Back when I was doing regular Texas vs. California updates, this is the sort of video I would feature. It covers why Texas is doing so much better than Europe, though the framing misses a few things I’ve tried to highlight below.
Caveat: I don’t know who “The Economic Matrix” is, but what they’re saying is generally right, but a bit incomplete.
“This is Texas. To most of the world, it’s just one of 50 American states. But if you pulled it off the US map and dropped it into the global rankings as its own nation, it would sit eighth in the world, sandwiched directly between France and Italy, with a staggering GDP of $2.77 trillion. But that’s just the start. In 2025, the Texas economy was bigger than the equivalent of the Netherlands, Belgium, Denmark, and Austria combined.”
“Texas and Europe are separated by more than an ocean. They’re separated by two completely different ideas of how a state should operate. And right now, one of those ideas is winning by a distance that gets harder to close every year. In 2024, the Texas economy grew by nearly 4%. The entire European Union managed 1%, and the gap is only getting wider.”
“The EU spent most of the last 15 years in crisis mode. A sovereign debt collapse left Greece, Spain, and Portugal on the edge of ruin.” I covered the European Debt Crisis (especially among the PIIGS (Portugal, Italy, Ireland, Greece, Spain)) as it was happening, and the thing to remember is that it was (and is) a deficit spending crisis. Like the federal government, European governments insist on spending more than they take in. Real austerity, i.e. cutting outlays until they match receipts, hasn’t failed, it’s been declared difficult and left untried.
“Years of near zero growth followed. The in 2022, Russia cut off the gas and sent inflation across the Euro zone spiking to 9.2%.” Here the video also avoids noting that another big inflation driver was the effects of the Flu Manchu lockdown across most EU economies.
“Through all of that, the Texas economy just kept climbing. The productivity gap tells the same story. Between late 2019 and mid 2024, labor productivity per hour in the Euro zone rose by 0.9%. In the US, it rose by 6.7%. Texas led that charge.”
“Look at the Permian Basin. Oil production nearly tripled in a decade while the rig count was cut almost in half because horizontal drilling and AI-guided extraction meant fewer rigs producing more oil. Same workforce, three times the output.” Oil industry-specific AI has very little do with the current general AI build-out bubble.
“There’s a mathematical reality that makes this trajectory almost impossible to reverse. At 1.5% annual growth, the EU takes roughly 47 years to double in size. At the 3.5% rate Texas usually averages, it takes 20. By the time the EU doubles once, Texas will have doubled twice. That gap compounds and it means every year the distance between these two economic models doesn’t just persist, it accelerates.”
“Mario Draghi, the former head of the European Central Bank, released a landmark report warning that without serious reform, the EU is heading toward what he called a slow agony. Leaders held a retreat to discuss it. Then they went back to their committees.” Future pain is abstract, while the electoral pain of trying to reform things is far more immediate.
“Since 2020, more than 200 companies have moved their headquarters to Texas. Tesla relocated to Austin in 2021. Chevron, one of the largest energy companies on Earth, announced its move to Houston in 2024. Charles Schwab, CBRE, SpaceX. More than half of these relocations came from California alone.”
“These are not satellite offices or mailbox moves. The reason they gave was simple. The regulatory environment in California made expansion too slow and too expensive. Texas made it fast, cheap, and permanent.”
“Spotify was founded in Stockholm, but listed on the New York Stock Exchange. Skype was built in Estonia and Luxembourg, then bought by Microsoft and absorbed into Redmond. ARM was designed in Cambridge, England, then acquired by a Japanese conglomerate and listed in New York. Europe keeps building the talent. America keeps cashing the check.”
“Beneath the growth stats and the corporate migrations, there’s one factor that explains this gap better than anything else: Energy. Texas produces more energy than almost any country on Earth. Not other American states, actual nations. Between 2007 and 2023, while the rest of the United States saw energy consumption drop by about 5%, Texas went in the other direction. Energy use in the state climbed by 21% and the industrial sector alone saw a 28% jump in demand. This was not a state focused on conservation or cutting back. Texas was building oil rigs, refineries, chemical plants, and massive wind installations, all at the same time.” Those wind farm installations were the result of subsidies, and they’re not really building new ones anymore.
“The reason Texas could pull this off comes down to one decision made decades ago. Texas built its own power grid, specifically to escape the slow motion gears of federal regulation. The result, solar capacity that grew 32% in just 2024, wind generation that leads every other American state, and a massive natural gas fleet running underneath it all to keep the lights on when the sun goes down, cheap, abundant, predictable, and fast to build.” Again, the solar build-out was aided by subsidies.
“For decades, the European energy models rested on one assumption. Buy cheap gas from Russia, build out renewables slowly, and keep industrial costs manageable. When Russia invaded Ukraine in 2022, that assumption collapsed overnight. Wholesale energy prices went vertical. Industrial electricity costs in Germany suddenly hit three to four times what businesses in Texas were paying for the exact same power.”
“Look at what happened to BASF, the largest chemical company in the world. For over 150 years, their home was Ludwigshafen, Germany, a sprawling industrial complex on the Rhine that employed tens of thousands. After 2022, they announced billions in cuts to that site. Plants shuttered, thousands of jobs gone. But BASF didn’t disappear. At the exact same time, they were breaking ground on new facilities in Freeport, Texas. Same company, same products, two completely different decisions driven entirely by the price of electricity.” Probably not just electricity. Union work rules in Germany are considerably less flexible than those in right-to-work Texas.
“France tried to escape this trap by leaning into nuclear power, which once covered 75% of French electricity needs. But that infrastructure is aging. New reactor projects like Flamenville have run tens of billions over budget and more than a decade behind schedule, and the political will to build more has been stuck in debate for a generation. The old Russian gas model is dead. The nuclear renaissance has not arrived. And permitting a single wind farm in the EU can take 7 to 10 years.”
“In Texas, the same process often takes a few months. Energy prices act like a hidden tax on everything from manufacturing steel to running a server farm to heating a bakery. European businesses pay that tax every single day. And Europe does not have the gas, does not have the grid independence, and does not have the permitting speed to change that.” Actually, Europe does have oil and gas reserves it refuses to develop.
“Cheap energy is a huge piece of the puzzle. But the real accelerant for the Texas economy has been something even harder for Europe to copy. And it starts with one number. The average top personal income tax rate across 35 European countries is 38.5%. In Denmark, that number hits a staggering 60.5%. In Germany, France, and Italy, high earners face rates between 45 and 50%.”
“In Texas, the state income tax rate is zero. It’s always been zero, and the Texas Constitution actually makes it illegal for the state to introduce one without a direct vote from the public. This is not a temporary policy that a new government can reverse after the next election. It’s locked into the foundation of the state.”
“Texas still has high property taxes, so the total burden on a normal resident is not as dramatic as that 0% headline suggests. But for the people these economies are competing over, the math is brutal. A senior software engineer in Munich earns roughly €75,000 and takes home about $45,000 after income tax and social contributions. The same engineer in Austin earns $140,000 and takes home over $105,000. same skills, same screen, more than double the money in their pocket at the end of the year. Between 2020 and 2024, Texas startups pulled in over $46 billion in venture capital. In Q1 2025 alone, Texas tech companies raised nearly $3 billion, the biggest single quarter the state had seen in over 2 years, with massive deals in cyber security, defense tech, and biotech.”
“Compare that to the other side of the Atlantic. The entire European Union raised about $17.5 billion for AI funding in all of 2025. The US raised nearly $70 billion for generative AI alone by midyear. Not total tech, not all venture capital, generative AI alone. These two regions are not competing in the same category.”
“The EU’s regulatory framework was designed to protect consumers and level the playing field. GDPR [General Data Protection Regulation], the AI Act, 27 different national compliance regimes stacked on top of each other. The intentions were sound, but the unintended result is that the compliance costs favor massive American companies like Google and Microsoft, who can absorb them easily over smaller European rivals who can’t.”
“None of this means Texas has it all figured out, because the truth is it hasn’t. The most visible problem is housing. In 2019, a median Texas family earned 62% more than they needed to buy a median home. By 2023, that cushion had collapsed to just 7%. Not 62%, 7%. Over a third of Texas households now spend more than 30% of their income on housing.” That’s a national problem, partially engendered by the Flu Manchu shutdowns, partially by restrictive local building codes. “Affordable housing” blather snipped, since this is just more unnecessary government subsidy and intervention.
“The workers who actually build the Texas economy, the Tesla line workers, the nurses, the warehouse staff, can’t afford to live in the cities their labor is building anymore. They commute in from further and further out, and the roads, the housing, and the services all fall behind.” Partially true, partially false. Austin housing prices exploded, but have come down dramatically. Dallas and San Antonio prices spiked, then plateaued. Houston prices have continued climbing, but gradually.
“When a place grows this fast, the infrastructure simply can’t keep up.” True of Austin, less true of Houston, though having to rebuild certain interchanges is making things a nightmare for certain commuters.
Discussion of energy grid problems and the 2021 ice storm snipped, since I think we’ve covered those enough here.
“The problems in Texas are the problems of a place growing too fast. The problems in Europe are the problems of a place that is barely growing at all. In that sense, Texas and Europe have something in common. Both are stuck. The difference is that Texas is gridlocked because too many people are trying to get to work. Europe is gridlocked because too many committees are still deciding whether to build the road. Right now, Texas has its sights set on overtaking France, a G7 nation. At current growth rates, that gap closes faster than most people realize. And France’s response, like the rest of Europe’s, has been to wait and see.”
“The real question isn’t whether Europe can change. It’s whether it actually wants to change badly enough to feel the pain that comes with it. Because while Brussels is still writing the rule book, the game is already over for the economies Texas has already passed. The ones still in its path just haven’t checked the scoreboard yet.”
Left out of this coverage: Texas has a constitutionally mandated balanced budget, while the overwhelming majority of European nations keep running budget deficits to keep their cradle-to-grave welfare states afloat.
Not to mention a government run by Republicans rather than unstable coalitions including the Greens…
Happy Black Friday, everyone! (Here’s my prepping/gift guide, if you haven’t seen it already.) I hope everyone had a great Thanksgiving. Some interesting international election results, unreasonable gun control legislation gets struck down in two different states, more legal trouble for Houston Democrats, and a weed company goes bankrupt. It’s the Friday LinkSwarm!
The average price American families will have to pay to celebrate Thanksgiving with a traditional dinner will be the most expensive in history after years of sky-high inflation that experts attribute partially to President Joe Biden’s policies, according to data from the Bureau of Labor Statistics (BLS).
The price of all goods has risen dramatically under Biden following a period of sustained high inflation, which peaked at 9.1% in March 2022 and has since remained elevated, measuring at 3.2% in October, while the index for food rose 3.3% year-over-year for the month. The total increase in costs for a Thanksgiving dinner is about 26% since the beginning of Biden’s term, culminating in the most expensive Thanksgiving dinner in history.
Don’t buy the cookies. “Girl Scouts To Host Training Sessions On ‘Internalized Racism,’ ‘White Supremacy Culture.'” (Hat tip: Instapundit.)
In a surprising turn of events, Argentina has elected the libertarian outsider Javier Milei as its new president. The hotly contested presidential run-off saw Milei defeating left-wing candidate Sergio Massa — a consequential shift in the country’s political landscape. Massa brusquely conceded on Sunday night, stating, “Milei is the president elected for the next four years.”
The victory of Milei, a self-proclaimed “anarcho-capitalist,” introduces an unconventional leader with what are considered to be radical economic views relative to Argentina’s neighbors. His campaign, characterized by anti-establishment rhetoric and metaphorical gestures such as wielding a chainsaw to show his fervor for cutting taxes, resonated with voters frustrated by Argentina’s economic decrepitude, including triple-digit inflation. One of Milei’s key proposals is the adoption of the U.S. dollar as Argentina’s national currency, an unprecedented move for a country of its size (Argentina is home to some 45.8 million people).
Massa — a lifelong politician and representative of Argentina’s left-wing political establishment — emphasized his government’s actions to address inflation during his tenure.
But Milei’s appeal, particularly among the younger generation, suggests a desire for change to break free from the cycle of economic crises.
Milei’s victory has produced excitement and concern alike. While some see him as the catalyst for much-needed economic reforms, others fear the potential austerity measures tied to his plans, such as shutting the central bank and slashing spending. Despite the uncertainty, Milei’s supporters view him as the only viable option to break the political status quo and address Argentina’s persistent and extreme economic challenges.
The election is not just a political shift but also a generational one, with Milei’s popularity among the youth reflecting a desire for a new direction. The effect of Milei’s win extends beyond Argentina’s borders, potentially influencing trade relationships, especially with his criticism of China and Brazil and his preference for stronger ties with the United States. As for the U.S., the hour is late, and we’ll take all the friends we can get, and Argentina is doubly welcome because the Millennium must be nigh if a libertarian won an election outside of New Hampshire.
Note: Linking to MSN rather than NRO because the latter has now raised it’s war against ad-blockers to obnoxious levels. Year-by-year, the TDS-infected NR has become ever-more sad and useless.
Geert Wilders, the Dutch populist whose anti-Islam comments have led to death threats, could become the next leader of the Netherlands following an election upset for his Freedom Party (PVV) on Wednesday.
After 25 years in Dutch politics without holding office, Wilders was set to lead coalition government talks and has a good chance of becoming prime minister.
An exit poll on Wednesday evening showed the PVV in a clear lead, 10 seats ahead of its closest rival, Frans Timmermans’ Labour/Green Left combination.
“We will have to find ways to live up to the hopes of our voters, to put the Dutch back as number one”, Wilders said in his first response, adding that “the Netherlands will be returned to the Dutch, the asylum tsunami and migration will be curbed.”
Maryland is one of 14 states that require background checks for all firearm purchases, whether or not the seller is a federally licensed dealer. Since 2013, Maryland has imposed an additional requirement on handgun buyers: They must first obtain a “handgun qualification license,” which entails completing at least four hours of firearm training and undergoing a seemingly redundant “investigation” aimed at screening out people who are legally disqualified from owning guns. According to the U.S. Court of Appeals for the 4th Circuit, that process, which can take up to 30 days, violates the Second Amendment.
In a decision published on Tuesday, a divided 4th Circuit panel concluded that Maryland’s handgun ownership licensing system is not “consistent with this Nation’s historical tradition of firearm regulation”—the constitutional test that the U.S. Supreme Court established last year in New York State Rifle & Pistol Association v. Bruen. Writing for the majority in Maryland Shall Issue v. Moore, 4th Circuit Judge Julius Richardson notes that Bruen “effected a sea change in Second Amendment law,” making a variety of gun control laws newly vulnerable to constitutional challenges. Maryland’s handgun licensing law is the latest example.
Speaking of unconstitutional gun laws being struck down: “It turns out that bullets are an essential part of a gun, and limiting the number of rounds in a gun violates the Oregon constitution. A county judge in Oregon made that decision on Tuesday overturning Measure 114, a citizen-passed measure that outlawed what gun grabbers call ‘high capacity magazines’ and required that Oregon serfs get a permit to be allowed to purchase a gun.” (Hat tip: Stephen Green at Instapundit.)
Funny how no Arab nation wants to take in Palestinians. They know the simple truth: They suck.
The Palestinians tried to take over Jordan in the 1970s, leading to the late King Hussein declaring war on them and driving them out. They were booted from Kuwait after collaborating with Saddam Hussein’s forces before the Gulf War. They set off a powder keg in Lebanon, a nation that has yet to recover from its brutal civil war that lasted 15 years. No Arab country wants these people because they bring instability and trouble.
Outgoing Houston Mayor Sylvester Turner gets to enjoy a new host of scandals on his way out.
As term-limited Houston Mayor Sylvester Turner finishes his final days at the helm of the state’s most populous city, a new set of scandals have emerged over city contracts and a dispute over who will pay for a book touting the mayor’s legacy.
In the most recent dustup, an investigation by Houston’s KPRC 2 discovered that city contracts for much-needed water repairs were awarded to two relatives of Houston Public Works (HPW) employee Patrece Lee, including one for $4.5 million to Lee’s brother, who had only created his company six months before the city council approved the “emergency contracts.”
When KPRC reporter Amy Davis attempted to question Turner about the issue at a public event last week, Turner became irate and told his communications director to escort Davis from the room.
“You are not going to get away with this,” said Turner to Davis. “You are rude.”
Late Friday, HPW Director Carol Haddock announced that the employee had been placed on leave while the city’s Office of the Inspector General investigated the allegations.
In another contract scandal, Houston Landing media reported last week that the Midtown Redevelopment Authority had referred information to law enforcement on a since-fired manager who allegedly steered more than $4 million in taxpayer-funded landscaping contracts to himself and another contractor.
The latest developments came hard on the heels of Turner’s squabble with Houston First Corporation, the city’s marketing organization. During the “State of the City” luncheon last September, hosted by Houston First, attendees were given copies of Turner’s book “A Winning Legacy,” which celebrates the mayor’s accomplishments during his eight years in office.
As first reported by Bill King, Turner told President and CEO Michael Heckman that Houston First must pay a $123,979 invoice for the 600 copies, but Heckman refused, saying it was not in the corporation’s budget and not an appropriate expense. Houston First Chairman David Mincberg later told FOX 26 that the corporation would develop a strategy to raise private funds to pay for the books.
Controversy has also surrounded Turner’s management of city finances. Last year, Controller Chris Brown warned that the city was using $160 million in federal COVID-19 relief funds to plug budget holes and even to cover ongoing expenses.
Speaking of governments in trouble for spending Flu Manchu funds on other priorities, Germany is also in trouble for pulling the same trick after their high court told them to stop. As Europeans, spending within their means is unacceptable, so they’re now plotting to suspend debt limits…
Texas Governor Greg Abbott endorses Donald Trump for President. This is interesting in that Abbott is a careful, cautious Republican, who might be more ideologically inclined to endorse Ron DeSantis or Nikki Haley. That Abbott has endorsed Trump indicates he thinks Trump is a lock for the 2024 nomination. He may be right.
“Stacey Abrams’ Brother-In-Law Arrested, Accused Of Human Trafficking, Choking Underage Girl…Jimmie Gardner, a well-known Georgia-based youth motivational speaker, is accused of human trafficking, lewd or lascivious touching, and battery…According to the Tampa Police Department, Gardner invited a 16-year-old girl to his hotel room in the early hours of Friday, offering to pay her for sexual acts.” Sounds like the wrong sort of youth motivation…
Welcome to the second half of 2022! The Biden Economy suckage becomes more obvious, the world’s most taboo lawsuit wants justice for real women being raped by fake women that the state of California forced on them, the Supreme Court slaps the EPA with a ruler over regulating carbon dioxide without congressional authority, and Eric Adams finally realizes he’s running a hellhole. It’s the Friday LinkSwarm!
Welcome to the world’s most taboo legal case, a lawsuit over imprisoned woman having the right not to be raped by men who “identify” as women.
On November 17, 2021, the Women’s Liberation Front, or WoLF, filed a civil rights lawsuit in California that drew almost no coverage. A press corps gearing up to be outraged en masse by the Amber Heard-Johnny Depp defamation case had zero interest in a lawsuit filed by far poorer female abuse victims.
Janine Chandler et al vs. California Department of Corrections targeted a new California state law, the “The Transgender Respect, Agency, and Dignity Act,” a.k.a. S.B. 132. The statute allows any prisoner who self-identifies as a woman — including prisoners with penises who may have stopped taking hormones — into women’s prisons. There was nothing TV-friendly about the scenes depicted in the complaint:
Plaintiff Krystal Gonzalez (“Krystal”) is a female offender currently incarcerated in Central California Women’s Facility. Krystal was sexually assaulted by a man transferred to her unit under S.B. 132. Krystal filed a grievance and requested single-sex housing away from men; the prison’s response to Krystal’s grievance referred to her assault by a “transgender woman with a penis.” Krystal does not believe that women have penises…
After a week spent denounced for reviewing the Matt Walsh documentary What is a Woman?, and for saying things I think will be boring conventional wisdom within a year, I was ready to never go near trans issues again and move to the impending financial disaster. But accident sucked me back. I’d made a point of pride of not reading a line of commentary about Heard-Depp, but listened to an episode of Blocked and Reported that touched on it after it was over, and learned three things that made me furious and think immediately of Chandler.
One, the ACLU, in apparent exchange for a pledge of $3.5 million, ghost-wrote Heard’s offending editorial, and in particular a line about her having “felt the full force of our culture’s wrath for women who speak out.” Two: Guardian writer Moira Donegan declared, “We are in a moment of virulent antifeminist backlash.” Three: Vice proclaimed without irony, “We’ve all failed Amber Heard.” Almost as one, the establishment press declared itself concerned with the suffering of a rich actress. However, there’s a gaping loophole in their concern for women, and Chandler sits in the middle of it.
Let’s talk about “the full force of our culture’s wrath for women who speak out” in the context of this case:
Chandler is the headline legal action in a nationwide battle over whether or not prisoners who self-identify as women, including those with histories of rape or sexual abuse, should be allowed to transfer to women’s correctional facilities. There have been both official and unofficial policy changes on this front in a growing collection of states across the country. These often happen with little to no public debate, because this issue may be the most impenetrable media taboo in America now.
The group bringing the suit, WoLF, has been targeted from every conceivable angle by pressure and censorship campaigns. While we at least heard about protesting Canadian truckers having their GoFundMe campaigns frozen, WoLF didn’t even bother trying to raise money on that platform, “because they just ban you really easily,” as legal director Lauren Adams put it.
They moved to a purportedly speechier platform, GiveButter, hoping they would have “less of a censorious kind of view.” But even GiveButter soon gave WoLF the boot (I reached out to the company, which hasn’t provided public comment yet). “It was just a general fundraiser,” Adams explains. “And they said we violated their community standards. So now we’re on GiveSendGo, which is a Christian crowdfunding site.”
If there’s a better illustration of the upside-down state of politics in 2022 America, it’s a feminist activist group forced to seek cyber-refuge in a Christian fundraising company.
Snip.
Most of the cross-dressing men claiming a “transgender identity” and granted transfer… are sex offenders, most are heterosexual men who want to be housed with women to get penis-in-vagina sex, most stop taking any feminizing hormone medications right after getting into women’s prison, they all refer to themselves as men when speaking to the women inmates, many have threatened to “fight you like a man” to women inmates, many have threatened to rape us, and they all have working penises that they are using to have sex with female inmates.
Transexism is now so central to the social justice victimhood politics ideology that controls the Democratic Party that it leads to letting men rape women rather than question the holy tenant that a man can magically become a women by declaring it so.
Notice how that “giant backlash” against the overturning of Roe vs. Wade seems to be limited to leftwingers freaking out on social media? Here’s a good explanation why:
This sums up my evolution better than I could have. Bet it’s highly highly a common sentiment.
Speaking of which, New York City mayor Eric Adams is shocked, shocked to discover that the city he runs sucks.
During an exclusive interview conducted as Adams rode the subways overnight for more than three hours last week, the former NYPD transit cop said he was astounded by the botched “deployment of resources” that has New Yorkers on edge amid a nearly 40 percent surge in major crimes this year.
“Let me tell you something: When I started looking into this, I was shocked at how bad this place is,” he said of the city.
Adams — who campaigned on a promise to restore order to an increasingly lawless Gotham — said the scales fell from his eyes when he began reviewing internal city operations following his swearing in moments after midnight on New Year’s Day.
Yet somehow I could tell that despite living some 1,700 miles away, thanks to the magic power of “paying attention” and “not depending on the MSM for news.”
Nowhere is the shift more pronounced — and dangerous for Democrats — than in the suburbs, where well-educated swing voters who turned against Trump’s Republican Party in recent years appear to be swinging back. Over the last year, far more people are switching to the GOP across suburban counties from Denver to Atlanta and Pittsburgh and Cleveland. Republicans also gained ground in counties around medium-size cities such as Harrisburg, Pennsylvania; Raleigh, North Carolina; Augusta, Georgia; and Des Moines, Iowa.
Who has the highest debt in the EU? Exactly who you would think: The PIGS (Greece, Italy, Portugal and Spain, in that order), then France, Belgium and Cyprus.
Following other western tech giants, Cisco plans to exit Russia permanently. Unless you’re in the sector, you might underestimate just how many pies Cisco has fingers in. (Hat tip: Stephen Green at Instapundit.)
[The sound you hear is the countless multitudes clicking off to another blog.]
Way back last decade, dispatches on the ongoing crisis were a regular staple of the blog. To summarize the crisis for those who weren’t paying attention back then:
A bunch of countries joined the Eurozone without following the requirements outlined for membership, including limiting budget deficits to 3% of less of their GDP, and overall debt-to-GDP ratio of 60% or less. How were they able to join? Simple: They lied and the Eurocrats turned a blind eye, because EU.
Foremost among those running into trouble were the PIIGS (Portugal, Italy, Ireland, Greece and Spain). (Cyprus and Malta also had serious issues, but their tiny size meant they presented no systematic risk for other nations, and Cyprus relieved its problems by becoming the dirty Russian money laundering capital of Europe.)
Ireland was probably the most incongruous of the five, since their debt only spiked when the Irish government nationalized Anglo Irish Bank to prevent it from collapsing.
In all other cases, the cause of of the problem was obvious: Each ran huge budget deficits to underwrite generous welfare state programs for countries with below replacement birth rates, and they were allowed to get away with it for a while because they used Germany’s credit rating in lieu of their own thanks to the Euro.
The problem finally came to a head after the SubPrime Meltdown in 2008 made various banks and regulatory agencies actually scrutinize balance sheets and realize just how broke the PIIGS were.
Greece was the worst, being the most dysfunctional, and absolutely refusing to slow down spending on their own. There followed a reoccurring farce where various Euro regulatory agencies (including the International Monetary Fund, the European Commission, and the European Central Bank, collectively known as “the Troika”) demanded Greece end their ridiculous high levels of deficit spending, Greece refused, the Troika threatened to cut off the tap entirely, Greece promised to be better, the Troika reluctantly extended them another loan, and then Greece continued to spend recklessly, setting up the next round of the farce.
A bunch of Eurozone countries then implemented “austerity,” which involved not cutting spending to balance their budgets, but merely reducing the deficits slightly.
None of these “austerity” measures eliminated deficit spending, and none addressed the issue that’s driving all of Europe (and us) bankrupt, namely unwillingness to carry out structural reforms of the welfare state. The few tiny reforms that have been undertaken have been, as NRO’s Michael Tanner notes, ridiculously timid, and even those have been heavily weighted in future years. “So far, European governments haven’t even been willing to take a penknife to the welfare state, let alone an axe.” Plus a huge round of tax hikes…
Actual austerity would mean (at a minimum) reducing spending to the amount of money actually taken in. As best I can tell, none of the PIIGS, or France, or the UK has undertaken such real austerity. That “severe” Greek austerity that just caused a change in government? It reduced Greece’s official deficit spending from 9.0% of GDP to 7.5% of GDP. They didn’t even want Greece to stop digging a hole, they just wanted them to dig more slowly.
Austerity did not fail, it was declared difficult and left untried.
Eventually growth in the Eurozone picked up just enough, and the Troika managed to install enough of their own functionaries in various PIIGS positions to ensure that their half-assed, anemic austerity programs were actually followed that, along with Brexit and the Rise of Trump, it got Eurozone debt crisis off the front page and back under the rug.
So fast forward to today. Has the European debt crisis been solved?
Hah! Of course not. Does the EU ever really solve anything? European debt grew during the pandemic, but this time they get to blame Flu Manchu rather than slow growth, high taxes, declining births and a bloated welfare state.
Spain, Italy and Greece have all continued their PIIGS-ish ways. The UK, under ostensibly conservative Tory governments for the entire pandemic and constant attack for “austerity,” and they’re still piling up debt like one of the PIIGS, though the double-whammy of Brexit dislocations and idiotic lockdowns are more to blame than increased spending per se.
Ireland, with the lowest deficit for the period, seems to have proved that their membership among the PIIGS was transitory.
What then of Portugal? Have they improved? It turns out only slightly and relatively. Their debt increased by 13.9% for the period, making them better not only than Spain, Italy, Greece and the UK, but also France, Cyprus, Malta, Hungary and Slovenia. They evidently managed a balanced budget in 2019 (at least on paper). Their Flu Manchu deficit spending is still unsustainable, just slightly less unsustainable than many of their fellow Eurozone grave-diggers.
We don’t have much standing to condemn others, as the United States ratio stands at 106.70%. Donald Trump had numerous virtues as President, but he was no deficit hawk, and Biden would crank up deficits even higher if the Senate let him.
We can see the fruits of this orgy of deficit spending in the worldwide inflation we’re seeing. (Feel free to argue whether government budget deficits or central bank quantitative easing is more at fault.) Inflation may ruin nations, but it’s the deficit-spender’s friend, letting him pay off debt on the cheap with now devalued currency. And it’s the working poor whose lives are most impoverished by it.
Robbing Peter to pay Paul has always been a popular proposition to get Paul’s vote, but we’re now robbing Peter and Paul’s unborn grandchildren to delay financial reckonings until after the next election cycle.
Today’s locus of instability is Italy, where two Euroskeptic parties, one left (Five Star Movement) and one right (the League, AKA the Northern League), were prevented from forming a coalition government by the country’s Europhilic President Sergio Mattarella, who vetoed their pick of Paolo Savona for finance minister because he advocates leaving the Euro. Like Spain, Italy found out that if they went too strongly against the EU’s wishes, they’d simply be required to keep voting until they got it “right.”
Accepting Italy as one of the eurozone’s founding members was a decision only made possible by ignoring common sense, by twisting statistics, and by making a mockery of the rules. But it was a Pyrrhic victory: Italy was allowed to trick its way onto a voyage that damned it. The euro simply did not fit the realities of Italy’s economy or its politics. By dramatically cutting the country’s financing costs (borrowing lire would have carried a significantly higher nominal cost) adopting the single currency allowed Rome to avoid tackling the country’s high debt load, a debt load that was made all the more dangerous now that it was all denominated in a ‘foreign’ currency. Italy could no longer print lire to pay off its creditors.
When the eurozone crisis hit, Italy was one of the victims, and so, in some respects was its democracy. In something that came uncomfortably close to a coup, the eurozone leadership essentially used Italy’s financial fragility as a lever to secure the replacement in 2011 of Prime Minister Berlusconi by a Brussels man, Mario Monti, a pliable, unelected proconsul. Next time you hear Brussels lecturing Eastern Europeans on democracy remember that.
Italy weathered the crisis in a ‘just a flesh wound’ sort of way. Its problems became chronic, rather than acute, if that’s the correct adjective to describe the consequences of staying stuck in the euro’s deflationary trap: High rates of unemployment and anemic economic growth.
The Independent:
Per capita GDP in Italy is still more than 8 per cent lower than it was when Lehman Brothers went bust in 2008. Quite incredibly, it is even lower than it was when the country joined the eurozone back at the turn of the millennium. Unemployment stands at 11 per cent, down from a peak of 13.1 per cent in 2014, but still double the 5.8 per cent low seen in 2007.
As the largest of the PIIGS and the third largest economy in the Eurozone, Italy’s participation in the Euro is a lot more vital than Greece’s, which is why the EU has actively been trying to crush any hint of (pick your neologism) Quitaly or Italeave.
Never mind the fact that, as in Spain, Italian voters want to have their cake and eat it too, advocating polices (in the form of “rolling back pension reforms and government subsidies to the unemployed”) that would only pile on further debt in a country that already has a national debt running at over 130% of GDP, secondly only to Greece in the Eurozone. That doesn’t change the fact that Italy has “ceded its sovereignty to the European Union and international financial markets.”
ATHENS — Greek counterterrorism officers have uncovered eight parcel bombs resembling those sent last week to the German finance minister in Berlin and to the Paris offices of the International Monetary Fund, a police official said on Tuesday.
The devices were discovered on Monday during a search of the Hellenic Post’s main sorting office, north of Athens, according to a police spokesman, Theodoros Chronopoulos. “The packages were destined for European countries,” he said, calling them “similar” to the ones sent to the German finance minister, Wolfgang Schäuble, and to the I.M.F.’s offices.
According to reports in the Greek news media, which Mr. Chronopoulos did not confirm, the packages intercepted at the Athens sorting office were addressed to European Union officials and to multinational companies. The targets reportedly included the leader of the eurozone group of finance ministers, Jeroen Dijsselbloem, who coordinates meetings on Greek bailout talks, and an unidentified official of the European Central Bank, one of Greece’s three main international creditors.
The Paris bomb injured a worker, but none of the bombs have caused fatalities.
As tempting as it is to pin any bombing jihadists, the targets suggest this was a bombing campaign carried out by the radical Greek left in advance of the Greek debt farce playing out again this summer. “A fresh crisis over Greek debt could be triggered as soon as in July when Greece is due to repay some 7bn euros to its creditors – money the country cannot pay without a fresh injection of bailout cash.”
I would say “stay tuned,” but I think we all know exactly how the current round of the farce will play out this summer…
Glenn Greenwald says Democrats will go to any lengths to avoid blaming themselves for their debacle:
I really haven’t experienced anything even remotely like the smear campaign that has been launched by Democrats in this really coordinated way ever since I began just expressing skepticism about the prevailing narrative over Russia and its role that it allegedly played in the election and, in particular, in helping to defeat Hillary Clinton. I mean, not even the reporting I did based on the Edward Snowden archive, which was extremely controversial in multiple countries around the world, not even that compared to the attacks now.
And the reason is very, very obvious, which is that it has become exceptionally important to Democratic partisans to believe that the reason they lost this election is not because they chose a candidate who was corrupt and who was extremely disliked and who symbolized all of the worst failings of the Democratic Party. It’s extremely important to them not to face what is really a systemic collapse on the part of the Democratic Party as a political force in the United States, in the House, in the Senate, in state houses and governorships all over the country. And so, in order not to face any of that and have to confront their own failings, they instead want to focus everything on Vladimir Putin and Russia and insist that the reason they lost was because this big, bad dictator interfered in the election. And anyone who challenges or anyone who questions that instantly becomes not just their enemy, but now, according to their framework, someone who’s actually unpatriotic, that if you question the evidence, the sufficiency of the evidence to support this theory, that somehow your loyalties are suspect, that you’re not just a critic of the Democratic Party, you’re actually a stooge of or an agent of the Kremlin.
For months, the CIA, with unprecedented clarity, overtly threw its weight behind Hillary Clinton’s candidacy and sought to defeat Donald Trump. In August, former acting CIA Director Michael Morell announced his endorsement of Clinton in the New York Times and claimed that “Mr. Putin had recruited Mr. Trump as an unwitting agent of the Russian Federation.” The CIA and NSA director under George W. Bush, Gen. Michael Hayden, also endorsed Clinton and went to the Washington Post to warn, in the week before the election, that “Donald Trump really does sound a lot like Vladimir Putin,” adding that Trump is “the useful fool, some naif, manipulated by Moscow, secretly held in contempt, but whose blind support is happily accepted and exploited.”
It is not hard to understand why the CIA preferred Clinton over Trump. Clinton was critical of Obama for restraining the CIA’s proxy war in Syria and was eager to expand that war, while Trump denounced it. Clinton clearly wanted a harder line than Obama took against the CIA’s long-standing foes in Moscow, while Trump wanted improved relations and greater cooperation. In general, Clinton defended and intended to extend the decadeslong international military order on which the CIA and Pentagon’s preeminence depends, while Trump — through a still-uncertain mix of instability and extremist conviction — posed a threat to it.
Whatever one’s views are on those debates, it is the democratic framework — the presidential election, the confirmation process, congressional leaders, judicial proceedings, citizen activism and protest, civil disobedience — that should determine how they are resolved. All of those policy disputes were debated out in the open; the public heard them; and Trump won. Nobody should crave the rule of Deep State overlords.
Yet craving Deep State rule is exactly what prominent Democratic operatives and media figures are doing.
One need not buy all of Greenwald’s analysis of geopolitics or Trump to conclude that his analysis of the current alliance between Democrats, the media and the intelligence community is essentially correct. (Hat tip: Ace of Spades HQ.)
My take is that several state actors certainly hacked Hillary’s email server for years and years, and silently read all her communications. Probably more than one state actor penetrated the DNC email system for several years.
It’s plausible than an insider leaked the DNC emails – some BertieBro IT Admin type who saw how the sausage was being made and who was smart enough to cover his tracks while pointing clues towards Russia.
Bottom line, this is a tale told by an idiot; full of sound and fury and signifying nothing. We know that something happened, but we don’t know who did it, and what they say in the report doesn’t change that.
Borepatch, in turn, points to this detailed analysis of the security on both Hillary’s email server and the DNC:
At this point, we can largely dispose of Hillary’s Hack. It was an open book to all comers and at least one was Romanian (and sharing with friends) and not Russia. However, I’d say it was almost certain that at some time a Russian intrusion happened. The name of the server was obvious. The location insecure. The operating system and protective layers a joke. Frankly, I’d expect them to be “in” the same day they first looked at it. Which means something like 8 years ago. So why didn’t things leak then?
Because the Russians Are Not Stupid. A fundamental of spycraft is you don’t expose sources and methods, you use them to collect intel for your use, not publication. I suspect they enjoyed a near real time email feed from the Secretary Of State for years, in silence. This argues for email dump to be someone other than them. My personal muse would be an NSA guy, aghast at what was in evidence. Like a Snowden, but not willing to give up the $1/4 Million salary… He (or she…) would have all the requisite skilz to pull it off and leave no finger prints, access to PRISM, and lots of neat toys to work with. Though more likely would be the underpaid I.T. guy Hillary had set it up who was making a backup one day and dropped a load… But I digress.
The bottom line on Hillary is we know she kept a full copy (found on Huma’s Laptop with the Wiener…) and that it was around until she had her lawyers erase it. We know it surfaced in full at the time the laptop went to the FBI, and in parts before that. We know at least one of her hackers was found (though he had likely not leaked it) and that he said he had a doomsday copy for safety. He wasn’t a very good hacker, so that shows lots of good ones walked right in and snagged copies. Assigning source of any Hillary leaks is going to be an exercise is “ME ME MEE!!! PICK MEEE!” with a dozen hands up in the room.
More from Guccifer 2.0 himself: “I have totally no relation to the Russian government. I’d like to tell you once again I was acting in accordance with my personal political views and beliefs. The technical evidence contained in the reports doesn’t stand up to scrutiny. This is a crude fake.” (Hat tip: Zero Hedge.)
Our new Secretary of Defense sounds serious about defeating the Islamic State. “We should try to shut down its recruiting, shut down its finances, and then work to fight battles of annihilation — not attrition, but annihilation — against them; so that the first time they meet the forces that we put against them, there should basically be no survivors.”
The problem that we are faced with, and what the American people seem to be rebelling against, are the “experts” who seek to influence government policy in ways voters are either opposed to or at the very least find ineffective and expensive.
To put it bluntly: those experts have screwed a lot of shit up. Obamacare, American foreign policy, the war on drugs, domestic environmental policy, the economy…the list of issues is seemingly endless. The American people were told for at least the last eight years that the smart set was in charge, and things would be just dandy if only we allowed the “experts” free rein. The problem is that there are a lot of things that may seem smart on paper but which just won’t work when forcibly applied to the citizens of 50 separate states, with 50 separate economies, and 50 distinct voting bases, and this assessment assumes that those implementing policy actually have America’s best interests as a free republic at heart.
This leads us to the real heart of the matter: liberty. The Washington political and bureaucratic classes have no Constitutional right to force the “solutions” to any of these problems on their fellow citizens. The health insurance “problem” is not a national problem insofar as there is no Constitutional right to health insurance (or even healthcare), and the answer to what problems there are in healthcare in Texas are very probably not the same as the answer for New Hampshire or Oregon. The federal government institutes regulations constantly affecting the economy that have no Constitutional basis. There is no Constitutional basis whatsoever for banning or regulating any drug at the Federal level, and yet we’re told we have a national “opioid epidemic” that demands a federal solution. Foreign policy experts are undoubtedly necessary, but our foreign policy, when any logic or reason can be discerned in it at all, certainly doesn’t seem to be guided by any experts in the field. There is even a very good possibility that actually fixing any “problem” at the federal level is viewed as bad for business, because without the problem to solve there would be a lot of unemployable experts.
In short, the American people don’t have a problem with experts or intellectuals. What they have a problem with is incompetence, and it is just a fact of life that the larger and more remote the government and bureaucracy become, the more incompetent and unaccountable they will be.
Thanks Obama. “93 percent of police officers are concerned about their safety on the job; 72 percent are less willing to stop suspicious characters; and 75 percent report increased tension between cops and the black community.” (Hat tip: Instapundit.)
Social Justice Warriors already deterring people from the “Women’s March on Washington.” See, they were all set to flaunt the peacock feathers of their leftwing virtue, only to be told “they had a lot of learning to do.” Because there’s nothing more fun than being lectured about how you’re a racist when you’re not. Welcome to Red State America, liberal white women! (Hat tip: Instapundit.)
Social Justice Warrior drama at the Free Software Foundation. “‘Developer’ Leah Rowe has been making unhinged, outrageous claims of harassment and bullying on behalf of her anonymous friend who was let go by the FSF. She then stole the Libreroot project from the community, locked it down away from the other devs, and made a unhinged claims of wrongdoing by the FSF and two employees. She has provided no evidence of any of these claims and as she is a post-modernist, we’re supposed to substitute her feelings for any facts as being equivalent.” The amazing thing is that, for once, FSF head honcho Richard Stallman (who is somewhere on the continuum between “true software visionary” and “fanatic lunatic no one wants to deal with”) isn’t the person at fault for the drama…
“An Arizona Department of Public Safety officer has survived an attempt on his life after a passing motorist shot dead a highway sniper who took aim at the trooper after stopping to assist an individual in a rolled vehicle.”
The poll with the best track record over the last three presidential elections gave Donald Trump a 2-percentage-point edge over Hillary Clinton on Saturday.
The Investor’s Business Daily/TIPP tracking poll has Trump with 42.1 percent and Clinton at 39.7 percent.
Thoughts on #NeverTrump: “They are putting a great volume of energy into bringing about a disaster, for which they will not take any ownership.”
No one trusts the media anymore. “Only one in nine Americans believes that Hillary Clinton is ‘honest and trustworthy.’ They don’t trust the media’s cover-up of her misdeeds, and the cover-up of the cover-up of the cover-up.” (Hat tip: Director Blue.)
More than anything, I can’t sit idly by and allow these perpetrators of fraud to celebrate and leak tears of joy like they did when they helped elect Barack Obama in 2008. I have to know I weighed in not only in writing but in the voting booth. The media needs to be destroyed. And although voting for Trump won’t do it, it’s something. Essentially, I am voting for Trump because of the people who don’t want me to, and I believe I must register my disgust with Hillary Clinton.
Here’s a New Yorker piece on the failure of the Euro. It provides a good, but incomplete, overview of the Euro’s failure (nowhere does it note that Europe’s cradle-to-grave welfare state is unsustainable, and it fails to note that none of the nations practicing “austerity” in southern Europe have cut outlays to match receipts). And the myopic policy prescription offered is, of course, more central planning. But there are some good bits. Like this:
The U.S. unemployment rate hit ten per cent for a single month in 2009 and is now below five per cent; the eurozone unemployment rate hit ten per cent around the same time, and is still in double digits. In some European countries, youth unemployment is more than forty per cent. America’s economy is bigger than it was when the crisis hit. The eurozone’s is smaller. To take just one example, Italy, the third-largest economy in the eurozone, has a per-capita G.D.P. that’s lower than it was at the end of the last century.
Also this:
Stiglitz observes that if the countries that committed to the single currency in 1992 had known what they know now, and if people had had the chance to vote on the proposal, “it is hard to see how they could have supported it.” That’s a hell of an indictment.
Hey, remember how we were told California’s assisted suicide law would only apply to terminally ill people who wanted to die? Now insurance companies are enouraging suicide rather than pay for life-extending drug treatments.
But if you’re not sure yet what you want to do, then take time to decide before you spend $30,000, $50,000, or $100,000 you don’t have for something you don’t need. In the meantime, start working. You’ll probably only find low-paying, hard-working jobs at first, but guess what? If you go to college, you’ll be working those same jobs when you get out, only you’ll be four years older and fifty grand poorer.
Scientists at the Oak Ridge National Laboratory in Tennessee have discovered a chemical reaction to turn CO2 into ethanol. Better idea than corn subsidies…
For the last ten years you’ve been told that the LHC must see some new physics besides the Higgs because otherwise nature isn’t “natural” – a technical term invented to describe the degree of numerical coincidence of a theory. I’ve been laughed at when I explained that I don’t buy into naturalness because it’s a philosophical criterion, not a scientific one. But on that matter I got the last laugh: Nature, it turns out, doesn’t like to be told what’s presumably natural.
“Liberalism has lost the loyalty of the downtrodden that once, with admittedly mixed motives, it set out to help. That’s a loss it’s unlikely to survive.”
Yesterday’s Brexit roundup mentioned that Italian banks account for nearly half the bad loans for the entire Eurozone.
Italy is now the heads-on favorite as the most likely instigator of the next global economic crisis. Some analysts are calling it a perfect storm:
Italy’s bank bailout fund might not be enough to beat back the Brexit. More key Italian financial services firms are under pressure and face the potential need to raise capital, leaving Italian government officials and its banking system trying to steer clear of a crisis.
As Italian bank bonds and share prices are seeing their value slammed in the face of rising uncertainty, banks with substantial bad loans are facing greater pressure, with rates around the world slipping into negative territory.
And, of course, they’re blaming Brexit rather than all the myriad problems with the EU that caused the Brexit.
Italy’s bank bailout fund might not be enough to beat back the Brexit. More key Italian financial services firms are under pressure and face the potential need to raise capital, leaving Italian government officials and its banking system trying to steer clear of a crisis.
As Italian bank bonds and share prices are seeing their value slammed in the face of rising uncertainty, banks with substantial bad loans are facing greater pressure, with rates around the world slipping into negative territory. It’s an anxiety some in Italy and throughout the European Union may have been hoping would be eased by the Brexit vote last month — but then the U.K. referendum delivered the opposite outcome from the one they had sought.
“Market volatility following the U.K.’s EU referendum result hit the Italian bank sector particularly hard because it is one of Europe’s weakest,” Fitch Ratings analysts said in a July 4 report. “Asset quality pressure is a main driver for the negative outlooks on several large and medium-sized Italian banks.”
The Brexit vote, which calls for the United Kingdom to abandon a European Union that has careened for years from one crisis to another, could hasten weak Italian banks’ downfall. It was widely expected that European and U.K. banks will suffer the brunt of the vote in late June, and while British banks have been hard hit by the news — which brings with it tremendous regulatory uncertainty — EU banks have suffered as well.
Many banks in Italy, including its largest, UniCredit SpA, have seen share prices pounded; its stock is down more than 60 percent so far this year. A staffer at UniCredit could not provide comment when contacted.
Already, Italian officials and executives appear to be pulling out all the stops to stave off banking sector contagion. The lingering question for banks is whether they can continue to support lending operations at a time when creditors face potential losses and as some of the country’s leading financial services firms could be subject to shotgun M&A marriages by regulators.
Italian financial services firms earlier this year established a multi-billion dollar fund called Atlante to buy non-performing bank loans. But the fund, which is in the 4-billion euro to 6-billion euro range ($4.43 billion to $6.65 billion), one analyst said, is far too small to cover all the non-performing loans held by major Italian banks. However, the fund could still be leveraged in order to support loan purchases.
“The authorities need to get banks to remove a large portion of soured loans from their books so they can loan more,” said Julien Jarmoszko, senior research manager at S&P Global Market Intelligence. “If investors fear more Italian banks, this will raise their cost of capital and reduce lending as a result.”
Look for some sort of holding action for temporary recapitalization (including a “bail in” or some sort of ECB scheme) to let all the insiders dump their bad debts onto the European taxpayer, which was the real point of prolonging the Greek farce.
More news on that front:
Atlante already took control of Veneto Banca after “a €1bn capital increase demanded by EU bank regulators attracted zero interest.” And Atlante may have to tap pension funs for further recapitalization.
Italy has also banned short-selling of imploding Banca Monte dei Paschi di Siena SpA. That’s never a good sign, and it never works for long.
“It’s bad – non-performing bank loans have risen to 18%. At 10%, most banks are technically bankrupt. That’s the percentage of capital and pledged deposits they have against bad loans. Our pledged deposits, not theirs. At 18%, they’re no longer “technically” bankrupt. They ARE bankrupt! Greece still has bad or non-performing bank loans of 34%, Ireland 19% and Portugal 12%. And we haven’t seen the next serious financial crisis yet.”
And bank bailouts could hit Italian sovereign debt right in the bond ratings. “Italian ratings are already at BBB- for S&P, though we must also add that DBRS still ranks the country at AL. Still, if these ratings start to come under pressure from the agencies, this could lead to speculation that Italy may eventually fall out of the investment grade bucket. This would have a major impact – in the first place in terms of the eligibility of Italian bonds for the PSPP.” That’s the European Central Bank’s public sector purchase program.
Of course, when push comes to shove, we’re likely to see all sorts of banking rules get thrown out the window…
