Have another Pat Condell rant, this one on why Europe needs a revolution against the anti-democratic EU:
Posts Tagged ‘European Debt Crisis’
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.
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:
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.
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…
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.
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.
The season has switched from not Summer to Summer here in Texas, so here’s a hot, humid LinkSwarm:
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.
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?
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…