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Mon Dec 9th, 2013 at 11:16:36 AM EST
How to Exit Austerity, Without Exiting the Euro Rob Parenteau New Economic Perspecitves
First of all, if a government stops having its own currency, it doesn't just give up `control over monetary policy'...If a government does not have its own central bank on which it can draw cheques freely, its expenditures can be financed only by borrowing in the open market, in competition with businesses, and this may prove excessively expensive or even impossible, particularly under `conditions of extreme urgency'...The danger then is that the budgetary restraint to which governments are individually committed will impart a disinflationary bias that locks Europe as a whole into a depression it is powerless to lift.
So wrote the late Wynne Godley in his August 1997 Observer article, "Curried Emu". The design flaws in the euro were, in fact, that evident even before the launch - at least to those economists willing to take the career risk of employing heterodox economic analysis. Wynne's early and prescient diagnosis may have come closest to identifying the ultimate flaw in the design of the eurozone - a near theological conviction that relative price adjustments in unfettered markets are a sufficiently strong force to drive economies back onto full employment growth paths.
Rob Parenteau notes that countries caught in the deflationary vise brought about by the EMU and the associated policies would face a high cost for exiting the Euro and proposes an alternative.
(Corrected name for Syriza leader)
by Frank Schnittger
Fri Dec 6th, 2013 at 02:09:57 AM EST
I first became aware of Nelson Mandela in a personal way, when, as a 17 year old undergraduate student, I came in contact with South Africans who had been banned by the Apartheid regime for their political activities and who were now campaigning for an end to Apartheid throughout Europe.
Basil Moore, author of an anthology of Black Theology which included a contribution from Steve Biko had been banned for campaigning against Apartheid in his role as General Secretary of the South African University Christian Movement. He lived under house arrest, his neighbours hung and strung up the the family pet from a lamp post outside their home, and he eventually escaped by sneaking across the border into Zimbabwe. Eva Strauss was banned for marrying a black man (and also perhaps for her outspoken political and feminist views). Colin Winter, Bishop-in-exile of Namibia had been deported for his opposition to Apartheid in Namibia and support for striking migrant workers.
All spoke with a moving personal touch. Politics was no longer some remote political struggle thousands of miles away. It wasn't just a cerebral and ideological battle: It was about how you lived your own life; it was also about the struggle against racism here at home. It was about the structures of international capitalism which made Apartheid possible, and which could also be part of its downfall.
front-paged by afew
Thu Dec 5th, 2013 at 10:44:38 AM EST
A few hopeful signs that this period we live in, where a large pool of labour has entered the world economy and as a by-product put "capital" in an incredibly strong position can come to an end:
Farmers Face Labor Shortages As Workers Find Other Jobs
FRESNO, Calif. -- With the harvest in full swing on the West Coast, farmers in California and other states say they can't find enough people to pick high value crops such as grapes, peppers, apples and pears.
In some cases, workers have walked off fields in the middle of harvest, lured by offers of better pay or easier work elsewhere.
The shortage and competition for workers means labor expenses have climbed, harvests are getting delayed and less fruit and vegetable products are being picked, prompting some growers to say their income is suffering. Experts say, however, the shortage is not expected to affect prices for consumers.
But farmworkers, whose incomes are some of the lowest in the nation, have benefited, their wages jumping in California to $2 to $3 over the $8 hourly minimum wage and even more for those working piece rate.
The shortage - driven by a struggling U.S. economy, more jobs in Mexico, and bigger hurdles to illegal border crossings - has led some farmers to offer unusual incentives: they're buying meals for their workers, paying for transportation to and from fields, even giving bonuses to those who stay for the whole season.
front-paged by afew
Mon Dec 2nd, 2013 at 05:06:57 AM EST
German politician Peer Steinbrück – one of the fiercest critics of Ireland’s tax regime – used Irish letter box companies when finance minister to try to balance the German budget through financial engineering.
Mr Steinbrück – an unsuccessful candidate in the recent German election – and his Social Democratic Party (SPD) have been particularly vocal critics of Ireland’s tax laws.
He used the recent election campaign to attack failed finance market alchemy and condemn “tax oases” such as Ireland and the Netherlands.
According to this morning’s Der Spiegel magazine, Berlin began doing business in Ireland to tap into pension funds of Germany’s post office, which was privatised and broken up in 1995 into three companies for telecoms, post and post office bank. (Irish Times)
I believe the declension here is: I manage my finances prudently, you engage in tax optimisation, he is a tax cheat.
This is, of course, pretty much the same sort of financial engineering as Italy and Greece engaged in to hide bits of their deficits.
Thu Nov 28th, 2013 at 02:42:20 AM EST
In a memo that we saw here, French bank Natixis' chief economist Patrick Artus, a well-known pundit on French media, describes Germany as a misfit in the single currency area, and outlines the macroeconomic case for D-exit.
This is a quick rundown of his points. The memo, in French, pdf, is here.
With the disclaimer that other fields than macroeconomics may be involved, Artus offers the following reasons for Germany to leave the euro:
- asymmetry of cycles between Germany and Rest of Euro Zone (ROEZ)
- weakening economic links between Germany and ROEZ
- structural asymmetries between Germany and ROEZ
- different foreign exchange needs between Germany and ROEZ
- impossibility for ROEZ countries to carry out internal devaluations
Cycles: absence of asymmetrical cycles is a condition for a shared currency. But GDP growth and the unemployment rate show strong asymmetry:
(Real GDP, annual change in %)
The asymmetry stems from structural differences (see further down), and differences in how credit supports demand:
(Credit to households and business, annual change in %)
The result of this asymmetry is that common monetary policy is not adapted to the whole of the Euro area. Between 2002 and 2007, it was too restrictive for Germany, too expansionist for ROEX; since then, it has been the reverse:
(Repo rate and nominal GDP)
Mon Nov 18th, 2013 at 05:35:10 AM EST
Via Paul Krugman, I saw that Larry Summers had given a presentation on the topic of secular stagnation at the IMF conference (admittedly, I wasn't invited this year, well, the letter must have been lost in the post ;-) ). If you'd rather read than watch, Krugman's summary is a nicely written one, and adds a few comments which can be interesting in themselves.
Well, I have not usually been inclined of late to say nice things about Larry Summers, although that was probably more about Summers the political persona. His academic research deserves more credit. So, much of it is interesting, although some of the conclusions he derives (and here Summers the neoliberal may be showing, for instance when he suggests that proper financial regulation may be a bad thing in the context of stagnation, which is bonkers) appear to either be there purely for provocation sake, or to be pre-conclusions looking for a justification. Still, I would have a few things to add, and I believe that the conclusions fall short in a couple of ways.
front-paged by afew
Thu Nov 14th, 2013 at 07:08:35 AM EST
In wonderful news for our austerian overlords, their great success story, Ireland, is to leave bailout mode on December 15th without a precautionary line of credit.
Whoo-hooo. Use this thread to list your favourite statistics showing what a successful economy Ireland is now.
Tue Nov 12th, 2013 at 05:06:11 AM EST
The European Green Party is organizing a primary for the two posts of leaders of the cross-Europe campaign for the European Parliament elections next year. (Twitter hashtag #GreenPrimary).
Greens select four candidates to run in primaries ahead of 2014 elections | EurActiv
Four Green MEPs [in fact 3 MEPs and one ex-MEP - note by afew] are entering the race for two top positions in the EU elections campaign ahead of the vote in May 2014.
On Thursday (7 November), the European Green Party (EGP) announced the four contenders who will take part in the primaries: French MEP and syndicalist José Bové; Italian MEP and co-chair of the European Green Party Monica Frassoni; German MEP and co-chair of the political group in the European Parliament Rebecca Harms; and German MEP Ska Keller.
Bové is arguably the most well-known among the contenders, but all contenders have a strong support in their home countries, party sources said. Ska Keller carries the nomination of the Federation of Young European Greens and has a profile that appeals to young participants in the online vote.
The candidates had to seek a nomination from a member organisation of the European Greens, as well as support of at least four member parties, to participate in the upcoming online vote. Frassoni got the support of five member parties, Harms and Keller from seven and José Bové secured the highest support with eight endorsements. [For lists of supporting parties, go here - afew].
The EGP requires the two candidates to come from different national member parties. This rules out having Rebecca Harms and Ska Keller runing as a tandem. Although the Greens traditionally have a man and a woman sharing lead positions, this is not a requirement, and the duo to lead the campaign could very well be two women.
What's this about?
|Harms, Bové, Frassoni, Keller|
The Greens ran the first cross-EU campaign for the EP elections in 2009, and will do so again, with the added attraction of this primary open to all sympathisers. This is also a step towards designating their candidate for Commission President. On this point see:
EUobserver.com / Political Affairs / EU Greens launch US-style primary elections
European parties hope to reverse this trend with trans-national campaigns and lead candidates who run for the top post at the European Commission, a novelty introduced by the Lisbon treaty.
But EU leaders recently poured cold water on hopes that the top candidate of the most popular party will automatically land the commission job.
German Chancellor Angela Merkel said she "sees no automaticity" between the election results and the post.
For his part, EU council chief Herman Van Rompuy warned against parties raising "false expectations."
Don't forget, the only "automaticity" is that Germany decides.
Should that make you want to go crazy and vote in this primary, the place to go is GreenPrimary. There's a FAQ here. You'll need to give an e-mail address and a mobile phone number, and check a box that says you sympathise with the values of the Greens.
Fri Nov 1st, 2013 at 05:34:28 AM EST
The most striking recent economic news item was Wednesday's US Treasury FX Report's denunciation of German policy.
U.S. Accuses Germany of Causing Instability - NYTimes.com
WASHINGTON — The United States Treasury singled out Germany for criticism in a report released on Wednesday that said Berlin’s reliance on exports was holding back its struggling partners in the European Union.
The criticism echoes longstanding complaints from European economists and international banks. But it was notable because it was included in an unusual forum: a semiannual report that usually focuses on currency manipulation. The timing may reflect the United States’ wish to influence German economic policy as Chancellor Angela Merkel forms her new government after recent elections.
US Treasury Report : Germany has maintained a large current account surplus throughout the euro area financial crisis, and in 2012, Germany’s nominal current account surplus was larger than that of China. Germany’s anemic pace of domestic demand growth and dependence on exports have hampered rebalancing at a time when many other euro-area countries have been under severe pressure to curb demand and compress imports in order to promote adjustment. The net result has been a deflationary bias for the euro area, as well as for the world economy. Stronger domestic demand growth in surplus European economies, particularly in Germany, would help to facilitate a durable rebalancing of imbalances in the euro area. The EU’s annual Macroeconomic Imbalances Procedure, developed as part of the EU’s increased focus on surveillance, should help signal building external and internal imbalances; however, the procedure remains somewhat asymmetric and does not give sufficient attention to countries with large and sustained external surpluses like Germany.
Here are some reactions:
Sat Oct 26th, 2013 at 01:37:02 PM EST
So, apparently the Germans are sending their intelligence chiefs to Washington for lunch and a giggle with their US counterparts:
Germany is to send its top intelligence chiefs to Washington to "push forward" an investigation into allegations the US spied on its leader Angela Merkel. (BBC)
Meanwhile, the French are all upset too - probably because they're worried their PM wasn't important enough to bug - and they both want a new arrangement with the US:
Observers say they may be seeking an arrangement similar to the 'Five Eyes' intelligence-sharing agreement the United States has had with Britain, Australia, New Zealand and Canada since just after World War II.
So, basically, they want to integrate their signal intelligence with the Americans' and share all their data in the hope that they, personally, will be treated better?
Craven fools. The NSA have been caught bugging US Senators. Why would they care about European leaders' privacy?
by Frank Schnittger
Sun Oct 6th, 2013 at 02:05:48 AM EST
Samuel Johnson made this famous pronouncement that patriotism is the last refuge of a scoundrel on the evening of April 7, 1775, but perhaps it is populism which is the last refuge of the modern political scoundrel. Ever since the Irish economic crash and the failure of the political system to properly regulate, and then resolve the Irish banking industry, politicians and politics have often been seen as the most egregious form of low life in the country.
Seeking to capitalize on this unpopularity, the Irish Prime Minister or Taoiseach, Enda Kenny, decided, almost on a whim, that it would be a good idea and an easy win for the Government parties to propose the abolition of the Irish Senate in a referendum to be put to the people. Despite a range of opinion polls showing large majorities in favour, that strategy has just blown up in his face with a narrow 52 to 48% majority of the electorate voting against his proposal.
The main arguments being put in favour of the abolition of the Senate where that:
- The Senate has relatively few powers under the Irish constitution and generally has a significant built in Government majority thanks to the Taoiseach having the power to nominate 11 members.
- The lack of a popular mandate. Some Senators are elected by University graduates only, and most of the others are elected by local county Councillors to represent notionally vocational groups but are in practice mostly politicians who failed to win election to the Dail or lower chamber by universal suffrage.
- Numerous proposals to reform the archaic nature of the Senate electorate have to date come to nothing.
- A small country like Ireland doesn't require a bicameral system of governance.
- Abolishing the Senate could lead to an annual cost saving of up to 20 Million p.a., although this figure is disputed and is in any case trivial in comparison to the cost of the public service as a whole.
Nobody on the NO campaign side sought to deny that the Senate was in need of fundamental reform, although proposals for reform varied greatly. But what the NO vote did perhaps indicate was that the electorate wanted more political accountability, not less.
front-paged by afew
Tue Oct 1st, 2013 at 02:19:32 AM EST
After years of toleration of nazi / organized crime activities the Greek government following the murder of Pavlos Fyssas, acted at last:
(Reuters) - Greek police arrested the leader and more than a dozen senior members of the far-right Golden Dawn party early on Saturday after the killing of an anti-fascist rapper by a party supporter triggered outrage and protests across the country.
The arrests, which are the most significant crackdown on a political party in Greece since the fall of a military dictatorship in 1974, are the biggest setback to Golden Dawn since it entered parliament on an anti-immigrant agenda last year.
front-paged by afew
Fri Sep 27th, 2013 at 05:22:58 AM EST
Our friend redstar asks:
Does anyone here still believe in the EU?
Keeping in mind the expression "army you have, not army you wish you had". In other words, now that you've seen what Europe is really all about, are you still for it, and why?
Use this as an open thread.
Wed Sep 25th, 2013 at 01:30:20 AM EST
There is great suffering in the peripheral countries of the Euro zone and the existing 'austerity' policies are gratuitously inflicting economic damage and destroying lives, especially in Greece and Cyprus, but also in Portugal, Spain and Ireland. At present, Germany has no motive to change anything and is the chief beneficiary of the existing crisis. This seems likely to continue so long as German workers accept their reduced circumstances and blame them on 'lazy southerners'. Germany is adamant about maintaining a hard money Euro and keeping all debts segregated by nationality while refusing to approve any surplus recycling mechanism within the Eurozone. These positions seem unlikely to change any time soon. Splitting the EMU into two monetary unions could provide a path to a resolution.
Sun Sep 22nd, 2013 at 12:36:21 PM EST
Germany elected a new parliament today, where the only practical question is: what kind of coalition will Chancellor Angela Merkel lead next. Exit polls indicate a "Grand Coalition" of the Christian Democrats (CDU) – plus their permanent Bavarian allies the Christian Socialists (CSU) – and the Social Democrats (SPD): the CDU/CSU is predicted to miss absolute majority by a few seats, the present neo-liberal coalition partner, the Free Democrats (FDP) is to drop from the federal parliament, the anti-Euro AfD party is predicted to narrowly miss the 5% limit, and no one should seriously expect the current SPD leadership to risk a three-party coalition with the Greens and the Left Party.
Wed Sep 18th, 2013 at 03:44:50 AM EST
A momentous announcement to the European people, from Mark Rutte and Jeroen "Dieselbomb" Dijsselbloem, through the mouth of the Dutch King:
“The classical welfare state is slowly but surely evolving into a ‘participatory society’,” he continued – one, that is, where citizens will be expected to take care of themselves, or create civil-society solutions for problems such as retiree welfare.
(FT.com: King’s speech to parliament heralds end of Dutch welfare state, September 17, 2013)
You have been warned.
Sat Sep 14th, 2013 at 05:06:17 AM EST
In the middle of the central Alps in Switzerland, high above the Gotthard tunnel and even higher above the Gotthard Base Tunnel, there is an east-west geological fissure which is drained by the upper Rhône, Reuss and Rhine rivers. Along these valleys run the electrified metre-gauge tracks of the Matterhorn Gotthard Bahn (MGB). During my tour of the Gotthard railway, I also rode MGB trains for a day tour in the high mountains. I wasn't as fortunate with the Sun as along the Gotthard line (clouds repeatedly arrived just minutes before a train), but I shot quite some photos in spectacular landscape.
MGB (ex FO) HGe 4/4II 108 "Channel Tunnel" with an eastbound Glacier Express (to St. Moritz) crosses the Bugnei Viaduct
by Frank Schnittger
Thu Sep 12th, 2013 at 01:10:59 PM EST
Paul Krugman has again been making some apposite comments on the EU economic crisis. First he slams Olli Rehn [European Commissioner for Economic and Monetary Affairs and the Euro] for being an ideological neo-liberal contemptuous of French democracy and with no real interest in furthering economic recovery in the EU:
The Austerian Mask Slips - NYTimes.com
Simon Wren-Lewis looks at France, and finds that it is engaging in a lot of fiscal austerity -- far more than makes sense given the macroeconomic situation. He notes, however, that France has eliminated its structural primary deficit mainly by raising taxes rather than by cutting spending.
And Olli Rehn -- who should be praising the French for their fiscal responsibility, their willingness to defy textbook macroeconomics in favor of the austerity gospel -- is furious, declaring that fiscal restraint must come through spending cuts.
As Wren-Lewis notes, Rehn is very clearly overstepping his bounds here: France is a sovereign nation, with a duly elected government -- and is not, by the way, seeking any kind of special aid from the Commission. So he has no business whatsoever telling the French how big their government should be.
But the larger point here, surely, is that Rehn has let the mask slip. It's not about fiscal responsibility; it never was. It was always about using hyperbole about the dangers of debt to dismantle the welfare state. How dare the French take the alleged worries about the deficit literally, while declining to remake their society along neoliberal lines?
There was a time when France was proud enough to stop such idiotic meddling in its affairs: Is there nothing that Olli Rehn can do or say that might get him sacked?
front-paged by afew
Tue Sep 10th, 2013 at 09:36:13 AM EST
George Stathakis, a professor of Economics at the University of Crete, is a SYRIZA MP and Shadow Minister of Development. Recently he wrote an article titled: "The Greek Issue in the Imaginations of German Politicians", where he points out six obvious truths about the Greek crisis that are being eschewed in German electoral discussions about Greece. Below I have translated these six points as they highlight "Eurotrib common sense", I think, and are interesting by themselves as they pretty much echo the analysis of the SYRIZA leadership, quite possibly Greece's government after the next elections (whenever they might come, and it might not be too long now)...
front-paged by afew
Tue Sep 3rd, 2013 at 02:03:36 AM EST
crossposted from Voices on the Square
Burning the Midnight Oil for the Arc of the Sun
Just this week, intervention into Syria was debated on the floor of the House in a robust, spirited debate in which the government of the nation presented its case, its elected opposition presented the contrary argument, and those fighting against intervention won the vote, 285-272.
front-paged by afew
by gmoke - Dec 8
by melo - Dec 10
by melo - Dec 10
by gmoke - Dec 8
by Oui - Dec 6
by marco - Nov 30
by afew - Nov 28
by Oui - Nov 23
by vbo - Nov 21
by gmoke - Nov 19
by Oui - Nov 19