Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

Bad Movie

by afew Wed Sep 21st, 2011 at 05:19:19 AM EST

Like In A Bad Movie, Wolfgang Münchau headlines his latest commentary in FT Deutschland, summarized by Eurointelligence thus (from e-mail):

Wolfgang Münchau argues in his column in FT Deutschland that the eurozone crisis has now dragged on for so long, and has become so toxic that is now very unlikely to be resolved. Once the crisis hit Italy, followed by an absolutely inadequate policy response of the Italian government, the crisis has reached a point of No return. Italy is too big to save with the current set of instruments, including ECB bond purchases, and in the absence of a credible programme of eurobonds, he concludes that a breakup of the eurozone must now be considered as a probable scenario. The question is now whether and how the EU can survive such a cataclysmic event.

Is there only one scenario for "a breakup of the eurozone"? Even supposing the good will of all concerned, (a dubious supposition), what new treaty could be negotiated and ratified in any foreseeable future? What, on the other hand, are the chances for the existing treaties being thrown out in total cacophony?

But, more than that, what do we want? An end to the EU? Meaning a return to what stage of European integration? None whatsoever, sovereign nations, borders, the old diplomacy games, the arms merchants rubbing their hands? What are the chances of building a new structure? What would it look like? What Europe do we want?


Display:
See discussion in the Open Thread here.

Also the Salon.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Sep 21st, 2011 at 05:28:28 AM EST
With hindsight, everything since the Single European Act was a bridge too far, politically. The Common Foreign and Security Policy and Cooperation in Criminal Justice never quite took off, the Euro is imploding under the weight of unrestrained internal trade imbalances, and Schengen is in the process of being rolled back.

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 05:46:18 AM EST
Were these bridges "too far" because:

  • they went beyond an absolute limit that Europe is culturally incapable of crossing?

  • they were, as such, ill-conceived?

  • they were accompanied by (and were too weak to check) a neolib wave that made for a Union that was essentially as large a free-trade zone as possible?

  • the disappearance of the Communist bloc has had, as one consequence, a decrease in the willingness of previous member states of the EEC to forgo national interests?

  • that disappearance, twenty years ago, marks a line that further European integration will not be able to go beyond in the foreseeable future? (not quite the same as the first question)

I know, there isn't one single response. And there may be others.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Sep 21st, 2011 at 06:05:51 AM EST
[ Parent ]
They crossed over a wave of xenophobia that accompanies the neo-liberal wave?
by Colman (colman at eurotrib.com) on Wed Sep 21st, 2011 at 06:07:56 AM EST
[ Parent ]
I have no idea why it happened but it did. And if there were any hope of a different kind of outcome going forward with in current political environment, the crisis wouldn't have run the course it has over the past 2 years.

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 06:26:47 AM EST
[ Parent ]
They were "too far" because the EU has demonstrated over 20 years a political inability and unwillingness to make them work. This is not a theoretical argument.

Regarding Schengen, for instance, I have been taking night trains between Spain and Frence for nearly 7 years now and I have always had my passport checked at the French border by French customs officials. As far as I'm concerned, France has always been in violation of the spirit of it.

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 06:16:41 AM EST
[ Parent ]
were fully aware that close economic integration and a common currency would only be viable if continual progress were made in integrating government and sovereignty. See Delors and Prodi in this respect. They made the dubious judgement that everyone would see the need for this, and that the political will to do so would gradually emerge.

Two problems then arose :

  • first, a generation of political midgets, with no willingness to sacrifice anything whatever for "Europe", and apparently no understanding that the benefits of the Euro etc. were not free.
  • second : a reaction from the European left which perceived further European integration as a free-marketer plot designed to strip away their hard-won rights and liberties.

The result was the crappy constitutional treaty, and the disaster of its rejection in 2005.

I have no idea whether the approval of the European constitution  would have, in itself, equipped us to better deal with the current crisis. But we would surely have been in another dynamic in these intervening years, and at least psychologically less resistant to doing what needs to be done to save the house from burning down.

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

by eurogreen on Wed Sep 21st, 2011 at 07:01:22 AM EST
[ Parent ]
second : a reaction from the European left which perceived further European integration as a free-marketer plot designed to strip away their hard-won rights and liberties.
It doesn't look like they were wrong. The Brussels Consensus has replaced the Washington Consensus and is meting out neoliberal shock-doctrine to EU member states to the point that we have coined the term being ECB'd where in the latter part of the 20th century developing countries were being IMF'd.

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 07:05:27 AM EST
[ Parent ]
The EU is doomed because 'by the people, for the people' has been replaced by 'by the banks, for the bankers.'

If media coverage wasn't quite so dedicated to tugging an economic forelock at our new lords and masters, more people might be angrier about this.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Sep 21st, 2011 at 07:12:12 AM EST
[ Parent ]
Yanis Varoufakis: The Road to Bankruptocracy: How events since 2009 have led to a new mode of reproduction
If anything, the Darwinian process has been turned on its head: The more unsuccessful a private organisation is, and the more catastrophic its losses, the greater its ensuing power courtesy of taxpayer financing. In short, socialism died during the Global Minotaur`s golden age and capitalism was quietly bumped off the moment the beast ceased to rule over the world economy. In its place, we have a new social system: Bankruptocracy - rule by bankrupted banks (if I were allowed to practise my Greek, I would call it ptocho-trapezocracy)

...

Ptochos is Greek for pauper but also for bankrupt. Trapeza is Greek for bank (originally it means table and is associated with banking because in ancient Greek city states borrowing and lending transactions were carried out in the Agora, with the parties to the transaction being seated around long tables).



Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 07:18:50 AM EST
[ Parent ]
as for responses, i await eagerly, but these are the right questions anyways.

very good discussion, birth pangs of a Neuropa?

going on the timetested principle that we learn to do things well by first doing them badly, what do we save to bring forward, and what do we leave behind?

perhaps it would be worth losing a common currency in order to save the cultural melting pot europe has grown towards since 30-40 years ago?

maybe the common currency can only work after other solidarity issues have been troubleshot?

is a common currency a cherry more than a cake? a cart, rather than the horse? a metaphor, not a successful one?

trying to undo all the institutional bonding that forms the warp of europe to the woof of its currencerial convenience will be a lot harder than people think, in other words many, many europeans feel equally european as they do feel nationalistic (except for during the world cup!).

it would make so much more sense to keep all the good agencies created for the whole continent and sacrifice what we know now for sure doesn't work, eg letting a few suits have too much power behind the curtain.

letting the european dream shatter into shards again won't be attractive to many voters, notwithstanding the idiot wind that is blowing now and has raptured our present leadership of neolib/con midgets.

the truth has been beyond the ken of the common man for two centuries, since the middle class outnumbered the wealthy, and the veil of discretion hid the machinery that banks and governments collude with to subjugate people.

looks like events will keep renting that veil.

'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 Wed Sep 21st, 2011 at 04:30:19 PM EST
[ Parent ]
Why do I hear echoes of the umma in all the talk about bringing a new euroconsciousness to the table?

Is 1984 going to be the Islamic Caliphate vs Secular West vs Asian Tigers?

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Wed Sep 21st, 2011 at 09:45:10 PM EST
[ Parent ]
i expect a new descriptor: 'eurotic'. what it will mean i have no idea.

:)

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Thu Sep 22nd, 2011 at 02:52:27 AM EST
[ Parent ]
The Euro was, in particular, ill-conceived, which ties in with the neolib wave since it was built broken in a way which would not have been broken if we lived in a universe where neolib fantasies regarding the economy applied.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Thu Sep 22nd, 2011 at 12:47:07 PM EST
[ Parent ]
Do you happen to know a good, reliable, political-economic history of the US under the Articles of Confederation - our first constitution?

From the scraps of knowledge I carry around in my head, the current EU and euro mess going on now strongly reminds me of what went on then.

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

by ATinNM on Thu Sep 22nd, 2011 at 01:14:58 PM EST
[ Parent ]
Not off the top of my head ~ I'll ask at the AFEE discusion email list.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Thu Sep 22nd, 2011 at 03:43:21 PM EST
[ Parent ]
That would be cool.  Thanks man.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Thu Sep 22nd, 2011 at 10:51:47 PM EST
[ Parent ]
Anne Mayhew, an American Institutionalist and Economic Historian:
As I remember Curtis Nettels' book, THE EMERGENCE OF A NATIONAL ECONOMY was quite good on the era of the Articles and the difficulties involved.

In some ways the story of the first constitution, the Articles of Confederation, is similar to the current EU and euro mess in that the "central government" could request payments but could not levy taxes on its own and was otherwise without significant powers. States became competitive in tariff policies and the central government was without power to honor its debts after the Revolution, much less to pursue any national policies.  In other ways the story was very different because the economies of the various states and regions were so much less integrated due to slow transportation and lack of communication.  A strong government of the sort that we are familiar with today was simply not possible.  Also, banking was in its infancy so that banking control was not a major issue.  (Of course, banking did become a big issue with the First and Second Banks of the U.S. but in the absence of peripheral American involvement in the Napoleonic Wars, the 2nd Bank probably would not have been created and after it ceased to exist in the 1830s, the U.S. did without a central bank, for better and for worse, for several decades.)

The bigger story to me is that railroads, steamships, the telegraph and telephone brought about practical integration throughout the 19th century that made greater legal and administrative integration imperative.  So long as the notes of the many state chartered banks that developed in the early 19th century circulated within limited geographic areas, the effects of the failure of one bank was of limited national importance.  By mid-19th century geographic
isolation was becoming sufficiently eroded so that when finance for the Civil War became important, the National Banking Act also tackled (though not very well) the need for more national control.  And so on through the creation of the FED, the reforms of the 1930s and on.

A similar story can be told for the commerce clause of the Constitution.  It may have created a national economy in a legal sense when the Constitution was
adopted but it took the railroad and steamship to make it a reality and to produce the conflicts that led to the interpretations that gave it meaning.  And that story continues today as well.

I would say, however, that the technological realities of today make the kind of loose confederation that the EU has attempted unworkable. [I might even make the same argument about the IMF but that is another story.]  But, I would be careful in saying that the abortive effort at loose confederation under the Articles of Confederation in the American past showed a similar unworkability.



I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sat Sep 24th, 2011 at 02:18:43 PM EST
[ Parent ]
Don't forget the social protocol in the Treaty of Maastricht

SOCIAL PROTOCOL

Thanks to the social protocol annexed to the Treaty, Community powers are broadened in the social domain. The United Kingdom is not a signatory of this protocol. Its objectives are:

  • promotion of employment;
  • improvement of living and working conditions;
  • adequate social protection;
  • social dialogue;
  • the development of human resources to ensure a high and sustainable level of employment;
  • the integration of persons excluded from the labour market.

Though everyone else appears to have forgotten, not least the troika wreaking havoc in periphery.

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

by A swedish kind of death on Wed Sep 21st, 2011 at 06:48:34 AM EST
[ Parent ]
Meanwhile, the German Constitutional Court lays down the law.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Sep 21st, 2011 at 07:05:56 AM EST
[ Parent ]
Again from Buiter's 3 scenarios:
2.3.3.5. The Role of the German Constitutional Court

The German Constitutional Court ruled on September 7, 2011 on whether the German participation in the first Greek bail-out and the EFSF is consistent with the German Basic Law (or German Constitution). We always thought it unlikely that, whatever the technical legal merits of the case, the German Constitutional Court would want to go down in history as the entity that destroyed the European Union. And the Court duly complied. It ruled that the German participation in the first Greek bailout and the EFSF do not have to be rolled back.

(My emphasis)

The Bundesbank doesn't seem to have the same qualms as the Court.

The case before the German Constitutional Court concerned the interpretation of the various `no bailout' Articles in the Treaty. The Court ruled that Germany's participation in the rescue measures had not violated parliament's right to control spending of taxpayer money, and that it did not give a rubber-stamp to the chancellor's office.

The court also noted, however, that its rulings "should not be misinterpreted as a constitutional blank cheque for further rescue packages." It said that "the government is obligated in the cases of large expenditures to obtain the approval of the parliamentary budgetary committee" - a rather manageable nuisance and certainly much less burdensome than having to obtain the approval of the Bundestag.

Even in the case that the German Constitutional Court had mandated a roll-back of German participation, this would hardly have been the end of the matter, on procedural grounds. It is clear that the fate of the EA will not be decided in the courtrooms.



Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 07:11:19 AM EST
[ Parent ]
It is possible that a really radical treaty - a United States of Europe for instance - might be ratified by the Irish electorate. Tinkering won't be, unless it contains enough outright bribery to make it unacceptable to everyone else.
by Colman (colman at eurotrib.com) on Wed Sep 21st, 2011 at 05:52:46 AM EST
I don't see that as very likely.

In the UK, we have daily anti-Europe propaganda from the headbanger red-tops. Europe is just too easy a target.

There's very little positive PR happening, from any source.

And now that the EU is being run by banks, for bankers, where would a radical treaty come from?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Sep 21st, 2011 at 07:14:27 AM EST
[ Parent ]
It would require a big change in the political landscape, but that landscape is not stable right now.

I was answering afew's question about what sort of treaty might get ratified.

by Colman (colman at eurotrib.com) on Wed Sep 21st, 2011 at 07:16:03 AM EST
[ Parent ]
And don't let's forget that, if/when the euro goes bang, a new treaty will be necessary. Yet it will be most unlikely that there will be agreement and, further, ratification of a new treaty. Hence my use of "cacophony" aka total fuck-up.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Sep 21st, 2011 at 07:21:19 AM EST
[ Parent ]
a United States of Europe, for instance

Something like that has always been my hope.  A truly united Europe, acting as a single economic and political entity would be an effective counterbalance to my country, which sorely needs it, and perhaps to China as well.  I think we would all be better off for it.

We all bleed the same color.

by budr on Wed Sep 21st, 2011 at 11:19:33 AM EST
[ Parent ]
What if Ireland got together with France, Spain, Belgium and maybe Italy in a new union, deliberately excluding Germany at first, in order to set the fundamental principles that would allow a unified system to work. This was they could avoid economic groupthink coming from the center of the continent.

Daniel Gros did a study last year that showed that many European countries were in bad debt situation shortly before and after 1990, a lot of them at the 100% debt to GDP range, and that there were fundamentally different strategies for exiting the debt dilemma. Countries on the periphery and Med (including France) grew out of debt by currency deflation and stimulus, while others in the center chose the means of austerity and slashed spending.

It would seem to me that this is a battle of economic ideology that's being waged.

by Upstate NY on Wed Sep 21st, 2011 at 01:57:33 PM EST
[ Parent ]
Maybe they will be overtaken by events soon, but Willem Buiter of Citi has put out two analysis papers [PDF]:
From the earlier 3 scenarios paper:
There are two canonical models for a Euro area breakup. The first is for one or more highly indebted, uncompetitive countries in the periphery to walk out. Greece is the most often mentioned candidate. The other is for one or more of the solvent and more internationally competitive core Euro area countries to walk out. Germany is the most frequently mentioned example. We will consider the likelihood of these two cases in turn, after we discuss the procedural aspects of EA exit.

...

Whatever the details of the modalities of an EA exit, it would likely be a drawn-out and messy affair. The scenario of a Euro area member state taking a vacation from the euro for, say, a couple of years, temporarily adopting its own currency, achieving a sharp depreciation in the value of its currency and then rejoining the Euro area at this much more competitive exchange rate, is most unlikely to be on the menu. The country in question would have to re-apply for EU membership again and, if this application were to be successful, would have to meet the Maastricht Criteria for Euro area membership again, as noted under point (5) of Article 50. It would be very unlikely to be able to count on much goodwill towards it on the part of the countries that remained in the EA. And the members of the `core' would quite likely try to apply even stronger EA membership criteria than the original Maastricht criteria and be more alert to potential fudges that have permitted EA entry in the past.

...

Although it is not possible for a country to be expelled from the Euro area or from the EU, it may of course be possible for 16 Euro area member states and/or 26 EU member states and/or the ECB to collectively make life so difficult and unpleasant for the 17th Euro area member state (and 27th EU member state), that the best course of action for the victim would be to leave.

A refusal by the ECB to continue to fund the Greek banks by accepting Greek sovereign or sovereign guaranteed debt as collateral at the Eurosystem and to permit the use of Emergency Liquidity Assistance (ELA) by the Greek NCB were the Greek sovereign to default on its debt, could have been a possible breaking point of this kind. A face saving solution for the ECB was found, however, when as noted earlier, it was decided on 21 July 2011, that following its enhancement and enlargement sometime in late September 2011 and the end of the year, the EFSF would guarantee Greek sovereign debt offered as collateral to the Eurosystem



Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 06:02:29 AM EST
These are brilliant analysis.. I am still a lot in it.

I would like to know what they say about my humble proposal of monetizing all Spanish and Italian debt in the short-term until inflation expectation grow.

http://avionesdecercanias.blogspot.com/

http://avionesdecercanias.blogspot.com/2011/09/reputationally-bankrupt-zombies.html

I commented on Munchau blog yesterday, that the ECB purchases would allow them to demand fiscal austerity when it is really needed, that is, when the economy is growing fast again and the financial markets are again pushing for bubbles.

I still did not find the naswer int he reports. I am still reading though.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Wed Sep 21st, 2011 at 06:17:02 AM EST
[ Parent ]
From 3 scenarios
The first option, fiscal union or Fiscal Pooling, includes both full-fledged fiscal federalism and its primitive sibling, an open-ended, uncapped `Transfer Europe' EU or euro area institutions and/or the creditor or donor countries in control spending, taxation and privatisation in debtor or beneficiary countries. The thinking solution entertained by part of the bond markets - a `Transfer Europe' large-scale E-bond issuance but no quid-pro-quo as regards a significant transfer fiscal sovereignty to a supranational authority or to the creditor/donor countries occupies the implausible end of the spectrum of Fiscal Pooling solutions.

Fiscal Pooling also includes the scenario where the ECB - like every central bank, a potential quasi-fiscal entity - absorbs part or all of the losses on the impaired sovereign and bank debt. If these losses exceed the ECB's non-inflationary loss absorption capacity (estimated in Buiter (2010c) to be around €3trn under quite plausible assumptions about the future economic environment), the ECB would, under the inflationary monetisation variant of this scenario, be willing to see future inflation rise above its `below but close to 2 per cent per annum in the medium term' operational benchmark for price stability. We call this scenario `ECB as Santa Claus' or short, `Santa ECB'.

...

3.4.3. Why `Santa ECB' will not happen

Other constraints than the fear of monetisation leading to inflation in excess of what the ECB deems consistent with price stability are, however, preventing the ECB from waving, say, €3 trillion worth of euro notes or other ECB/Eurosystem liabilities in the air while shouting: "come and get them". The ECB takes the separation between monetary and fiscal policy seriously. The only quasi-fiscal role it accepts is the one inherent in the fact that its immediate dividend-receiving shareholders are the national central banks (NCBs) of the euro area and that it will therefore, over time, pay out as dividends to the NCBs the profits made as a by-product of the pursuit of its price stability mandate. From the NCBs, these ECB profits flow through to the member states' Treasuries and thus to their tax payers and the public expenditure beneficiaries.

Although outright purchases of the debt of insolvent or potentially insolvent sovereigns at inflated prices, or lending to (near) insolvent banks offering as collateral debt instruments issued or guaranteed by (near) insolvent sovereigns, are consistent with satisfying the price stability mandate of the ECB if the right mix of monetary and non-monetary financing is adopted, these actions do amount to quasi-fiscal operations. The NPV of future seigniorage will be redistributed over time and it will be redistributed from all members of the eurozone to the creditors of the sovereigns or banks receiving ECB bail-outs and/or to the tax payers in the (near) insolvent member states that might, but for the ECB's interventions, have faced more severe fiscal austerity.

There are clearly good reasons for the ECB to be reluctant to be drawn into the fiscal morass. As the guardian of a `fiat' currency, the credibility of the ECB is clearly key though we suspect that drawing lines that shall not be crossed (such as in the case of outright sovereign debt purchases of the debt of EA sovereigns), only to be crossed soon afterwards is not the most expeditious strategy for supporting the long-term credibility of the ECB. But that credibility is certainly worth safeguarding. A second, important argument against ECB bail-outs parallels the reasons against an E-bond `solution' - that it is not a solution. Continued ECB purchases at best do little to address near-term solvency in the EA sovereign and banking sectors.13 And the long-term cost in encouraging reckless behaviour by sovereigns, banks and investors would be large.



Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 06:22:35 AM EST
[ Parent ]
The middle section is worth quoting more:

A way may even be a found to interpret existing Treaty clauses creatively to allow a member state to leave the EA while remaining in the EU, without amending the Treaty. Is it really too farfetched to entertain the possibility that just the clear and definitive wish of a member country to leave the euro area might be enough to convince the other member states to go along with it exiting the euro area while remaining a member of the EU?  

Finally, should one member state be determined to leave the eurozone and the EU, but find itself unable to garner sufficient support or even just acquiescence by the other members of the euro area, it could simply decide to renege on its commitments as member of the EA and EU unilaterally, perhaps not even waiting for the EU exit negotiations to run their course. Although following such provocative behaviour, the other member states would be highly likely to wish to hold the departing member state to account, the scope for retaliation and punishment would seem to be limited. It is not conceivable that force would be used to prevent or undo an unlawful defection. After all, the most important original force behind European integration was the memory of two recent World Wars and the belief that economic and political integration would make armed conflict in the future less likely than it was in the past. It does seem inevitable, however, that a confrontational unilateral EA exit would imply an EU exit at the same time.  

Whatever the details of the modalities of an EA exit, it would likely be a drawn-out and messy affair. The scenario of a Euro area member state taking a vacation from the euro for, say, a couple of years, temporarily adopting its own currency, achieving a sharp depreciation in the value of its currency and then rejoining the Euro area at this much more competitive exchange rate, is most unlikely to be on the menu. The country in question would have to re-apply for EU membership again and, if this application were to be successful, would have to meet the Maastricht Criteria for Euro area membership again, as noted under point (5) of Article 50. It would be very unlikely to be able to count on much goodwill towards it on the part of the countries that remained in the EA. And the members of the `core' would quite likely try to apply even stronger EA membership criteria than the original Maastricht criteria and be more alert to potential fudges that have permitted EA entry in the past.

Now I think if a country acts to leave the eurozone (EA in the paper) but not the EU, as I understand it the only thing that can happen is the Commission taking them to the Court. From that fines and loss of voting rights could stem. So would the Commission do that?

I would note that Sweden is formally bound to enter the eurozone and intentionally keeps out by failing to reach the currency stability requirement, in order to satisfy a domestic public opinion. Nothing has been done about that.

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

by A swedish kind of death on Wed Sep 21st, 2011 at 07:05:25 AM EST
[ Parent ]
From the Citi report:

"...we believe that the improvement in Greek competitiveness that would result from the introduction of the ND and its sharp depreciation vis-à-vis the euro would be short-lived in the absence of meaningful further structural reform of labour markets, product markets and the public sector. Higher domestic Greek ND-denominated wage inflation and other domestic cost inflation would swiftly restore the old uncompetitive real equilibrium or a worse one, given the diminution of pressures for structural reform resulting from euro area exit.
In our view, the bottom line for Greece from an exit is therefore a financial collapse and an even deeper recession than the country is already experiencing - probably a depression..."

I'm deeply suspicious of that "structural reform of labour markets" rhetoric, because what it boils down to is "Chinese labor practices - good. Worker rights and living wages - bad".

By most standards Greece is already in depression. The rate of pauperization is unprecedented already. And the immense amount of indiscriminate and heavy taxes imposed are going to have a large effect on savings. What's more important, leaving the Euro and planning for a non-feudal future might actually motivate people and have them make willing sacrifices.

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Wed Sep 21st, 2011 at 08:08:08 AM EST
[ Parent ]
Forget about what Europe we want. You don't integrate Europe with the Europeans you wish you had, but the Europeans you have. And utopias fail because they fail to take into account that real people differ from the core assumptions of the utopia.

So, what Europe is politically possible today?

I submit that, as a matter of Zeitgeist, constitutions drafted after 1980 (for example, post-Communist Eastern Bloc European constitutions) are neoliberal in spirit where those drafted between 1945 and 1980 are social-democratic. Where Colman says

It is possible that a really radical treaty - a United States of Europe for instance - might be ratified by the Irish electorate. Tinkering won't be, unless it contains enough outright bribery to make it unacceptable to everyone else.
I wouldn't want anything to do with a neoliberal United States of Europe. The fact is, the criticism that the Lisbon Treaty (formerly Constitution), incorporating aspects of treaties from the 1990s such as the Amsterdam and Maastricht Treaties, was structurally neoliberal was entirely on point. And this is not just a philosophical issue as the fact thet the EU structure entrenches and enhances trade imbalances and encourages private debt bubbles while hamstringing government fiscal policy is not just the fashionable idiocy du jour but actually enforceable from the treaties as long as there is one idiot in the EU institutions who's willing to be legalistic about it.

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 06:13:11 AM EST
Migeru:
Forget about what Europe we want.

That is simply a way of saying "we don't want Europe".

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Sep 21st, 2011 at 07:02:58 AM EST
[ Parent ]
I don't want this Europe.

Europe, yes, but not like this.

And I'm not about to advocate enlightened dictatorship forcing an unwilling public into my European utopia.

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 07:06:51 AM EST
[ Parent ]
You don't have to. Neither do you have to propose utopian solutions.

But if, as you argue elsewhere, it's not just European integration but liberal democracy and the Enlightenment that have gone through the hoop, having some idea of the basic principles of a political system one could live with, even support, wouldn't seem to be entirely useless.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Sep 21st, 2011 at 07:17:15 AM EST
[ Parent ]
Sorry, don't let my despondency get in your way.

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 07:21:52 AM EST
[ Parent ]
asdf may just be trying to be provocative when he says
My theory, repeated here too often, is that feudalism is the system that works and that people are comfortable with. Who really cares about politics? Biggest gripe about the riots in England is that football games are being cancelled. And social media? Nothing but improved gossiping technology.

There are the rich and powerful, and there are the poor and downtrodden. The trick is for the first group to keep the second group just barely happy enough so they don't riot. The infrequency of riots prove that they are operating just at the margin. Absence of riots would suggest that further claims could be made on the poor, so it looks as if we are just at the correct operating point right now.

Also
The idea that technological society can't be maintained under a feudal system needs to be investigated further.

In the feudalism of the middle ages, while it's true that technology didn't develop, there was a class of scribes who maintained the accumulated written knowledge. And there was a civil engineering class that specialized in technically complex cathedrals.

One must also ask what all of the future 10 billion people are going to do. Make-work is one good answer, and a feudal system can supply that through a complex and superfluous hierarchy of servants and minions, each with a specified rank and privilege. The railroad system in India seems to have that system figured out, as do most military establishments.

And who says that feudalism needs to be unpleasant? If it can supply a basic level of physical comfort, plus football and gossip, 90% of humanity will be perfectly happy. It's only the troublemakers who worry about social justice who get upset when the hierarchy isn't "fair."

The trick is for the ruling class to manage the system so that there's no revolution. With the lower classes enthusiastically supporting the current system, we're quite a ways from that sort of bother...

and
1. So if capitalism is the only realistic system, why, when it collapses, does everybody (including the rabidly capitalistic) run to socialism for rescue? Doesn't that mean that socialism is a "realistic" system, and that capitalism can survive only temporarily on its own, i.e. is in the category of "unrealistic" systems?

2. Feudalism has been around a lot longer than capitalism, and was or was not "successful" depending on semantics.




Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 07:30:38 AM EST
[ Parent ]
You don't have to. Neither do you have to propose utopian solutions.

I didn't see Mig as proposing utopias, rather, he was deploring that the hopes for the present arrangement and the arrangement itself are too utopian to survive the brutal realities with which they are being confronted.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Sep 21st, 2011 at 01:29:39 PM EST
[ Parent ]
How about we skip this silly and trivial intermediate bungling and start working on having a real United Nations, with an army, a world currency, and computerized bureaucrats?

Align culture with our nature. Ot else!
by ormondotvos (ormond.otvosnospamgmialcon) on Wed Sep 21st, 2011 at 09:51:40 PM EST
[ Parent ]
At this point, I'm willing to believe the notion that Liberal Democracy is a failed political system, as it has failed twice in 80 years in exactly the same manner.

Krugman: Doom!

I was recently asked to give a talk on "capitalism and democracy"; that's bigger-think than I usually do, but I gave it a try. I took as my starting point the famous Fukuyama thesis that liberal democracy -- meaning basically a market economy plus democratic institutions -- was an end state, a final resting point for state organization.

I always had my doubts about that, largely thanks to the 1930s: what we saw there was that a severe economic crisis could put liberal democracy very much at risk. And it was a close-run thing: slightly better strategic decisions by the bad guys could have made totalitarianism, not democracy, the end state.

...

But one thing I was sure of was that the next great crisis would be different. It would be environmental, or about resource shortages, or about runaway technologies, or something; it wouldn't be about a banking crisis and a collapse of aggregate demand, aggravated by bad monetary and fiscal policy. We'd learned to much to repeat that performance -- right?

Wrong. The amazing thing now is not that we're having a crisis, it's the fact that we're having the same crisis, and making the same mistakes.

In ofar as Liberal Democracy is the political system of the Enlightenment, then the Enlightenment itself is being indicted here.

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 07:02:41 AM EST
We've had this conversation before.

Economically Englightenment values don't work because economics carried corrosive notions such as self-evident rationality, and 'enlightened' self interest, as a rhetorical virus.

In science, the feedbaqck mechanisms - independent review, and aggressive questioning - promote independent insight. Science may not be perfect, but it works fairly well as a mode of enquiry.

But economics took medieval religious notions of personal morality and smushed them up with some cod rationalisations about heroic emancipated individualism.

Unfortunately, that was just PR. Because it fundamentally didn't change from the existing medieval (late Roman?) political models, which are based on might-is-right.

So social darwinism - individual profit at any moral and social cost to others - is the political default.

Social democracy has opposed that default with occasional success, most obviously when backed up with the threat of direct action.

But it has never been in a position to remove it as a viable political influence.

The one - remote - possible positive outcome of the current neoliberal counter-reformation is that once the bodies are counted and the mess is cleared up, neo-liberalism may be left with the same positive social reputation as Nazism and the Inquisition.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Sep 21st, 2011 at 07:28:42 AM EST
[ Parent ]
ThatBritGuy:

But it has never been in a position to remove it as a viable political influence.

history seems to indicate only blood in the streets achieves a dissolution of said influence, sigh.

and then, insidiously, a new creepy class of dunghill climbers collaborates to become a new 'political influence', to regame the new system. better dachas for the better communists...

it's this tendency for sociopaths to outmaneuver the placid, less neurotic populus, and the sense of fairness to be loopholed, and bingo! meet the new bosses, same as the old bosses, but in different drag.

can we educate somehow from babyhood to eradicate this psycho-moral flaw from our collective constitution?

i earnestly hope so, because the rot can set in very early, and ungoverned ego starts to wreak havoc already on the family/tribe level, let alone once these powerfreaks attain privileges like the nuclear button, the power to increase climate change and nuclear power, spend untold amounts of dwindling resources on wartoys and other psychotic manifestations of their inner turmoil and soulless insecurity.

in other words, the state of things as we blog today...

'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 Wed Sep 21st, 2011 at 08:01:53 AM EST
[ Parent ]
You've never considered Technocracy?

Align culture with our nature. Ot else!
by ormondotvos (ormond.otvosnospamgmialcon) on Wed Sep 21st, 2011 at 09:54:28 PM EST
[ Parent ]
and then, insidiously, a new creepy class of dunghill climbers collaborates to become a new 'political influence', to regame the new system

If we had the magical power to prevent the emergence of the class of dunghill climbers to magically prevent Technocracy from falling into that, then I'd prefer to use that power on social democracy, instead.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Sep 22nd, 2011 at 12:57:10 PM EST
[ Parent ]
This discussion contains (as always) highly insightful and intelligent analysis of this key issue. However, the points tend toward the lack of solutions available, given the "Europe we have and not the one we wish."
Which may be true.

Perhaps we're forgetting that the coming chaos will produce dissolution, which might just be what is necessary to provide a solution which wouldn't otherwise be able to appear.

The downside of course, is that some neo-fascism is also able to appear.

I'm betting on the opposite, because to me there's a critical mass (a minority, true) willing to react against current political ineptitude and strong ECB shock doctrine policies. The gradual emergence of a Green economic and financial policy, though in its infancy, is such a step.

Sadly, i can't forgive Obama for destroying the words hope and change.

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

by Crazy Horse on Wed Sep 21st, 2011 at 08:38:09 AM EST
I've just written a parallel comment saying much the same thing below, although, as usual, it took me 10 times more words to get there.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Sep 21st, 2011 at 08:49:02 AM EST
[ Parent ]
We belong to the starry-eyed visionary optimist class?

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Wed Sep 21st, 2011 at 09:27:20 AM EST
[ Parent ]
Me too.  God help us.

We all bleed the same color.
by budr on Wed Sep 21st, 2011 at 11:54:01 AM EST
[ Parent ]
I agree the future is the Green Left. However, the next electoral cycle is EPP monopoly and in Spain the PP just made it known that they oppose the EU's target of 30% carbon emission reductions and want to tone it down to just 20% "because the current economic conditions don't allow for more". Austerity will kill all.

Like the long term is green and the short term is blue, the medium term may well be brown:

In should be first stated that, although most economists are now agreed that full employment may be achieved by government spending, this was by no means the case even in the recent past.  Among the opposers of this doctrine there were (and still are) prominent so-called 'economic experts' closely connected with banking and industry.  This suggests that there is a political background in the opposition to the full employment doctrine, even though the arguments advanced are economic.  That is not to say that people who advance them do not believe in their economics, poor though this is.  But obstinate ignorance is usually a manifestation of underlying political motives.

There are, however, even more direct indications that a first-class political issue is at stake here.  In the great depression in the 1930s, big business consistently opposed experiments for increasing employment by government spending in all countries, except Nazi Germany.  This was to be clearly seen in the USA (opposition to the New Deal), in France (the Blum experiment), and in Germany before Hitler.  The attitude is not easy to explain.  Clearly, higher output and employment benefit not only workers but entrepreneurs as well, because the latter's profits rise.  And the policy of full employment outlined above does not encroach upon profits because it does not involve any additional taxation.  The entrepreneurs in the slump are longing for a boom; why do they not gladly accept the synthetic boom which the government is able to offer them?  It is this difficult and fascinating question with which we intend to deal in this article.

...

The dislike of government spending policy as such is overcome under fascism by the fact that the state machinery is under the direct control of a partnership of big business with fascism.  The necessity for the myth of 'sound finance', which served to prevent the government from offsetting a confidence crisis by spending, is removed.  In a democracy, one does not know what the next government will be like.  Under fascism there is no next government.

(Political Aspects of Full Employment by Michal Kalecki, 1943)

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 09:00:18 AM EST
[ Parent ]
Capitalists oppose Government spending because that helps everyone.  They are only interested in their own success, and paradoxically, that becomes much easier when everyone else is struggling. If you want cheap docile workers, promote policies which promote unemployment. If you want to increase market share, make it harder for your competitors and for new entrants to start up. Even a fool can run a successful business when there is no credit available for others to set up.

Established businesses have a relative competitive advantage when times are hard. The interests of individual capitalists are frequently at variance with the interests of capitalism as a whole. Capitalist praise competition and kill competitors. The US teaparty agenda is being driven by a few individual politically engaged capitalists. Buying a politician is remarkably cheap if that's part of your business model. In Europe it is the big banks.

Without a strong state capitalism has no means of addressing its collective best interests and ends up destroying itself.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Sep 21st, 2011 at 09:28:34 AM EST
[ Parent ]
Migeru:
I agree the future is the Green Left. However, the next electoral cycle is EPP monopoly and in Spain the PP just made it known that they oppose the EU's target of 30% carbon emission reductions and want to tone it down to just 20% "because the current economic conditions don't allow for more". Austerity will kill all.

Sweden has reduced more then its share, and the state has CO2 emission certificates to spare. In order to prepare for a coming economic downturn, these will be sold. Cause having less CO2 is not economic prudent or something.

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

by A swedish kind of death on Wed Sep 21st, 2011 at 10:16:01 AM EST
[ Parent ]
"Clearly, higher output and employment benefit not only workers but entrepreneurs as well, because the latter's profits rise."

Prove it. I don't think it's clear at all. Specify your underlying axioms. I think one of them is rational profiteers.

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Wed Sep 21st, 2011 at 09:57:44 PM EST
[ Parent ]
The difference between the Europe we have and the one we want being to wide, it is hard to see a way. Maybe it will help to scetch how we think the near future of the EU will unfold, and then we can perhaps see the possibilities.

If I start I do not think the EU will unravel even if the euro does. Neither do I think members abandoning the euro will be forced out. I see no new treaty in my crystal ball, european integration will unravel a bit but hold in general.

Schengen will probably last in principle, but with increasing exceptions. I note that there is already a pre-crisis history of limiting the movement of leftish elements in the run-up to big summits.

Common Foreign and Security Policy will not go much further, be neither will the structures EU inherited from WEU be lost.

Cooperation in Criminal Justice might unravel if there is a serious challenge to the European arrest warrant. That would for example be if there is a case where the government and/or justice system of one member state refuses to extradite a citizen (which will not happen in the Assange case).

CAP, the common market, the EU lawmaking structure and other basic structures I think will keep going.

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

by A swedish kind of death on Wed Sep 21st, 2011 at 10:12:29 AM EST
[ Parent ]
A part of the Cooperation in Criminal Justice that I think will last is the part were cops from one country can act in another. Marketed as being necessary in order to allow cross-border chases of bank-robbers and such, as far as I know it has mostly been used to reinforce local cops when an international summit needs to be protected against demonstrators. And that will probably be needed in the future too, which I think will trumph by far the nominal resistance from local nationalists against foreign cops on their streets.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Wed Sep 21st, 2011 at 01:51:36 PM EST
[ Parent ]
The notion that "Liberal Democracy" has failed is tied up with the failure of unregulated market economics. The ideology of liberal economics has overwhelmed the ideology of state regulation, and so we have an EU increasingly dominated by EPP parties and neo-liberal economic values encoded into governing treaties.

But the question remains whether the EU and EA or fundamentally neo-liberal in conception, and dedicated to further the rich-poor divide through market mechanisms.  Certainly that has been the trend in recent times, but is our historical focus here large enough?

The greater perspective on the EU/EA is not neoliberal in conception, but a determination to avoid war, ultranationalism, and the robber baron capitalism of the 20's and 30's. I don't know how far the EU/EA has to continue with its current descent back to the 30's, before people realise that this path is not going to end well, but I can't accept as fundamental the premise that 90% of people are totally stupid, uninterested in politics and only want the football and reality TV shows to carry on.

People become politicised when their fundamental needs and rights are no longer respected or self-evidently available to them. They may be voting EPP now, but the interesting thing is that the real growth in political support is for parties to the left of the now traditional and compromised social democratic establishment. The left alternative may not be close to governing majorities yet, but that is where support is growing.  For younger people, "Europe" is a given that the establishment dare not put at risk.

Hence the Greek/Italy crisis is more likely, in the longer term, to lead to a new left resurgence that a further descent into neo-liberal or protofascist resurgence.  That was the response of an older neo-feudal generation. The anger is not that we have had too much "Europeanisation", but that the EU has failed to address the challenges of globalisation and unregulated capital.

Even if the interventions in Greece are bloody minded, ham-fisted, and misconceived, they are still political interventions and a realisation that economic problems have to be solved by political means.

So my contention (wishful thinking?) is that the longer term response to the current crisis will be a further integration of Europe, and a growing reassertion of the (European) state over the market.  People realise it is the "free-market" which has caused this crisis, and the anger is at the inadequacy of the political response, not at politics per se.

So lets forget this feudalistic preference stuff and nonsense.  people aren't interested in politics because they hope their politicians are covering off that job for them.  The more they realise that EPP politicians are incapable of doing that, the more they look for alternatives.  At the moment most voters are not exactly spoilt for choice of inspiring alternatives. Even the most ridiculous of alternative parties are being given a try.  But once a coherent alternative political narrative becomes established (as social democracy once was, the current ruling parties will be swept from power.

"Europe" as a political ideal is a lot more resilient than the current crisis hawkers give it credit for.  It is not about to fall apart because of a failure of the current generation of political leaders to deal with the problems arising. A new generation of leadership will emerge with a much more jaundiced view of the economic orthodoxies of today.  Hopefully a new Governing philosophy - not Royalism, Feudalism, Marxism, Capitalism, Socialism, Social Democracy, free market liberalism or third way centrism - will emerge.

Krugman is right that it is amazing our current leaders are repeating the mistakes of the 1930's.  He is wrong if he thinks the outcome will be the fascism and wars of the 1930's and 1940's. The future is green.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Sep 21st, 2011 at 08:46:19 AM EST
Will the Green beat the brownshirts in a war?

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 08:51:31 AM EST
[ Parent ]
I deliberately used green rather than Green, and it is politics which will win over war in Europe.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Sep 21st, 2011 at 09:10:43 AM EST
[ Parent ]
Even Jerome is threatening war
a Neuro without France cannot happen (it will destroy Europe and mean war, as the Polish minister noted), and the Germans have basically said that a euro without Italy should not happen either.
It is the level of brinkmanship that's truly worrying right now. (On which see Germany and Greece flirt with mutual assured destruction by Ambrose Evans-Pritchard)

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 09:17:31 AM EST
[ Parent ]
Your point is both valid and worrying. But minor point: Jérôme is reporting, not threatening.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Wed Sep 21st, 2011 at 09:26:22 AM EST
[ Parent ]
At least people making these comments seem to realise that the stakes are very high.  I would be very worried people thought this was just an academic discussion over optimal currency areas.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Sep 21st, 2011 at 09:31:29 AM EST
[ Parent ]
As you already pointed out: this will only change when the Erasmus generation reaches significant political power. Unfortunately, many unpleasant things might happen before that.
by Bernard (bernard) on Wed Sep 21st, 2011 at 09:58:55 AM EST
[ Parent ]
[ET Moderation Technology™]

Make sure you use the "comments" form of the url: http://www.eurotrib.com/comments/2011/8/1/4131/20157/53

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 10:08:54 AM EST
[ Parent ]
2025 is when we should expect the Erasmus generation to achieve politically seniority.


Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 10:10:39 AM EST
[ Parent ]
I would only note that the current neo-classical economics is, and the prior classical economics was, as noted by Polanyi, a hopelessly doomed utopian project in that it posited an autonomous economic sphere where the society was to be reordered to serve the economy, whereas all previous understandings of society had the economic and productive activities of that society serving the society as a whole. This was despite the fact that the society had been and was being massively reordered through its political apparatus to serve the needs of its economy.

The problem is that the economic vision treated land, labor and capital as pure factors of production and made unrelenting demands that they be treated as such, while such treatment was incompatible with the long term survival of society and the environment. The only reason society, and now the environment, survived as well as it did was due to the effective opposition of that utopian project, which is now failing.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Sep 21st, 2011 at 01:42:04 PM EST
[ Parent ]
The problem is that the economic vision treated land, labor and capital as pure factors of production and made unrelenting demands that they be treated as such, while such treatment was incompatible with the long term survival of society and the environment.

You give too much credit to economic profession. These three; land, labour and capital are more than enough to solve economic problems. But even them are too much for that "science" to handle. To add there even more sofisticated factors and expect this profession come out with sensible propositions is a fantasy.

The basic morality and economics that land is a human right and most productive rent-free is missing from almost every theory and high-flying declaration. And without this basic understanding feudalism is a logical conclusion of all theories.

by kjr63 on Sat Sep 24th, 2011 at 07:03:00 AM EST
[ Parent ]
Addition:

"most productive rent-free"

Naturally also free of interest.

by kjr63 on Sat Sep 24th, 2011 at 07:05:06 AM EST
[ Parent ]
"People become politicised when their fundamental needs and rights are no longer respected or self-evidently available to them."

Considering the manipulation of the media, including the internet, self-evidence may not ever occur to any majority.

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Wed Sep 21st, 2011 at 10:03:44 PM EST
[ Parent ]
It depends on the degree of political mobilisation within a state.  Of course only a small minority may actively engage in politics, but they can mobilise the majority with good organisation and communication skills.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Sep 22nd, 2011 at 10:24:43 AM EST
[ Parent ]
Martin Wolf: Time for Germany to make its fateful choice (FT.com, September 13)
"Perhaps future historians will consider Maastricht a decisive step towards the emergence of a stable, European-wide power. Yet there is another, darker possibility ... The effort to bind states together may lead, instead, to a huge increase in frictions among them. If so, the event would meet the classical definition of tragedy: hubris (arrogance), ate (folly); nemesis (destruction)."
I wrote the above in the Financial Times almost 20 years ago. My fears are coming true. This crisis has done more than demonstrate that the initial design of the eurozone was defective, as most intelligent analysts then knew; it has also revealed - and, in the process, exacerbated - a fundamental lack of trust, let alone sense of shared identity, among the peoples locked together in what has become a marriage of inconvenience.

...

This is what I heard from an Italian policymaker: "We gave up the old safety valves of inflation and devaluation in return for lower interest rates, but now we do not even have the low interest rates." Then: "Some people seem to think we have joined a currency board, but Italy is not Latvia." And, not least: "It would be better to leave than endure 30 years of pain." These remarks speak of a loss of faith in both the project and the partners.

...

In the end Germany must choose between a eurozone disturbingly different from the larger Germany it expected or no eurozone at all. I recognise how much its leaders and people must hate having been forced into a position in which they have to make this choice. But it is the one they confront. Chancellor Angela Merkel must now dare to make that choice, clearly and openly.

(Google link)

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 09:31:00 AM EST
..Once the crisis hit Italy,

What is this crisis? A real economy crisis or financial crisis? The latter has nothing to do with the former. If the banks have wasted their capital, they should go bankrupt. Debts are cancelled and then ECB provides liquidity to real economy. It not more complicated than this.

by kjr63 on Wed Sep 21st, 2011 at 11:24:51 AM EST
Nice sentiment, but yes it is more complicated.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Wed Sep 21st, 2011 at 11:43:20 AM EST
[ Parent ]
The problem is that, because utility banking is an essential infrastructure, banks don't "just go bankrupt". Continued operation of the payment and clearing system needs to be ensured throughout the bankruptcy process. That's why banks are usually subject to a special resolution regime. Governments may have to recapitalise the utility part of the bankrupt bank. Since governments cannot be funded by the ECB they may not have the fiscal capacity to do so. In addition, because of free movement of capital across internal EU borders, entire countries can be subjected to "runs" as has in fact been happening for many months if not years.

In the worst case scenario, all cash in the EU might end up in German banks while both the banks and the governments of deficit countries go bankrupt as a result of a generalised deposit run, while the banking supervisors and central banks at both the national and European level wash their hands of the whole thing because of "free movement of capital".

And, of course, a "banking" crisis is both a "real economy" and a "financial" crisis.

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 11:49:02 AM EST
[ Parent ]
..Since governments cannot be funded by the ECB they may not have the fiscal capacity to do so.

If that is the case they must create new currency. Economy cannot feed the parasite forvever.

by kjr63 on Wed Sep 21st, 2011 at 06:19:26 PM EST
[ Parent ]
It seems to be accepted that parasite bankers and financiers must be endured.

Even Marx knew better.

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Wed Sep 21st, 2011 at 10:25:16 PM EST
[ Parent ]
The ongoing financial crisis creates the real economy crisis by way of the debt-crisis.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Wed Sep 21st, 2011 at 01:55:25 PM EST
[ Parent ]
Of course. The less there are interest, rent, monopolies and capital gains, the more healthy is the real economy. That is really the opposite what we are told every day.
by kjr63 on Wed Sep 21st, 2011 at 06:22:35 PM EST
[ Parent ]
kjr63:
A real economy crisis or financial crisis?

if regulation had been effective they wouldn't be so linked.

that's the idea of reinstalling glass-steigel or ringfencing as the brits call it.

problem is they are talking about it, not doing it, and the date it's enacted is so freaking far in the future they may as well not bother at all.

with the usual delusions of megalomnania and hubris they fondly imagine the people are too stupid to ever believe their friendly local bank where they keep their savings are lying conniving thieves, for ever and ever amen.

wonder of wonders, people start getting a clue when their savings go down the crapper and bonuses for the lords of the universe keep rising.

pass the port charlie, what's that commotion below deck?

'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 Wed Sep 21st, 2011 at 03:07:38 PM EST
[ Parent ]
The problem is the de facto "bankruptocracy" cited elsewhere in this diary by TBG. Despite have been, in effect, insolvent and bankrupt, these institutions and their largest investors retain control over the governments they have captured. The only solution that would offer a way forward is to write down the debt to levels that can be paid, but this debt is owed to politically powerful individuals who will see all merrily go to hell in handbaskets before they will agree to accept losses that wipe out their wealth and power. The way out to a better future involves dealing effectively with that ugly fact.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Sep 21st, 2011 at 05:22:39 PM EST
[ Parent ]
Gee, Obama's pretty close with his "Tax the Rich" and then all we need is a serious Tobin tax?

Align culture with our nature. Ot else!
by ormondotvos (ormond.otvosnospamgmialcon) on Wed Sep 21st, 2011 at 10:27:56 PM EST
[ Parent ]
I will believe Obama is doing more than just posturing for the progressives when he orders investigations and prosecutions of multiple frauds on Wall Street. Had he wanted to do ANY of the things he again hints and implies he now wants to do he could readily have done them prior to the elections in Nov. 2010. Now he had convenient excuses as to why the Republicans are preventing him from doing what he now claims he wants to do.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Sep 22nd, 2011 at 12:27:06 AM EST
[ Parent ]
Also when the "tax the rich" goes beyond, "the rich ought to pay the same rate as the middle class", to, "the rich ought to pay a higher rate than the middle class".

But he's running for the "independents", and since the Hedge Fund wing of the Democratic party is already center-right, the Hedge Fund wing conception of "playing to the independents" is playing to the ground between the center-right and the radical right.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Sep 22nd, 2011 at 01:05:43 PM EST
[ Parent ]
The famous Independents™.  A group comprised of equal parts of people more Conservative then the GOP and ignoramuses:

NEWSWEEK recently asked 1,000 U.S. citizens to take America's official citizenship test, 29 percent couldn't name the vice president. Seventy-three percent couldn't correctly say why we fought the Cold War. Forty-four percent were unable to define the Bill of Rights. And 6 percent couldn't even circle Independence Day on a calendar.

granted most of the former are a subset of the latter ...

But.

Still.

 

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

by ATinNM on Thu Sep 22nd, 2011 at 01:11:37 PM EST
[ Parent ]
Yes, US elections are generally decided by people who don't start paying attention to politics until September of the Presidential election year. The main influence of the electoral "base" of each party in Presidential years is deciding which candidates are available to low information voters to choose from.

So, of course, the radical reactionaries have invested quite a bit into working out how to feed those people memes for the majority of the time that they are not paying attention, that pander to their existing preconceptions while favoring the radical reactionary candidates.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Sep 22nd, 2011 at 03:41:08 PM EST
[ Parent ]
Not surprising, given that even Newsweek couldn't get America's official citizenship test right. The only question on the Cold War is
During the Cold War, what was the main concern of the United States?
by gk (gk (gk quattro due due sette @gmail.com)) on Thu Sep 22nd, 2011 at 04:15:08 PM EST
[ Parent ]
FREEDOM!
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Sep 22nd, 2011 at 04:55:56 PM EST
[ Parent ]
The two of you are obviously among the 73% Newsweek talks about....
by gk (gk (gk quattro due due sette @gmail.com)) on Fri Sep 23rd, 2011 at 04:15:51 AM EST
[ Parent ]
I take it that the correct answer was "finding plausible reasons to keep up military budgets!"

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Thu Sep 22nd, 2011 at 10:17:17 PM EST
[ Parent ]
The US fought the Cold War o keep the World safe for Democracy.

Democracy is so precious, to the US power elites, it had to be locked-up in a bank vault, guarded by the US military-industrial complex, and never, ever, allowed to 'roam free.'

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

by ATinNM on Fri Sep 23rd, 2011 at 01:49:59 PM EST
[ Parent ]
Poorly worded question. If that's the answer, the question is, "What did the US claim was its main concern during the Cold War?

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sat Sep 24th, 2011 at 02:28:54 PM EST
[ Parent ]
Why breaking up is so hard to do - FT.com

The eurozone then cannot stay where it is, cannot undo what it has done and finds it traumatic to go forward. But the very notion of exit is destabilising. They made it; and they must now make it work. Right now what is needed is aggressive economic expansion at the core, not least via immediate loosening of ECB monetary policy, along with strong support for the countries that face illiquid public debt markets and big debt reductions, in some cases. In the longer term, the minimum needed is a far greater degree of fiscal solidarity and discipline, and a eurozone-wide banking system, with much higher capital levels.

Is this feasible? I do not know. But I do know what is at stake. The eurozone hates being in the frying pan. It must not jump into the fire.

(Google link)

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Sep 21st, 2011 at 04:36:24 PM EST


Display:
Go to: [ European Tribune Homepage : Top of page : Top of comments ]

Top Diaries