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A postmodern reenactment of the 1930s

by JakeS Tue Feb 12th, 2013 at 04:30:42 AM EST

Earlier this week, I attended a talk by a distinguished gentleman scholar, on the subject of tax fraud and its enablers.

He wanted grad students for research projects in Eastern Europe, so after the talk we chatted a bit about the situation in Greece, which led to an e-mail exchange, in which I was asked whether I was actually serious when I gave 50/50 odds of at least one civil war in Southern Europe before the end of the present depression.

And since I already have the response typed up, I figured I'd repost it here:

Short answer: Yes.
In terms of both the magnitude of the crisis (GDP loss, inequality, unemployment, poverty, your indicator of choice here) and the policy response (rigid adherence to a hard money/balanced budget doctrine) we are in a postmodern reenactment of the 1930s. I don't see why we should expect a built-to-fail policy mix to fail any less catastrophically than it did last time.

Longer answer below the fold.

front-paged by afew


Longer answer: Greece is basically a failed state by now. Going by the Russian experience (ten years of austerity causes approx. 1 percentage point of poverty-related excess mortality), somewhere between 5 and 50 thousand Greeks have died of poverty since the beginning of the depression. Throughout the present depression, Spain has been Greece plus 12-18 months. And throughout the present depression, European policymakers have managed to underperform even my most pessimistic expectations.

On top of this, Spain and Greece are net fuel importers running primary trade deficits, which is known to lead to instability in the event of a sudden loss of access to hard currency credit. Given the contemporary political landscape, I cannot tell a plausible story about how Spain and Greece can avoid either loss of access to hard currency credit or a total breakdown of the legitimacy of their current political system (Greece is already quite far down the latter track). The only event I can imagine being of sufficient magnitude to change the political landscape enough that such a story becomes plausible is an armed conflict on sufficient scale to wake up the creditor countries to the fact that their policies are unsustainable.

Long answer:
Greece and Spain are both saddled with an obviously unsustainable hard currency debt. There are precisely three ways in which that story can end:
1) The country is liquidated (think Russia in the 1990s in the very best case).
Both countries have armed paramilitary forces on both the left and the right (and Spain has the added fun of having armed nationalists in the provinces and a central government that has in the past threatened to use the army to subdue provinces that fail to toe the Madrid line). They will not go quietly into the night.

2) Disorderly default, in which case they will be cut off from hard currency borrowing for a period of approx. 18 months, until the hysterics in the financial markets have calmed down (going by the Russian and Argentine experiences).
Both countries have a trade deficit, and are import dependent on fuel (and in Spain's case food as well - Greece is a net food importer in money terms, but I believe they are a net calorie exporter, and under suddenly imposed autarky that's what counts). Which means that being cut off from hard currency borrowing is pretty much equivalent to being put under a wartime naval blockade.
Switching to what is essentially a wartime economy cannot be done from a cold start, which means that the government will have to make serious preparations for default at least one to two quarters in advance. I do not believe that the current government of either country has done so, because I do not believe that they ever viewed the crisis in terms of national security and territorial integrity. An incoming Syriza or IU government is unlikely to be given six months to prepare before they are forced to choose between disorderly default and an austerity regime which will destroy their electoral legitimacy (and that's assuming they have the plans ready to roll out the moment they enter office - which Syriza has indicated that they have, but I don't think IU does).
In the absence of an orderly transition to a wartime economy, loss of access to food and fuel will effectively liquidate the country per option 1 (think a postmodern reenactment of 1930s Germany).

3) Orderly default, in which the ECB monetizes their (new) government bonds for a period of 18-24 months following a default, until the hysterics in the financial markets have calmed down. This will avoid civil war.
If you can present a politically plausible story that ends with the ECB committing to unrestricted bond monetization, then I would very much like to hear it. Because I can't think of any, and none of my friends can either.

- Jake

Display:
See also.

And.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 8th, 2013 at 03:07:53 PM EST
The countries will be violently liquidated, but the creditor countries will not wake up, preferring to fall back on the comfortable "those lazy southerners really don't know how to govern themselves".

Remember the 1930's: Spain had a civil war in 1936-39 and Europe's liberal democracies sat back, preferring to allow the Axis powers and the Soviets to battle it out in a proxy war. Not even the invasion of Poland by Germany got France and Britain to wake up (see the phoney war). It took the invasion of Belgium to get France to wake up, and then it was too late.

France only abandoned the Gold Standard in 1937, whereas Britain had done so in 1931 and the US in 1933.

Conclusion: the ECB will not accept debt monetization unless and until Germany itself is in depression. Currently it's in a very mild recession.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS

by Migeru (migeru at eurotrib dot com) on Sat Feb 9th, 2013 at 01:54:03 AM EST
Not even the invasion of Poland by Germany got France and Britain to wake up (see the phoney war).

I'll try to look up a source later, but I remember reading that France (and Britain) were actually concerned about the insufficiency of their military potential (partly falling for Third Reich propaganda about German military potential) and first wanted to arm themselves.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sat Feb 9th, 2013 at 04:29:29 AM EST
[ Parent ]
Were they really falling for propaganda there?

I mean, once the war did come around they spent four years getting their asses handed to them pretty much everywhere they actually had to fight anybody who could shoot back.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 9th, 2013 at 04:32:52 AM EST
[ Parent ]
They weren't falling for propaganda: Poland, the low countries and France fell to Germany very quickly. Britain nearly lost the air war and Stalin had to engage in scorched earth policies and allow the front to move all the way to Moscow (plus endure sieges of Stalingrad and Leningrad) before being able to mount a counterattack.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Sat Feb 9th, 2013 at 08:43:06 AM EST
[ Parent ]
Thought that might have been a result of strategic/tactical advantage rather than better armament.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Sat Feb 9th, 2013 at 08:54:20 AM EST
[ Parent ]
Some  of both.  The Germans had built and tested two new military organizational concepts that no other army had recognized, the tactical air wing and the armored division.  Their hardware was decent, but not all that much better.  What the German army had done was to put a few officers in charge of creating the organization necessary for this hardware to be put to use on the battlefield in an effective manner.  In both cases, this was largely due to the political backing of Hitler himself, over and against the more conservative high command. Goering was an early Nazi supporter and close to Hitler from before he took power.  Goering had encouraged Hitler to make use of air travel during his election campaigns, something never done in Germany before, and after Hitler began rearmament Goering was given funds and clout to build the Luftwaffe.  The creator of the Armored Division, Heinz Guederin,  benefited from similar direct patronage from Hitler.

The Luftwaffe was effective, but its strength was as much in the terror it caused in the high command of the Allied powers, and in its use in support of paratroop attacks on key points.  It helped, but on the few big battles in Belgium prior to Allied encirclement, it was hardly decisive.  In those battles, the main German army was stopped cold.

The armored division was something that took everyone by surprise.  The Allied powers were utterly ignorant of it, and the German command didn't think it would work as Guederin said it would.  The key was it speed of movement behind the lines.  Guederin crossed into France at a point where the Allies had believed terrain would prevent armored advance, and thus had defended lightly.  Breaking the scattered defenders, the armored division was able to move very quickly in a Sickle Cut to completely cut off the main Allied army in Belgium.  Neither side believed it was possible for an effective fighting force to move as quickly as Guderins panzers moved, and before any reaction was possible the Allied army in Belgium was surrounded.  Cut off and unable to break out, they were forced to Dunkirk.

The Blitzkrieg legend was developed after the fact to explain this sudden victory.  It was not a matter of fighting, though, so much as operational surprise.  British and French tanks were better, and gave the Germans fits.  Their troops fought hard.  Had the Allied planners thought such an attack was at all conceivable, it would have been impossible.

Further, had the Allies pushed into Germany during the occupation of Poland, the war may well have ended right there, or been fought in large part on the banks of the Rhine.

Likewise, had Stalin not kept himself willfully blind to the imminent, and increasingly obvious German attack, the German advance to the gates of Moscow would never have happened.  

by Zwackus on Sun Feb 10th, 2013 at 04:10:18 AM EST
[ Parent ]
Further, had the Allies pushed into Germany during the occupation of Poland, the war may well have ended right there, or been fought in large part on the banks of the Rhine.

That's another case where the memory of the last big war, and another Potemkin element, the Westwall (Siegfried Line) made the Allies stop in front of a ghost.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sun Feb 10th, 2013 at 02:36:12 PM EST
[ Parent ]
Battle of France - Wikipedia, the free encyclopedia

In 1939-40, 45% of the army was at least 40 years old, and 50% of all the soldiers had just a few weeks training.[60] Contrary to what the blitzkrieg legend suggests, the German Army was not fully motorised. Just 10% of the Army was motorised in 1940 and could muster only 120,000 vehicles, compared to the 300,000 of the French Army. The British also had an "enviable" contingent of motorised forces.[60] Most of the German logistical tail consisted of horse-drawn vehicles.[61]

Only 50% of the German divisions available in 1940 were combat ready,[60] often being more poorly equipped than their equivalents in the British and French Armies, or even as well as the German Army of 1914.[62] In the spring of 1940, the German army was semi-modern. A small number of the best-equipped and "elite divisions were offset by many second and third rate divisions".[62]

In other words, Germany's army at the time was to a significant part a Potemkin army. If the Allies didn't know that, it's no wonder that they were afraid, especially seeing that they themselves had poorly equipped divisions, too. The situation was reversed for German military leaders, who originally only wanted to delay an all-out confrontation on the Western Front until 1942 when they could arm themselves in turn.

This (fairly well-referenced) Wikipedia article also points out that the Blitzkrieg narrative was created after the fact, that is, the invasion was more successful and victory more decisive than planned. From what I gather, the key factors were the use of communication by the (otherwise inferior) German motorised forces, and the French leadership's mistaken expectation of an attack focused on the Belgian-Dutch border (a more southerly attack cut up their lines).

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sat Feb 9th, 2013 at 08:43:07 AM EST
[ Parent ]
The superiority of the German armed forces weren't due to better equipment (France had better tanks) or because ther German soldiers were Aryan übermenschen but because Germany had the best officer corps in the world, and the best operational doctrine in the world. This was further compounded on the eastern front by the enormous Stalinist purges which had more or less destroyed the formerly high quality Soviet officer corps.


Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sat Feb 9th, 2013 at 02:18:30 PM EST
[ Parent ]
And - thanks to real world experience in Spain -  a highly developed and experienced tactical air force.  The role of Stuka dive bombers and Heinkel He 111 level bombers at Sedan should not be overlooked.  

Skepticism is the first step on the road to truth. -- Denis Diderot
by ATinNM on Sat Feb 9th, 2013 at 02:33:49 PM EST
[ Parent ]
To put it another way, at least some influential officers didn't want to fight the last war. But even the officer corps shouldn't be over-estimated, see the history of the Manstein Plan, or the genesis of the halt order that saved Britain's army. Victory can depend on who makes the bigger blunders, rather than on who has better strategic foresight.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Feb 9th, 2013 at 04:13:04 PM EST
[ Parent ]
Indeed! The Mainstein plan story is fascinating. If that plane hadn't crashed in Belgium, who knows what might have happpened? The mind boggles.

Still, and I suppose I wasn't really clear on this, I didn't really refer to the eventual superiority of German officers on the Army Group, Army or Corps level, but rather on the platoon, company, batallion, brigade and division level. If I recall correctly, to be comissioned as a Second Lieutenant in the Wehrmacht required 5 years of higher studies at the officer school, or whatever.

As we're already a bit off topic I'll end with a quote from one of my favourite Wehrmacht generals, Kurt von Hammerstein-Equord.

"I divide my officers into four groups. There are clever, diligent, stupid, and lazy officers. Usually two characteristics are combined. Some are clever and diligent -- their place is the General Staff. The next lot are stupid and lazy -- they make up 90 percent of every army and are suited to routine duties. Anyone who is both clever and lazy is qualified for the highest leadership duties, because he possesses the intellectual clarity and the composure necessary for difficult decisions. One must beware of anyone who is stupid and diligent -- he must not be entrusted with any responsibility because he will always cause only mischief."

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat Feb 9th, 2013 at 06:04:18 PM EST
[ Parent ]
Having read Hammerstein-Equord's English and German Wikipedia bios, wow. This man would be much more deserving of post-war adulation than Claus von Stauffenberg; but I guess a general taking no active part in the invasion of Poland but plotting a coup or assassination already during the Sudeten crisis (not to mention his communist and Soviet ties) didn't quite fit the Adenauer era elite's foundation mythologies (like "Evil SS/Good Wehrmacht").

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Feb 11th, 2013 at 09:27:30 AM EST
[ Parent ]
Did that really need guessing? Contacts to the left were very very bad. Having known what the rest of the population claimed not to have known was even worse. There was no need to make a difference between SS and Wehrmacht during the 50's: both wasn't embarassing, let alone a career-killer or so. That only changed during the Auschwitz trials in the early 60's. The CDU called Willy Brandt a traitor until far into the sixties, by the way.
by Katrin on Mon Feb 11th, 2013 at 10:52:05 AM EST
[ Parent ]
The way I understand it, the invasion of Czechoslovakia made clear to the British policy establishment that there a war was going to be needed. According to Nevile Henderson the policy he as British ambassador to Berlin followed until then was that a) the Versailles treaty was unfair and created the conditions for the nazis b) if Germany was allowed to re-capture German areas (ie what was fair) by peaceful methods this would strengthen the peace faction of the nazi party and eventually lead to a normalisation (ie pre-WWI conditions) of the German society. My impression is also that for the nazi policy establishment the invasion of Czechoslovakia proved that Britain was not serious about risking war on teh continent.

After that the driving factor was the reenactment of WWI France and Britain had planned. Since defense had the advantage, invading Germany was ruled out (after some preliminary expeditions in Saarland). To lessen the costs for France this time the key was to open up more fronts and strangle Germanys access to raw materials. One such way was to get a Nordic front and stop the flow of iron to Germany.

Like occuping the minefields

During the Winter War the Norwegian authorities secretly broke with the country's own neutrality by sending the Finns a shipment of 12 Ehrhardt 7.5 cm Model 1901 artillery pieces and 12,000 shells, as well as allowing the British to use Norwegian territory to transfer aircraft and other weaponry to Finland.[2]

This presented an opportunity to the Allies who, while genuinely sympathetic to Finland, also saw an opportunity to use the pretence of sending troop support to additionally occupy ore fields in Sweden and ports in Norway.[11] The plan, promoted by the British General Edmund Ironside, included two divisions landing at Narvik, five battalions somewhere in Mid-Norway, and another two divisions at Trondheim. The French government pushed for action to be taken to confront the Germans away from France.[12]

However:

The proposed Allied deployments never occurred, after protests from both Norway and Sweden, when the issue of transfers of troops through their territory was suggested. With the Moscow Peace Treaty on 12 March 1940, the Finland-related Allied plans were dropped. The abandonment of the planned landings put immense French pressure on Neville Chamberlain's British government, and eventually led to the Allied mining of the Norwegian coast on 8 April.[12][13]

So try again

This was soon changed to a plan involving the mining of Norwegian waters to stop iron ore shipments from Narvik and provoke Germany into attacking Norway, where it could be defeated by the Royal Navy.[19]

And this succeeded! Except the part about defeating Germany. And the part about reenacting the Western front from WWI.

So, in conclusion, Britain started war planning after March 1939, but their plans and action only makes sense in that they planned to fight the last war.

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 Sat Feb 9th, 2013 at 07:08:37 AM EST
[ Parent ]
I meant occupying ore fields.

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 Sat Feb 9th, 2013 at 07:09:47 AM EST
[ Parent ]
The countries will be violently liquidated, but the creditor countries will not wake up, preferring to fall back on the comfortable "those lazy southerners really don't know how to govern themselves".

That's the low end of my prediction range.

I really hope they don't manage to underperform that, because I don't see a lot of room to underperform that and still avoid a fourth Franco-German war...

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 9th, 2013 at 07:56:23 AM EST
[ Parent ]
I'm not sure if a fourth Franco-German war is coming, but I do feel a bit like what I imagine the IPCC feels like when they continuously issue reports in which the worst-case scenario winds up looking optimistic to the point of delusion.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Sat Feb 9th, 2013 at 08:04:29 AM EST
[ Parent ]
The whole crisis has felt like a predictable horror movie where, as characters die off one at a time, the audience knows that they shouldn't open that door, they shouldn't go scouting, they shouldn't eat that, they shouldn't push that button...

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Sat Feb 9th, 2013 at 08:47:25 AM EST
[ Parent ]
"I really hope they don't manage to underperform that, because I don't see a lot of room to underperform that and still avoid a fourth Franco-German war..."

Just what could a new war possibly accomplish?
Isn't it more reasonable to junk the whole European concept and restart from scratch as painful as that may be?

Hey, Grandma Moses started late!

by LEP on Sun Feb 10th, 2013 at 10:18:59 AM EST
[ Parent ]
LEP:
Just what could a new war possibly accomplish?
Isn't it more reasonable to junk the whole European concept and restart from scratch as painful as that may be?

the very idea of modern french and germans becoming nationalistic enough to go to war... it's too surreal and improbable to even seriously consider.

as for canning the project and starting again, it would be a good idea, though the breakup would be messy, it's by no means certain it would be worse than what's happening now, and no policy turnarounds in sight.

creating a new european union that would please everyone is obviously utopian, but at least one thing is clear... creating a common currency without an euro-equivalent of the U.S. Federal Reserve and a union-wide fiscal policy.

the probability of a second attempt being a quantum leap forward is high- the mistakes are so fresh in our minds, and the results of doing it wrong so flamingly evident.

besides, there already is a war, between the 1% and their henchmen and the rest of us.

maybe they will have to win that one to realise how stupidly suicidal a victory it was first. some juggernauts are unstoppable- seems like that's what we have to endure seeing how successfully the propaganda  of neolib brain rot has taken root.

it will crash and burn, the present setup, but without european countries taking up arms against each other, that seems utterly insane, hopefully europeans have created enough cross-border cultural awareness and appreciation for each other that we will be immune to the kind of parochial patriotism that was relatively easily whipped up in WWs 1 and 2.

wars these days are exercises in democracy building in geographical backwaters where resources are plentiful, with few divisions to protect them.

/snark

"We can all be prosperous but we can't all be rich." Ian Welsh

by melo (melometa4(at)gmail.com) on Sun Feb 10th, 2013 at 01:30:44 PM EST
[ Parent ]
besides, there already is a war, between the 1% and their henchmen and the rest of us.

Earlier an army was needed to grab lands, goods, extract tithes. Now that is all much easier. Especially when the other side is clueless what and how they are loosing.

I will start a job at Athens University next month, by the way. Will it get interesting in one year?

by das monde on Tue Feb 12th, 2013 at 11:35:12 PM EST
[ Parent ]
You mean Athens Greece?
If so
a. Welcome! Mail me if you need any advice or help!
b. In much less than a year, depending on your definition of "interesting"

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Wed Feb 13th, 2013 at 07:47:29 AM EST
[ Parent ]
Thanks, I will.
by das monde on Wed Feb 13th, 2013 at 11:57:52 PM EST
[ Parent ]
You got your Kevlar?

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 Fri Feb 15th, 2013 at 12:49:34 AM EST
[ Parent ]
Just what could a new war possibly accomplish?

It would create quite a bit of radioactive glass where a couple of German cities used to be. Nothing much else.

Which is why it isn't in my prediction range.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Feb 11th, 2013 at 03:36:47 PM EST
[ Parent ]
See also, from Friday's Newsroom
Eurointelligence: At last, a deal on the Irish promissory notes (08.02.2013)
Wolf and Kaletsky on the monetary financing of deficits

Martin Wolf and Anatol Kaletsky both picked up on a speech by Adair Turner, in which he openly advocated monetary financing of debt. QE and other forms of non-conventional policies had not brought the desired benefits, and it was now time for the biggest of all bazookas.

Martin Wolf picks up on the debate about nominal GDP targeting, and calls for an official re-assessment of the current inflation targeting regime, which he says is failing in the current environment.

I agree with Lord Turner that the even more important question is how to make any policy effective. This, inevitably, raises questions about how monetary policy works in an environment of ultra-low interest rates. Lord Turner thinks the unthinkable: namely, monetary financing of the fiscal deficit. So should policy makers. They have to think afresh. If not now, when?
Anatole Kaletsky recalls that Keynes and the Monetarist agreed on the notion that in dire circumstance the central bank should create money. Keynes advocated money to be deposit in coal mines, for workers to extract it. The monetarists chose the then high-tech variety of a helicopter drop. This is how Kaletsky would do it:
Consider the U.S. Federal Reserve. At present the Fed prints $85 billion of new money monthly and distributes it to banks and Wall Street investors by buying government bonds. And the Fed has promised to continue this monthly "quantitative easing" until such time as unemployment drops and is clearly and sustainably declining to more normal levels. Now suppose instead that the Fed divided its $85 billion monthly money production into 300 million checks of $283 each and sent these to every man, woman and child in America. Suppose, moreover, that the Fed promised to keep sending out these checks, worth more than $1,000 a month for a four-person household, until the United States reached its unemployment target - and the Fed chairman added that he would increase the checks to $1,500 or $2,000 a month for that household if $1,000 monthly proved insufficient. There can be little doubt that this deluge of free money would stimulate consumer spending and revive employment - and no doubt that it would be infinitely more effective than distributing money to bond investors and banks through QE.
We're in the postmodern equivalent of 1935...

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Sat Feb 9th, 2013 at 02:03:22 AM EST
Problem is that I suspect you wouldn't get the majority to vote for that at the Fed.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Sat Feb 9th, 2013 at 08:07:00 AM EST
[ Parent ]
Even Kaletsky is falling prey to the money drop delusion.

What you need is monetization of fiscal policy!

Of course, you're not likely to get a majority for that in Congress either. The Fed is more likely to be accomodating than the congresscritters.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS

by Migeru (migeru at eurotrib dot com) on Sat Feb 9th, 2013 at 08:45:35 AM EST
[ Parent ]
It's undoubtedly the case you couldn't get it through Congress.  With the Fed, there's at least a possibility.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Sat Feb 9th, 2013 at 08:54:55 AM EST
[ Parent ]
Oh, and the light you're seeing isn't the end of the tunnel: It's the oncoming train of a petroleum price choke-chain effect.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 9th, 2013 at 04:26:02 AM EST
With something akin to a world war looming, the over armed insane Empire is prepared to go. Let's hope The Empire fractures in the process.

The good news ... it's only a life sentence. You eventually leave this planet of idiots.
by THE Twank (yatta blah blah @ blah.com) on Sat Feb 9th, 2013 at 11:25:27 AM EST
How likely is something like this to make a dent in German public opinion?

Not very.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS

by Migeru (migeru at eurotrib dot com) on Sun Feb 10th, 2013 at 06:16:41 AM EST
Have to start somewhere.

Skepticism is the first step on the road to truth. -- Denis Diderot
by ATinNM on Sun Feb 10th, 2013 at 12:19:48 PM EST
[ Parent ]
If it doesn't go viral, not at all. If it goes viral but FAZ & co issue counter-propaganda before it goes viral too much, not much. If the Rajoy government continues, it will be easy to find rhetoric to dismiss it. And if SPD and Greens (as a whole, not a few party lefties) don't dare to take it up, even a dent in public opinion won't result in much. (Just yesterday, the Lower Saxony SPD and Greens announced their coalition agreement, and the debt brake was the first priority they mentioned... without telling how they would strive to achieve compliance.)

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sun Feb 10th, 2013 at 02:46:38 PM EST
[ Parent ]
If it doesn't go viral, not at all. If it goes viral but FAZ & co issue counter-propaganda before it goes viral too much, not much.

To give a ray of hope: time and again, there are articles in German media that German politicians don't get social media (the last one I saw ridiculed Steinbrück's ghost-authored blog). So social media could be a medium to go under the government's radar and bypass counter-propaganda issued by the government itself.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sun Feb 10th, 2013 at 02:50:12 PM EST
[ Parent ]
Scheiße

'tis strange I should be old and neither wise nor valiant. From "The Maid's Tragedy" by Beaumont & Fletcher
by Wife of Bath (kareninaustin at g mail dot com) on Sun Feb 10th, 2013 at 11:26:31 AM EST
Great Leap Forward blog: MMT, THE EURO, AND THE ROAD TO RECOVERY: Interview with L. Randall Wray (conducted by CJ Polychroniou for the Greek national financial daily Express)
Q: You have written a great deal about the euro crisis, including the Greek crisis. In your view, did Greece have much of a choice when it ended up under an EU/IMF rescue mechanism, or should it have managed somehow an orderly default and returned to the drachma? This is a position taken by a number of economists both in Europe and in the US. Where do you stand on this?

A: Here's what I recommended for Greece, Ireland, Portugal, Italy, and Spain. You must band together, making a pact that you will not allow the center to pit one Euro member against the other. Together you demand an end to austerity, or you will leave the EMU--all for one and one for all. Debt relief for all. Substantial fiscal stimulus from the center for all. A job guarantee program for all. Without that, all of you leave. Make it clear. Make it believable. And leave if the center does not stop the austerity. You do not need to serve Germany's domestic policy agenda.

Q: The contractionary policies and the harsh austerity measures advocated so passionately by Germany and the EU leaders as a means for the peripheral nation of the euro zone to deal with their fiscal and debt problems, regardless of how they arose, have proven to be absolutely catastrophic for those economies, causing massive human suffering and stalling global growth. How do you explain the persistence of EU chiefs and certain capitals on having Greece and the other indebted euro zone nations stay the course when the results are so devastating?

A: As discussed, domestic politics combined with some desire to impose labor discipline have got Euroland to the present situation. Here's the problem. Those who are powerful in the center view exports as the path to prosperity. Germany is of course the most successful at that. While Germany is huge within the EU it is relatively small compared to the global economy. It is conceivable that Germany can hold costs in check while innovating, improving efficiency and focusing on high value exports to create demand for its output (many of those exports staying within the EU, of course). Perhaps Germany can hold its own against Asia and the Americas. But this strategy has no chance of succeeding for Europe as a whole. The world is not big enough to supply demand for Europe's potential output, while Martian demand is at best speculative. And everywhere else has cheaper labor than Europe's. So Germany insists on belt-tightening and cost-cutting throughout Europe, which cannot work because Europeans cannot reduce living standards to those of Viet Nam. And even if they did, that kills Germany, too.

If one were extremely cynical, one would conclude that Europe's leaders understand all this but don't give a damn because they plan to move all jobs to Asia anyway. They are globalists, not nationalists or even Europeanists. Europe can wither and die, and Europe's megacorps would find outlets and workers in China. It is possible that this is the true strategy. It wouldn't be the first time--look at Japan, which moved jobs abroad and killed their own economy. I don't know.



I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Sun Feb 10th, 2013 at 04:02:38 PM EST
We've come along way to a strange place when American letist academics call for nationalist leaders in Europe.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Feb 10th, 2013 at 04:16:28 PM EST
[ Parent ]
Europe already either has or can no longer avoid nationalist leaders.

The question is whether they will be the fascist or the socialist version of nationalist...

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 10th, 2013 at 08:16:52 PM EST
[ Parent ]
When push comes to shove, liberal democracy prefers the fascist version.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Mon Feb 11th, 2013 at 04:22:31 AM EST
[ Parent ]
From today's Eurointelligence:
Spanish opposition leader gives a strong anti-austerity message

Spain's opposition leader Alfredo Perez Rubalcaba gave a strong anti-austerity message at a meeting in Turin in support of Bersani (video and transcript), which shows that the moderate left in Europe is beginning to distance itself with increased clarity from the policies currently pursued.  He said that in today's Europe, Angela Merkel calls the shots. The price was a rise in euroscepticsm to such an extent that the country would no longer approve a constitution in a referendum, as it did last time. He was especially scathing about the budget agreement, which set aside only €6bn for youth unemployment - in contrast for the €40bn in lending to banks.

Here is my paraphrased translation of Rubalcaba's words:
I come from a firmly pro-European country which is only receiving from Europe 'men in black', reprimands, cuts in social rights, and austerity and moral scolding; and which relieves that today in Europe Angela Merkel and she alone calls the shots. And they are right, because in Europe only Angela Merkel and the European Right call the shots.

I come from a country which, were it to vote on the European Constitution today, might not approve it like we did some yeas back. Because the European Right which is imposing suffering as a way out of the crisis is making euroscepticism grow in my country. We have to convince many people in Southern Europe who have become Eurosceptic because of these policies by the European Right that more Europe is needed to get out of the crisis.

On the European budget Spaniards wonder how it is possible for Europe to lend €40bn to the banks and only thought of setting aside €6bn for youth unemployment. How can we defend a Europe that gives four, ten times more to financial power than to young jobseekers? This has to change.

We have to remind the European Right that they are a machine for creating Eurosceptics.



I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Mon Feb 11th, 2013 at 04:25:19 AM EST
[ Parent ]
Spain's opposition leader Alfredo Perez Rubalcaba gave a strong anti-austerity message at a meeting in Turin in support of Bersani

What is Bersani's position on austerity? (And Monti's government record?)

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Feb 11th, 2013 at 09:30:11 AM EST
[ Parent ]
he supported monti's makeover, and now promises to take a different route, less radically opposed than berlusconi, who's promising to give cash extracted through monti's house and land tax (except on the vatican property).

bersani has just words, and his party is involved in the MPS bank scandal, so is losing votes to that. he is conspicuously silent on the greening of the economy, leaving those votes to grillo.

if i understand correctly the 5*ers will have 100 seats in parliament.

i think most italians are realising bersani has nothing new to bring to the table really, he was there to pick up centrist voters disenchanted with satyrism, who are forgetting their disgust at the prospect of a cheque in the mail.

beppe is on a roll meanwhile, his campaign speechifying finally on the daily tv news... too big to ignore at this point, which considering the craven italian media is no mean feat. the wall is breached, and considering how many arrests were made today of 'excellent' big fish, it seems like the magistrature will have its hands full for a while.

berlusconi stuck his foot in his mouth also, saying we should be realistic and accept that bribery is just a fact of life and it is auto-lesionistic, pure masochism to pretend that italy can run without it, in other words to attack it is a form of treason against the homeland. (and all the judges are commies, yawn)

i hope oliver stone does a biopic of this guy soon, it could out-do nixon's for the viscosity factor alone.

"We can all be prosperous but we can't all be rich." Ian Welsh

by melo (melometa4(at)gmail.com) on Thu Feb 14th, 2013 at 08:41:40 PM EST
[ Parent ]
I immediately get worried that Berlusconi will end up largest since they were in second place last time I saw the polls (and since largest gets automatic majority in a mockery of proportional distribution).

Saw on wikipedia that polling is not done the last two weeks. Any non-italian (swiss?) polls similar to the belgian polls of french elections?

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 Fri Feb 15th, 2013 at 09:44:39 AM EST
[ Parent ]
I swear that the virtually identical recommendations I made over the last three years for Greece, Ireland, Portugal and Spain did not derive from an awareness of this aspect of Wray's work. :-)

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 Feb 11th, 2013 at 02:22:51 PM EST
[ Parent ]
How do you explain the persistence of EU chiefs and certain capitals on having Greece and the other indebted euro zone nations stay the course when the results are so devastating?

From the point of view of German and ECB leadership it is probably that none of the victims has made an effective protest against austerity and that there is no unified front opposing current policies. The leadership of too many of the countries that could band together to force change remain too sufficiently enthralled by the vision of the European Union to accept that current leadership has gone so wrong that the consequences of maintaining the status quo outweigh the consequences of a dramatic break. And then there would have to be a clear alternative, preferably only one, but it is essential that they understand that they are decisively at the end of the current policy path.

Most of the current national leaders represent wealth much more than they represent their own electorates or constituencies and current policy plays to the prejudices of the wealthy very well. The only way things will change is if current leadership is presented with a stark choice. Even if they understood the situation and agreed there were serious problems they will likely only take effective action if and when the alternatives are even more bleak.

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 Feb 11th, 2013 at 02:51:22 PM EST
[ Parent ]
The leadership of too many of the countries that could band together to force change remain too sufficiently enthralled bribed

FIFY.

What's the news from Spain and Greece about this?

I mean really - who thinks this isn't happening?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Feb 11th, 2013 at 03:17:29 PM EST
[ Parent ]
They don't need to be bribed, they're kleptocratic.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Mon Feb 11th, 2013 at 03:47:42 PM EST
[ Parent ]
Around 2008 it crossed my mind that getting old might save me: I am now a couple of years of being 40 and that might avoid me being drafted. One would agree that there are similarities between both periods. But there are also differences...

  1. The elite is highly engaged in the globalization thing. The so-called "1%" would stand much to loose from a nationalist breakdown. Thus I do not see strong support for things like fascist (at least at the top level... at the popular level it is an entirely different question)

  2. I wonder (I ask): What about if the ECB would simply do "an Ireland" to Southern European debt (non-banking included): extend maturity to 30/40 years and lower the interest rate? Would not that create a situation that is economically acceptable to the South and politically tolerable to the North? Would that be a solution in any way?

  3. It should be noted (as you note) that many of the Southern countries have lost food-sovereignty: In the case of Portugal, I think we produced 80% of what we ate on EU-entry and now around 20% (not totally sure of the numbers, from memory). A "Disorderly default" (i.e. without creditor blessing) could literally mean the starvation of many.

  4. In a disorderly default, I would imagine that debt held under the law of other countries (As part of the debt was emitted e.g. in London) might become a problem. See the issues that Argentina has with confiscation.

  5. Another solution might be a Marshall Plan of sorts for the South. But seeing the discussions on the EU budget, things seem to be going the other way...

  6. Another issue is migration. There is ongoing migration from the South to the North. On one hand, people of working age are leaving the South (thus depleting the area of workers) with obviously bad medium term consequences. On the other hand this is bound to become a political hot potato in the North (in the UK you see already see the discussion heating up).

In more ways than one Southern European countries are not sovereign nations anymore. Some degree of food autonomy is a starting point. Emitting debt under local law only would be another.
by cagatacos on Mon Feb 11th, 2013 at 06:08:47 AM EST
The EU has gone a long way in the wrong direction since Spain and Portugal joined 27 years ago, if we have to be carefully considering "food sovereignty" and the risk of starvation.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Mon Feb 11th, 2013 at 06:30:29 AM EST
[ Parent ]
Perhaps one of the errors since that time was not to support small farming aggressively through the CAP : this would have given added resilience to the economy, and maintained a higher degree of food autonomy.

Can it really be true that Portugal only produces 20% of its food? How disastrous!

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

by eurogreen on Mon Feb 11th, 2013 at 09:34:48 AM EST
[ Parent ]
Don't you all let your imagination run away with you? Against whom is that war you are fantasising about? Germany wants to be left out. That leaves on the side of the northern euro area The Netherlands and Finland.
by Katrin on Mon Feb 11th, 2013 at 10:56:49 AM EST
[ Parent ]
Germany wants to be left out.
Left out of what? The Euro?

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Mon Feb 11th, 2013 at 11:02:26 AM EST
[ Parent ]
That's what we need, and fast.
Actually, out of the EU would be cherry on the cake.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
by Cyrille (cyrillev domain yahoo.fr) on Mon Feb 11th, 2013 at 12:17:59 PM EST
[ Parent ]
out of everything and being at the same time the biggest exporter in the known universe.
by IM on Mon Feb 11th, 2013 at 12:32:50 PM EST
[ Parent ]
European periphery countries can export to the rest of the unknown multiverse.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Mon Feb 11th, 2013 at 12:34:25 PM EST
[ Parent ]
Only fair; the unknown is much larger, after all.
by IM on Mon Feb 11th, 2013 at 12:52:59 PM EST
[ Parent ]
Exactly. But a shooting war? Get real.
by Katrin on Mon Feb 11th, 2013 at 12:53:43 PM EST
[ Parent ]
Want to bet on having real shooting in Greece and Spain within five years?

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Mon Feb 11th, 2013 at 03:10:59 PM EST
[ Parent ]
No. But real shooting, coups, riots, are not the same as war, even if they are just as frightening.
by Katrin on Mon Feb 11th, 2013 at 03:54:37 PM EST
[ Parent ]
We're talking about two countries that are still scarred from civil wars 70-80 years ago... But okay, "not the same as war"...

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Mon Feb 11th, 2013 at 04:59:58 PM EST
[ Parent ]
Well, scenario A may be as bad as scenario B, but they are not the same.

When it comes to demanding repayment of a loan from a debtor, there is an ultimate point when the debtor can say "come and get it if you dare". If the creditor is Germany, that's that. Have you ever thought of it?

by Katrin on Mon Feb 11th, 2013 at 05:10:52 PM EST
[ Parent ]
Well, the idea was only floated in the event of underperforming failing to wake up (ie still pushing the same doctrines) after Spain, Portugal, Italy and Greece had disintegrated into civil wars.

So if you were to do worse than that, well, then France would probably be next. And if France disintegrates, it's at least plausible that at some point some people will want to do more than merely stop paying, and demand some back (something that Germany did once, didn't it?).

Not saying it's the most likely. Just that if you accept the premise that elites do even worse than failing to change course after countries break into civil wars, well, it will have to be bad. And indeed the 30s is the nearest experience. I'm pretty sure that lots of people explained that full outbreak was impossible back then too. In fact, I know that it was stated in the early 1910s.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Tue Feb 12th, 2013 at 03:35:57 AM EST
[ Parent ]
Yes, that's what JakeS is talking about when he talks about hard default leding to lack of access to international credit markets which, for a net importer of food and fuel with a current account deficit is tantamount to a wartime blockade.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Tue Feb 12th, 2013 at 03:45:49 AM EST
[ Parent ]
There is such a thing as a "low intensity civil war" and the current Greek government seems to me to want to keep this option on the table.

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Mon Feb 11th, 2013 at 05:27:27 PM EST
[ Parent ]
I'll start worrying about Spain when I see the levels of political violence of the 1970s. If it gets to early 1930s levels, then I will really worry.

Currently there is no political violence to speak of.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS

by Migeru (migeru at eurotrib dot com) on Tue Feb 12th, 2013 at 03:52:12 AM EST
[ Parent ]
considering gladio, no-one would believe it in italy anyway. in fact if they were to try another piazza fontana it might just spur further investigation into what really happened then.

too recent to 'insabbiare' (let get buried under the sand).

likewise falcone and borsellino's murders.


"We can all be prosperous but we can't all be rich." Ian Welsh

by melo (melometa4(at)gmail.com) on Thu Feb 14th, 2013 at 09:13:44 PM EST
[ Parent ]
From the macroeconomic perspective of a net food and fuel importer with a trade deficit, "loss of access to the international currency markets" is functionally equivalent to "naval blockade."

That's what the defaulting governments need to prepare for. And that is what they have not done and will not do.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Feb 11th, 2013 at 03:30:39 PM EST
[ Parent ]
There'll always be enough foreign currency available to import food and fuel for everyone, as long as there is a reasonable amount of equality or some kind of welfare state. Lot's of other imports will disappear before there is a physical lack of food and fuel.

Just look at Italy. The current account deficit has fallen a bit (IIRC), not due to greater exports, but due to falling imports. But people still afford food and fuel.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Mon Feb 11th, 2013 at 06:00:12 PM EST
[ Parent ]
as long as there is a reasonable amount of equality or some kind of welfare state

Which, under the current austerity policies, cannot be assured.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS

by Migeru (migeru at eurotrib dot com) on Tue Feb 12th, 2013 at 03:47:00 AM EST
[ Parent ]
The Irish experience of 1845-57 provides an instructive contrary case study.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Feb 13th, 2013 at 02:15:49 PM EST
[ Parent ]
But the UK had no lack of foreign currency. And Ireland was a net exporter of food.

Great Famine (Ireland) - Wikipedia, the free encyclopedia

Cecil Woodham-Smith, an authority on the Irish Famine, wrote in The Great Hunger: Ireland 1845-1849 that no issue has provoked so much anger and embittered relations between England and Ireland as "the indisputable fact that huge quantities of food were exported from Ireland to England throughout the period when the people of Ireland were dying of starvation." Ireland remained a net exporter of food throughout most of the five-year famine.[fn 4]

Christine Kinealy writes that Irish exports of calves, livestock (except pigs), bacon and ham actually increased during the famine. The food was shipped under guard from the most famine-stricken parts of Ireland. However, the poor had no money to buy food and the government then did not ban exports.[66]

Ireland in that period is an example of what happens to a subordinate region that suffers a shock where the general population is denied the money to buy the basics, even the basics produced in their own region.

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 Wed Feb 13th, 2013 at 02:29:56 PM EST
[ Parent ]
But this is essentially the Spanish dynamic (and to some extent the Greek): Cash crops replace food crops. That the cash crops happened to be food meant that the Irish, had they had an independent government acting in the national interest, could have readily converted cash crop to food crop. Spain is not so fortunate.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Feb 13th, 2013 at 03:11:23 PM EST
[ Parent ]
Jake:
That's what the defaulting governments need to prepare for. And that is what they have not done and will not do.

What is needed is a bloody minded opposition that can get into power, lie its ass off about how they are committed to paying all the while they are preparing to default. When they are prepared, (can get through the next winter), then do it and invite others in the same position to do the same thing. If it were any country the size of Greece or larger it would likely be game over for those supporting the current regime. They would be so busy dealing with their own domestic political consequences that they would have little time to be concerned about the defaulting country.  

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 Fri Feb 15th, 2013 at 01:04:21 AM EST
[ Parent ]
The problem with that is that by the time a sufficiently bloody-minded opposition gets into government, the required "lie their ass off" phase may well be longer than the political system can survive a pro-austerity government.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 15th, 2013 at 01:56:52 PM EST
[ Parent ]
Regarding the 20%, I feel I need to clarify a few things:

  1. This was a number that I remember from a local political party MP comment.

  2. After a cursory search I am getting more confused. It depends on the metrics.

  3. In terms of food autarky, I think 30% is probably correct. But even so, take the number with a grain of salt.

  4. The Portuguese case is confounded by the fact that the country is a massive exporter of paper, thus a big part of the land is covered with eucalyptus (!). Indeed if you add paper, cork and wine the numbers turn around quite nicely. The problem is: while wine can be eaten in the form of grapes, paper and cork cannot.

I just felt I should leave a comment here so that the above number is not taken at face value.
by cagatacos on Mon Feb 11th, 2013 at 02:08:34 PM EST
[ Parent ]
Going back to the food/energy/money dependence thing: What can a country without independence in those fronts do? In the short-term? Obey (which is what Krugman was - in my view correctly - saying).

A government with vision (or interest in the common good) would raise the autonomy on those fronts during the next couple of years so that it would be in a reasonable bargaining position in the future.

I think the options on the table seem to be the worse:

  1. Obey, but not with the objective to get out of the dependent position

  2. Risk disobeying, but too soon would mean probably suffering (starvation/poverty et al).
by cagatacos on Mon Feb 11th, 2013 at 05:38:30 PM EST
[ Parent ]
A country lacking enough domestic food and fuel can import from abroad. Other imports can be reduced.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Mon Feb 11th, 2013 at 06:01:08 PM EST
[ Parent ]
In time and with proper planning and control.

Which requires lead time.

Lead time that an incoming popular government will not be granted, and which the outgoing cronies have not taken.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Feb 13th, 2013 at 02:17:04 PM EST
[ Parent ]
In order:

  1. A fascist dictator or two in Southern Europe will not be the end of the current iteration of globalization. Globalization has survived right-wing nationalist regimes in peripheral and semi-peripheral economies before. Thrived on them, even.

  2. In 2011 it would. Maybe even in 2012. Maybe it will work for Spain. But Greece is so far down the hole that only deficit spending as much as required for as long as required going forward is going to have a chance of solving the problem.

  3. Possession is 9/10ths of the law. In a disorderly default, the defaulter should prepare for every contingency up to and including a naval blockade.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.
by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Feb 11th, 2013 at 03:28:01 PM EST
[ Parent ]
To clarify:

Regarding point 1, I was saying that a fascist movement currently does not have the necessary (?) support of the elite.

Gloabalization would survive fascism in Southern Europe. But that was not my point.

The right loves Brussels/Berlin/Troika/IMF. At least in Portugal it allows them (or the most rabid part of them) to have a free hand at doing what they always wanted. Thus my point: a fascist movement will not have the support of the elite. It would be a mostly popular thingy.

Unless, of course, the current alignment of interests change and the interests of the elite of each country becomes out of phase...

by cagatacos on Mon Feb 11th, 2013 at 05:31:54 PM EST
[ Parent ]
I've been reading a lot of the commentary on this, and I am getting upset because as far as I can tell, everything here is getting the scope of the problem and potential solutions wrong. Badly.

Point the first: The certain problem - the one thing which absolutely has to be fixed - is the ECB, and the total immunity to normal political feedback it enjoys.

It is possible that other things are also wrong, but as long as the ECB is clearly wrecking everything there is no way to tell. The Euro might be fine with a saner central bank - there is just no way to tell as long as the board is nuts.

Maybe what we need is more expansionary works problems, or import controls, or whatever, but judging by recent performance, any government policy that actually worked, would get sabotaged by the ECB.

So, forget everything else. What is needed is a way to cause the ECB to give a rats ass about the consequences of its actions.

Suggestions:
Pickets.
Boycotts (of the original, "noone will deal with or provide services to you, personally, for any amount of money" kind).
Arrange for their kit and kin to join the ranks of the unemployed.
Lobbying.
Letter campaigns.
A popular initiative to repeal the formal independence of the bank. It should be quite possible to meet the signature requirements for this, and even if it has no chance of passing soon, it should focus their minds.

All of the above.

by Thomas on Tue Feb 12th, 2013 at 07:36:53 AM EST
In California there was a referendum that approved a popular vote to confirm a California Supreme Court justice a few years after their appointment, but be careful what you ask for. The notable outcome of that referendum was the ouster of the liberal judges appointed by Jerry Brown and their replacement with RW stooges appointed by Brown's Republican hack successor Dukmejian.

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 Feb 12th, 2013 at 10:43:59 AM EST
[ Parent ]
But the ECB isn't the problem, right now. Draghi has with his bluff kicked the can down the road a few months more.

The problem is the fiscal policies pursued by the national governments.

by IM on Wed Feb 13th, 2013 at 04:51:24 AM EST
[ Parent ]
For those national governments under Troika administration, that comes to the same thing.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Feb 13th, 2013 at 02:10:35 PM EST
[ Parent ]
On which see Speech by Mario Draghi, President of the ECB (Meeting with Members of Parliament, Madrid, 12 February 2013)

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Wed Feb 13th, 2013 at 03:10:45 PM EST
[ Parent ]
Reforming the ECB to be actually useful requires rewriting at least the unwritten part of the German constitution, as well as both the written and unwritten parts of the fundamental treaties of the Union.

The ECB certainly must be brought to heel and eventually fully subjected to intrusive democratic controls. But by the time that happens, Greece and Spain and probably Italy will have already played out to their conclusion.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Feb 13th, 2013 at 02:14:48 PM EST
[ Parent ]
Yes. Which is why I am suggesting that pressure be brought to bear via moral suasion. The ECB is 14 people with fuckall formal oversight at all. Pressure them. Personally. People do not resist explicit moral censure from large groups very well.
This will either work, or inspire sufficient panic among the mighty once they grasp the magnitude of the vulnerability they have created that the board gets reformed quickly. So, either we win, or austerity looses.  
by Thomas on Wed Feb 13th, 2013 at 04:05:22 PM EST
[ Parent ]
Spelling it out further - the problem is that board independence means the ECB can do whatever the heck they care to, short of printing fourteen billion and walking home with one each. Currently what they care to do appears to be  "burn the european economy and project down". Charitably, because they are morons.
Apply all legal measures of persuasion and pressure you can think of until their desires change, and their new course of action is every bit as formally unstoppable.

Once people realize that the ECB is essentially an endrun around the entire formal political structure, the status quo will last.. a month?

by Thomas on Wed Feb 13th, 2013 at 04:13:18 PM EST
[ Parent ]
The entire German political establishment appears to agree that the ECB is configured as it should be. Central bank independence, interpreted fundamentalistically as a prohibition of monetary financing of fiscal policy, is part of the German basic law. No promiment German politicians question austerity, and most economists who do are in "exile".

What you propose will be done over Germany's dead body.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS

by Migeru (migeru at eurotrib dot com) on Wed Feb 13th, 2013 at 04:36:12 PM EST
[ Parent ]
The point is that Germany cannot stop it. Convince, by hook or crook, the 14 people of the ECB board to do something, and there are no legal pathways available for Germany, or anyone else, to stop it from happening. So convince them to do quantitative easing by mailing out 300 million checks or monetarising every european national debt across the board until unemployment hits zero, and all they can do is have seizures. They are ideologically committed to a framework that includes the central bank having near-total freedom of action. This can, and should be, turned against them.
by Thomas on Thu Feb 14th, 2013 at 01:28:28 AM EST
[ Parent ]
"They" being shorthand for "the austerity coalition"
by Thomas on Thu Feb 14th, 2013 at 01:32:02 AM EST
[ Parent ]
Yes, Central Bank independence cuts both ways.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Thu Feb 14th, 2013 at 02:02:07 AM EST
[ Parent ]
Somehow, I'm sure that they would suddenly find arguments to change the ECB board as they had evidently betrayed their mandate.

Which is not to say it should not be tried (or that they would fully succeed). But the last 40-50 years (and maybe beyond that) have had a striking tendency of the laws being interpreted differently when presented with a right-wing or left-wing situation.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Thu Feb 14th, 2013 at 02:36:16 AM EST
[ Parent ]
I thought ECbankers were unimpeachable...

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Thu Feb 14th, 2013 at 03:24:17 PM EST
[ Parent ]
Imagine that tomorrow they all became (literally, not figuratively as now) brain-dead, while still alive. Do you doubt that a solution would be found to replace them?

Accusation of criminal treason would probably at least trigger a temporary replacement. Especially if they were to act in a not insanely far right wet dream commie way.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Fri Feb 15th, 2013 at 04:35:25 AM EST
[ Parent ]
A memberstates parlament-appointed central bank borad can fire their CB boss (thus changing on of the heads at ECB), though the CB boss has the right to appeal that to the Court. So that is the mechanism, but in order to affect ECB decisions a majority of euro-states must do it at roughly the same time.

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 Fri Feb 15th, 2013 at 09:48:18 AM EST
[ Parent ]
There's a fundamental contradiction between the doctrine of CB independence and the insistence on a tight definition (and the tightest interpretation of that definition) of what the CB is allowed to do.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Feb 14th, 2013 at 04:00:42 PM EST
[ Parent ]
The doctrine of central bank independence has always been a shell game designed to protect Lysenkoist idiocy from public censure.

There is no contradiction at all in enshrining far-right policies into the constitution and then setting up an economic junta which is unaccountable as long as it enforce those policies.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 14th, 2013 at 04:13:24 PM EST
[ Parent ]
No contradiction at all -- from the point of view those who wish to impose those far-right policies.

But for the majority of public opinion in Europe today, the contradiction between the doctrine of independence and the fact of tight limits on independence should be a perfectly perceptible one -- if it were given sufficient play, of course (admittedly not easy to bring about).

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Feb 14th, 2013 at 04:20:07 PM EST
[ Parent ]
At the rate things are deteriorating I would not be too surprised if there were violence directed at the persons comprising the ECB board. Why should they feel so smug and safe when the policies they are enforcing are costing the lives of thousands of people each year. Those people have relatives and some may have some idea of taking personal revenge. This is not an unknown concept in some of the affected countries.

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 Fri Feb 15th, 2013 at 01:18:21 AM EST
[ Parent ]
"Central bank independence, interpreted fundamentalistically as a prohibition of monetary financing of fiscal policy, is part of the German basic law. "

Avtually no. Part of the european treaties, yes. But the independence of the bundesbank rested on a ordinary law.

>The entire German political establishment appears to agree that the ECB is configured as it should be<

A good part of said establishment now actually thinks that the ECB is misconfigured, Germany only having as much of a vote as the smaller states.

by IM on Thu Feb 21st, 2013 at 03:38:55 PM EST
[ Parent ]
Apply all legal measures of persuasion and pressure you can think of until their desires change, and their new course of action is every bit as formally unstoppable.

Not so: Presumably the ECB and/or its board could be prosecuted for violating Art. 123A.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 14th, 2013 at 03:14:57 PM EST
[ Parent ]
Can EU institutions and/or officials be prosecuted on the federal level for violating treaties? If so, who prosecutes, what is the procedure and what punishments are possible?

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 Thu Feb 14th, 2013 at 03:29:23 PM EST
[ Parent ]
I don't know, but I'd assume that it would work the same way as it does when a member state is sanctioned for breach of its treaty obligations. Particularly since the Eurosystem doesn't actually conduct any operations at the ECB level - the operational side is still carried out at the local member central bank.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 14th, 2013 at 03:42:34 PM EST
[ Parent ]
Pressure them. Personally. People do not resist explicit moral censure from large groups very well.

Under contemporary terrorist law, I suspect that the ECB would resist it exceptionally well.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 14th, 2013 at 03:15:59 PM EST
[ Parent ]
What aspects of contemporary terrorist law prevent the democratic expression of criticism and moral censure?
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Feb 14th, 2013 at 03:55:26 PM EST
[ Parent ]
The part where you are not allowed to make your criticism known by any means (such as picketing their place of employment) that cannot be deflected by any halfway competent secretary.

The suggestion was to personalize the matter. I doubt that any currently legal pressure tactic can penetrate their protective bubble of studied indifference to the opinions, or well being, of the hoi-polloi.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 14th, 2013 at 04:08:23 PM EST
[ Parent ]
By alluding to terrorist law, I think you're stretching a point.

It is possible today to get widescale movements of opinion going, and they may certainly include nominal criticism of persons in prominent public employment.

Possible, but difficult, I admit.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Feb 14th, 2013 at 04:13:09 PM EST
[ Parent ]
But that's not the point Thomas was making. See above re. personalizing the issue.

The ECB governing council is (according to that view) a for all practical purposes a group accountable only to itself and its cronies. Public opinion, in this view, doesn't matter. At all.

So the suggestion was, as it was euphemistically put, to "pressure them. Personally."

And since we are for the most part talking about experienced Lysenkoist hacks, the legal avenues for applying effective pressure to their persons are unlikely to be effective. People who are persuaded to abandon politically convenient idiocy by the mere fact that it kills people don't tend to make it to the governing board of the ECB.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 14th, 2013 at 04:24:21 PM EST
[ Parent ]
JakeS:
legal avenues for applying effective pressure to their persons are unlikely to be effective

That much I agree with.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Feb 14th, 2013 at 04:45:25 PM EST
[ Parent ]
Of course, I don't agree with the basic premise that the ECB isn't accountable either.

Pretending that the ECB is impartial and unaccountable, as if it were a court of sorts, is a shell game, not a serious statement of institutional reality.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 15th, 2013 at 02:00:34 PM EST
[ Parent ]
I think Thomas thoughts are spot on, if undeveloped. European Tribune - Does public opinion matter? With chart!
1. Can they affect you personally?
(Everything from a big payoff or nice lunch to being scorn at the supermarket or getting relatives whacked counts.)
==YES=> Ok, they matter. Weigh them against other concerns. (Like what benefits your position and power. Oh, and personal opinions if any are left.)
So of the top of my head, ways to reach them personally:

Rewards: Bah, we don't have the means. Not compared to what te other side can offer.

Punishments:

Clog the administration. ECB is a fairly small agency, so if there are requests they have to at least answer this is possible. Or if you can clog their lines of communication with requests from the public (this is essentially what happens when Amnesty gets going). But are there any such ways? Do ECB have to answer question from MEPs for example?

Reputational. ECB board members appear to prefer secrecy. Would they react to naming and shaming? This can be done online, but posters targeting them personally in their home cities could also get interesting.

Social. Everyone is sensitive to peer pressure. Blair apparently was, according to books about his fall. But is there any way to get their club members to scorn them? After all, the function of places like the City is to create a safe bubble. And I suspect terrorist legislation would be used if suffraget tactics were employed to make them and their peers feel uncomfortable.

Financial. Do any ECB members or immediate family own or by name are connected to major brands that can be damaged? Selective boycotts?

Physical. Not a fan. Even if one sets aside moral issues Sharp argues convincingly against trying to grapple with the state on the states strongest grounds.

Then we also have Thomas other suggestion which attacks this point:

European Tribune - Does public opinion matter? With chart!
4. Can your position and power be affected by voting? ==NO=> They do not matter
This needs to change and may be efficient to argue together with actions from the list above.

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 Fri Feb 15th, 2013 at 02:13:46 PM EST
[ Parent ]
This was the basic premise of my unfinished novel on exactly this subject. Perhaps I should post some quotes.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Tue Feb 19th, 2013 at 10:50:49 AM EST
[ Parent ]
I think that could be interesting. If you are a bit stuck it could also perhaps be inspiring.

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 Tue Feb 19th, 2013 at 02:16:57 PM EST
[ Parent ]
Oh, we're talking about "democratic expression of criticism"?

Thomas was talking about much more pointed action, bordering on harassment:

Pickets.
Boycotts (of the original, "noone will deal with or provide services to you, personally, for any amount of money" kind).
Arrange for their kit and kin to join the ranks of the unemployed.


I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Thu Feb 14th, 2013 at 04:26:34 PM EST
[ Parent ]
Among Thomas's suggestions only picketing really seems susceptible of falling under terrorism law definitions. He does also talk about democratic expression of criticism.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Feb 14th, 2013 at 04:38:15 PM EST
[ Parent ]
The other two would lead to immediate arrest...

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
by Cyrille (cyrillev domain yahoo.fr) on Fri Feb 15th, 2013 at 05:14:26 AM EST
[ Parent ]
a diary with all the members, bios, connection, lines of power, pictures?

who are these people and how did they claw their way to such positions of nubridled, unregulated, unnaccountable power? why doesn't everyone know them, since their attitudes and actions determine the quality of life, even survival of hundreds of millions just inside the EU.

who coded this idiocy into the european constitution?

and how can it be undone as long as its presence and power are so shadowy? do they go through revolving doors into other positions of galactic power?


"We can all be prosperous but we can't all be rich." Ian Welsh

by melo (melometa4(at)gmail.com) on Thu Feb 14th, 2013 at 09:24:03 PM EST
[ Parent ]
Family trees with photos, addresses and maps placed on the web by Anonymous or some such organization, fliers with the same information spread around various cities where there has been acute suffering,.... They will begin to get the idea. Of course packages of such information could be sent to the 14 after the preceding.

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 Fri Feb 15th, 2013 at 01:24:52 AM EST
[ Parent ]
Earlier this week, I attended a talk by a distinguished gentleman scholar, on the subject of tax fraud and its enablers.
Did Spain's finance minister feature prominently among the latter?

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Thu Feb 14th, 2013 at 02:03:38 AM EST
No, he's a piker by comparison to the big banking houses.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 14th, 2013 at 03:16:02 PM EST
[ Parent ]


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