Posts Tagged ‘Europe’

Walter Russell Mead Visits Europe

Thursday, October 17th, 2013

The indomitable Walter Russell Mead has been traipsing around Europe, and has much of interest to report from various countries there regarding the continuing slow-motion Euro crisis.

The Italians? Not happy.

The Italians feel caught in a cruel trap; the euro is killing them but they don’t see any alternative. When a German visitor gave the conventional Berlin view (the southern countries got themselves into trouble by bad policy, and austerity is the only way out; budget discipline and cutting labor costs are the only way Italy can once again prosper), a roomful of Italians practically jumped on the table to denounce his approach.

The Italian position is basically this: it’s crazy to blame Italy or the other southern countries (except Greece, which nobody seems to like very much) for the euromess; Germany played a huge role in designing the poorly functioning euro system in the first place and remains its chief beneficiary. When German banks lent billions to Spanish real estate developers and hoovered up the bonds of southern countries, where were the German bank regulators? German politicians, say the Italians, don’t want to admit to their voters that incompetent German bankers and incompetent German bank regulators wrecked the German financial system by making stupid loans worth hundreds of billions of euros. In a “normal” world, German politicians would have to go to their taxpayers to fund a huge bailout of insolvent German banks thanks to their cretinous euro-lending. Pain would be more equitably distributed between borrowers and lenders.

From an Italian point of view, much of Europe’s austerity isn’t the result of German moral principles; Italians think that a cynical absence of moral principles led the German political class to scapegoat garlic-eating foreigners in a desperate attempt to prevent the voters from noticing just how recklessly incompetent the German elite really is. Germany is using the mechanisms of the euro to force southern governments to bail out German (and French and other northern) banks at immense social pain and economic cost. The Italians, even sensible and moderate ones who want to cooperate with Europe, totally reject the logical and moral foundations of the German approach to the crisis, and they feel zero gratitude or obligation to make life easier for Germany as the drama unfolds.

The French? Not happy.

In France, the people I spoke with worried about the rise of the National Front. According to some polls the ultra-right could emerge as the biggest party in France in the next round of regional and European elections. The French Socialists under the increasingly unpopular President Hollande don’t seem to have much idea about how to move forward; their most popular politician at the moment is a Minister of the Interior who is trying to compete with the National Front for the anti-immigrant vote by breaking up encampments of Roma and denouncing them as immigrants who don’t want to assimilate.

Also they, and the rest of Europe, seriously misunderstand the Tea Party:

One of the reasons Europeans are so fearful of the Tea Party is that they assume that because it is right wing and populist it is like the National Front in France or Golden Dawn in Greece. Today’s small government American Tea Partiers are much farther from Huey Long and Father Coughlin in their political views than some European right wingers are from the darker demagogues of Europe’s bloody past, and until the European establishments understand this, they will likely continue to misjudge the state of American politics.

The Germans? It’s complicated.

There are Germans who sympathize with the Italian critique of EU austerity policy, but Germans on the whole seem to feel that in pushing a tough reform agenda in Europe, and linking further payments and bailouts to that reform agenda, they are doing their neighbors a favor. They sincerely believe that their own relatively strong economic performance is the result of their willingness to accept some liberalizing reforms coupled with a commitment to fiscal prudence. They think that by exporting this model they are helping other European countries on the path to lasting prosperity, and they believe that with some patience, the other European countries will soon begin to experience the benefits of German-style economic reform.

Europe, of course, has a very unhappy history with things labeled “German-style.”

Mead feels that Europe is rich enough to continue subsidizing it’s Euro-folly for the immediate future, but it comes at a cost:

The bitter public feelings generated by the euro crisis and its long, painful aftermath are still working their slow and ugly way through the European political system. In country after country we are seeing steady gains by political movements that bear a superficial resemblance to the American Tea Party, but in fact flirt much more with the kind of dangerous nationalist and chauvinist ideas that have proven so destructive in Europe’s past.

It’s a sobering, moderately lengthy read, and I commend all of it to your attention.

European Debt Crisis Update for July 10, 2013

Wednesday, July 10th, 2013

The ongoing European Debt Crisis hasn’t ended, it’s merely undergoing a summer hiatus while the various bankers and Eurocrats involved in the shell game take their customary 8 week vacations. As such, expect a new round of crisis headlines to come rolling in during the fall.

Remember: The purpose of the shell game is to let insiders unload their bad debts onto taxpayers. (Look how it was done in Ireland for pointers.) The shell game will continue as long as the insiders can get away with buying off restive electorates with an unsustainable cradle-to-grave welfare state.

Europe’s present is our future.

  • Once again, Greece is being given money to pretend to reform. Look for more fake austerity, and another bailout in six months.
  • “Greece will never repay the money it’s been lent to ‘save’ it. The current debate over whether Greece has done enough by way of reform, tax hikes and spending cuts to have earned the next tranche of bailout funds is largely beside the point. If Greece is cut loose, or walks away, its euro-zone creditors will lose their money. The Greeks and the Germans are surely both aware of this. They’re also aware that Greece’s external debt position is far worse than when the bailouts began—when its debt stood at a mere 129% of GDP—and that any talk of debt sustainability in Greece has become a joke.” It’s now at 157% of GDP.
  • Predictably, Greek unions respond to more fake austerity and staff cuts by extending strikes.
  • Europeans realize that their governments are corrupt. Those who think they’re not corrupt? “In Spain that number is just 8 percent. In Italy, it’s 13 percent. And Greeks and Portuguese have the least trust in the world regarding their governments’ efforts: Just 1 percent of respondents say their government is making strides against corruption.”
  • And just how corrupt is Greece? “Politicians and journalists are viewed as on the take by most Greeks with 50 percent also saying they’ve had to bribe public officials to get services.”
  • Eurozone unemployment hits all time highs.
  • The EU is preparing a banking union bill. No word on whether it will require depositors to take haircuts like those in Cyprus in the event of a bank failure.
  • And speaking of bank failures, there are rumblings that Slovenia will require a bailout.
  • Portugal is still trudging through their own bank bailout…
  • …despite which they may still need another bailout.
  • Italy could be forced to beg for a bailout in six months.
  • UK actually proposes to roll back some 35 EU laws. This may be the first sign that Cameron’s wet Tories have actually noticed how effectively Nigel Farge’s UKIP is eating into their base…
  • UKIP itself says it’s a threat to the entire political class Well, let’s hope so…
  • Latvia is now set to join the Euro on January 1, 2014.
  • LinkSwam for May 31, 2013

    Friday, May 31st, 2013

    The season has switched from not Summer to Summer here in Texas, so here’s a hot, humid LinkSwarm:

  • In Europe, youth unemployment is climbing to scary, stratospheric heights. So scary I’m going to swipe their chart:

    Notice how countries that have kept their deficit spending relatively low (Germany and even the UK, where deficits has at least decreased under Cameron) are doing much better than the PIIGS. Again, Austerity hasn’t failed in Europe, it’s been declared difficult and left untried.

  • Harry Reid calls his close personal friend and business associate Harvey Whittemore (and his wife) “wonderful people.” Oh, and Whittemore is now also a convicted felon.
  • Eric Holder: Obama’s sin eater. “The attorney general has done little in his tenure to protect civil liberties or the free press. Rather, Holder has supervised a comprehensive erosion of privacy rights, press freedom and due process. This ignoble legacy was made possible by Democrats who would look at their shoes whenever the Obama administration was accused of constitutional abuses.”
  • Pentagon Papers lawyer James Goodale talks about just how bad Obaama is for freedom of the press.
  • ObamaCare rates next year in California: “Obamacare will increase individual-market premiums by an average of 116 percent.”
  • Britain remains in denial over Islamic terror.
  • The Gang of 8 proposal implements amnesty and gives conservatives nothing in return.
  • Ted Cruz actually tries to fix the bill. Gang of 8 tells him to get stuffed.
  • The Chicago Sun-Times lays off their entire staff of photographers. Including a Pulitzer Prize winner.
  • LinkSwarm for May 6, 2013

    Monday, May 6th, 2013

    Time for another LinkSwarm!

  • Silly Joanne Chesimard. If she had just served her time, she’d have tenure by now.
  • Europe is “bleeding out”. Youth unemployment? “59.1% of those under 25 are unemployed in Greece, 55.9% in Spain, 38.4% in Italy, 38.3% in Portugal, 26.5% in France.” More: “Hope and Change economies are crony capitalist systems which pick winners and losers. They maintain the status quo at all costs — and reward those who have captured government over those who innovate.”
  • So which is funnier, violence against women, or intimidating crime witnesses? Mountain Dew puts both in the same ad! Hilarity ensues! (Oh, and some people think it’s racist. It is, but not any more than a random gangsta rap video.)
  • People don’t like being bossed around by the political class. But that’s the Democratic Party’s entire model!
  • Will the welfare state dstroy democracy?
  • Did the Boston Bombers kill illegal alien amnesty?
  • “We found 15 Trial Court cases, and 12 Appellate Court cases, where Shariah was found to be applicable in these particular cases. The facts are the facts: some judges are making decisions deferring to Shariah law even when those decisions conflict with Constitutional protections.”
  • Another day, another green car bankruptcy filing.
  • According to the IRS, the sins of the mothers are, in fact, the sins of the sons.
  • War on terror? What war on terror?
  • Israel hits Syrian weapons bound for Hezbollah. World yawns.
  • And just in case it wasn’t clear before, Syria’s army sucks at fighting Israel. Though they seem quote adequate for killing their own people…
  • Gun businesses continue to leave Colorado.
  • Former New Mexico Democratic Gov. Bill Richardson says that Ted Cruz isn’t allowed to be a Hispanic because he opposes illegal alien amnesty. Maybe they should just declare that you can’t be Hispanic unless you’re a Democrat and be done with it.
  • Speaking of Cruz, here’s a piece in The New Republic that, when stripped of standard TNR talking points, boils down to “Yes, Ted Cruz could be elected President.”
  • Another day, another another 20 dead in an Islamist attack on a Christian church.
  • Obama vows to stick hands into the open flame even longer this time.
  • Three year old black girl is the NRA’s youngest lifetime member.
  • China’s new Communist Party headquarters looks like a wang.
  • There are some Williamson County elections coming up May 11. None I’m voting in, but lots of city and ISD elections.
  • Nothing says “confidence” quite like insulting the genitalia of a stranger’s 11-year old child on the Internet.
  • Spain IS Beyond Doomed, But It’s Not Practicing Real Austerity

    Tuesday, April 30th, 2013

    Take a look at these charts. Unemployment in Spain is up over 25%, and most have been unemployed more than 2 years. Matthew O’Brien is correct when he says that Spain’s inflexible labor laws contribute greatly to the unemployment, but errs when he says that “austerity hasn’t been the path to prosperity. It’s been the path to perma-slump.”

    Austerity hasn’t failed in Spain. It hasn’t been tried.

    Spain last ran a budget surplus in 2008, and since then it has engaged in deficit spending. In 2012, Spain’s budget deficit was 9.4% of GDP, and this year it will be 10.6% of GDP.

    Remember, real austerity isn’t trying to tax-and-spend your way to prosperity. Real austerity is cutting budgets until outlays match receipts. Estonia bit the bullet and balanced its budget, and its economy is now growing at a steady clip. Meanwhile, governments all across Europe continue to try the same deficit spending Keynesian pump-priming, and keep having the same recession. In most of Europe, “austerity” has meant digging their own graves more slowly rather that stopping digging.

    And European elites refuse to stop digging because their power and perks all stem from swaddling voters in an unsustainable cradle-to-grave welfare system.

    If all this sounds familiar, that’s because it is. Europe makes the same mistakes, gets the same results, and keeps doubling down on stupid, content to keep the farce running as long as they possibly can. Instead actually of solving the interrelated problems of debt, unsustainable entitlements, and the Euro, the Euroelite seem content to preside over the world’s slowest, most boring train wreck. Yes, it’s a pity the train is sliding inexorably toward the chasm, but there’s such fine vintages to be had in the saloon car, and it offers such a magnificent view of the coming crash…

    Greece: More Bailouts, More Fake Austerity

    Wednesday, April 17th, 2013

    While attention was focused on the Boston bombing, Gosnell, and gay marriage, Greece just got another bailout. This is in exchange for further “austerity.”

    What sort of “austerity” is Greece practicing? The sort that involves deficit spending at 10% of GDP, which is up from 9%. It was supposed to be cut to 7.5%.

    So Greece wants more money because it can’t even keep to its previous promises on its fake austerity goals.

    Let me explain it once again: Real austerity is cutting spending until it matches incoming receipts. Not reducing the rate of deficit spending. Not raising taxes so politicians can continue to spend.

    No country in the EU (at least outside the Baltics) has practiced real austerity. That Forbes piece on the Baltic nations includes a lot of good advice that EU nations are largely ignoring:

    Don’t run up big debts. It is a lot easier to manage when things go bad if you aren’t overextended to start. Observed Rosenberg: “Estonia’s experience shows that prudent policies during the boom may not avoid a bust, but they can put the country into a better position to deal with shocks.”

    Don’t engage in an orgy of “stimulus” spending. That will run up big debts without generating long-term growth. When budgets eventually are cut, as they will have to be, the economic loss and political pain will be even greater.

    Make tough decisions early. People typically are ready to act after the crisis hits. In the case of Latvia, argued Asmussen, by acting swiftly “most of the required painful budgetary decisions could be passed before the so-called ‘adjustment fatigue’ kicked in.”

    Maintain fiscal responsibility. Otherwise any progress will be transitory. Growth is the natural result of reform. Delaying reform exacerbates the problem while prematurely terminating reform short-circuits the recovery.

    Emphasize budget cuts. Expansive and irresponsible public outlays usually contribute to economic crisis. Moreover, the state as well as citizens should sacrifice after a crash. The answer is to cut expansive and irresponsible public outlays. In fact, economists Alberto Alesina and Silvia Ardagna found that “spending cuts are much more effective than tax increases in stabilizing the debt and avoiding economic downturns. In fact, we uncover several episodes in which spending cuts adopted to reduce deficits have been associated with economic expansions rather than recessions.”

    Finally, don’t rest on one’s laurels. There always is more to do. Even nations which have implemented serious reform programs, like the Baltic States, could make further improvements.

    As far as I can tell, none of the core EU states (and certainly none of the PIIGS) has tried this approach since the 2008 recession hit. They keep trying Neo-Keynesian pump-priming and deficit spending to keep both the Euro and their unsustainable welfare state float, and they keep experiencing endless recession. Their fake austerity comes in slightly reducing the amount of their deficit spending enough to pretend they’re in compliance to keep the bailouts coming. Ireland hasn’t practiced real austerity. Neither has Portugal, Spain, or Italy (though Italy has come closest).

    The shell game of bailouts and fake austerity will continue as long as the Eurocrats can keep getting away with it.

    LinkSwarm for April 4, 2013

    Friday, April 5th, 2013

    Been a while since the last Friday LinkSwarm, so here it is!

  • The problem with Europe’s economy? It’s the spending, stupid.

    Government spending on bailouts, subsidies, grants, salaries and entitlements commands a much larger share of these economies than it did just a few years ago. European austerity has been focused on the private sector — namely, taxpayers with high incomes.

    That is the second thing the PIIGGS have in common. The highest income tax rate was recently increased in every one of the troubled PIIGGS except Italy (where it was already too high at 43%). The top tax rate was hiked from 40 to 46.5% in Portugal, from 41 to 48% in Ireland, from 40 to 45% in Greece, from 40 to 50% in Great Britain, and from 48 to 52% in Spain.

  • Immigration “reform:” Distrust and Then Verify.
  • News flash: Getting a PhD in Literature is not a surefire path to financial security. Stop the presses!
  • Female Princeton grad tells current Princeton women that maybe they should consider getting married in college. Naturally the Ivy league/feminist/MSM complex threw a fit. (Pro-tip: There are few surer signs of leftwing PC think than the word “hetronormative.”)
  • Homicide Trends in the US: 1980 to 2008.
  • Dwight brings up another case of journalistic malpractice. “Meet the Sniper Who Killed 2,200 People in Iraq.” As Dwight notes, anyone with even passing knowledge of snipers should know that this claim is ludicrous from the git go. In sports terms, it’s like someone claiming they threw 20 Major League no hitters, or ran a two minute mile. It reminds me of Scott Thomas Beauchamp’s smears about troops in Iraq in The New Republic. (If you remember the Beauchampo affair, it turns out that he was engaged to Elspeeth reeve, who just happened to be a TNR fact-checker. Somebody should make them read Stolen Valor.
  • Also from Dwight: This interesting piece about a gay man talks about coming out at Jerry Falwell’s Liberty university.
  • Texas Attorney General Greg Abbott: UN Treaties don’t trump the Bill of Rights.
  • Left-wing bigots pat themselves on the back.
  • Quick Cyprus Update for March 21, 2013

    Thursday, March 21st, 2013

    Cyprus crisis is a miniature version of the Greek crisis, and the Greek crisis is a miniature version of Europe’s crisis. The scale and details differ, but the underlying problem is mind-numbingly familiar: People spending too much of other people’s money with too little accountability. Cyprus bank bailouts are unsustainable in the same way that Greek government bailouts are unsustainable in the same way that the European cradle-to-grave welfare state is unsustainable.

    How could it have been avoided? The same way any of the multitudes of financial crises that have rocked Europe in last several years could have been avoided: Don’t spend money you don’t have. That solution is both blindingly obvious and completely unacceptable to the Eurocratic elite (as well as our own liberal ruling class). After all, the bloated welfare state is where they get theirs. Nothing can be allowed to come between the permanent ruling class and their perks. Nothing.

    Some current Cyprus news:

  • Four days left until the next end of the world.
  • Background on the Cyprus crisis.

    Once Greece hit the skids in 2010, it was inevitable that Cyprus would follow. Already by 2011 the government was effectively prevented from selling bonds by a junk credit rating. It resorted to a €2.5 billion ($3.2 billion) loan from the Russian government, due in 2016. The killer, though, was the pact reached in October 2011 to reduce the value of Greek government bonds by 70 percent. That produced a loss to the Cyprus banks of more than €4 billion—the same in proportion to the economy’s size as a $4 trillion loss in the U.S. President Demetris Christofias, seemingly not realizing the severity of the blow, agreed to the haircut without seeking offsetting aid for Cypriot banks. He eventually sought a bailout, but, befitting a left-wing politician who earned a doctorate in history in the Soviet Union, dragged his heels on cutting government spending while inveighing against the “troika” of the European Union, the European Central Bank, and the International Monetary Fund. Losses mounted.

  • Russia to Cyprus: Die in a fire.
  • Explaining the Cyprus crisis like you’re an idiot.
  • It’s Crazy Stan’s Discount State Assets Stand! Everything must go!
  • David Cameron Suddenly Remembers He’s a Tory

    Wednesday, January 23rd, 2013

    Well well well, maybe David Cameron has some cobbles after all.

    Cameron has generally presided over the “wettest” Tory administration the UK has seen since Neville Chamberlain, but today he delivered a veritable pipe bomb of a speech on the future of the European Union.

    First, the problems in the Eurozone are driving fundamental change in Europe. Second, there is a crisis of European competitiveness, as other nations across the world soar ahead. And third, there is a gap between the EU and its citizens which has grown dramatically in recent years. And which represents a lack of democratic accountability and consent that is – yes – felt particularly acutely in Britain.

    Also this:

    If Europe today accounts for just over 7 per cent of the world’s population, produces around 25 per cent of global GDP and has to finance 50 per cent of global social spending, then it’s obvious that it will have to work very hard to maintain its prosperity and way of life.

    While Obama is certainly doing his best to make sure America’s portion of that last figure increases (driving down Europe’s share as a side effect), what Cameron is saying here is both obviously true and absolutely unacceptable to the Euroelite: The European cradle-to-grave welfare state is unsustainable.

    And this:

    People are increasingly frustrated that decisions taken further and further away from them mean their living standards are slashed through enforced austerity or their taxes are used to bail out governments on the other side of the continent.

    Cameron basically stood up and pointed out that the Emperor has no clothes.

    Still more:

    More of the same will not secure a long-term future for the Eurozone. More of the same will not see the European Union keeping pace with the new powerhouse economies. More of the same will not bring the European Union any closer to its citizens. More of the same will just produce more of the same – less competitiveness, less growth, fewer jobs.

    “Hey dumbasses: stop digging!!”

    And still more:

    I want us to be at the forefront of transformative trade deals with the US, Japan and India as part of the drive towards global free trade. And I want us to be pushing to exempt Europe’s smallest entrepreneurial companies from more EU Directives.

    These should be the tasks that get European officials up in the morning – and keep them working late into the night. And so we urgently need to address the sclerotic, ineffective decision making that is holding us back.

    That means creating a leaner, less bureaucratic Union, relentlessly focused on helping its member countries to compete.

    In a global race, can we really justify the huge number of expensive peripheral European institutions?

    Can we justify a Commission that gets ever larger?

    Can we carry on with an organisation that has a multi-billion pound budget but not enough focus on controlling spending and shutting down programmes that haven’t worked?

    And I would ask: when the competitiveness of the Single Market is so important, why is there an environment council, a transport council, an education council but not a single market council?

    And here we have a Tory Prime Minister actually sounding like…a Tory! Who would have thunk it?

    Thatcher or Reagan he’s not, but this is bold stuff given the Eurocentric tenor of post-Thatcher UK governments.

    Oh: He also wants a referendum on EU membership by 2017.

    Reactions from the Eurocratic elite has been predictable: How dare Cameron slander our magnificently robed Emperor? And naturally all of them focus on the referendum than his substantive critique of the increasing collectivist, bureaucratic and unsustainable EU.

    Good show, Cameron old boy, good show. (Golf clap)

    Greece Opts To Continue to Euro Shell Game

    Sunday, June 17th, 2012

    Feeling less suicidal than usual, Greek voters have opted for the conservative (for Greece) New Democracy party in parliamentary elections, beating out the radical-left Syriza, which insisted Europe keep shoveling money into the black hole that is the Greek budget, but rejected even the fake austerity the Eurocrats demanded. New Democracy leader Antonis Samaras has his work cut out for him, convincing the Eurocrats that yes, this time, they really are implementing austerity. This time for sure!

    Look for this to help forestall the inevitable “grexit” for, oh, maybe three months. Which is when I bet Greece will find out it can’t pay it’s bills again after the latest infusion of cash, the money Europe kicked in will have strangely disappeared without seeming to have been spent on any fundamental government services, and insiders will have managed to transfer another few months of funds into their out-of-country banks accounts in advance of the next crisis…