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Not My Europe

by afew Fri Nov 18th, 2011 at 04:25:06 AM EST

The Markets™ are pulling out of eurozone countries' sovereign bonds with increasing haste, sending spreads with the German bund ever higher: the French spread briefly above 2%, and even the ultra-orthodox Netherlands affected. We've been hearing voices raised in favour of the ECB monetarising sovereign debt, and both Zapatero and Sarkozy are pushing for a change in Merkel's attitude.

Time wasted. The German political and financial establishment will not give way on monetarisation, citing the usual ghost haunting, apparently, the country's sense of its own history: hyper-inflation (look out, here comes Hitler!). Michael Meisser, deputy head of the CDU/CSU group in the Bundestag, says it would be futile to attempt to solve the crisis by the "money printing press" (h/t Eurointelligence email briefing), while the chief of the economic wise men advising Merkel, Wolfgang Franz, says in a FAZ interview:

Im Gespräch: der Wirtschaftsweise Wolfgang Franz: „Noch mehr EZB-Anleihekäufe wären eine Todsünde“ - Wirtschaft - FAZ Economy wise man Wolfgang Franz: More ECB bond purchases would be a mortal sin - Economy - FAZ
Nach aller historischen Erfahrung nicht zuletzt in Deutschland gehört die Monetarisierung von Staatsschulden zu den Todsünden einer Zentralbank.From all historical experience, not least in Germany, the monetization of government debt is among the mortal sins for a central bank.

Merkel too refuses to see any solution in the role of the ECB. There's only one way forward for the euro: a new-treaty forced march to hardline fiscal integration in which "sinner" countries will be taken over and run by the Union in one of its avatars (why not an EMF?).

Not my federalism, not my Europe.


Display:
Just a stupid question:Can the Banque de France print Euros  ?? & why not, buy French gov bonds.
by fredouil (fredouil@gmailgmailgmail.com) on Fri Nov 18th, 2011 at 04:38:20 AM EST
See my diary: Can the Eurozone National Central Banks create fiat Euros by themselves? (December 1st, 2010)

They cannot issue paper money by themselves, but whether they can create money as bits in a computer as part of their ordinary activity as central banks remains, to me, an open question.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 04:49:23 AM EST
[ Parent ]
A very theoretical open question...
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 18th, 2011 at 04:56:53 AM EST
[ Parent ]
Were they determined to do so they could almost certainly repo total trash from Society General or Credit Agricole -- with all the risks that entails. That would, in effect, replace trash with high powered money denominated in euros. I believe the question would be how much of this they have already done.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Nov 18th, 2011 at 09:38:57 AM EST
[ Parent ]
Of course they are determined to do so...

The sovereign bond purchase program does nothing to stabilize the bond markets so its only purpose is to bail out the bondholders.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 09:47:54 AM EST
[ Parent ]
"The sovereign bond purchase program does nothing to stabilize the bond markets"

...only because its scale is insufficient. If the ECB's bond purchase program were significant, it would send a signal to bondholders that the risk of investing in these bonds was close to nil, thereby increasing investor's appetite for these assets and pushing interest rates down as a result.

by Lynch on Sat Nov 19th, 2011 at 05:26:15 AM EST
[ Parent ]
It's not (simply) a question of volume. If the ECB commits to buying N bn €-Mark's worth of bonds, then "the market" will simply short N bn + 1 €-Mark's worth of bonds, and laugh all the way to the bank.

The ECB needs to say "we will purchase however many bonds these countries want to sell." Then, and only then, will they be stabilising the government bond markets. Where by "stabilising," I mean, of course "depriving them of their unjustified subsidies."

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 19th, 2011 at 05:35:37 AM EST
[ Parent ]
Or "we will not tolerate yields above so and so percent".

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Sat Nov 19th, 2011 at 05:37:26 AM EST
[ Parent ]
If the ECB commits to buying N bn €-Mark's worth of bonds, then "the market" will simply short N bn + 1 €-Mark's worth of bonds, and laugh all the way to the bank.
Eurointelligence: French spreads breach 200bp for the first time (18.11.2011)
ECB has introduced an upper limit of €20bn per week for SMP interventions

According to Frankfurter Allgemeine Zeitung, the ECB governing council has introduced an upper limit of €20bn the central bank can spend per week to help ailing euro countries to stabilize the spreads on their government bonds. This move is interesting in the sense that the market expectations are that with the arrival of Mario Draghi and the intensification of the crisis the ECB would go the other way and loosen its limits of the program. The paper, however, argues that there is a growing scepticism among the governing council's members about the program which has resulted in lowering the weekly ceiling from a previously higher figure to €20bn. According to FAZ discusses at each of its bimonthly meetings the SMP and sets a ceiling for the coming two weeks. Whether the €20bn ceiling was maintained at yesterday's governing council meeting is unclear. According to the ECB's official SMP figures it spend only €4.5bn last week, much less than the markets had expected.



To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Sat Nov 19th, 2011 at 05:39:32 AM EST
[ Parent ]
The ECB is consistently and resolutely too little and too late - as policy. They might as well save their money.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Nov 19th, 2011 at 04:01:19 PM EST
[ Parent ]
Why do we need ECB? All local central banks can print the money they need. And then there would not be any kind of monetaristic "spread" between economies. Inflation could be controlled by taxation. ECB cannot do it. Look at housing markets. We have seen that the ECB is a failure.
by kjr63 on Sat Nov 19th, 2011 at 06:07:14 AM EST
[ Parent ]
Whether we have euro-bonds or we have just local central banks with their bonds. The latter is the democratic alternative.

Neo-liberalism is such a fantastic consept. First it allocates market surplus to rentiers, then monetarism creates taxation via back door. And now economy, politics and banking are the one and same.

by kjr63 on Sat Nov 19th, 2011 at 06:17:09 AM EST
[ Parent ]
..and the Finland's lunatic euro-minister wants to give political power of EU to Wall Street. Please wake me up.
by kjr63 on Sat Nov 19th, 2011 at 06:20:45 AM EST
[ Parent ]
Inflation could be controlled by taxation

And if Germany then gets via taxation a monetaristic income stream , they can use this productively, to public infrastructure.
This is just common sense, but umcomprehensible to neo-liberals.

by kjr63 on Sat Nov 19th, 2011 at 06:30:05 AM EST
[ Parent ]
It's not only a matter of scale, but of stated intent. The ECB goes out of its way to deny that it's stabilizing the market. All they claim to be doing is "ensure the channels of transmission of monetary policy continue to function" (paraphrasing Draghi at the last ECB press conference).

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Sat Nov 19th, 2011 at 05:36:40 AM EST
[ Parent ]
I would think that there are plenty of technical opportunities to do something like that. For example, when you write a check you create money (depending on which counting system you're using).

Suppose that two banks create a little electronic exchange where they extend loans back and forth at a high rate, by writing virtual checks to each other. One would suspect that this could be structured so that it creates lots of new money (bits in the computer set to 1), and perhaps some of that could be leaked into the bank's regular accounts. As long as those two little programs are sitting there trading back and forth at a 1 MHz per transaction rate, that money still exists...

Unless there is some sort of broadly worded regulation that prevents this sort of approach...

by asdf on Fri Nov 18th, 2011 at 01:47:04 PM EST
[ Parent ]
Aside from the rules against wire fraud, you mean?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 02:10:04 PM EST
[ Parent ]
If the two entities agree beforehand it's not fraud.

It may be illegal or contractually unenforceable for other reasons, tho.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Nov 18th, 2011 at 02:46:14 PM EST
[ Parent ]
I'm pretty sure that creating the impression that you have a much greater cash flow than you really do, so as to funnel part of this synthetic cash flow to other uses, is considered fraud.

It was when Enron did it.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 03:58:38 PM EST
[ Parent ]
Should have referenced, in afew's comment:

Suppose that two banks create a little electronic exchange where they extend loans back and forth at a high rate, by writing virtual checks to each other.

In US law two parties may agree to be paid in anything they want.  That's how the Future's Markets work, after all.  The only over-riding consideration to this is one party cannot refuse to be paid in US Federal Reserve Notes since, by law, they are legal tender for all debts, Public and Private.

Miscellany:

The Treasury and Federal Reserve gets hinky if an entity, group, or community starts issuing "money," but there are ways around that.  

Get too useful or wide-spread and the IRS wants their cut of the action.  There are problems paying 'Barter Tokens' (or whatever you call 'em) for due and payable taxes.      

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Nov 18th, 2011 at 04:11:29 PM EST
[ Parent ]
asdf:
Suppose that two banks create a little electronic exchange where they extend loans back and forth at a high rate, by writing virtual checks to each other.

That is not too far from a complete description of the High Frequency Trading activity that is explicitly sanctioned by the SEC for the purpose of creating liquidity. Except that it seems to fail just when it is needed most. But it is a great little earner for those privileged to engage in it.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Nov 19th, 2011 at 04:08:32 PM EST
[ Parent ]
As long as checks are cleared nationally (which I believe is still the case in most places), you could effectively have virtual local currencies in parallel to the euro in the form of national checks, which would be accepted by all local banks and thus by all local businesses, but could not be used outside the country.

Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri Nov 18th, 2011 at 02:27:38 PM EST
[ Parent ]
Parallel monetary systems? | Steve Keen's Debtwatch
Advances in information technology now make it possible for non-government entities, or governments themselves, to establish and run a national parallel paperless monetary system at very low cost and launch it on very short notice. The workings of such a system is described and discussed. Such systems may ameliorate the dire state of affairs in the hardest hit eurozone countries, and increase the political pressure on EU and national elites for debt forgiveness, full employment and reduction of cutbacks. It may also be applied in near-bankrupt U.S. States.
by generic on Fri Nov 18th, 2011 at 02:30:01 PM EST
[ Parent ]
Short answer, no.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 18th, 2011 at 04:55:09 AM EST
[ Parent ]
I'd like to see Don Draghi and Frau Merkel try to stop them if they decide to do so anyway.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 04:58:19 AM EST
[ Parent ]
That is frankly a useless point. At that stage, what "euro" would there be?
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 18th, 2011 at 05:05:51 AM EST
[ Parent ]
One around France and without Germany, which is the only one that could actually work.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 05:20:41 AM EST
[ Parent ]
Which supposes thet 1) the euro as currently constituted is over and done with; 2) a certain number of countries other than Germany agree to create a common currency.

That's a whole lot more than Jake was saying.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 18th, 2011 at 05:26:40 AM EST
[ Parent ]
The fact is, Sarkozy will do its utmost to hitch his wagon to Merkel's and Rajoy appears to be set to attempt some sort of deal with Merkel rather than make a common front with the rest of the Mediterranean countries.

Because everyone wants to be German.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 05:37:45 AM EST
[ Parent ]
That is true. Sarkozy's entire future (and this is a very powerful motivational element in politicians' decisions to "believe" in this or that dogma) is staked on not unhitching from Germany, when the fact is that France is unhitched. So he will go on calling Angela and attempting to build one crappy political compromise after another.

I'll translate a passage from Quatremer's blog.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 18th, 2011 at 05:45:45 AM EST
[ Parent ]
Eurointelligence: Sarkozy is prepared to render sovereignty in order to find a compromise with Merkel
Nicolas Sarkozy is looking for a way out of the current crisis decoupled France from Germany in the investors' perception and that has driven up the country's borrowing costs to record levels since the euro introduction. But Le Monde reports the president is looking for common ground with Angela Merkel to prepare the eurozone institutionally on a medium term. In a reaction to the chancellors willingness to render parts of German sovereignty to defend the euro Sarkozy thinks about responding in kind." In exchange there will have to major political sacrifice from the French side", the paper quotes a presidential advisor. Sarkozy is looking at accepting real budgetary control powers at a eurozone level that go beyond the reenforced Stability and Growth Pact rules that were recently decided. But according to Le Monde there will also have to be institutional changes to give the reinforced eurozone more political legitimacy. The paper writes that Sarkozy may outline his ideas in a big speech on Europe that might take place on December 11, the 20th anniversary of the Maastricht summit.


To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 05:52:15 AM EST
[ Parent ]
Meanwhile, apparently Rajoy has made an appeal to "the markets" to give his government a respite and some breathing room.

Bwahahahahahahah - idiot.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 06:02:39 AM EST
[ Parent ]
Do you have a quote of that?

Serious cartoon material. Catholic supplicant, praying for misericorde.

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

by eurogreen on Fri Nov 18th, 2011 at 08:48:56 AM EST
[ Parent ]
ElPais.com: Rajoy pide a los mercados "un mínimo de margen"
El líder del PP, Mariano Rajoy, hay pedido este viernes a los mercados "un mínimo de margen" para afrontar la situación económica. "Esperemos que esto se pare, que se den cuenta de que aquí hay elecciones y de que los que ganen tienen derecho a un mínimo margen, que debe ser de algo más de media hora", ha manifestado.
Rajoy asks the markets for "a minimal margin"
The PP leader, Mariano Rajoy, this Friday asked the markets for "a minimal margin" to confront the economic situation. "We hope that this stops, that they realise that there are elections here and that the winners have the right to a minimal margin, which should last more than half an hour", he stated.


To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 08:57:05 AM EST
[ Parent ]
He can say anything he likes, there's no laugh test to pass?

I'm sure that in France, he would have put a brilliant future behind him with a remark like that.

Colour me aghast.

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

by eurogreen on Fri Nov 18th, 2011 at 09:08:13 AM EST
[ Parent ]
He's going to win with 195-110 out of 350 seats in parliament. He hasn't been saying diddly squat about his policies after the election. He's just coasting on the general rout of ZP's PSOE. And now he's panicking, too.

Other rumours (seen from two completely different sources in the Spanish press) are that he intends to go to Merkel as soon as the polls close and pledge biting austerity in exchange for "liquidity". Also, that the PP is considering replicating Ireland's NAMA success by creating a bad bank to buy up €170bn of impaired real estate assets from the banking sector (there goes 15% of GDP). And he's going to roll back just about everything you can think of, such as the smoking ban, gay marriage, the law on support for dependent people, and so on.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 09:12:14 AM EST
[ Parent ]
Why do all leading Eurozone-politicians so totally lack any sense of even basic patriotism? With the exception of the German ones I suppose, and even this German sort of patriotism will eventually end up creating self-inflicted wounds, as Germany destroys her export markets. Don't these politicians care about their countries and their countrymen, or are they just utterly, utterly stupid? It's the same in the UK and the US, mitigated by the fact that they have their own currencies, and that they seem to subvert the national interest to a domestic financial elite rather than a foreign one.

It almost seems like Iceland is one of the only countries on earth with patriotic leaders, and only because they threw out the last anti-patriotic bunch (Oddson et al).

Whatever happened to Europe and the world?

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

by Starvid on Fri Nov 18th, 2011 at 11:33:23 AM EST
[ Parent ]
They have a sense of patriotism. In the case of Spain, Serious™ people worry about whether Spain will be in the new "hard core" of the Euro along with Germany, the Netherlands and Finland is a matter of National Pride. Just like whether or not Spain had a seat at the G20 was the big issue at the end of 2008 (the Government never said what position Spain would defend from that seat, nor did anyone in the press think to ask, presumably because the public didn't much care - it was all a matter of national pride again).

I would call that patriotism, even if it's stupid. In fact, I consider patriotism stupid. Good national economic policy should not be carried out out of patriotism but out of solidarity and consideration for the consequences of political decisions on millions of innocent bystanders.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 11:42:36 AM EST
[ Parent ]
I think, in this instance, Starvid was referring to "national interest" or "the interests of all the people". That love of country and concern for the well being of all has been subverted and captured by the right wing world wide does not inherently discredit those attitudes nor prevent one from criticizing the actions of the government when it favors the interests of wealth over that of the people. Woody Guthrie loved his country and was concerned for the well being of all.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Nov 20th, 2011 at 06:00:48 AM EST
[ Parent ]
Ask yourselves, was FDR a patriot? Without question. Was this a good thing? Indeed it was. I'm not sure what you put into patriotism, but to me it is a love of country which surpass any boundary of class or special interest, who put the best of the country as a whole first, and the patriot is the man who thinks first not of his own personal or economical well-being, but of that of the country. Isn't that just the kind of men Europe and America needs? Patriotism isn't nationalism, nor is it jingoism. It is the spirit of the American and the French revolutions: freedom, equality, brotherhood.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Nov 20th, 2011 at 10:54:23 AM EST
[ Parent ]
That doesn't seem like patriotism to me, rather macho jingoistic posturing, of the big swinging dick kind.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Nov 20th, 2011 at 10:57:03 AM EST
[ Parent ]
How about the anti-austerity forces, who are they and how are they projected to do?
I mean, after the whole "Indignado" thing something like ~70 PSOE + PP seems lame. Were the crowds in the squares just a vocal but small minority then?

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Fri Nov 18th, 2011 at 11:41:38 AM EST
[ Parent ]
In terms of votes, in 2008 these was a participation of 74%, and out of that the PSOE and PP vote was 43% and 38%. so 60% of eligible voters actually cast votes for the PPSOE. Polls suggest that 65% will vote this time, of which 45% will vote for the PP and 30% for the PSOE. That makes 45% of eligible voters casting votes for the PPSOE.

I (or kcurie) will be posting a pre-election diary soon, and we'll be there for live blogging the vote count (8pm to midnight CET on Sunday)

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 11:53:00 AM EST
[ Parent ]
king canute, ordering the tide not to rise, while it's lapping around his throne.

'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 Sat Nov 19th, 2011 at 09:08:13 PM EST
[ Parent ]
Sortie de route pour "Merkozy" - Coulisses de Bruxelles, UE "Merkozy" goes off the road - Backstage Brussels, EU
dès le départ, tout a opposé Berlin et Paris. Merkel, sous la pression des libéraux eurosceptiques du FDP, a ainsi refusé toute solidarité financière avec la Grèce et a même envisagé un défaut d'Athènes voire sa sortie de l'euro. Il a fallu que Paris négocie longuement pour qu'elle se résolve à voler à son secours, six mois après le début de la crise. Trop tard pour éviter la panique des marchés....from the beginning, Berlin and Paris were opposed on everything. Merkel, under pressure from the liberal Eurosceptics of the FDP, rejected any financial solidarity with Greece and even considered Greek default and exit from the euro. Paris had to negotiate for a long time to get her to decide to fly to Greece's rescue, six months after the start of the crisis. Too late to prevent market panic.

Sortie de route pour "Merkozy" - Coulisses de Bruxelles, UE "Merkozy" goes off the road - Backstage Brussels, EU
c'est elle qui a exigé que les dettes de la zone euro puissent être restructurées et qui a imposé une décote de la dette grecque de 50 % le mois dernier. Or, au départ, « Merkozy » avait expliqué que jamais les dettes européennes ne seraient restructurées. Sarkozy aurait pu refuser, mais le risque était que « Merkel saute de la barque, car elle n'était pas plus attachée que ça à l'euro au début de 2010 », explique-t-on dans l'entourage du Président. « Maintenant, elle a compris que l'euro était aussi dans l'intérêt allemand ». Au fur et à mesure de l'aggravation de la crise, une seconde raison s'est ajoutée à la première pour expliquer la volonté française de coller le plus possible à l'Allemagne, comme le reconnaît le Président lui-même en petit comité : « nous avons fait le choix stratégique de nouer ce partenariat avec l'Allemagne qui sort la France du tropisme des pays du sud ». En clair, il fallait indiquer aux marchés que jamais Paris ne décrocherait de Berlin quelle qu'en soit le prix. « Soit on converge avec l'Allemagne, soit on diverge et on s'effondre », est persuadé Nicolas Sarkozy....it was [Merkel] who insisted that eurozone debts might be restructured and who imposed a 50% haircut on Greek debt last month. But in the first instance, "Merkozy" had explained that European debts would never be restructured. Sarkozy could have refused, but the risk was that "Merkel could jump off the boat, because she was not particularly attached to the euro in early 2010," is the explanation from the President's entourage. "Now she has understood that the euro is also in the German interest." As the crisis has worsened, a second reason was added to the first to explain the French desire to keep as close as possible for Germany, as recognized by the President himself before a small group: "We made the strategic decision to establish this partnership with Germany that pulls France out of the tropism of the southern countries" . In plain terms, it was necessary to show the markets that Paris would never unhitch from Berlin, whatever the price. "Either we converge with Germany, or we diverge and we collapse" , Nicolas Sarkozy is persuaded.

  1. "a second reason was added to the first": Quatremer cites as the first, Sarkozy's perception that Europe needed "leadership" and it was natural that France and Germany should provide it

  2. "it was necessary to show the markets that Paris would never unhitch from Berlin": (my comment) it was equally necessary to show the French electorate that Sarkozy was maintaining France's "rank"...
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 18th, 2011 at 06:14:11 AM EST
[ Parent ]
it was equally necessary to show the French electorate that Sarkozy was maintaining France's "rank"

Male politicians and their penchant for swagger.

The commentary in Spain (and the statements of presumptive incoming PM Rajoy) are basically about "Spain withh remain in the Euro" as a matter of national pride.

We will pretend to have a big swinging dick if it kills us! And the voters lap it up, of course, because they luv themselves some national pride.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 06:18:49 AM EST
[ Parent ]
Rather than swagger, I think Sarkozy pins his hopes for reelection on the perception that he's an experienced hand who is protecting French interests and maintaining the Berlin-Paris "parity". A widespread feeling that France under his governance has become categorised with the Mediterranean countries would make him, come next May, not just toast but a smoking pile of black crumbs.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 18th, 2011 at 06:23:28 AM EST
[ Parent ]
The fact is - if a politician decides to unhitch, he will be blamed by other politicians for it and will lose its job, because nobody will make the opposite case.

So it's rational from politicians, and our electorate is too ill informed, or too lazy to care, to vote in a way that would open other doors.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Fri Nov 18th, 2011 at 08:56:28 AM EST
[ Parent ]
Wait, are you advocating that France unhitch from Germany?

Who are you and what have you done to the real Jerome?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 08:58:03 AM EST
[ Parent ]
but he could make Germany blink first. If he said clearly "Dump your ideological blinders, or else kill the EU" he might get a German change. Not a happy one, for sure, but a real one.

But he doesn't believe it's the right thing to do anyway.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Fri Nov 18th, 2011 at 02:25:25 PM EST
[ Parent ]
We will pretend to have a big swinging dick if it kills us!

Heh, that could well be the national motto of France... ;)

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

by Starvid on Fri Nov 18th, 2011 at 11:36:20 AM EST
[ Parent ]
"le danger en Europe augmente, mais on ne voit pas très bien ce qui va nous sauver" (danger is rising in Europe, but it's hard to see what is going to save us).

(In French, mostly).

Not entirely the same point of view on ECB monetarisation, but a welcome kick in the institutional antheap and a clear demand to "put Keynes into Brussels".

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 18th, 2011 at 04:38:58 AM EST
Another point D C-B makes forcefully (with Van Rompuy, Barroso, and Juncker in attendance) is that Europe cannot work while France has a blanket minimum wage at €9/h, while Germany, in some sectors, is at €5 to €7/h while running a constant trade surplus: "someone should tell Mrs Merkel this".
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 18th, 2011 at 05:02:14 AM EST
[ Parent ]
See here for links to English and German voiceover versions (links at the youtube page for the French original).

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 05:16:43 AM EST
[ Parent ]
Look at the faces of van Rompuy and Juncker, and try to figure out what the fuck Barroso and Rehn find so amusing.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 06:46:04 AM EST
[ Parent ]
It would seem plausible anyhow.

I actually went to university with Rehn, he graduated a couple years ahead of me and I didn't know him, but he sure is bringing shame on the progressive institution we both attended.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Sat Nov 19th, 2011 at 04:17:54 PM EST
[ Parent ]
Farage : German Europe

by fredouil (fredouil@gmailgmailgmail.com) on Fri Nov 18th, 2011 at 04:41:55 AM EST
Fuck Farage.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 18th, 2011 at 04:55:58 AM EST
[ Parent ]
yeah is an ass, but he has plenty of fun thanks to this overextended Europe and all these unelected buffoons, they need to go.
by fredouil (fredouil@gmailgmailgmail.com) on Fri Nov 18th, 2011 at 05:32:18 AM EST
[ Parent ]
Here we have the head of a nationalistic, anti-European party who can only win seats in the European parliament.

And y'all thought us Yanks didn't get irony. :)

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Fri Nov 18th, 2011 at 07:14:16 AM EST
[ Parent ]
From Alphaville


Sprechen Sie Deutsch?
Posted by Neil Hume on Nov 18 08:59.

Friday's quote du jour comes from German paper Frankfurter Allgemeine Zeitung and its interview with Irish prime minister Enda Kenny.

First question - "Mr Irish prime minister, do you speak German?"

Answer: "I can only say good day, but my children are learning."

Oh, the unintended irony.



"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Fri Nov 18th, 2011 at 05:27:13 AM EST
Michael Meisser, deputy head of the CDU/CSU group in the Bundestag, says it would be futile to attempt to solve the crisis by the "money printing press"

Where does he think private money comes from?

by kjr63 on Fri Nov 18th, 2011 at 06:19:39 AM EST
From working hard and earning it.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 18th, 2011 at 06:25:16 AM EST
[ Parent ]
Private rent-seeking = earning
Public infrastructure investment = waste
by kjr63 on Fri Nov 18th, 2011 at 06:36:26 AM EST
[ Parent ]
Actually, it's worse......

Creating real world wealth = unproductive.

Creating claims over real world wealth = productive.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Fri Nov 18th, 2011 at 03:55:46 PM EST
[ Parent ]
Or

Creating real world wealth = risky

Creating claims over real world wealth = less risky

Also, the turnover of paper pushing is higher than that of productive investment.

Taken together, it explains banks' increasing aversion to productive lending.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 04:12:16 PM EST
[ Parent ]
Buying governments so they guarantee your claims over real world wealth - a sure thing.

And here we are.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Nov 18th, 2011 at 04:13:47 PM EST
[ Parent ]
And because claims create more profit than real capital, claims create more surplus.
What a beautiful world neoliberalism is.
by kjr63 on Fri Nov 18th, 2011 at 05:16:43 PM EST
[ Parent ]
No relation to Mackie Messer?

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Fri Nov 18th, 2011 at 08:52:05 AM EST
[ Parent ]
suckers' wallets?

'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 Fri Nov 18th, 2011 at 10:51:42 AM EST
[ Parent ]
Europe's souvereign "debt crises":

by kjr63 on Fri Nov 18th, 2011 at 06:29:27 AM EST
I am not close to German politics, but it seems to me that the only hope for Europe is the replacement of Merkel by a SDP/Green led government.

Am I right in thinking that:

  1. Merkel is institutionally incapable of accepting/implementing policies that could solve the crisis.

  2. The SDP/Greens are likely to lead the next German Government.

  3. The SDP/Greens are likely to implement a paradigm shift in German politics which will make a major contribution to resolving the Eurozone crisis.

If not, will someone please tell me what the more likely evolution of German politics will be?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Nov 18th, 2011 at 07:11:58 AM EST
the only hope for Europe is the replacement of Merkel by a SDP/Green led government

And even that doesn't guarantee anything as the SPD is full of austerians.

Steinbrueck signals he may challenge Merkel in 2013. Krugman: The economic consequences of Herr Steinbrueck.

2013? Did they say 2013? There isn't going ot be a Euro in 2013.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 07:20:04 AM EST
[ Parent ]
1. yes, 2. probably, 3. unlikely.

It was the red and green coalition that got us into the "Hartz4" mess. I suspect the CDU is more likely to get rid of neoliberalism than SPD/Greens.

by Katrin on Fri Nov 18th, 2011 at 07:27:03 AM EST
[ Parent ]
Many thanks.  Why is it that "socialist" parties worldwide are more bought into the neo-liberal paradigm than many liberal/conservative parties?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Nov 18th, 2011 at 07:58:40 AM EST
[ Parent ]
Because they conflated the fall of communism with a failure of socialism and were looking for something new to make them look serious.
by Colman (colman at eurotrib.com) on Fri Nov 18th, 2011 at 08:10:27 AM EST
[ Parent ]
I'm not sure to what extent they conflated them, but the right sure did, and made bully capital out of it.  
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 18th, 2011 at 09:02:30 AM EST
[ Parent ]
Very many of them appeared to buy into the idea. I suspect, as in the USA, it involved the need for campaign finance.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Nov 18th, 2011 at 09:54:59 AM EST
[ Parent ]
Their economic cadres were educated in academic economics after 1980. That alone explains a lot.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 09:08:07 AM EST
[ Parent ]
In Sweden, the ideological break comes in the 1980ies where the economic rightwing within soc-dems starts their manouvering with seizing crucial seats like central bank board. Late 80ies there is a struggle with the rightwing within soc-dems perceived as a minority - kanslihushögern - which is won by the rightwing with the 90ies crisis (caused in no small amount by the policies pushed by the same rightwing in the 80ies). So I would put the schooling before the 80ies, or possibly early 80ies.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Sat Nov 19th, 2011 at 06:10:13 AM EST
[ Parent ]
Process started in the mid-50s when it became obvious Authoritarian Command Economies weren't providing economic growth, most notably in consumer goods.

A national consensus was reached a Mixed Economy was the way to go and, thus, Welfare States were created.  

Following the fall of the Eastern Bloc socialist ideology collapsed, the hard Left collapsed with it and the Center Left (Social Democrats, et. al.) didn't do the work to create a counter-balance to the Right and just kind of slipped into supporting Neo-Capitalist Economics and Neo-Liberalism on the political side.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Nov 18th, 2011 at 03:04:38 PM EST
[ Parent ]
They probably perceived that creating a viable alternative narrative would effectively cut them off from available sources of funding.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Nov 19th, 2011 at 04:16:29 PM EST
[ Parent ]
And why do you "suspect the CDU is more likely to get rid of neo-liberalism?"

Isn't the CDU currently embracing Migeru's "shit a brick neo-gold standard?"

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Fri Nov 18th, 2011 at 08:10:53 AM EST
[ Parent ]
The CDU may well see the FDP disappear as a national political force, and usher in fascism.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 08:17:26 AM EST
[ Parent ]
Come on.
by IM on Fri Nov 18th, 2011 at 08:51:17 AM EST
[ Parent ]
Okay, maybe I'm exaggerating on the FDP.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 08:52:52 AM EST
[ Parent ]
As for fascism, let's survey the EU in 5 years' time.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 08:53:29 AM EST
[ Parent ]
Are you thinking of a certain post-fascist party closer to home?
by IM on Fri Nov 18th, 2011 at 09:01:59 AM EST
[ Parent ]
I'm thinking of van Rompuy's "we need reform, not elections", about LAOS getting into the ECB's "national unity" government for Greece, about the True Finns, about that Finnish foreign minister who thinks the Euro is a darwinian meat grinder, about Barroso warning that it's austerity or loss of democracy...

Like I said, let's survey the field in 5 years' time.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 09:07:09 AM EST
[ Parent ]
We can't have nasty voters fucking things up, legitimacy be damned.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Fri Nov 18th, 2011 at 09:14:33 AM EST
[ Parent ]
Legitimacy proceeds from the bank accounts of the rich.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Nov 19th, 2011 at 04:17:59 PM EST
[ Parent ]
Frau Merkel and her Troika have brought an unreconstructed fascist party into the Greek government.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 09:17:34 AM EST
[ Parent ]
Germany is probably the country in Europe which is least likely to get a fascist party into power, while inadvertandly doing the most to promote fascism in the European periphery. Oh the irony...

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 11:44:10 AM EST
[ Parent ]
What irony? It will be used to cement the narrative that the irresponsible children in the rest of Europe cannot be trusted with their own affairs.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 11:53:54 AM EST
[ Parent ]
ziss time you vill ask uss to organise your lazy asses!

on your knees, assume the position...

'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 Fri Nov 18th, 2011 at 04:25:26 PM EST
[ Parent ]
Currently? The Bundesbank has been on a "shit a brick neo-gold standard" since the time of Adenauer.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 08:29:53 AM EST
[ Parent ]
Angela Merkel promised Germany would obediently fight all the US's wars (as opposition leader she even flew to Washington to declare in public that she would have led the Bundeswehr into Iraq). Angela Merkel promised with her there would be decades of nuclear power to come. Angela Merkel promised the end of debt-sinful wastefulness that a Suebian housewife does not approve of. Now look who kept us out of Libya and simply dropped nuclear power.
by Katrin on Fri Nov 18th, 2011 at 08:32:02 AM EST
[ Parent ]
I'm sure Merkel would quickly respond to opinion polls showing that Swabian housevives changed their mind about austerity and debt.

Other than that, Aust(e)rian goldbuggery is not "neoliberal".

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 08:36:47 AM EST
[ Parent ]
That woman has only one single aim: to stay chancillor. Everything else is irrelevant. If we can convince her that she won't stay chancillor, unless the ECB can become a central bank, the retiring age is lowered to 60, and we get a minimum wage of € 10, she'll forget the Swabian housewife. It's never a U-turn, btw. Just minor corrections of her course.

The SPD would never dare that.

by Katrin on Fri Nov 18th, 2011 at 08:45:44 AM EST
[ Parent ]
Is she really going to earn a third term?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 08:48:16 AM EST
[ Parent ]
It sounds unbelievable, but I wouldn't put it past her.
by Katrin on Fri Nov 18th, 2011 at 08:58:53 AM EST
[ Parent ]
I wouldn't put it past her to try it. But what in the world are the German voters thinking?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 08:59:42 AM EST
[ Parent ]
Merkel is the preeminent political tactician of her generation.

Part of the reason is that she has little need to seek validation: staying in control is validation enough. She will never give good soundbites, preferring to climb over the bodies of politicians who try and project "alphaness".

Her ego is not firmly attached to any position or viewpoint - look at her nuclear flipflop.

She learned her skills from the Fat Man - and look how long he hung on.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt ät gmail dotcom) on Fri Nov 18th, 2011 at 09:10:04 AM EST
[ Parent ]
Not now. But elections are not now bit n two years. And even a week is a long way in politics.
by IM on Fri Nov 18th, 2011 at 09:00:18 AM EST
[ Parent ]
Your constant whitewashing of neoliberalism is annoying.
by IM on Fri Nov 18th, 2011 at 08:59:30 AM EST
[ Parent ]
It is not the same thing. I doubt Milton Friedman would have agreed with the ECB's policies.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 09:21:24 AM EST
[ Parent ]
The problem is not the imported anglo ideology but the homegrown European one.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 09:22:14 AM EST
[ Parent ]
The problem is that, though they can be distinguished, both of them are there.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 18th, 2011 at 09:27:56 AM EST
[ Parent ]
Since the imported anglo-american ideology that you like to defend caused the crisis, that is myopic.

And you over-use the term austrian. Didn't you recently comment on a de Long thread full of austrians? Look again: genuine Austrians don't like modern central banks, the ECB included.

by IM on Fri Nov 18th, 2011 at 09:46:07 AM EST
[ Parent ]
I don't "defend" the ideology, I just think blaming it for our ills is to avoid looking at the beam in Europe's own eye.

As far as the Euro crisis goes, the 2007-8 subprime crisis was the trigger. The cause was the institutional structure designed into the Maastricht Treaty in the early 1990s. And the crisis is only getting worse because of the entirely homegrown crisis management.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 09:53:25 AM EST
[ Parent ]
So there was a separate sub-prime crisis that ended in 2008 and we lived happily ever after? And surely there happened nothing at all in the US or the UK after 2008, the little trigger event over and them not being part of the Euro-zone?

And so you do indeed defend the ruling neo-liberal ideology, ruling all over the western world: Nobody is to blame, just some malefactors over the mountains in Germany, who are "Austrians" and "Gold-bugs". The entire neo-liberal school in economics meanwhile, whose public speakers are pushing austerity and talking about confidence and uncertainty just now, is not to be blamed.

And whatever you or Krugman speculate about what would Milton Friedman say, most really existing neoliberals oppose fiscal stimulus, regulation and warn again and again of inflation resulting from the semi loose monetary policies of the Fed oder the BoE.

by IM on Fri Nov 18th, 2011 at 12:03:27 PM EST
[ Parent ]
No, there was a totally separate subprime crisis which is still ongoing in the US and UK.

But, with the exception of a few French and German banks, it had essentially no impact on the EU. Except that it triggered the structural currency crisis in the EMU. But if the subprime crisis had not done that, then some other event would. All such bubbles eventually pop.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 01:35:29 PM EST
[ Parent ]
if the European banks had been left to go bankrupt, a lot of the claims they had on the periphery would have been cleansed in the bankruptcy process, and the imbalances would have been corrected, and the public sector would not have been blamed for the crisis.

Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri Nov 18th, 2011 at 02:32:37 PM EST
[ Parent ]
And that would have kicked the can down the road another ten years or so. Maybe. But it would not have changed the fact that currency pegs both subsidise and aggravate the negative consequences of wage suppression.

Now, I'd be perfectly happy with another ten years of happy days, at least on a purely personal level. But you can't run a 500 million people federation on that sort of Oil E. Coyote economics.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 04:15:12 PM EST
[ Parent ]
You could have done it for a loooong while, buying lots of time for evening out competitivness, if you had financed the periphery deficits not by issuing periphery credit to the core, but by selling periphery equity to the core.

How this should have been regulated in practice, I have no idea.

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

by Starvid on Fri Nov 18th, 2011 at 04:22:22 PM EST
[ Parent ]
If that equity went into creating new capital, yes. If it just allowed Southern oligarchs to cash out and skip town for Bahamas with the money... not so much.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 04:24:00 PM EST
[ Parent ]
I'm rather looking at the core gradually buying the large companies owned by periphery interests.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 04:29:12 PM EST
[ Parent ]
But that happened already in the first years after each country joined the EU.

Look at Volkswagen - it owns Seat, Skoda, Bugatti, and a bunch of other peripheral Euro brands.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 04:33:18 PM EST
[ Parent ]
It has happened to a certain degree, that's true. But not at all to as great a degree as could happen. Most large companies are listed, and I don't think there are that many major periphery corporations with a majority of their shareholders in the core.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 04:42:20 PM EST
[ Parent ]
No, because a bunch of them are now wholly owned subsidiaries and no longer listed. The ones that remain are, then, more likely to be majority periphery-owned.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 04:45:27 PM EST
[ Parent ]
If they're going to act as private equity firms and eventually drain the bought-out firms of capital, then what good does that do to the productive fabric of the peripheral economies?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 04:37:00 PM EST
[ Parent ]
I wasn't referring to the private equity business model, rather just ordinary share ownership.

Like so...

  1. BMW sells lots of cars to Spain, makes lots of money which accrues as dividends to the owners.

  2. Instead of sending the dividends to banks who lend them to Spanish BMW-buyers, they buy shares in Iberdrola from the BMW-buyers.


Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 04:46:44 PM EST
[ Parent ]
The way it works is like so:

VW buys Seat. It continues to sell Seat cars to Spaniards, but now the profit flows to Germany. Over time it moves production to other countries, lays off workers and closes plants. All along, it gets handouts from the Spanish government in exchange for keeping plants open and workers employed for a little longer.

They may buy shares in Iberdrola along the way, but that's incidental.

Come on, VW is a for-profit venture, not a charity, and it has no attachment whatsoever to Spain.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 04:50:14 PM EST
[ Parent ]
Indeed, but I can't see what has got to with anything. The crux is figuring out a way to recycle the core surplus, to finance the periphery deficit, without using loans. If a country wants to import more than it exports and avoid borrowing, it can sell assets instead. And that's my suggestion, except I have no idea how to regulate this. I suppose it would require some kind of limits on core bank lending to the periphery.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 04:53:43 PM EST
[ Parent ]
The crux is figuring out a way to recycle the core surplus, to finance the periphery deficit, without using loans.

You're expecting private firms to do it, that is, you're expecting the market to provide surplus recycling.

Also, you're imagining that buying equity in existing firms is investment. It's just a change of hands of ownership claims over existing assets. When your hypothetical BMW buys Iberdrola shares from Spanish BMW buyers, what do the BMW buyers do with the proceeds from the sale of their Iberdrola share sales? Apart from buying BMWs, they park their money in Luxembourg tax-dodging schemes taking advantage of the free movement of capital. Then, in order to stem the capital flight, the Spanish government creates Luxembourg-grade tax-dodging schemes under Spanish law accessible only to people with 2M euros or more.

You're not asking "why isn't BMW reinvesting their Spanish profits into new power plants in Spain?", because that appears patently absurd. No firm will do that. And that would be investment, not speculation.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 04:58:20 PM EST
[ Parent ]
The fact that it is a change of ownership and not new investment, is the very idea. If the money went to new investment in Spain, that would just mean German investment in Spain, which wouldn't help the BMW buyers finance their purchases. It is those who consume more than they earn who have to part with assets if they are to avoid loans (here symbolised by the BMW buyer). In this case, the actor who sells his Iberdrola shares need not himself buy the BMW, but might deposit the money in a Spanish bank who lends to bubbly property developers. Then you still have domestic bank problems, but the current account problem disappears somewhat, when the deficits caused by periphery imports are covered by asset sales to the core.

Exactly who and how the asset transfers operate within Spain is not very important (or it is important, but it's something Spain can handle itself with regulation, taxation etc), but the main point here is that the current account deficit is not covered by loaning money from abroad, but through selling assets to abroad actors.

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

by Starvid on Fri Nov 18th, 2011 at 05:10:11 PM EST
[ Parent ]
I think the point is that "Spain parting with assets due to its trade deficit" means that capital eventually leaves Spain because of (non-Ricardian) free movement of capital. So the Spanish economy loses capital intensity and therefore loses productivity. It is that feedback loop that needs to be arrested by new investment form the Core to the Periphery, and which the private sector is not going to undertake spontaneously.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 05:15:55 PM EST
[ Parent ]
That might very well be correct, but I still think it somewhat misses the point. Transfering ownership of already existing companies, doesn't change the capital intensity of the Spanish economy, it only changes who owns the Spanish companies.

Anyway, I'm not arguing the market can do this itself. Indeed, we saw that the market solution to funding the periphery current account deficits was a massive wave of loans. If we somehow could have stopped, reduced or regulated that lending (capital controls?), the only financing available would have been asset sales. This means that either assets would have been sold, or the current account deficit would have been forcibly closed as there would have been no money available to finance more imports than there were exports (plus whatever limited/regulated lending which would have been allowed).

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

by Starvid on Fri Nov 18th, 2011 at 05:24:52 PM EST
[ Parent ]
Either way you would have ended up with a recession in the periphery.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 05:28:31 PM EST
[ Parent ]
Only if there was no/limited lending or any sale of periphery assets.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 05:31:49 PM EST
[ Parent ]
The sale of periphery assets leads to profits which would otherwise have stayed in the periphery flowing out. This leads to recession.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 05:32:46 PM EST
[ Parent ]
Well, that is a fair point. But it would certainly not lead to an immediate problem as the transfer of ownership would be gradual, new companies would be created by local entrepeneurs, and consumption is not generally financed by dividends but by salaries anyway. Even if much corporate investment is financed by retained earnings, it's very unlikely that investments would move to the core just because ownership moved there. Telefonica will not move its focus from the Iberian peninsula and Latin America just because Commerzbank mutual funds (or whomever) buys 30 % of the total number of outstanding shares.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 05:43:32 PM EST
[ Parent ]
new companies would be created by local entrepeneurs

With what capital?

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 05:44:16 PM EST
[ Parent ]
Not all companies need massive amounts of capital, especially not in the start-up phase. When it needs to expand, it can do so through bank lending, rights issues, private placements, retained earnings among other things, and not all this capital needs to have a domestic source.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 05:49:33 PM EST
[ Parent ]
But all companies which produce industrial goods do. So unless you are advocating a core of industrial societies and a periphery of servant societies...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 06:20:23 PM EST
[ Parent ]
And as I said, above, there are many ways to access capital, not all domestic.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 06:33:12 PM EST
[ Parent ]
If the money went to new investment in Spain, that would just mean German investment in Spain, which wouldn't help the BMW buyers finance their purchases.

Eh, what?

I pay you for your stock in Vattenfall, and you use the proceeds to buy my train.

Or.

I pay you to build a new wind farm, and give me the money you'll get from selling the electricity. You then use the profits from building the wind farm to buy my train.

Which of these two would you think is the more sustainable?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 05:31:32 PM EST
[ Parent ]
Uh... just ignore that comment. I had the Chinese in Africa modus operandi in mind, ie use no local labour.

But anyway, the sustainability wasn't really my point here. With a current account deficit and a cap on foreign lending, you can obviously only finance the deficit as long as you still have any assets left to sell.

A further point is that you could of course eliminate your CA deficit by attracting FDI. But that can hardly be seen as a European task, according to the principle of subsidarity, but the job of the national government or the local authority.

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

by Starvid on Fri Nov 18th, 2011 at 05:43:41 PM EST
[ Parent ]
A further point is that you could of course eliminate your CA deficit by attracting FDI. But that can hardly be seen as a European task, according to the principle of subsidarity, but the job of the national government or the local authority.

Within one country the national government does this, because regions or towns cannot do it to the sufficient scale by themselves. If they could they wouldn't be deficit regions.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 05:50:24 PM EST
[ Parent ]
Krugman: US State Balances Of Payments
A number of readers have asked why the United States doesn't have internal problems with balance of payments imbalances comparable to those afflicting the euro zone.

...

Second, fiscal integration: booming states pay a lot in taxes, slumping states get a lot of automatic transfers.

...

What all this comes down to, of course, is that a common currency has a much better chance of working if you actually have a nation.

One of the ways the US achieves this is that a lot of government handouts to corporations involve requiring them to set up facilities in deficit states.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 05:55:13 PM EST
[ Parent ]
What all this comes down to, of course, is that a common currency has a much better chance of working if you actually have a nation.

Creating the euro to promote European identity and solidarity is dong it all backwards, and it became even worse with the democratic deficit, which is worse than any current account or budget deficit we have anywhere in Europe.

I'm not even sure if there enough solidarity for a Scandinavian currency union to work - that's already failed once.

Uh, here I'm sitting a late Friday night, debating CA deficits and FDI, when I should be out partying, the definition of a nerd. ;)

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

by Starvid on Fri Nov 18th, 2011 at 06:52:23 PM EST
[ Parent ]
It's the end of the world. I should be out partying like there's no tomorrow, because there actually isn't.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Sat Nov 19th, 2011 at 03:07:23 AM EST
[ Parent ]
Anybody done any work on money flow within a national economy?

Seems to me for a nation with a negative CA to seek FDI is only kicking the can down the road.  It does not solve the basic problem of internally generated wealth compounding, recycling, creating more internally generated wealth.

Under unusual conditions (Post WW 2 through 2008?) where the global economy is a Positive Sum Game¹ FDI can be of benefit by bringing a nation's economic infrastructure to the point of self-funding take-off.  

Under normal historic conditions ... I doubt it.  As an example is the Post-Civil War economy of the US where, IIRC, FDI from the British Empire, mostly, coincided with "The Long Depression" of 1872 to 1905.  
(Or thereabouts.)  

But I don't know that, thus the shout out.

¹  I include the potential for Mutualism, see Proudhon, Tucker, Kropotkin, Sorel, Lagardelle, Rocker, & etc., in Game Theory, especially "Tit-for-Tat With Forgiveness Strategy."  No longer current, enough, on Game Theory to know the State of Play within the field.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Nov 18th, 2011 at 06:17:26 PM EST
[ Parent ]
The trick to FDI is to make sure that you also transfer technical know-how, and that you either siphon off a bit of the cash flow every year or plan to reverse course suddenly and rob the foreign investors blind when you do so.

See, e.g., Korea for the former strategy, and China for the latter.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 06:24:22 PM EST
[ Parent ]
The "Great Western Expansion" of the US was funded by both methods!

Don't know if you've read Roughing It by Mark Twain so I shall elucidate, in the book he gives several 'strategies' Nevada mine owners used to mine their suckers investors.  Another rip-off, not mentioned in his book, was to promote "investments" in ranches, that didn't exist, upon which non-existent cattle didn't graze that were to be shipped to Chicago meat packing plants (which DID exist, amazingly) over non-existent railroads.

LOL

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Nov 18th, 2011 at 06:32:21 PM EST
[ Parent ]
While there are many pitfalls to FDI in South Korea and especially China, many if not all companies who have invested there have profited greatly from it. Maybe the European CA deficit countries should focus more on trying to compete outside Europe than inside it, where they are hamstrung by the euro.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 06:38:32 PM EST
[ Parent ]
That's no different than asking for all of the Eurozone to be a net exporter. If you have to assume there's a foreign economy to feed off in order for the Euro to be sustainable you've lost already.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 06:41:17 PM EST
[ Parent ]
That is indeed the Eurozone net exporter route. It would not be permanent though, but be yet another way to buy time to reform the internal eurozone CA balances (by increasing real wages in the core and depressing them in the periphery, preferably through inflation).

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 06:49:54 PM EST
[ Parent ]
Korea, certainly. That's the nice thing about technology transfer: It only makes you poorer relatively.

China... well, let's see how the chips fall when China reverses course. As it must, because the present course is not sustainable. Until then, all you have is funny-money.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 06:54:59 PM EST
[ Parent ]
But countries don't invest (mostly), they create conditions, and firms then invest. All manner of Yurpeen firms have attempted significant investment in the Asian markets, over decades, particularly in China. With success ratios which appear as scatter shot across the graph.

So there are already several decades of experience by the Yurpeen companies in going into those markets. i was going to give examples, like of a German company who made a fortune selling fiber spinning machines to China, then went bankrupt when the chinese stole the technology, then were reborn when the chinese realized the machines had to work 3 shifts over years.

but i can't because, in answered the phone this late, and...

of course, i'm not addressing the problem of peripheral countries actually having something to export, or whether that needs to be a particular focus of their attempt at resurgence. back to the call.

s
o
r
r
y.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Fri Nov 18th, 2011 at 07:15:06 PM EST
[ Parent ]
Anybody done any work on money flow within a national economy?

Wynne Godley, Randall Wray and Steve Keen, to name three. See this google search, especially Wray's Benzinga article: Who Saw it Coming? Wynne Godley, Fred Bethune's Pt. 1 and Pt. 2 of Introduction to Godley's work, And Steve Keen's Dynamic Monetary Multisectoral Model paper where he applies stock and flow analysis with a dynamic model consisting of a set of linear differential equations.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Nov 19th, 2011 at 10:18:14 PM EST
[ Parent ]
They do it here, in spite of Sweden being smaller population-wise than certain regions of the US or Eurozone.

Deficit regions within countries generally and eventually resolve themselves, due to labour mobility and fiscal transfers.

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

by Starvid on Fri Nov 18th, 2011 at 06:35:06 PM EST
[ Parent ]
Don't forget the fiscal transfers. Those are not subsidiarity.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 06:35:45 PM EST
[ Parent ]
I'm not sure I understand what you mean by that? Intra-national transfer payments can only be decided on a national level. Kansas cannot decide that California should transfer cash to Kansas, only Washington DC can do that. Hence, according to the principle of subsidarity, the decision of intra-national payments must be taken on the national level.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 06:47:42 PM EST
[ Parent ]
But when you respond to "regions or towns cannot do it to the sufficient scale by themselves" by saying "labour mobility and fiscal transfers," then you are conceding the point that towns and regions cannot do it to the sufficient scale by themselves.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 07:00:44 PM EST
[ Parent ]
They can do it and should it, but it can certainly not offset all problems.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 08:13:48 PM EST
[ Parent ]
The crux is figuring out a way to recycle the core surplus, to finance the periphery deficit, without using loans.

No, the crux of the matter is to find a way to recycle the surplus without setting up a positive feedback loop. Asset stripping fails more gracefully than vendor financing, true... but not all that much more gracefully.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 05:04:16 PM EST
[ Parent ]
If a country wants to import more than it exports and avoid borrowing, it can sell assets instead. And that's my suggestion, except I have no idea how to regulate this.

That is not a bad description of the way Wall Street pursued the deindustrialization of the USA. They bought up going manufacturing concerns, sold the capital equipment to a new company who shipped it to Mexico, etc. where it was used to manufacture the same goods cheaper for export to the USA to fill the same channels that the original company had used. They can lay off most, if not all, US employees, depending on whether they want to retain a Made in USA label, sell most, if not all, of the property formerly used by the company and either sell the intellectual property rights and brand names or lease them to others to operate. You can see what wonders this has done for the US economy and society, and this was done mostly by US financial companies. When your industry has become foreign owned your government cannot protect it even if it has the will to do so.

But eventually they run out of assets to strip. In the USA this was solved before it became a problem, first under Volker in the late '70s who raised interest rates to >20% to choke off inflation. But this also had the effect of attracting capital from all over the world to enjoy the astounding interest rates. Likewise, the Gulf states were convinced to send their oil export profits to Wall Street for investment and to avoid problems with the currency in which they were paid - aka recycling pertodollars. This led to dodgy loans to corrupt South American countries and then to the "Latin American Debt Crisis", which was resolved without losses to the investors, if at US public expense.

Then, when markets are used to sending capital to Wall Street and when Wall Street can generate outsized profits on that capital, those flows were used to finance the twin deficits of the federal budget and the trade deficit. That is the essence of Varofukas' analysis in The Global Minotaur.

This was aided by the USA de facto having the world's  reserve currency and by remorseless exploitation of that fact by the US Government and the Federal Reserve. The USA could print money and export inflation. As John Connally, LBJ's Sec. of Treasury, told the Europeans: "It is our currency but it is your problem." The USA also realized that foreign instability could increase capital inflows, as happened with the fall of the Shah in Iran. Huge amounts of wealth moved from Tehran to Los Angeles, neither for the first nor the last time.

Under Greenspan the Fed moved to creation of serial asset bubbles to generate profits in bull markets in stocks and real estate. Unfortunately, this may only work for the country that possesses the world reserve currency, although Germany's de facto control of the Euro and its status as the low cost manufacturing exporter in many markets has allowed it to benefit similarly, especially with respect to the Euro-Zone.

But such a tribute attracting Minotaur as the USA had until 2008 is not feasible for Spain or Italy. So they suffer wealth extraction and asset stripping by Germany and other creditor nations. Worse, the whole model by which the US scheme worked has stalled since 2008 and it appears that the weight of accumulated public and private debt, much of it fraudulent, will not allow a resumption of that process, certainly not until the rule of law is reestablished in the financial markets. Both writing down unpayable debt and reestablishing the rule of law will greatly harm those interests who currently own the federal government.

The environment in which EZ deficit countries are trying to resolve their difficulties is one in which the dominant economic power, the USA is stumbling and, IMO, about to go into a debt deflation death spiral, Europe, the second largest economic area, is paralyzed with a deeply flawed constitution and also likely entering a deflationary spiral, and China is experiencing twin bubbles in real estate and stocks along with inflation and looks to be headed to a hard landing.

Perhaps the best strategy for the citizens and the government of any country is to hand on to what they have, stall off creditors and slow roll concessions to creditors as best they can and deliberately provoke default rather than surrender sovereignty. Then they can wait until the dust settles and see how many of their creditors and governing institutions are still standing. Meanwhile, adopt the attitude: "It may be our debt but it is your problem." What is good for the goose is good for the gander.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Nov 19th, 2011 at 08:47:30 PM EST
[ Parent ]
I think you're looking at this the wrong way, as if the only actors able to buy shares are industrial actors, ie VW buying other car companies. But consider instead the shareholders of VW, who certainly aren't car manufacturers, but rather things like mutual funds, insurance companies and individual investors.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 04:56:24 PM EST
[ Parent ]
You continue to confuse speculation with investment.

Buying Iberdrola shares is speculation. Building a power plant is investment. No pension fund is going to do the latter over the former.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 04:59:25 PM EST
[ Parent ]
But the important thing here is not investment, but transfer of ownership of assets.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 05:10:53 PM EST
[ Parent ]
Let's merge this thread with the parallel one at this point.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 05:17:11 PM EST
[ Parent ]
Buying shares on the secondary markets does nothing for a firm's Cash Position.  All it does is re-divvy up who owns how many staterooms on the Titanic.  

A firm has to issue (sell) new stock or re-issue treasury stock to investors to receive funds.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Nov 18th, 2011 at 06:23:56 PM EST
[ Parent ]
Indeed, but we aren't really discussing a firms internal cash position, but rather the national current account deficit, and how it can be financed. ;p

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 06:54:01 PM EST
[ Parent ]
  1. The current account deficit is a symptom.

  2. We're also discussing the countrt's internal cash position as if it were a firm's.


To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Sat Nov 19th, 2011 at 03:08:19 AM EST
[ Parent ]
That's still a positive feedback loop on CA imbalances.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 04:44:28 PM EST
[ Parent ]
Yeah.

Germany is having a Positive Feedback Loop in the Positive Direction while the periphery experiences a Positive Feedback Loop in the Negative Direction.

The idiots have managed to make it a Zero Sum Game.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Nov 18th, 2011 at 04:50:45 PM EST
[ Parent ]
In the final analysis what's needed is not to dismantle inefficient industries but to recognize that inefficient industries are actually underinvested or undercapitalised industries and that by investing in new productive capital their productivity can be improved.

But that, of course, would undermine the incumbents so it's not done.

It's much better to organise the Eurozone as a giant vendor-finance scam.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 04:25:05 PM EST
[ Parent ]
Speaking of the vendor finance perspective, I think it's important to remember the financing and the selling is not done by the same actors, ie, it's not BMW that lends cash to its own customers. There are financial intermediaries at work, and I think that if you forget that, too large a piece of the blame falls on certain people, eg the German export sector, and too little blame falls on certain other people, eg those who borrow far too much money to buy eg BMW's.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Nov 18th, 2011 at 04:32:22 PM EST
[ Parent ]
I don't forget that. The point of the vendor finance analogy is that if export subsidies are done by the government they're illegal state aid but if they're organised as private sector vendor finance with the government then bringing all its diplomatic clout to bear when the bubble pops, it's just the market at work, and thrift and virtue and entrepreneurship.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 04:35:27 PM EST
[ Parent ]
Oil E. Coyote economics is only one of the disconnects to Reality of Neo-Classical Economics.  If a Economic theory doesn't take Feedback Loops into account they're off analyzing some Other Economic Activity, in some Other Universe.  Coupled with an Invisible Hand, the Magic Confidence Fairy, and other imaginary entities and processes ...

And you're off in Cloud CuckooLand.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Nov 18th, 2011 at 04:28:14 PM EST
[ Parent ]
...Economic theory doesn't take Feedback Loops into account...

Nor does it explicitly take into account debt levels or endogenous money creation - or lack thereof.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Nov 19th, 2011 at 08:55:15 PM EST
[ Parent ]
" No, there was a totally separate subprime crisis which is still ongoing in the US and UK.

 But, with the exception of a few French and German banks, it had essentially no impact on the EU."

That is not the year 2008 I remember. Totally separate was a delusion first in US 2007 and 2008, then in the rest of world in 2008. It was wrong and a world-wide financial crisis was triggered by sub-prime.  That you still cling to this delusion is rather surprising. So nothing happened in Europe between spring 2008 (Bear Stearns) and autumn 2009 (Greece)? Nonsense.

by IM on Sat Nov 19th, 2011 at 12:12:45 PM EST
[ Parent ]
The hysterical children on the money markets panicked in 2008, which exposed the fundamental weakness of the Eurozone.

But the hysterical children on the money markets panic every once in a while - that is in the nature of things. If you do not build your institutional structure so that it can survive a hissy fit by the hysterical children, then you are setting yourself up for a crisis. These continued attempts to blame an incidental crisis for the fundamental flaws of the Eurozone are tiresome. It is akin to blaming the man who lights a match for the explosion caused by installing a faulty gas line. If it had not been him, then it would have been something or someone else.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 19th, 2011 at 01:59:26 PM EST
[ Parent ]
for crisis management in Germany is not an early election, but a Grand Coalition between the CDU and the SPD, with the current parliament.

No FDP, no CSU. No Greens or Linke (clean hands!)

She is "pragmatic" enough to actually do what needs to be done, after having eliminated all the other options. She just needs to get rid of all those people who have principles which run counter to reality.

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

by eurogreen on Fri Nov 18th, 2011 at 09:13:43 AM EST
[ Parent ]
The trouble with a grand coalition is that "crisis management" (referring to the Oyhro crisis) is not the only crisis at the front of the table. There are serious issues which old guard politicos can't really handle at all.

My version is the Greens are somehow forced to wake up, as in DC-B and Giegold, and bake up a Green Auflauf with spices from Die Linke and Die Piraten, on a base of progressive economics. They haven't shown they are capable of such vision yet.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Fri Nov 18th, 2011 at 09:43:06 AM EST
[ Parent ]
"My version is the Greens are somehow forced to wake up, as in DC-B and Giegold"

Let me express it in this way: Cohn-Bendit and Giegold are not exiled to the EP because they are so powerful. Is Cohn-Bendit even a german green nowadays?

by IM on Fri Nov 18th, 2011 at 09:48:56 AM EST
[ Parent ]
But if those two engender grass roots support among Yurpeen green-leaners, or even party members, those in power would be more likely to accept those economic policies. And perhaps some of the Greens in power have already noticed?

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Fri Nov 18th, 2011 at 11:01:47 AM EST
[ Parent ]
Deserves a 10 and I am limited to a 4.

Bottom Line: you can't fight something with nothing and nothing is what the Center Left has.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Nov 18th, 2011 at 03:11:03 PM EST
[ Parent ]
The SPD is a prime example of the Third Way or pensée unique which is one of the key elements of Crazy Horse's what happened before i got here, and how the EU became a neo-lib structure.

See Yanis Varoufakis' grim assessment of Europe's Social Democratic Parties

He calls them one of the most toxic elements of the current crisis because of their constant betrayal, while in power, of the rhetoric they use in opposition and when campaigning among their base.

To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis

by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 08:15:48 AM EST
[ Parent ]
  1. Yes

  2. Yes. Could be a great coalition though.

  3. I don't know.
by IM on Fri Nov 18th, 2011 at 08:57:46 AM EST
[ Parent ]
  1. Institutionally, yes. Personally not, if it would enable her to hold onto power.

  2. Probably, as things stand right now.

  3. Not if Steinbrück is candidate. Sigmar Gabriel is making rumblings, and one can expect somewhat more sense from him.


The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Fri Nov 18th, 2011 at 09:14:30 AM EST
[ Parent ]
The SPD politics is so old-school that the younger
electorate will not give their votes to them.

After Berlin (SPD-CDU), the game can be played like this:

  • CSU seperates from CDU for a german-wide relativly-right-wing party with social sensibility, with a potential of 10-11%, collecting the national-liberals from the FDP.
  • CDU moves to the center, adopting some SPD positions. This will keep them around 30% of the votes.
  • Elections are called, in June 2012 for September 2012 (due to some european reasons, probably)
  • FDP will be out by that time
  • SPD will try to be Serious People and will loose big (below 20%)
  • CDU can then select from greens or SPD for a coalition, neither of them will be called a "great coalition" with a bit over 50%
  • And the CDU will be the king-maker for quite a few years to come, until people realize that green politics has very good reasons.

    Note that the german Linke does not come into play in all this. They are too weak and miss structure.


    One year to go !

    by pi (etrib@opsec.eu) on Fri Nov 18th, 2011 at 04:10:38 PM EST
    [ Parent ]
    Plus Die Linke are still considered 'dirty' by large swathes of the SPD and Greens.

    To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
    by Migeru (migeru at eurotrib dot com) on Fri Nov 18th, 2011 at 04:13:39 PM EST
    [ Parent ]
    Given that the SPD has been moving to the centre for so long that they have come out the other side - without gaining votes - why should the CDU gain votes in return for moving to the centre - especially if they are held responsible for the near destruction of the EU?

    Index of Frank's Diaries
    by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Nov 18th, 2011 at 04:53:41 PM EST
    [ Parent ]


    Friends come and go. Enemies accumulate.
    by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 05:17:11 PM EST
    [ Parent ]
    >CSU seperates from CDU for a german-wide relativly-right-wing party with social sensibility, with a potential of 10-11%, collecting the national-liberals from the FDP.>

    That has been tried and instantly shelved back then the CSU was in a much better position. The CSU is hradly in a condition to try this.

    "CDU moves to the center, adopting some SPD positions. This will keep them around 30% of the votes."

    Without the CSU? They do move to the center, that much is true.

    "Elections are called, in June 2012 for September 2012 (due to some european reasons, probably)"

    We will speak again June  2012 then. I don't think so.

    by IM on Sat Nov 19th, 2011 at 12:03:59 PM EST
    [ Parent ]
    I don't believe either that the CSU can play this role, but I expect an attempt to found an ultra-right party of Islamophobes and Atlanticists. Guttenberg, Sarrazin, Broder, Stadtkewitz, Sarrazin are the obvious suspects.
    So far CDU/CSU have been able to prevent that. I doubt that this is still true. Merkel had to modernise the CDU in order to get some young voters. We will see how many people she left behind, if it is enough for a new ultra-right party.
    by Katrin on Sat Nov 19th, 2011 at 12:34:45 PM EST
    [ Parent ]
    Sarrazin twice?

    To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
    by Migeru (migeru at eurotrib dot com) on Sat Nov 19th, 2011 at 03:49:50 PM EST
    [ Parent ]
    He isn't double as evil as the rest of the lot. Just a mistake of mine.
    by Katrin on Sat Nov 19th, 2011 at 03:57:11 PM EST
    [ Parent ]
    Aznar left behind a splinter party in 1996. They quickly became marginal and have been forgotten.

    To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
    by Migeru (migeru at eurotrib dot com) on Sat Nov 19th, 2011 at 03:50:43 PM EST
    [ Parent ]
    We have seen attempts at an ultra-right party on the state-level before and they have always ended in the same way: it died a splinter party. On the federal level they never even grew. This time it might be different, because Merkel has moved the CDU very far away from the social conservativism of only 10 years ago, and now the Euro and the lazy-Greeks-campaign... Scary.
    by Katrin on Sat Nov 19th, 2011 at 04:04:04 PM EST
    [ Parent ]
    Why are we still talking about fear of hyperinflation? It's a canard. If anyone took it seriously, we'd be looking not only at ethics and morality in financial history, but ethics and morality in may realms of human activity.

    The canard covers over current motivations and self-interest.

    by Upstate NY on Fri Nov 18th, 2011 at 11:11:37 AM EST
    The ticking time bomb at the ECB

    I am reminded of the line from Kafka's The Castle, "We have very clever lawyers here, capable of taking nothing and turning it into whatever you like."

    Now the ECB faces its own moment of choice, where sticking to its principles will lead to terrible consequences. If the ECB reverses course, it admits its mistakes to the world and confesses its members to have been incompetent ideologues. If it does not reverse course, it makes itself obsolete by presiding over the break-up over the euro zone.

    So it's just a matter of whether (but ideally, when) the Bank takes the plunge and credibly intervenes, dropping its silly claim to virgin purity. The Bank's daily activities in the bond markets are the clearest indicator that it can find a justification for going all the way - the Bundesbankers already having resigned in appreciation of this slippery slope. The ECB has its own clever lawyers. Time for them to swallow their pride and put an end to the turmoil in the bond markets.



    '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 Fri Nov 18th, 2011 at 11:24:17 AM EST
    [ Parent ]
    Well, why is there ever hyperinflation in the first place? Because of politicians doing something that might help them get re-elected. Which is exactly what is going on right now in a bunch of other spheres also...
    by asdf on Fri Nov 18th, 2011 at 02:03:04 PM EST
    [ Parent ]
    Because someone tries to pay debts in foreign currency by printing domestic currency.
    by Katrin on Sat Nov 19th, 2011 at 04:07:48 PM EST
    [ Parent ]

    Due to the brilliance of our central bankers and their political enablers almost none of the unsustainable debt has been written down. We cannot move forward until it is. But the debt belongs to those who own the existing political system.

    "It is not necessary to have hope in order to persevere."
    by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Nov 18th, 2011 at 02:08:37 PM EST
    Of course that's only half true.

    Central bankers can't abolish the business cycle. But fiscal policy can.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 18th, 2011 at 02:14:10 PM EST
    [ Parent ]
    Central bankers can't abolish the business cycle.

    Neither can they save fools from their folly, but that does not stop them from trying. By trying they ARE succeeding in facilitating the transfer of the costs of that folly from the fools whose folly it was to the naive public, most of whom were previously victimized by these same wealthy fools on the top side of Reggie's wheel. Functionally, it seems, it is neither sociopathic nor criminal if it is done on behalf of an elite.

    "It is not necessary to have hope in order to persevere."
    by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Nov 18th, 2011 at 02:52:19 PM EST
    [ Parent ]
    Given the recent elections can it be concluded they are a spent force in German politics?

    She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
    by ATinNM on Fri Nov 18th, 2011 at 03:13:25 PM EST
    "Force" somehow isn't the word. FDP is short for Fast Drei Prozent (almost three percent), by the way, and... It's even become boring to bash that dead party.
    by Katrin on Fri Nov 18th, 2011 at 03:35:34 PM EST
    [ Parent ]
    They were able to exert a stronger influence over Federal governing and policy, in alliance with the Christian Democrats, than their punk-assed numbers should have allowed.  Thus, "force."

    Tho' I admit the wording could have been better.

    She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

    by ATinNM on Fri Nov 18th, 2011 at 04:18:23 PM EST
    [ Parent ]
    With $2.5 trillion in Federal reserve asset purchases, a $1T stimulus ....

    Our watered down response seems positively brilliant.

    I'll also note that the US government has been far less worried about the tender sensibilities of bond investors. In the EU,Bill Gross would be setting policy instead of whining.

    by rootless2 on Fri Nov 18th, 2011 at 03:32:11 PM EST
    Bill Gros IS setting policy in Europe. Bondholders is the one category whose interests have been protected throughout this sorry crisis.

    Wind power
    by Jerome a Paris (etg@eurotrib.com) on Sat Nov 19th, 2011 at 04:14:42 AM EST
    [ Parent ]
    But the "orthodox" left wing opinion is that the Obama administration is a craven servant of the financial class.
    by rootless2 on Sat Nov 19th, 2011 at 01:27:12 PM EST
    [ Parent ]
    That the EU is living through shock doctrine does not absolve the Obama government, IMO.

    It is like comparing the economic policies of Pinochet to anyone ruling at the same time, the latter will look good.

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

    by A swedish kind of death on Sat Nov 19th, 2011 at 03:09:37 PM EST
    [ Parent ]
    Well, for me one of the truly stupid things about the modern "left" is an unwillingness or inability to distinguish between Pinochet and Allende - who was after all a moderate social democrat.

    If you can't tell the difference, your hysteria meter is stuck on 11 and you are unable to negotiate any wins at all. Basically, a refusal to distinguish between Allende and Pinochet is a political advantage for Pinochet.

    by rootless2 on Sat Nov 19th, 2011 at 03:27:09 PM EST
    [ Parent ]
    There is not, sadly, any politician in The WestTM in this day with half the social democratic credentials of Allende.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 19th, 2011 at 03:38:58 PM EST
    [ Parent ]
    Whether that is correct or not, the utter strategic failure of not being able to tell the difference has continuing terrible consequences.
    by rootless2 on Sat Nov 19th, 2011 at 03:47:07 PM EST
    [ Parent ]
    There is a different in attitude, but not when it matters.

    To err is of course human. But to mess things up spectacularly, we need an elite — Yanis Varoufakis
    by Migeru (migeru at eurotrib dot com) on Sat Nov 19th, 2011 at 03:48:54 PM EST
    [ Parent ]
    The utter strategic failure is on the part of centrists who believe that they can serve the left one shit sandwich after another and count on the left to behave "responsibly" and "not split the vote."

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 19th, 2011 at 03:58:42 PM EST
    [ Parent ]
    Sorry, but that's a gross misreading of what is happening. By effectually allying with the right against any social democratic government instead of attempting to build political strength, the "left" acts as a kind of vaccine against any actual political change and a lock on the door to political power.

    You see the results in Spain and Portugal where weak SD governments, facing no pressure from the left - just attacks - give way to right wing governments.

    As a great example, in NYC, Boomberg, the candidate of  Wall Street beat a candidate endorsed by the Working Families party due to the fundamental disinterest of the "left" in local government. The result has national and even global implications.

    by rootless2 on Sat Nov 19th, 2011 at 04:05:26 PM EST
    [ Parent ]
    What social democratic governments are you talking about in Spain and Portugal? I sure as Hell don't see any.

    You will notice that the Spanish government decided to pass its far-right policies with... the far right. Instead of using its majority with the left-wing parties to impose left-wing policies.

    So who's in alliance with who here?

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 19th, 2011 at 04:09:13 PM EST
    [ Parent ]
    I think your error here is compounding the inability to distinguish Pinochet from Allende with an inability to at all understand how politicians are motivated. First of all, the shameful capitulation of the Spanish government is not "far right". Far right is when the police are sticking ice-picks under knee-caps of union organizers on a regular basis. Spain had a far right government within living memory, so histrionics seems wildly inappropriate. Second, since everyone expects the weak SD government to fall to a right wing government, there is no motivation for SD politicians to put themselves out on a limb.  Do you want to play the game or write fantasy rule books from the spectator seats?
    by rootless2 on Sat Nov 19th, 2011 at 04:21:59 PM EST
    [ Parent ]
    rootless2:
    your error here is compounding the inability to distinguish Pinochet from Allende

    So you are saying Jake S cannot distinguish between Pinochet and Allende. That is not established and is, of course, an ad hominem of a pretty rank order.

    by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 19th, 2011 at 04:23:51 PM EST
    [ Parent ]
    Sorry, that's not ad hominem. I am responding to his argument in which the lame actions of the Social Democrats in Spain are called "far right". When the Far Right took power in Spain, the nation was filled with secret mass graves.  If you are going to make political arguments in which stupid economic policies are equated to mass torture and murder, you might expect people to question your judgment.
    by rootless2 on Sat Nov 19th, 2011 at 04:28:40 PM EST
    [ Parent ]
    You're cute, but yes it is far-right. Or perhaps you missed the very instructive demonstration that Greece has provided of how that capitulation is going to be enforced?

    You're also saying "oh, you have to support the Party, or it will have to surrender because it's falling anyway and doesn't want "to go out on a limb."" This is firstly a completely misconstrual of actual Spanish politics for the past year and a half - the betrayal came first; weakness followed. It is, secondly, facile apologia for a party that had a left-wing majority in parliament and refused to use it, deciding instead to ally with the right and shovel a destructive piece of shit reform package down the throats of a public that is overwhelmingly opposed to it.

    If Zapatero and his government had told the Troika to fuck off and die, and just unilaterally defaulted on all government bonds the second he saw what happened to Greece and Ireland when they played ball, then he would have been riding into this election on an unprecedented wave of popular support.

    But he decided to cave, and now he's paying for that. I fail to see how that's anybody's fault but the fucking quislings who prefer to cut deals with the right to dirtying their hands by cutting deals with the communists.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 19th, 2011 at 04:37:51 PM EST
    [ Parent ]
    I don't say you have to do anything at all. I say that if your political analysis cannot distinguish between Falange machine gunning people into mass graves and weak kneed social democrats giving in to bond vigilantes your methods of analysis are junk

    And if you think that "omg the SD have betrayed us AGAIN" is a fresh insight, I have to inform you that this is how it works. If you rely on people like Zapatero and cannot produce any political force that pushes him to "the left", then you have failed - he didn't fail. The center left is EXPECTED to cave to the right if it does not have strong push from the left. And strong push is not "a few people screaming".

    by rootless2 on Sat Nov 19th, 2011 at 08:10:45 PM EST
    [ Parent ]
    Now why are social democrats - carrying on a straight line inheritance from Marx and Engels, built up by unions - supposed to cave to the right?

    Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
    by A swedish kind of death on Sun Nov 20th, 2011 at 08:21:03 AM EST
    [ Parent ]
    for a kind of petulant anti-politics that eschews political power and the ugly compromise that any participation in governance entails in favor of self-pity and consumer economy spectacle.
    by rootless2 on Sat Nov 19th, 2011 at 04:08:05 PM EST
    [ Parent ]
    If you were paid to write that kind of sentence, someone would be wasting their money.
    by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 19th, 2011 at 04:11:53 PM EST
    [ Parent ]
    That's a textbook ad hominem argument, indicating perhaps you have no actual counter.
    by rootless2 on Sat Nov 19th, 2011 at 04:18:04 PM EST
    [ Parent ]
    It's not even textbook, I'm calling you out. You can't express a reasonable, clear argument without overloaded rhetoric and, my word, non-stop ad hominems against those you call "the left".
    by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 19th, 2011 at 04:22:03 PM EST
    [ Parent ]
    You are not calling anyone out, you are slandering my motivations because you apparently cannot respond otherwise. Weak does not begin to describe it. Here we are in 2011, the EU left can't even fucking defend milktoast Keynsianism and it's, of course, all the failure of people to appreciate the pure motives and brilliant political diagnosis of a political faction that keeps failing.
    by rootless2 on Sat Nov 19th, 2011 at 04:25:40 PM EST
    [ Parent ]
    I didn't mention your motivations - I haven't a clue what they are.
    by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 19th, 2011 at 04:29:38 PM EST
    [ Parent ]
    of course you didn't - you just insinuated someone was paying me.

    Why would I take offense?

    by rootless2 on Sat Nov 19th, 2011 at 04:34:39 PM EST
    [ Parent ]
    I used the conditional. But on a good many places you'd be given the bum's rush for the amount of deliberate provocation you've posted here over a couple of days. And personally, no, I don't get your motives at all.
    by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 19th, 2011 at 04:38:13 PM EST
    [ Parent ]
    I find the tendency of "leftists" to take affront at anything which challenges their self-assessment as brilliant and principled opponents of power, somehow mysteriously crippled by the criticism of neoliberals - silly.
    by rootless2 on Sat Nov 19th, 2011 at 08:14:40 PM EST
    [ Parent ]
    rootless2:
    the EU left can't even fucking defend milktoast Keynsianism

    The EU "left" that is responsible for abandoning Keynes and lining up with neoliberalism goes by the names of Blair, Brown, Schröder, Gonzalez, Zapatero, Steinbrück...

    by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 19th, 2011 at 04:57:12 PM EST
    [ Parent ]
    I'm afraid not. Those people are centrists and social democrats. My complaint is that the people who call themselves "left" and have nothing but contempt for the weak social democrats don't seem to be able to DO anything or generate any popular following.
    by rootless2 on Sat Nov 19th, 2011 at 08:06:24 PM EST
    [ Parent ]
    Then you have not been paying attention.

    You have Die Linke in Germany. You have an actual honest-to-God left-wing party in Denmark which doubled or trebled its vote relative to the last two elections (and another reasonably left-wing party which could credibly overtake the nominally social democratic party). Norway was less a success - their left-wing party was emasculated by the social democrats when it got too big for their liking, but hey you can't win every time. The Greek left has doubled in size.

    You had an actual popular revolution in Iceland which replaced the entire compromised political class and pushed through a constitutional revision (using those "general assemblies" and "sit-ins" you so despise, though I will grant that circumstances where special).

    So yeah, the left that trebles in size every two elections does nothing but bitch without gaining traction. Obviously.

    Incidentally, you'll notice the strong correlation here: Countries with first past the post faux-democracy manage to keep their left wing parties marginal and irrelevant... so far. Countries with parliamentary democracy don't. Unless you wish to postulate particular cultural pathologies of certain left wing parties, which precisely correlate with certain constitutional structures, I think you would be better served by looking at the institutional impediments to effective opposition than pretending that it is some personal moral failure on part of the left.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Nov 20th, 2011 at 05:40:41 AM EST
    [ Parent ]
    De Linke and German Greens - and starting recently French Greens are quite interesting. The difference between them and the US/UK left is not in the first-past-post system but in their commitment to winning local elections and building a real organization. Especially in the US, the "left" has zero municipal or state legislative involvement and remains a movement of disaffected metropolitan elites. One can see this "left" in action in NYC at OWS where they are very insistent on vague grand statements about capitalism, but have no concrete proposals (because, of course, politics is such a game of compromise) and no involvement in local electoral and labor or other economic issues.  New York state actually has a real somewhat left wing party called the Working Families party. The WFP/Democratic candidate against Bloomberg lost in 2009 - with historically low turnouts.  The OWS "left" has not been interested in such trivia. Obviously the unfolding of OWS and of US national politics over the last 2 years would have been very different with an active left mayor in NYC as opposed to a socially liberal finance Republican. During the New Deal, the involvement of Fiorello Laguardia in national politics had a huge impact on the Roosevelt administration.

    However, the fact is that De Linke is 12%.

    I wonder why you claim I despise sit-ins? Well, actually, I do not wonder. I know that your analysis is that I must be a centrist neoliberal opponent of popular movements - as with anyone who does not applaud "left" strategies that have worldwide put the right wing in power.

    by rootless2 on Sun Nov 20th, 2011 at 06:28:03 AM EST
    [ Parent ]
    You are always going on about the uselessness of usual left wing tactics. Seems reasonable to infer that you despise sit-ins.

    Also from where I sit the biggest danger for potential left wing movements in the US seems to be the hug of death by the democratic party. They more or less managed to turn the anti war movement into a hammer to bash Republicans over the head with. While keeping the wars of course.

    by generic on Sun Nov 20th, 2011 at 07:32:02 AM EST
    [ Parent ]
    That's textbook troll rhetoric.

    If you have a coherent point to make - I doubt it, but let's see - pull it together into a diary and we'll have at it.

    If you're just here to generate noisy destructo-wannabe rhetoric about 'the left' - whatever that is, according to your definition - you may find your efforts will get more traction on other sites.

    by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Nov 19th, 2011 at 04:25:10 PM EST
    [ Parent ]
    I have no problem with ugly compromise.

    I have a problem with compromise beyond what is absolutely and irrefutably necessary.

    In short, when you have 50 % + 1 seat in parliament by allying with the communists, and you prefer to ally with the "centre"right, then you're not on the left.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 19th, 2011 at 04:11:57 PM EST
    [ Parent ]
    But of course that is what the center left does.  I don't understand the appeal of a political program based on bitching ineffectually about the way politics works. What one would expect is that a center left government would be used as a space in which to expand unions, coops, local parties and political influence instead of as an excuse for complaining.
    by rootless2 on Sat Nov 19th, 2011 at 04:17:30 PM EST
    [ Parent ]
    Under that definition of a centre-left government, Europe has not had a single centre-left government for twenty years. So that would be sort of moot.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 19th, 2011 at 04:26:24 PM EST
    [ Parent ]
    about ten years ago. And yup, the PC was indeed a respected coalition partner.

    The Hun is always either at your throat or at your feet. Winston Churchill
    by r------ on Sat Nov 19th, 2011 at 04:31:47 PM EST
    [ Parent ]
    Yes, I remember that - the Communist Party at that point was a solid supporter of the defense and nuclear industry and of the partnership between big industry and centralized unions. Of course they were welcomed into coalition.

    More to relevant is the nervousness of SPD in coalitions with Greens.

    by rootless2 on Sat Nov 19th, 2011 at 04:37:05 PM EST
    [ Parent ]
    I see you leave out Die Linke?

    Forgetful, or are they simply inconvenient to your narrative that there is no alternative to supporting sell-outs with compulsive centrist disorder?

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 19th, 2011 at 04:44:35 PM EST
    [ Parent ]
    and assume they don't know who Die Linke is, else they would have known how repulsed the SPD is from the real left, thereby belying the SPD's actual claim to be social democrats.

    The Hun is always either at your throat or at your feet. Winston Churchill
    by r------ on Sat Nov 19th, 2011 at 04:55:20 PM EST
    [ Parent ]
    But that's exactly what I said. I don't know how anyone could be surprised when a SD party chooses to ally with the right rather than a left party
    by rootless2 on Sat Nov 19th, 2011 at 07:27:16 PM EST
    [ Parent ]
    You seem to be transposing US-centric political phobias onto the EU and related issues.

    Suggest you learn a bit more about what you are attempting to talk about.

    The Hun is always either at your throat or at your feet. Winston Churchill

    by r------ on Sun Nov 20th, 2011 at 06:57:50 AM EST
    [ Parent ]
    De linke proves my point.
    by rootless2 on Sat Nov 19th, 2011 at 06:30:56 PM EST
    [ Parent ]
    Which is that if you don't support the sell-outs, they'll start selling you down the river instead of up it?

    Yeah, I'll take Die Linke over SPD in that case, thankyouverymuch.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 19th, 2011 at 07:41:14 PM EST
    [ Parent ]
    The point is that if you think its  unexpected when a center left SD party gives in to right wing pressure, you are dismissing 100 years of history. Even Allende, who you think was so great lost his nerve and would not hand out weapons to the public as the right wing coup was starting.

    The problem with the left is that they think denouncing is a positive action.  If your political methods result only in failure, something is wrong with them.

    by rootless2 on Sat Nov 19th, 2011 at 08:04:22 PM EST
    [ Parent ]
    I don't think it's unexpected, in this day and age.

    I do think it's a reason not to support them.

    The problem with the left is that they think denouncing is a positive action.

    There is nothing wrong with denouncing backstabbing bastards. It does not a viable parliamentary party make on its own, but then no action on its own makes a viable parliamentary party. So if your criticism essentially boils down to "you must support the quislings until you have a fully viable parliamentary alternative," then you're full of shit. If you don't break with the quislings, you'll never have a fully viable parliamentary alternative.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Nov 20th, 2011 at 05:23:01 AM EST
    [ Parent ]
    There is nothing wrong with denouncing backstabbing bastards.

    Of course there is something wrong with it. "Denouncing" is the politics of powerless carping. Nobody builds political power by explaining that they have been betrayed AGAIN. The "left" spends all its energy explaining to the public that (a) it keeps putting trust in people who screw it over and (b) it is powerless and angry and is then surprised by the failure of the public to rally around in support.

    by rootless2 on Sun Nov 20th, 2011 at 06:31:37 AM EST
    [ Parent ]
    Yeah, yeah, you keep telling yourself that.

    The simple fact is that sellouts lose votes. If those votes don't have a non-sellout party to go to, they'll go to the sofa party. That's the lesson of the last thirty years of European political history.

    Whining that the left's lack of support for the sellouts cause them to lose votes is just that: Whining. Not reality-based analysis.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Nov 20th, 2011 at 07:28:11 AM EST
    [ Parent ]
    The "left" contributes to this phenomenon by championing the strategy of sulking instead of organizing for power.
    by rootless2 on Sun Nov 20th, 2011 at 08:07:35 AM EST
    [ Parent ]
    Tell that to someone who isn't organising for power.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Nov 20th, 2011 at 10:16:42 AM EST
    [ Parent ]
    I can't for the life of me see the problem with supporting the defence and nuclear industries and promoting partnership between big industry and centralised unions. But then I'm from Sweden, where that has been the order of the day for the last 70+ years or so.

    Peak oil is not an energy crisis. It is a liquid fuel crisis.
    by Starvid on Sat Nov 19th, 2011 at 05:30:51 PM EST
    [ Parent ]
    Right - until the voters threw out the Social Democrats.
    by rootless2 on Sat Nov 19th, 2011 at 07:49:55 PM EST
    [ Parent ]
    Yes, since that happened, support for the defence and nuclear industries haven't been as solid as before.

    Peak oil is not an energy crisis. It is a liquid fuel crisis.
    by Starvid on Sat Nov 19th, 2011 at 11:02:14 PM EST
    [ Parent ]
    No, that's what one would expect a left government to do.

    In fact, there is currently no such left as 'center-left'.

    by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Nov 19th, 2011 at 04:28:47 PM EST
    [ Parent ]
    Who is this straw man on the left, who conflates Pinochet and Allende?

    Name me one person on the left who holds such a position.


    The Hun is always either at your throat or at your feet. Winston Churchill

    by r------ on Sat Nov 19th, 2011 at 04:05:25 PM EST
    [ Parent ]
    I'm responding to the argument that claims a weak social democratic party is essentially far right.
    by rootless2 on Sat Nov 19th, 2011 at 07:50:45 PM EST
    [ Parent ]
    Uh, no.

    You're responding to the argument that the economic policy being pushed by said social democrats (in name only) is far-right.

    There's a reason Allende was toppled. Here's a hint: It wasn't because he was pushing IMF-style austerity.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 19th, 2011 at 07:52:59 PM EST
    [ Parent ]
    Allende was overthrown because the US wanted to maintain a seamless net of military dictatorships and because, like all social democrats, when push came to shove, he would not open the armories.

    Is this news?

    by rootless2 on Sat Nov 19th, 2011 at 10:19:43 PM EST
    [ Parent ]
    If Allende had caved in the amount that Zapatero has caved - that is, to the extent that there is no difference at all between his economic policy and that of Pinochet, then I very much doubt that the US would have cared whether Chile had elections or not.

    You don't seem to grasp that ZP's economic policy is substantially and materially to the right of Pinochet's. That it may be possible to force through this policy without dumping people from planes over the Atlantic does not make it any less an extremist agenda. It is not even obvious that the body count will be lower when all is said and done.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Nov 20th, 2011 at 05:28:53 AM EST
    [ Parent ]
    Whatever Allende did, in the end, Kissinger and Pinochet would have killed him. There was no room for a democratic government in Nixon's Latin America. And let's note that Nixon was an early success for the "denouncing" left that sat out the 1968 election because Humphrey was such a weak, cowardly etc. compromise.

    The historic failure of the Western left is a failure to either enthusiastically oppose right wing governments or build power during the tenure of moderate governments.

    by rootless2 on Sun Nov 20th, 2011 at 06:35:31 AM EST
    [ Parent ]
    I love the idea that ZP's economic policy is "substantially and materially", no less, to the right of Pinochet.

    It's good to have a sense of humor, but really.

    by rootless2 on Sun Nov 20th, 2011 at 07:12:03 AM EST
    [ Parent ]
    So in your world you can only be right-wing if you're pulling out the brownshirts?

    Well, give it a year or two, and ZP's constitutional clusterfuck might very well do that.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Nov 20th, 2011 at 07:38:26 AM EST
    [ Parent ]
    Well I do think that mass murder of union members is to the right of an elected government embracing austerity to pay bonds. Perhaps that's an indication of lack of ideological depth.
    by rootless2 on Sun Nov 20th, 2011 at 08:05:33 AM EST
    [ Parent ]
    Ahem.

    The right has never had a monopoly on violence. Whether a government is violent or not has very little to do with its position on a left-right (however reductive such a one dimensional measure might be) spectrum.

    Violence has far more to do with what the government needs (and is ready to do) to enforce his policies. In Pinochet's case, it was so obvious that it was a coup that violence was always going to be needed (and of course Pinochet was more than happy to provide).

    It may not be the case (yet) in the West -though various police crackdowns over the recent past, which are not restricted to te Occupy movements, give a strong hint that, should violence be needed, those in power would not be found in short supply.

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

    by Cyrille (cyrillev domain yahoo.fr) on Sun Nov 20th, 2011 at 09:12:59 AM EST
    [ Parent ]
    That may be the standard marxian theory, but I think it's false. Civil liberties are not epiphenomena in the "superstructure" of the economic order, but fundamental. A grossly exploitative capitalist system may generate sporadic police violence against citizens, but that's not the same thing as an organized totalitarian corporate state. Even at the margins, the difference between Hoover's America sending in military force crush a veterans protest and FDR's America in which the Federal government was squeamish about such a use of force is the difference between a successful labor movement and a suppressed one.
    by rootless2 on Sun Nov 20th, 2011 at 09:48:42 AM EST
    [ Parent ]
    In other words, a right-wing government becomes less right wing simply by virtue of its opposition not being strong enough to require violent repression?

    That seems oddly backwards, not unlike how it is oddly backwards that voting Die Linke supposedly makes the left weaker rather than stronger.

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Nov 20th, 2011 at 10:19:29 AM EST
    [ Parent ]
    A right wing government becomes less right wing by virtue of the absence of a police state. Yes.
    by rootless2 on Sun Nov 20th, 2011 at 10:21:07 AM EST
    [ Parent ]
    Surely it works the other way round, making a left wing goverment with a police state less left wing. So Stalin was centrist. Maybe there isn't enough police in Cuba to get them there, but then at least centre left.

    Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
    by Cyrille (cyrillev domain yahoo.fr) on Sun Nov 20th, 2011 at 12:51:56 PM EST
    [ Parent ]
    Again, the right has no monopoly on totalitarianism. Whether or not a country is right wing is an entirely different question from whether or not it is totalitarian.

    Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
    by Cyrille (cyrillev domain yahoo.fr) on Sun Nov 20th, 2011 at 12:53:35 PM EST
    [ Parent ]
    rootless2:
    one of the truly stupid things about the modern "left" is an unwillingness or inability to distinguish between Pinochet and Allende

    For utter, empty stupidity, that one takes the cake.

    You just enjoy farting around with your smart-ass comments seeing how far you can wind people up.

    by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 19th, 2011 at 04:15:07 PM EST
    [ Parent ]
    No - I'm enormously frustrated by the functioning of the "left" as a venting station and vaccination against any real political change.  At the very least, one would think that EU leftists would at least consider the possibility that their utter powerlessness might have something to do with their tactics.
    by rootless2 on Sat Nov 19th, 2011 at 04:23:48 PM EST
    [ Parent ]
    Well you're not doing well expressing that point of view. You're not talking to unreasonable people here. Make your case clearly and reasonably. Write a diary on it. Why not?
    by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 19th, 2011 at 04:25:29 PM EST
    [ Parent ]
    Tactics might well be a problem, but to me, it seems the really big problem is a lack of good ideas, and a lack of good people to help promote and implement them.

    Peak oil is not an energy crisis. It is a liquid fuel crisis.
    by Starvid on Sat Nov 19th, 2011 at 05:33:57 PM EST
    [ Parent ]
    their utter powerlessness might have something to do with their tactics.

    Would you also apply this critique to Occupy Wall Street?  

    "It is not necessary to have hope in order to persevere."
    by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Nov 19th, 2011 at 10:48:29 PM EST
    [ Parent ]
    Ok. Tell us about the real political change that you have produced.
    by Metatone (metatone [a|t] gmail (dot) com) on Sun Nov 20th, 2011 at 05:46:06 AM EST
    [ Parent ]
    Obviously we can see that the USA, under the despised and well known to be neoliberal and worthless Obama administration has taken a very different approach to the financial crisis than the EU. Considering that the US government was run by people to the right of Merkel just 3 years ago, that seems like a huge win to me.
    by rootless2 on Sun Nov 20th, 2011 at 06:11:41 AM EST
    [ Parent ]
    I didn't ask about the USA. I asked about YOU.

    You've thrown a large number of accusatory statements at people on this board - about their actions and their statements.

    What organising have you done?

    What difference have you made?

    by Metatone (metatone [a|t] gmail (dot) com) on Sun Nov 20th, 2011 at 11:22:05 AM EST
    [ Parent ]
    "The German political and financial establishment will not give way on monetarisation, citing the usual ghost haunting, apparently, the country's sense of its own history: hyper-inflation (look out, here comes Hitler!)."

    I thought it would already have been said, but I don't see it in the comments so:

    Hyperinflation in 1923 gave rise to embarrassing pictures of piles of banknotes to buy common goods.

    Deflation in 1930-32 gave rise to Hitler in power, the Shoah and World War 2.

    Current German reaction is: "despite the absence of any likelihood of strong inflation whatever we do right now, let's stay clear of any policy that ever led to any sort of inflation, because of what history teaches us, you see.

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

    by Cyrille (cyrillev domain yahoo.fr) on Sat Nov 19th, 2011 at 06:28:17 AM EST
    There was some discussion (incomplete, I think) of the subject here.
    by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 19th, 2011 at 08:01:51 AM EST
    [ Parent ]


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