Europe on this date in history:

1802 - By the Law of 20 May 1802, Napoleon Bonaparte reinstates slavery in the French colonies, revoking its abolition in the French Revolution

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For errant Saturdayness

Yesterday, the paper edition of The Guardian had the following story on the front page:
Cost of Greek exit from euro put at $1tn | Business | The Guardian

The British government is making urgent preparations to cope with the fallout of a possible Greek exit from the single currency, after the governor of the Bank of England, Sir Mervyn King, warned that Europe was "tearing itself apart".

Reports from Athens that massive sums of money were being spirited out of the country intensified concern in London about the impact of a splintering of the eurozone on a UK economy that is stuck in double-dip recession. One estimate put the cost to the eurozone of Greece making a disorderly exit from the currency at $1tn, 5% of output.

Officials in the United States are also nervously watching the growing crisis: Barack Obama on Wednesday described it as a "headwind" that could threaten the fragile American recovery.

Only of course, the paper headline was just: $1,000,000,000,000

front-paged by afew

Europeans on this date in history:

1922 - establishment of the Young Pioneers, the Soviet replacement of the [Boy] Scouts

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You can talk in here

My attention has recently been directed to a letter from Vince Cable to David Cameron, sent in February and published by the BBC in March (PDF) on the topic of industrial policy.

Beyond the tortuous reasonings to justify having an industrial policy (it boils down to "we're not picking winners, but it's a request of big business"), the most interesting bit was this quote:

While we are making move to promote the next generation of renewables (nuclear and offshore wind)

Nukes as renewables? That's quite an argument to make... Low carbon may be arguable, but renewable is rather more of a stretch!

But this means, more interestingly, that as a "renewable" source of energy, nuclear is likely to become a candidate for a feed-in tariff (or its marketista-distorted cousin, the "contract for differences" whereby the government lets you sell your power on the market but pays you the difference between that price and an agreed fixed price) ... but the price level required for nukes is a big open question and there are suggestions that it will end up being significantly higher than onshore wind and close to what is offered to offshore wind in other countries. That will put quite a dent in the argument that nukes are so much cheaper than renewables as a source of low carbon electricity. We'll see...

Europeans on this date in history:

1872 - birth of Bertrand Arthur William Russell, a British philosopher, logician, mathematician, historian, and social critic. (d. 1970)

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What do we have here?

I've been away out of the country for a while and out of touch with the referendum debate raging in Ireland concerning the Fiscal Stability Treaty. So a seminar in Trinity College Dublin on the topic led by a lawyer, an economist and a sociologist seemed like a good way to get back into the topic. The speakers were:

1. Dr. Gavin Barrett, School of Law, University College Dublin (Voting YES)
   
2. Prof. Terrence McDonough, School of Business & Economics, National University of Ireland, Galway (Voting NO)
   
3. Trinity's Head of School of Social Sciences and Philosophy, Prof. James Wickham (my old Sociology Prof. voting DON'T Know).

Dr. Barrett's main points were that there is very little in the Treaty that is not already contained in previous Treaties and Council decisions, and that the Treaty, through the establishment of the ESM, provides Ireland with an insurance policy in case we needed further funding after the current Troika led "bail-out" expires at the end of 2013. Ireland needs to roll-over c. €18 Billion of debt in 2014 alone, and may not be able to achieve that funding on the sovereign debt markets or from the IMF in the absence of ECB/European Commission goodwill and support.

In a subsequent question I noted that many Irish voters might regard external restraints on Government borrowing as a good thing in itself given the experience of two Fianna Fail led administrations in the late 1970's and from the late 1990's onwards, which effectively bought their way to power on the promise of tax reductions and public expenditure increases at a time when the economy was already growing rapidly. The resulting booms led to rather painful busts which Irish voters will not wish to see repeated.

So why all the fuss, and why is there a real possibility the Treaty will be rejected?

front-paged by afew

Europeans on this date in history:

1946 - birth of Udo Lindenberg, German pop music survivor.

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Exclusively Wednesday

I really don't know what to say to this:

Mr Noonan said adopting the treaty will send a signal out to Europe that the Irish are serious, committed people, and committed to the repair job required for the economy.

If we vote No, he said, Europe will move on and we will be left with less than full membership of the eurozone.

Insert golfing joke for his Bloomberg audience.

Wonder if he knows that Irish golf clubs seem to be begging for members at this stage?

Meanwhile, UK Independence MEP Nigel Farage, said ratification of fiscal treaty would result in an unacceptable loss of sovereignty for Ireland.

Why, thank you for coming over here to tell us how to look after our sovereignty.

Mr Farage was speaking as a delegate of the Europe of Freedom and Democracy group who are in Dublin today campaigning against the fiscal treaty.

Europeans on this date in history:

1830 - death of Joseph Fourier, Physicist (b. 1768)

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If you're feeling down in the dumps

How do to deficit reduction:

By the fourth quarter of the year, loans from the EU-IMF programme were €34.2 billion, almost 20 per cent of total liabilities. (Irish Times)

It’s working! In opposite land, the deficit is going down!

On the one hand, the news in Europe at the moment is pretty depressing: the amount of theological propagandra being emitted from our Most Serious Lords and Masters in order to browbeat the Greeks into appointing a suitable government and putting any other possibly rebellious states back in line is incredible. They worship the confidence fairies but they are willing to drastically undermine what confidence is left in the Euro in order to punish the heretics.

On the other hand, the narrative shows possible signs of turning. Hollande’s election, Merkel’s defeats in state elections, the Greek election and the increasing difficulty in hiding the divergence between religious dogma and reality seems as if it may cause the prevailing story - governments have to cut spending to save the economy - to change. When herd behaviours like the conventional wisdom change they often change quickly.

The problem is that even if the narrative does change and we suddenly come to our collective senses Europe will find itself in a very difficult place: face saving solutions that might have been sufficient a couple of years ago will probably not suffice.

Yanis Varoufakis has posted Version 3.0 of his Modest Proposal, which seems as good a proposal as possible for sorting the problems out as is available within the political constraints we’re facing. It has three threads

1. Deal with the banking crisis by creating a single European Banking Area that will directly recapitalise, supervise and resolve banks.
2. Deal with the sovereign debt crisis by turning their Maastricht Compliant Debt into ECB issued bonds.
3. Recycle surpluses through the European Investment Bank and the European Investment Fund funded by ECB bonds.

Which is all far too sensible for the Serious people.

Europeans on this date in history:

1618 - German astrologer Johannes Kepler confirms his previously rejected discovery of the third law of planetary motion

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Sing for your supper

Europe on this date in history:

1931 - Ådalen shootings: five people are killed in Ådalen, Sweden, as soldiers open fire on an unarmed trade union demonstration.

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Today the most populous German state, Northrhine-Westphalia (NRW), is holding snap elections.

The previous elections in 2010 were noteworthy for several reasons, in increasing order of importance:

• the emerging five-party parliament resulted in something unusual for Germany when Social Democrats (SPD) and Greens risked a minority government,
  
• In the campaign, to help her local comrades of the Christian Democrats (CDU), Chancellor Angela Merkel saw fit to employ xenophobic stereotypes against Southern Europeans, setting the tone of public discussion on the Eurozone crisis ever since;
  
• It was after these elections and this CDU loss that Merkel buried the tax cut dreams of her Free Democrat (FDP) coalition partners and chose austerity as both domestic and European signature theme.

Austerity was now a main campaign theme (more below the fold). The snap elections were the result of a mis-calculation by the opposition (see Snap elections in NRW by Katrin for details), as they came when the NRW SPD and Greens soared in the polls. Since then, the situation changed somewhat with the meteoritic rise of the Pirate Party, and a poll bump for the FDP that put them above the 5% limit again. Still, if the last polls are a good indication, red-green is likely to get majority: the SPD is at 37-38%, the CDU at 30-33%, Greens 10-12%, Pirates 7.5-10%, FDP 5-6%, and the losers of the election, the Left Party, at 3-4%. Update [2012-5-13 12:19:17 by DoDo]: exit polls indicate the CDU doing much worse and the FDP even better (see comments for the results).

The likely effects of the election: the SPD will be somewhat emboldened, federal environment minister Norbert Röttgen (CDU) who leads the CDU list will have to bury his dreams to succeed Merkel, and Merkel will 'suffer' another 'Pyrrhic defeat'.