As unemployment among the newest working generation passes 50% on the "periphery," (aside...periphery = Anglo-German euphemism meant to encapsule Spain, country clearly at the center of Europe, at the front lines of the last time we actually fought over something worth fighting for), and as a whole new generation decides to take a pass on "democracy," an institution which serves no one but our elites...

Closer to home, accross the Channel from here, our neighbours in the UK await the impact of austerity measures agreed by a centre-left/rightwing coalition government, the result a a systemic failure by the previous centrist Labour government to represent its core constituency: workers.

NLR's latest issue editorializes on what this means for Britain, and in fact, for all of us:

Suspecting there's a lot of anxiety and sadness hereabouts given the successes of the Sarkozy government to ignore overwhelming popular rejection, in the streets and in polls, of his retirement "reform" package, similar austerity measures in Germany, far worse in Greece, Ireland, Spain, Portugal and coming soon the UK.

Add to this the drubbing the centre-right Obama government in the US took from the far-right, and it appears that those of us who aren't extremist neo-liberals in the West are losing on all fronts.

What to do? Despair? I note this a bit in comments to ATinNM's diary, as well as in the diary itself. And yet, and yet, these are exciting times for those of us on the left, we only have to look at it a bit differently.

"Creative individuals and undeviating purpose and rationality achieve joy and fulfillment. Parasites who persistently avoid either purpose or reason perish as they should."

Alan Greenspan, Letter to the Editor of the NY Times, 1957, in defence of Ayn Rand's  seminal work of ressentiment, Atlas Shrugged

I never thought I'd agree with Alan Greenspan on anything, ideologically speaking, until earlier this week. As the chief practitioner and high priest of Anglo-American, so-called "laissez faire" Capitalism, the great oracle of Objectivist Social Darwinism stood for everything which was wrong with first England, and shortly thereafter America, beginning in the late 1970's. The ideology he represented, rightfully seen as the reactionary, hateful musings of a bitter bourgeoise émigrée from the Soviet Union back when they were first published fifty years ago (Mr. Greenspan's letter, excerpt reproduced above, was in response to a NY Times book review critic who rightfully opined that Atlas Shrugged was "written out of hate"), has done more damage to human progress in the West than any other ideology in the post-war period.

Bubbles from the diaries - afew

In the SW Suburbs of Paris, wedged between the lungs of Paname, Forêt de Meudon on one side, Forêt de Fausses-Reposes on the other, my house sits, with a big ass barbeque grill which braved the -20 Minnesota winters but alas isn't a big fan of the 3 degrees and rain Paris winters. (Note from bbq...wtf? You promised me the Var. Why have you forsaken me?)

But, I am told, Paris actually becomes tolerable, climate wise, in March. So, it's time for couscous and barbeque at my place.

The Anglo-American banking system is collapsing all around us. Each day brings a new revelation. Insane executive pay packages to reward substandard management practices, leading to predictable systemic financial failure and implosion of the businesses they poorly led. Credit then freezes, as no one in a position of fiduciary trust trusts anyone else in such a position. Since credit is the grease which has smoothed the edges of the present global expansion, the credit freezes squelches economic activity far and wide, leading to mass lay-offs, or if you are "lucky," wage cuts, reduced pensions and benefits, and an all around increased sense of vulnerability.  

No one is immune. The Americans and their Anglo-allies in London may have driven this credit boom predictably off off a cliff, but theirs was, as in transportation, a hub and spoke operation, and it isn't only the hub taking a beating. So are the many spokes, with unpredictable effects far afield from the collapse itself. It is therefore not surpising, in retrospect, that the Japanese and the Germans also pursue the same logic of downwardly spiraling economic prospects.

And, of course, none of our elites are accountable for their crimes, war or economic.

So you're saying, "sure Redstar, I get all this, I read the news same as you. It's Anglo-disease or so other neo-liberal rot, but what are we to do?" The short answer, increasingly finding a refrain in the words of Nobel Prize winners Stiglitz and Krugman, not to mention Doctor Doom himself, is one word: Nationalisation.

"Sure," you're saying, "I heard that too, but I don't have a pig in the pot, little debt, I rent my place, the banks aren't my problem. I mean, sure, I want the bastards to give back the money they stole, but how does this effect me other than my rage? Let `em go bust and the hell with them. It's not in (insert name of your country)'s cultural values to nationalise anything, that's so mid-20th century.  

In short, the reason why you should care whether the government runs the banks: your job depends upon it, as does that of a number of those close to your.

Here's why.

from the diaries - afew

Jérôme has already blogged the unrest in France spreading out from Guadelope on the front page. And indeed, the unrest is spreading to other DOM/TOM, to neighbouring Martinique,with a general strike called not just for Guadeloupe, but for the rest of the DOM/TOM and, hopefully, to the Metropole as well:

After nearly a month of general strikes in Guadeloupe and the beginning of social unrest in Martinique, a 4,000-strong protest for better purchasing power in the islands.
Jean-Luc Mélenchon's Parti de Gauche, Lutte Ouvrière, Olivier Besancenot's NPA and other anti-capitalist movements on the left protested against the effects of the crisis alongside Antillais living in Paris. (n.b. if you watch the video, you'll see Pierre Laurent representing the PCF as well, right next to Mélenchon, Besancenot, Laguiller for LO...is there unity on the left again?)

Cost of living increases, declining living standards, insecurity: activists in Paris think metropolitan France is effected by  "Pwofitasyon,"  (exploitation in Créole) and hope the general strike will spread to other DOM-TOM and to the metropole as well.

This has everything to do with the unwinding of the financial crisis, as it takes out the weakest among us while our respective governments protect their patrons, the wealthy, the bankers, the industrialists, the contributors.

Surprise, surprise....as usual, the PS is nowhere to be seen. Now why could that be?

What Europe are we working towards?

Well, this is the one we have:

...Last week ended with the Lithuanian police firing tear gas and rubber bullets at demonstrators. Some of them were throwing stones at the Parliament building in Vilnius in protest of the government's austerity plan. Five thousand people had responded to calls from the trade unions. The demonstration was marked by 80 arrests and some 20 injured. The scenes resembled those seen on Tuesday 13 January in neighbouring Latvia. In Riga thousands assembled in front of Parliament in a peaceful demonstration demanding early elections. By the end of the protest clashes had caused injuries to eight people and led to the arrests of 126 more. These demonstrations are the largest the Baltic States have known since leaving the Soviet Union in 1991.

The motive?

Well, The Baltic countries are, like many new EU entrants, being battered by the Anglo-American financial sector meltdown, having participated, as many former Eastern-bloc nations in deference to US and UK cold war "benefactors," did. As in the US, the UK, Ireland and Iceland, their financial sectors are collapsing, real estate bubbles bursting, and severe recession is setting in.

Time to go after those who drove these poor countries off the cliff, right? Not if French Socialist Party luminary Dominique Strauss Kahn, hand in hand with the European Commission, were to have their way:

I have to tell you, it's hard to take Brussels seriously much of the time. Out of touch meddling bureaucrats, some populists in various official languages say, telling me my sausage or my cheese shouldn't be available for public sale or my cigarettes have too much nicotine in them. Ineffectual bureaucrats who do nothing for regular Europeans, are incapable of making Europe and the EU relevant for its citizens, and whose wooden language in PR efforts fail in all member languages. And economically-challenged, parochial tinkerers who never miss an opportunity to think small.

As we face a serious economic challenge, with member states Hungary, Latvia, Spain, Ireland, Romania and the UK (beyond the perennial economic basket case Italy) facing severe economic challenges causing hardship among our fellow European citizen, it's a fair question: what the hell good does the EU do? And what the hell good does the Euro do? (And, trust me, it's not a polite topic of conversation among "educated" Europeans, but listen closely at the market square...even the Euro is being called into question by those referred to by my president as the "gens d'en bas," the "little people," who have an unfortunate tendency to vote their own interests and worldview.

The more I think about it, I have to say, not a hell of a whole lot. After all, it doesn't take a genius to observe how easy it is for 1% of Europe to scuttle pretty much anything. And you may not like Lisbon or Nice or even Marseille (though I'll sternly take issue on this last one) but think about it...1% of the EU could be condemning praise of motherhood and your right to a decent blood sausage, and next thing you know it, what is important to you have been cluster-fucked by a well financed campaign in one of those tiny little English-speaking countries, where certain rich people tend to have lucrative contracts with the US military. And we, Europeans, are supposed to be ok with this, and think those 1% of people who stupidly are taken in by this (among other things) should be considered proper partners?

I for one have had enough of this shit.

Europe can only be strong if we are together. Not some bullshit customs union whereby the bosses use the lowered level of sovereignty to drive a race to the bottom to fuck each of the rest of us, but a real country, where we are all the same, all with the same rights in each place, same privileges, same opportunities for our children, and where you have a bad Spanish accent, Antonin has a curious french one, Jerome speaks english like an American and we don't mind.

This means three things. Economic. Cohesion. Diplomatic.  

On economy, we are politically together, on matters of economic policy, of solidarity, of foreign policy. No social opt out. No exceptions. I am unemployed in France, I get those benefits in Poland and vice versa. Same general and largely progressive tax structure, same liveable minimum benefits, same educational opportunities for all, right to housing, et c.  
We either stupidly follow the American to war together, or we don't.  

On foreign policy we are on the same page. Either we all follow the Americans into their next stupid adventure, or none of us do. And if the English remain in Europe, they lose their vote on this for 50 years due to rank stupidity over the past 50 regarding their foreign policy.

Finally, on cohesion. This is where we fail miserably and where the Americans kick Europe's ass. It's not neo-liberalism that made the US strong in the post war era. It's cohesion policy. This means everyone is American, even the backwater morons who kiss their cousins in the South, and deserves investments, income transfers, infrastructure to help it grow and education to help it, via its children, out of collective illiteracy.

We now have two shining opportunities. Integration of formerly poor parts of Europe, in large part victims of our complicity in the proxy war waged by the US on the Eastern bloc. This takes investment. This requires money. These monies would be most efficiently managed by and transferred from Europe. And yet, Brussels expenditures account for less than one percent of EU GDP.

Compare with the US in times of proper investment, and laugh.

Second, we have a major economic crisis facing all of us, and yet, instead of acting together, as Europeans, making sure that the infrastructure development goes where it is most needed and therefore generates the most prosperity for all of is, we legislate so that the advantages of our initiatives fall only on our immediate neighbors and not our fellow Europeans.

This is where we most abjectly fail, and this is where the Americans have historically had the advantage.

It is for this reason, and not because I am some daily mirror reading racist as some have supposed, that I sincerely think Europe needs to get smaller. There are countries in Europe that are part of the EU but, via their political culture, of course driven by the elite (but also, of course, sanctioned over and over again by their electors), are not in the Europe I want to be a part of. This is a political preference of mine, of course, and I am not ashamed of it.

It's time to make Europe smaller, more focused, less distracted by the English-speaking countries with their special relationships across the globe which have the habit of getting the way of them being properly European. Let them have the customs unoin they thing the EU should be limited to, and let it be called the UK. And, Ireland, having rejected Europe not once, but twice, and bought in, election after election, to Anglo-American neo-liberalism, should be invited to join in.

Similarly, countries like Denmark and the Netherlands, also keen advocates of what Jerome calls anglo disease and in any event trojan horses against the Europe I want to see, should also be invited to join it...in both cases virtually no one in those countries does not speak English and small wonder since that's the world view to which they've married themselves.

And above all, spare us talks of early accession for more egregiously and chronically neo-liberal catamites like Iceland. We've had enough of letting in country after country to water down our own socialism. If you;re not ready for it, apply for membership in the US. They need the application fees, I hear.

After all, anglo is as anglo does. And in the anglo business world, when the shit hits the fans we talk of consolidation. This means closing down non-core businesses for that the rest becomes cohesive. Non-core businesses are those which don't fit with the rest of the company, which maybe have never really turned a profit or only recently have before going south quickly again thanks to crappy management.

Time for consolidation. The english, the irish, the italians, the dutch, the danes may not like it, but if we are going to make a go of this, we can't be wasting our time on branches that aren't part of the programme.

Two speed europe? Either that, or no speeds.      

For those of you who, like me, have been bemused by the use, by President Sarkozy among others, of the term "Real Economy," as set apart from the supposedly "fake," financial economy, of wolves rather than the polite lambs of the "real," "good" economy, there's a fascinating and brief deconstruction, by linguist Alain Rey, editor in chief of the French language dictionary Le Robert (equivalent to Websters in the English language), of the term in today's Humanité (oh how I love the English translation, saves the hassle!)

This about sums it up:

...what interested me in this affair is that the term "financial crisis" is a very old expression, and completely normal because there have often been financial crises, most frequently associated with an economic crisis as in 1929, but this is the first time I've heard tell of "the real economy". This expression supposes, and this is rather monstrous, that the economy can't be real in the world of finance. That there are thus two Capitalisms : a bad one that is in the process of collapsing, and a good one, which is "the real economy". The standard of living and buying power belong to the world of the real economy, because they represent realities of daily life far from the unreal world of finance. And this view is corroborated by more and more astronomical figures. When one speaks of 100,000 euros, we remain in a world that is still of human dimensions, even if we don't ourselves possess such sums of money. When you speak of a million euros, we are more likely in the world of the rich, of the powerful, of soccer players, of Johnny Hallyday. Such figures can cause bitterness or admiration, but they remain real. But when one speaks of 27 billion, or 270 billion, or 2,700 billion dollars in a global economy, we are in a completely virtual sphere. There is no longer any human significance possible.

Yet, Capitalism is a single reality. It is fictitious to speak of a real economy. Marx had an expression that I often quote because I find it absolutely brilliant. For all material objects, all manufactured things, as well as the daily life and the landscapes, we are in a world of signs that represent, according to him, "hieroglyphics of human labor." All true value, he says, comes from work. But today, in this crisis, we see that true value no longer comes from work. Instead, it comes from sheer speculation. To speculate means to act on your imaginination, with no basis in reality, without any control. One lends on loans, and then one speaks of loans on borrowing. This is the contrary of good sense and personal experience. Wages, factory closings, standard of living, are all rather stable expressions because they relate to ordinary experience and to daily life.

The world of the imaginary is crashing down before our eyes, and part of this imaginary world is the false dichotomy of the "real" and the "financial" economy. In our present, liberal system, they are the same, and when the financial comes crashing down, so will the real. The more quickly we realize this, and draw the necessary conclusions, especially on the left, the better.

My, my, that was quick...It wasn't long ago the pink monster began whispering the unthinkable. The City was a Reykjavik-on-Thames just waiting to happen, due to its exposure to the same financial conditions which bankrupted Iceland and its lack, like Iceland's central bankers, of a reserve currency. Apparently British authorities are duly taking a fright and talking to the Commission about joining the Eurozone:

Some influential people in the higher echelons of government have been talking about it to the European Commission, apparently. The pound is now plummeting - again - and there are some fairly obvious signs that we do not seem to be able to run our economy very well. If our banking system needs to be nationalised completely, that might even bankrupt the nation. So the euro suddenly looks like a good idea, if it helps us get through this crisis.

Could it be it's time for the limeys to pay the piper for leading all the neo-liberal rats to capitals on the Continent? A perfect time to contemplate letting the British pay for the mess they've helped the Americans get us all in...  

They still don't get it.

John Aravosis, whose Americablog is one of the more progressive web logs in the United States, has a number of pet issues he likes to push. Probably first and foremost is gay rights, which is understandable given his background. Lately though, he's been pushing for the US' god-granted right to cheap oil and gasoline. The spectacle is nothing short of disgusting:

OPEC Hoping to Push World into Recession

Screw OPEC. I seriously hope the Obama people have a stern talk with the Saudis and the Kuwaitis, among others, and let them know that the next time their existence is threatened the American people won't be so disposed towards saving their greedy, ungrateful asses.

More of Mr Aravosis claiming that Americans deserve 50-cent per litre gasoline can be found here, here, and here.

I never thought I'd wholeheartedly cheer a Wolfgang Münchau article in the Financial Times, but there's a first time for everything. Mr. Münchau really gets to the heart of what is going on in Germany, which will, as in the past, prove a day late and a dollar short in facing the truth of a severe deterioration of the economic climate here in Europe:

Germany's boycott of a co-ordinated European response to this crisis has become serious and persistent. Only a day after the European Commission proposed a modest European Union-wide stimulus of 1.5 per cent of gross domestic product, Peer Steinbrück, the German finance minister, declared that Berlin would reject any co-ordinated EU-level response on the spurious grounds that Germany would have to pay a quarter of the costs.

Yet even he knows that economic conditions have deteriorated more rapidly in the past four weeks than at any stage in our lifetimes. I expect that eurozone - and German - GDP will decline by anything between 2 and 4 per cent next year. Even the more optimistic forecasters admit that the risk is on the downside.

For those who have doubts, the severe downturn here in Eurozone land is real, and the proverbial German head in the sand becomes more and more inexcusable with each passing day.

A challenging take on the issues - promoted by DoDo

Unfortunately, as is usually the case, for the wrong reasons:

In an interview with the Times, (Shadow Chancellor George) Osborne said people instinctively understood that the state could not borrow itself out of trouble. The weight of debt would stifle recovery and create a major risk for sterling, he added.

"Sterling has devalued rapidly against the euro and the dollar," Mr Osborne said.

"We are in danger, if the Government is not careful, of having a proper sterling collapse, a run on the pound.

"The danger of a run on the pound . . . is that it pushes up long-term interest rates, which is a huge burden on the economy.

"The more you borrow as a government the more you have to sell that debt and the less attractive your currency seems."

Well, you can't argue with that logic. Well, not if you've taken an economics course or two and remember them. And Mr Osborne is correct: Sterling is dropping like a stone, not just against USD, but also, EUR. The last time it was this low against a trade weighted basket of currencies, the Bank of England was still struggling in the aftermath of Black Wednesday.
 

I know, I know, Anglo Disease is supposed to be spreading to everyone, and the Global recession is on! "Decoupling? No way ! If we're going to suffer," say the illuminati, in English of various accents, across the globe, "so are you!"

Even usually reasonable Anglo commentators get into the act. The PRC's not de-linking announces Chris, in Paris (and perhaps just up the street for all I know), snarkily:

Darn. And those spouting off about the decoupling theory all sounded so clever. Who ever could imagine that when the West goes into recession, it would impact China? It sounded so incredibly reasonable that rich buyers, full of money and credit could disappear and be replaced by workers averaging around $1000 per year in income. Gosh, it's just such a shock.

(Yeah Chris, get back to us if the PRC actually goes into a recession...you know, they've got a lot of dollars to spend their way out of this...)

Even Krugman got into the act, and pretty early too.

These usually reasonable lefties (for Americans, that is) line up nicely behind the recent pronouncements of John Thain, head of that very august organization of the left, Merrill Lynch:

"There is no such thing as decoupling. ... Each individual economy will be more or less affected, depending on reliance on global trade and commerce."
 

(Alas, this is true. We'll all be selling less to bankrupt Americans, and it's going to take some time to adjust. But who'd you rather be, the bankrupt person with no money to buy anything, or the temporarily cash-pressed person who has to find different people to sell to? I think I know the answer, and I'm not even a shopkeeper!)

So escape the Anglo curse? Perish the thought. We're all going to pay for the sins of debt-laden Anglo-American over-consumers too!

A funny thing happened along the way to the coïtus interruptus economicus. To all the decoupling naysayers, France says Bite Me!

Bucking the trend, French GDP unexpectedly expanded 0.1 percent from the second quarter, when it shrank 0.3 percent. Economists had forecast a contraction of 0.1 percent.

Eat that, neo-liberal punditocracy! The managed economy is holding up quite well, thank you.

Do FT journalists ever stop peddling their free trade, liberalisation and deregulation gospel?

To read Giles Merritt, a former FT journalist and current SecGen of a "Think Tank" based out of Brussels called "Friends of Europe," the very worst thing we can do, as Europeans facing the Anglo-American credit crisis, is meddle with our trade policy to the detriment of the gospel of trade liberalisation pushed by those very same Anglo-Americans over the past three decades.

Nobody really knows what caused the Great Depression of the 1930s, but its specter is haunting us now. Will the financial meltdown spreading around the world lead to a re-run of the events that followed the Wall Street crash of October 1929? The answer to this question lies ahead of course, but the clues we have are unsettling.

The end of Europe? Of our collective if imperfectly shared prosperity? Heaven's no. The end of the Growth and Stability Pact which hamstrings member states facing economic downturns and which, combined with a stingy central bank, puts people out of work and social safety nets under stress.

Rumblings begin from Europe's periphery:

BUDGET CUTBACKS by the Government will not rescue the economy, the Labour Party has warned.

Calling for a shift in Government thinking on how to escape the downturn, the Opposition party has made the case for a €1 billion fund to hire unemployed building workers to build schools and public housing, and insulate existing dwellings in order to help meet climate change targets.

Issuing a 10-point recovery plan yesterday, Labour said newly-jobless workers should be immediately retrained, rather than left to languish on the dole queues for a year before qualifying...

"There is a need for immediate measures to cushion the blow," said party leader, Eamon Gilmore, as he published Labour's Key Proposals for Economic Recovery.

The party urged the Government to:

• Employ thousands out of construction workers to build schools, and properly insulate homes;

• Direct newly-unemployed into training courses and college;

• Focus on improving exports;

• Set out four-year economic plan to get through existing crisis;

• Target National Development Plan on jobs-intensive projects, such as schools and public housing;

• Ring-fence education from budgetary cutbacks;

• Offer tax-breaks to high-tech start-up firms; and end tax breaks for property and high-earner pension plans;

• Improve value-for-money in the public service, but block cuts that lead only to greater costs for the State in the end;

• Investigate the performance of the Central Bank and Financial Regulator over the last five years, and;

• Back EU moves to curb international financial excesses.

Yes, I know it's not entirely unexpected. Redstar thinks the markets express fundamental value today, on a day the Dow dropped 7%, the Nasdaq over 9% and the S&P 500, in it's biggest drop since Black Monday 1987, almost as much as the silly Nasdaq tech stocks. Fundamental value because the US economy is still overvalued, after various credit bubbles, by perhaps 20%.

Ah, but take a look at the details of the S&P 500 today...there's even more market data than you think...giving you a picture of macro trends to expect. For out of 500 stocks tracked by the Standard and Poors 500, only one, that's right one, advanced today: the Campbell's Soup Company.

CONFIDENTIAL BUSINESS PROPOSAL

 Dear Mr. American,

Good day and compliments.

I am HENRI PAULSON, the Ministry of the Treasury of the Republic of America, and the personal financial adviser to GEORGE W. BUSH (the eldest son of the former dictator of America, GENERAL GEORGE HUSSEIN WALKER BUSH).

Today, on my way to work, I listened to a National Public Radio report on the state of the health care system in Germany, a report which concorded globally, if not in the details, with my own experiences with the health care system in France. In terms of the actual report, the general thrust was to attempt to dispel illusions that Americans typically have about social health care, and as such, was accurate and also well argued, though given NPR's small audience, one which will fall, literally, on deaf ears. This is a big redwood tree, falling in the forest, but alas, few are there to hear it.

One piece of it, the Intro, really struck me as the first time in US media I have heard a theme we talk about often and which Americans, average Joe Six-pack Americans, simply don't get:

Germany has the world's oldest universal care system and is arguably the most successful. Like Americans, most Germans get their health coverage through their employers. But Germany's rich pay higher premiums to subsidize insurance for the poor -- a principle the Germans call "solidarity."

There's that word: Solidarity. And it's not just Germans calling it by name. It is the expression of our shared European values, of each according to ability, to each according to need. Or, if you prefer a less Marxian giving of the phrase, it is the product of a shared belief that we are all in this together. And it is a concept truly foreign to the values of Americans, for whom the overriding, if inefficiently and unevenly applied, value is Charity.