Why Europe Keeps Failing........ merged with "EU Seizes Cypriot Bank Accounts"

[GAP]

Strange how they react when the truth hits home...... :

 

[Edward Campbell]

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, which some economists in the Twitterverse find ominous.

 

[Edward Campbell]

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

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.

 

[a_majoor]

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

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."

 

[Brad Sallows]

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.

 

[a_majoor]

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

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

 

[Brad Sallows]

Seems like a high price to pay just to get subsidized luxury autos from Germany.

 

[Edward Campbell]

And The Telegraph reports 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.

 

[Infanteer]

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.

 

[Edward Campbell]

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 remained in the "International Defence and Security" page.

 

[Infanteer]

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.

 

[busconductor]

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.

 

[Edward Campbell]

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 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

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.

 

[Kirkhill]

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.

 

[BrendenDias]

So.. Greece and their "Facist" party eh? Has quite a few seats...

 

[busconductor]

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.

 

[BrendenDias]

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..

 

[Brad Sallows]

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.

 

[Edward Campbell]

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

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.

 

[Edward Campbell]

The Globe and Mail reports 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, 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.