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My basic sense is that we are at the end of one of the six or so major globalization cycles that have occurred in the past two centuries. If I am right, this means that there still is a pretty significant set of major adjustments globally that have to take place before we will have reversed the most important of the many global debt and payments imbalances that have been created during the last two decades. These will be driven overall by a contraction in global liquidity, a sharply rising risk premium, substantial deleveraging, and a sharp contraction in international trade and capital imbalances. To summarize, my predictions are: .... European politics will continue to deteriorate rapidly and the major political parties will either become increasingly radicalized or marginalized. Spain and several countries, perhaps even Italy (but probably not France) will be forced to leave the euro and restructure their debt with significant debt forgiveness. Germany will stubbornly (and foolishly) refuse to bear its share of the burden of the European adjustment, and the subsequent retaliation by the deficit countries will cause German growth to drop to zero or negative for many years.
To summarize, my predictions are:
....
IMO, this COULD be a good thing. Globalization has chiefly served to enable holders of large amounts of capital to confound any attempts at regulation by individual nations, whose average citizens have been regularly and repeatedly raped by the international corporations which are the vehicles for the large holders of capital.
The real basis for creation of capital is the power of the state to creatively reorder the society to suit the needs of the business enterprises within it. This has been done exclusively in the interests of those businesses and with disdainful disregard for the needs and interests of all but those with existing capital. The most recent phase of that process has, effectively, put to sleep the powers of the state to act in the interests of any but those with capital. This has been definitively accomplished by the almost total capture of the states.
Winding down globalization will not cure the problems that afflict our societies, but it does create the space for solutions to be implemented. In order for that space to be utilized large numbers of the electorate in individual countries have to realize the potential they have to shape their society and lives and must use that opportunity effectively. The alternatives are a collection of individual authoritarian states. An individual authoritarian state does not have to have a mad expansionist goal in order to make life miserable for the vast majority of its citizens. "It is not necessary to have hope in order to persevere."
Spain and several countries, perhaps even Italy (but probably not France) will be forced to leave the euro and restructure their debt with significant debt forgiveness.
In the end, the tremendous market instability experienced in August, when Spain's risk premium shot up to 400 basis points, convinced the Socialist that he had to send out a powerful message about the country's commitment to financial solvency. (Emphasis added.)
The most important consequence of running the state like a private firm is that the state should not be in the business of providing free or implicit guarantees of any kind, as these are large "contingent liabilities" threatening to bankrupt the state. The threat of bankruptcy is real, as the state must fund itself by borrowing from private lenders, unable as it is to create money to fund necessary expenses deriving from the exercisising of implicit guarantees. One alternative to bankruptcy is default, but this is considered unthinkable as defaulting on obligations to fellow EU member states is "uneuropean". In addition, countries with a large primary trade deficit may find it impossible even to default. So, what kinds of implicit guarantees are Eurozone governments providing that they shouldn't be in the business of providing? I can think of half a dozen off the top of my head: deposit insurance for banks granting limited liability to businesses disaster relief access to health care access to education access to legal redress public safery All of these are implicit guarantees that every citizen in Europe expects to enjoy relatively free of charge. These are large contingent liabilities of the state. Any and all of them could not be undertaken by a private entity that didn't charge hefty fees up front and wasn't adequately capitalised in case a particularly large claim presented itself. Would you pay a savings deposit insurance premium to an inadequately capitalised insurance company? (not that "sophisticated investors" didn't do exactly that when they bought CDS "protection" over the past 10 years) Would you incur risks with a full-liability entity having less capital than your potential loss? Would you trust you can be rescued from a disaster by an entity without the capital and operating income to actually fund a rescue operation? How about health insurance from an entity without the resources to pay for the treatment? How about your right to file a complaint to an entity without the necessary money to operate a grievance handling system? How about contracting physical security or firefighting services from an entity without the operating income to actually deploy security or firefighters?
So, what kinds of implicit guarantees are Eurozone governments providing that they shouldn't be in the business of providing? I can think of half a dozen off the top of my head:
Eventually, matters will come to a head and a stable resolution will be found. Unfortunately, installing some pliable tin-pot dictator who rounds up dissidents in football stadiums is one form of "stable resolution."
- Jake Friends come and go. Enemies accumulate.
A great deal depends on the extent to which, among the Spanish people as a whole, the C20 history of Spain, starting from the 1930s, is now felt to be a closed book - or, to the contrary, is still unresolved and therefore alive. The right has certainly been pushing the latter term. Which is more worrying, imo, than the constitutional amendment.
When people commend the British humour as the master of the absurd, I believe they are referring to that. Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
The church no longer dictates how people live - but its success in lobbying Spain's government should not be underestimated ... The issue is power, and the Spanish church has an awful lot of it, but it lies somewhere else. Its kingdom is of this world. As a reaction to secularisation, the church has become an American-style political lobby, which no longer shepherds souls but votes. With its radio and TV stations and its vast network of schools and universities, it shapes the conservative political camp. It is its ability to deliver busloads of school children to Madrid that makes rightwing demonstrations possible and massive. ... And this is what World Youth Day was about: the joy of triumph and the anticipation of more concessions to come from the next government. Journalists scrutinised the long and repetitive speeches of the pope as if they were all about theology, but they weren't. The medium is the message. The message is the massive presence, like a seraphic version of the International Brigades, of the Catholic church on the streets of Spain, the old faithful country gone astray.
...
The issue is power, and the Spanish church has an awful lot of it, but it lies somewhere else. Its kingdom is of this world. As a reaction to secularisation, the church has become an American-style political lobby, which no longer shepherds souls but votes. With its radio and TV stations and its vast network of schools and universities, it shapes the conservative political camp. It is its ability to deliver busloads of school children to Madrid that makes rightwing demonstrations possible and massive.
And this is what World Youth Day was about: the joy of triumph and the anticipation of more concessions to come from the next government. Journalists scrutinised the long and repetitive speeches of the pope as if they were all about theology, but they weren't. The medium is the message. The message is the massive presence, like a seraphic version of the International Brigades, of the Catholic church on the streets of Spain, the old faithful country gone astray.
Or, if we assume the right chose to practise the politique du pire, they wouldn't need to call on the constitutional amendment to shrink the state and destroy redistributive policies
But that is not the point. The point is that the right can call upon the constitutional amendment to enlist the power of the courts against any left-wing restoration effort.
Specifically, whatever power the courts hold has now been firmly wedded to a far-right agenda, until such time as it is possible to restore the constitution or stage a coup d'etat.
And since the insane far-right holds a blocking minority against restoration...
But by undermining the viability of the regime after Franco, they prepared peaceful regime change.
I remember my joy when I read the news about Blanco. It sort of side-tracked me politically for a while. It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
Jump Franco, jump like Carrero Blanco.
"Jump" being more of a... boom.
Was this said in Spain? In Portugal I am sure it was.
If the sanity-based side wins that constitutional crisis, Spain's creditors will be told to fuck off. If the insanity-based side wins the constitutional crisis, there will be another one, and another one and another one, until either the sanity-based side wins or the insanity-based side starts rounding up dissidents and shooting them.
For a federal republic like Spain and Germany, loss of territorial integrity becomes a credible scenario if the federal and some local levels end up on different sides in the constitutional crisis.
One way or another, the Spanish body politic will be writing itself a new constitution before 2050.
For a federal republic like Spain and Germany, loss of territorial integrity becomes a credible scenario...
Especially considering the not insignificant centrifugal forces present in Spain today. This could be good news for Catalan and Basque separatists, among others. "It is not necessary to have hope in order to persevere."
What sort of retaliation would that be? Tariffs? Cut off energy or food supplies? Seems to me that if Germany has a globally competitive economy, there's not much that the rest of Europe can do about it.
Seems to me that if Germany has a globally competitive economy, there's not much that the rest of Europe can do about it.
i agree, the rest of europe can suck eggs, from their point of view, the periphery is tapped out as luxury goods market asia and brazil can keep them in the style they're accustomed to.
and just to balance out the germany bashing here a bit, it's not their fault that the PIIGS are less responsible, civic minded, industrious or thrifty, and more corrupt, but it was tolerable when there was money to be made, during which period the euro was a convenient tool, now no longer necessary.
it's not that they want to throw the rest under the bus, it's just time to move on to more avid market, and for that the PIIGS are so much ballast to be jettisoned, nothing personal, just bidnis...
the vaunted european union of common cause was probably a convenient fiction for the movers and shakers all along. that fiction was perceived as reality by millions of dewy eyed believers (myself included), and now there is a huge bureaucracy of EU technocrats geared to protect and ameliorate the lives and rights of EU citizens, setting a good example for the world in many fields, such as alt energy. you're not going to be able to crash all that good will and earnest politicking very easily.
what will be telling is if, faced with the great leap backward that the european state collapsing would be, if enough populist goodwill for the ideal european union project could build to thwart the purely mercenary motives spawned by the neo-lib political capture of those even token leftwing parties here.
i pray that the fiction, born to delude, will have planted itself into so many citizens that they are willing to peacefully take to the streets, to force the hand of those who thought they could dangle a dream in front of gullible, wartorn millions, and then jerk it away as soon as a whole generation has been raised as much 'european' as french or german etc.
perhaps then pols will learn a lesson about keeping promises... europe may need to almost completely founder before mass consciousness awakes to realise what we are in danger of losing, when we had barely begun. 'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
Beware these seemingly benign transformations. They tend to metastasize and become religion.
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