Scraping through? | 70 comments (70 topical, editorial, 0 hidden)

Hey, get this.

ElPais.com: Barroso advierte de que "no hay plan B" para Grecia

Grecia vota hoy la moción de confianza sobre el primer ministro Yorgos Papandreu y en apenas una semana tendrá su prueba de fuego: debe aprobar por lo civil o por lo militar un severo plan de austeridad que incluye miles de despidos de funcionarios, bajada de sueldos y de pensiones y un programa de privatizaciones que prácticamente solo deja en manos del Estado las islas y el Partenón. ¿Y si eso falla? "No hay plan B", ha asegurado el presidente de la Comisión Europea, José Manuel Durao Barroso. Si Grecia no aprueba los recortes -con una tensión social creciente en la calle contra esa propuesta? "no hay alternativa", ha afirmado en rueda de prensa.

Barroso warns that "there is no plan B" for Greece

Greece votes today on Prime Minister Yorgos Papandreou and in barely a week they will have their litmus test: they must approve by civilian or military means a severe austerity plan including thousands of public servant layoffs, wage and pension cuts and a privatization programme leaving in the hands of the state practically nothing but the islands and the Parthenon. And, if that fails? "there is no plan B", claimed Commission President Barroso. [What] if Greece doesn't approve the cuts - with a growing social tension on the street against the proposal? "there is no alternative", he stated in a press conference.

Is it just me, or is that reference to "military means" in the opening sentence just creepy? And, considering it's outside the quotation marks, did Barroso say it or did El Pais editorialise it?

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Jun 21st, 2011 at 09:29:55 AM EST
[ Parent ]

Re: Scraping through? (none / 1)

These words are not in the advance draft of his speech (my bold):

EUROPA - Press Releases - José Manuel Durão Barroso President of the European Commission Press conference in advance of the European Council Press Conference Brussels, 21 June 2011

We know that many people in Greece are faced with deep cuts that have a real impact on their income. We understand how difficult this is. If there were an easier route out of the crisis, we would have taken it. But there is not. The only way for Greece to return to growth and create jobs in a sustainable way is to restore competitiveness and put its public finances on a solid footing. That is the route Greece has embarked upon, with the European Union's full support and solidarity.
It is crucial that the new Greek Government receives the confidence of the Parliament tonight so that it can build the consensus the country needs for far-reaching economic reform. Next week is the moment of truth where Greece needs to demonstrate that it is genuinely committed to the ambitious package of further fiscal measures and privatisations put forward by Prime Minister Papandreou's government and agreed with the EU and the IMF.
My message today is that if Athens acts, Europe will deliver. There is a plan. I urge everybody to now act upon it. I think it is better to act than just to talk. There is a plan, let's put it to practice.

But the page is headed with the warning "check against delivery" (he may finally have said something different).

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Jun 21st, 2011 at 09:47:26 AM EST
[ Parent ]

Re: Scraping through? (none / 0)

A letter from Barroso:

Barroso draws Commission's red lines ahead of summit | EurActiv

In a letter sent to EU heads of state and government, European Commission President José Manuel Barroso has laid down his services' red lines regarding to the EU's priorities ahead of a summit on 23-24 June.
...
In the field of economic policy, Barroso calls for a financial transactions tax (FTT) to be introduced in Europe, despite the fact that the issue is not officially expected to be discussed during the summit.
The Commission is expected to unveil a blueprint for the EU's next long-term budget on 29 June. Barroso's announcement suggests that the EU executive may propose to introduce an FTT as a so-called 'own resources' stream of EU financing, likely to taxed at a level of 0.01-0.05% of the value of financial transactions.
Barroso argues that such an EU-wide tax would prevent the internal market for financial services from fragmenting as a result of uncoordinated national tax measures.
The Portuguese also stresses that financial institutions should make a fair and substantial contribution to recouping the costs of the recent crisis, apparently throwing his weight behind the idea of making banks and other financial institutions pay for the sector's failings through a levy on banks' liabilities.
Another highlight of Barroso's letter is his insistence that EU countries should not undermine the bloc's border-free Schengen area by deciding to re-introduce border controls at national level.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Jun 21st, 2011 at 09:54:03 AM EST
[ Parent ]

Wow! (none / 1)

Formerly serious people backing a transaction tax!

First those darn flaky social democrats (SDP et Socialistes)

And now that tedious Barroso fellow.

Are we winning yet? There's a dramatic turnaround in the range of options proposed, in any case.

Tina? Tara? Tamara? (There are manageable and realistic alternatives...)

_{It is rightly acknowledged that people of faith have no monopoly of virtue
- Queen Elizabeth II}

by eurogreen on Tue Jun 21st, 2011 at 11:54:59 AM EST
[ Parent ]

Re: Scraping through? (none / 0)

Quotes from the actual press conference speech, mostly relayed by business/markets media, stress the offer of cohesion funds to Greece:

Barroso suggest swift extra EU funds to help Greece now -- EUbusiness - legal, business and economic news from Europe and the EU

"I'd like to ask the European council to discuss what we can do to assist Greece beyond its consolidation efforts to enhance competitiveness and address the urgent problem unemployment," Barroso said at a news conference.
Greece had the potential to access European monies under the European Union's cohesion policy, he said.
"We should concentrate these funds on where it matters most now, on improving competitiveness and employment. We should cordinate them, find a way to frontload and accemlerate them so that Greece gets the benefit now," he said.

EU Commission says Greece should get help accessing billions of EU development funds - News1130

Greece has been unable to access billions of euros in EU funds designed to boost development in the bloc's poorer regions because it can't co-finance projects and prove that it can use them effectively.
Barroso said that the EU could accelerate payouts and frontload some projects, which could give Greece quick access to some €1 billion to help make its businesses more competitive and boost employment and training. That's only a small fraction of the €15 billion or so Greece could still get from the EU until 2013.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Jun 21st, 2011 at 10:07:31 AM EST
[ Parent ]

Re: Scraping through? (4.00 / 2)

The offer of cohesion funds is not an offer of additional cohesion funds, it's an offer to front-load the disbursement of available cohesion funds. So, what is being proposed? To give Greece all the cohesion funds for 5 years in just one year so they can give it to the banksters?

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Jun 21st, 2011 at 10:25:22 AM EST
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Re: Scraping through? (none / 1)

Is Barroso concerned that the ineffectual measures foisted on Greece will simply precipitate a Greek default, and therefore take down Portugal immediately?

Is Barrosso concerned about Portugal?

by Upstate NY on Tue Jun 21st, 2011 at 10:50:22 AM EST
[ Parent ]

Re: Scraping through? (none / 0)

Possibly.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Jun 21st, 2011 at 10:53:46 AM EST
[ Parent ]

Re: Scraping through? (none / 1)

EU Commission says Greece should get help accessing billions of EU development funds - News1130

Greece has been unable to access billions of euros in EU funds designed to boost development in the bloc's poorer regions because it can't co-finance projects and prove that it can use them effectively.

I saw somewhere that Greece has a very low conversion rate of EU regional development funds, I understand that better now.

If the proposition is to relax the co-financing rules, or give them assistance in qualifying projects, then perhaps it might be the start of "doing the right thing now that we've exhausted all the other possibilities"?

_{It is rightly acknowledged that people of faith have no monopoly of virtue
- Queen Elizabeth II}

by eurogreen on Tue Jun 21st, 2011 at 12:14:38 PM EST
[ Parent ]

Re: Scraping through? (none / 1)

How is Greece going to co-finance in the throes of austerity?

It would be best for Greece to turn Barroso's proposal on its head and ask to be allowed to roll over unused cohesion funds until after it is solvent again.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Jun 21st, 2011 at 12:37:57 PM EST
[ Parent ]

Re: Scraping through? (4.00 / 2)

...the EU could accelerate payouts and frontload some projects, which could give Greece quick access to some €1 billion to help make its businesses more competitive

Competitive to what?

The unassailable fact¹ is there are 4.5 billion people who would be ecstatic to have a job paying €10,000/yr whereas that money would only enable a Greek citizen to live on a park bench and eat cat food. The unassailable fact¹ is the EU (and US and Canada and etc.) Cost of Living is too high compared to the global wage rate. The unassailable fact¹ is the Cost of Living MUST, at some point, fall to some correlation to the wage rate for the stark reason people cannot buy what they do not have the money to buy. And as the Cost of Living falls economic activity, as measured in money decreases, as well.

Austrians and NCE economists like to go around bleating, "TANSTAAFL." Well, it applies to the FIRE sector as well as the slob on the assembly line. As the COL falls FIRE sector profits and their expected and booked profits on previous investments MUST fall, as well, with the effective negative return on those investments directly related to the amount of leverage they created on the primary paper².

Also Sprach CAPM.

The Germans and French are attempting - I don't know how consciously - to use the Greek government as a pass-through entity in an attempt to shore-up their own FIRE institutions who foolishly lent the money in the first place and who foolishly bought the bonds in the second place. The "actual" crisis is not the PIGS or the EU periphery; the "actual" crisis is the fact the German and French FIRE sector is, effectively, bankrupt because they made foolish investments with their operating capital.

---------------------------------------------------------------------------------------------------- ---

¹ like a turd in a punchbowl

² ignoring the fact the downside of a leveraged investment is greater than the upside

Ever since I learnt about confirmation bias I've started seeing it everywhere

by ATinNM on Tue Jun 21st, 2011 at 11:45:14 AM EST
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Re: Scraping through? (none / 1)

Perhaps the global wage rate is too low?

by Colman (colman at eurotrib.com) on Tue Jun 21st, 2011 at 11:49:57 AM EST
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Re: Scraping through? (none / 0)

TANSTAAFL!

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Jun 21st, 2011 at 11:52:16 AM EST
[ Parent ]

Do you mean Tinstaafl? (none / 0)

TANSTAAFL sound like some sort of smorgasbord.

_{It is rightly acknowledged that people of faith have no monopoly of virtue
- Queen Elizabeth II}

by eurogreen on Tue Jun 21st, 2011 at 12:20:48 PM EST
[ Parent ]

Ah, I was thinking of Rijsttafel (none / 0)

Rijsttafel - Wikipedia, the free encyclopedia

The Indonesian rijsttafel (pr: RYST-tah-fell), a Dutch word that literally translates to "rice table", is an elaborate meal adapted by the Dutch from the Indonesian feast called nasi padang.

Prizes for what it's an anagram for.

"Really, it's just so terribly troublesome, a free European lunch"

_{It is rightly acknowledged that people of faith have no monopoly of virtue
- Queen Elizabeth II}

by eurogreen on Thu Jun 23rd, 2011 at 07:35:12 AM EST
[ Parent ]

Re: Scraping through? (none / 1)

The global wage rate is too low for some areas (relative to their COL,) too high for some areas (relative to their productivity,) and just right for others.

Under these conditions trans-nationals can 'arbitrage' the labor costs of their goods by buying labor in low COL and wage rate areas, selling in high COL and wage rate areas.

Ever since I learnt about confirmation bias I've started seeing it everywhere

by ATinNM on Tue Jun 21st, 2011 at 12:05:38 PM EST
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Re: Scraping through? (none / 1)

This arbitrage operation is what floating currencies and full employment fiscal policy are supposed to prevent, by making sure that wages equal cost of living equal productivity in any given currency zone, and dumping the residual on the money markets.

But obviously this sticks the money markets with the unenviable role of actually doing their jobs. So naturally they tend to object to that.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Jun 21st, 2011 at 12:18:10 PM EST
[ Parent ]

Re: Scraping through? (none / 1)

And also why God invented tariffs.

Well acknowledged place tariffs can, under some circumstances, have deleterious outcomes. It's not so well-acknowledged¹ placing tariffs too low can also have deleterious outcomes.

It would help if economists, policy advisers, and Decision Makers could spell "d-y-n-a-m-i-c f-e-e-d-b-a-c-k l-o-o-p-s" ... but let us not wish for the impossible.

¹ Generally by regulators and their "enablers" sticking their fingers in the ears and shouting, "La! La! La! I can't hear you!"

Ever since I learnt about confirmation bias I've started seeing it everywhere

by ATinNM on Tue Jun 21st, 2011 at 02:54:09 PM EST
[ Parent ]

Re: Scraping through? (none / 0)

Tariffs are not needed simply to balance different CoL levels. The smart way to use tariffs is to compensate for hidden subsidies.

Such as subsidy-by-dead-coal-miners and subsidy-by-dumping-dioxin-in-the-river.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Jun 21st, 2011 at 04:29:25 PM EST
[ Parent ]

Scraping through? | 70 comments (70 topical, 0 editorial, 0 hidden)

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