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Around 2008 it crossed my mind that getting old might save me: I am now a couple of years of being 40 and that might avoid me being drafted. One would agree that there are similarities between both periods. But there are also differences...

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Currently there is no political violence to speak of.

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

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

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

likewise falcone and borsellino's murders.


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

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

- Jake

Friends come and go. Enemies accumulate.

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

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

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

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

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

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

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

- Jake

Friends come and go. Enemies accumulate.

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

Great Famine (Ireland) - Wikipedia, the free encyclopedia

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

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

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

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

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

- Jake

Friends come and go. Enemies accumulate.

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

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

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 15th, 2013 at 01:04:21 AM EST
[ Parent ]
The problem with that is that by the time a sufficiently bloody-minded opposition gets into government, the required "lie their ass off" phase may well be longer than the political system can survive a pro-austerity government.

- Jake

Friends come and go. Enemies accumulate.

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

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

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

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

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

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

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

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

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

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

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

Which requires lead time.

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

- Jake

Friends come and go. Enemies accumulate.

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

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

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

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

- Jake

Friends come and go. Enemies accumulate.
by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Feb 11th, 2013 at 03:28:01 PM EST
[ Parent ]
To clarify:

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

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

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

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

by cagatacos on Mon Feb 11th, 2013 at 05:31:54 PM EST
[ Parent ]

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