing provisions of the Copyright Act from the National Post:

http://news.nationalpost.com/2013/01/27/silvio-berlusconi-praises-benito-mussolini-for-backing-hitler-says-he-did-good-despite-anti-jewish-racial-laws/?utm_source=dlvr.it&utm_medium=twitter
Quote
Silvio Berlusconi praises Benito Mussolini for backing Hitler, says he ‘did good’ despite anti-Jewish racial laws

Associated Press

Jan 27, 2013

ROME — Former Italian Premier Silvio Berlusconi praised Benito Mussolini for “having done good” despite the Fascist dictator’s anti-Jewish laws, immediately sparking expressions of outrage as Europe on Sunday held Holocaust remembrances.

Berlusconi also defended Mussolini for allying himself with Hitler, saying he likely reasoned that it would be better to be on the winning side.

The media mogul, whose conservative forces are polling second in voter surveys ahead of next month’s election, spoke to reporters on the sidelines of a ceremony in Milan to commemorate the Holocaust.

In 1938, before the outbreak of World War II, Mussolini’s regime passed the so-called “racial laws,” barring Jews from Italy’s universities and many professions, among other bans. When Germany’s Nazi regime occupied Italy during the war, thousands from the tiny Italian Jewish community were deported to death camps.

“It is difficult now to put oneself in the shoes of who was making decisions back then,” Berlusconi said of Mussolini’s support for Hitler. “Certainly the (Italian) government then, fearing that German power would turn into a general victory, preferred to be allied with Hitler’s Germany rather that oppose it.”

Berlusconi added that “within this alliance came the imposition of the fight against, and extermination of, the Jews. Thus, the racial laws are the worst fault of Mussolini, who, in so many other aspects, did good.”

More than 7,000 Jews were deported under Mussolini’s regime, and nearly 6,000 of them were killed.

Reactions of outrage, along with a demand that Berlusconi be prosecuted for promoting Fascism, quickly followed his words.

Berlusconi’s praise of Mussolini constitutes “an insult to the democratic conscience of Italy,” said Rosy Bindi, a center-left leader. “Only Berlusconi’s political cynicism, combined with the worst historic revisionism, could separate the shame of the racist laws from the Fascist dictatorship.”

Italian laws enacted following the country’s disastrous experience in the war forbid the encouragement of Fascism. A candidate for local elections, Gianfranco Mascia, pledged that he and his supporters will present a formal complaint on Monday to Italian prosecutors, seeking to have Berlusconi prosecuted.

Advocating aggressive nationalism, Mussolini used brutish force and populist appeal evoking ancient Rome’s glories to achieve and keep his dictatorial grip on power, starting in the early ’20s and lasting well into World War II. His Fascist “blackshirt” loyalists cracked down on dissidents, through beatings and jailings.

He encouraged big families to propagate the Italian population, established a sprawling state economy and erected monumental buildings and statues to evoke ancient Rome. Mussolini sought to impose order on a generally individualistic-minded people, and Italians sometimes note trains ran on time during Fascism.

With dreams of an empire, he sent Italian troops on missions to attack or occupy foreign lands, including Ethiopia and Albania. Eventually, Italian military failures in Africa and in Greece fostered rebellion among Fascist officials, and in 1943 he was placed under arrest by orders of the Italian king. His end came at the vengeful hands of partisan fighters, who shot him and his mistress, and left their bodies to hang in a Milan square in April 1945.

Berlusconi’s former government allies have included political heirs to neo-fascist movements admiring Mussolini.

In 2010, he told world leaders at a Paris conference that he had been reading Mussolini’s journals, and years earlier Berlusconi had claimed that Mussolini “never killed anyone.”

Berlusconi is running in Feb. 24-25 Parliamentary elections and has repeatedly changed his mind on whether he is seeking a fourth term as premier. Monti is also running, but polls put him far behind front-runner Pier Luigi Bersani, a center-left leader who supported Monti’s austerity measures to save Italy from the Eurozone debt crisis.

Polls show about one-third of eligible voters are undecided.


It is important to recall that the rise of the Italian Fascists and German Nazis was rooted in economic crises - not unlike those Europe is facing today. The rubbish Berlusconi is sprouting is typical of that which tries to paper over the cracks and offer people and easy way out. The "easy way" will lead, again, to more problems than it solves.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on January 27, 2013, 13:58:36
I remember having this discussion with a classmate in Guelph back in 1978 or so.  She was Italian although born in Canada. 

She said you couldn't say a bad word to her grandmother about Mussolini because "he gave her her first pair of shoes".  Up until Mussolini many Italians, like many folks across Europe, including Britain, went barefoot.

Mussolini won power in 1922, 10 years before Hitler came to power, 17 years before Britain declared war and governed through the depths of the depression.  He had the backing of the monarchy, the papacy and the majority of the public (the defining characteristic of those nasty "populist" regimes).

Tangent Alert:

Populist Government - bad - Most people agree with the government and disagree with me.
Democratic Government - good - Most people agree with me and the government.

Populist forces - bad - the majority that disagrees with me (Mensheviks)
Democratic forces - good - the minority that agrees with me (Bolsheviks)
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on February 04, 2013, 10:18:55
This article, which is reproduced under the Fair Dealing provisions of the Copyright Act from EurActiv.com, illustrates a problem with my "layer cake" proposal:

http://www.euractiv.com/consumers/eu-threatens-punish-selfish-norw-news-517431
Quote
EU threatens to punish Norway for breaching EEA agreement

Published 30 January 2013

Norway is failing to live up to its obligations as a member of the European Economic Area (EEA), including imposing extra taxes on EU products and not implementing more than 400 directives, according to an EU report to be published later this year.

In the Commission draft report, which looks into the functioning of the EEA, the Scandinavian country is being criticised for imposing tariffs on EU products from 2013 and "resisted EU efforts for ambitious liberalisation" of the EU's single market.

According to the draft, obtained by EurActiv, 427 acts whose compliance date in the EU has expired, also remained to be incorporated in Norway by October 2012.

"This situation might thus lead to competitive advantages for operators based in the EEA-EFTA countries, and more fundamentally risks undermining the legal certainty and homogeneity of the single market," the report reads.

"This problem is of great concern for the EU side and should be solved as a matter of urgency," the report states.

'Selfish Norway'

Moreover, the EU also dislikes the fact that Norway has rejected several directives coming from Brussels. The Norwegian government has for example warned it won’t implement the EU’s postal directive about competitiveness for letter mail weighting less than 50 grams.

Danish MEP Bendt Bendtsen (European People's Party), who has been closely following the trade issues with Norway, told EurActiv the problems started in 2012 when Norway raised the price of hydrangeas from the EU by 72%.

Eventually, the extra taxes spread to EU food products such as cheese and meat.

Bendtsen said Norway is acting "selfishly" and that the taxes were put on EU goods "deliberately" as the Norwegian Centre Party, which is part of the Norwegian government, has for a long time pushed for the extra taxes.

"Norway only wants the cream on the cake," the MEP said.

Threaten with punishment

The EU’s foreign service and the Commission, which have the formal responsibility for the relationship with Norway through the EEA agreement, have confirmed that there is an increasing disapproval with Norway.

“This development worries us. We don’t like the backlog on implementing directives, and this is a case we are trying to deal with now," Maja Kocijancic, spokesperson of Catherine Ashton, the European Union High Representative for Foreign Affairs and Security Policy, told Norwegian TV2.

She confirmed that the EU is looking into the possibilities for sanctions within the EEA agreement's frame.

Leader of the pro-EU organisation Europabevegelsen Paal Frisvold said Norway risks exclusion from the European marine and cargo market and could lose cooperation on mobile roaming prices, making them more expensive in Norway.

However, Bendtsen said that the right EU punishment would be to hit Norway's fishing industry, or to take the step even further: "The consequence should be kicking Norway out of the EEA," the MEP said.

Stupid situation

Norway's Prime Minister Jens Stoltenberg said the country has a good relationship with the EU, but the fact that there are disagreements over individual directives is nothing new.

Erna Solberg, leader of the biggest opposition party, the Conservatives, said the Norwegian government doesn’t understand the EEA’s mutual obligations. She said Norway isn't active enough when it comes to its Europe policy and doesn’t use the opportunities in effecting the EU legislation enough.

“It is stupid that we have put ourselves in a situation where our closest partners obviously are frustrated with us,” Solberg said.

Potential impact on British EU debate

Bendtsen said the problems in the EU-Norway relations could eventually affect the ongoing British debate on whether to stay in or leave the EU.

Norway has previously been mentioned as a positive example of a non-EU member which still gets advantages and benefits of being part of the EU's single market.

However, in his EU speech last Wednesday, British Prime Minister David Cameron asked whether it was in Britain's best interest and desirable for Britain to be like Norway or Switzerland – with access to the single market, but outside the EU.

"While Norway is part of the single market – and pays for the principle - it has no say at all in setting its rules: it just has to implement its directives," Cameron said.


Although many of us, me included, too often tend to see Europe as a monolith it is, very clearly, not that at all. Scandinavia and the Balkans have little in common, less even than, say, Britain and Spain. Europe is both an idea and, for some, an ideal, but it isn'y, yet, a concerete anything. There is no reason for Norway to want to please Portugal (where the hydrangeas are grown) or, even, Germany and until there is Europe remains a place of differences, not a monolith. It is easier to pull it apart than to hold it together.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on February 04, 2013, 15:51:49
It's possible the Euros are choosing this moment to beat up on the Norwegians as a shot across Cameron's bows.

Norway is often held up as a successful example of the type of relation Europe should have with Britain. 

Cameron has been making noises about moving towards that type of relation.

The Europeans have responded by threatening the Square Mile.

Unfortunately that may be a bit of a losing game for them.  They are threatening to undermine London if Britain stays in its current association with Europe; if it accedes to Euro demands and becomes part of the Eurocore; if it leaves Europe entirely.

Short form:  This is all about the Huguenot Banks of the 1690s (England, Scotland and Barclays) versus Frankfurt's Metzler Bank and Colbert's legacy.  And Mark Carney is right in the middle of the battle.

From a British perspective, leave or stay, they are going to have to fight to keep their position in the international monetary arena.  That likely means more gifts to bankers and much chagrin at the pubs.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on February 06, 2013, 12:54:21
Bloomberg reports (http://www.bloomberg.com/news/2013-02-06/berlusconi-closes-bersani-s-lead-within-error-margin-poll-shows.html) that, as Italy approaches a 24 Feb election, "former Italian Prime Minister Silvio Berlusconi narrowed the lead of front-runner Pier Luigi Bersani to within the margin of error of an opinion poll."

And that's why Europe keeps failing.
Title: Re: Why Europe Keeps Failing........
Post by: Chris Pook on February 06, 2013, 13:54:50
Bloomberg reports (http://www.bloomberg.com/news/2013-02-06/berlusconi-closes-bersani-s-lead-within-error-margin-poll-shows.html) that, as Italy approaches a 24 Feb election, "former Italian Prime Minister Silvio Berlusconi narrowed the lead of front-runner Pier Luigi Bersani to within the margin of error of an opinion poll."

And that's why Europe keeps failing.

And in Italy the Arian Lombard Germans of the Ghibelline faction continue their courageous struggle against the equally courageous Catholic Frank Germans of the Guelph faction for the control of Rome.    :nod:

As you say - that's why Europe keeps failing.  The names and banners and causes change but the blood feuds carry on.
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on February 25, 2013, 12:15:58
While Bloomberg reports that Italian voter turnout fell in the first day of parliamentary elections, setting a pace for a post- World War II low (http://www.bloomberg.com/news/2013-02-25/italy-voters-stay-home-as-turnout-on-pace-for-lowest-since-wwii.html), the latest polls show Italian elections still up in the air as newest polls show Berlusconi in the lead in Senate (http://qz.com/56410/italy-elections-2013/); in short: those who can be bothered to vote do so for the dimwit who promises an easy (fascist) solution.

Italy will fail ~ along with Greece, Portugal, Spain and, most likely France ~ ultimately destroying the European Union, as it now exists, and allowing room for Germany to, finally, create Mitteleuropa.
Title: Re: Why Europe Keeps Failing........
Post by: Remius on February 25, 2013, 13:39:38
Yep.  Nothing like making a promise to refund last year's property taxes and buying a soccer player or two for your team to get voters out to vote for you...

Our system isn't perfect but I'll take it over theirs any day.
Title: Re: Why Europe Keeps Failing........
Post by: Larry Strong on February 25, 2013, 13:58:48
In my view, if they vote that clown back in they get what they deserve....



Larry
Title: EU Seizes Cypriot Bank Accounts
Post by: tomahawk6 on March 16, 2013, 16:00:05
Yep you thought it was YOUR money in the bank.Its really the State's money.

http://news.yahoo.com/savers-forced-bear-costs-cyprus-bailout-051941784.html
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on March 16, 2013, 23:26:28
Now that the EU has laid claim to private savings accounts, look for bank runs to begin in the PIIGS, and transfers of wealth into alternative forms less liable to confiscation or arbitrary siezure. I think Canada may become a haven for some of this "hot" money due to our reputation as a well regulated and stable economy. The other thing to watch for is the Russian reaction to this:

http://www.zerohedge.com/news/2013-03-16/europe-does-it-again-cyprus-depositor-haircut-bailout-turns-saver-panic-bank-runs-br

Quote
Europe Does It Again: Cyprus Depositor Haircut "Bailout" Turns Into Saver "Panic", Frozen Assets, Bank Runs, Broken ATMs
Submitted by Tyler Durden on 03/16/2013 10:33 -0400

Europe has done it again.



Late last night, after markets closed for the weekend, following an extended discussion the European finance ministers announced their "bailout" solution for Russian oligarch depositor-haven Cyprus: a €13 billion bailout (Europe's fifth) with a huge twist: the implementation of what has been the biggest taboo in European bailouts to date - the  impairment of depositors, and a fresh, full blown escalation in the status quo's war against savers everywhere.

Specifically, Cyprus will impose a levy of 6.75% on deposits of less than €100,000 - the ceiling for European Union account insurance, which is now effectively gone following this case study - and 9.9% above that. The measures will raise €5.8 billion, Dutch Finance Minister Jeroen Dijsselbloem, who leads the group of euro-area ministers, said.

But it doesn't stop there: a partial "bail-in" of junior bondholders is also possible, as for the first time ever the entire liability structure of a European bank - even if it is a Cypriot bank - is open season for impairments. The logical question: why here, and why now? And what happens when the Cypriot bank run that has taken the country by storm this morning spreads everywhere else, now that the scab over Europe's biggest festering wound is torn throughout the periphery as all the other PIIGS realize they too are expendable on the altar of mollifying voters and investors in the other countries that make up Europe's disunion.

Bloomberg's take on the sacrifice of Cyprus' savers:

Officials have struggled to find an agreement that would rescue Cyprus, which accounts for just half of a percent of the euro region’s economy, without unsettling investors in larger countries and sparking a new round of market contagion. Policy makers began meeting at 5 p.m. yesterday in a hastily convened gathering, seeking to overcome differences on bondholder losses while financial markets were closed.
 
“Further measures concern the increase of the withholding tax on capital income, a restructuring and recapitalisation of banks, an increase of the statutory corporate income tax rate and a bail-in of junior bondholders,” according to a communique released by ministers after the talks. It didn’t specify whether bank or sovereign bond holders could be affected.
 
The European Central Bank will use its existing facilities to make funds available to Cypriot banks as needed to counter potential bank runs. Depositors will receive bank equity as compensation.
 
Finance Minister Michael Sarris said the plan was the “least onerous” of the options Cyprus faced to stay afloat.
 
“It’s not a pleasant outcome, especially of course for the people involved,” said Sarris. The Cypriot parliament will convene tomorrow to vote on legislation needed for the bailout.
Needless to say, the locals are delighted:

In the coastal town of Larnaca, where irate depositors queued early to withdraw money from cash machines, co-op credit societies that are normally open on Saturdays stayed closed.
 
"I'm extremely angry. I worked years and years to get it together and now I am losing it on the say-so of the Dutch and the Germans," said British-Cypriot Andy Georgiou, 54, who returned to Cyprus in mid-2012 with his savings.
 
"They call Sicily the island of the mafia. It's not Sicily, it's Cyprus. This is theft, pure and simple," said a pensioner.
For the real response, look to Russia:

The island's bailout had repeatedly been delayed amid concerns from other EU states that its close business relations with Russia, and a banking system flush with Russian cash, made it a conduit for money-laundering.
 
"My understanding is that the Russian government is ready to make a contribution with an extension of the loan and a reduction of the interest rate," said the EU's top economic official, Olli Rehn.
 
Almost half of [Cyprus'] depositors are believed to be non-resident Russians, but most of those queuing on Saturday at automatic teller machines to pull out cash appeared to be Cypriots.

While "saving", pardon the pun, yet another insolvent country merely has the intent of keeping it in the Eurozone, and thus preserving Europe's doomed monetary block and bank equity for a little longer, this idiotic plan will achieve two things: i) infuriate not just Russians but very wealthy, and very trigger-happy Russians. The revenge of Gazpromia will be short and swift, and we certainly would not want to be Europeans next winter when the average heating level of Western European will depend on the whims of Russian natural gas pipeline traffic; ii) start a wave of bank runs first in Cyprus and soon everywhere else that has the potential of being the next Cyrpus.

Sure enough, here come the bank runs:

While the tax on deposits will hurt wealthy Russians with money in Cypriot banks, it will also sting ordinary citizens. Some ATMs in the country have run out of cash, Erotokritos Chlorakiotis, general manager of the Cooperative Central Bank, told state-run CYBC.
Forzen assets and "national bank holidays" are baaaaack:

Funds to pay the levy were frozen in accounts immediately, ECB Executive Board Member Joerg Asmussen said. The levy will be assessed before Cypriot banks reopen on March 19 after a March 18 national holiday. Sarris said electronic transfers will also be limited until then.
Europe's response: this is a unique situation. Just like the Greek bailout was unique;  just like the Irish and Portuguese bailouts were unique;  just like the bailout of Spanish banks was unique.

“As it is a contribution to the financial stability of Cyprus, it seems just to ask a contribution of all deposit holders,” Dijsselbloem said, noting the country’s financial industry was five times the size of its economy. The plan includes “unique measures” that address the “exceptional nature” of Cyprus and show “inflexible commitment to financial stability and the integrity of the euro area.”
Curiously, even everyone's favorite liar, former Eurogroup president, Jean-Claude Juncker, has a warning that this "bailout" is the worst thing Europe could have done:

Skeptics including Luxembourg’s Jean-Claude Juncker had said that imposing investor losses in Cyprus risked reigniting the financial crisis that has so far pushed five of the euro zone’s 17 members to seek aid. Last year, the euro area took what officials called a unique step to ask Greek bondholders to absorb losses.
But fear not: Europe has promised this absolute resolution taboo won't repeat itself...

When asked if a deposit assessment could be ruled out for future rescues, Rehn said in an interview: “It can and there is no concrete case where it should be considered.”

... Until it does repeat itself of course - after all the fundamental problem for Europe has never been resolved: the continent is still broke, and it still is running out of good, unencumbered assets (which as being repledged by the banking oligarchy) with every passing day.

Now the only thing unknown is Russia's response:

Corporate tax rates in Cyprus will rise to 12.5 percent to 10 percent as part of the deal, Dijsselbloem said. Rehn told reporters that Russia, whose banks have loaned as much as $40 billion to Cypriot companies of Russian origin, would ease terms on its existing loans to Cyprus as the rescue unfolds. Cyprus’s finance minister is scheduled to fly to Moscow on March 20.
What is known, however is that Cypriots have taken the news in stride.... and to their local ATM machine, which sadly is showing the following message: "Your transaction has been cancelled due to a technical issue. This ATM cannot complete withdrawals at this time" (courtesy of Yannis Mouzakis).

It didn't take long before the Cyrpus Cooperative bank issued a statement saying "some ATMs run out of cash" - by some they likely mean all as the entire country is now gripped in a full force depositor run.

Some other snapshots of what is currently happening in Cyrpus, where locals are using excavators if not to force the ATMs into "compliance" then to block bank entrances out of blind fury. From Philenews:

Indignant citizen who has the testimony of the Cooperative Credit Society Kyperoundas, cut the morning the entrance of the branch of the SEA, located on Avenue Nikos and Despina Pattichi in Limassol.
 
He said he believes that deceived by the assurances that the relevant deposits are insured citizens and decided how to express his protest, parking the excavator outside the entrance of the branch of SEA
 
And more from iefimeirda:

With the first light of day after the unprecedented decision to the Eurogroup on the terms of the Memorandum of Agreement and the taxation of savings, hundreds of people flocked to Cyprus stores credit cooperatives Larnaca to withdraw their deposits.

With the opening of stores found they could not withdraw all their money, because the electronic system of credit cooperatives was not working. And when it became possible, writes the Daily Cyprus, the system seemed to finally hit the appropriate amount of the new tax, which provoked strong reactions. Even after the government ordered the stores eventually closed.
 
At the same time, according to information or ATMs of banks give no money so that there is a huge inconvenience.
 
After lunch return to Cyprus President Papadopoulos Nikos Anastasiadis from Brussels in the morning reached political agreement on the rescue of the economy, while in the meantime the Presidential prepares emergency meeting of ministers of the government.
 
According to all the information, will this weekend be submitted and voted on bills in the form of urgency, before the banks opened Tuesday morning.
 
In the text of the agreement, with the characteristic title "We caught napping," the website says Sigma Live Nicosia agreed terms "under threat of closing banks."  painful Describing the agreement, Sigma relies on sources from Brussels you speak of night thriller and roll jams, and the Cypriot delegation warned even withdrawal from the negotiations.

Congratulations Cyprus savers - you were just betrayed by both your politicians, and by Europe - sorry, but you are the "creeping impairments" in the game known as European bankruptcy. And so is anywhere between 6.75% and 9.9% of your money, which you were foolish enough to keep with your banks (where at least you were compensated with a savings yield of... 0%).

More importantly, as of this morning Europe has finally grasped that there is a 6.75% to 9.9% premium to holding physical cash in your mattress rather than having it stored with your local friendly insolvent bank.

Luckily Cyrpus is so "small" what just happened there will never happen anywhere else: after all in Europe nobody has ever heard of "setting an example". Or so the thinking among Europe's unthinking political elite goes.

And congratulations Europe: just when people almost believed you things are "fixed" you go ahead and prove to the world that you are as disunified (because size doesn't matter in a true union), as confused, as stupid and as broke as ever.
Title: Re: Why Europe Keeps Failing........
Post by: NinerSix on March 17, 2013, 05:21:18
I think Canada may become a haven for some of this "hot" money due to our reputation as a well regulated and stable economy. The other thing to watch for is the Russian reaction to this:

I agree (not that I have much to back this up).

So, what does that mean? What if Canada is seen as the safe investment/money holding democracy? What if all of a sudden we find ourselves in new found wealth, due to a bunch of overseas money flowing in?
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: Retired AF Guy on March 18, 2013, 18:11:45
And what effect (if any) does this have on the folks on the other side of the Green Line?
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: Old Sweat on March 18, 2013, 18:15:20
Hopefully not a lot, but the island could become unstable. Who knows what might happen then?
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: Journeyman on March 18, 2013, 18:35:24
But....the mighty UN peacekeeping force is there.  Effectively keeping nothing from happening since 1964.   :nod:
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: E.R. Campbell on March 18, 2013, 19:02:15
There may be more to this than meets the eye. It may be a somewhat ham handed attempt by the EU to clean up an enormous, largely illegal, Russian money laundering scheme. See this report (http://www.bbc.co.uk/news/business-21831943) from BBC News.
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: Chris Pook on March 18, 2013, 19:06:52
http://www.thenational.ae/news/world/europe/mediterranean-gas-finds-have-cypriots-dreaming-of-riches

Cyprus, Greece, Turks, Russians, Israelis, the EU, Natural Gas.....what more could you ask for?
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: cupper on March 18, 2013, 22:10:17
I love the logic behind the Cypriot Government.

Let's tax all savings at 9%+ and hope that nobody decides to pull their money out of the banks.
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: Brad Sallows on March 18, 2013, 22:49:44
I have been laughing about this all day.  The EU and its euro crisis is a gift that just keeps on giving.
Title: Re: Why Europe Keeps Failing........
Post by: Brad Sallows on March 18, 2013, 22:52:29
Canada already has a reputation for being a safe and sober place to park money.  What Cyprus has is a reputation for a blind eye to money laundering.
Title: Re: Why Europe Keeps Failing........
Post by: ModlrMike on March 19, 2013, 03:26:14
This is nothing more than an attempt to punish the ants for the sins of the grasshoppers.
Title: Re: Why Europe Keeps Failing........
Post by: NavyShooter on March 19, 2013, 09:31:15
This means it's a good time to invest in real assets/silver/gold/etc...

Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on March 19, 2013, 22:22:36
I agree (not that I have much to back this up).

So, what does that mean? What if Canada is seen as the safe investment/money holding democracy? What if all of a sudden we find ourselves in new found wealth, due to a bunch of overseas money flowing in?

The "Hot" money is not a good thing. These people will be looking to grab assets quickly in order to secure their wealth with real assets like property, so expect real estate prices to spike. Companies may also be targeted for takeover (small/medium sized), which will provide a short term cash infusion, but the new owners might be inclined to dismember the companies and selloff assets in order to meet whatever goals they have (which are tied to their positions in Russia etc. and not to the good of the local market).

Expect this to create turmoil in the Canadian market.
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: cupper on March 22, 2013, 21:23:53
Interesting situation. Cyprus has to come up with 30% of it's GDP in 48 hours, or it goes down the tubes.

And one thought is that the EU is taking a hardline stance because it can. Who cares about Cyprus? They couldn't bully Greece or Italy, but the Russian Mafia island tax haven has no ability to push back.

Will be interesting to see what happens late Sunday night just before the Asian markets open.
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: Fishbone Jones on March 22, 2013, 21:54:43
Good thing those UNFICYP peacekeepers are there  ::)

Since 1964 :sarcasm:
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: cupper on March 23, 2013, 00:15:40
Interestingly, one option is to sell off the Turkish controlled part of the island to the Turks.
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: X Royal on March 23, 2013, 10:27:54
You have to love completely false and misleading headlines.
The EU never seized any bank account.
What they did was propose a tax on bank deposits as a condition of a bail out. The taxed money to be replaced with bank shares for those who had money taxed from them.
The Cypriot government voted down this proposal and has been working on a counter proposal which most likely will include some form of deposit tax.
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: E.R. Campbell on March 23, 2013, 10:35:35
 :goodpost:

Milpoints inbound.
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: Thucydides on March 23, 2013, 22:44:31
It looks like they are going far beyond what the lurid headlines suggested. Too bad sensible solutions like leasing the natural gas deposits in Cypriot waters to some company that was able to develop them (ou know, creating real wealth) seem to have gone by the wayside. Even if having GAZPROM assume the lease was politically unpalatable, BP or Shell are European companies with the experience and capability to do so (less sure about Total SA), and of course there are plenty of American companies (or Canadian ones for that matter) who are also able to do the job.

In the longer term, this is a question we have to face here in Canada. While federal debt may only be @ 38% of GDP, there are huge unfunded liabilities (federal pensions), and the ever escalating Provincial debts (and who knows what sorts of unfunded liabilities are on their books?) Without a huge wealth infusion sometime soon, we may end up in a desparate scramble to preserve our individual wealth and savings while governments seek money to either pay out impossible debts or repdiate them, creating massive financial chaos in their wake.

http://pjmedia.com/tatler/2013/03/23/cyprus-depositor-haircut-25-off-the-top-for-the-rich/?singlepage=true

Quote
Cyprus Depositor Haircut: 25% Off the Top for the Rich

by
RICK MORAN
Bio
March 23, 2013 - 7:15 am
     
If Vladimir Putin was angry when the haircut was at 10% for big depositors, what do you think he’s going to say about the government of Cyprus absconding with 25% of bank deposits over 100,000 euros?

Reuters:

Cyprus said on Saturday it was looking at seizing a quarter of the value of big deposits at its largest bank as it races to raise the funds for a bailout from the European Union and avert financial collapse.

Finance Minister Michael Sarris said “significant progress” had been made in talks in Nicosia with officials from the European Union, European Central Bank and International Monetary Fund.

He confirmed discussions were centered on a possible levy of around 25 percent on holdings of over 100,000 euros at Bank of Cyprus, and expressed hope that a package could be ready by the end of the day for approval by parliament.

Cyprus faces a Monday deadline to clinch a bailout deal with the EU or the European Central Bank says it will cut off emergency cash to the island’s over-sized and stricken banks, spelling certain collapse and a potential exit from Europe’s single currency.

Amid signs of momentum, Cypriot and EU officials said Cypriot President Nicos Anastasiades was expected in Brussels on Sunday to meet EU leaders including Council President Herman Van Rompuy and Commission President Jose-Manuel Barroso, as well as IMF Managing Director Christine Lagarde and the head of the ECB, Mario Draghi.

Van Rompuy and Barroso canceled a planned EU-Japan summit in Tokyo to tend to the Cyprus saga and euro zone officials told Reuters that the bloc’s 17 finance ministers would meet on Sunday afternoon.

“Significant progress has been made in the direction of getting a deal, at least at the troika level,” Sarris told reporters.

He said a number of issues were still outstanding, but that a package could be ready “late this afternoon or early evening” for approval by parliament.

Putting the depositor haircut back on the table became necessary when Russia, fearing the instability of the Cyprus banking system, refused to bail out the wobbly institutions until after the EU infusion of cash. With this new plan to skim a quarter of the value of big depositors — many of them Russians — it is unknown if any company in Russia is going to have the desire to help the Cypriots out with their financial crisis.

Cyprus has taken additional steps to reform the banks:

Racing to placate its European partners, Cypriot lawmakers voted in late-night session on Friday to nationalize state pensions and split failing lenders into good and bad banks.

They also gave the government powers to impose capital controls on banks, anticipating a flood of money from the island when banks are due to reopen on Tuesday after more than a week of lockdown.

The plan to nationalize semi-state pension funds has, however, met with resistance, particularly from Germany which made clear that tapping pensions could be even more painful for ordinary Cypriots than a deposit levy.

Next page: Is America Next?

Grabbing retirement money seems to be all the rage among the socialist kleptocrats. It’s making their mouths water thinking about what they could do with all that cash. At the moment, your 401K might not be worth what it once was, but at least its safe. Whether it will be tomorrow is an open question.

These are all short-term fixes for Cyprus’s overfed, undercapitalized banks.

Cypriot leaders fear the damage the levy would do to the country’s offshore banking industry. The tottering banks hold 68 billion euros in deposits, including 38 billion in accounts of more than 100,000 euros – enormous sums for an island of 1.1 million people which could never sustain such a big financial system on its own.

With the Island’s GDP at $24 billion, there are almost 3 times as much in bank deposits as the entire economy is worth. They are going to have to address that fundamental problem if they expect to put their financial house in order.

The parliament has the ability to throw a monkey wrench into the proceedings and blow up the deal. But since the alternative is unthinkable, they will likely swallow hard and pass the legislation.

Related:

Europe Attempts to Tax Bank Accounts in Cyprus. Is America Next?
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: cupper on March 23, 2013, 22:59:51
You have to wonder how much of this is a result of creditors taking a "haircut" on the bailout for Greece. And if they weren't forced to take a cut on the investments owed, would the Cypriot Banks be in the state they are in now?
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: Chris Pook on March 23, 2013, 23:25:42
If the corollary to having a fiat system of currency is that no small country can ever possess more than a large country due to it smaller GDP how long before an enterprising small country turns to an alternative source of wealth to back its currency?  Gold for example?

Cyprus used to hold that position.  Templars.  Huguenots.  Britons.  Where next?  Doha?  They never lost their appreciation for hard currency.  Singapore?  Not Hong Kong.  They can hang onto the coattails of China.

Suppose Cyprus were to purchase 6.8 Bn Euro of gold and back their banks with that?
Title: Re: Why Europe Keeps Failing........
Post by: Thucydides on March 24, 2013, 15:37:44
This problem is not restricted to Europe, but sits at the heart of most of the economies of the developed world. Since normal pricing mechanisms have been suppressed or disabled by the shenanigans of central banks, we do have the formation or potential formation of bubbles everywhere. The US stock market is an excallent example, even though corporate profits have only gone up by a meger 4%, the market has risen 14%, driven by a tidal wave of money and an effectively zero interest rate policy, which has investors desparate for some sort of return bidding up stocks. A Hayekian bubble is forming in the stock market as a result.

http://www.thedailybeast.com/articles/2013/03/22/cyprus-is-imploding-so-why-aren-t-markets-freaking-out.html

Quote
Cyprus is Imploding, So Why Aren't Markets Freaking Out?
by Megan McArdle Mar 22, 2013 10:49 AM EDT
The failure to reach a deal is a BFD. But so far, markets yawn.

The single biggest fact you need to know about Cyprus is summed up by Kevin Drum's admirably pithy headline: Cyprus needs to lay its hands on one-third of its GDP by Monday.  Otherwise, the island nation's banks are insolvent--and since a surprisingly large fraction of its economy seems to consist of selling bank accounts to Russians, that presents something of a conundrum.

I'm still trying to wrap my brain around how we arrived at this impasse. It seems as if at every turn, the governments involved have actively, even joyously, bounded towards the worst possible decision.

To be sure, it isn't as if there were a lot of great decisions available to be made.  There's a big hole in their banking sector, and no obvious way to plug it without a huge cash infusion RIGHT NOW--which doesn't leave a whole lot of alternatives to taxing the bank accounts, or getting a big bailoit from the EU.  And the EU is getting kind of sick of bailouts.

Still, it's hard to understand why the Germans apparently insisted that the Cypriot governmetn kick in so much money that it was left with no alternative to slapping a tax on its bank deposits.  Yes, I do understand that the Germans didn't want the Spanish and Italians and Irish and Portuguese thinking that a similar deal might be forthcoming if they let everything go to hell.  On the other hand, if their depositors get worried about similar haircuts . . . well, it's hard to say that they'll be in a better position.  And what if they succeed?  Cyprus slaps a hefty tax on its bank deposits, and then five gets you ten that they have a bank run which sows considerable chaos throughout the EU.

On the other hand, once they'd insisted, it's hard to see why a rational parliament wouldn't accept the deal.  Angrily, fearfully, more-in-anger-than-in-sorrow, yes.  But unless they think that the GDP fairy is going to drop off enough cash to make their banks solvent by next week, this doesn't make any sense.  Yes, if they tax the bank deposits, they will cost small savers some money, and risk triggering an even bigger crisis when anxious russians decide to take their depsoits elsewhere.  Yet, this is exactly what will happen if they don't take the deal: the banks will be insolvent, the Russian accounts will flee, and the small depositors will lose far more than the 3% or 7% or whatever percent that taking the EU deal would haverequired them to give up.  So aside from a stirring expression of national pride in the face of a stupid and shortsighted German ultimatum, I'm hard-pressed to see what is accomplished by having the Cypriot cavalry charge straight into the maw of the oncoming tanks. 

Of course, political systems thrive on stirring and shortsighted expressions of national pride.  This is not the first time we've seen such displays during a financial crisis, and it certainly won't be the last.  Which actually raises an important question: why aren't markets freaking out?  There are alll sorts of scary lessons to be taken from the Cypriot experience, starting with: the eurozone may well decide that your bank account should be decimated pour encourager les autres.  If Cyprus decides to leave the euro--and if it refuses the EU deal and lets its banking system go, it will pretty much have no choice--the lessons get even scarier.  But so far, the markets have pretty much offered a big yawn. 

What are the explanations for this? The first is obvious: Cyprus really is unique.  It's a tiny island nation with a big, big banking system, and so far, it has essentially told the eurocrats to go jump in the lake.  Perhaps they reckon that odds of this being repeated are not huge.

The second is almost as obvious: they just don't believe that when push comes to shove, the eurocrats and the Cypriot parliament are going to agree to let Cyprus go over the ledge.

Then we get into more exotic territory, such as this offering from Steven Lewis at Monument Securities, via the FT:

More likely, investors realise the ‘knock-on’ effects from a Cypriot default are literally incalculable. But they are insensitive to bad news. They respond to those factors which would lead them to buy financial assets; they can do nothing with any other information. Central banks’ massive asset purchases have set up a situation where the markets’ normal signalling mechanisms no longer operate because investors have huge volumes of uncovenanted liquidity, created by the central banks, to commit to long-term assets. The central banks would, no doubt, claim this as a triumph for their asset-buying policies. They do not want to see economic recovery blown off course by recurrent financial crises. However, for those who believe free markets are the most efficient means of allocating capital, the impairment of the capital markets’ pricing function must be cause for concern. It presages serious misallocation of capital, carrying negative implications for future economic capacity. The most extreme and obvious form of misallocation is seen when a market ‘bubble’ forms. The bursting of a bubble may have spectacular consequences. But misallocation of capital may occur even when a ‘bubble’ does not form. For example, when investors, in their quest for yield, overlook significant differences in the risk-adjusted returns that assets may realistically be expected to provide. Central bankers say they are on the look-out for ‘bubbles’ but they seem unconcerned about any broader misallocation of resources their policies may generate.

Relatedly, the WSJ offers this explanation from David Bloom at HSBC: "People just don't know how to trade this stuff"

In other words, the crisis is coming.  But we have to have the crisis to find out what's in it. 

Like The Daily Beast on Facebook and follow us on Twitter for updates all day long.

Megan McArdle is a special correspondent for Newsweek and The Daily Beast covering business, economics, and public policy. A former senior editor at The Atlantic and writer for The Economist, Megan has a diverse work history including three small startups and a disaster recovery firm at Ground Zero.

For inquiries, please contact The Daily Beast at editorial@thedailybeast.com.
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: cupper on March 24, 2013, 22:45:12
Looks like they came to a deal:

Cyprus secures bailout from international creditors, avoids bankruptcy

http://www.washingtonpost.com/business/cyprus-secures-broad-agreement-with-creditors-toward-securing-bailout/2013/03/24/509e71ae-94e1-11e2-95ca-dd43e7ffee9c_story.html?hpid=z1

Quote
BRUSSELS — Cyprus secured a package of rescue loans in tense, last-ditch negotiations early Monday, two EU diplomats said, saving the country from a banking system collapse and bankruptcy.

The cash-strapped island nation needs a 10 billion euro bailout ($13 billion) to recapitalize its ailing banks and keep the government afloat. The European Central Bank had threatened to cut crucial emergency assistance to the country’s banks by Tuesday without an agreement.

The finance ministers of the 17-nation eurozone accepted the plan reached in 10 hours of negotiations, the diplomats said. They spoke on condition of anonymity pending the official announcement.

Under the plan, Cyprus’ second-largest bank, Laiki, will be restructured and holders of bank deposits of more than 100,000 euros will have to take losses.

Title: Re: EU Seizes Cypriot Bank Accounts
Post by: E.R. Campbell on March 26, 2013, 10:52:53
Here, reproduced under the Fair Dealing provisions of the Copyright Act from Bloomberg Businessweek is a fair summatin of the Cyprus situation:

http://www.businessweek.com/articles/2013-03-21/europes-cyprus-crisis-has-a-familiar-look
Quote
Europe's Cyprus Crisis Has a Familiar Look

By Peter Coy on March 21, 2013

To most of the world, the banking crisis that broke out in Cyprus in mid-March was as abrupt and unexpected as an outbreak of Ebola. For Cypriots, it wasn’t sudden at all. Many opportunities to steer the country in a better direction came along over the years but were missed or never tried. Now the misbegotten decision by European finance ministers to tax the accounts of ordinary depositors to help pay for a bailout of the country’s biggest banks has become a source of continentwide embarrassment.

The bailout mess roiling the capital of Nicosia and the financial hub of Limassol has plenty of only-in-Cyprus color: Russian oligarchs doing biznes in the sunny Mediterranean, a simmering conflict with Turkey, a former president who was educated in Soviet-era Moscow. Underneath the details, though, is a frustratingly familiar pattern. A small country cleans up its act and joins the international financial community. Money pours in from abroad. The cash is spent or lent unwisely under the noses of inattentive or ineffectual regulators. When losses mount, the money flows out as quickly as it came in. In the end, it’s the little guys who lose the most.

Only five years ago, Cyprus seemed to be in a sweet spot. The country had teetered on the edge since a war in 1974 that left the northern third of the island under Turkish control. For years it also had shaky government finances and a reputation as a haven for foreign money launderers and tax evaders. But successive governments worked hard to lose those bad habits as the price for admission to the European club. Cyprus balanced its budget (for two years, anyway). And it tightened banking regulations so successfully that today it’s in better compliance with the 36-nation Financial Action Task Force’s rules on money laundering than Germany, France, or the Netherlands.

Cyprus was the richest of the 10 countries that joined the European Union in 2004. Just four years later it dropped its currency, the pound, in favor of the euro. There was a brief episode of capital flight after the Lehman Brothers failure in 2008, but it was soon reversed.

For a time, being inside the EU and the euro zone benefited both Cyprus and foreigners eager to invest there. It made the country—whose population of 800,000 or so is no bigger than that of Jacksonville, Fla.—more attractive as a place to do business. It particularly lured wealthy Russians, who appreciated the country’s strong protection of property rights beyond Moscow’s reach and its 10 percent corporate income tax rate (Europe’s lowest), not to mention the balmy weather and a shared Orthodox faith. The storefronts of Limassol are plastered with signs in Cyrillic. Roman Abramovich, the oligarch whose properties include London’s Chelsea Football Club, operates Evraz (EVR), his steel, mining, and vanadium business, through a limited liability company called Lanebrook in downtown Nicosia. There’s no evidence to support German parliamentarians’ allegations that Cyprus is a haven for tax evaders. In January even Russian tax authorities gave Cyprus a clean bill of health.

The problem—again, a familiar one—was that Cyprus’s two biggest banks couldn’t manage the flood of deposits. Cypriot regulators fell short as well. Athanasios Orphanides, who worked for the U.S. Federal Reserve before becoming governor of the Central Bank of Cyprus in 2007, realized the hot money could cause bubbles and inflation in the domestic economy, so he limited the share that could be lent domestically. Fine, except the big two—the Bank of Cyprus (BOC) and the Cyprus Popular Bank—simply shoveled the money westward into loans in Greece. Greek government bonds were particularly attractive because they offered higher yields at supposedly zero risk—since everyone knows sovereigns don’t default, right?

A picaresque character in the sorry tale is the wealthy Greek businessman Andreas Vgenopoulos, a former national fencing champion who is nonexecutive chairman of Marfin Investment Group (MIG). He bought Cyprus Popular Bank in 2006, renamed it Marfin Popular Bank, and led a rapid, risky expansion in Greece. It ended with the Cyprus government forcing him out and seizing control, but not before his derring-do induced the Bank of Cyprus to take similar risks to keep pace. Vgenopoulos’s bank lent money to people who used proceeds of the loans to buy shares in his other business, Marfin Investment Group. Vgenopoulos says there’s nothing wrong with that. This January he sued Cyprus, asking it to give him back the bank and pay damages.

Once Greece hit the skids in 2010, it was inevitable that Cyprus would follow. Already by 2011 the government was effectively prevented from selling bonds by a junk credit rating. It resorted to a €2.5 billion ($3.2 billion) loan from the Russian government, due in 2016. The killer, though, was the pact reached in October 2011 to reduce the value of Greek government bonds by 70 percent. That produced a loss to the Cyprus banks of more than €4 billion—the same in proportion to the economy’s size as a $4 trillion loss in the U.S. President Demetris Christofias, seemingly not realizing the severity of the blow, agreed to the haircut without seeking offsetting aid for Cypriot banks. He eventually sought a bailout, but, befitting a left-wing politician who earned a doctorate in history in the Soviet Union, dragged his heels on cutting government spending while inveighing against the “troika” of the European Union, the European Central Bank, and the International Monetary Fund. Losses mounted.

Which brings us to the current ****-up. Germany’s parliament insisted that creditors of the big Cyprus banks share the pain of the bailout. The banks have few private bondholders, so that left depositors. President Nicos Anastasiades, a right-wing politician who succeeded Christofias in February, reluctantly agreed to the tax on bank deposits in negotiations with the troika. But on March 19, Cyprus’s parliament rejected the deposit tax by a 36-0 show of hands. Banks remained closed as the crisis dragged on, and frightened Cypriots lined up at cashless ATMs. One man was arrested for trying to bulldoze his way into a bank.

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fimages.bwbx.io%2Fcms%2F2013-03-20%2F0320_or_cypruschart_inline.jpg&hash=2801809d41df3ee5b63a0d6da81dbab4)

Cyprus-born Christopher Pissarides, who won the Nobel Prize in Economics in 2010, is only slightly less incensed than the bulldozer man. In an e-mail exchange, the London School of Economics professor said he was “appalled” by the troika’s gambit. “Small countries be warned when joining the euro zone,” he wrote. “You could be bullied anytime by your big brothers if it suits their political objectives.” Bullying of Cyprus aside, the macroscale fear is that depositors will expect the same thing to happen in Greece, Portugal, and so on. If they yank their money out as a precaution, that could cause the failure of even healthy banks.

In retrospect, most or all of this could have been avoided if Cypriot banks had been prevented from lending so heavily to Greece. Once it was clear that the Central Bank of Cyprus was underregulating, the European Central Bank should have made noise, even though at the time it lacked authority to dictate terms. When the halloumi hit the fan, the EU, ECB, and IMF should have stood by Cyprus unconditionally. The time for tough love is before the crisis, not during it.

Now it’s all about keeping Cyprus from collapsing while appeasing creditor nations like Germany. “This is not the end of the process but instead kicks off a further round of negotiation with Moscow and Berlin,” Alexander White, a European political analyst at JPMorgan Chase (JPM) in London, said in a note. That Europe’s leaders resorted to this plan shows just how limited their options have become—which is why it’s so important to avoid getting into jams like this in the first place. When will we learn?


As the article makes clear, Cyprus' problems are inextricably linked to those of the rest of the Eurozone - it is not unique, just another domino.

For that reason, Mods, may I suggest a merge with the "Why Europe Keeps Failing" thread, please?
Title: Re: Why Europe Keeps Failing........
Post by: E.R. Campbell on March 26, 2013, 10:59:32
More on the problem, with some attention to Cyprus, the latest domino, in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Financial Post:

http://business.financialpost.com/2013/03/26/europe-has-a-crisis-and-its-much-bigger-than-cyprus/
Quote
Europe has a crisis — and it’s much bigger than Cyprus

Joe Weisenthal, Business Insider

13/03/26

In a way, Europe should be thrilled that financial markets barely batted an eye at the crisis in Cyprus, which reached a bailout deal with the eurozone Sunday.

But Europe has a problem on its hands that’s bigger than Cyprus: The economy stinks.

Recently, we got fresh proof that things are bad or getting worse.

In France, the Flash PMI report (which is a mid-month look at the combined services and manufacturing sectors of the economy) came in dismal, with the output index falling to a four-year low.

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fstatic3.businessinsider.com%2Fimage%2F514dde5f69bedda72b000016-608-436%2Fscreen%2520shot%25202013-03-23%2520at%252012.53.45%2520pm.png&hash=50d9d3cfe995bd35946832d41e8b5967)

Meanwhile, Germany’s economy is the envy of Europe, but even they are not immune to trouble.

You can see its Flash PMI jutted lower this week as well.

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fstatic4.businessinsider.com%2Fimage%2F514de0d56bb3f7e333000017-729-504%2Fscreen%2520shot%25202013-03-23%2520at%25201.04.43%2520pm.png&hash=7fad7084c6c05c078f5496bc85c519ac)

Meanwhile, the horror show in Italy and Spain continues unabated.

This week, Danske Bank economist Frank Øland Hansen warned that France was beginning to look more like a peripheral country than a core one.

Not only is the economy sinking, but from a labor cost/competitiveness standpoint, it’s looking PIIGSish.

(https://Army.ca/forums/proxy.php?request=http%3A%2F%2Fstatic1.businessinsider.com%2Fimage%2F514de2b069bedd8f3c000009-388-672%2Fscreen%2520shot%25202013-03-23%2520at%25201.10.16%2520pm.png&hash=2bd7ecc5cfb959bb6902ef91ecdeb31e)

Not only is the European economy a mess, and the second biggest country looking more and more peripheral, there isn’t much action being taken to address any of it.

Cyprus hasn’t made a dent in markets, and it might not. On the other hand, all of the above is a crisis.


I agree with Joe Weisenthal, Cyprus is just a symptom of a deep European crisis.
Title: Re: EU Seizes Cypriot Bank Accounts
Post by: Jungle on March 26, 2013, 13:30:40
For that reason, Mods, may I suggest a merge with the "Why Europe Keeps Failing" thread, please?

Done
Title: Re: Why Europe Keeps Failing........ merged with "EU Seizes Cypriot Bank Accounts"
Post by: Thucydides on March 27, 2013, 11:10:22
Putting Cyprus into a bit of perspective:

Quote
iCYPRUS?:  Charles Krauthammer says the size of the Cyprus bailout is so small that Apple could buy the island nation and rename it iCyprus:

http://www.youtube.com/watch?v=s6dVEkEE3-Q

The wrong people are in charge of the political process.... >:D
Title: Re: Why Europe Keeps Failing........ merged with "EU Seizes Cypriot Bank Accounts"
Post by: E.R. Campbell on March 27, 2013, 11:21:02