Quotulatiousness

July 3, 2012

“The longer the euro area’s debt crisis drags on, the more it resembles an instrument of economic torture”

Filed under: Economics, Europe — Tags: , , , , , — Nicholas @ 08:47

The Economist on the long-drawn-out European financial mess:

THE longer the euro area’s debt crisis drags on, the more it resembles an instrument of economic torture. Like the medieval rack, every turn of the crisis tears Europe further apart. This week Cyprus announced it would seek a bail-out. Spain formally asked for money to recapitalise its banks. The Greek limb is close to being ripped off. How long can the Italian one hold?

Monetary union was meant to be a blessing. The euro’s founders dreamed that it would end chronic and divisive currency crises, promote growth and multiply Europe’s economic power. After the creation of the single market, the euro was the next step toward political union.

[. . .]

Now, after first blaming speculators, then profligate states, then, more broadly Europe’s lack of competitiveness, the cardinals of monetary union have belatedly come to understand that the main problem is the euro itself. A new report by a group of prominent economists — sponsored by Jacques Delors, the former president of the European Commission, and Helmut Schmidt, the former German chancellor — describes in telling detail how the euro is destroying itself.

Start with the European Central Bank’s “one size fits all” interest rate, which the report’s leading author, Henrik Enderlein of the Hertie School of Governance in Berlin, relabels a “one size fits none” rate. Differences in inflation are magnified: in countries with higher-than-average inflation (eg, Italy), the real interest is too low, fuelling more inflation; the opposite is true in countries where inflation is low (eg, Germany). Another problem is that the single market is far from complete, so that competition does not even out price differences across the EU. The market in services, which represents the biggest share of economic output, is still fragmented. Moreover, European workers are less likely to move in search of jobs than, say, American ones. A further curse is that countries of the euro zone do not independently control their own money. Because each lacks its own central bank to act as a lender of last resort, troubled countries can more easily be pushed into default as markets panic. Lastly, cross-border financial integration has spread far enough to channel contagion from one country to another, but not so far as to break the cycle of weak banks and weak sovereigns bringing each other down.

June 24, 2012

Conrad Black: Don’t blame Canada

Filed under: Cancon, Economics, Europe, Government — Tags: , , , , , , — Nicholas @ 08:45

In his weekly column at the National Post, Conrad Black refutes Jose Manuel Barroso (who appeared to refer to Prime Minister Harper as a “nobody” recently) that the European crisis was made in North America:

Stephen Harper is absolutely correct to refuse to contribute to World Bank assistance to Europe. The reward for the consistently intelligent fiscal management of Canada by both governing parties for more than 20 years should not be to assist rich countries that ignored our example and the warnings of their own wiser statesmen until the wheels came off the Euro-fable in all four directions.

The president of the European Commission, Jose Manuel Barroso, made the point at the G20 meeting in Mexico last week — in, as he thought, a reply to Harper’s comments on Europe’s self-generated economic and fiscal problems — that the current economic crisis originated in North America. That is not entirely true. It originated in the ill-starred fiscal and social policies of most European countries, and the tinder was set alight by bad financial, social, fiscal and regulatory policy in the United States.

Margaret Thatcher, Angela Merkel, and even Gerhard Schroeder, as well as a number of Austrian, Dutch, and Scandinavian leaders all warned that Europe could not continue to guarantee employment to all job-holders as a steadily shrinking percentage of Europeans worked and the public sector share of GDP rose, infused with the steroids of over-bountiful social democracy. Most countries of Europe today are like the little pigs who didn’t build their homes from weather-proof materials.

Furthermore, it is no rejoinder to Mr. Harper to complain about the Americans. It would be no less logical to blame the floundering of Dalton McGuinty’s Ontario on booming Texas, since both jurisdictions are in North America. In the same line of reasoning, I would like Newfoundland’s involvement in the drug wars in Mexico fully examined.

June 21, 2012

Canada’s recession, in one Tweet

Filed under: Cancon, Economics, Europe, USA — Tags: , , — Nicholas @ 12:16

June 19, 2012

EU’s Barroso spurns advice from Canadian “nobody”

Filed under: Cancon, Economics, Europe — Tags: , , , , , , , — Nicholas @ 08:22

The EU is not taking Prime Minister Stephen Harper’s advice gracefully. In fact, they’re not taking it at all:

Maybe it was the 35 C heat here on Mexico’s Baja Peninsula. Maybe it was the pressure of the crisis he faces back home.

Whatever it was, when I asked European Commission president Jose Manuel Barroso here Monday why Canada should risk its financial good name to bail out European banks, Barroso blew a diplomatic gasket.

“We are extremely open and we are engaging our partners but we are certainly not coming here to receive lessons from nobody,” he harrumphed.

That “nobody” is apparently our PM. How dare a mere Canadian politician offer criticism of the European Union, the greatest political achievement of mankind?

In Barroso’s eyes, the fiscal crisis in Europe is not even Europe’s fault. It is the victim in all of this. For that reason, the rest of the world ought bail it out, even though, as Prime Minister Stephen Harper has noted, the so-called euro area of 27 countries is the single largest and wealthiest economic unit in the entire world.

Harper has told Barroso just that, saying that if Canada — or anyone else — is going to kick in to a US$430 billion pool administered by the International Monetary Fund, then Europe is going to have to release the chokehold it has had on the IMF.

And of course, no negotiation with the EU is complete without some hard-to-misunderstand threats from the Eurocrats:

But Barroso wasn’t finished. In the middle of his tirade, he trotted out a thinly veiled threat that a Canada-EU free-trade deal was at risk unless Harper comes to his senses and sends Canadian cash to the continent.

“We are trying to conclude an important agreement on trade with Canada. Why? Because all the other parts of the world look at Europe as a source of possible growth for them. And, in fact, they also have an interest. The sooner the situation is stabilized in Europe, the better for them,” he said.

June 18, 2012

There, but for the grace of God …

Filed under: Britain, Europe, France, History, Humour — Tags: — Nicholas @ 15:55

Rerun of the Greek election

Filed under: Economics, Europe, Greece, Politics — Tags: , , , — Nicholas @ 09:16

The Economist summarizes the results of yesterday’s election in Greece:

WHEN deciding whether to grant citizenship to an outsider, the Ancient Greeks would put the matter to a vote, tossing coloured pebbles into a clay jar. On June 17th almost 29.7% of voting Greeks picked the colours of New Democracy, a centre-right party that broadly supports the country’s EU bail-out agreement. It was seen as a vote to remain citizens in good standing of the single currency. New Democracy narrowly beat Syriza, the “coalition of the radical left”, which was threatening to rip up the bail-out agreement. That would have resulted in ejection from the euro area or at least ostracism (another Ancient Greek practice) from its fellow members.

On the face of it, this do-over election has generated the kind of result euro-officials were hoping to see in the first election on May 6th. The leader of New Democracy, Antonis Samaras, will now seek to form a coalition with other parties that broadly support the bail-out. The Greek people can look forward to the sweat of fiscal austerity, not the tears of financial chaos. They can expect chronic misery rather than acute disaster.

[. . .]

What about the economy? As our piece last week reported, it has spent the last six weeks in suspended animation. Unfortunately, economies do not keep well in the freezer. The hesitation has wreaked great and irreparable harm. The banks have lost more deposits. The government’s arrears have grown. Erik Nielsen, chief economist of UniCredit, reports that pharmacists have suspended credit to the government, hampering the supply of medicines. The pebbles cast in May have spread damaging ripples through world markets, which have not reversed themselves. They “introduced yet another round of uncertainty” that the second bail-out programme “was not built to deal with.”

June 16, 2012

Peter Oborne on Enoch Powell, a “monster” with integrity

Filed under: Britain, Europe, History, Politics — Tags: , , , — Nicholas @ 10:36

In the Telegraph, Peter Oborne outlines the career of British parliamentarian Enoch Powell:

For years, Enoch Powell has been a monstrous figure in British politics. Even the mention of his name has been enough to invite damnation by association. Before the last election, David Cameron forced Nigel Hastilow to stand down as Conservative candidate for Halesowen after he praised Powell for being “right” about immigration.

[. . .]

With not one word changed, Powell’s speeches on Lords reform, some delivered half a century ago, could be delivered today. This is because his analysis was not dependent on day-to-day events and a transient national mood. His approach was based on first principles, extraordinary learning and a rigorous understanding of the British constitution.

It was this intellectual clarity which caused him to oppose British entry to what was then known as the Common Market. At the start of 1971, during the final stage of negotiations, Powell took himself round Europe speaking in Turin (in Italian), Frankfurt (in German) and Lyon (in French). As he remarked: “There is no more ignorant vulgarity than to treat language as an impediment to intercourse, which education, habit, travel, trade, abolish and then remove.” He used these speeches to warn his French, Italian and German audiences that the British tradition of national sovereignty and parliamentary democracy was incompatible with European economic and political union.

[. . .]

But now we must come to Enoch Powell’s notorious speeches on immigration, which have defined his posthumous reputation and established his pariah status. He challenged the culture of denial that surrounded the subject even then, predicting that the immigrant community would rise much faster than official statistics suggested. His claims were denounced as alarmist and irresponsible, even by The Daily Telegraph. As Tom Bower shows in a well-researched and fair-minded essay, Powell’s projections turned out to be much nearer the truth than the official ones.

[. . .]

The case for the defence goes like this: at the time immigration was surrounded by a culture of silence, and Powell was doing no more than bravely voicing the concerns (and using the language) of his constituents. He was no racist, as even opponents like Michael Foot acknowledged, and as his stance over the Hola Camp suggests. And let’s not forget that Powell, who had a brilliant war, risked his life for five years in the fight against fascism. But I am certain that the Conservative Party was right to drive him out for his remarks, which had the malign effect that no mainstream politician dared raise the issue of immigration for a generation.

For some, this single episode has been enough to damn his memory, and that can be understood. But Enoch Powell was a man of extraordinary integrity. He walked alone. To quote the late Daily Telegraph commentator TE Utley, doing his best to stand up for Powell in the wake of the notorious “rivers of blood” speech of April 1968: “He does not believe that politics is a hand-to-mouth affair, a succession of expedients to meet unforeseen and unforeseeable circumstances.”

Update, 19 June: In the Telegraph, Brendan O’Neill points out that modern anti-racists actually have more in common with Powell than they may realize:

What was the key prejudice in Enoch Powell’s infamous 1968 speech, which everyone is talking about again following Powell’s 100th birthday? It wasn’t actually hatred of immigrants, whom Powell believed to be ambitious, ferociously so. Rather it was fear of native Britons. It was fear of what white Brits, or what Powell referred to as the “ordinary working man”, might do if more and more foreigners turned up in their towns.

Indeed, Powell explicitly argued that “the sense of alarm and resentment lies not with the immigrant population but with those among whom they have come”. It was these people, he said, these “ordinary Englishmen”, who posed a threat to the social order, since their anti-immigrant anger had become so intense that to introduce more immigrants would be to “risk throwing a match in to gunpowder”. In short, “ordinary working men” were a powder-keg of unpredictable emotions whom the state should try its best not to antagonise. Or as Powell put it, “The supreme function of statesmanship is to provide against preventable evils”, including the evil of “ordinary working men” having their “alarm and resentment” further stirred up.

Even Powell’s most notorious line — “like the Roman, I seem to see the River Tiber foaming with much blood” — was a prediction not of immigrant behaviour but of native British violence against immigrants. Powell said native Brits, “for reasons which they could not comprehend” (presumably because they were a bit dim), were feeling dangerously like “strangers in their own country”.

June 13, 2012

“… there simply aren’t enough lifeboats!”

Filed under: Economics, Europe, Greece, Italy — Tags: , , , , — Nicholas @ 13:18

Nigel Farage speaking in the European Parliament:

Another one bites the dust. Country number four, Spain, gets bailed out and we all of course know that it won’t be the last. Though I wondered over the weekend whether perhaps I was missing something, because when the Spanish prime minister Mr Rajoy got up, he said that this bailout shows what a success the eurozone has been.

And I thought, well, having listened to him over the previous couple of weeks telling us that there would not be a bailout, I got the feeling after all his twists and turns he’s just about the most incompetent leader in the whole of Europe, and that’s saying something, because there is pretty stiff competition.

Indeed, every single prediction of yours, Mr Barroso, has been wrong, and dear old Herman Van Rompuy, well he’s done a runner hasn’t he. Because the last time he was here, he told us we had turned the corner, that the euro crisis was over and he hasn’t bothered to come back and see us.

I remember being here ten years ago, hearing the launch of the Lisbon Agenda. We were told that with the euro, by 2010 we would have full employment and indeed that Europe would be the competitive and dynamic powerhouse of the world. By any objective criteria the Euro has failed, and in fact there is a looming, impending disaster.

You know, this deal makes things worse not better. A hundred billion [euro] is put up for the Spanish banking system, and 20 per cent of that money has to come from Italy. And under the deal the Italians have to lend to the Spanish banks at 3 per cent but to get that money they have to borrow on the markets at 7 per cent. It’s genius isn’t it. It really is brilliant.

So what we are doing with this package is we are actually driving countries like Italy towards needing to be bailed out themselves.

In addition to that, we put a further 10 per cent on Spanish national debt and I tell you, any banking analyst will tell you, 100 billion does not solve the Spanish banking problem, it would need to be more like 400 billion.

And with Greece teetering on the edge of Euro withdrawal, the real elephant in the room is that once Greece leaves, the ECB, the European Central Bank is bust. It’s gone.

It has 444 billion euros worth of exposure to the bailed-out countries and to rectify that you’ll need to have a cash call from Ireland, Spain, Portugal, Greece and Italy. You couldn’t make it up could you! It is total and utter failure. This ship, the euro Titanic has now hit the iceberg and sadly there simply aren’t enough life boats.

June 6, 2012

Europhiles and Euroskeptics have much in common

Filed under: Europe, Government, Media, Politics — Tags: , , , — Nicholas @ 08:57

Under all the noise and confusion, the fans of the EU and the foes of the EU are rather similar says Brendan O’Neill:

Over the past year, as the Euro crisis has intensified, there has been a really interesting revelation — which is that Europhiles and Eurosceptics are not that different from each other. In fact, Europhiles and Eurosceptics are driven by very similar impulses, by similar anti-democratic instincts.

Both of these groups seem keen to absolve national governments of responsibility, to absolve nation states of responsibility for political and economic chaos.

The Europhile does it by kowtowing to Brussels, calling upon EU institutions to do more to save Europe. And the Eurosceptic does it by blaming the EU for almost everything that goes wrong, treating Brussels as a kind of Death Star that has sucked decency from every inch of Europe.

The Europhile tends to have blind faith in the EU, seeing it as the solution to every problem, while the Eurosceptic has a blinkered dislike of the EU, seeing it as the cause of every problem. What they share in common is a belief that responsibility lies with the EU. Both the depiction of the EU as the saviour of Europe and the depiction of it as the destroyer of Europe are underpinned by an instinct to say: ‘National governments are not to blame for what has gone wrong.’

In answer to the question ‘Did the EU kill democracy?’, I would say ‘No, it didn’t’. The EU is better understood as the end product of the death of democracy in Europe, a creation of national governments that had given up on the ideas of sovereignty and democracy. The EU follows the demise of European democracy, rather than instigating it.

The real driving force behind the EU over the past 40 years was the cowardice and opportunism of national governments, not the sinister ambitions of Brussels or Berlin. National political leaders who felt increasingly estranged from their own populations fashioned a post-sovereign institution that they could effectively hide in.

June 2, 2012

The Eurovision Song Contest and the European Union

Filed under: Europe, History, Humour, Media — Tags: , , , , , — Nicholas @ 09:45

Mark Steyn on the similarities between the top TV event in Europe and the EU itself:

One recalls the 1990 Eurovision finals in Zagreb: “Yugoslavia is very much like an orchestra,” cooed the hostess, Helga Vlahović. “The string section and the wood section all sit together.” Shortly thereafter, the wood section began ethnically cleansing the dressing rooms, while the string section rampaged through the brass section pillaging their instruments and severing their genitals. Indeed, the charming Miss Vlahović herself was forced into a sudden career shift and spent the next few years as Croatian TV’s head of “war information” programming.

Fortunately, no one remembers Yugoslavia. So today Europe itself is very much like an orchestra. The Greek fiddlers and the Italian wind players all sit together, playing cards in the dressing room, waiting for the German guy to show up with their checks. Just before last week’s Eurovision finale in Azerbaijan, The Daily Mail in London reported that the Spanish entrant, Pastora Soler, had been told to throw the competition “because the cash-strapped country can’t afford to host the lavish event next year,” as the winning nation is obliged to do. In a land where the youth unemployment rate is over 50 percent, and two-thirds of the country’s airports are under threat of closure and whose neighbors (Britain) are drawing up plans for military intervention to evacuate their nationals in the event of total civic collapse, the pressing need to avoid winning the Eurovision Song Contest is still a poignant symbol of how total is Spain’s implosion. Ask not for whom “Ding-Ding-A-Dong” dings, it dings for thee.

June 1, 2012

“Only the enemies of the Euro and of the European political project … dream of such a cataclysm”

Filed under: Britain, Economics, Europe — Tags: , , , — Nicholas @ 13:22

To be a True European, you must believe in the European project wholeheartedly and unreservedly. Any other attitude is unacceptable:

I was once interviewed by one of Le Soir’s best-known journalists, who asked me whether I was in favor of the European project. I said that I would answer if she would tell me what it was. She did not, and we moved on to other subjects. Whatever the European project may be, those who don’t embrace it wholeheartedly — with a fervor that can only be described as mystical, considering that no one can explain or define it in simple terms — are depicted not as skeptics, but as enemies. Thus in Le Soir, we read: “Only the enemies of the Euro and of the European political project, notably the City of London, dream of such a cataclysm [the break-up of the single currency]!”

The City of London — Britain’s equivalent of Wall Street — here plays the role of the bloated plutocrat of Soviet iconography or of the Jewish manipulator of Nazi iconography, pulling the strings behind the scenes in order to achieve its malevolent design of controlling the world. One can make many possible criticisms of the City of London, but a determination to destroy the viability of the euro for some unspecified, atavistic reason is certainly not among them. If the euro is viable, the City couldn’t destroy it; if it is not, the City cannot save it. Besides, the idea that there is a congregation of malign conspirators within the fabled Square Mile who would rejoice at the euro’s implosion is absurd; the prospect is almost universally viewed with apprehension, though it would not come as a surprise to everyone.

May 28, 2012

The EU elites’ fear of populism reveals their loathing of ordinary people

Filed under: Europe, Politics — Tags: , , , , , — Nicholas @ 09:32

In sp!ked, Patrick Hayes looks at the predictions of populist disaster from the EU elite:

There is little the EU elites fear more than so-called ‘populism’. According to one commentator, ‘in conferences and dinner parties from Brussels to Bratislava, the topic of populism dominates conversations’. As Corrado Passero, Italy’s minister of economic development, declared earlier this year, ‘our worst enemy right now is populism’. Clegg echoed such concerns in his interview with Der Spiegel. ‘Frankly’, he said, ‘questions about the British debate on EU membership will just be a small sideshow, compared to the rise of political populism’.

[. . .]

The casual equation of ‘populism’ with xenophobia, racism and even Nazism reveals much about the EU elites, and not a great deal about the actual views of the public. After all, that word — ‘populism’ — is commonly defined along the lines of the Collins dictionary as, ‘a political strategy based on a calculated appeal to the interests or prejudices of ordinary people’. Which raises a question: do Clegg and the many other politicians and commentators fretting about populism see xenophobia, racism and nationalism as being the default political prejudices of the public? From the public discussion, it would seem that if the ignorant, feral masses are not kept in their place by a liberal elite which understands their genuine interests, then concentration camps are just around the corner. As a Guardian editorial put it: ‘When Brussels or Berlin loses sight of [democracy], voters reach for simpler and uglier solutions.’

The widespread concerns being voiced by the political classes about the dangers of populism speak to an elitist disdain for mass politics. Trying to represent the uncontrollable electorates is seen to be cynically pandering to their proto-fascistic whims. The fear of the rise of populism, then, comes not from a genuine concern that a Fourth Reich is imminent, but rather from a terror of the public. The only solution is seen to be greater consolidation and centralisation of power in Europe-wide institutions in Brussels. These can then insulate the enlightened elite from the barbarian hordes roaming across Europe, so they can continue in their attempt to keep civilisation alive. The worst xenophobes are in fact among the European political elite, petrified of the ignorant, bigoted Others that make up the rest of the European populace.

May 24, 2012

A Greek exit is an existential threat to the Euro

Filed under: Economics, Europe, Greece — Tags: , , — Nicholas @ 09:55

John Kay explains why it’s not just a simple cut-and-run for Greece or the rest of the Euro:

When countries joined the single currency, a relatively simple piece of domestic legislation converted contracts in drachmas, pesetas, markkas and Deutschmarks into contracts in euros at a prescribed exchange rate. But you cannot simply reverse that process when countries leave the single currency. You have to prescribe which contracts are now to be fulfilled in drachmas and which remain in euros or converted into Deutschmarks. That determination is politically fraught, technically complex and subject to long legal challenges.

About two years ago some large businesses and wealthy individuals began seriously to ask, “if the euros were to unwind, in which currency would my asset or contract be denominated?” The issue is not whether the euro coins in your pocket carry an Athenian owl or German imperial eagle. The issue is the status of bank deposits and loans, residential mortgages and commercial contracts, as well as wages and prices. The drain of funds from Greek banks is an indication that ordinary people are now thinking in these terms.

Europe’s hapless politicians, having asserted that exit from the single currency was impossible, must now claim that exit would be relatively easy. Only then can they plausibly threaten the Greek electorate with expulsion if they vote the wrong way. But exit was never impossible, never easy and even when it was publicly unthinkable central banks would have been negligent not to have put in place contingency plans.

That is why even though Greece is a small part of the eurozone, a Greek exit is an existential threat to it. Once a path to exit has been defined, business and individuals will have a template for understanding the consequences of further unwinding.

May 23, 2012

Giving up on politicians

Filed under: Media, Politics — Tags: , , , , — Nicholas @ 08:34

A post from Jan Boucek at the Adam Smith Institute blog:

What with the ongoing eurozone crisis, G8 summits and NATO confabs, politicians from around the world continue to dominate the headlines — but things don’t seem to be getting any better. Amid all that hot air, though, were a couple of nice pearls of wisdom in the past week. Both suggested salvation from beyond the world of politics.

At a press conference on the occasion of his receipt of the Templeton prize, the Dalai Lama blamed last summer’s riots on young people “being brought up to believe that life was just easy. Life is not easy. If you take for granted that life will be easy, then anger develops, frustration and riots.”

Indeed. Politicians spend a lot of time promising to make life easy, alleviate risk and absolve individuals from the consequences of their behaviour.

Meanwhile, in a BBC interview prompted by the government’s scrapping of nutritional regulations for school lunches, celebrity chef Jamie Oliver said “I’ve given up on politics. My focus for the next 15 years is business and people. That is where the hope is. Governments are too short term. They’re too transient… They really don’t understand. There’s a political agenda but when you make these changes there’s very physical things that happen that they know nothing about which is very dangerous.”

May 22, 2012

Reason.tv: Is Austerity to Blame for Europe’s Economic Woes?

Filed under: Economics, Europe, Government, Media — Tags: , , , — Nicholas @ 11:50

« Newer Posts — Older Posts »

Powered by WordPress