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The Confidence Fairy Strikes Again

by Frank Schnittger Mon May 9th, 2016 at 06:09:48 AM EST

David Folkerts-Landau, Chief Economist at the Deutsche Bank, has a screed in the Financial Times which is wrong on just about every level that can be imagined. Arguing that the ECB's policy of negative interest rates is undermining public and business confidence, Folkerts-Landau asks:

What should be done? The priority is breaking the negative spiral of lower confidence engendered by ever-looser money. The ECB needs to begin reversing its policy of negative interest rates. Moving back into the black would raise confidence across the eurozone.

Apparently lower interest rates cause people to save more and invest less. Recovery will only come when governments implement "reforms" which involve reducing investment and spending  (and employment) still further. The ECB is causing further stagnation and deflation in the Eurozone by reducing interest rates and buying Sovereign and Corporate debt, not responding to it with the main tools at its disposal.  The problem is that there are rising debt levels - not the excess savings identified by Draghi as a cause of the crisis.

Has it not occurred to Folkerts-Landau that excessive savings and debt might in fact be two sides of the same coin?

Read more... (12 comments, 379 words in story)

Northern Ireland Assembly Elections

by Frank Schnittger Sat May 7th, 2016 at 08:38:08 AM EST

On the surface the Northern Ireland assembly elections have resulted in a return of the status quo with the larger parties winning broadly the same number of seats. However there has been a generational change in many of the personnel involved, and in some ways the election marks a further milestone on the road towards the normalisation of Northern Ireland politics post the Good Friday Agreement.

Read more... (6 comments, 375 words in story)

New Irish Government formed

by Frank Schnittger Fri May 6th, 2016 at 02:41:36 PM EST

After 70 days of Political paralysis in Ireland, Enda Kenny has become the first Fine Gael Taoiseach to be re-elected to that role, and also the first leader of a country that underwent a Troika bail-out programme to be re-elected to government.  However his election today, by 59 votes to 49 with 50 abstentions, underlines the weakness of his political position.  His government will be made up of 50 Fine Gael TDs (Members of Parliament) and a rag bag of independents who can rarely agree on anything and it is anyone's guess how long his new Government can survive.

Read more... (1 comment, 407 words in story)

Edging closer to a new Government in Ireland

by Frank Schnittger Wed May 4th, 2016 at 01:30:38 PM EST

The two major parties in Ireland, Fine Gael (25% support at last election) and Fianna Fail (24%) have finally, after over two months, come to an agreement which will allow Fine Gael to form a minority government with the support of a handful of independent or small party members of parliament. The agreement stipulates that Fianna Fail will abstain on major confidence and financial votes in the Dail (Irish Parliament) for roughly the next three years but retains the right to vote down or introduce legislation on other matters. Such an arrangement became unavoidable when Sinn Fein, Labour and the Anti-Austerity Alliance/People before profit parties all refused to coalesce with either Fine Gael or Fianna Fail.

Read more... (934 words in story)

Restorative Justice in Ireland - an effective way of dealing with crime

by Frank Schnittger Wed May 4th, 2016 at 06:59:26 AM EST

NB This post does not seek to represent the official views of RJS Limited.

One of my few remaining active responsibilities post retirement is to act as a voluntary director and community representative on the Board of Restorative Justice Services Ltd., a charity funded by the Probation Service of Department of Justice.  As such, I am somewhat constrained in what I can say on the subject, and in particular, must avoid using confidential or privileged information. However one of our roles is to act as an advocacy group for restorative justice in Ireland, and it is in that spirit that I offer the following summary (based largely on internal documents) of what is being done in the area of restorative justice in Ireland, and particularly in the greater Dublin area.

Restorative justice is defined in National Commission on Restorative Justice Final Report (2009) (PDF) "as a victim-sensitive response to criminal offending, which, through engagement with those affected by a crime, aims to make amends for the harm that has been caused to victims and communities and which facilitates offender rehabilitation and integration into society".

We see restorative justice as complementary to the punitive or retributive criminal justice system and we manage the process entirely under the supervision of the Courts service and the Department of justice. There is in Ireland, at present, no statutory basis for our service and as such participation is entirely at the discretion of the relevant Judge, the offender and the victim. The service generally intervenes pre-sentencing and is focused on offender rehabilitation and harm reduction with a view to reducing re-offending and the impact of crime on victims and the wider community.

Diary rescue - Frank Schnittger

Read more... (6 comments, 1717 words in story)

LTE: The witterings of old farts

by Frank Schnittger Sat Apr 30th, 2016 at 12:46:07 PM EST

Dear Sir,
Your correspondent, Donald Clarke, (My 10 cents on newspaper comments sections, Fri. 22nd. April) takes advantage of a suspension of readers comments on Irishtimes.com to have a whinge at, yes, you guessed it, reader comments on newspapers.

He has discovered, apparently to his shock and horror, that many reader comments are rude, abusive, or ill-informed.  He wants to read the views of expert  columnists, under the supervision of wise editors, and not the drivellings of the great unwashed.

Fair enough, but no one is forcing him to scroll down the page to the comments section.

Strangely enough, my experience has been almost the exact opposite. Formal newspaper columnists tend to dish out the same ideas, again and again, in a number of different guises on different topics.

You can generally predict what the writer is going to say on any given topic if you are familiar with his or her previous work. Sometimes their articles amount to little more than the witterings of old farts...

Readers comments, on the other hand, are often a joy to behold: witty, informed, controversial, outspoken - without the "both siderism" , equivocation, and faux objectivity  so often characteristic of their supposed betters on staff.

Of course there are also those comments which cross the line into unacceptable personal abuse, but most commenting systems have functionality to report those comments and exclude them from the discourse.

Some commenting systems even become largely self-regulating by enabling fellow readers to downrate and exclude a comment where a number of readers have found it to be offensive.

Other commenting systems allow readers to promote other readers' comments they have found to particularly incisive or informative to a more prominent position at the top of the comments section.

The Guardian recently did a study which found that of their ten most abused authors, 8 were women,  6 were non-white, three were gay and two were of a non Christian religion.  (Note to arithmetic nitpickers:  an author can belong to several categories!)

Of course this is unacceptable. In total, 2% of their 140 million comments to date were deemed to violate their community standards and were eliminated from the discourse.

Adding commenting and blogging functionality to irishtimes.com has, in my view, been one of the great enhancements of your digital offering. I often find the comments more enlightening than the lead article.  Frequently they correct errors that the lead author has made, hopefully, before the article has made it to print.

The Irishtimes.com thus gets free content, free fact checking, free marketing feedback on what its readers like, read, and think, and more readers as a wider community engages with the Irish Times and with each other.

What's not to "like"?

Comments >> (4 comments)

Ireland to get a Government at last?

by Frank Schnittger Wed Apr 27th, 2016 at 08:54:50 AM EST

In Political Paralysis in Ireland? I wrote about the inconclusive outcome to the Irish general election of February 2016 and predicted that we were in for a prolonged period of Kabuki theatre where the major parties, Fine Gael and Fianna Fail, would be dancing around each other without holding hands and with everyone else trying to force the unwilling couple to mate.

It is now over two months since that election, and I have revisited that diary on occasion to see if an update was required and concluded that no, nothing much new was really happening. Fianna Fail have been anxious to avoid the fate of minority partners in previous Irish coalition Governments which traditionally get hammered at the next election. So a straightforward coalition which would have provided a large working majority was out of the question.

Read more... (13 comments, 1670 words in story)

To Brexit or not to Brexit: That is the question

by Frank Schnittger Wed Apr 27th, 2016 at 08:50:23 AM EST

Given that it is the great Bard's 400th. Anniversary, a Shakespearean soliloquy seems apposite. What are the arguments for and against a British exit from the EU, and what are the views of European Tribune contributors on the subject?

President Obama has just swung by on his way back from being snubbed in Saudi Arabia, before giving Merkel some much needed succour on the refugee problem. His emphatic endorsement of Britain staying within the EU inspired Brexit lead campaigner Boris Johnson to the heights of Trumpian abuse.

Basically Obama said Britain should stay in the EU to maximise its global influence, and suggested that the UK would have to go to the back of the queue if it wanted bi-lateral trade deals post Brexit. And in case anyone should think that Obama is on the way out and therefor cannot speak for the USA on this issue, it should be noted that Eight former Republican and Democratic Treasury Secretaries have just written a letter endorsing his point of view.

This struck at the heart of the Brexit case - which has always maintained that Britain could have all the benefits of EU market access, without the costs of EU membership.  Britain, the argument goes, is so important in its own right, that other countries including the rump EU Block would be falling over themselves to cut bilateral trade deals with a newly independent UK.

Read more... (29 comments, 1472 words in story)

Frank's Story Index

by Frank Schnittger Tue Apr 26th, 2016 at 01:33:43 PM EST

The 357 articles I have posted on the European Tribune since Wed Nov 28th. 2007 are grouped somewhat arbitrarily under the 13 headings below with the latest listed first.

1. Human Rights (30)
2. Energy, Climate Change, Transport and the Environment (14)
3. Irish Economy (31)
4. Irish Politics (57)
5. Irish European Referenda and Elections (43)
6. Brexit and the UK(16)
7. The EU and the Eurozone (45)
8. US Politics (59)
9. Global economics, politics, foreign policy and war. (15)
10. Sport (11)
11. Personal Topics (20)
12. The European Tribune, Blogging and the Internet (13)
13. Just having a laugh (5)

Stories are listed only once even though many could have been listed under several headings. For direct access to a story please click on the titles in blue below.

Read more... (14 comments, 4960 words in story)

Political Paralysis in Ireland?

by Frank Schnittger Thu Mar 10th, 2016 at 07:36:13 PM EST

The recent Irish general election resulted in an outcome that is unlikely to lead to the formation of a stable government. Ireland thus joins a number of countries such as Spain and Slovakia which have had inconclusive elections in response to the austerity policies of recent times. Governments have not been re-elected, but neither have coherent alternative governments been formed. Fine Gael, the main Government party, got 25% of the first preference vote (-11% compared to 2011), and won just 50 seats (-26 since 2011). They are still the largest party but fell far short of the 79 seats required for an overall majority. Their erstwhile coalition partners, Labour, were close to being annihilated gaining just 7% of the vote (- 13%) and 7 seats (- 30).

Fianna Fail, the previous ruling party unceremoniously booted out of power at the 2011 general election for presiding over the bank bail-out and economic collapse made something of a comback, gaining 24% of the first preference vote (+7%) and 44 seats (+20). However they have ruled out forming a grand coalition with Fine Gael, the only combination of parties capable of forming a stable government with an overall majority in parliament. Part of the problem is that minority partners in Irish Governments have tended to be severely punished by the electorate at the next election - witness the permanent demise of the the Progressive Democrats in 2009, the temporary demise of the Greens at the last election, and Labour's latest implosion this time around.

The other big winners in the election were Sinn Fein with 14% of the vote (+4%) and 23 seats (+9) and a wide variety of smaller parties - People before Profit/Anti-Austerity Alliance (6 seats, +4), Social Democrats (3, +0), Greens (2, +2) and independents from both the left and right of the political spectrum (23, +9). Most are protest or local candidates with no interest in helping to form a national Government.  Collectively most share the traditional wet dream of the left - forcing the two (1922) civil war parties, Fine Gael and Fianna Fail into a grand coalition in order to expose the lack of ideological distinction between them in anticipation of seeing them decimated at the next general election. The expectation is that this would lead to a more "European" left right divide in Irish politics and the prospect of the left attaining majority power at some stage in the not too distant future.

Read more... (15 comments, 1837 words in story)

Political Prognostications for 2016.

by Frank Schnittger Wed Jan 20th, 2016 at 08:00:53 PM EST

I've long held the somewhat controversial view that political analysis is only as good as its ability to make verifiable or falsifiable predictions about the future course of events and thus have tended to be impatient with those sorts of "on the one hand, and on the other" analyses which can allow the analyst to claim vindication regardless of the outcome.  If nothing else, clear predictions can allow a better understanding of underlying assumptions and a gauging of ones own ignorance.

So here goes, my predictions for 2016, which I am happy to see disputed, and ultimately proved wrong if only to improve my understanding of underlying trends.

  1. Fine Gael will score a resounding victory in the Irish general election compared to current polls which will nevertheless see them some way short of an overall majority and thus requiring Labour or perhaps some independent/small party support to form the next Government. Labour will do badly, Sinn Fein will fail to make a decisive breakthrough, and Fianna Fail will tread water.

  2. David Cameron will succeed in avoiding Brexit despite the increasing unpopularity of the EU and a failure, on his part, to secure dramatic concessions from the EU as part of his renegotiation strategy.  However the result will be close and test his marketing skills to the limit.  Paradoxically, Labour's Jeremy Corbyn will come out of the campaign with his reputation and standing in the polls  enhanced.

  3. A combination of low oil prices, low interest rates, and low Euro valuations will allow the EU economy to slowly recover despite quite a few external shocks in the shape of the refugee crisis, terrorist atrocities, and a slowdown in China and emerging markets.  Even peripheral countries like Greece, Spain and Portugal will recover somewhat off a low base, and Ireland will experience another year of near Celtic Tiger like growth.

  4. Donald Trump will win a resounding victory in the Republican Primary elections and probably nominate someone like Ohio Governor John Kasich as his VP pick in order to re-unify the party ahead of the General Election. Somewhat ironically, given the much lower media profile of the Democratic primary elections, Hillary Clinton will struggle to shake off the Vermont Socialist, Bernie Sanders, in the Democratic primary and struggle, initially, to ignite her campaign against Trump. She will end up winning the Presidency resoundingly, however, with an increasingly popular President Obama's support, and probably lead the Democrats to victory in the Senate (and currently implausibly) in the Congressional elections as well.

  5. Climate change will continue to wreck havoc with extreme weather events causing ever greater economic and social dislocation. Oil and commodity dependent economies in the middle east, Africa and Russia will struggle and political instability will increase world wide with some regional conflicts re-igniting as elites seek to distract their polities from economic hardships. Netanyahu might do something seriously stupid to try and preempt Iran' rise as a regional power and Syria will continue to be an unresolved humanitarian disaster.

Discuss.  Perhaps you can add your own predictions.
 

Comments >> (102 comments)

Irish General Election 2016

by Frank Schnittger Wed Dec 30th, 2015 at 08:56:48 AM EST

The Irish General Election is expected to be called shortly for the end of February with the Government Parties of Fine Gael (Christian Democrat) and Labour (Socialist) fighting for re-election against Fianna Fail, Sinn Fein and a plethora of Independents and smaller parties who currently make up c. 20% of the seats in the Dail.

The election takes place against a backdrop of significant economic revival with growth for 2015 expected to come in at around 7% of GDP (by far the highest in Europe), unemployment declining from 15.2 to 8.8% since January 2012, the public sector deficit declining from 12% of GDP to a cash balance in 2015, and the Debt/GDP ratio declining from a peak of over 120% to less than 100%.

Ordinarily, such a rapid turnaround in Ireland's economic fortunes could be expected to result in a Government being returned to office, but there are also significant residues of resentment against the Government due to their policies of cutting public expenditure and introducing new taxes such as water charges, property taxes and universal social charges.

In addition, the recovery is still very Dublin centric with many of the more rural parts of the country feeling little benefit.  Many families have suffered from unemployment, emigration, depressed wages, higher taxes, homelessness, negative equity and the threat of mortgage foreclosure. Many have also been effected by cuts in social and health services for the sick and disabled.

Read more... (11 comments, 684 words in story)

Ireland 24 France 9

by Frank Schnittger Sun Oct 11th, 2015 at 02:11:18 PM EST

OK, I don't want to crow too much but Ireland were unfortunate to win by only 15 points and lose three of their best players to injury - Sexton, O'Connell and O'Mahoney - three of the main leaders of the team.  The match confirmed my  prior prognostications that Ireland are now a better team than that which won the last two 6 Nations titles.  Not only that, but all 8 substitutes played their part and added something positive to the team performance - something that would never have been the case in the past.

For France it is a demoralising defeat, the third time in a row that they have now lost to Ireland - and they have not beaten Ireland in their last five meetings.  Ireland had 70% possession and France never looked even close to winning the match never once threatening the Irish try line. Having said all of that, France are still a very good side, and could well embarrass the All Blacks in the quarter-final.

The Quarter final match-ups have now been decided:

South Africa vs. Wales
New Zealand vs. France
Ireland vs. Argentina
Australia versus Scotland

In other words, very much as I predicted with Wales replacing the home nation England. So much for my detractors Eurogreen, Melanchthon et al! That is part of the weakness of Rugby as a world sport: the international pecking order is fairly clearly established and is rarely upset.  For all their natural and numerical advantages, France still have some way to go to being a top power in World Rugby.

Having said all that, if O'Connell and Sexton are ruled out of the World Cup, the road ahead will become increasingly difficult for Ireland.  Argentina will offer a stern challenge in the quarter final and my prediction that Ireland will proceed to the semi-final is far from a done deal.  Nevertheless it has beeen a good week for Irish sport - beating world champions Germany in the European Cup qualifying was another highlight.  If things get much better than this, I can see Prime Minister, Enda Kenny, calling a snap general election in November rather than the expected date in early spring...

Comments >> (15 comments)

Onwards and upwards: Rugby World Cup 2015 Part II

by Frank Schnittger Mon Oct 5th, 2015 at 07:32:37 AM EST

England, despite home advantage, have crashed out of the World Cup beaten by their own expectations and two very good Wales and Australia performances.  Some crunch matches remain - notably Australia vs. Wales and France vs. Ireland to see who wins their respective pools and thus how, exactly, the quarter-finalists will match up. But the likelihood of an upset is now very small and only Japan, of the Tier 2 nations, have a realistic chance of progressing if they beat the USA and Scotland fail to beat Samoa.

The Quarter-finalists will thus likely be very much as I predicted in Rugby World Cup with Wales replacing England.  Hardly a shock result as results between them have tended to be 50:50.  What is remarkable is that Wales have achieved this despite losing 6 of their best backs to injury. Good team management, spirit, cohesion and tactical nous still counts for a lot in rugby.  However after Australia's convincing win against England, it is hard to bet against them beating Wales and winning the pool.  Both France and Ireland have been under-whelming to date, so it will be interesting to see who comes out on top on Sunday 11th. October.

Read more... (2 comments, 660 words in story)

Rugby World Cup

by Frank Schnittger Thu Sep 24th, 2015 at 01:28:21 PM EST

OK, so I know that Eurotrib.com isn't exactly a hotbed of sports fans, never mind professional rugby fans.  But who amongst us is perfect? I've long been an armchair rugby supporter even though my own experience of the game is decidedly limited and mixed. So for the very afew readers here with a passing interest in rugby, what follows is my take on the Rugby World Cup which has just gotten under way.

  1. Although World Rugby Limited (the Governing Body) like to claim the Rugby World Cup is the third biggest sporting event that ever takes place on this planet, rugby still has relatively limited appeal.  Only four countries (New Zealand, Australia, South Africa and England) have ever won the quadrennial World Cup in its 28 year history, and there are, at most, 7 or 8 countries with any realistic prospect of winning the Cup, and anything other than a New Zealand win this time around would be an upset.

  2. The fact that a "second tier" nation (Japan) has actually beaten one of the major powers (South Africa) in this years tournament is, already, one of the greatest shocks of World Cup history. Of course the playing schedule, designed to suit the "tier 1 nations", then immediately pitted the Japanese against an improving Scottish team with only  three rest days in between.  Not surprisingly, Japan then lost to a team much less accomplished than South Africa. Rugby is a much more physical game than soccer, and it simply isn't possible to peak for two games in a row within 5 days. Professional boxers, by way of comparison, often only have 2 or 3 fights in a year.

  3. If you want to predict the relative standard of each rugby playing nation, the following table is instructive:

New Zealand outperforms based on its player numbers because it is the no. 1 sport in New Zealand, and practically defines New Zealand's identity, whereas, say, in Ireland, Rugby is only the no. 3 or 4 sport, behind Gaelic football, Soccer, and Hurling.

4. The other key determinant of playing standard is whether a country can support or participate in a professional club league.  New Zealand, South Africa, France and England have their own fully professional indigenous leagues whereas the Celtic Nations, Italy and Australia have a share in multi-national professional leagues.

5. Overall, however, there are only a few hundred fully professional players in even the leading nations, with the vast bulk of the players being amateurs.  And even the top professional players only earn in a year what a top soccer player can earn in a week. Players in many nations like the Pacific islands or eastern Europe have to migrate to New Zealand, Australia, France or England to earn a living, and often end up playing international rugby for their adopted country. The advent of professionalism in the 1990's has therefore only served to accentuate the divide between the leading and second tier nations.

So who is going to win this year's tournament?  If you can't contain your excitement, please follow me below the divide...

Read more... (19 comments, 1142 words in story)

What is Microsoft good for now?

by Frank Schnittger Wed Jul 22nd, 2015 at 12:46:29 PM EST

Microsoft is one of the most successful corporations in the world, having blazed the trail for personal computing and making its founder, Bill Gates the World's richest man. Windows has become almost ubiquitous on PCs and laptops and MS Office is the office productivity tool of choice for most business and personal users. But what has Microsoft accomplished in the last 20 years beyond leveraging its early mover advantage and dominant position in PC computing?  I would argue very little, and I would like to invite you to argue otherwise. But first a little personal personal computing history...

Back around 1990 I was given responsibility for end-user computing in part of the business I was working in, although nobody quite knew what that meant at the time. WordPerfect had just replaced Multimate as the corporate standard word processor, and Lotus 123 was replacing earlier micromodelling programmes used by accountants and other business analysts. The truly adventurous management consultant types started giving management presentations using Lotus Freelance and some had even used DBaseIII for rudimentary database applications.

Read more... (46 comments, 2183 words in story)

The Greece Blame Game

by Frank Schnittger Mon Jul 20th, 2015 at 08:56:41 AM EST

Now that the EU has effectively taken over the running of Greece, it follows, logically, that it should also be held responsible for the outcome of its policies. So what happens if Greece goes further into even deeper recession, the debt becomes even more unsustainable, and the "reforms" do not bring about the turnaround in economic performances that neo-liberal economic "theory" says they will?

It's those lazy Greeks of course!  It's the untrustworthy left wing Government that didn't implement the reforms properly! And the slightest upward blip in performance will be treated as overwhelming proof that "the reforms are working" whilst the widespread evidence of poverty and decline will be ignored.

And what will the European "left" do then?  The maiden speech by 20 year old Scottish MP, Mhairi Black, is instructive (h/t Helen).

Parties which have lost touch with the growing under classes in our societies have no idea what is really going on. Perhaps a "study group" of high ranking politicians will visit Greece; stay in 5 star hotels, listen to a few think tank presentations, talk to a few waiters, and declare all is well.

After all the people living on the street don't vote and don't really count.

Meanwhile Schäuble is playing a clever game. By floating the negotiated Grexit option and declaring his lack of confidence in the "reform" programme, he is insulating himself and his government from criticisms that austerity doesn't work when the economy shrinks further and the debt becomes even more unsustainable.  "We told you so", we offered you the Grexit option but you turned us down!

Apparently Schäuble has discovered that debt write-downs aren't legal within the Eurozone. But what about the debt write-down in 2010?  Can only banks write down debts? So why were banking debts transformed into sovereign debts then?  To make a further write-down impossible?   But it was the banks which Greece borrowed from.  What the banks did later to lay off their responsibilities isn't Greece's problem.

Meanwhile Merkel is trying to play good cop to Schšuble's bad cop.  It's not going well...

Comments >> (30 comments)

Scape goating Greece

by Frank Schnittger Mon Jul 13th, 2015 at 06:38:45 AM EST

Killing the European Project - The New York Times

Suppose you consider Tsipras an incompetent twerp. Suppose you dearly want to see Syriza out of power. Suppose, even, that you welcome the prospect of pushing those annoying Greeks out of the euro.

Even if all of that is true, this Eurogroup list of demands is madness. The trending hashtag ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece canít accept; but even so, itís a grotesque betrayal of everything the European project was supposed to stand for.

Can anything pull Europe back from the brink? Word is that Mario Draghi is trying to reintroduce some sanity, that Hollande is finally showing a bit of the pushback against German morality-play economics that he so signally failed to supply in the past. But much of the damage has already been done. Who will ever trust Germanyís good intentions after this?

In a way, the economics have almost become secondary. But still, letís be clear: what weíve learned these past couple of weeks is that being a member of the eurozone means that the creditors can destroy your economy if you step out of line. This has no bearing at all on the underlying economics of austerity. Itís as true as ever that imposing harsh austerity without debt relief is a doomed policy no matter how willing the country is to accept suffering. And this in turn means that even a complete Greek capitulation would be a dead end.

Can Greece pull off a successful exit? Will Germany try to block a recovery? (Sorry, but thatís the kind of thing we must now ask.)

The European project ó a project I have always praised and supported ó has just been dealt a terrible, perhaps fatal blow. And whatever you think of Syriza, or Greece, it wasnít the Greeks who did it.

Read more... (25 comments, 1671 words in story)

Greek Crisis to Transform EU?

by Frank Schnittger Mon Jul 6th, 2015 at 06:54:10 AM EST

When I wrote Beware of Greeks bearing gifts: a study in negotiating styles, it was because I had grave doubts that Yanis Varoufakis' negotiating style would yield the kind of results he sought. Of course I had even graver doubts that any kind of negotiating style would yield a reasonable result for Greece, and so that question was essentially moot:  We where heading for a diplomatic disaster one way or the other. The neo-liberal fantasy of austerian "reform" was simply too deeply embedded in the culture of the EU governing elite for a successful outcome to be possible.

It is as yet unclear whether the Greek referendum result will prompt a fundamental re-think on the part of the EU elite. Merkel's hastily arranged visit to Hollande at least provides a signal that there is some awareness that a new approach is required. Krugman encapsulates the EU dilemma nicely: Ending Greece's Bleeding - The New York Times

The [European] central bank now faces an awkward choice: if it resumes normal financing it will as much as admit that the previous freeze was political, but if it doesn't it will effectively force Greece into introducing a new currency.

Specifically, if the money doesn't start flowing from Frankfurt (the headquarters of the central bank), Greece will have no choice but to start paying wages and pensions with i.o.u.s, which will de facto be a parallel currency -- and which might soon turn into the new drachma.

Suppose, on the other hand, that the central bank does resume normal lending, and the banking crisis eases. That still leaves the question of how to restore economic growth.

In the failed negotiations that led up to Sunday's referendum, the central sticking point was Greece's demand for permanent debt relief, to remove the cloud hanging over its economy. The troika -- the institutions representing creditor interests -- refused, even though we now know that one member of the troika, the International Monetary Fund, had concluded independently that Greece's debt cannot be paid. But will they reconsider now that the attempt to drive the governing leftist coalition from office has failed?

I have no idea -- and in any case there is now a strong argument that Greek exit from the euro is the best of bad options. Imagine, for a moment, that Greece had never adopted the euro, that it had merely fixed the value of the drachma in terms of euros. What would basic economic analysis say it should do now? The answer, overwhelmingly, would be that it should devalue -- let the drachma's value drop, both to encourage exports and to break out of the cycle of deflation.

The problem with any negotiating style is that if you as negotiator become an issue, you're losing. That is why Corporations and Governments change their key negotiating personnel so regularly. If you become identified with a failure, you become part of that failure, and it doesn't matter how brilliantly you conducted yourself during that debacle.  

Read more... (69 comments, 1338 words in story)

The case for Austerity

by Frank Schnittger Sat Jul 4th, 2015 at 08:10:54 AM EST

Former Irish Taoiseach and EU Ambassador to the US John Bruton lays out the case against the Greek Government fairly succinctly in his article in the Irish Times today (4/7/15). In it he criticises US Nobel prizewinning economists Paul Krugman and Joseph Stiglitz for advocating a NO vote in the Greek referendum.

His arguments may be summarized as follows:

1. "Krugman says the euro was a "terrible mistake" because he claims it failed to insulate the public finances of the states of the euro zone from bubbles in particular countries, like he says the US system does. In fact, the US only does this to a limited extent and, unlike the EU, it has no general bailout fund for states".

In fact Krugman never claimed the US system could prevent housing bubbles and criticized neo-liberal de-regulation "reforms" for making such bubbles more likely. Furthermore, the US Federal budget is 20% of GDP compared to an EU budget of only 1% of GDP and thus Federally funded programmes like Social Welfare, Medicare and Medicaid can do a lot to alleviate the worst effects of (say) a burst housing bubble in Florida on the poorer people in Florida. How much better off would the Greek people be today if they had a social welfare and healthcare system funded by the EU?

Read more... (14 comments, 831 words in story)
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News and Views

 22 - 28 August 2016

by Bjinse - Aug 22, 34 comments

Your take on today's news media

 15 - 21 August 2016

by Bjinse - Aug 15, 16 comments

Your take on today's news media

 Open Thread 22-28 August

by Bjinse - Aug 21, 14 comments

The greatest thing youíll ever learn is just to thread

 Open Thread 15-21 August

by Bjinse - Aug 15, 13 comments

I coulda been a thread

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