Posts Tagged ‘European Debt Crisis’

Protestors March Against UK’s Non-Existent Austerity

Saturday, June 21st, 2014

I see that #NoMoreAusterity is trending on Twitter this morning. It seems the usual leftist protest sorts are rallying against the Cameron government’s “austerity.”

The only problem is it doesn’t exist.

Real austerity is cutting government spending until it matches receipts. Under David Cameron, deficit spending has merely gone from 11.4% of GDP in 2010 to a projected 5.8% in 2014. So the UK government hasn’t practiced austerity, it’s merely slowed the rate at which it’s digging its own grave.

For the protestors, this simply will not do. They want government to give them things, and if it means having the moribund economies of Greece and Spain, so be it.

But unlike Greece and Spain, the UK won’t be able to get Germany to bail them out, nor to hold down the hyperinflation that is the inevitable endpoint of excess deficit spending.

More EU Election Fallout

Wednesday, May 28th, 2014

It’s hard to know just how much weight to put in widespread gains by Eurosceptic parties in EU elections, mainly because the EU decision-making process seems so opaque to outsiders. Even if Eurosceptic Parties had won significant majorities, you get the impression that they would be like Patrick McGoohan’s character on The Prisoner after he got elected #2, issuing orders and flipping switches to no effect whatsoever:

Even were the Eurosceptics to form a coalition, power would still lie in the Council, or, some feel, in the permanent unelected EU bureaucracy. The entire apparatus seems designed specifically to thwart popular will and keep all power in the hands of the continental elite.

More reactions to the election:

Roger Kimball:

The architects of the EU envision a European superstate in which national identity is subordinated to the abstraction of “Europe.” The regime would be internationalist but only titularly democratic: the real power (as has been traditional on the continent) would reside in a technocratic elite, not the people. But the people, it seems, have just awakened to this reality and it turns out they don’t like it.

One take-away from yesterday’s election is this: when conservative parties cease providing a natural home for the community-binding sentiments of patriotism and national identity—when, that is to say, conservative parties cease being conservative—those parts of the population not indentured to the apparatus of dependency look elsewhere.

John O’Sullivan in National Review:

These results are merely the latest evolution of a very ominous long-term trend for the Tories. As Anthony Scholefield and Gerald Frost pointed out in their 2011 study Too Nice to Be Tories, the Conservative Party has been steadily losing one region of the United Kingdom after another in the last 40 years. It used to be able to depend on nine to twelve Unionist votes from Northern Ireland for its parliamentary majority; it gets none now. It won half the Scottish seats in 1955; the last three general elections each returned one Scottish Tory to Parliament. It wins eight seats out of 40 in Wales. And from the 158 MPs elected from the North of England, the Tories got 53.

This is a dreadful record, but it could get worse. UKIP is now starting to replace the Tories as the main challenger to Labour in northern working-class constituencies. The new party takes votes in particular from culturally conservative and patriotic working-class men whom both major parties have abandoned in their pursuit of urban middle-class progressives. UKIP may therefore be a threat to both parties, but the local elections suggest that it is a bigger threat to the Conservative party.

All this leaves Cameron with difficult choices:

Either he does the electoral deal with UKIP that he now says he won’t do, in which the Tories agree to support UKIP candidates in a given number of seats in return for UKIP’s not fielding candidates elsewhere. In London, for instance, that would give UKIP an electoral base of something just above 40 percent — in Britain as a whole an even larger one.

Or he contrives to lose the Scottish referendum on independence, which would remove only one Tory from the House of Commons but 41 Labourites and 11 Lib-Dems.

France’s ruling class are in a panic following the strong showing of Le Pen’s National Front.

Here’s a piece from the Jewish magazine Tablet in 2011 suggesting that Marine Le Pen has worked to purge the party of the antisemitism her father exhibited. Maybe.

Could UKIP and Eurosceptic parties even form a majority coalition in the European parliament? Possible but doubtful.

Then there’s the question of who would lead such a coalition, Nigel Farage or Marine Le Pen. Anglo-French rivalry is not exactly unknown…

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.

LinkSwarm for September 13, 2013

Friday, September 13th, 2013

My schedule is finally close to getting back to normal after Worldcon, so here’s the latest Friday LinkSwarm:

  • Greek unemployment hits 27.9%. Remember: For all the mentions of “austerity measures,” they’ve never balanced a budget.
  • Why we were in Benghazi. Short answer: Smuggling arms to Syrian rebels. Remember: No Americans died in Iran-Contra.
  • Syrian rebels do what they do best: kill women and children.
  • Obama’s Syrian policy is “is an unmitigated cl*st*rf*ck.” And that’s from his friends at The New Republic.
  • Charles Krauthammer calls it epic incompetence.
  • Today is the 20th anniversary of the Oslo Accords, which, as we all know, finally brought long-lasting peace and stability to the Middle East. “Decadal stasis points to the sterility of the Arab-Israeli diplomatic process.”
  • Mark Steyn on ObamaCare.
  • Mickey Kaus is worried that Republicans can still snatch amnesty defeat from the jaws of victory.
  • How often does Defensive gun use occur? “From about 500,000 to more than 3 million per year.”
  • PPP’s poll data showed Giron was in trouble, but they didn’t release the poll, ostensibly because they didn’t believe it. That may be the case, but their explanation is suspect, given they actually testified in court as part of the effort to get the recall effort thrown out. Also, they didn’t do Giron and the gun-grabber side any favors by suppressing the results (the Liberal Reality Bubble strikes again). Bonus: Pollster Twitter slap fight!
  • Is the House Republican leadership actually stupid enough to kill the sequester in a deal with Obama? Let’s hope not…
  • Jihadi rapper killed by fellow jihadis. And you thought Vanilla Ice’s reviews were brutal…
  • To a visitor from India, America looks like a classless society. “I’ve noticed that most Americans roughly have the same standard of living. Everybody has access to ample food, everybody shops at the same supermarkets, malls, stores, etc. I’ve seen plumbers, construction workers and janitors driving their own sedans, which was quite difficult for me to digest at first since I came from a country where construction workers and plumbers lived hand to mouth.” (Hat tip: Ace.)
  • How can Newspapers make money these days? How about by selling off their old photo morgues?
  • UK’s NHS: Now With Added Death.
  • Million Muslim March falls a mere 999,970 marchers short of their goal.
  • Rep. Peter King of Long island is running for President. Expect GOP voters to greet his campaign with the same enthusiasm with which they greeted Jon Huntsman’s.
  • Super-genius astronomer wants to name an asteroid “Trayvon”.
  • New Jersey police: hate crimes don’t happen to white people.
  • Police Chief meeting with Sheriff Joe Arpaio on his own time and money? That’s a suspension.
  • Austin: 13 murders in 8 months. “Otherwise known as a slow weekend in Chicago.”
  • Holly Hansen takes a look at Williamson County judicial races.
  • LinkSwarm for August 23, 2013

    Friday, August 23rd, 2013

    Another Friday LinkSwarm on Friday, to make your Friday seem more like Friday:

  • Why work when welfare pays better?
  • Europe’s Jews fear that their days are numbered.
  • Ted Cruz: traitor to his class. From the number of MSM attacks on Cruz, they obviously see him as the biggest threat to derail Hillary’s coronation in 2016.
  • And since there was a little mini-boomlet of “Ha, conservatives must hate that Cruz’s given name is Rafael!” stupidity from the leftosphere, here’s a video that reminds you that Ted Cruz’s father Rafeal is all kinds of awesome as well:

  • Surprise, surprise, surprise! Greece will need another bailout.
  • Hospital called LICH just can’t seem to die. (Hat tip: Dwight.)
  • Well, this is lovely: The Department of Homeland Security employees a black supremacist preparing for a race war against white people and gays.
  • Forced sterilization of “mental defectives” returns to the UK.
  • Dear Jeff Bezos: Maybe the Washington Post could make more money if they didn’t alienate half their potential audience by hyping anti-Republican witch hunts.
  • Fail to wear a veil when you leave the house? That’s a dismembering.
  • “Bradley Manning Is Not a Woman. Pronouns and delusions do not trump biology.”
  • Foreign aid is destructive.

    To improve the socio-economic development of Africa, the continent desperately needs private innovations, empowered by rule of law and an ambience of free enterprise, free of restrictive government regulations.Economic growth and development is indeed a vital ingredient towards achieving prosperity and a free society. However, it takes a spontaneous market driven approach without state interventionist barriers to achieve the noble aim, not foreign aid.

  • Remember folks: Partisan redistricting is perfectly constitutional. And Texas Democrats of it were masters of it for decades.
  • Sears posts $194 million loss. In other news, Sears is still in business.
  • Basketball statistician kills himself, and leaves behind meticulous suicide website explaining why he did it. One reason (among many others): “Economic collapse is inevitable (see U.S Financial to the left). The United States’ annual debt and cumulative deficit is way beyond the “out of control” label usually associated with it. It’s spiraling into oblivion and it will take society with it. Today the deficit is $16.9 trillion dollars with another $125 trillion of unfunded liabilities such as social security, medicare, prescription drug and federal pensions. It’s hopeless.”
  • What happens when rats have all their food needs met and are allowed to breed without restrictions? Social death followed by physical death. Though usually interpreted as an indictment of overpopulation, it could just as easily be about the the pitfalls of a purposeless life…
  • State Rep. (and Appropriations Committee chair) Jim Pitts will not seek reelection. Pitts, one of Speaker Joe Straus’ allies, recently was accused of seeking preferential treatment of his son at UT law school. Pitts was also one of the legislators pushing for…
  • The Impeachment of UT regent Wallace Hall for the crime of actually investigating wrong-doing, such as the law school slush fund.
  • 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.
  • What Austerity?

    Monday, May 27th, 2013

    Forbes makes the same point that I have made repeatedly: Austerity has not been tried and failed in Europe, it has been found difficult and left untried.

    The official figures show that PIIGS governments embarked on massive spending sprees between 2000 and 2008. During this period, their combined general government expenditures rose from 775 billion Euros to 1.3 trillion – a 75 percent increase. Ireland had the largest percentage increase (130 percent), and Italy the smallest (40 percent). These spending binges gave public sector workers generous salaries and benefits, paid for bridges to nowhere, and financed a gold-plated transfer state. What the state gave has proven hard to take away as the riots in Southern Europe show.

    Then in 2008, the financial crisis hit. No one wanted to lend to the insolvent PIIGS, and, according to the Keynesian narrative, the PIIGS were forced into extreme austerity by their miserly neighbors to the north. Instead of the stimulus they desperately needed, the PIIGS economies were wrecked by austerity.

    Not so according to the official European statistics. Between the onset of the crisis in 2008 and 2011, PIIGS government spending increased by six percent from an already high plateau. Eurostat’s projections (which make the unlikely assumption that the PIIGS will honor the fiscal discipline promised their creditors) still show the PIIGS spending more in 2014 than at the end of their spending binge in 2008.

    Remember: Real austerity is cutting budgets until receipts match outlays. In Europe this hasn’t been tried outside the Baltic states. Meanwhile, Japan has been trying Keynesian stimulus for two decades and has nothing to show for it but a mountain of debt.

    Or take this abstract (I’m still working through the actual paper) from German Institute for Economic Research economist Georg Erber: “The core thesis of the paper is that taking a close look at the actual statistics available from Eurostat on the PIIGS-countries plus Cyprus, one finds little empirical evidence that the governments there have de facto reduced their total public expenditures.”

    Keynesian pump-priming hasn’t worked in Europe. Could real austerity (i.e., cutting budgets until they’re balanced) work to restore growth in Europe (and here)?

    Why not actually try it and see?

    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.