Quotulatiousness

April 16, 2012

“This sort of investment pays for itself ten-fold over a very short period of time”

Filed under: Economics, Government, Technology, USA — Tags: , , , , , — Nicholas @ 10:16

You see? This is what’s wrong with private enterprise, especially in California. Those wimps aren’t willing to invest in something that will “pay for itself” ten times over in a “very short period of time”. That’s why all the greatest economic advances have come from over-aged students, business council speechifiers, bureaucrats, and career apparatchiks!

If you believe calling your opponents names is a sign that you have lost the argument, then this new high-speed rail commercial from the California Alliance for Jobs — in which unexpectedly macho proponents of the $41 billion, $110 billion, $98.5 billion, $68.4 billion high-speed rail project deride skeptics as “wimps” — is pretty much the end of the line […]

What reveals the intellectual bankruptcy of the high-speed rail project is not the insults but that what is supposed to be a rousing propaganda piece comes off like an orientation video for new hires at a failing company.

The video’s cast includes hacks respected citizens from Operating Engineers Local 3, including Alliance for Jobs Executive Director Jim Earp, along with leaders from what’s usually referred to as the “business community” whose skill sets cluster around serving on business councils rather than doing any actual business. There’s also a career apparatchik and the founder of the “I Will Ride” Student Coalition, who is apparently a UC Merced senior but looks at least a decade too old.

[. . .]

Again, why not just claim the Fresno-Bakersfield line will end up carrying 38 million people, the entire population of California, every day? It would be no less accurate than the current claims, which have been made with no data on ticket costs, no comparative studies of existing bullet-train ridership, or anything else that can reasonably pass for due diligence.

Oh, and nobody actually knows where the bullet train will go to or from. (Past, present and possibly future candidates include Corcoran, Borden, Fresno, Anaheim, Los Angeles, San Francisco, and some guy named Dave’s rec room.) You wouldn’t build a patio with the amount of planning that’s gone into the high-speed rail project.

To put the headline into a bit of perspective, note that only one high speed rail line in the world is profitable. This is an old hobby horse of mine and I’ve posted about High Speed Railways a few times before.

Update: And to answer the question about why parts of Europe, Japan, and China have high speed rail systems and neither Canada nor the United States do, here’s a brief overview I wrote last year:

The best place to build a high speed rail system for the US would be the Boston-New York-Washington corridor (aka “Bosnywash”, for the assumed urban agglomeration that would occur as the cities reach toward one another). It has the necessary population density to potentially turn an HSR system into a practical, possibly even profitable, part of the transportation solution. The problem is that without an enormous eminent domain land-grab to cheat every land-owner of the fair value of their property, it just can’t be done. Buying enough contiguous sections of land to connect these cities would be so expensive that scrapping and replacing the entire navy every year would be a bargain in comparison.

The American railway system is built around freight: passenger traffic is a tiny sliver of the whole picture. Ordinary passenger trains cause traffic and scheduling difficulties because they travel at higher speeds, but require more frequent stops than freight trains, and their schedules have to be adjusted to passenger needs (passenger traffic peaks early to mid-morning and early to mid-evening). The frequency of passenger trains can “crowd out” the freight traffic the railway actually earns money on.

Most railway companies prefer to avoid having the complications of carrying passengers at all — that’s why Amtrak (and VIA Rail in Canada) was set up in the first place, to take the burden of money-losing passenger services off the shoulders of deeply indebted railways. Even after the new entity lopped off huge numbers of passenger trains from its schedule, it couldn’t turn a profit on the scaled-down services it was offering.

Ordinary passenger trains can, at a stretch, share rail with freight traffic, but high speed trains cannot. At higher speeds, the actual construction of the track has to change to deal with the physical problem of safely guiding the fast passenger trains along the rail. Signalling must also change to suit the far-higher speeds — and the matching far-longer safe braking distances. High speed rail lines cannot be interrupted with grade crossings, for the safety of passengers and bystanders, so additional bridges and tunnels must be built to avoid bringing road vehicles and pedestrians too close to the trains.

In other words, a high speed railway line is far from being just a faster version of what we already have: it would have to be built separately, to much higher standards of construction.

Getting back to the California HSR line; it goes from A to B on this map:

Okay, you think, at least Fresno will get some snazzy slick rail service . . . except this section will be built but not operated until further connecting sections are built . . . at a later date. Maybe. It will be the track, including elevated sections through Fresno, and the physical right-of-way, but no electrical system to power the trains; but that’s fine, because the budget doesn’t include any actual trains.

April 5, 2012

Why government stimulus is usually a bad idea

Filed under: Cancon, Economics, Government — Tags: , , — Nicholas @ 09:12

Mike Milke of the Fraser Institute:

Frum’s praise for Ottawa’s go-slow approach on balanced books is premised on the perception that if Ottawa actually cut spending (as opposed to slowing the rate of growth) such actions would endanger our prosperity: “If you reduce spending too fast, you crimp your economy,” wrote Frum.

But that’s a mistaken notion.

To use just one example from a large body of research, in 2009, leading fiscal policy expert and Harvard University professor Alberto Alesina and his colleague Silvia Ardagna reviewed stimulus initiatives in Canada and 20 other industrialized countries from 1970 to 2007. In the 91 instances where governments tried to stimulate the economy, it turned out the unsuccessful attempts generally were the ones based on increased government spending. Alesina noted that “a one percentage point higher increase in the current [government] spending-to-GDP ratio is associated with a 0.75 percentage point lower growth.”

In other words, stimulus spending doesn’t increase economic growth; it harms it.

To see how Ottawa’s own stimulus spending was unnecessary, consider how Canada emerged from the last recession and how government stimulus spending had nothing to do with it. Our recession ended in mid-2009; it was only about then that federal and provincial governments started spending extra (borrowed) stimulus cash.

To credit stimulus spending for the end to Canada’s recession, one must argue that extra (borrowed) dollars mostly spent after June 2009 somehow magically rescued the Canadian economy before June 2009.

All the borrowing did have one effect: It added to the existing large federal debt mountain, forecast to hit $614-billion in 2015, up from $457-billion in 2008.

The government’s stimulus spending was demanded by the opposition, but evidence since then indicates that the minority Tories would probably have passed a stimulus budget even if the opposition didn’t give them political cover.

April 3, 2012

At the “School of American Declinism”, the NYT is head cheerleader

Filed under: China, Economics, Media, USA — Tags: , — Nicholas @ 08:01

Jon, my former virtual landlord, sent me this link to an article on the inevitable rise of China and matching inevitable decline of the United States:

The senior leadership of the Chinese government increasingly views the competition between the United States and China as a zero-sum game, with China the likely long-range winner if the American economy and domestic political system continue to stumble, according to an influential Chinese policy analyst.

China views the United States as a declining power, but at the same time believes that Washington is trying to fight back to undermine, and even disrupt, the economic and military growth that point to China’s becoming the world’s most powerful country, according to the analyst, Wang Jisi, the co-author of “Addressing U.S.-China Strategic Distrust,” a monograph published this week by the Brookings Institution in Washington and the Institute for International and Strategic Studies at Peking University.

[. . .]

The United States is no longer seen as “that awesome, nor is it trustworthy, and its example to the world and admonitions to China should therefore be much discounted,” Mr. Wang writes of the general view of China’s leadership.

In contrast, China has mounting self-confidence in its own economic and military strides, particularly the closing power gap since the start of the Iraq war. In 2003, he argues, America’s gross domestic product was eight times as large as China’s, but today it is less than three times larger.

[. . .]

Mr. Wang writes that the Chinese leadership, backed by the domestic news media and the education system, believes that China’s turn in the world has arrived, and that it is the United States that is “on the wrong side of history.” The period of “keeping a low profile,” a dictum coined by the Chinese leader Deng Xiaoping in 1989, and continued until now by the departing president, Hu Jintao, is over, Mr. Wang warns.

“It is now a question of how many years, rather than how many decades, before China replaces the United States as the largest economy in the world,” he adds.

March 10, 2012

Canadian Conservatives: “You are not that party”

Filed under: Cancon, Economics, Government, Liberty — Tags: , , , , , — Nicholas @ 12:27

Andrew Coyne’s presentation to the Manning Centre conference in Ottawa:

What I believe in are a set of principles having to do with the freedom of the individual, the usefulness but not infallibility of markets, and the legitimate but limited role of the state. There are, in brief, a few things we need government to do, based on well-established criteria on which there is a high degree of expert consensus. The task is simply to get government to stick to those things, rather than waste scarce resources on things that could be done as well or better by other means: that is, government should only do what only government can do.

As I say, these ideas are not novel, or controversial. Indeed, you would find support for them, to a greater or lesser degree, across the political spectrum.

Nevertheless, there was a party, once, that believed in these things, to a somewhat greater extent than the other parties. That party called itself conservative, whether with a small or a large C, so I suppose you could call the things it believed conservatism. But you are no longer that party.

For example, that party favoured balanced budgets. But you are not that party. In fact, you boast of how your decision to add $150-billion to the national debt saved the economy.

That party favoured cutting or at least controlling spending, after the massive spree of the Liberals’ last years. But you are not that party. In fact, you boast of how you have increased spending by 7% per year — $37-billion in one year!

That party favoured a simpler, flatter tax system, that left people free to decide how to spend, save or invest their money for themselves. But you are not that party. In fact, you boast of the many gimmicks and gew-gaws with which you have festooned the tax code.

That party favoured abolishing corporate welfare. But you are not that party. In fact you boast of the handouts you make, often accompanied by ministers or indeed MPs bearing outsized novelty cheques. In some cases, you even put the Conservative logo on them.

The story of the last decade is how the rock-ribbed small-c conservatives of the old Reform Party were tamed, neutered, and blinkered into becoming a blue-painted Liberal Party. It worked, in the sense of getting their hands on the levers of power, but their souls were tainted, corrupted, and eventually disposed of in the process.

February 29, 2012

Ireland introduces the doomsday scenario: allowing voters to have a say on the Euro

Filed under: Europe, Government, Law — Tags: , , , , — Nicholas @ 09:33

The EU is not a democratic institution, and is actively hostile to any attempt to consult the people as it tries to become a super-state. Ireland just tossed a medium-sized spanner into the works:

Premier Enda Kenny said Dublin was acting on legal advice from Ireland’s attorney-general that “on balance” the fiscal compact requires a vote under the country’s constitution. “It gives the Irish people the opportunity to reaffirm Ireland’s commitment to membership of the euro,” he told ashen-faced members of the Dail.

All three major parties back the treaty but analysts say there is a high risk of rejection by angry voters in the current fractious mood. The compact gives the EU intrusive powers to police the budgets of debtor states, and has been denounced as feudal bondage by Sinn Fein and Ireland’s vociferous eurosceptics. The Irish voted “No” to both the Nice and Lisbon treaties before being made to vote again. Dublin has ruled out a second vote this time.

The Taoiseach’s announcement sent the euro into sharp dive against the dollar, though it rebounded later. Europe’s leaders thought they had tweaked the wording of the text just enough to avoid an Irish vote.

Note that last sentence closely. Avoiding consulting the very people who’ll be most affected is standard practice in the EU. Good for Ireland that they aren’t willing to be steamrolled yet again.

February 28, 2012

Did Greece get bailed out or did it default? A little from column A and a bit from column B

Filed under: Economics, Europe, Government, Greece, Politics — Tags: , , , — Nicholas @ 09:56

Detlev Schlichter explains what happened in the “big fat Greek bailout”:

Greece was bailed out for the second time in four months. Or did it default? Well, a bit of both, I guess.

All bondholders are equal. But some are more equal than others. If you are the ECB, your Greek bonds were exchanged, par for par, for new Greek bonds, and you can go on pretending that they are worth their principal amount. You won’t have to report a loss for now. But if you are a ‘private’ entity — and that is a rather loosely used term these days as it includes the banking industry which is either now partially owned by the state or to a considerable degree dependent on ongoing support from the lender-of-last resort — more than half your Greek investment was wiped out. So Greece defaulted. But as you ‘agreed’ to the ‘haircut’ it was in fact a ‘voluntary restructuring’, although you really had no choice.

[. . .]

I guess we shouldn’t lose sight of the fact that Greece’s economic model is fundamentally unsustainable, whichever way you cut it. Greece has been living beyond its means for a long time, and has managed to do so by flying under air-cover of the EMU project and with the tailwind of cheap credit and easy money. Spending by the Greek state accounts for more than half of registered economic activity, and a third of the workforce is employed by the public sector. ‘Activities’ are being subsumed under the heading of ‘Greek GDP’ that nobody would voluntarily pay for, that are to a large degree wasteful, and that are simply unaffordable under anything but the most bizarrely generous credit conditions, i.e. precisely those that Greece enjoyed from 2001 to 2008. Easy money has been used to paper over grave economic imbalances. Some of what is generously labelled ‘GDP’ should be discontinued — and fast.

To even suggest that such an economic model would be manageable if Greece, a country with about three quarters of the population of metropolitan Los Angeles but with less than half of L.A.’s GDP, only had its own paper currency and could inflate and devalue to its heart’s content, is economically illiterate. No country ever prospered by running budget deficits funded by the printing press or by creating domestic inflation. Devaluing your currency may give your exporters a shot in the arm — for about five minutes. But it scares your domestic savers away for years to come and severely diminishes your ability to keep or attract capital, the backbone of any sustainable economic model. To even try and attempt to ‘inflate away’ a debt load worth 160 percent of a generously calculated GDP would cause economic damage of gigantic proportion. One must have swallowed the Keynesian mythology of deficit-spending whole to believe that the country could borrow and print itself out of this mess. A proper default on its existing debt and rebuilding from a lower base — but with a hard currency — are the better options.

February 21, 2012

Greece: “now officially a ward of the international community”

Filed under: Economics, Europe, Government, Greece — Tags: , , , — Nicholas @ 10:40

Felix Salmon on the dire Greek financial future:

Greece is now officially a ward of the international community. It has no real independence when it comes to fiscal policy any more, and if everything goes according to plan, it’s not going to have any independence for many, many years to come. Here, for instance, is a little of the official Eurogroup statement:

    We therefore invite the Commission to significantly strengthen its Task Force for Greece, in particular through an enhanced and permanent presence on the ground in Greece… The Eurogroup also welcomes the stronger on site-monitoring capacity by the Commission to work in close and continuous cooperation with the Greek government in order to assist the Troika in assessing the conformity of measures that will be taken by the Greek government, thereby ensuring the timely and full implementation of the programme. The Eurogroup also welcomes Greece’s intention to put in place a mechanism that allows better tracing and monitoring of the official borrowing and internally-generated funds destined to service Greece’s debt by, under monitoring of the troika, paying an amount corresponding to the coming quarter’s debt service directly to a segregated account of Greece’s paying agent.

The problem, of course, is that all the observers and “segregated accounts” in the world can’t turn Greece’s economy around when it’s burdened with an overvalued currency and has no ability to implement any kind of stimulus. Quite the opposite: in order to get this deal done, Greece had to find yet another €325 million in “structural expenditure reductions”, and promise a huge amount of front-loaded austerity to boot.

February 18, 2012

Rex Murphy: The Drummond report should have been released before the Ontario election

Filed under: Cancon, Economics, Government, Media — Tags: , , , , — Nicholas @ 11:48

In the National Post, Rex Murphy expresses his displeasure that the Drummond report was not available for discussion during the last Ontario election campaign:

With the exception of the writings of the prophets Jeremiah and Isaiah at their bleakest, flavoured with a touch of H.P. Lovecraft on the days when that lightless mind was wrestling with a migraine, the recent meditations of Don Drummond on Ontario’s fiscal situation set the standard for prose that vibrates with gloom and foreboding.

The prophet Drummond is aware of this. He tried to prepare Ontario for the grim messages he was sending. At the press conference announcing his 529-page diagnosis of Ontario’s fiscal morbidity, he produced a remarkable understatement about his report and the 320 recommendations of cuts, freezes and cancellations that so enliven its bristling pages. Said Mr. Drummond (perhaps hiding a bitter smile): “This will strike many as a profoundly gloomy message.” Those listening to Mr. Drummond recalled P.G. Wodehouse: “I could see that, if not actually disgruntled, he was far from being gruntled.”

The Drummond report is scathing, frightening, a grim portrait, an indictment of Ontario’s fiscal management during the last eight years of McGuinty government. It is everything columnists in this paper have said and more. The Drummond analysis offers what we may call a spectrograph of Ontario’s perilous financial situation. It is also a devastatingly chilly portrait of imminent decline, should the government of this once dynamic, productive and industrious province fail to follow the prescription — 320 deep, demanding and painful recommendations that Mr. Drummond so vigorously recommends.

[. . .]

Politicians worry about cynicism and apathy among the electorate. Bringing out this report after sending the voters to the polls will reinforce the cynicism and bake the apathy. And why not? I have no doubt that Tory leader Tim Hudak or the NDP’s Andrea Horwath would have found a way, or been only too obliging, to see the report after the election, as well.

There should be an election do-over. Of course there will not be. Because to call an election now, and contest one on the real state of the economy, would be an unparalleled action of real candour and public valour. It would be asking Ontarians to vote on the reality of their government, not the spin of the parties. What politician would dare set so dangerous a precedent as that?

Of course, given how badly Tim Hudak and the Progressive Conservatives fought the last election, they’d still manage to fumble, flail, and falter just enough to let Mr. McGuinty keep his job. One can only imagine that the gods (along with the rest of Canada) hate Ontario and want to see more suffering.

“Somewhere in the near-eternal labyrinth of the Drummond report there must be evidence that the McGuinty’s Liberal government did something right over the last decade. If there is, I haven’t found it yet.”

Filed under: Cancon, Economics, Government, Politics — Tags: , , , , — Nicholas @ 00:01

Terence Corcoran brings the gloom on the Ontario government’s most likely response to the Drummond report:

Ontario, get ready for The Big McGuinty. The 562-page report from the government-appointed Commission on the Reform of Ontario’s Public Services, chaired by economist Don Drummond, has all the makings of a diversionary shell game in which everybody is directed to follow the pea of spending cuts while the real game is something else.

With attention now focused on carving Mr. Drummond’s 362 recommended slices off the great Ontario spending bologna, the real bait-and-switch objective, The Big McGuinty of this giant exercise in fiscal self-flagellation, is something else altogether: tax increases.

Does anybody seriously think the Liberal government of the Rev. Dalton McGuinty, after a decade of installing feel-good spending increases and extravagant policy schemes, is suddenly going to roll it all back and reverse a decade of ideological commitment to government intervention and liberal spending programs?

The Drummond report would require policy-backtracking on a vast scale. Somewhere in the near-eternal labyrinth of the Drummond report there must be evidence that the McGuinty’s Liberal government did something right over the last decade. If there is, I haven’t found it yet.

February 16, 2012

How long will it take for McGuinty to “lose” the Drummond report?

Filed under: Cancon, Economics, Government, Politics — Tags: , , — Nicholas @ 11:24

Yesterday, the Drummond report was released, containing literally hundreds of recommendations for getting Ontario’s government back on the fiscal straight-and-narrow. Perhaps half a dozen of the recommendations will be welcomed by Dalton McGuinty and his ministers. The rest will be anywhere from mildly unwelcome to outright anathema. In the National Post, Linda Nguyen has an overview:

The Ontario government needs to “swiftly and boldly” implement all of the hundreds of recommendations in a massive report released Wednesday if it wants to eliminate a projected $30.2 billion deficit by 2017, warns economist Don Drummond.

“Unfortunately, we’re dealing with a harsh reality in identity here,” said Mr. Drummond, author of the 543-page report and former chief economist with TD Bank.

The audit, which could be an example to other jurisdictions struggling to control spending, offered 362 recommendations in various sectors including health care, education, social programs, justice and labour relations.

[. . .]

In its 2011 budget, the Ontario government had projected its deficit to climb to $16-billion, but Mr. Drummond says his projects peg it at more than double that if the province continues its current spending.

To reach the target, Ontario must decrease its total program spending to 0.8% for the next seven years.

It’s been an item of faith among Liberals and NDPers that former Premier Mike Harris carpet-bombed the provincial economy during his two terms in office. As Scott Stinson points out, however, “Ontario’s projected spending needs a 17% cut. Mike Harris only cut 3.9%”:

“Avoid across-the-board cuts. Such a blunt tool treats equally a valuable efficiently run program and one that is outdated and sloppily managed. This is dumb.”
Dumb? Such plain speaking! We are used to government reports that prefer to say a measure “fails to properly realize efficiencies by ensuring its actions are in line with forward-looking goals and objectives.”

“This is not a smorgasbord from which the government can choose only the tastiest morsels and ignore the less palatable.”
Eat your brussels sprouts, Dalton McGuinty! But despite the pleasant analogy — who doesn’t enjoy a good buffet? — this is one of the more stark lines in the whole report. Implement it all, or it won’t work, the Commission says. Yikes.

“In budget planning, do not count chickens before they are hatched.”
We’ll say this for Mr. Drummond: he’s not afraid to use the folksy language.

“Kicking the can down the road is no solution.”
See?

“Do not hang onto public assets or public service delivery when better options exist. Consider privatizing assets and moving to the private delivery of services wherever feasible.”
Also, when preparing discussions with public-service unions, bring a helmet.

[. . .]

“The province should, in future discussions with the Ontario Teachers’ Federation, reject further employer rate increases to [pension plans] beyond the current rate.”
Another one sure to be a hit with the unions. Did you know that on average a teacher retires at 59, having worked 26 years, and collects a pension for 30 years? Me neither.

“The government should work to discuss, in particular, the overproduction of teachers with Ontario’s 13 universities offering teacher education programs.”
The term “overproduction” of teachers makes them sound kind of like widgets.

“Reshape student financial assistance, including the newly announced 30% Off Ontario Tuition grant, to target more of the assistance to low-income students.”
Say, remember that key plank of your election platform? Yeah, you need to totally rethink that.

February 15, 2012

Stephen Gordon: The timing may be right for an austerity budget

Filed under: Cancon, Economics, Government, USA — Tags: , , — Nicholas @ 09:40

The federal government needs to rein in spending, and an “austerity” budget is intended to do that. Stephen Gordon points out that the US economy’s recent positive signs will increase the chances of budgetary success here in Canada:

For the first time in years, the economic news out of the U.S. is encouraging: a strong jobs report for January, a continuing fall in the number of initial claims for unemployment benefits, and even signs that its housing market may begin to revive in the near future. It may appear unseemly parochial to wonder what a U.S. recovery means for Canada, but that is the question that matters for Canadian policy making.

The recent recession should put to rest sayings such as “when the U.S. economy sneezes, the Canadian economy catches cold” to rest. The Canadian recession began almost a year after the U.S.’ did, was much less severe, and was over much more quickly. Nor was this an exceptional episode: the effect of a U.S. recession on Canada is much smaller than what is generally supposed.

The obverse side of this statement is that a strong U.S. recovery doesn’t guarantee strong economic growth in Canada. But it may be enough to offset the effects of an austerity program that will be much less austere than that implemented by the Chrétien Liberal government. In 1995, the federal structural deficit was on the order of four per cent of GDP, as opposed to 1 per cent now. Even if the Conservatives implement federal public-sector cuts similar in magnitude to those of the mid-1990s, transfers to provinces and individuals are to be spared.

February 3, 2012

Paul Wells: Harper and the Tories acted like “trust fund kids”

Filed under: Cancon, Economics, Government — Tags: , , , — Nicholas @ 11:06

An interesting column at Maclean’s this week, where Paul Wells recasts Stephen Harper’s recent speech at Davos as autobiographical confession:

This passage should be read as thinly veiled autobiography and confession. This week a former senior public servant told me that when the Conservatives came to power in 2006, they inherited structural surpluses, booming oil prices and shrinking public debt, and they acted the way trust-fund kids do. “These were like kids in a candy store who had all this allowance. ‘Wow, we can do all this stuff?’ ”

But don’t take my nameless source’s name for it. Take Jim Flaherty’s. His first budget speech, in 2006, carried the title “Focusing on Priorities.” And what did he describe as priorities? In order: “Providing immediate and substantial tax relief,” he said. “Encouraging the skilled trades.” “Families and communities.” “Investing in infrastructure.” “Security.” “Accountability.” “Expenditure management.” “Restoring fiscal balance for our Canadian federation.” And right down there at the bottom, “prosperity.” So you can’t say it wasn’t the No. 1 priority. It’s right there in ninth place.

In Flaherty’s 2007 budget speech, the word “growth” appeared once.

But sometimes the world changes and the trust fund goes bust. For Harper, that happened in the first week of December 2008, when he had to fight like a street gang to keep the job he thought he’d just been re-elected to. So much changed after that. He won in 2011 by running on the economy after years of running away from it. And now here he was in Davos to tell everyone about “the good, growth-oriented policies. The right, often tough choices.”

Flaherty is my local MP, so I’m well acquainted with his habit of talking like a conservative, but running the finance ministry like one of Pierre Trudeau’s acolytes. It must really be galling him that he has to act like a grown-up for the coming budget. As I’ve said more than once, if you factor out the military and foreign affairs aspects, there were few things that Harper did that wouldn’t have been done just as readily by Paul Martin. And I mean Martin as PM, not in his more successful guise as minister of finance.

January 31, 2012

Germany issues “secret” document to Greek government on debt repayment

Filed under: Economics, Europe, Germany, Government, Greece, Politics — Tags: , — Nicholas @ 09:41

Mick Hume recounts the machinations within the European Union:

One outraged Greek government minister described it as ‘the product of a sick imagination’. Another called it ‘absolutely laughable’. The formal title of the document in question is ‘Assurance of Compliance in the Second GRC Programme’. It is neither a joke, nor a sick fantasy. It reads more like the draft of a death warrant for democracy, first in Greece and then elsewhere in Europe.

This supposedly secret document was issued by Angela Merkel’s German government to its partners in the Eurozone — and then carefully leaked, to ensure maximum impact. It sets out two extraordinary measures that the Germans want to impose to ensure that the Greek authorities comply with the swingeing budget cuts which they promised but have apparently failed to deliver to the markets’ satisfaction.

First, it says Greece must ‘legally commit itself to giving absolute priority to future debt service’. All state revenues must go first to paying debts and interest due, before a cent can be spent on public services. And the Greek government will not be allowed to threaten to default on its debts in future; if it cannot pay, it must accept that ‘further cuts’ will be ‘the only possible consequence’.

Second, the Germans want the Eurozone to oversee the ‘transfer of national budgetary sovereignty’ from Greece to ‘the European level’ under a ‘strict steering and control system’. The plan is for the Eurozone group to appoint a budget commissioner to oversee Greek finances, with the power ‘to veto decisions not in line with the budgetary targets’ set by European and international officials. If that was not humiliating enough, the Greeks would also have to look happy to bend the knee by ensuring that this new system of outside control ‘is fully enshrined in national law, preferably through constitutional amendment’.

To get the Greeks to agree to these unprecedented conditions, the German document also offers incentives — or as we used to call it, threats. If Athens does not accept the compliance measures, then ‘the Eurozone will not be able to approve guarantees for GRC II’. That is the second huge bailout of €130 billion which Greece desperately needs if it is not to go officially bust in weeks. The ‘Assurance of Compliance’ document is a ‘secret’ blackmail note.

Update: Ah, Monty captures the absurd state of the EU perfectly in a throw-away line in today’s Daily DOOM — “Like German porn, the politics of the Greek bailout just keep getting weirder and more complicated.”

January 23, 2012

The EU culture war against Hungary

Filed under: Europe, Government, Media — Tags: , , , , , — Nicholas @ 10:07

Frank Furedi on the confused situation between the European Union bureaucracy and the government of Hungary:

Thirty or 40 years ago, the way that the EU and the IMF are behaving towards Hungary would have been described as a classic example of neo-colonial pressure. Unlike Greece, Hungary is not simply being lectured about the need to sort out its economy — it has also been subjected to a veritable culture war. As far as the EU and the Western media are concerned, the real crime of the Hungarian government is not so much its inept economic strategy as its promotion of cultural and political values that run counter to what is deemed correct in Brussels.

The Brussels bureaucracy has long regarded Hungary as a society in danger of being engulfed by white savages. In 2006, when people in Budapest rioted against their corrupt government, the EU and sections of the Western media described the demonstrators as right-wing mobs posing a threat to democratic values. At the time, Brussels weighed in to support its man in Budapest, Ferenc Gyurcsany, the Socialist prime minister. The fact that Gyurcsany had lied to cover up the scale of Hungary’s massive budget deficit, and that he had admitted his dishonesty to some of his close colleagues, did not stop his mates in the EU from singing his praises. Poul Nyrup Rasmussen, president of the Party of European Socialists, was quick to rush to Gyurcsany’s defence, claiming he was the ‘best man to make the reforms that Hungary needs’.

What the Western media overlooked was that the corrupt Gyurcsany government was complicit in creating the conditions for mass demoralisation and cynicism. It was this EU-backed regime that did much to unravel and damage public life in Hungary. Gyurcsany’s humiliating electoral defeat in 2010, and the triumph of Viktor Orban and his Fidesz party, meant that the EU’s placeman was replaced by an autocratic nationalist and populist prime minister.

[. . .]

But then, the EU itself has no inhibitions about imposing its values on to its target audiences. It, too, does not want its constitutional proposals held up to public scrutiny. Sometimes it rules by decree and refuses people’s requests to hold any referenda on EU-related matters, on the basis that the issues are far too complex for ordinary people to understand. Evidently, the EU commissioners have read their Voltaire. To recall — it was Voltaire who praised the Russian absolute monarch Catherine the Great’s invasion of Poland and celebrated her ability ‘to make fifty thousand men march into Poland to establish there toleration and liberty of conscience’. The EU does not have 50,000 men but it does have many other resources for executing its culture war. Voltaire was tragically mistaken in his belief that deploying coercion was a legitimate tool for forcing people to change their beliefs — but at least he actually believed in tolerance and freedom of conscience. In contrast, the EU technocracy has little time for genuine tolerance.

January 19, 2012

In spite of the large number of petitioners, recalling Wisconsin’s governor may not be a done deal

Filed under: Economics, Government, Politics, USA — Tags: , , , , — Nicholas @ 12:33

Christian Schneider in City Journal on the efforts underway in Wisconsin to recall Governor Scott Walker:

One morning last February, Wisconsin governor Scott Walker called his staff into his office. “Guys,” he warned, “it’s going to be a tough week.” Walker had recently sent a letter to state employees proposing steps — ranging from restricting collective bargaining to requiring workers to start contributing to their own pension accounts — to eliminate the state’s $3.6 billion deficit. That day in February was when Walker would announce his plan publicly.

It turned out to be a tough year. The state immediately erupted into a national spectacle, with tens of thousands of citizens, led by Wisconsin’s public-employee unions, seizing control of the capitol for weeks to protest the reforms. By early March, the crowds grew as big as 100,000, police estimated. Protesters set up encampments in the statehouse, openly drinking and engaging in drug use beneath the marble dome. Democratic state senators fled Wisconsin to prevent a vote on Walker’s plan. Eventually, the Senate did manage to pass the reforms, which survived a legal challenge and became law in July.

The unions aren’t done yet: they’re now trying to recall Walker from office. To do so, they will try to convince Wisconsin voters that Walker’s reforms have rendered the state ungovernable. But the evidence, so far, contradicts that claim—and Wisconsinites seem to realize it.

The fight between the Governor and the public unions matters more than it may seem: Wisconsin was the first state to allow civil service workers to unionize and has traditionally been seen as a strong union (and therefore also Democratic) state ever since. If unions can have some of their power trimmed back there, it will hearten the efforts of other state governments to follow suit.

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