The European Right's Powerful Push
    By Arielle Thedrel
    Le Figaro

    Monday 05 May 2008

    Does Boris Johnson's victory in the London mayoral contest portend a Tory victory in the British legislative elections that must take place between now and 2010? Regardless, it tallies with European electorates' more general movement to the right. In London, as in Italy, the right has just resumed power. It was already in control in Germany, the Netherlands, and, in Scandinavian countries, of Denmark, and also of Sweden, long presented as a bastion of social democracy. This shift to the right also holds for Eastern Europe. Conservative or [neo]Liberal parties have been elected in Warsaw, Prague, the Baltic countries, Bucharest. They have the wind in their sails in Hungary, where the left in power is in its death throes as the 2010 legislative elections approach.

    Virtually alone, Spain seems to resist. However, José Luis Zapatero's election owes much to the tactical errors committed by his right wing rivals during the March elections, as well as to their anachronistic takes on social issues.

    So the phenomenon is as extensive as it is spectacular and the wear and tear of being in power - which obtains most notably for Great Britain, governed by Labor since 1997 - does not suffice to explain it. "In the background," emphasizes Georges Mink, Research Director at ISP-CNRS, "there are enormous economic and social changes, the wilting of ideological certainties and - since the fall of the Berlin Wall - the appearance of new threats such as immigration."

    Transformations to which the left has yet to produce a convincing response: for the right's success is undoubtedly based on the failure of the social democratic model. "Globalization," Corinne Deloy, researcher at the Robert-Schuman Foundation, explains, "has made the social software obsolete. That's especially true now that - with the economic crisis we've entered into - there's nothing left to redistribute. Suddenly, people trust the right more to find solutions to problems that called the left's competence into question, for example, such primary themes as the demographic aging of European societies and retirement financing.
 The right has profited from Social Democracy's decline, but so have more radical movements on the left: witness Olivier Besancenot's breakthrough in France, but also that of the Socialist Party in the Netherlands, which became the third power in that country in 2006, and of the People's Socialist Party in Denmark (which garnered 13 percent of the votes in last November's elections), or, still better, of Die Linke in Germany (a coalition that brings together former DDR communists, unions and hard-line purist socialists).

    If the right appears better armed to confront the shock of globalization, it's also true that it has transformed itself by betting, to use Georges Mink's expression, on "ideological confusion." To mobilize voters, the right has, as Corinne Deloy reminds us, borrowed from the left: "In spite of opposition from part of the CDU, Angela Merkel has exploited certain social themes such as women's status and child care. In general, the right strives to retool the social model defended by the left in a rational manner."

    It has also cannibalized themes that traditionally belonged to the far right: the security issue, protection of [national] identity and immigration. In Italy, the new mayor of Rome, Gianni Alemanno (National Alliance), is the poster child for that strategy. In Hesse, the CDU didn't hesitate to exploit populist themes in the January regional elections. In the former Communist countries, where the welfare state reigned up until the end of the 1980s, the phenomenon was even more brutal. These countries' entry into the European Union in 2004 coincided with the emergence of a nationalist and openly anti-European right. Even today, in Prague, President Vaclav Klaus refuses to hoist the European flag alongside the national flag.

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Phew! Someone open a window!

Insurmountable Dilemma for Central Banks
    By B.O.
    L'Humanité

    Wednesday 30 April 2008

    Classical monetary policies are neutralized in the face of stagnation and inflation. Hence the urgent need for radical revisions.

    The big countries' monetary issuance institutes are confronted with a terrible dilemma. One of the characteristics of the present crisis is, in fact, to combine stagnation of economic activity with an upsurge in inflation. Now, classically, central banks strive to regulate the system by lowering interest rates to fly to the aid of growth when it falters. Conversely, they increase interest rates when economic activity heats up to avoid an "overheating" that would cause inflation. The problem today is that both phenomena are occurring simultaneously.

    Faced with this "stagflation," to use the specialists' jargon, any classical intervention by the monetary authorities appears counterproductive. Should they lower their interest rates, the cheap credit which banks and other big financial operators access first essentially benefits speculators (see below). Should they increase the cost of money, they suffocate growth.

    In the United States, the Federal Reserve has opted for a drastic reduction in the cost of money and should reduce its funds rate by another quarter percent today to bring it down to two percent. But this monetary policy on steroids is obviously not succeeding in erasing the threats of recession. Still worse, by inundating the world with dollars, it feeds speculation still further.

    In Europe, where the ECB maintains high interest rates (four percent) and even threatens to increase them to "arrest inflationary risks," according to Bank of France Governor Christian Noyer, the signs of a sharp decline in economic activity are ever more tangible.

    To escape from the dilemma, it would be necessary to operate a radical revision of monetary policy, which must be far more supple and innovative if it intends to simultaneously benefit real economic activity and fight financial inflation. Communist economists have long advanced the idea of a credit policy based on selective interest rates, i.e. reducing the cost of money for employment-rich investments and useful spending (training, research) and, conversely, increasing rates for purely financial operations to deterrent levels.

    The pertinence of this different logic for financing the economy has undoubtedly never appeared with quite so much force as during the crisis of these last few weeks, taking into account the dilemma noted above. It is also a consideration for very broad swathes of the economy, given that it corresponds to the interests of diverse classes of employees, and even those of small and medium-sized company owners, today victims of credit contraction. And it inevitably induces a kind of society in which company democracy, citizen control exercised by the elect, the workers, takes on a totally new dimension.

Yes, I know-- we all know these things, in the main, but what we are about here on ET (I think) is spreading  understanding as well as a method of useful discourse.