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Merkel's Asmussen lords over Spain from the ECB

by Migeru Sun Apr 1st, 2012 at 04:53:53 AM EST

Not six hours had passed last Friday since the press conference at which the Spanish Finance Minister Cristóbal Montoro had introduced the new budget after Spain's Council of Ministers that the ECBuBa was already on record saying that it was good, but not good enough.

El BCE urge a España a aplicar los ajustes con "legislación de emergencia" | Economía | EL PAÍSThe ECB urges Spain to apply the adjustments with "emergency legislation" | Economy | EL PAÍS
Guindos arremete contra los "planteamientos absurdos" que invitan desde Bruselas a pedir ayuda al fondo de rescate para la banca[Economy minister] Guindos charges against "absurd proposals" from Brussels inviting to ask the rescue fund for help for the banking sector

Details below the fold.

Claudi Pérez Copenhague --- España es el gran riesgo, el país que puede desencadenar un nuevo capítulo de la crisis fiscal europea. En un movimiento inaudito que pone de manifiesto ese secreto a voces, el Banco Central Europeo (BCE), la institución que lleva las riendas de la respuesta europea a la crisis, instó este viernes al Gobierno español a tramitar por la vía rápida los Presupuestos de 2011. Europa quería un ajuste rotundo, y ahora lo quiere deprisa: "Es preferible que el presupuesto se tramite con legislación de emergencia", explicó este viernes en Copenhague el alemán Jorg Asmussen, miembro del comité ejecutivo del Eurobanco, el sanedrín que decide los tipos de interés, la barra libre de liquidez para la banca y la titubeante compra de bonos de los países con problemas cuando las cosas se desmadran en los mercados de deuda. Claudi Pérez Copenhague --- Spain is the great risk, the country that can trigger a new chapter in European fiscal crisis. In an unprecedented move highlighting this open secret, the European Central Bank (ECB), the institution that holds the reins of the European response to the crisis, on Friday urged the Spanish government to fast-track the approva of the [2012] Budget. Europe wanted a resounding adjustment, and now it wants it quickly: "it's preferable that the budget is dealt with with emergency legislation" said Friday in Copenhagen Germany's Jorg Asmussen, member of the executive committee of the ECB, the Sanhedrin which decides interest rates, the free-for-all liquidity to the banks and the hesitant bond purchases whrn things get out of hand in the debt markets.

I find the general tone of this article shocking. Referring to a political group as 'a Sanhedrin' (the name of the Jewish council that tried Jesus and handed him to Pontius Pilate to be executed) is not unheard of, but it denotes (and elicits) very strong contempt. This is the kind of language I would expect in the right-wing press referring to arch-enemies such as a gathering of union leaders or of the executive committee of a Basque independentist party. I don't expect such language from El Pais, but obviously I don't follow football, since I just googled a bit and discovered that a popular radio program calls its roundtable discussions "Sahedrin". Oh, well. Popular culture and all that.

Las cuentas públicas llegarán al Congreso el próximo martes, y los trámites parlamentarios podrían demorar la aplicación de los recortes de gastos y las subidas de impuestos hasta bien entrado el mes de junio: apenas medio año para usar la tijera y recortar el déficit del 8,5% al 5,3% del PIB. Eso, en condiciones normales. La prueba de que las condiciones de España son extraordinarias son las prisas del BCE: "El presupuesto es satisfactorio. Pero es preferible que las nuevas medidas se pongan en marcha tan pronto como sea posible, antes de junio, para que tenga el máximo impacto en 2012", dijo Asmussen, que fue uno de los principales asesores económicos de la canciller Angela Merkel en el Ejecutivo alemán y ha aprendido a toda velocidad la retórica tradicionalmente dura, severa, de los banqueros centrales germanos. El BCE tiene el problema perfectamente identificado: además de la vía urgente, quiere tener de inmediato toda la información "sobre cómo se van a reducir los déficit de las comunidades autónomas".The public accounts come to Congress next Tuesday, and parliamentary procedures could delay the implementation of spending cuts and tax increases well into the month of June: just half a year to use the scissors and cut the deficit 8 , 5% to 5.3% of GDP . That, under normal conditions. The proof that conditions in Spain are extraordinary is the ECB's rush: "the budget is satisfactory. But it is preferable that the new measures are in place as soon as possible, before June, to have maximum impact in 2012" said Asmussen, who was one of the main economic advisors of Chancellor Angela Merkel in the German government and has quickly learned the traditionally harsh, severe, rhetoric of German central bankers. The ECB has clearly identified the problem: in addition to the fast-track, they immediately want to have all the information "on how they deficit of the autonomous communities will be reduced".
España está por la labor, pero es evidente que esa presión no agrada al Ejecutivo. "Independientemente de lo que diga el BCE", replicó el ministro de Economía Luis de Guindos, "los presupuestos demuestran el compromiso con la austeridad". Eso sí, "hay una serie de trámites parlamentarios que se pueden acortar", concedió. Spain is willing, but clearly that pressure is not pleasing to the Government. "Independently of what the ECB says", said Economy Minister Luis de Guindos, "the budgets demonstrate a commitment to austerity". Granted, "there are a series of parliamentary procedures that can be shortened".
I don't know about you, but I find this all pretty unseemly.
Display:
Merkel's Asmussen lords over Spain from the ECB | 88 comments (87 topical, 1 editorial, 0 hidden)
Seed comment (4.00 / 3)
No, this is not an April Fools' story.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sun Apr 1st, 2012 at 04:54:33 AM EST
Re: Merkel's Asmussen lords over Spain from ECB (none / 0)
100 días y una sombra de intervención | Política | EL PAÍS100 days under the shadow of intervention - Politics - ElPais.com
Convencer a la vez a Bruselas y a los españoles es muy difícil. Por eso en el Ejecutivo, tras el golpe de las andaluzas, se ha instalado un debate de fondo: ¿Hay que contarle a los ciudadanos realmente cómo están las cosas? ¿Hay que hablar del riesgo de intervención? ¿Conviene explicar que la presión de Bruselas es de tal calibre que no hay margen para hacer otra cosa? De momento, el viernes ya se endureció el tono al presentar los Presupuestos --Soraya Sáenz de Santamaría y Cristóbal Montoro hablaron de "situación límite" y "crítica"--. Pero aún no se ha llegado a pronunciar la palabra tabú, "intervención", porque creen que generaría una psicosis que podría ser muy perjudicial en los mercados.To convince Brussels and the Spanish at the same time is very difficult. That's why, in the government, after the blow of the Andalusian [election defeat], a fundamental debate has established itself: Must the citizenry be told how things really are? Must one speak of the risk of intervention? Is is advisable to explan that the pressure from Brussels is of such magnitude that there is no room to do anything else? For the moment, on Friday the tone was hardened when the budget was introduced --- Soraya Saenz de Santamaría and Cristóbal Montoro spoke of 'limit' and 'critical situation' --- but the taboo word 'intervention' hasn't been uttered yet, becausethey believe it would generate a psychosis which could be very damaging in the markets.
......
"Yo no sé si lo explicamos bien o mal, pero no nos engañemos, estamos aguantando gracias a la respiración asistida de la barra libre de liquidez del Banco Central Europeo. Si no fuera por eso, esto revienta. No tenemos margen para nada, mucho menos para echarnos atrás y matizar la reforma laboral, por ejemplo. Y eso lo saben los sindicatos, lo sabe el PSOE y lo sabe todo el mundo que tiene alguna responsabilidad", señala un miembro del Ejecutivo."I don't know whether we're explaining it well or badly, but let's not fool ourselves, we hold up because of the assisted breathing from the ECB's free-for-all liquidity. We have no margin for anything, much less to backtrack and retouch the labour reform, for instance. The unions know this, and the PSOE, and everyone who has any responsibility", indicates a member of the Executive.

Of course pointing out that the Euro's constituent rules and the entire crisis response are irresponsible wouldn't be responsible.

Rajoy ha entrado ya en la fase similar a la de Zapatero en que la solo repetía una y otra vez un mensaje: mi único objetivo es salvar a España de la intervención. Claro que el presidente actual lo ha hecho antes de cumplir 100 días en el cargo y él, al contrario que su antecesor socialista, no lo dice abiertamente en público. Hay otra diferencia abismal: Rajoy tiene una mayoría absoluta recién lograda, un poder enorme en las autonomías, un crédito político y una legitimidad muy amplia para llevar a cabo reformas y tres años y medio hasta las próximas elecciones generales.Rajoy has already entered a phase similar to that of Zapatero in which he just repeated one message over again: my only goal is to save Spain from intervention. But the current PM has done this before being in office for 100 days and he, contrary to his socialist predecessor, does not say it openly in public. There is another great difference, Rajoy has a recently achieved absolute majority [in parliament], political credit, and qide legitimacy to carry out reforms and three and a half years until the next general elections.


There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sun Apr 1st, 2012 at 06:59:09 AM EST
Asmussen lords over Spain from the ECB (4.00 / 2)
Knowing the likely result of these austerity measures, and the size of the Spanish economy and its relationship to the rest of the eurozone, I have to wonder what Asmussen is up to. They are precipitating the destruction of the eurozone. Why?
by Upstate NY on Sun Apr 1st, 2012 at 11:42:18 AM EST
Re: Asmussen lords over Spain from the ECB (none / 1)
Drunk on hubris?

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Apr 1st, 2012 at 12:31:04 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 5)
Europeans better hope there is a rational (even if devious, pessimistic or despicable) strategy, because if this is really nothing more than a psychopathic impulse, then you really are better off without a unified Europe.
by Upstate NY on Sun Apr 1st, 2012 at 01:56:42 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 4)
The policies seem to make about as much sense as the peasant beating his horse to death in Brothers Karamazov. But this sort of thing does happen. They make more sense as a projection of one's own negativity onto an animate object and then destroying that object. This will sometimes happen when people cannot or will not face their own demons.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Apr 1st, 2012 at 02:55:40 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 3)
La actitud del BCE: dos hipótesis | Edición impresa | EL PAÍS*The ECB's attitude: two hypotheses | Print edition | El Pais
Luis Garicano, 20 de noviembre de 2011Luis Garicano, 20 november 2011
¿Y cómo paramos el pánico? ¿Quién puede hacerlo? Solo una institución, el Banco Central Europeo, tiene los recursos ilimitados requeridos para parar esto. Simplemente debe anunciar, como propusimos en agosto en estas páginas Fernández Villaverde, Santos y yo, que, para los países que cumplan ciertas condiciones, los tipos de interés de su deuda no superarán en ningún caso el 4%. Con alta probabilidad, no será necesario ni siquiera comprar mucha deuda: una vez que el objetivo exista, los mercados saben que poco podrán frente la capacidad ilimitada del BCE. No olvidemos que la Reserva Federal ha hecho compras de bonos por un valor mayor que las deudas conjuntas del sur de Europa.And how do we stop the panic? Who can do it? Only one institution, the ECB, has the unlimited resources required to stop this. They must simply announced, as Fernández Villaverde, Santos and Myself proposed on these pages, that the yield on the debt of countries fulfilling certain conditions will not exceed 4% under any circumstances. Highly likely, it won't even be necessary to buy a lot of debt: once the goal exists, markets know they can do little against the unlimited capacity of the ECB. Let's not forget that the Fed has made bond purchases worth more than the joint debt of Southern Europe.
Y sin embargo, el BCE se niega a hacer esto. ¿Por qué?However, the ECB refuses to do this. Why?
Hay dos hipótesis posibles. La primera es la de la superstición. Bajo esta hipótesis, el BCE, al igual que la opinión pública alemana, es presa de las supersticiones. Pese a la evidencia en contrario proveniente de las masivas compras de bonos en Japón, en Reino Unido y en EE UU, el BCE persistiría en la creencia de que la compra temporal, pero de forma ilimitada, de la deuda de un país solvente en una situación como la actual generaría inflación. Esto, simplemente no es cierto, ni en teoría, ni en práctica. Si esta hipótesis es correcta, no hay nada que hacer: el pánico seguirá, los tipos se dispararán, y se acabó el invento.There are two hypotheses. The first is superstition. Under this hypothesis, the ECB, like German public opinion, is prey to superstitions. Despite the contrary evidence coming from bond purchases in Japan, the UK and the USA, the ECB would persist in the belief that the temporary, yet unlimited purchase of debt of a solvent country in a the current situation would generate inflation. This is simply untrue, both in theory and in practive. If this hypothesis is correct, there's nothing to do. Panic will continue, rates will shoot up, and that will be the end of it.
La alternativa es que el BCE esté jugando una peligrosa, pero racional, partida de cartas. El BCE sabe que, en los buenos tiempos, las economías del sur de Europa no hicieron ningún esfuerzo por modernizarse. Saben que, si los tipos cayeran, los políticos de estos países volverían a sus andadas, negándose a hacer reformas que son necesarias para salir del subdesarrollo institucional en el que se encuentran, con enormes economías sumergidas, mercados brutalmente ineficientes, justicia de-sesperantemente lenta, falta de seguridad jurídica, etcétera. Y sabe que, sin estas reformas, el jugar con la misma moneda seguirá generando desequilibrios insostenibles. Bajo esta hipótesis, el BCE sabe lo que hace, que es asegurarse que los problemas estructurales de fondo se atacan y resuelven, aunque, eso sí, juega con fuego.The alternative is that the ECB is playing a rational, but dangerous, card game. The ECB knows that, in good times, the economies of Southern Europe made no effort to modernize. They know that, if rates fell, politicians in these countries would go back to their old ways, refusing to make the reforms necessary to get out of the institutional underdevelopment they are in, with large underground economies, brutally inefficient markets, despairingly slow justice, lask of legal security, and so on. And it knows that, without these reforms, playing with the same currency wil continue to generate unsustainable imbalances. Under this hypothesis, the ECB knows what it's doing, which is to ensure that the underlying structural problems are addressed and solved, though, granted, it's playing with fire.

Unfortunately, even in Garicanos "rational brinkmanship" scenario, the macroeconomics is wrong or at least incomplete. Structural deficit is not addressed by solving the institutional flaws he enumerates, but by investing in import substitution. And that kind of investment is not forthcoming even if his rational scenario, for that would be unacceptable market manipulation in the eyes of the Brussels establishment.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sun Apr 1st, 2012 at 05:17:14 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 6)
large underground economies

It seems that relatively speaking, although not in absolute euro terms, as the depression continues the underground economy is growing. VAT numbers are a good indicator:
The loss of VAT revenues is attributed to the chronic problems of the tax collection mechanism, with Provopoulos stressing that its performance is declining further. The problem is further being exacerbated by increasing tax evasion and the lack of liquidity in the market. Had Greece retained the same VAT revenues as 2008, it would have had an additional 2.3 billion euros last year, he said [emphasis mine]

brutally inefficient markets

As company after company is shut down, and going bankrupt it requires a breathtakingly irrational faith in the Invisible Hand fairy to assume that as markets become ever more oligoplistic they will become more "efficient". Unless I'm missing some interpretation of "efficient" here

despairingly slow justice

Reducing the number of people working in the justice system and their pay will make them faster? Also the litigation load that accompanies the huge economic disaster, increases the waiting time...

lack of legal security

I'm not sure what is meant here...?

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Sun Apr 1st, 2012 at 06:37:37 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 1)
lack of legal security

I'm not sure what is meant here...?

Mostly, inconsistent enforcement. Also, retroactive legislation, etc.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sun Apr 1st, 2012 at 07:39:49 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 4)
If only the Greeks loosened up the regulations on the taxi industry, the world economy would snap back instantly!
by Upstate NY on Mon Apr 2nd, 2012 at 08:43:25 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 6)
After Talos' Greek take, Italy's turn:

large underground economies

A chronic problem in Italy. You might distinguish between the underground economy associated with organized crime which is annually calculated at circa 135 billion euro; massive evasion by professional sectors, artisans, shop-keepers, lawyers, doctors; massive evasion by the elite class through corruption, transnational finances, etc. The first group generally preys on the second group in symbiosis with the third group. Fiscal pressure in Italy this year will exceed 45% in relation to the so-called legal economy. According to calculations beyond my grasp this actually amounts to over 54% when computed with the whole mess.

brutally inefficient markets

Frankly I don't know what this means literally. You can have a brutally inefficient industrial sector represented by companies such as FIAT presently run by an hysteric prat from Canada who would have us believe that the only problem is workers' wages and unions.  The Italian industrial sector is pre-Cambrian, a bunch of corrupt free-loaders that has done nothing in decades to be competitive and innovative (Sales down -35% in March.

So what the hell is he using the word "markets" for?

despairingly slow justice

Exactly what groups one (organized crime) and three (the elite) need to thrive. Very much a holy alliance. Rather than raise hell about workers' rights and flashy raids on small shop-keepers by the treasury police, just repeal all of Berlusconi's laws as well as those passed by the misnomer'd "center-left" such as the execrable Boato "counter reform." Justice was working wonderfully from 92 to 94 with the Clean Hands season.

lack of legal security

Any business that wants to set up shop in a country where false accounting is legal might have second thoughts.  

Naturally we know that Monti's Bulgarian majority in parliament depends on the whims of Berlusconi's personal concerns (Alfano), a thoroughly sissified simulacra of the left (Bersani), and the elite opposition to Berlusconi's predatory elitism (Fini, Casini). This entails that we must be fed all this bullshit about sacrifices and austerity for the populace while an irresponsible elite continues to do as they fucking well please.

But what gets me is the term "institutional underdevelopment." What's been going on in Italy these past decades is a class war. It's a War waged against the common people, the common good and against the institutions by the elite by all means available. The expression is way off mark. It's the contempt, the constant discrediting of institutions, by the elite that has bred civil unrest and apathy.

by de Gondi (publiobestia aaaatttthotmaildaughtusual) on Mon Apr 2nd, 2012 at 05:31:14 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 3)
The logic of the redtape in Greece is similar in that it prohibits new ventures and thereby leaves vertically integrated markets to vested interests. The shipping oligarchs started the banks and engage in the distribution system. Pay to play. The economy in these countries has been captured by powerful interests. Parasites, and they are hard to get rid of. Starve a parasite? The host will die first.

But the USA isn't far behind. Citizens United and the legal capture of our government through campaign finance is eroding the free market. Patent law, copyright, the internet, education, media: monopolized. On my local level, you have politicians going to bat for people who are going to federal jail for defrauding the city on contracts, cheating on federal taxes, and bilking customers (myself included! [I had a new gasline installed under my driveway] all under the watchful eye of the local gas utility and the city inspectors!).

I think Italy and Greece are the future.

by Upstate NY on Mon Apr 2nd, 2012 at 07:25:12 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 4)
So what the hell is he using the word "markets" for?

He's whoring for labour "market" deregulation. Anyone who isn't an economist or politician knows the labour doesn't work like a commodity market.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 01:38:43 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 6)
So he refers to labour markets not plain definition number one where products are bought and sold? Or is he refering to the elite-inspired rape of public resources in the name of free enterprise, the holy Private Sector that knows what's good for us?

It recalls the dispicable outrage of American capitalists when the Chinese passed a law to raise the minimum wage from 65 cents an hour to 75 cents.  

One problem is the interclass war of workers. Rather than fight immigration and so-called third world workers in sweat shops it would be better to encourage legislation and workers' rights in the so-called third world. On the consumers'side, massive publicizing and boycotting of produce would be in order. The recent anti-Apple campaign is an example.  

by de Gondi (publiobestia aaaatttthotmaildaughtusual) on Tue Apr 3rd, 2012 at 02:02:00 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 7)
But what gets me is the term "institutional underdevelopment." What's been going on in Italy these past decades is a class war. It's a War waged against the common people, the common good and against the institutions by the elite by all means available. The expression is way off mark. It's the contempt, the constant discrediting of institutions, by the elite that has bred civil unrest and apathy.

See Vicente Navarro: Crisis and Class Struggle in the Eurozone: The Cases of Spain, Greece, Ireland and Portugal (Counterpunch, AUGUST 19-21, 2011)

This shared history, however, has determined the nature of their states, a critical variable for understanding countries' economic behavior. Their states have been very repressive. Even today, these countries have the largest number of policemen per 10,000 individuals in the EU-15. Another shared characteristic is their very low level of state revenues and their highly regressive fiscal policies. The revenues to the state are much lower than the EU-15 average: approximately 34% of GNP in Spain, 37% in Greece, 39% in Portugal, and 34% in Ireland, compared with the EU-15 average of 44%, and compared with 54% in Sweden - the EU-15 country where the left has governed for the longest period. The low state revenues result from extremely regressive policies. The super-rich, rich, and high-income upper middle classes do not pay taxes at the same level and intensity as those in most of the central and northern EU-15 countries - a consequence of a history of government by ultra-right-wing parties. Of course, progress has been made since the dictatorships ended. But the dominance of conservative forces in the political and civil lives of these countries explains why their state revenues are still so low.

As a result, the public sectors in Portugal, Ireland, Greece, and Spain are extremely underdeveloped. And their welfare states are poorly funded and very limited, including their public transfers (pensions) and public services (medical care, education, childcare services, homecare services, social services, and others). Indicators of this are many. One example is public social spending as percentage of GNP, which is lower in these countries than the EU-15 average (27%): Spain, 22.1%; Greece, 25.9%; Portugal, 24.3%; and Ireland, 22.1% (compared with Sweden, 29.3%). Another example is the percentage of the adult population working in public services of the welfare state - again, lower than the EU-15 average (15%): Spain, 9%; Greece, 11%; Portugal, 7%; and Ireland, 12% (compared with Sweden, 25%). In fact, Greece's percentage is three points higher, 14%, because it includes services for the military, (which represents approximately 30% of public employees).

The specificity of the political regimes

Thus, for these four countries, not enough attention has been paid in the economic literature to the consequences of being governed by ultra-conservative forces. The influence of such forces has been enormous. It is also important to emphasize that the conservative forces in these peripheral countries are different from those in northern and central EU-15 countries. They do not belong to democratic traditions since they are the inheritors of either fascist or authoritarian regimes. Even today, after almost 30 years of democracy, such forces continue to be very influential in the four states, even when the states are governed by social democratic parties. As just one example, Spain's Supreme Court has taken Judge Baltasar Garzon, who used to be a member himself of the Court, to trial for daring to inquire about crimes committed by General Franco's fascist regime. It is not fully comprehended outside Spain just how influential the ultra-right-wing forces still are within the Spanish state. They dominate political culture in many different ways, including control of the major media. There are no major left or left-of-center media in Spain, or in the other countries in this group.



There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 01:49:58 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 0)
It's nice to learn that Ireland had a tradition of fascist dictatorship. And then Greece was a spit-in-the-bucket sort of thing, a batch of greedy colonels a long time ago.
by de Gondi (publiobestia aaaatttthotmaildaughtusual) on Tue Apr 3rd, 2012 at 02:09:33 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 1)
Of all people I wasn't expecting you to gloss over the Greek civil war of the late 1940's, or Gladio, or...

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 04:35:39 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 0)
Actually, Italy isn't mentioned above- that's PIIGS versus PIGS. I simply don't agree with Navarro's premises concerning repressive states (Ireland!?). We can do better than that.

Certainly, Portugal, Spain, Greece and Italy have long and consolidated traditions of elite prevarication and unaccountability to the common citizenry. I can't vouch for Ireland. Most states based on the Protestant reform have a marked degree of empowerment of the commons that has checked the excesses of the elites. But with the present world financial crisis, they too are plump for picking. It's a matter of time.

by de Gondi (publiobestia aaaatttthotmaildaughtusual) on Tue Apr 3rd, 2012 at 07:07:26 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 0)
I simply don't agree with Navarro's premises concerning repressive states (Ireland!?).

repressiveness is only one of the characteristics that Navarro mentioned.

res humà m'és aliè

by Antoni Jaume on Tue Apr 3rd, 2012 at 11:22:02 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 1)
That's his major premise. The rest is consequential. I agree with Colman and Migeru jsut below. Navarro is making a blanket claim and the supporting evidence he offers is rather sloppy. It makes for a quick-read op-ed. Even if one can agree with some of his points, it certainly doesn't exempt us from critical reasoning.
by de Gondi (publiobestia aaaatttthotmaildaughtusual) on Tue Apr 3rd, 2012 at 11:54:08 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 4)
As far as Greece goes, I think he is right. It's history is one of careening from crisis to crisis with the military and the right always as the backdrop. And even after entering the EU in the 1980s, they ramped up social welfare from almost nothing/nada to a range somewhat below the European average. That was the doing of the left, but the backdrop is still that most of the money goes to the rich and the military.

You can trace these forces in Greece all the way from the National Schism through WW2 and especially in the Civil War, the 1950s dominated by the ascendant conservatives and finally the colonels.

by Upstate NY on Tue Apr 3rd, 2012 at 12:35:59 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 0)
As I remember, the nationalist irish are not that different from most mediterranean fascist. And should I remind you of the importance of the catholic hierarchy in Eire?

res humà m'és aliè
by Antoni Jaume on Tue Apr 3rd, 2012 at 06:40:55 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (3.67 / 3)
Well, apart from being technically either Marxists or Social Democrats, the nationalist Irish weren't that different from the Fascists.

Or did you mean the developer and large land-owner developer dominated main parties in Ireland? They were pretty thoroughly center right, sure. With a dash of self-sufficiency that would fit in nicely with the thought processes of a lot of the green types.

Actually, come to think of it, the 1950s economic horror show would fit in nicely in a lot of debates around here. Possibly apart from the whole dependency on exporting cattle for processing in the UK thing.

by Colman (colman at eurotrib.com) on Tue Apr 3rd, 2012 at 09:38:21 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 1)
Self-sufficiency in the 1950s? Sounds like Franco.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 09:42:47 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 0)
Well, one possible translation of Fianna Fáil would be 'warriors of destiny', as 'Fianna' is Gaelic for the old warrior class, and Fianna Fáil has been the dominant party since independence, occasionally losing power to Fine Gael. Ireland seems somewhat to have resembled Mexico in that both had relatively low levels of military development combined with a political system dominated by 'revolutionary' parties that had turned decidedly status quo. In the case of Mexico the revolution had turned on the Catholic Church, which had been a bastion of conservatism and reaction, stripping it of power and possessions, while in Ireland the Church had been identified with the struggle for independence from a Protestant power. In Mexico the Party of Revolutionary Institutions dominated for >50 years of uninterrupted rule with presidents who served single five year terms, while in Ireland one leader, Eamon de Valera of Fianna Fáil, dominated Irish political life from the '30s into the '70s.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 3rd, 2012 at 10:35:20 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 1)
His analysis of Ireland seems a bit weird. Anyway, I thought Ireland's problem was that the social welfare was far too generous?

It may simply be that those countries underwent their economic development during the 80s and 90s rather than the 60s and 70s and so were influenced by the small-government free-market zeitgeist.

by Colman (colman at eurotrib.com) on Tue Apr 3rd, 2012 at 06:24:31 AM EST
[ Parent ]
Navarro (none / 1)
It does seem that he's extrapolating from the Spanish situation to all the 5 PIIGS beyond what can be legitimately extrapolated.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 11:34:15 AM EST
[ Parent ]
Re: Navarro (4.00 / 4)
And he's missing the real point, which is that the assorted states which had missed out on the economic development after WWII were developed under EU influence at a time when the political discourse was becoming dominated by the Reagan-Thatcher revolution.
by Colman (colman at eurotrib.com) on Tue Apr 3rd, 2012 at 11:38:44 AM EST
[ Parent ]
Re: Navarro (4.00 / 2)
I don't think he's missing that. His point is precisely that the PIIGS missed out on the Post-WWII economic and political development (he includes Ireland and not Italy presumably because Italy was a founding EEC member), and that one cannot separate the two. The political ("institutional" in the words of Luis Garicano upthread) underdevelopment was not corrected by the EU after 1980 because of the dominance of the Thatcher/Reagan paradigm.

Let's face it, the diagnosis of what's wrong with the Euro periphery is pretty simple and people as ideologicaly distant as Garicano and Navarro can agree on it. The difference is in the assessment of the causes of what's wrong and the policy proposals to fix it. Garicano, like most serious people, fully buys into the "neoliberal reform" agenda and the "painful but necessary" "internal devaluation". Navarro is a leftist dissident and doesn't.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 11:47:47 AM EST
[ Parent ]
Re: Navarro (4.00 / 4)
If you break Italy into North and South, then the post-war paradigm you describe applies. The north rebuilt and became an economic powerhouse, while the south didn't receive the same level of investment, and this was coupled with its political deficiencies to produce an Italy which, from the outside, appears to have much in common with the so-called laggards.
by Upstate NY on Tue Apr 3rd, 2012 at 12:40:00 PM EST
[ Parent ]
Re: Navarro (none / 1)
The so-called Mezzogiorno was flooded with investments. The plan was to encourage the industrial North to invest in the South by delocalizing industry. Gothic cathedrals were built in the wilderness without infrastructure. The North got its government subventions for its "investments", the local politicos and the various mafias got their cuts, and no jobs were created. It was massive corruption at its best. It still goes on with the EU substituting the Italian state and wondering where all the funding dissappears.
by de Gondi (publiobestia aaaatttthotmaildaughtusual) on Tue Apr 3rd, 2012 at 01:32:59 PM EST
[ Parent ]
Re: Navarro (4.00 / 2)
Capital flows doesn't mean investment, as we have seen in the last 10 years of the Euro.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Apr 4th, 2012 at 05:03:38 AM EST
[ Parent ]
Re: Navarro (4.00 / 4)
I'd say it wasn't so much a question of how much Marshall Plan money was made available, as the political context in which that happened and the specific political aims of the US in the postwar years as the Cold War increased its grip. While West Germany (once the "plan" of reducing it to an agrarian society was dropped) was billed to become economically successful in contrast to Red Germany across the border, in Greece and Italy the enemy was within, in the form of Communist parties capable of taking power. That led to US support for civil war in Greece and Gladio in Italy, which inflicted long-term damage on the development of democratic institutions in each country.

Just as American policy saw a strong Western Europe grouped around its industrial powerhouse West Germany as a necessary counterweight to the Soviet-dominated East, it did not count the Southern fringes (bar evidently the industrial North of Italy) as essential components of that bloc. That non-integration is still with us.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Apr 3rd, 2012 at 02:48:23 PM EST
[ Parent ]
Re: Navarro (4.00 / 2)
In Southern Europe, anticommunism justified antidemocratic practices and, economically, it was convenient to have a source of cheap labour for the EEC as well as an export market. Regarding tourism, it was not possible to fly across the planet so keeping the mediterranean vacation spots cheap was a necessity, too.

Over the next 20 years we could expect a return to the conditions of the 1960s: wealthy core near full employment, emigration from a deindustrialised periphery, managed democracy at best, and peak oil making intercontinental travel expensive so the working class of the core can vacation for cheap on the Med.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 03:21:05 PM EST
[ Parent ]
Re: Navarro (4.00 / 3)
Over the next 20 years we could expect a return to the conditions of the 1960s: wealthy core near full employment, emigration from a deindustrialised periphery, managed democracy at best, and peak oil making intercontinental travel expensive so the working class of the core can vacation for cheap on the Med.

You're far too optimistic.

by de Gondi (publiobestia aaaatttthotmaildaughtusual) on Tue Apr 3rd, 2012 at 03:33:32 PM EST
[ Parent ]
Re: Navarro (4.00 / 4)
Okay, maybe the 1760's.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 03:40:09 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 10)
Why? To kill social democracy - not the parties they are killing themselves, but the institutional framework they left, one state at the time. And to empower ECB to kill even more.

My impression is that they are done with Greece for now, so it is Spain and Portugals turn.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Sun Apr 1st, 2012 at 03:01:31 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 1)
That would satisfy Upstate NY's requirement for 'despicable'. Sort of makes the Bush 43 deliberate effort to drive out the inhabitants of the Lower 9th, et cetera, in New Orleans because they voted disproportionately Democratic, thereby improving the chances of the Republicans carrying Louisiana, pale in comparison. Where do such policies morph into 'crimes against humanity'? Apparently in another universe.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Apr 1st, 2012 at 03:42:37 PM EST
[ Parent ]
The European Social Modelissimo is still dead (4.00 / 3)
Presseurop: Draghi buries European social model (27 February 2012)
"The European social model has already gone". Never has a central banker spoken with such brutality about the ongoing crisis. The remarks made by Italian Mario Draghi who has succeeded Jean-Claude Trichet at the head of the ECB, in a long interview with the Wall Street Journal on Friday 24 February, are so overwhelming in their implications that they probably could not have been published elsewhere than in the newspaper revered as the "bible" of global finance. Even Jean-Claude Trichet chose his words more carefully when attempting to explain what the future holds for the peoples of Europe.

For Mario Draghi, a former Goldman Sachs banker who now commands the fate of Europe's single currency, the bid to save the euro will come at a high cost. Specifically, there will be "no escape" from tough austerity measures in all of the over-indebted countries; and this will necessarily involve giving up a social model based on job security and generous safety nets.

The model that provided the basis for European prosperity since the Second World War "has gone," argues Mario Draghi who reminds the WSJ journalist that the situation described in the famous quote from German economist Rudi Dornbusch - "the Europeans are so rich they can afford to pay everybody for not working" - no longer applies.



There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sun Apr 1st, 2012 at 07:45:29 PM EST
[ Parent ]
Re: The European Social Modelissimo is still dead (none / 1)
"the Europeans are so rich they can afford to pay everybody for not working"

Or for working. Not only are both statements true, but they offer the way out of the present crisis - but for the destructive beliefs clung to by >90% of Europeans - and not just them. If the statement no longer applies that is entirely a political statement, not an economic requirement.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Apr 1st, 2012 at 09:17:41 PM EST
[ Parent ]
Re: The European Social Modelissimo is still dead (4.00 / 3)
For an example see Randall Wray's ongoing series on his job guarantee plan.  The USA is spending much more than the cost of such a program just for the Afghanistan War, even without deducting the costs of existing programs, such as unemployment insurance and welfare. See blogs 42 - 44.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 2nd, 2012 at 02:39:43 PM EST
[ Parent ]
Randall Wray (4.00 / 6)
Holy shit, this is golden: MMP Blog #42: Introduction to the Job Guarantee or Employer of Last Resort (18 March, 2012)
I think that once the program is fully understood the only opponents will be those who enjoy seeing others unemployed. As I have argued, we cannot rule out cruelty. It is part of the human condition. So I do understand that some people like to witness the suffering of others--those they consider to be "undeserving". Cruelty will always exist. But we should never let the cruelest people in our society dictate public policy.

As readers will recall, J.M. Keynes recommended directing cruelty toward management of balance sheets rather than toward tyrannizing fellow humans:

There are valuable human activities which require the motive of money-making and the environment of private wealth-ownership for their full fruition. Moreover, dangerous human proclivities can be canalised into comparatively harmless channels by the existence of opportunities for money-making and private wealth, which, if they cannot be satisfied in this way, may find their outlet in cruelty, the reckless pursuit of personal power and authority, and other forms of self-aggrandisement. It is better that a man should tyrannise over his bank balance than over his fellow-citizens; and whilst the former is sometimes denounced as being but a means to the latter, sometimes at least it is an alternative. (GT Ch 24)
And as recent research demonstrates, we have created a sector of the economy that specializes in employing such people:
Studies conducted by Canadian forensic psychologist Robert Hare indicate that about 1 percent of the general population can be categorized as psychopathic, but the prevalence rate in the financial services industry is 10 percent. And Christopher Bayer believes, based on his experience, that the rate is higher. Bayer is a well-known psychologist who provides therapy to Wall Street traders. The type of psychopath the author is writing about is characterized by compulsive gambling.  And the Wall Street psychopath doesn't necessarily show up to his or her first day of work in this condition.  These "financial psychopaths" generally lack empathy and interest in what other people feel or think. At the same time, they display an abundance of charm, charisma, intelligence, credentials, an unparalleled capacity for lying, fabrication, and manipulation, and a drive for thrill seeking. A financial psychopath can present as a perfect well-rounded job candidate, CEO, manager, co-worker, and team member because their destructive characteristics are practically invisible. They flourish in fast-paced industries and are experts in taking advantage of company systems and processes as well as exploiting communication weaknesses and promoting interpersonal conflicts. Unfortunately-writes the author-the best candidates for many Wall Street jobs exhibit the traits of a financial psychopath. http://www.businessinsider.com/wall-street-psychopaths-2012-2#ixzz1oFcrIIq0
I think Keynes might have under-appreciated the damage such psychopaths on Wall Street can do to our economy. In any case, we should not let the cruelty of these psychopaths prevent us from pursuing sensible programs, such as full employment for anyone who wants to work.


There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 04:40:52 AM EST
[ Parent ]
Re: Randall Wray (4.00 / 6)
Wray closes this post as follows:

Let me close with a long quote from J.M. Keynes, among my favorite quotes from him:

   The Conservative belief that there is some law of nature which prevents men from being employed, that it is `rash' to employ men, and that it is financially `sound' to maintain a tenth of the population in idleness for an indefinite period, is crazily improbable - the sort of thing which no man could believe who had not had his head fuddled with nonsense for years and years.

    The objections which are raised are mostly not the objections of experience or of practical men. They are based on highly abstract theories - venerable, academic inventions, half misunderstood by those who are applying them today, and based on assumptions which are contrary to the facts . . .

    Our main task, therefore, will be to confirm the reader's instinct that what seems sensible is sensible, and what seems nonsense is nonsense. We shall try to show him that the conclusion, that if new forms of employment are offered more men will be employed, is as obvious as it sounds and contains no hidden snags; that to set unemployed men to work on useful tasks does what it appears to do, namely, increases the national wealth; and that the notion, that we shall, for intricate reasons, ruin ourselves financially if we use this means to increase our well-being, is what it looks like - a bogy.



While Keynesian 'sensibility' was influential for about three decades it has been back to nonsense since the '70s.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 3rd, 2012 at 11:01:43 AM EST
[ Parent ]
Re: Randall Wray (4.00 / 4)
Here's the whole list of L Randall Wray's posts on the Job Guarantee:


There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 11:30:46 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (3.75 / 4)
La diferencia socialdemócrata | Opinión | EL PAÍSThe Social Democrat difference | Opinion | El Pais
Jordi Sevilla 30 MAR 2012Jordi Sevilla 30 March 2012
La diferencia socialdemócrata debe hacer compatible la propiedad privada y la superioridad técnica del mercado, con la defensa del Estado y el cumplimiento de otros objetivos de responsabilidad social corporativa.The Social Democratic difference must make compatible private property and the technical superiority of the market with the defence of the State and the fulfilment of other objectives of corporate social responsibility.
......
Jordi Sevilla fue ministro socialista de 2004 a 2007. Acaba de publicar `Para qué sirve hoy la política. Una democracia para escépticos'.Jordi Sevilla was socialist minister from 1004 to 1007. He just publihsed `What politics is for. A democracy for sceptics'.

And this, my friends, if why the parties are killing themselves.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sun Apr 1st, 2012 at 05:22:40 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 6)
Euractiv: Delors points the finger at Europe's 'killers' (29 March 2012)
Delors made these statements in the European Parliament, where he gave his backing to an appeal "For a European Socialist Alternative", which he said represented "an offensive of Social Democracy in the broader sense".

...

Delors, who called the European Parliament's Socialist and Democrat group members who hosted the meeting his "comrades", said the current EU was "the reverse" of what he tried to achieve in the 1980s and '90s. Social dialogue and the community method are on the decline, he warned, and are being replaced by a surge of individualism and inter-governmental solutions, promoted by the conservatives.

Solidarity on the decline

"I regret to say today that social dialogue is absent. And why does this upset me? Not because it's the opposite of what I was trying to do, but because the dialogue is together with the parliamentary system, a cornerstone of democracy," he said.



There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Apr 2nd, 2012 at 10:20:51 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 0)
This is still absent from French media.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Apr 2nd, 2012 at 10:43:07 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (3.50 / 2)
I'm shocked:
Among the EU's national leaders, he pointed the finger at French President Nicolas Sarkozy and German Chancellor Angela Merkel.

...

He briefly referred to Sarkozy, accusing him of trying to "reassure" the French people by telling them that intergovernmentalism in Europe was the rule, as if "Europe could be French".

...

"Whatever the challenges of Schengen, and they largely come from Sarkozy, would there ever be Schengen countries if a few countries did not try to do it?" he said, referring to French president's electoral speech, which called for radically changing the way the Union manages its common borders.



There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Apr 2nd, 2012 at 10:48:11 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 0)
My impression is that they are done with Greece for now, so it is Spain and Portugals turn.

Very true. But, you don't really see Portugal being bashed or pressured much. They are the "good students". They even have their second rescue package pre-approved. Spain will pay for not being super obedient until they cry uncle.

by Euroliberal on Mon Apr 2nd, 2012 at 02:55:08 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (3.67 / 3)
I think something else is up. I think they know Portugal is teetering.

That's why the kind of shenanigans that got Greece/Goldman Sachs in trouble is being overlooked in Portugal.

Plus, Barroso!

http://seekingalpha.com/article/428631-portugal-gradually-shuffles-its-way-towards-the-front-of-the- debt-queue

According to the Troika calculations Portugal had sovereign debt of 102.7% of GDP in 2011, and a budget deficit of 5.9% broadly in line with the target laid down in its bailout package. Yet, despite the fact that the Portuguese reform programme was recently described by the WSJ (following the lead of the IMF) as being on track, the deficit numbers were, in fact, only saved by a last minute scramble which involved transferring funds (5.6 billion euros or 1.9% of GDP) from the banking-sector pension system to the government social security one, in order to achieve what the IMF consider a short term accounting benefit. There were also questions raised as to whether this was not "short term gain for long term pain" in another sense, since the government has also to assume future liabilities for bank pensions, and several experts have queried whether these liabilities were transferred on a "fair value" basis, or whether indeed some sort of disguised longer term (in the short term the bank balance sheets take a hit) subsidy to the banking system was not in fact indirectly provided.

In their second review of the programme (published in December) the IMF said the following: "Staff questions both the timing of the transfer and the appropriateness of in effect using an accounting technique to mask the true fiscal position". That is to say the Fund has a double role here - to talk the efforts of the Portuguese administration up before the world's press, and to try and keep the politicians in line in the background.

by Upstate NY on Tue Apr 3rd, 2012 at 12:49:51 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 1)
Garicano cree que se llegará al 5,3% de déficit al recortar hasta 64.000 millones | Economía | EL PAÍS[Luis] Garicano believes 5.3% deficit will be attained by cutting up to €64 billion | Economy | El Pais
El economista de Fedea tacha de "imposible" alcanzar la cifra propuesta por BruselasThe economist from FEDEA labels the figured proposed by Brussels as "impossible" to attain.
......
Preguntado por los ajustes, Garicano ha explicado que reducir el gasto público en 10.000 millones de euros conlleva una caída de entre el 0,6% y el 0,8% del Producto Interior Bruto (PIB).Asked about the adjustments, Garicano explained that cutting public spending by 10 billion Euros implies a GDP drom between 0.6% and 0.8%

So, the plan is to cut Spain's GDP by an additional 4% this year (above and beyond the general recession)? Of does the Troika's plan involve "expansionary austerity" whereby cutting by €10bn improves the "confidence" of markets resulting in economic growth rather than contraction?

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sun Apr 1st, 2012 at 04:53:40 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 1)
Shock Doctrine alive and well.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Sun Apr 1st, 2012 at 05:06:48 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (3.67 / 3)
The Euro project and the EMU are increasingly looking like an exercise in collective psychosis - one that will end in lots of death and destruction.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Apr 1st, 2012 at 07:27:57 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 6)
I think that Garicano and all FEDEA guys are working for the shock doctrine, very well paid by the IBEX 35 corporations, making very dark numbers to set a new paradigm of one-only contract for everybody, retrospective, to avoid young's unemployment, kill the sectorial negotiation, competitive lowering of salaries, etc.

Next step will be taxing for f**ing, any arbitrary amount.

He wasn't famous when the great building bubble, but he sound reasonable always in the same direction.

His only criticism for banks: too many politicians in control.

He is one of the best example of propaganda, putting the magnifying glass on the past wrong things and promoting worst things.

We learned, after reading "La société du spectacle" by Guy Debord, the paper that those public relations guys were writing.

I'd be happy if I could spit on his face, while saying a few words.

He works more for the legal destroying of right, than for any economic construction of Europe, from his little throne of LSE.

And he pays-back to his sponsor in the end of the conference, for example, saying that the future of Spain was to bet on the Cloud (in conference sponsored by Google), after competitive devaluation of workers.

They all are working for banks, knowing that their numbers don't work.

And as I'm Basque, I deserve a couple of points:

-- I'm a freelancer and my best client is a USA University (they pay better than in Spain).

-- We the Basques, 75 years after being bombarded first by Mussolini's in Durango and a few weeks later by german Nazys in Gernika (the first systematic civil bombings of civilians, just to try a new weapon), are building very important peaces for the engines of the A380, by Airbus, or the E787 Dreamliner, by boeing, or Wolkswagen bosses were coming to Arrasate to buy robots for their car assemblies from MCC, etc. and our unemployment is 8% in Gipuzkoa, 7,8% in Araba and 14% in Bizkaia, very far from spanish standards.

I'm a confederalist, but day after day I'm becoming more nationalist and independentist, because of the disaster of Spain.

I hope that France will vote right in the next election and so will do Germany, just to star to change course and get right the european project. Otherwise, we are f*ked.

As things are going, I expect more than six million unemployed for the end of the year in Spain.

El País is the last straw of a real newspaper; but today is very-very yellow and it works for a USAn hedge-fund. Publico only in web version... The road for a depression.

We the Basques, we still have some solidarity and stubbornness to have a newspaper in Basque and a newspaper from the Herri Batasuna environment alive. From private donations.

We export more than we import, and we still preserve our public banks in our hands.

I've asked several times to Garicano, why under the same legal framework Euskadi works and Spain don't?

He deletes my questions.

I first asked him: Who are you to decide that Spain must abolish "collective negotiation" of labour sectors?

No answer.

If Basque Country more or less works in European Standars within the same law, why do you want to change it?

Because they work for the banks and IBEX 35 enterprises, like De Guindos and they all.

Sorry Migueru. We have Varoufakis, Steve Keen, Richard Koo, but they want to be blind, even Krugman wants to be blind, and Obama is bought,...

Let's boycott Iran and be the friends of the friends of Syria, and so all.

Thanks for your post.

by kukute on Sun Apr 1st, 2012 at 10:32:14 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 0)
Sorry for the boldface. I don't know what happened.
by kukute on Sun Apr 1st, 2012 at 10:33:19 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 0)
[ET Moderation Technology™]

It's the Auto Format of comments. Text between *asterisk* comes out as boldface.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Mon Apr 2nd, 2012 at 02:24:48 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 0)
And sorry for lots spelling errors.
by kukute on Sun Apr 1st, 2012 at 10:38:54 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (3.67 / 3)
We export more than we import, and we still preserve our public banks in our hands.

I've asked several times to Garicano, why under the same legal framework Euskadi works and Spain don't?

The obvious answer is the Mondragon Cooperative.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Mon Apr 2nd, 2012 at 02:26:27 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 1)
MCC, ITP, CAF and several others.

MCC has quite a lot to do with low unemployment in Gipuzkoa.

And I know that German elections are a year ahead, but we'll arrive there with Mario's help, I hope.

Tkx

by kukute on Fri Apr 6th, 2012 at 05:06:47 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 4)
I hope that France will vote right in the next election and so will do Germany, just to star to change course and get right the european project. Otherwise, we are f*ked.
First of all, while Hollande may win in France this Spring, German elections are in 2013. Spain does not have that long to wait. Then, I don't share your optimism regarding the German SPD. They are still busy distancing themselves from Die Linke and like the rest of the European Social Democrats they're still stuck in austerity yes, but not this way.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Apr 2nd, 2012 at 05:15:50 AM EST
[ Parent ]
I'm considering moving to Euskadi (none / 0)
El Pais: Bilbao rechaza la amnistía fiscal de Rajoy porque Bizkaia "no blanquea dinero"
La negativa de Bizkaia, que se suma a la de Guipuzkoa, convierte a Euskadi en la única comunidad que no aplicará la medida
Bilbao rejects Rajoy's fiscal amnesty because Biscay "doesn't launder money"
Biscay's refusal, joining Guipuzkoa, makes the Basque Country the only [Spanish Autonomous] Community where the measure won't apply


There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Apr 2nd, 2012 at 02:47:06 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 1)
Greece, if I remember correctly, had under 100% private debt to GDP when all this started. In Spain and Portugal, the private debt is much higher (though in Spain, the gov't debt is still very low). The risk is that because of the private debt, the two economies will fall apart much faster than Greece's did if people can't make their payments and banks are then sucked into the vortex. I think they are treading much more lightly in Portugal than in Spain because the EU realizes that one rational thing for Spain to do is to expand investment (given its low public debt to GDP), whereas Portugal is on a precipice (it was allowed to move 1.9% of GDP worth of debt into pensions in order to meet its so-called targets).
by Upstate NY on Mon Apr 2nd, 2012 at 08:49:52 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 4)
I think it's simpler than that. Spain has an EPP government.

(Also, Spain is bigger. And France might start to see the handwriting on the wall when Spain goes tits-up.)

- 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 Mon Apr 2nd, 2012 at 01:37:45 PM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (4.00 / 8)
Knowing the likely result of these austerity measures, and the size of the Spanish economy and its relationship to the rest of the eurozone, I have to wonder what Asmussen is up to.

You are making an assumption which is not in evidence: That Asmussen knows the likely result of the application of his nostrums.

Asmussen is a quack. Quacks have a wide variety of rhetorical and psychological defense mechanisms against empirical reality that contradicts the efficacy and safety of their favourite nostrum. The only material difference between Asmussen and, say, Andrew Wakefield is that the latter has been reduced to operating out of fly-by-night quack outfits in Texas, while the former is part of the politburo of the most powerful federal institution in the European Union.

- 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 Mon Apr 2nd, 2012 at 04:02:48 AM EST
[ Parent ]
Re: Asmussen lords over Spain from the ECB (none / 1)
Can we ask him to read internal IMF documents?
by Upstate NY on Mon Apr 2nd, 2012 at 08:56:32 AM EST
[ Parent ]
We can *ask,* certainly. (n/t) (none / 1)


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 Mon Apr 2nd, 2012 at 01:34:32 PM EST
[ Parent ]
Re: Merkel's Asmussen lords over Spain (4.00 / 4)
What has become very painfully obvious is that any stat that fancies itself to be sovereign has to, as a matter of national security, have a contingency plan for dealing with total loss of access to hard currency credits. Not because such loss of access is necessarily a realistic scenario, nor because such a plan, predicated on the mobilisation of only domestic resources, will necessarily be preferable to the alternatives that present themselves. But because having such a plan sets an upper boundary on the amount of horseshit you have to swallow from the IMF, ECBuBa and similar quacks.

If you have a plan that involves martial law and a lot of pain, and they present demands that involve martial law and unbearable pain, you can tell them to fuck off and die, and then simply default on every foreign creditor you don't like.

- 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 Mon Apr 2nd, 2012 at 04:14:22 AM EST
Re: Merkel's Asmussen lords over Spain (4.00 / 2)
If they could work out bilateral goods and services based swaps with non EMU nations that could be a start: title to defaulted homes on the Costa del Sol, etc. and cheap labor to make them habitable along with expedited residency visas in return for tanker loads of oil; agricultural products and specialist medical care for college educations. It might not take too long before the rest of the EMU was too busy dealing with their own turmoil, post default, to be able to further damage Spain.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 2nd, 2012 at 09:49:22 AM EST
[ Parent ]
Re: Merkel's Asmussen lords over Spain (none / 0)
I could even spur some wholesome competition among Spanish regions: El Prat lends Madrid a hand in EuroVegas bid (1 April 2012)
Madrid's efforts to secure the right to host American tycoon Sheldon Adelson's EuroVegas development have received a boost after a delegation from Barcelona, which was mulling a bid to lure it to Catalonia, left a Las Vegas meeting with more hindrances than incentives.


There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Apr 2nd, 2012 at 10:00:21 AM EST
[ Parent ]
Re: Merkel's Asmussen lords over Spain (none / 0)
Adelson could always have Newt Gingrich give rousing speeches to like-minded US tourists who would fill his multiple skyscrapers around his knock-off Vegas Strip.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 2nd, 2012 at 10:25:42 AM EST
[ Parent ]
Captions? (none / 0)
Seen on ElPais' quasi-twitter feed:
El enviado de Merkel. Volker Kauder, presidente del CDU de la canciller alemana, ha visitado la Cámara Baja y ha dado el visto bueno a las reformas emprendidas por Rajoy que, en su opinión, "van por buen camino". Kauder está en España a iniciativa de Merkel (FOTO:C. Moya, EFE)
Merkel's envoy. Volker Kauder, President of the German Chancellor's CDU party, has visited the lower house [of the Spanish parliament] and given his approval to the reforms undertaken by Rajoy which, in his opinion, "go in the right direction". Kauder is in Spain at Merkel's initiative (PHOTO:C. Moya, EFE)


There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Apr 2nd, 2012 at 09:26:45 AM EST
Re: Captions? (none / 0)
Caption contest:

  1. "Nice little democracy you have there."

  2. "Remove that stairway and that banister will never do."

  3. ...?


As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 2nd, 2012 at 09:54:05 AM EST
[ Parent ]
Re: Captions? (none / 0)
"nein, nein, ze arm a little stiffer, raise it up like ziz, zen click ze heels"

It's a fine line between homage, parody, and consumer opportunism. Jess Walter
by melo (melometa4(at)gmail.com) on Mon Apr 2nd, 2012 at 09:04:59 PM EST
[ Parent ]
Re: Captions? (4.00 / 2)
"Replace with plain wooden benches, sir?"

"Nein, replacement costs DM. Just strip the cushions off the old ones."

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Apr 3rd, 2012 at 02:24:23 AM EST
[ Parent ]
Re: Captions? (none / 0)
ElPais: Merkel's envoy: "The government is on the right track and will be successful"


There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Apr 2nd, 2012 at 10:40:45 AM EST
[ Parent ]
Re: Captions? (none / 0)
"And the fish was this big."

"Wait, wait, you want to vote on that law?"

- 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 Mon Apr 2nd, 2012 at 01:41:59 PM EST
[ Parent ]
Re: Captions? (4.00 / 2)
Doesn't he look like Emperor Palpatine launching his death ray from his hands in The Return of the Jedi?

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Apr 2nd, 2012 at 02:48:08 PM EST
[ Parent ]
Re: Captions? (4.00 / 3)
If I didn't know any better he looks like a puppet with Merkel's hands reaching out from under his sleeves.
by Upstate NY on Mon Apr 2nd, 2012 at 07:27:42 PM EST
[ Parent ]
Re: Captions? (4.00 / 2)
"This is not the economy you are looking for..."
by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Apr 2nd, 2012 at 07:54:21 PM EST
[ Parent ]
Re: Captions? (none / 0)
"come warm your hands at the volcano, aah that's good... i hope you all have shares in bundesbank"

It's a fine line between homage, parody, and consumer opportunism. Jess Walter
by melo (melometa4(at)gmail.com) on Mon Apr 2nd, 2012 at 08:53:50 PM EST
[ Parent ]
Re: Captions? (none / 0)
If you want a vision of the future, Winston, imagine a boot stamping on a human face forever.

Von überall könnte das Volk, Urbrut alles Undemokratischen, Zelle des Terrors, über die gewählten Hüter von Wachstum und Wohlstand® kommen. - flatter
by generic on Mon Apr 2nd, 2012 at 09:31:58 PM EST
[ Parent ]
Re: Captions? (none / 1)
"Whoa, wait, I said 'resistance is futile, you will be assimilated', not that you can come back to Germany with me."

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 01:52:30 AM EST
[ Parent ]
Re: Captions? (none / 0)
(The guy on the right is the Speaker of the Spanish lower house, by the way)

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 01:53:43 AM EST
[ Parent ]
Re: Captions? (none / 0)
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Apr 3rd, 2012 at 02:09:19 AM EST
[ Parent ]
Re: Merkel's Asmussen (4.00 / 5)
There is a reason to destroy Spanish capital and demand... this is to destroy demand on tradeables commodities and eliminate the current account deficit in a single year. Since we do not have pesetas and the ECB will not print money for the States, demand destruction is the only indirect way to reduce import...just by destroying the demand for it. This is why DeLong and Krugman think European policemakers are sociopaths. This is how a sociopath would solve a current account balance problem. A non-sociopath will print money and increase inflation expectations solving two crises at the same time.

So, the question is what the Spanish government will do once Spain lives within its means (meaning export is roughly equal to imports)? If the reduction of the imports that came after the Nominal GDP fall of 2009 is any guide, a GDP falling 4% this year will eliminate the current account deficit completely.

Then what? If this is as crazy as it seems this benchmark will not change anything... and Spain will be destroyed by European economic policy.

The other option is that the Spanish governments wakes up and threaten to leave the euro if any further fiscal consolidation is requested... and finally no further fiscal consolidation is requested and printing money starts (or not even printing, just targeting Spanish debt price).

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Mon Apr 2nd, 2012 at 05:22:33 PM EST
Re: Merkel's Asmussen (4.00 / 5)
So, the question is what the Spanish government will do once Spain lives within its means (meaning export is roughly equal to imports)? If the reduction of the imports that came after the Nominal GDP fall of 2009 is any guide, a GDP falling 4% this year will eliminate the current account deficit completely.

Then what? If this is as crazy as it seems this benchmark will not change anything... and Spain will be destroyed by European economic policy.

Yeah, and then as soon as economic growth picks up, the trade deficit will return... Unless the long recession has destroyed the economic sectors responsible for most of the imports. But part of the "adjustment" includes a moratorium on rail and renewable energy development, and the key source of Spain's trade deficit is fossil hydrocarbons, so...

Truly a brilliant strategy from our betters.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 01:44:38 AM EST
[ Parent ]
Re: Merkel's Asmussen (4.00 / 2)
Unless the long recession has destroyed the economic sectors responsible for most of the imports. But part of the "adjustment" includes a moratorium on rail and renewable energy development, and the key source of Spain's trade deficit is fossil hydrocarbons, so...

See Luis de Sousa'a What makes them PIIGS? (April 10th, 2010)

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 01:51:21 AM EST
[ Parent ]
Merkel's Asmussen lords over Spain from the ECB | 88 comments (87 topical, 1 editorial, 0 hidden)


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