Welcome to the new version of European Tribune. It's just a new layout, so everything should work as before - please report bugs here.

Do we want free movement of capital in Europe?

by Migeru Thu Jul 24th, 2014 at 01:52:29 AM EST

In the discussion of Britain's EU exit initiated by Frank, Cyrille challenges me repeatedly on free movement of capital:

I think the "four freedoms" should apply as widely as possible so, on that basis, it would be a bad thing if the UK were to leave the EU.
That is a consistent view, ...

[b]ut I had been under the impression that you were no fan of the free movement of capital -certainly an unrestricted one.

Well, touche
Unfettered cross-border capital flows are a bad idea. Just look at the financial crises of the last 30 years, worldwide.
So, do we want free movement of capital? More below the fold.

front-paged by afew


...if you have free movement of workers, goods and services and freedom of establishment and service, plus a monetary union, I don't know how you can restrict the free movement of capital.
I'm not clear why free movement of capital could not be restricted at all even with perfect freedom in the other 3 and monetary union (for instance, since there are state subsidies to some companies, the state should be allowed to prevent the company moving its capital as soon as they end). But assuming that it is the case, then why should the 4 freedoms be considered an unqualified good thing to be spread as widely as possible?
Of course I said "restrict" when I was thinking of "eliminate". At the height of the Euro crisis I myself proposed on occasion the imposition of a levy on cross-border money flows, proportional to sovereign CDS spreads or bond risk premia so it would go away on its own if the crisis abated.

A monetary union with free trade and free movement of workers plus capital controls is basically a return to the European Communities under the pre-1971 Bretton Woods system of gold-standard fixed exchange rates, but without the possibility of devaluation. So the same tensions that led to serial devaluations in Europe prior to the Euro would still exist, just without an outlet other than "internal devaluation" which is a recipe for economic depression and widespread misery. But we're almost there as it is - we already have a monetary union behaving as an Ersatz gold standard due to hard-money ideology, with internal devaluations, and capital controls in Cyprus.

Now, how does the European Commission frame free movement of capital?

Free movement of capital is at the heart of the Single Market and is one of its 'four freedoms'. It enables integrated, open, competitive and efficient European financial markets and services - which bring many advantages to us all.

For citizens it means the ability to do many operations abroad, such as opening bank accounts, buying shares in non-domestic companies, investing where the best return is, and purchasing real estate. For companies it principally means being able to invest in and own other European companies and take an active part in their management.

That's what it comes down to, but capital controls also entail taxing people for carrying large amounts of cash across borders... as they are wont to do: Customs find smuggled cash in every third car (the Local, 17 Apr 2014)
The number of Germans smuggling large amounts of cash across the Swiss border into Germany rose dramatically last year. Customs officers said on Thursday they made a find in almost every third car they checked.

Display:
Well, with eliminate then I would have completely agreed.

I believe that of the four freedoms, the one that I would want the least restricted (people -yes, I'd like free movement of people if possible, not just workers), is actually the most restricted, in practice if not in law.

I believe that, especially absent a rather strong political and societal convergence, the other three need to allow for quite significant restrictions (for example, if a tax is introduced on carbon in one country, it must be possible to tax imported goods based on their production emissions).

I would not see them as unqualifiable goods in all circumstances.

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

by Cyrille (cyrillev domain yahoo.fr) on Thu Jul 17th, 2014 at 08:56:56 AM EST
I believe that, especially absent a rather strong political and societal convergence, the other three need to allow for quite significant restrictions (for example, if a tax is introduced on carbon in one country, it must be possible to tax imported goods based on their production emissions).
As I argued in the other thread, it is the political dimension of the EU, allowing Union-wide standards to be legislated by means of directives which become binding for the member states, that makes freedoms of movement desirable in the EU.

But in the case of monetary policy, the monetary union and free movement of capital make fiscal union (with fiscal transfers) a necessity.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Thu Jul 17th, 2014 at 11:14:46 AM EST
[ Parent ]
"it is the political dimension of the EU, allowing Union-wide standards to be legislated by means of directives which become binding for the member states"

I would not say that this particular dimension has covered itself with glory of late. Whether from its lack of democratic representation, or from the actual outcomes. The level of discrepancy between neighbour states in matters such as taxation is incompatible with the smooth running of states.

And yes, a fiscal union is an absolute necessity, but I reckon that unrestricted movements of capital are a major problem even absent monetary union.

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

by Cyrille (cyrillev domain yahoo.fr) on Thu Jul 17th, 2014 at 11:26:13 AM EST
[ Parent ]
But absent a monetary union there is no reason not to have capital controls.

Are unrestricted movements of capital within France "a major problem"?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Thu Jul 17th, 2014 at 11:32:37 AM EST
[ Parent ]
Actually, there are some issues in France, but... how is France not a monetary union?

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
by Cyrille (cyrillev domain yahoo.fr) on Thu Jul 17th, 2014 at 01:12:49 PM EST
[ Parent ]
As far as I see it, a "monetary union" is an area with a common currency, but without common fiscal policy and without free flow of labor (in the EU free flow of labor is not possible because of the different languages). Obviously you could call any area with one currency a "monetary union", but this is not how it is used in practice.
by rz on Fri Jul 18th, 2014 at 03:53:47 AM EST
[ Parent ]
OK, I agree it is unusual to call France a monetary union.
But I then simply don't understand Mig's using France as an example for his statement "But absent a monetary union there is no reason not to have capital controls". I must be missing something, I am not trying to be obtuse but I don't think I got it.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
by Cyrille (cyrillev domain yahoo.fr) on Fri Jul 18th, 2014 at 06:20:53 AM EST
[ Parent ]
A single state with a single currency generally doesn't have internal capital controls.

It's only when you're not in a monetary union, when you have separate states with separate currencies, that it makes sense to have capital controls.

But I personally prefer floating exchange rates and agreesive macroprudential and foreign reserve policy to guard against the real-economy effects of exchange-rate fluctuations, and against hot money flows causing balance-of-payments crises.

Interventionist fixed-exchange-rate policies, especially it they try to prop up the value of the domestic currency, are probably a major contributor to catastrophic macroeconomic crises.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Fri Jul 18th, 2014 at 06:25:40 AM EST
[ Parent ]
In a monetary union, meaning with a single currency capital controls are also possible (see Cyprus) and maybe desirable (as you proposed, right?).
by rz on Fri Jul 18th, 2014 at 10:01:49 AM EST
[ Parent ]
Well, if you don't have fiscal union you need capital controls. But then what's the point of monetary union?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Jul 18th, 2014 at 10:06:10 AM EST
[ Parent ]
I don't know. Maybe the symbolic value?
by rz on Fri Jul 18th, 2014 at 02:08:17 PM EST
[ Parent ]
I absolutely think we must maintain the free movement of capital in Europe. The idea of a monetary union becomes rather absurd if that movement is restricted, except in very serious crisis situations (like in Cyprus).

However, this requires some kind of fiscal union or the monetary union will just become a machine producing mass unemployment whenever a member state is hit with an asymmetric shock, as recent years have shown.

This is of course no surprise, but was widely argued even before the monetary union was launched, but I digress.

So if we are to have monetary union, we should have free movement of capital, or otherwise what's the point, and if we have monetary union, we also need some kind of fiscal union.


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

by Starvid on Tue Jul 22nd, 2014 at 05:38:01 PM EST
[ Parent ]
We've seen lots of ideas on how to run a fiscal union. Eurobonds, partial pooling of sovereign debt up to the Maastricht debt limit, an agressively financed EIB, ECB monetizing deficits, outright fiscal transfers, and so on.

What they all have in common is that they've all been shot down. A big reason for this seems to be that people consider them unfair: it looks like the frugal people who've kept their houses in order are going to have to pay for the lazy wastrels. Even if the real macro story is a bit different from this (to say the least), this is an incredibly powerful narrative, which means it's important to figure out some way to get around it.

So I've figured out another mechanism for fiscal union - Migeru didn't like it much, but I'd like to hear your opinions. Keep in mind that the idea is not to create a perfect fiscal solution, but something that works good enough to actually be implemented and transform the EMU from a mass unemployment-producing machine into something reasonably functional.

The idea is that we create something we call the European Fiscal Mechanism, the EFM. This is an independent organization which is tasked with estimating the aggregate European output gap. If it detects such an output gap, it injects fiscal assets (i.e. cash) into the state budgets of all Euro member nations, in some way which is seen as fair. Say, a country which makes up 20% of the Euro economy gets 20% of the cash, no matter if it has an actual output gap or not.

If the crisis, like the current one, is a result of current account imbalances, spending in current account surplus nations without output gaps will help too, as it will push inflation in those countries and help get the unit labor costs in line with those in the countries with current account deficits.

The money is only disbursed from the EFM to the member state if it is spent on something. Spending it on paying down state debt does not qualify as spending in this view, but spending it on infrastructure, social programs, tax cuts and so on does.

The EFM raises money for disbursement by selling long-dated bonds into the market. All its bonds are guaranteed by the ECB. Another identical option would be direct borrowing from the ECB, but this would set off even more red lights, so we shall in this way "sanctify the money through the bid/ask spread of investment banks".

The EFM will gradually and over time manage its debt by refinancing its current bonds with new bonds when the old ones mature, and also if needed have priority access to a certain fraction of the annual the EU budget, i.e. the money which is extracted from the member states via the membership fee. This will also have the added bonus of forcing the EU to cut useless and wasteful spending programs, which is sure to be both useful and popular.

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

by Starvid on Tue Jul 22nd, 2014 at 06:03:57 PM EST
[ Parent ]
The frugal people who've kept their houses in order is a good cover for rentiers, financial sharks. The output gap is alomost a derivative of the rentier power gap.

Nothing wrong about getting return on capital... in normal times. But when debt entitlements are sacred regardless realistic  social-economic conditions, this is basically an end of the free market and democracy.

by das monde on Tue Jul 22nd, 2014 at 10:11:10 PM EST
[ Parent ]
How to finance your EMF?

I think such a mechanism should be financed through a Europe wide tax on capital, call it the Pickety tax.

by rz on Wed Jul 23rd, 2014 at 01:41:32 AM EST
[ Parent ]
I don't think that would work very well. First, because the effect might be slight, as we would reduce spending by taxing people. Sure, the reduction in spending from increased taxation would be smaller than the increase in spending from increased government spending (as not all the taxed wealth would be spent in the first case - some of it would have been saved). We would still get a net increase in spending, but borrowing would be even better from that point of view.

And it would look a bit silly if we increased taxes and doled out the money to the member states just to see them cut the same taxes with the same money. Then we're not really getting any traction. We could of course say that the new money couldn't be used for tax cuts, but I think that would make it even harder to get a program like this down the throat of the member states.

Also, I don't think we want to make this a leftist "soak the rich"-thing, because then it would never get support from the center-right, which is a prerequisite for any realistic solution. We can soak the rich later, but our first priority one must be to stop mass unemployment in Europe.

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

by Starvid on Wed Jul 23rd, 2014 at 06:04:28 AM EST
[ Parent ]
Don't estimate "output gaps." Such estimates always, always, always underestimate the true need for fiscal expansion. (Both for structural, methodological reasons and because they are trivial to manipulate for partisan political advantage, and those who have access to make such manipulations are normally biased toward deflation.)

Simply pay out a percentage of EU nominal GDP per capita equal to the higher of the EU overall unemployment rate or the simple, unweighted average of the national unemployment rates.

It should be a wholly separate facility from the rest of the EU budget, so as to protect it from partisan tampering and the temptation to divert the funds for other purposes.

Your proposed funding scheme would have made Charles Ponzi balk, but then again the rules it is designed to circumvent are the kind of transparently bad-faith nonsense that invites this sort of Rube Goldberg solutions.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jul 23rd, 2014 at 02:36:36 AM EST
[ Parent ]
JakeS:
Simply pay out a percentage of EU nominal GDP per capita equal to the higher of the EU overall unemployment rate or the simple, unweighted average of the national unemployment rates.

Since the unemployment rate is eminently manipulable, use the employment rate to inversely determine the percentage.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Jul 23rd, 2014 at 03:08:23 AM EST
[ Parent ]
When it comes to measuring output gaps, that is as you say, quite easy to manipulate, and some kind of simplified solution might be a good idea. It's better with too much fiscal support from the EFM than too little, as the ECB can far more easily adjust its monetary policy to deal with overheating than recession, due to the existence of the zero lower bound.

I think linking the funding of the EFM to the EU budget in some indirect way would help get it populist/eurosceptic support, which is sorely needed. You could avoid partisan problems by just saying that the EFM has the right to take XX% of the EU budget every year if it feels like. Obviously the EFM needs to be independent like the ECB, except staffed by non-crazy people. Ideally, people should think of it as an equal to the ECB.

And yes, it sure is a Rube Goldberg-device, but we can't let the perfect become the enemy of the good. Remember, every day with 25% unemployment in Spain is a total disaster. Every single day.

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

by Starvid on Wed Jul 23rd, 2014 at 05:57:40 AM EST
[ Parent ]
The idea is that we create something we call the European Fiscal Mechanism, the EFM. This is an independent organization which is tasked with estimating the aggregate European output gap. If it detects such an output gap, it injects fiscal assets (i.e. cash) into the state budgets of all Euro member nations, in some way which is seen as fair. Say, a country which makes up 20% of the Euro economy gets 20% of the cash, no matter if it has an actual output gap or not.
Okay... EU Balks at Changing Deficit Rule to Ease Austerity (WSJ, September 25, 2013)
The change was approved by technical experts at a meeting last week and was expected to be supported at a Tuesday meeting of more senior officials in Brussels. But an article published in The Wall Street Journal about last week's decision generated concern in some national capitals about its effects on budget policies, an EU official said.

...

The change involves a highly technical methodology that the European Commission, the European Union's executive arm, uses to calculate the "structural deficit," which is the actual budget deficit adjusted for the strength of the economy. The commission uses the structural deficit to determine how much austerity governments will need to undertake to meet EU budget targets.

...

Europe's current calculations about how much of the deficit is structural and how much is caused by the downturn in the business cycle assume much of the budget deficits seen in the bloc's weakest economies are built-in, meaning they will persist even after the economy has returned to full strength. If a deficit is structural, rather than cyclical, more austerity measures--spending cuts or higher taxes--are required.



A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Jul 23rd, 2014 at 05:30:01 AM EST
[ Parent ]
Europe's current calculations about how much of the deficit is structural and how much is caused by the downturn in the business cycle assume much of the budget deficits seen in the bloc's weakest economies are built-in, meaning they will persist even after the economy has returned to full strength. If a deficit is structural, rather than cyclical, more austerity measures--spending cuts or higher taxes--are required.

I am trying to figure out what formal school of economics would lead to this conclusion. Austrian? The prescription seems to be 'if the patient is ill, amputate. Still not well? More Amputation.' The economics of cannibalism.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Jul 25th, 2014 at 10:16:59 PM EST
[ Parent ]
This is mainstream neoclassical NAIRU bullshit. Read this revised methodology for calculating output gaps [PDF] and weep.

Also, Noahpinion has a guest post on How important was the "structural balance" screw-up in driving European austerity? (October 05, 2013) describing what's wrong with the European Commission's econometrics.

The European Commission uses a production function methodology for calculating potential growth rates and output gaps (see here). It features a simple Cobb Douglas specification where potential output depends on TFP and a combination of factor inputs (potential labor and capital). Importantly for what follows, potential labor input is calculated as:

Working age Population x Participation rate x Average hours worked x (1 - NAWRU)

It's important to focus on potential labor input since the bulk of the revisions applied between 2008 and 2010 to potential GDP arose because of revisions to labor input.

And note the use of NAWRU rather than NAIRU. If you use NAIRU (non-accelerating-inflation rate of unemployment) you're using unemployment as a policy lever to achieve an inflation policy target. But if you use NAWRU (non-accelerating-wages rate of unemployment) you're using deliverately using unemployment to depress wages, but hiding that under a supposedly objective econometric model.

It really is criminal.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sat Jul 26th, 2014 at 12:07:58 AM EST
[ Parent ]
Then the intellectual heritage would be  Keynesian Synthesis, per Samuelson and Phillips, but grossly perverted by Monetarists and further perverted by compromizing with Keynes rejectionists from the original version of Neo-Classical Economics.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jul 26th, 2014 at 11:38:00 AM EST
[ Parent ]
Absent a fiscal union, there is no sense having a monetary union.

But rather than having the free movement of capital hinge upon its pre-requisites if the economy was to be stabilized in the face of crisis ...

... it was thought appropriate to build them upon the neoliberal fantasy that when government gets out of the way, that eliminates the sources of crises rather than changing who it is that authors the crisis.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Jul 20th, 2014 at 08:00:21 PM EST
[ Parent ]
Schaeuble is still pushing his Sparkommisar idea. Cyclical fiscal adjustment forever!
by rz on Mon Jul 21st, 2014 at 01:15:05 AM EST
[ Parent ]
This is clearly the crucial question. At the moment I see no option to restrict capital movement, but going back to national currencies.

The fiscal union, which monetary union would require is not forthcoming. Instead the crisis is festering and the turn of more and more people against the EU leads to restrictions on the one truly crucial freedom: the free movement of people.

by rz on Thu Jul 17th, 2014 at 01:40:41 PM EST
A fiscal union is not forthcoming, nor are capital controls, nor is a monetary de-union ...

... of the things that are not forthcoming which could allow the broken-by-design system to no longer be broken by design, which of them is CLOSEST to being in reach.

A confederal fiscal union would set a monetary-union-wide deficit and distribute the proceeds on a fixed formula, eg per capita, to the member countries.

Monetary de-union may happen by deepening crisis, as a consequence of never fixing the broken system ... but in terms of selected reforms, is it really more likely than a confederal fiscal union?

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Jul 17th, 2014 at 05:27:43 PM EST
[ Parent ]
In terms of selected reforms, capital controls is probably the least heretical option.

But monetary de-union by default still remains the most probable outcome.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jul 18th, 2014 at 01:16:39 AM EST
[ Parent ]
Agreed.

In Cyprus we already installed capital controls. So I guess it is not completely impossible that this will be the solution.

And while it is very improbable that monetary de-union* is not on the table it is actually hugely popular in many European countries.

* I like this word creation.

by rz on Fri Jul 18th, 2014 at 03:40:23 AM EST
[ Parent ]
I garbled that sentence.

I want to say that at the moment only some protest parties want to blow up the Euro. But they might soon gain a substantial amount of followers, if the economic situation deteriorates further.

I am wondering: The left wing party in Greece (Syzra, I think), do they want to leave the Euro?

by rz on Fri Jul 18th, 2014 at 10:04:53 AM EST
[ Parent ]
Alexis Tsipras: Interview with the European Left (14 May 2014)
Alexis Tsipras may become the next Prime Minister of Greece. Indeed, if elections were held today he would win, according to surveys. He almost became the PM two years ago, in the last elections; he was one point short of a win. The popular support of his campaign scared conservatives, not only in Grece but throughout Europe. Many political and other forces banded against him, claiming that if SYRIZA won, the party would take Greece out of the Euro and EZ, and that chaos would ensue. This was a blatant lie meant to scare citizens. SYRIZA is, and has been, committed to keeping Greece in Europe. SYRIZA wants to help reform Europe, and to increase democracy.  


A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Jul 18th, 2014 at 10:10:53 AM EST
[ Parent ]
That is true, but with the caveat that Syriza is committed to keeping Greece in the Euro so long as the other parties to that arrangement fulfill their obligations. Which includes, among other things, rediscounting Greek treasuries held by private (and nominally private) banks with access to the Eurosystem rediscount facilities.

In other words, Syriza is leaving itself an out in case the ECBuBa starts making noises about another coup d'etat against the Greek clearing infrastructure.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jul 18th, 2014 at 12:17:56 PM EST
[ Parent ]
Maybe we should create a new diary: Do we want a common currency?

Do we? Judging from the participation in this diary I have the feeling generally here at the Eurotrib people are still Pro-Euro. Until very recently I also excluded  monetary de-union as an option. But I am becoming more and more frustrated with the situation. Without adequate monetary stimulus austerity has been catastrophic. I mean even judged by its own metrics, reducing the debt load, it has failed. But nothing is changing politically.

by rz on Sat Jul 19th, 2014 at 04:09:14 AM EST
[ Parent ]
rz:
I mean even judged by its own metrics, reducing the debt load, it has failed. But nothing is changing politically.
Nothing is changing politically because our DLs have sewn up the game for years, and this is a big WIN for their bankster buddies, Corporations cashing in on shock doctrine, MIC etc etc.

That's the only value to the Farages, de Pens etc, not that their vision is any healthier but they do name names and want to upend the status quo.

Austerity will continue unless these rogue parties capture enough votes to unseat this creepy crew running Europe into the ground. Morale will decidedly not improve with Junker, Holland, Merkel and Renzi.

Talking about balancing the budget is just the ruse they use to con the rubes, while actually increasing debt and shifting wealth upwards into fewer hands.

Losing the Euro would be a small price for being able to believe again in the EU.

It's the only way to make it workable if the ECB won't act as a proper Central Bank, there are no Eurobonds.

If enough people demand exit then they have to change the rules for the Euro to survive, whereupon there will be no need to can it and go back to national sovereign currencies. Germany know this but it's in her interest to continue the present course as long as possible, as either way, with the DM or the revamped Euro, they will lose out. If the rest of Europe demands change she cannot hold out, and her export market suffers.
The inflation paranoia is, like austerity and balancing the budget, just another smoke screen for BAU...

This is becoming obvious to all but the most ingenuous!

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sat Jul 19th, 2014 at 07:13:48 AM EST
[ Parent ]
That's the only value to the Farages, [l]e Pens etc, not that their vision is any healthier but they do name names and want to upend the status quo.

Austerity will continue unless these rogue parties capture enough votes to unseat this creepy crew running Europe into the ground. Morale will decidedly not improve with Jun[c]ker, Holland[e], Merkel and Renzi.

You continue to ignore the existence of the European United Left (Tsipras-like) and cheering the ugly parties. Must be because Grillo hitched his wagon to Farage...

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sat Jul 19th, 2014 at 12:55:20 PM EST
[ Parent ]
Do you think the EUL is doing a good job of being opposition?

Thanks for the spelling corrections!

I am not 'cheering' the ugly parties of UKIP and Le Pen, I have deplored them. The only thing worse is the Troika.

Tsipras is very worthy indeed, and I am 'cheering' them on. They have a long way to traction, while Mv5 are already giving Italy a view of what a real opposition should be. Too bad you can't see it from there. Mv5 claim they're beyond L/R, but I don't hear Tsipras on TV here suggesting conflict of interest, parliamentary immunity, election system, citizens' income, broadband rollout, renewable energy prioritisation, anti-mafia, anti-corruption, anti-F-35 laws.

Tsipras seem like really nice people, but they're as much a sideshow as Vendola on the Left, or Scelta Civica on the Right. La Lega has many more votes.

What is satisfying is watching the Right trying to rally ranks and re-invent themselves. It's pretty hopeless, yet the media give them much more airtime than Mv5. They just don't want to get it that there's a big change happening. Every day evidence adds up that the ideology by both C-L and C-R is hokum, balderdash, bullshit, because it plain doesn't work. Years of appointed technocrats have not made the rabbit appear from the hat, and Renzi, as I said here when he first popped out of the woodwork is old wine in a new shiny bottle, Italy's TB infection, Tony Bliar.

Renzi is holding his party together with the fickle chewing gum of charisma. Parliament remains hung on the election reform, which was supposed to be their only job before giving back the voting rights to the citizenry. Meanwhile new election law is being crafted in a secret meeting by a convicted criminal who's not even allowed to vote! National debt is rising the deeper the austerity cuts, and the best Padoan can do is suggest more of the same Troika treatment abuse. I mean, come on! Mv5 is the only real opposition with any bite from what I can glean combing through the MSM and the blogs here.

I'm sure De Gondi could give you a much more informed, complete picture, but he ain't around much these days, more's the pity!

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sat Jul 19th, 2014 at 02:24:51 PM EST
[ Parent ]
Yes, I do think GUE/NGL is doing a good job of being opposition.

The M5S, on the other hand, by allying itself with Farage (which you deplore) has succeeded in putting itself beyond the pale: the EPP, PSE and ALDE allied themselves to deny Farage's group (and the M5S) any institutional roles (committee chairs or vice-chairs, for instance). While some in the Green and Left groups have criticised this as a violation of democratic principles given the size of the Farage group, there appears to be a sort of cordon sanitaire in place. So, good luck with effective opposition from there. Even the eurosceptic AfD is doing better (though Bernd Lucke was excluded from the bureau of the Economic and Monetary Affairs Committee), because they're in Cameron's group.

People following this conversation may not be aware there's a small political group in Italy called "L'Altra Europa con Tsipras" which got three MEPs (most prominently, Barbara Spinelli). Of course, having a foreign namesake doesn't help anyone get traction in national politics.

Regarding Tsipras and Grillo: Alexis Tsipras a In Mezz'Ora: "Beppe Grillo non capisce: la rabbia da sola non basta" (Huffington Post Italy, 6 April 2014)

"Anni fa abbiamo guardato al fenomeno Grillo con simpatia perché era figlio della rabbia dei cittadini italiani, ma la rabbia da sola non basta. Grillo fa finta di non capire l'importanza della realtà europea". Intervistato da Lucia Annunziata a In Mezz'Ora, Alexis Tsipras, candidato per la sinistra europea a presidente della Commissione Ue, non fa sconti a nessun politico italiano, a cominciare dal leader del Movimento Cinque Stelle.

Secondo Tsipras, i nemici da sconfiggere alle prossime elezioni europee sono più d'uno: da un lato c'è il populismo, colpevole di voler "disgregare l'Ue"; dall'altro ci sono le politiche di austerity che hanno fatto solo male al progetto europeo. "Per noi - ha aggiunto Tsipras - l'Europa è il terreno di una lotta di classe".



A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sat Jul 19th, 2014 at 04:33:35 PM EST
[ Parent ]
Migeru:
While some in the Green and Left groups have criticised this as a violation of democratic principles given the size of the Farage group, there appears to be a sort of cordon sanitaire in place. So, good luck with effective opposition from there.

I guess they are scared of something, huh?

Look, bonding with Farage may well be the dumbest thing they ever did, I grant you that. It never warmed my fuzzies either. If it was a gamble to get their ball upfield and then the goalposts were moved, then we get to see how EU realpolitik rolls, that's always good! Cordon sanitaire, good one.

But what you don't reflect on it seems is that MV5 haven't espoused Farage's platform, they just have some coincident goals, primarily sorting out this dog's dinner of a currency foisted on us. (Not that it's the currency per se that's at fault, just its ridiculous mis-management.) If it weren't for the rules being as they are I guarantee they wouldn't have done it. A lot of their followers are gagging on it and unless it leads to better ends, it may cost them big time at the box.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sun Jul 20th, 2014 at 08:45:23 AM EST
[ Parent ]
Why didn't Grillo join the GUE/NGL? We know why he didn't join the Greens: they vetoed him because he had been in talks with Farage.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sun Jul 20th, 2014 at 02:13:52 PM EST
[ Parent ]
Migeru:
The M5S, on the other hand, by allying itself with Farage (which you deplore) has succeeded in putting itself beyond the pale: the EPP, PSE and ALDE allied themselves to deny Farage's group (and the M5S) any institutional roles (committee chairs or vice-chairs, for instance).

And to get more committee chair and vice-chairs to hand to ALDE. MEP Wikström, ALDE (and committee chair thansk to this deal) defended it as a natural step in making a coalition.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Sun Jul 20th, 2014 at 12:18:04 PM EST
[ Parent ]
Parliament remains hung on the election reform, which was supposed to be their only job before giving back the voting rights to the citizenry. Meanwhile new election law is being crafted in a secret meeting by a convicted criminal who's not even allowed to vote!
Yes, I heard... from L'Altra Europa con Tsipras.
L'Altra Europa con Tsipras invita tutti e tutte coloro che l'hanno sostenuta a essere presenti martedì 15 luglio a Roma sotto il Senato e a promuovere e a partecipare a tutte le iniziative per sbarrare la strada al progetto anticostituzionale della coppia Renzi-Berlusconi. Conitnueremo la presenza mercoledì 16 luglio. In molte città tra martedì 15 luglio e mercoledì 16 luglio stiamo organizzando volantinaggi e presidi.
I mean, come on! Mv5 is the only real opposition with any bite from what I can glean combing through the MSM and the blogs here.
Well, I'll grant you the bite because of the size of the M5S. But if I can hear about the electoral reform from L'Altra Europa from outside the country, so can you form inside...

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sat Jul 19th, 2014 at 05:26:38 PM EST
[ Parent ]
I saw a good interview with Spinelli, a mild-mannered woman with good intentions and venerable father, but that was it, incisive unfortunately it wasn't...

Thanks for your diligence in finding hearteningly intelligent actions by the L'Altra Europa group.

They may catch a few votes from people who don't trust the MV5. They are too academic for the voters though and their web presence is negligible, social media wise.

Beppe's blog is huge, and the comments aren't stupid either. He was in the vanguard of political blogging worldwide, the Dkos of Italy, if Dkos had its own party.

Di Maio more than held his own at the live stream with Renzi on the 17th, put him in his place more than a few times, reducing him to babbling froth on others. (Mind you Renzi is an expert frothbabbler, like TB.)

What's politically embarrassing for the PD is their resistance to letting go of the Nazarene pact with B, and their ever-more obvious efforts to wangle Berlu a presidential pardon fuels a lot of anger that the Mv5 are channeling into good (imo) politics. B's megalomania just got an un-needed shot in the arm from his acquittal yesterday, so he is dipping his scummy oar in, though it's possible he's actually damaging the R's ability to cohere by not just going away somewhere where there's no TV cameras for a while.

Like Beppe with Mv5, who do better when he takes a back seat! Too short a fuse, makes funny comedy but too much -even comic- ire scares the grandma vote away.

And there's lots of voter granmas here who think he's Frank Sinatra and Francis of Assisi rolled into one...

Tsipras are just dabbling in Italy in comparison, though they have integrity and made the 4% vote, just.

They'd be better off colonising intellectuals and joining Beppe, imho. Firebrands do come in handy to get a platform off the ground.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sun Jul 20th, 2014 at 08:23:00 AM EST
[ Parent ]
They'd be better off colonising intellectuals and joining Beppe, imho.
I'm afraid the Farage ties will scare awy from Grillo any lefties who are not already in the M5S, and quite a few who are.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sun Jul 20th, 2014 at 01:36:23 PM EST
[ Parent ]
Well, if they don't believe in The Leader then they're not worth having, are they?
by Colman (colman at eurotrib.com) on Sun Jul 20th, 2014 at 01:42:29 PM EST
[ Parent ]
Migeru:
I'm afraid the Farage ties will scare away

Fear about fear.

Scary Farage, Scary Grillo!

To break the lockdown austerity mindset some risk will be inevitable.

Farage at his most unpalatably idiotic scares me a lot less than continued slo-mo shock troika doctrine.

The only thing that scares me about Grillo is when his ego blocks him from seeing when enough is enough.

It looks like you were right about linking with Farage being a poor move for MV5, since the regrettable means did not lead to an auspicious end, so far at least.

(Lady, Fat, sing).

Maybe no-one expected a cordon sanitaire either!

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Mon Jul 21st, 2014 at 03:29:58 AM EST
[ Parent ]
Yeah, scary Grillo. I didn't like it one bit when he made a fuss against decriminalizing illegal immigration. He showed the worst ugly-party populist instincts.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Jul 21st, 2014 at 04:28:31 AM EST
[ Parent ]
That was a long time ago and he corrected after his movement showed him a better way.

The way it should be...

Look, if you were here you'd see Beppe has backed off enormously since the elections, while his pariamentarians are steadily being true to their words, not terribly effectively because of 'La Casta' obstructionism so far, but they are not flagging in their fight. The job of 'opening up Parliament like a can of tuna' is a lot harder than one can possibly imagine from afar.

Easier pulling hundreds of full-grown boars out of a trough at feeding time with your bare hands.

Thanks again for filling in gaps in my Italian political education, as they are large and legion.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Mon Jul 21st, 2014 at 10:38:30 AM EST
[ Parent ]
I can certainly understand the lure of making a tactical alliance with RW loons in order to force a change in the Euro. But for it to be worth it it has to succeed, and that seems unlikely. Then there must be a careful evaluation of the consequences. If it results in a voting majority for RW loons then any fix will be fatally compromised, making the whole situation possibly worse. There are real dangers in a 'the worse, the better' philosophy. But the European status quo regarding the Euro seems little better than a crypto-fascist cabal as it is.
 

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jul 26th, 2014 at 12:02:05 PM EST
[ Parent ]
Just recently, someone posted approvingly about UKIP MEP Godfrey Bloom on one of the Podemos Facebook pages, because he told the rest of the MEPs "it won't be long before they storm this chamber and they hang you, and they'll be right". Prefaced by quoting "the great American philosopher Murray Rothbard"...

Recently melo quoted Grillo rhetoric about "opening the parliament like a can".

It so happens that Godfrey Bloom was expelled from the parliament for shouting "Ein Volk, Ein Reich, Ein Führer":

It so happens that Bloom said that in response to Schulz' suggestion that if the UK did not want a financial transaction tax for the EU, then the Eurozone alone could institute such a tax.

Presumably the Podemos supporters agree with the financial transaction tax... And don't get me started about the philosophy of Murray Rothbard.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sat Jul 26th, 2014 at 12:15:55 PM EST
[ Parent ]
Somehow I dropped the third video in my post:

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sat Jul 26th, 2014 at 12:29:23 PM EST
[ Parent ]
From wiki:
Rothbard rejected the application of the scientific method to economics, and dismissed econometrics, empirical and statistical analysis, and other tools of mainstream social science as useless for the study of economics.[47] He instead embraced praxeology, the strictly a priori methodology of Ludwig von Mises. Praxeology conceives of economic laws as akin to geometric or mathematical axioms: fixed, unchanging, objective, and discernible through logical reasoning, without the use of any evidence.

Well, in his defense I can say that, at the least, he doesn't bother to pretend to be scientific.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jul 26th, 2014 at 10:20:00 PM EST
[ Parent ]
And now I know from whence the loons at the Von Mises Institute came.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jul 26th, 2014 at 10:21:43 PM EST
[ Parent ]
by das monde on Sat Jul 26th, 2014 at 11:21:16 PM EST
[ Parent ]
More Spinelli: Spinelli contro Juncker: "Dice di voler abolire Troika, ma è pro-austerità" (Il fatto quotidiano, 9 July 2014)
Jean-Claude Juncker, candidato popolare alla Presidenza della Commissione europea, è stato contestato all'incontro con il gruppo della Sinistra unita (Gue) al Parlamento europeo. Barbara Spinelli (L'Altra Europa): "Juncker è contraddittorio, da una parte è critico, vuole abolire la Troika, però dall'altra parte dice che la politica d'austerità è l'unica possibile. Vuole apparire nuovo ma in realtà perpetua le politiche che ci sono state finora". Pablo Iglesias, leader dello spagnolo Podemos, si dice preoccupato: "Juncker è stato il presidente di un paradiso fiscale come il Lussemburgo, uno strumento per fare gli interessi dei ricchi". Iglesias attacca anche i compensi ricevuti da Juncker: "15mila euro per due ore di conferenza in Germania quando nel Sud Europa il salario minimo non arriva ai 700 euro al mese" di Alessio Pisanò
This is an excerpt from the recent appearance of JC Juncker before the GUE/NGL group in the European Parliament. One of the reasons the GUE/NGL is going to be more effective as opposition than Farage/Grillo is that Juncker takes them seriously as an interlocutor. Even if there are serious disagreements and some hard opinions were voiced, the meeting remained cordial. I don't expect Juncker to pay attention to what Farage/Grillo have to say.

You can watch the entire debate with the GUE/NGL group here: http://www.europarl.europa.eu/ep-live/en/other-events/video?event=20140709-1145-SPECIAL-UNKN

By entering your email address below the plug-in you'll receive a link to download a windows media file.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Mon Jul 21st, 2014 at 04:25:23 AM EST
[ Parent ]
I was wondering about the Situation in Italy. Since austerity has failed and the Italian debt-load is rising instead of falling, Hans-Werner Sinn has been making the talk show tour, explaining to everybody that the problem is that Italy (and others) aren't actually really cutting spending.

I looked at the numbers of the Italian budget. I fund that it got roughly cut from 76 Billon Euro to 72 Billion Euro. But I suspect the increased amount of debt service  masks the actual cut in public spending.

do you have some number of that?

by rz on Sun Jul 20th, 2014 at 04:46:07 AM EST
[ Parent ]
Renzi is applying Troika austerity with a vengeance, new taxes a-gogo from Padoan. All Mv5 initiatives for wealth distribution rebuffed. (Renzi's big idea was a risible E80 a month 'gift' to middle sector workers).

The 'Caste' is still going strong with 90% of its bloated privilege intact.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sun Jul 20th, 2014 at 08:30:36 AM EST
[ Parent ]
The 'Caste'
Where did that come from? Podemos uses the term in Spain.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sun Jul 20th, 2014 at 01:39:28 PM EST
[ Parent ]
La Casta - Wikipedia, the free encyclopedia
La Casta From Wikipedia, the free encyclopedia Jump to: navigation, search
This article is an orphan, as no other articles link to it. Please introduce links to this page from related articles; try the Find links tool for suggestions. (February 2009)

La casta. Così i politici italiani sono diventati intoccabili (The Caste. How Italian politicians became untouchable) is an Italian book, written by Sergio Rizzo and Gian Antonio Stella, two journalists from the Italian national newspaper Corriere della Sera, detailing the amount of graft and corruption in italian politics. It was published in 2007, and became a bestseller.[1]



'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Mon Jul 21st, 2014 at 02:19:12 AM EST
[ Parent ]
Maybe that's where Pablo Iglesias got the term. He studied in Italy.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Jul 21st, 2014 at 04:18:15 AM EST
[ Parent ]
I believe you that austerity is going strong.

But I need numbers. Does anybody now where I find numbers for the debt service of the crisis countries?

by rz on Sun Jul 20th, 2014 at 02:32:46 PM EST
[ Parent ]
You should we real feel sad about Grillo? It seems to me the M5S has been a joke all along.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Jul 24th, 2014 at 03:49:23 PM EST
[ Parent ]
The interview was about the EU election. So he talks about the decisions which need to be taken on the European level. But still he doesn't sound like somebody who would do the full Kirchner.

But then: If he is not ready to go the Argentinian wya, what can he actually accomplish?

by rz on Sat Jul 19th, 2014 at 04:16:02 AM EST
[ Parent ]
Would their first preference be to kick the German's out of the Euro?

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sun Jul 20th, 2014 at 08:01:24 PM EST
[ Parent ]
That is a very tiny minority opinion, even among protest parties, since arriving at it requires a fairly sophisticated understanding of the actual cause-and-effect relationships within the monetary union. And said cause-and-effect relationships have been if not actively obfuscated then at least tacitly denied in the stories Europeans are being told and telling each other about the crisis.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jul 21st, 2014 at 01:59:37 PM EST
[ Parent ]


Display:
Go to: [ European Tribune Homepage : Top of page : Top of comments ]

Top Diaries

The Brexit effect

by Frank Schnittger - Oct 25
20 comments

A Trip to the Woodshed

by Cat - Nov 3
20 comments

Catalonia?

by Frank Schnittger - Oct 28
17 comments