Though markets have calmed a bit, the desperate search for a lever that will actually steer Europe away from the looming wall of a EuroCrash continues. Meanwhile, certain repeating motifs are detected:
“Now that times are bad, the single currency has turned into an unbridled doomsday machine. Merkel continues to insist that she’ll do whatever it takes to save Europe’s “destiny”. The continued insistence on fiscal austerity and debt repayment tells a different story. Is Germany really prepared to bankroll a wider monetary union by putting its money where its mouth is, or is the game finally up?”
Europe now has the lowest growth of any region in the world. We have already wasted years in trying to control this sickness in the euro, and we are saving the cancer and killing the patient. We have blighted countless lives and lost countless jobs by kidding ourselves that the answer to the crisis might be “more Europe”. And all for what? To salvage the prestige of the European Project, and to spare the egos of those who were wrong and muddle-headed enough to campaign for the euro.
Johnson is right about the cancer, but slightly wrong about the cause: The European cradle-to-grave welfare state is the cancer; the Euro just made it slightly more malignant.
But with two separate commentator’s calling the Euro a Doomsday Machine, I feel a new meme coming on:
Not to mention much better chances of being linked by Jonah Goldberg and James Lileks…
Greece is happy to stay in the Euro…as long as other countries are footing the bill. They want more subsidies and an end to even the #fakeausterity. Not only do they want to continue to dig their deficit spending grave, they insist on digging it as fast as possible. How to get Germany to agree to continue footing the bill is the one flaw in their otherwise cunning plan…
Why the Blue State model doesn’t work: Cheap money doesn’t mean welfare states balance their budgets, it just means they spend that much more:
Greece, Spain, Ireland, Portugal and Italy (and California). In each case, the promise of more bailouts and a steady flow of cheap money only produced more reckless behavior, excessive levels of government spending and record levels of debt.
Johan Norberg, a senior fellow at the Cato Institute, summarizes the results: “From 1997 to 2007, government expenditures increased by around 6 percent annually in Spain, Portugal and Greece, while population remained mostly stable. Spending increased by 4 percent a year in Italy — even while the economy shrank.”
Consequently, “Between 2000 and 2010, Portugal increased its public debt as a share of GDP from 49 percent to 93 percent, France from 57 percent to 82 percent, Italy from 109 percent to 118 percent, and Greece from 103 percent to 145 percent,” reports Norberg.
The European crisis is as much a crisis of politics as economics. The current paralysis of the Greek political system demonstrates the point very clearly. EU policy has actively contributed to this crisis by effectively sealing off discussion of the political problems thrown up by austerity.
Budgetary policy is at the core of traditional democratic politics in Europe but the management of the euro zone is increasingly being effected not through democratic institutions but via a centralised and depoliticised form of technocratic fiat. The “stability” narrative has triumphed over the need for legitimacy as the crisis in Europe has deepened.
Ivan Krastev, the eminent political scientist, argues that we have now arrived at a point where national governments have politics but are no longer in control of policy, including budgetary policy, which is moving via the fiscal treaty and other measures to the EU level.
On the other side of this divide the European Union has policies but no politics, since decisions are increasingly being made by technocratic managers rather than directly elected representatives of the European public. The euro zone crisis has thus amplified an existing problem – the absence of both a European citizenry and a transparent European level political process.
A long meditation on what a Greek exit would mean involving Frankenstein, Old Maid, and David Brin.
The EU sends inspectors to find out why Spain’s deficits are so high. Offhand I would say the solution to the mystery might be “because they’re spending more money than they’re taking in.” Obviously such thinking will never get you anywhere in the EU civil service…
Good evening. I’m not Chevy Chase, and you’re not either. (Unless the real Chevy Chase is reading this, in which case: 1. Loved you on the original SNL, and 2. Stop being such a total dick.)
Take a look at this update: “German Chancellor Angela Merkel has mooted the idea that Greece should hold a referendum on the euro alongside its second round of elections next month.” Well, no use even pretending that the Greeks have a say in their own future, is there?
How bad will the Euro-collapse be? “This type of shock could produce instability at least as extensive as the aftermath of the collapse of Lehman Brothers.”
Der Spiegel goes all Amityville Horror on Greece: GET OUT.
Speaking of prominent German media outlets slamming Greece (insert your own Cartman’s Mother joke here), can anyone tell me why the Greek finance ministry offices look like an episode of Hoarders? My German is a bit rusty to watch a 45 minute documentary, but what are in the garbage bags? Tax returns?
Spain’s housing bubble gets compared to Ireland’s housing bubble, including how it’s getting ready to drag down the banking sector. Actually, it also sounds an awful lot like Japan’s housing bubble. But Spain’s economy isn’t nearly as strong as Japan’s…
No matter what Greece does, “the country faces years of austerity after years of mismanagement, whatever the election result. Even at the height of the global financial crisis, it was obvious the museum-piece economies of Europe, weighed down by bulging public payrolls, entrenched welfare state systems and archaic work practices, faced greater upheavals and decades of poorer living standards than the US.”
A $200 transaction can cost society $100,000 for a three-year sentence. And imprisoning large numbers of dealers produces an army of people who, emerging from prison with blighted employment prospects, can only deal drugs. Which is why, although a few years ago Washington, D.C., dealers earned an average of $30 an hour, today they earn less than the federal minimum wage ($7.25).
I oppose the War on Drugs for reasons of general principles (it’s not the purpose of government to save people from themselves), the specific application of constitutional federalism (the Commerce Clause should not apply to the regulation of drugs manufactured and sold within the confines of a single state), and for reasons of budgetary philosophy (making drugs illegal has expanded the size and power of the federal government while increasing the budget deficit; legalizing, regulating and taxing drugs would reduce both the deficit and the harm to individuals and society). Frankly, I’d be for the immediate legalization of methamphetamine tomorrow if it meant we could stop ID-ing people with colds trying to buy Sudafed.
There has been slow but steady progress in the conservative movement for saner drugs laws, from William F. Buckley arguing for the decriminalization of marijuana, to National Review declaring that “The War on Drugs is Lost” in 1996, to Republican Presidential candidates like Ron Paul and Gary Johnson (who, like Paul once did, bolted for a doomed Libertarian Party run) making the same case.
Despite growing sentiment, almost no legislative headway has been made on the issue because there’s no consensus in the Republican Party (or the American people) for that change. When an initiative for the total legalization of marijuana fails in California (though poor wording helped contribute to the defeat), where can it succeed? But the lack of a consensus for legalization is no reason to avoid fighting for saner laws at the state or national level or trimming funding for the DEA.
Another question is how come we never hear anything about legalization from the supposedly pro-freedom Democratic leadership? If Obama, an admitted recreational drug user in his youth, has ever made a speech as President supporting legalization or decriminalization of any drugs, it’s evaded my attention. Indeed, not only does he not support decriminalization, he’s actively hostile to the idea.
George Will thinks more seriously and clearly than Barack Obama on the issue of drug legalization. Then again, the first ten words in the preceding sentence are pretty much true all the time,,,
According to this article in the Houston Chronicle, “Sixteen small counties across Texas appear to have more registered voters on their rolls as of 2010 than qualified citizens of voting age.”
As the icing on top of the voter fraud cake, here’s James O’Keefe (who you may know from such classics as ACORN’s Hardest Working Pimp) obtaining Eric Holder’s ballot.
And the cherry? “I’ll be back faster than you can say furious.”
A left-wing Irish documentary maker sets out to make a documentary about the plight of the Palestinians, but gets waylayed by those annoying facts, and instead decides to tell both sides of the story. Guess what? His friends aren’t interested. “The problem began when I resolved to come back with a film that showed both sides of the coin. Actually there are many more than two. Which is why my film is called Forty Shades of Grey. But only one side was wanted back in Dublin. My peers expected me to come back with an attack on Israel. No grey areas were acceptable.”
Israel and Hamas declare a ceasefire after four days of fighting. Honestly, maybe because I was traveling, or because I no longer feel the need to consult MSM news sources on a daily basis, I was actually unaware that there was slightly more violence than usual in the Middle East. The fact that Hamas cried uncle after a mere four days, despite the fact that Israel set it off by giving Hamas leader Zuhair al-Qaissi an express ticket to paradise, tells you that they must really have been getting their asses kicked by the IDF. Maybe Zuhair al-Qaissi really was important, or possibly Iran and Syria have had their hands too full to dole out the Qassam rockets with their customary generosity.
It turns out that Greece forcing haircuts on recalcitrant bond holders via the “Collective Action Clause” automatically triggers credit default swaps, the financial instruments that helped bestow such laughter and joy unto the world economy in 2008. There’s such a fine line between “bankrupt” and “solvent.”
But thanks to the rest of the EuroZone ponying up money to keep Greece solvent, Greece’s national debt will decline…from 120% of GDP, to a tiny, minuscule, almost-impossible to see 117% of GDP. In 2020. You know, the same year I’ll be enjoying a regular threesome with Olivia Wilde and Megan Fox.
But the bailout is accomplishing its primary goal: Keeping the whole thing from collapsing while Eurocratic insiders get to pretend everything is OK long enough to dump their losses onto taxpayers and continue to milk the rubes just a little bit longer.
And there’s already talk of another bailout being necessary before the ink on this latest batch of fiat Euros was even dry. A new record!
You may remember my mention of EarthQuest, the projected Montgomery County “environmental theme park” that was going to be partially financed with public money.
Well, now comes word from Dwight that it is officially kaput. “No construction is planned; investors are nowhere to be found. Funding to EarthQuest consultants has stopped.”
Who could have possibly predicted that? Well, beside the blogger who wrote “the entire project has “money-losing rathole” written all over it,” that is…
Well, ain’t that a pisser. “‘European solidarity is not an end in itself and should not be a one-way street. Germany’s engagement has reached it limits,’ said the text, drafted by Chancellor Angela Merkel’s Christian Democrats and Free Democrat (FDP) allies.”
Has Germany’s willingness to throw bad money after good to bail out wastrel Greece’s unsustainable welfare state finally reached an end? Maybe. Or maybe Merkel is angling for more leverage over Greece to force them to cough up some more sovereignty, or even to (fat chance) actually implement austerity measures rather than just give them lip service. But without Germany, the IMF isn’t going to cough up, and without the two of them, there probably isn’t enough in the kitty to finance even the latest round of Greek bailout, much less the larger fund needed to staunch the contagion once the Greek default dominoes start tumbling.
The game of musical chairs may finally be reaching its end.
Greek bureaucrats in their Social Security office stage a walk-out. Now if all government employees went on strike and stayed there, they might just have a chance…
Want to know exactly how the Greek debt bond swaps will proceed? Me neither, but here it is anyway. Just part of full-service blogging, Ma’am….
Spain’s housing market makes ours look healthy by comparison. “Repossessed houses in Spain are valued at 43 percent less on average than the appraisals on the mortgages.”
So the latest “final” bailout is agreed upon, the Greek parliament passes the austerity measured decreed by their German overlords like good little members of the Eurocratic elite, and for their troubles Greek citizens (whose input on the issue is neither required nor desired) responded to these events with widespread arson and looting.
Here are some protesters expressing their displeasure with austerity measures via the now-traditional medium of Molotov cocktails:
Who are we supposed to root for, the Eurocrats who turned a blind eye to Greece’s spendthrift ways when they let them join the Euro, the Greek bureaucrats who went on an orgy of unsustainable welfare state spending with Germany’s credit card, or the Greek citizens who happily sucked at the welfare state teat as long as Uncle Helmut was paying for it and are now throwing a hissy fit because mean Aunt Angela wants to ween them away? It’s like trying to decide between the pusher who stops giving away free heroin after ten years, or the junkie suddenly denied their fix: There are no heroes or sympathetic actors. Keep giving me my heroin or the Acropolis burns!
Other burning Euro issues:
And those members of the Greek parliament who voted against the deal? 43 members of the socialist and conservative parties were were immediately expelled from their parties. That will teach them not to heed their master’s voice…
Those austerity measures are absolutely set in stone…except that they’re not. “Antonis Samaras, leader of New Democracy and likely the next prime minister, said the measures should be renegotiated after national elections expected in April.” What’s mine is mine, what’s yours is negotiable.
Forbes spins scenarios. If Greece leaves the Euro, things get slightly worse. All the PIIGS leaving is a bit more serious. Germany leaving the Euro? It makes the the housing bubble aftermath look like a clear blue sky of deepest summer by comparison…
As long as Germany wasn’t complaining, others could make free with Germany’s credit card. Once in the euro, Greece, Italy, Spain, and other countries that bankers used to consider reckless or unstable could borrow at the same rates. (The treaties that bound all these dissimilar countries together stipulated that there would be no bailouts for those who borrowed too much, but bankers obviously didn’t believe that.) A boom in lending pushed up wages and prices in those “peripheral” countries, rendering them uncompetitive. After the financial crisis of 2008, the countries that had overborrowed were saddled with more debt than they could comfortably repay. The eurozone’s Mediterranean members have come to think that Germany ought to rescue them. But the Germany to which they are addressing their petitions is not the penitent, diffident, and easily browbeaten land that they came to know over the last three generations. Germany has its own ideas about economics and morality, and it is ready to insist that its weaker neighbors adhere to them.
(snip)
The German public was dragged into the euro reluctantly and would never have consented to it had they been consulted. “The euro has always been the ‘Golden Calf,’ so to speak,” says Barclays’s economist Thorsten Polleit. “It was forced upon Germans.” There is still a lot of debate about how it was forced upon Germans. The most common explanation is that French president François Mitterrand insisted on the euro as a condition of Germany’s reunification. A number of Germany’s top politicians and economists assured citizens that the new currency would hold prices stable. That turned out to be right. They also promised that this would not mean sharing wealth and bailing out laggards. That turned out to be wrong—and perhaps catastrophically, apocalyptically wrong. In the late nineties, “many chief economists did a lot of client presentations where they told people the euro would be as stable as the German mark,” says Jörg Krämer, chief economist at Commerzbank. “I am quite happy I was young enough not to have had to do this.”
How the latest deal could trigger a crisis “rivaling anything yet seen.”. Also: You know which bank isn’t taking any haircut at all he latest debt deal? The European Central Bank.
Greece and the EU are having their final showdown (I tell you final! This time we mean it! Lather, rinse, repeat!) over the Greek debt crises. Until they do it all over again two months from now.
Some people wonder just what all this has to do with the U.S. economy? Well, the one good thing about having a crack house at the end of the street: No one worries about how crappy your own house looks, because it’s great by comparison. But once the PIIGS start defaulting, getting kicked out of the EuroZone, or both, people are going to start to notice that Obama hasn’t mowed the lawn in months…
Metaphors! I mix them! Now back to all that exciting Euro-defaulting action:
Europe tells Greece take the deal or else. Of course, as Bob Dylan once noted: “When you got nothin, you got nothin to lose.” At this point, who does throwing Greece out of the EuroZone hurt worse: Greece, or Europe? Alternate metaphor: Maybe you should have cut off that gangrenous toe before it spread to your thigh…
And what’s this unacceptable demand Europe is making? To cut deficit spending by…1.5% of GDP. For a country running a deficit of, what, 9% of GDP? “Son, you’ve got to promise you’ll cut down on shooting smack by one-sixth.” Hey Greece (and, for that matter, Europe. And Obama): How about you (and try to keep up with me here) stop all deficit spending? That would take care of the problem, no?
The real reason Germany is asking for total control of Greek finance in exchange for the next bailout? To make Greece say no so they don’t have to bail out the rest of the PIIGS: “How do you preclude Portugal, Ireland and, indeed, Spain from asking for the same deal as Greece, if the negotiations succeed? Answer; you can’t. So the Germans throw a politically impossible demand in front of the Greeks, in effect saying, “No more money unless you effectively surrender your national sovereignty.” And that’s the implied warning ahead for the other periphery countries which look to secure the deal currently on the table for Greece. In effect, the Germans (behind the auspices of the troika) are saying, “It’s fiscal austerity on our terms. You try to renegotiate like the Greeks and we take you over. The other alternative is that you leave.”
This article goes into detail about how exactly they lied.
The leader of the Greek Coalition of the Radical Left says the EU won’t dare kick Greece out. And he also wants a three-year suspension of all payments by Greece to foreign creditors. He may be on to something. When you owe the bank $3,000, you have a problem. When you owe the bank $30 billion, the bank has a problem. The OJ Simpson/Clevon Little technique of holding a gun to your own head just might work. “Do what he says! He’s crazy!”
Spain’s fourth largest airline collapses. “The airline was seen as a flagship of the regional government of Catalonia, which had helped it stay afloat with more than 150m euros of subsidies. The government refused to provide more funding on Friday.”
