Quotulatiousness

November 22, 2011

Acronym watch: “In the euro zone farmyard, it’s time to forget about the PIGS and start counting the broken EEGs”

Filed under: Economics, Europe, Germany, Humour — Tags: , , — Nicholas @ 09:36

The journalists will appreciate this new acronym:

The euro zone needs a new acronym. For the past three years, PIGS has served as a catchall for the cash-strapped states on the single currency’s periphery. But now that the crisis has moved to the core, a change is overdue.

PIGS has proved surprisingly durable. When it was first coined, citizens of Portugal, Ireland, Greece and Spain were understandably upset at being lumped together in such a derogatory way. Yet as Ireland and Portugal followed Greece in seeking bailouts, their similarities outweighed historical differences.

Some felt the acronym was self-fulfilling, giving attention-deprived speculators a handy shortlist from which to select their next sovereign victim. However, its survival was also an accident. When Italy got into trouble earlier this year, it slotted smoothly into the slot previously reserved for bailed-out Ireland. Politically sensitive bodies avoided the zoomorphic insult by reshuffling the letters to create the GIPS.

[. . .]

A better idea might be to start with the one remaining euro zone member that isn’t under attack from the bond markets. Andrew Balls, head of European portfolio management at PIMCO, now describes the euro zone states being shunned by investors as EEGs: Everyone Except Germany.

November 17, 2011

Snapshots from Greece

Filed under: Economics, Europe, Germany, Greece, Media, Politics — Tags: , — Nicholas @ 07:54

Brendan O’Neill has a few snippets from Athens:

‘Prime ministers should be chosen by us, not Angela Merkel,’ says the taxi driver taking me to the Acropolis. Taxi drivers here love talking politics, and they love hating Merkel. She’s treated as the arch villain of this tragedy. Magazine covers show a massive Merkel playing with Greek politicians as if they were dolls. Graffiti invites her to do things that are probably anatomically impossible. My advice to her is to avoid visiting Greece for the duration of The 100 Days. Probably longer.

•••

The taxi driver also tells me he can’t relate to Papademos. ‘He’s not a man of the people’. But it’s precisely Papademos’s lack of experience in dealing with the grubby, demanding demos that endears him to the EU elite, which fought tooth-and-catapult to have him installed as PM. As one European economist put it: for Brussels the great thing about Papademos is that he ‘speaks the language and shares the philosophy of [the] EU and ECB’ and that he ‘comes in without officially representing a party’. That is, he’s apolitical, unchosen, boring and bureaucratic — just the kind of politician the EU likes. It’s already a cliché, but that doesn’t stop it being true: Athens is now both the birthplace and graveyard of European democracy.

•••

Yet the graffiti expresses exasperation as well as anger — a deep disappointment with Greek workers. Commonly scrawled phrases are ‘Wake up!’ and ‘Stop being slaves!’ You get the impression that the Greek left, which is rowdier and noisier than its western European counterpart, is as annoyed with the masses as it is with Merkel. In Syntagma Square, nothing much remains of the radical protest camp that so excited outside observers earlier this year and which provided the template for the global ‘Occupy’ movement. There is just a memorial tree, with political paraphernalia attached to it in remembrance of the camp. It’s like one of those shrines that pops up on roadsides where someone has been killed by a speeding car, only it is adorned, not with wreaths, but with balaclavas, goggles and batteries (which were thrown at the police). It has the unwitting whiff of being a gravestone not only for the Greek left, but for Greek politics itself.

November 13, 2011

The report from Greece

Filed under: Economics, Europe, Germany, Greece — Tags: , — Nicholas @ 12:16

Michael Petrou and Stavroula Logothettis survey the Greek debt crisis in a report that Maclean’s cheekily headlines “Acropolis Now”:

“We are finished as a nation,” says Marko Gjini, a 39-year-old unemployed construction worker in Athens. “The country has been sold off. We have no say in anything anymore. Greece is owned by the Germans.”

Like many Greeks these days, Gjini is bitter and despondent because of his country’s financial mess, and the austerity measures that have been imposed in an effort to contain it. His wife, Aleka, a public hospital nurse, has seen her income drop from 1,200 euros a month to 800 euros. Now, facing more taxes and cuts to public expenditures, the family expects to have a net monthly income of less than 500 euros. Marko and Aleka are investing whatever money they can toward English lessons for their twin eight-year-old boys in the hope that they might have a better future somewhere else. “Let the government fall,” says Gjini, “[German Chancellor Angela] Merkel is the boss now anyway.”

[. . .]

For Vaso Gildizi, a Greek freelance writer, events in Cannes were “a national humiliation for the country.” The Greek prime minister was scolded like a schoolboy and sent home. The incident didn’t sit well with many Greeks who were already sour on the bailout deal and the euro itself.

“We’re bankrupt,” says 44-year-old Vasilia Paneli, owner of Bliss, a trendy café a short walk from Syntagma Square and the parliament in Athens. “We know it. The EU knows it. And yet we continue this Greek tragedy. A referendum would at least give us a voice, a chance to speak up for our future.” Paneli was unmoved by French and German threats that a referendum on the bailout deal would have meant a vote on whether to remain in the eurozone. She’d rather Greece leave it. “It’s self-serving,” she says. “I say let’s go back to the drachma.”

[. . .]

William Antholis, a senior fellow at the Brookings Institution think tank, likens flirting with a return to the drachma to “threatening suicide to avoid a lynching.” Greece is in for a painful few years whatever happens, he said in an interview with Maclean’s. The austerity measures are going to bite. But leaving the euro, he says, would be disastrous. The costs could include a run on Greek banks, as people sought to withdraw euros before they were changed to drachmas. Some banks would probably collapse. Greece would likely default on its debts, and would be unable to pay pensions and salaries. Some sectors of the economy built on export might benefit from a new, devalued currency, but at the expense of much heavier blows elsewhere.

November 9, 2011

Under attack by overwhelming economic forces, French and Germans consider retreat to citadel

Filed under: Economics, Europe, France, Germany — Tags: , — Nicholas @ 14:42

If they’re floating ideas like this, the Euro is done:

German and French officials have discussed plans for a radical overhaul of the European Union that would involve establishing a more integrated and potentially smaller euro zone, EU sources say.

French President Nicolas Sarkozy gave some flavor of his thinking during an address to students in the eastern French city of Strasbourg on Tuesday, when he said a two-speed Europe — the euro zone moving ahead more rapidly than all 27 countries in the EU — was the only model for the future.

The discussions among senior policymakers in Paris, Berlin and Brussels go further, raising the possibility of one or more countries leaving the euro zone, while the remaining core pushes on toward deeper economic integration, including on tax and fiscal policy.

As in any retreat, some outlying forces (countries) will have to be sacrificed to save the main body (France and Germany). A small retreat may not be enough — but Greece, Italy, Spain, and Portugal are likely to be left outside the walls.

November 3, 2011

The “Euro-elites now see democracy not so much as a distraction, more as a disaster or even a death-threat”

Filed under: Europe, Greece, Politics — Tags: , , — Nicholas @ 12:12

With the agonized screaming coming from the various offices of the European Union, you’d think Greek Prime Minister George Papandreou’s announcement of a referendum was the next-best thing to the emergence of the Antichrist. Mick Hume explains that the reason the Eurocrats took it so badly is that, from their point of view, democracy is Kryptonite:

‘If voting changed anything, they would make it illegal.’ So goes the famous old slogan, attributed to the anarchist Emma Goldman, expressing radical cynicism about the capitalist elites’ traditionally contemptuous attitude to political democracy.

In the current Euro-crisis, however, it appears that matters have gone further still. Europe’s political, media and economic elites are now so insecure, isolated and fearful of any hint of popular opposition that even the suggestion of giving Greeks a vote seemed to change everything for them — and some of them would clearly like to make such referendums illegal if they could.

No sooner had Greek premier George Papandreou announced his plan for a referendum on the latest Euro bailout and austerity package than, in two shakes of an imaginary ballot paper, all that the elites hold dear had apparently been destroyed: the ‘historic’ deal to save Europe agreed days earlier was now reportedly ‘in ruins’, the financial markets were sinking like stones, there were warnings that the Euro itself was now in mortal danger and even that the world was heading for a global depression. All this panic and chaos, apparently, because somebody suggested the outrageous idea of giving the Greek people a say on their future? No wonder that many in authority talk as if they really would like to ban voting today.

[. . .]

Papandreou’s announcement of a referendum, described even by the sober BBC as a ‘nightmare’ for Europe, could hardly have caused more shock, anger and revulsion in high places if somebody had placed a bomb under this week’s G20 summit in Cannes. The mood of Europe’s rulers was captured by President Sarkozy’s French regime, which described the Greek prime minister’s dalliance with democratic politics as ‘irrational and dangerous’. Trying to square this disdain for public opinion with his own need to seek re-election by the French people, Sarkozy himself has generously conceded that ‘giving people a voice is always legitimate’ before adding the obligatory ‘but…’: ‘the solidarity of all Eurozone countries is not possible unless each one agrees to measures deemed necessary’. In other words, whatever the Greek or any other electorate wants, their government will have to adopt those ‘measures deemed necessary’ by the Euro-elite, primarily the Germans and the French, if they want to remain members of the club.

Is the UKIP Britain’s version of the Reform Party?

Filed under: Britain, Politics — Tags: , , , , — Nicholas @ 08:46

Britain’s Conservative Party didn’t suffer quite the electoral humiliation that the Canadian Tories did (dropping from a huge majority to only two seats in parliament), but they did suffer a split. In Canada, the western faction became the Reform Party which eventually took over the “main” party after several elections in the wilderness. The British conservative party didn’t suffer quite so dramatic a death-and-rebirth, but Peter Oborne makes a case for the UK Independence Party as Britain’s equivalent of the Reform Party:

The first manifestation of this split was the creation of the Anti-Federalist League by the distinguished historian Alan Sked in 1991, at just the time that the Maastricht Treaty was signed. The decision to deprive eight Conservative MPs of the whip in the mid-1990s was another significant moment. Sir James Goldsmith’s Referendum Party took the disintegration process one stage further.

Sir James was far more successful than is widely appreciated, and forced the Conservative government to pledge a referendum on future European treaty changes. He also sucked away many Tory activists. When the Referendum Party folded after his death the following year, these activists tended not to return to the Conservatives. Many of them gave their loyalty to Ukip, the protest party led by Nigel Farage which now campaigns for Britain to leave the European Union.

In contrast to the racist BNP, which tends to attract former Labour supporters, Ukip is in reality the Conservative Party in exile. Many of its senior members wear covert coats and trilbies, making them look like off-duty cavalry officers. They are fiercely patriotic and independent.

[. . .]

If a Left-wing party had reached Ukip’s size and consequence, the media would be fascinated. But, because of its old-fashioned and decidedly provincial approach, it has been practically ignored. In the 2004 European elections, the party gained a sensational 16 per cent of the vote. Had it been the Greens or the Communists that had pulled off this feat, the BBC would have gone crazy. Instead it chose not to mention this event, coolly classifying Ukip as “other”.

For the metropolitan elite, the party scarcely exists. This is why last Sunday’s YouGov poll showing that support for Farage’s party had crept up to 7 per cent — just one point fewer than the Liberal Democrats — gained no coverage. But the significance of this is very great. I believe that Ukip is about to take over from the Lib Dems as Britain’s third largest political party.

October 26, 2011

When all the party leaders agree, it’s almost certainly a bad idea

Filed under: Britain, Government, Media, Politics — Tags: , , , — Nicholas @ 08:43

Mick Hume on the consistent refusal of British politicians to allow the electorate any choice on EU involvement:

When all of Britain’s elitist, unrepresentative and interchangeable political leaders unite behind an issue in the name of ‘the national interest’, it is a sure sign that something is amiss. Exhibit A: the united front presented by Tory prime minister David Cameron, his Lib Dem deputy Nick Clegg and opposition Labour leader Ed Miliband against the demand for a referendum on Britain’s relationship with the European Union. When this unappealing triumvirate is being cheered on by many in the high-minded media, alarm bells should really be ringing.

The official line from the Lib-Con government and the Labour opposition this week, as party leaders sought to marshal their MPs to vote against the parliamentary motion calling for an EU referendum, was that to have a national debate about the UK’s membership of the EU just now would not be in the national interest; it would be ‘a distraction’ from coping with Europe’s desperate economic and financial problems. As Cameron put in on the day of the vote, ‘it’s the wrong time to have this debate’ because ‘we’re in the middle of dealing with a crisis in the Eurozone’. A referendum now would be ‘rash’.

Turn that front-bench consensus on its head. It is precisely because of the parlous state of the Euro economy, and the paucity of solutions being offered by our rulers, that now is exactly the right time to have a major public debate on the future of the UK and Europe. The real ‘distraction’ that the Euro-elites fear today is democracy.

October 4, 2011

European Union’s biggest fear isn’t the financial crisis: it’s the voters

Filed under: Bureaucracy, Economics, Europe, Government — Tags: , — Nicholas @ 09:24

Mick Hume points out that the EU is undemocratic, and well on the way to being even less so if the Eurocrats get their way:

When even the Europe editor of the Europhile BBC suggests that ‘it is quite possible that an early casualty in the Eurozone crisis will be democracy’, it is surely time to ask some serious questions about the way that the handling of Europe’s financial and economic problems is intensifying the crisis of democratic politics.

If there is one thing that worries the Euro-elites even more than their out-of-control finances these days, it is their uncontrollable electorates. Governments, EU bureaucrats and Euro-bankers do not trust the ignorant European masses, many of whom have stubbornly refused to accept (on the rare occasions they have been asked) that the authorities know what’s best for them. We have followed on spiked in recent years the elites’ sustained efforts to impose a new centralised constitution on the EU and then, when those nations offered a vote rejected their imperious plans, to sneak it in through the backdoor anyway. They will not take ‘no’ for an answer, no matter how often and how loudly we tell them.

[. . .]

Every discussion of the possible outcome of the crisis only seems to suggest two options: either a ‘disastrous’ break-up of the Eurozone or its ‘restructuring’ – that is, a mega-bailout coupled with further moves towards fiscal as well as economic union. The first of these is not really considered an option at all by the Euro-elites. It would be an act of political suicide on their part. So the second option is their only one. But they also fear what the reaction of their peoples will be to that, especially in Germany and France.

Their answer has been effectively to suspend democratic debate of these matters and keep the public out of the loop, conducting the real deals in smoke-free rooms and secret correspondence behind a curtain of media obfuscation.

[. . .]

Democracy is a meaningless charade without choices and competing visions for the future of society. And the bankrupting of democracy is surely too high a price to pay for any financial package. There is no ready-made alternative economic solution to hand. But the very least we should demand is that the true depth of the crisis be made public, and that every aspect of the counter-crisis measures must be openly debated. The first step in that direction should be to challenge the way that European democracy is being bankrupted and asset-stripped in the name of saving the continent. Fighting for the future of Europe is not the same thing as the survival of the Euro-elites.

As things stand, we in Europe look set to end up with the worst of both worlds. We are supposed to swallow the abrogation of democracy and imposition of the dictatorship of experts and bureaucrats in the name of economic necessity. And then their elitist schemes won’t work anyway either to bring about an integrated Europe or to revitalise the Euro economy.

September 29, 2011

Charles de Gaulle as euro-skeptic

Filed under: Economics, Europe, France, Germany, History — Tags: , — Nicholas @ 09:13

Conrad Black provides a thumbnail sketch of de Gaulle’s real intentions regarding European integration:

Charles de Gaulle was born in Lille in 1890, to the family of a monarchist schoolteacher. De Gaulle was a Flaubertesque haut bourgeois, as well as an officer of the French army when it was rivaled only by the German army as the greatest in the world, and was unrivaled as the most storied army of all. He was imbued with the middle-class concept of the value of savings, frugality, pay-as-you-go. To him, greatness and security could never be bought or sustained on the installment plan. And mere politicians, whom he considered a lesser breed swimming in a sticky fondue of moral weakness and opportunism, could never be trusted to resist the temptation to pander, devalue, or seek short-term gain.

De Gaulle’s farsightedness was not confined to national projections of household economics; he also warned of the dangers of Euro-integration. He was the chief architect of the Franco-German friendship treaty of 1963, and — as a veteran of the terrible hecatomb of the Battle of Verdun and a World War I prisoner of war of the Germans, as well as the founder of the Free French in World War II — he knew as well as anyone the horrors of the centuries-long conflict along the Rhine. He also favored a common market and the end of violent ancient rivalries among the many European nationalities. But he always saw a homogenized, centralized Europe as a dangerous fantasy. He believed that a Continental interest, composed of as many as 20 or 25 languages and cultures, would be only an alphabet gruel, blended and stirred by faceless bureaucrats from the little countries, and not representing any real popular interest at all.

He thought that the original Common Market of France, West Germany, Italy, and Benelux could be used by France, effectively maneuvering between the U.S. and the USSR, and between Germany and the Russians, to project and amplify France’s — and, more particularly, his own — influence. Up to a point, while the U.S. was mired in Vietnam, and before European Communism became too enfeebled to challenge the West (which de Gaulle also foresaw), he was correct. But he believed that an unlimitedly accessible Europe would become an incoherent Tower of Babel, governed by bureaucratic intermeddlers in the name of feckless politicians, and liable to excessive outside influence, including from the U.S.

H/T to Monty at Ace of Spades HQ for the link.

“The euro isn’t just a failed currency, but a language unto itself”

Filed under: Bureaucracy, Economics, Europe, Humour — Tags: , , — Nicholas @ 09:01

Jonathan Weil provides a sampling of Euro terms and their real-world meanings:

It’s bad enough for average Americans that most European leaders speak English with heavy accents. What’s worse, even when we can make out the words they utter, it’s almost always impossible to figure out what these officials are really saying. That’s because they’re speaking in Euro-ese.

Fortunately, there is an answer to their endless riddles: a Euro-to-English dictionary, excerpts of which I have included below. To truly see the meaning of the seismic events rapidly reshaping Europe, you must know what the following 10 Euro terms of art mean in plain American English:

1. Finance ministry: A house of worship where government leaders go to pray for bailouts, economic miracles, panaceas and other forms of divine intervention.

How to use in a sentence: Officials at the Greek Finance Ministry said they remain hopeful the country will receive its next batch of rescue loans in time to avoid a cataclysmic default.

2. Coordinated: Chaotic, unfocused, brain-dead, paralyzed to the point of nonexistence; even in its best moments resembling a hopeless klutz.

Example: Finance ministers from the Group of 20 nations last week said they were “committed to a strong and coordinated international response to address the renewed challenges facing the global economy.”

September 28, 2011

Ed West: The utopian pipe dreams of the European project

Filed under: Europe, History, Politics — Tags: , , , — Nicholas @ 08:55

Ed West bids an unfond farewell to the Euro (and the European Union):

The diversity delusion and the euro delusion are both symptoms of a similar pseudo-religious mania. Both sprung from a noble attempt to ensure that the horrors of 1914-1945, inspired by nationalism and scientific racism, were never repeated. Both make them more likely to be repeated. Jean Monnet, architect and first president of the European Coal and Steel Community, conceived the idea of a United States of Europe in order to ensure such wars never happened again, through a new empire in which nationalism had been erased. Because Monnet was opposed by Charles de Gaulle, who favoured a Europe of nations, he therefore he developed the “Monnet method” of “integration by stealth”, a policy that ultimately led to the tragedy of economic union.

Perhaps more influential still was Alexandre Kojeve, who set up the embryonic European Union and influenced a generation of pro-EU thinkers in France. He came up with the “end of history” theme, whereby national boundaries and exclusive communities would wash away and a new world without borders would emerge. The EU’s vapid motto, United in diversity, reflects this neo-Christian utopianism.

Without exception the guilty men of Europe also shared, and still, share, the diversity delusion. The Liberal Democrats have entirely signed up, and most of the Labour Party too, although the Tories must share the blame too. Only one senior Tory spoke up against both mass immigration and the Common Market, Enoch Powell (who was also a voice in the wilderness in opposing Keynesian policies — only Paul the Octopus in recent years has been more right). Powell’s provocative language certainly helped his opponents, but as immigration is by its very nature a more toxic subject, so milder opponents have been silenced, leaving only the cranks, oddballs and extremists to represent opposition to this new utopia. This in turn makes it easier to present critics as extremists, just as even a couple of years ago opponents of the euro were labeled extremists and xenophobes. Contrary to what proponents of this delusion claim, it is not about xenophobia or racism; the issue, as Charles Moore wrote on Saturday, is one of sovereignty, and sovereignty relies on the legitimacy that only nations can provide.

Instead, as Roger Scruton noted, European intellectuals tried to “discard national loyalty and to replace it with the cosmopolitan ideals of the Enlightenment… The problem… is that cosmopolitan ideals are the property of an elite and will never be shared by the mass of human kind.”

The European project was a utopian idea, and I suspect that Britain’s peripheral part in the third great stupid, European idea of the last century will soon be over. National loyalty, whatever the elites feel, is here to stay. I guess we’re all extremists now.

September 26, 2011

Mark Steyn: It really is the end of the world as we know it

Filed under: Economics, Media, USA — Tags: , , — Nicholas @ 12:05

Feeling too optimistic? Mark Steyn has a solution for that:

Headline from CNBC: “Global Meltdown: Investors Are Dumping Nearly Everything.” I assumed “Nearly Everything” was the cute name of a bankrupt, worthless, planet-saving green-jobs start-up backed by Obama bundlers and funded with a gazillion dollars of stimulus payback. But apparently it’s “Nearly Everything” in the sense of the entire global economy. Headline from the Daily Telegraph of London: “David Cameron: Euro Debt ‘Threatens World Stability.’” But, if you’re not in the general vicinity of the world, you should be okay. Headline from the Wall Street Journal: “World Bank’s Zoellick: World In ‘Danger Zone.’” But, if you’re not in the general vicinity of . . . no, wait, I did that gag with the last headline.

I mentioned in this space a few weeks ago the IMF’s calculation that China will become the planet’s leading economic power by the year 2016. And I added that, if that proves correct, it means the fellow elected next November will be the last president of the United States to preside over the world’s dominant economy. I thought that line might catch on. After all, we’re always told that every election is the most critical consequential watershed election of all time, but this one actually would be: For the first time since Grover Cleveland’s first term, America would be electing a global also-ran. But there’s not a lot of sense of America’s looming date with destiny in these presidential debates. I don’t mean so much from the candidates as from their media interrogators — which is more revealing of where the meter on our political conversation is likely to be during the general election. On Thursday night, there was a question on gays in the military but none on the accelerating European debt crisis. It is certainly important to establish whether a would-be president is sufficiently non-homophobic to authorize a crack team of lesbian paratroopers to rappel into the Chinese treasury, break the safe, and burn all our IOUs. But the curious complacency about the bigger questions is disturbing.

September 22, 2011

Telegraph: The great euro swindle

Filed under: Britain, Economics, Europe, Media — Tags: , , , , , — Nicholas @ 09:34

This is an interesting summary of the path to the Euro, and how some predicted the current situation at the very start of the project:

The field is theirs. They were not merely right about the single currency, the greatest economic issue of our age — they were right for the right reasons. They foresaw with lucid, prophetic accuracy exactly how and why the euro would bring with it financial devastation and social collapse.

Meanwhile, the pro-Europeans find themselves in the same situation as appeasers in 1940, or communists after the fall of the Berlin Wall. They are utterly busted. [. . .]

The central historical error of the modern Financial Times concerns the euro. The FT flung itself headlong into the pro-euro camp, embracing the cause with an almost religious passion. Doubts were dismissed. Here is the paper’s Lex column on January 8, 2001, on the subject of Greek entry to the eurozone: “With Greece now trading in euros,” reflected Lex, “few will mourn the death of the drachma. Membership of the eurozone offers the prospect of long-term economic stability.” The FT offered a similarly warm welcome to Ireland.

The paper waged a vendetta against those who warned that the euro would not work. Its chief political columnist, Philip Stephens, consistently mocked the Eurosceptics. “Immaturity is the kind explanation,” sneered Stephens as Tory leader William Hague came out against the single currency.

[. . .]

Now let’s turn to the BBC. In our Centre for Policy Studies pamphlet, Guilty Men, we expose in detail how the BBC betrayed its charter commitment and became a partisan player in a great national debate — all the more insidious because of its pretence at neutrality.

For example, in the nine weeks leading to July 21, 2000, when the argument over the euro was at its height, the Today programme featured 121 speakers on the topic. Some 87 were pro-euro compared with 34 who were anti. BBC broadcasters tended to present the pro-euro position itself as centre ground, thus defining even moderately Eurosceptic voices as extreme.

H/T to Tim Harford for the link.

September 12, 2011

What is “the biggest European policy mistake since Britain and France let Hitler have the Sudetenland”?

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

For the record, I don’t actually think Europe would be better off with a single federal government, but Walter Russell Mead thinks the big mistake was attempting an economic union without a political union to match:

What is worrying investors worldwide is the evident intellectual and political bankruptcy of Europe. The Europeans are not stupider than other people, but they face deep structural economic and political problems that their institutions are hopelessly inadequate to solve. Creating a monetary union without a true federal government is looking more and more like the biggest European policy mistake since Britain and France let Hitler have the Sudetenland.

The current crisis is the result of a decade of policy failure. Greece should never have been allowed into the euro; prudent leaders would have checked its statistics, discovered the blatant frauds with which the Greeks sought to conceal the true state of their affairs, and told the country politely but firmly to come back when it was ready. Following that initial blunder, Europe failed to take note in any serious way of the serious distortions that were caused by suddenly reducing interest rates in Greece and other peripherals to near-German levels. Beyond that, alarm bells should have been ringing as it became clear that Greece and a number of other countries were treating their suddenly lower interest costs as found money. They were spending the windfall rather than taking advantage of the once in a lifetime opportunity to reform their economies in preparation for life under a monetary union with countries like Germany. If Europe’s institutions were up to the job, the warning signs would have been noticed and corrective steps taken years ago.

September 6, 2011

Switzerland devalues the franc

Filed under: Economics, Europe — Tags: , , — Nicholas @ 12:06

In what appears to be a successful attempt to devalue their currency, the Swiss have announced that they will peg the franc at €0.83, or SFr1.20 to the euro:

The Swiss National Bank in effect devalued the franc, pledging to buy “unlimited quantities” of foreign currencies to force down its value. The SNB warned that it would no longer allow one Swiss franc to be worth more than €0.83 — equivalent to SFr1.20 to the euro — having watched the two currencies move closer to parity as Switzerland became a “safe haven” from the ravages of the eurozone crisis.

The move stunned currency traders, and sent the Swiss franc tumbling against other currencies. Jeremy Cook, chief economist at currency brokers World First, said it was “intervention on a grand scale”, and the start of a “new battle in the currency wars”.

“That was the single largest foreign exchange move I have ever seen … The Swiss franc has lost close on 9% in the past 15 minutes. This dwarfs moves seen post-Lehman brothers, 7/7, and other major geo-political events in the past decade,” Cook said.

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