We have not heard so much recently about the euro crisis, but that does not mean that it has disappeared. On the contrary, it has become chronic and could turn acute anytime, as the eminent analyst, Dr. Oliver Hartwich points out:
The euro crisis has become chronic — but that does not mean that it cannot become acute anytime. Quite the contrary, the state of the eurozone is so bad now that even outrageous ideas for future monetary policy can no longer shock us.
Last week’s ECB media conference was a case in point. When ECB President Mario Draghi was asked what he made of “helicopter money”, he did not dismiss it out of hand. Instead he effectively told journalists that the idea of just crediting people with newly created central bank money had to be watched.
In central banking speak, this basically means that it is the next logical step.
But it is also an admission: The ECB has exhausted all its conventional and unconventional policy options. What remains in their toolkit are those policies that are plainly untested, untried and unworkable.
How bad must the state of an economy be when even zero interest and negative deposit rates do not trigger any inflation response? How bad when not even quantitative easing can revive economic activity? And indeed how bad when the very survival of the banking system depends on such trickery?
Let there be no doubt about it: Europe has manoeuvred itself into a dead end. Or more to the point: the ECB has.
The problem with the ECB’s policies is not so much that they may be technically illegal and certainly run counter to the spirit of the treaties under which the Bank was set up. The problem is that they entrench the eurozone’s reliance on ECB support to the point that it can no longer be withdrawn without causing widespread damage.
Let’s put it this way: If the ECB decided tomorrow, next year or in 10 years’ time that now was the time to return to more normal monetary circumstances, it could no longer do so. That is because it has already administered so much of its monetary medicines that withdrawal symptoms could well kill the patient.
Showing posts with label euro. Show all posts
Showing posts with label euro. Show all posts
Monday, 21 March 2016
Thursday, 28 January 2016
Dr Oliver Hartwich: "Merkel may not politically survive the disaster she has created"
Dr Oliver Hartwich is again spot on in his analysis of the state of the European Union and in putting the blame on the failed German chancellor Angela Merkel:
On multiple fronts the EU as an institution, as a project and as a promise is under simultaneous attack. But unlike in previous times, the result will not be an EU rising like phoenix from the ashes. It will either be the end of the EU or at least the end of the EU as we know it.
Despite its costs in the hundreds of billions, the euro crisis has not derailed the EU just yet. The continent’s monetary, fiscal and banking problems have not been solved, of course. However, they were sufficiently abstract not to cause widespread popular unrest. Plus, by administering some ECB alchemy, they can at least be put on hold for a while.
With the refugee crisis engulfing Europe it is different. More than a million migrants entering the EU mainly via Greece and Italy cannot be ignored, put on hold or inflated away. They have to be dealt with. They are visible. And they are posing serious questions to the way the EU and each individual member state regard themselves. --
The only hope for Merkel to politically survive this situation is also the least likely. She needs to find a European agreement to jointly deal with the crisis. This is not going to happen if EU members cannot even relocate more than 331 refugees.
Merkel also needs help from Turkey in stopping the flow — and last week’s Turkish-German consultations did not suggest that this was going to happen anytime soon. Finally, Merkel needs Greece to protect its sea border with Turkey. Again, you would not want to hold your breath.
Even professional EU optimists like Donald Tusk, President of the European Council, and Jean-Claude Juncker, President of the EU Commission, are sounding increasingly desperate. They are both on the record warning of an existential crisis to the EU — and they are right.
The problem is no-one knows what would follow the failure of the EU. All we know is that there is little time left to avert the collapse of this institution.
And while all of this is happening, the United Kingdom is flirting with an exit from the EU, the new Polish government is experimenting with a new form of authoritarianism, and in Portugal the conservatives have failed to form a government despite their better-than-expected showing in last year’s elections.
Politically and economically, Europe is burning. And the one person who deserves more blame than anyone else for the sorry state of the continent is the same who is regularly seen as the ‘most powerful woman in the world’ or Time’s ‘person of the year’: Angela Merkel.
Merkel’s unwillingness to confront the failings of the monetary union despite an insistence on internal devaluation has destabilised Greece and is also responsible for the rise of extremist and populist parties across Europe. Her unilateralism on refugees is dividing the EU and has given rise to Eastern European nationalists. In her own country, her failed euro policies and her naive migration recipes are burdening taxpayers for generations to come.
Merkel may not politically survive the disaster she has created — and that would be well deserved. The collateral damage of her failing would be a Europe that sees the resurrection of nationalism, borders and political extremism. And it would be the end of the EU as we knew it.
On multiple fronts the EU as an institution, as a project and as a promise is under simultaneous attack. But unlike in previous times, the result will not be an EU rising like phoenix from the ashes. It will either be the end of the EU or at least the end of the EU as we know it.
Despite its costs in the hundreds of billions, the euro crisis has not derailed the EU just yet. The continent’s monetary, fiscal and banking problems have not been solved, of course. However, they were sufficiently abstract not to cause widespread popular unrest. Plus, by administering some ECB alchemy, they can at least be put on hold for a while.
With the refugee crisis engulfing Europe it is different. More than a million migrants entering the EU mainly via Greece and Italy cannot be ignored, put on hold or inflated away. They have to be dealt with. They are visible. And they are posing serious questions to the way the EU and each individual member state regard themselves. --
The only hope for Merkel to politically survive this situation is also the least likely. She needs to find a European agreement to jointly deal with the crisis. This is not going to happen if EU members cannot even relocate more than 331 refugees.
Merkel also needs help from Turkey in stopping the flow — and last week’s Turkish-German consultations did not suggest that this was going to happen anytime soon. Finally, Merkel needs Greece to protect its sea border with Turkey. Again, you would not want to hold your breath.
Even professional EU optimists like Donald Tusk, President of the European Council, and Jean-Claude Juncker, President of the EU Commission, are sounding increasingly desperate. They are both on the record warning of an existential crisis to the EU — and they are right.
The problem is no-one knows what would follow the failure of the EU. All we know is that there is little time left to avert the collapse of this institution.
And while all of this is happening, the United Kingdom is flirting with an exit from the EU, the new Polish government is experimenting with a new form of authoritarianism, and in Portugal the conservatives have failed to form a government despite their better-than-expected showing in last year’s elections.
Politically and economically, Europe is burning. And the one person who deserves more blame than anyone else for the sorry state of the continent is the same who is regularly seen as the ‘most powerful woman in the world’ or Time’s ‘person of the year’: Angela Merkel.
Merkel’s unwillingness to confront the failings of the monetary union despite an insistence on internal devaluation has destabilised Greece and is also responsible for the rise of extremist and populist parties across Europe. Her unilateralism on refugees is dividing the EU and has given rise to Eastern European nationalists. In her own country, her failed euro policies and her naive migration recipes are burdening taxpayers for generations to come.
Merkel may not politically survive the disaster she has created — and that would be well deserved. The collateral damage of her failing would be a Europe that sees the resurrection of nationalism, borders and political extremism. And it would be the end of the EU as we knew it.
Friday, 17 October 2014
Alan Greenspan on the never ending euro failure
There is no end to the ongoing euro crisis. Former Fed Chairman Alan Greenspan explains why the euro is - and will stay - a huge failure:
"At the outset of the creation of the euro in 1999, it was expected that the southern eurozone economies would behave like those in the north; the Italians would behave like Germans. They didn’t," Greenspan said. "Instead, northern Europe fell into subsidizing southern Europe’s excess consumption, that is, its current account deficits."
Greenspan predicts that as the south's fiscal crisis deepens, the flow of goods from the north will stop altogether and southern Europe's standard of living will go down.
"The effect of the divergent cultures in the eurozone has been grossly underestimated," he added. "The only way to have several currencies from divergent nations lumped together is if they are culturally close, such as Germany, the Netherlands and Austria. If they aren’t, it simply can’t continue to work."
Tim Worstall also has a good piece on the same subject in Forbes:
While these very different economies are locked into the one currency, one interest rate, system there’s really not a lot anyone can do about it. Some talk of fiscal union, which is in essence the rich areas sending money to the poor ones. But absolutely no one at all thinks that those rich areas have the desire nor capacity to ship enough money: we’re not talking about a few billions here or there, but substantial percentages of GDP being necessary.
All of which is what made me conclude long ago that the failure of the euro is inevitable. Please note, I don’t mean that collapse of it is: political finagling can hold it together for decades if people really try. What I mean is failure in an economic sense. Interest rates will always be set for the core economies, meaning that they will always be wrong for the peripheral ones. Which means that those peripheral economies are condemned to a cycle of huge boom and bust as interest rates are either way too low or way too high for their circumstances.
Yes, I do think it fair to say that wild gyrations are a sign of failure in an economic policy or system. And in this sense, I think it inevitable that the euro will fail. For it already has.
"At the outset of the creation of the euro in 1999, it was expected that the southern eurozone economies would behave like those in the north; the Italians would behave like Germans. They didn’t," Greenspan said. "Instead, northern Europe fell into subsidizing southern Europe’s excess consumption, that is, its current account deficits."
Greenspan predicts that as the south's fiscal crisis deepens, the flow of goods from the north will stop altogether and southern Europe's standard of living will go down.
"The effect of the divergent cultures in the eurozone has been grossly underestimated," he added. "The only way to have several currencies from divergent nations lumped together is if they are culturally close, such as Germany, the Netherlands and Austria. If they aren’t, it simply can’t continue to work."
Tim Worstall also has a good piece on the same subject in Forbes:
While these very different economies are locked into the one currency, one interest rate, system there’s really not a lot anyone can do about it. Some talk of fiscal union, which is in essence the rich areas sending money to the poor ones. But absolutely no one at all thinks that those rich areas have the desire nor capacity to ship enough money: we’re not talking about a few billions here or there, but substantial percentages of GDP being necessary.
Yes, I do think it fair to say that wild gyrations are a sign of failure in an economic policy or system. And in this sense, I think it inevitable that the euro will fail. For it already has.
Thursday, 4 September 2014
The Econonomist: "The euro may yet be doomed"
The Economist is spot on about the euro:
"If Germany, France and Italy cannot find a way to refloat Europe’s economy, the euro may yet be doomed." --
"In recent weeks the countries of the euro zone have begun to take in water once again. Their collective GDP stagnated in the second quarter: Italy fell back into outright recession, French GDP was flat and even mighty Germany saw an unexpectedly large fall in output (see article). The third quarter looks pretty unhealthy, partly because the euro zone will suffer an extra drag from Western sanctions on Russia. Meanwhile, inflation has fallen perilously low, to around 0.4%, far below the near-2% target of the European Central Bank, raising fears that the zone as a whole could fall prey to entrenched deflation. German bond yields are hovering below 1%, another harbinger of falling prices. The euro zone stands (or wobbles) in stark contrast with America and Britain, whose economies are enjoying sustained growth."--
"(But) without a new push from the continent’s leaders, growth will not revive and deflation could take hold. Japan suffered a decade of lost growth in the 1990s, and is still struggling. But, unlike Japan, Europe is not a single cohesive country. If the currency union brings nothing but stagnation, joblessness and deflation, then some people will eventually vote to leave the euro. Thanks to Mr Draghi’s promise to put a floor under government debt, the market risk that financial pressures could trigger a break-up has receded. But the political risk that one or more countries decide to storm out of the single currency is rising all the time. The euro crisis has not gone away; it is just waiting over the horizon."
The euro in its present form is bound to fail. The sooner it happens, the better. Unfortunately the present European politicians will do their utmost in order to deny the failure, thus seriously delaying the much needed economic revival in Europe.
"If Germany, France and Italy cannot find a way to refloat Europe’s economy, the euro may yet be doomed." --
"In recent weeks the countries of the euro zone have begun to take in water once again. Their collective GDP stagnated in the second quarter: Italy fell back into outright recession, French GDP was flat and even mighty Germany saw an unexpectedly large fall in output (see article). The third quarter looks pretty unhealthy, partly because the euro zone will suffer an extra drag from Western sanctions on Russia. Meanwhile, inflation has fallen perilously low, to around 0.4%, far below the near-2% target of the European Central Bank, raising fears that the zone as a whole could fall prey to entrenched deflation. German bond yields are hovering below 1%, another harbinger of falling prices. The euro zone stands (or wobbles) in stark contrast with America and Britain, whose economies are enjoying sustained growth."--
"(But) without a new push from the continent’s leaders, growth will not revive and deflation could take hold. Japan suffered a decade of lost growth in the 1990s, and is still struggling. But, unlike Japan, Europe is not a single cohesive country. If the currency union brings nothing but stagnation, joblessness and deflation, then some people will eventually vote to leave the euro. Thanks to Mr Draghi’s promise to put a floor under government debt, the market risk that financial pressures could trigger a break-up has receded. But the political risk that one or more countries decide to storm out of the single currency is rising all the time. The euro crisis has not gone away; it is just waiting over the horizon."
The euro in its present form is bound to fail. The sooner it happens, the better. Unfortunately the present European politicians will do their utmost in order to deny the failure, thus seriously delaying the much needed economic revival in Europe.
Saturday, 22 March 2014
Oxford economics professor Kevin O'Rourke: "The euro crisis has caused the EU democratic deficit to widen"
This Oxford professor is worth listening to:
The euro crisis has caused the EU democratic deficit to widen which threatens reaching a durable solution to the region’s economic malaise, warned Kevin O’Rourke, professor of economics at Oxford University.
The debt crisis that has divided the eurozone into debtor and creditor nations has also seen the emergence of the unelected technocrat with very dangerous consequences, he said.
Prof O’Rourke said the “men in the white coats” from the European Commission and the ECB, among other EU institutions, had incorrectly diagnosed the cause of the crisis and prescribed inappropriate remedial measures with disastrous results.
Read the entire article here
The euro crisis has caused the EU democratic deficit to widen which threatens reaching a durable solution to the region’s economic malaise, warned Kevin O’Rourke, professor of economics at Oxford University.
The debt crisis that has divided the eurozone into debtor and creditor nations has also seen the emergence of the unelected technocrat with very dangerous consequences, he said.
Prof O’Rourke said the “men in the white coats” from the European Commission and the ECB, among other EU institutions, had incorrectly diagnosed the cause of the crisis and prescribed inappropriate remedial measures with disastrous results.
Read the entire article here
Monday, 10 February 2014
The euro and the EU are doomed
Political leaders and eurocrats have recently been celebrating the end of the euro crisis. They are of course lying. There is only a temporary lull before the next acute stage of the crisis sets in. If you do not believe me, read what the FT's columnist Gideon Rachman writes:
But there is also a different, darker interpretation that I find more convincing. This holds that the economic crisis has gravely damaged the euro. It has stripped the project of support and legitimacy and exposed the design flaws in the single currency. The biggest flaw remains the lack of a large central budget and a transfer union of the sort that makes other federal currencies, such as the dollar, work.
That weakness can only be remedied by the creation of something much closer to a European state. But the crisis has profoundly undermined the pro-European sentiment that would be necessary to build a United States of Europe. Even in Germany, which has historically supported the European ideal, the country’s most respected institutions are crying foul.
As a result, the euro is stuck with a floundering economy, inadequate institutions and weak support. That does not sound like a long-term recipe for success to me.
But there is also a different, darker interpretation that I find more convincing. This holds that the economic crisis has gravely damaged the euro. It has stripped the project of support and legitimacy and exposed the design flaws in the single currency. The biggest flaw remains the lack of a large central budget and a transfer union of the sort that makes other federal currencies, such as the dollar, work.
That weakness can only be remedied by the creation of something much closer to a European state. But the crisis has profoundly undermined the pro-European sentiment that would be necessary to build a United States of Europe. Even in Germany, which has historically supported the European ideal, the country’s most respected institutions are crying foul.
As a result, the euro is stuck with a floundering economy, inadequate institutions and weak support. That does not sound like a long-term recipe for success to me.
Thursday, 30 January 2014
Angela Merkel is not honest about the Europan Union and the euro
German Chancellor Angela Merkel (a de facto social democrat) is right, when she says that the euro crisis is not yet over. But she is not honest, when she states that a "real economic union" is what is needed in order to solve the crisis:
German Chancellor Angela Merkel called for a fresh push to create “real economic union” through changes to European treaties, saying that the euro-area debt crisis isn’t yet defeated.
Addressing lawmakers in Berlin today in her first policy speech of the year, Merkel said that Europe risks falling behind unless the 18-nation euro region expands binding commitments and improves its current “unsatisfactory” coordination on economic policy.
“Without decisive progress on this front, without a quantum leap, we won’t overcome the European sovereign-debt crisis,” Merkel said. “We might learn to live with it somehow, but we won’t keep our place at the top of global development.” --
“It has to be Europe’s aim to emerge from the crisis stronger than it went in,” Merkel said. “Because that is so, we can’t trust the deceptive calm we’re seeing right now” in the euro area. The currency union must be deepened “and I’m convinced that this requires further development of the EU’s treaties,” she said.
Read the entire article here
Merkel knows very well that the euro crisis cannot be solved without the European Union becoming a real political union - a federal European state - but she does not want to say it. Instead she is mumbling about "further development of the EU's treaties", because she knows that neither the majority of German voters, nor the voters in other EU countries, are prepared to support a federal European state.
German Chancellor Angela Merkel called for a fresh push to create “real economic union” through changes to European treaties, saying that the euro-area debt crisis isn’t yet defeated.
Addressing lawmakers in Berlin today in her first policy speech of the year, Merkel said that Europe risks falling behind unless the 18-nation euro region expands binding commitments and improves its current “unsatisfactory” coordination on economic policy.
“Without decisive progress on this front, without a quantum leap, we won’t overcome the European sovereign-debt crisis,” Merkel said. “We might learn to live with it somehow, but we won’t keep our place at the top of global development.” --
“It has to be Europe’s aim to emerge from the crisis stronger than it went in,” Merkel said. “Because that is so, we can’t trust the deceptive calm we’re seeing right now” in the euro area. The currency union must be deepened “and I’m convinced that this requires further development of the EU’s treaties,” she said.
Read the entire article here
Merkel knows very well that the euro crisis cannot be solved without the European Union becoming a real political union - a federal European state - but she does not want to say it. Instead she is mumbling about "further development of the EU's treaties", because she knows that neither the majority of German voters, nor the voters in other EU countries, are prepared to support a federal European state.
Tuesday, 7 January 2014
Janet Daley on the euro 2014: "more and more like the East German Ostmark"
It is easy to agree with Janet Daley's prediction for the eurozone in 2014:
... the eurozone will not collapse – at least, not as definitively as the Communist bloc did 20 years ago. But neither will it take any serious steps to resolve its internal contradictions. The euro will survive – however many democratic governments, constitutional arrangements and national institutions have to be trampled underfoot to preserve it. The pretence will be abandoned that the artificial life-support system on which the currency has been dependent is some temporary emergency measure, and it will come to be accepted as a permanent fixture.
With this, the euro will quite rapidly lose what connections it had with economic reality, becoming more and more like the East German Ostmark, whose value was decided by bureaucratic fiat and sustained by a political act of will. The social costs of this – particularly in southern Europe – will be devastating. But they are unlikely to lead to the sort of violent unrest that once seemed to be imminent. The peoples of the Mediterranean seem too exhausted by hardship to organise national rebellions. They will simply resign themselves to a future of economic dependency and occasional outbursts of neo-fascist disorder.
Read the entire Telegraph column here
... the eurozone will not collapse – at least, not as definitively as the Communist bloc did 20 years ago. But neither will it take any serious steps to resolve its internal contradictions. The euro will survive – however many democratic governments, constitutional arrangements and national institutions have to be trampled underfoot to preserve it. The pretence will be abandoned that the artificial life-support system on which the currency has been dependent is some temporary emergency measure, and it will come to be accepted as a permanent fixture.
With this, the euro will quite rapidly lose what connections it had with economic reality, becoming more and more like the East German Ostmark, whose value was decided by bureaucratic fiat and sustained by a political act of will. The social costs of this – particularly in southern Europe – will be devastating. But they are unlikely to lead to the sort of violent unrest that once seemed to be imminent. The peoples of the Mediterranean seem too exhausted by hardship to organise national rebellions. They will simply resign themselves to a future of economic dependency and occasional outbursts of neo-fascist disorder.
Read the entire Telegraph column here
Sunday, 29 December 2013
Germany and the UK would benefit from a euro break up
In the long run Germany and the UK would benefit from a break up of the euro, according to the leading British research group the Centre for Economics and Business Research (CEBR):
"Germany is forecast to lose its position as the largest Western European economy to the UK around 2030 because of the UK's faster population growth and lesser dependence on the other European economies," the report said.
"If the euro were to break up, Germany's outlook would be much better," it added. "A Deutsche Mark-based Germany certainly would not be overtaken by the UK for many years if ever."
The think-tank's chief executive claimed that Britain's economy would grow even faster if it left the European Union.
"My instinct is that in the short term, the impact of leaving the EU would undoubtedly be negative," Douglas McWilliams told the Daily Telegraph. “My suspicion is that over a 15-year period, it would probably be positive."
"Germany is forecast to lose its position as the largest Western European economy to the UK around 2030 because of the UK's faster population growth and lesser dependence on the other European economies," the report said.
"If the euro were to break up, Germany's outlook would be much better," it added. "A Deutsche Mark-based Germany certainly would not be overtaken by the UK for many years if ever."
The think-tank's chief executive claimed that Britain's economy would grow even faster if it left the European Union.
"My instinct is that in the short term, the impact of leaving the EU would undoubtedly be negative," Douglas McWilliams told the Daily Telegraph. “My suspicion is that over a 15-year period, it would probably be positive."
Wednesday, 11 December 2013
Swedes give a huge NO to the euro
The Swedes were smart enough to say no to the euro in a 2003 referendum. And now, ten years later, they are even more critical of the crisis ridden eurozone:
A whopping 78 percent of the electorate would choose to stay out of the eurozone if the country held a referendum today.
"Of those who replied in May 2013 that they would vote yes to the euro, about 67 percent would still vote yes, while about 21 percent now in November would vote no," Statistics Sweden said in a statement.
A slim 13.9 percent of men and 11.3 percent of women were in favour of introducing the euro currency in Sweden.
A whopping 78 percent of the electorate would choose to stay out of the eurozone if the country held a referendum today.
"Of those who replied in May 2013 that they would vote yes to the euro, about 67 percent would still vote yes, while about 21 percent now in November would vote no," Statistics Sweden said in a statement.
A slim 13.9 percent of men and 11.3 percent of women were in favour of introducing the euro currency in Sweden.
Wednesday, 25 September 2013
Daily express columnist Leo McKinstry: The euro "is demolishing the very foundations of economies"
Daily Express columnist Leo McKinstry has written an excellent piece on why the euro is doomed to fail:
IT was meant to be the engine of growth, discipline and stability across Europe.
But the single currency has fast become a wrecking ball that is demolishing the very foundations of economies. As the product of a fanatical political ideology it has piled up colossal debts, fuelled inflation, reduced living standards and lengthened dole queues.
When the single currency was first established in 1999 the leaders of Europe promised that it would usher in a new era of prosperity.
The Eurosceptics, who predicted that it would cause disaster, were treated as nothing more than a bunch of deluded extremists, cranks and xenophobes.
But the critics turned out to be absolutely right. The EU zealots are the ones gripped by self-delusion and extremism.
Even now as the eurozone implodes the oligarchs of the EU and their cheerleaders still cling on to their dream of European integration. They show no shame for the misery they have inflicted on us, no willingness to recognise their dangerous dogma is absurd. They are like members of a cult.
Read the entire column here
IT was meant to be the engine of growth, discipline and stability across Europe.
But the single currency has fast become a wrecking ball that is demolishing the very foundations of economies. As the product of a fanatical political ideology it has piled up colossal debts, fuelled inflation, reduced living standards and lengthened dole queues.
When the single currency was first established in 1999 the leaders of Europe promised that it would usher in a new era of prosperity.
The Eurosceptics, who predicted that it would cause disaster, were treated as nothing more than a bunch of deluded extremists, cranks and xenophobes.
But the critics turned out to be absolutely right. The EU zealots are the ones gripped by self-delusion and extremism.
Even now as the eurozone implodes the oligarchs of the EU and their cheerleaders still cling on to their dream of European integration. They show no shame for the misery they have inflicted on us, no willingness to recognise their dangerous dogma is absurd. They are like members of a cult.
Read the entire column here
Thursday, 19 September 2013
The Alternative for Germany makes the German elections interesting
There is one reason why this weekend's German elections are of interest - to see, whether the stunning success (so far) of the euroskeptic Alternative for Germany (AfD) will be enough for the party to reach the Bundestag.
Professor Bernd Lucke's AfD has within a few weeks witnessed a faster growth than anybody had foreseen, according to the conservative daily Die Welt. Polls show that the euro crisis has created a diffuse fear for the future, which the traditional parties are not able to handle.
Not surprisingly, Lucke also has many sympathizers also in the UK:
When Bernd Lucke, the head of the euroskeptic party Alternative for Germany (AfD), visited the United Kingdom before the summer break, he was courted as an honored guest. Lawmakers from the governing Conservative Party met with him in private. The country's main news show, BBC's "Newsnight," brought him in for a prime-time studio interview. Instead of being berated as a right-wing populist, he was praised for his intelligence. --
In June, when Lucke was sitting in front of the black-red-gold flag in the "Newsnight" studio, moderator Jeremy Paxman described him as a taboo-breaker. There is a new party in Germany that is "ready to say what has been unsayable," said Paxman. Namely, that "the euro is nuts." Lucke laughed politely and answered the sympathetic questions in fluent English.--
Tuesday, 17 September 2013
Chief Executive of Danish Saxo Bank: "The euro is doomed"
Things have been fairly quiet in Euroland lately, mainly due to the upcoming German elections. (Chancellor Merkel and her Social democratic opponent do not want the euro crisis to disturb the election campaign). But the crisis has of course not disappeared. That's why it is good that Lars Christensen, chief executive of Saxo Bank, reminds us about the reality:
The eurozone is doomed and its dysfunctional model has no chance of recovery with the euro in its current form, creating problems for Russia and other world economies, Lars Christensen, chief executive of European investment bank Saxo Bank, said at a Moscow press conference on Tuesday.
Underperforming eurozone countries create a massive drain on the world economy, he said. “This is a problem not just for Russia but for everybody else,” Christensen added. Saxo bank has been operating in Russia since 2011. --
“The euro is doomed. It took decades to get it in place and unfortunately it will have a very long time to get rid of it again,” he said.
While an immediate dissolution of the common European currency has a potential to be catastrophic for some economies and political leaders who invested their careers in it, the eurozone project had “fundamental construction” problems from the very start, Christensen added.
“These 17 countries [which are part of the eurozone] have to act as if they were a one nation state, [where] you can have some solidarity with areas that are underperforming and accept substantial transfer payments [to support them]. [But] you can’t expect 17 countries to have that kind of solidarity toward each other,” he added.
“[Greece] hasn’t done anything different from what they did before they joined the eurozone. Greece is not the problem for euro. Euro is the problem for Greece.”
Read the entire article here
The eurozone is doomed and its dysfunctional model has no chance of recovery with the euro in its current form, creating problems for Russia and other world economies, Lars Christensen, chief executive of European investment bank Saxo Bank, said at a Moscow press conference on Tuesday.
Underperforming eurozone countries create a massive drain on the world economy, he said. “This is a problem not just for Russia but for everybody else,” Christensen added. Saxo bank has been operating in Russia since 2011. --
While an immediate dissolution of the common European currency has a potential to be catastrophic for some economies and political leaders who invested their careers in it, the eurozone project had “fundamental construction” problems from the very start, Christensen added.
“These 17 countries [which are part of the eurozone] have to act as if they were a one nation state, [where] you can have some solidarity with areas that are underperforming and accept substantial transfer payments [to support them]. [But] you can’t expect 17 countries to have that kind of solidarity toward each other,” he added.
“[Greece] hasn’t done anything different from what they did before they joined the eurozone. Greece is not the problem for euro. Euro is the problem for Greece.”
Read the entire article here
Support for joining the euro at all time low in Sweden
Sweden is not going to join the failed eurozone anytime soon. Support for the euro has plummeted; now only 9% of the Swedes are in favour of joining.
Jonas Ljungberg, professor at the Department of Economic History at Lund University eplains why the euro is not working:
"A 'one-size-fits-all' approach to interest rates doesn't work in the eurozone. The countries are simply too different," he tells The Local.
Ljungberg contends that the entire euro project is flawed as the eurozone doesn't correspond to an optimal currency area that is set up to reap the benefits of having a common currency.
"You end up with some countries following the European Central Bank (ECB) that have their interest rates too low, which can lead to the sort of real estate bubbles that hit Spain and Ireland," he explains.
"While in Germany interest rates are likely too high and this leads to deflation and falling wages."
He cites calculations carried out by Lars E. O. Svensson, a former Riksbank deputy governor, that tried to quantify the costs of euro membership to the Swedish economy.
"He found that Sweden stood to lose 50,000 jobs if the ECB rate was a half-point too high," says Ljungberg. "Sweden would not have benefited from joining the euro. Rather, I think Sweden has benefited by staying out."
He credits Swedish voters for "not being swayed by the arguments of the elite" who campaigned in favour of euro membership back in 2003.
"The elite were very dismissive of the concerns and arguments of the rest of the public," he says. "It's not enough to just say that only people who are uneducated are against joining."
The eurozone crisis hasn't help boost Swedes' confidence in the common European currency, perhaps exacerbating a latent "hesitation about handing too much power to Brussels of Frankfurt", says Ljungberg.
Up until 2009, support for the euro among Swedes hovered around 40 percent, with just over half of those polled saying they were against joining.
But ever since early 2010, support for the euro has plummeted. In May 2013, a poll by the SOM Institute in Gothenburg revealed only nine percent of Swedes were in favour of joining the euro.
Read the entire article here
Jonas Ljungberg, professor at the Department of Economic History at Lund University eplains why the euro is not working:
"A 'one-size-fits-all' approach to interest rates doesn't work in the eurozone. The countries are simply too different," he tells The Local.
Ljungberg contends that the entire euro project is flawed as the eurozone doesn't correspond to an optimal currency area that is set up to reap the benefits of having a common currency.
"You end up with some countries following the European Central Bank (ECB) that have their interest rates too low, which can lead to the sort of real estate bubbles that hit Spain and Ireland," he explains.
"While in Germany interest rates are likely too high and this leads to deflation and falling wages."
He cites calculations carried out by Lars E. O. Svensson, a former Riksbank deputy governor, that tried to quantify the costs of euro membership to the Swedish economy.
"He found that Sweden stood to lose 50,000 jobs if the ECB rate was a half-point too high," says Ljungberg. "Sweden would not have benefited from joining the euro. Rather, I think Sweden has benefited by staying out."
He credits Swedish voters for "not being swayed by the arguments of the elite" who campaigned in favour of euro membership back in 2003.
"The elite were very dismissive of the concerns and arguments of the rest of the public," he says. "It's not enough to just say that only people who are uneducated are against joining."
The eurozone crisis hasn't help boost Swedes' confidence in the common European currency, perhaps exacerbating a latent "hesitation about handing too much power to Brussels of Frankfurt", says Ljungberg.
Up until 2009, support for the euro among Swedes hovered around 40 percent, with just over half of those polled saying they were against joining.
But ever since early 2010, support for the euro has plummeted. In May 2013, a poll by the SOM Institute in Gothenburg revealed only nine percent of Swedes were in favour of joining the euro.
Read the entire article here
Monday, 9 September 2013
Failed former European leaders try to hide their failures by advocating a federal European state
A group of (mostly) retired European politicians - and a few academics - have signed an article in which they pretend that a federal European state is the answer to all present European problems:
When the heads of the EU’s three major institutions -- the European Commission, the European Council, and the European Parliament -- collected the Nobel Peace Prize together in Oslo last December, they spotlighted the vague mandate and lack of institutional clarity that are at the core of the organization’s current problems. Unless these institutions can garner legitimacy among European citizens and transform the EU into a real federal union, with common fiscal and economic policies to complement its single currency, Europe will be worried by its future as much as its past and continue to find its social model battered by the gales of an ever more competitive global economy.
When the heads of the EU’s three major institutions -- the European Commission, the European Council, and the European Parliament -- collected the Nobel Peace Prize together in Oslo last December, they spotlighted the vague mandate and lack of institutional clarity that are at the core of the organization’s current problems. Unless these institutions can garner legitimacy among European citizens and transform the EU into a real federal union, with common fiscal and economic policies to complement its single currency, Europe will be worried by its future as much as its past and continue to find its social model battered by the gales of an ever more competitive global economy.
The first step forward has to be developing an economic growth strategy, to escape the union’s current debt trap and to create breathing space for the tough reforms that can make Europe as a whole competitive again. As former German Chancellor Gerhard Schroeder has said, “Structural reforms can only work in conjunction with a growth trajectory.” Then, to sustain reform, the union needs a clear path to legitimacy for a strong but limited European government, one that resembles today’s Swiss federation. This will entail creating an executive body that is directly accountable to Europe’s citizens (emerging from the current commission), strengthening the parliament as a lower legislative house, and turning the council (a committee of the leaders of the member states) into an upper legislative house. Along the way, France will have to yield more sovereignty than its historic comfort zone has so far allowed, and Germany will have to realize that its own self-interest calls for it to bear the burden of resolving the current account imbalances within the Eurozone.--
Any move toward such a political union would obviously raise myriad thorny issues. The new institutions and their rules would ideally be established from the bottom up through a constituent assembly, rather than by a treaty change -- but how could a truly ground-up process ever get traction? The large parties that would win the most seats in the European Parliament would need to hash out a compromise or a common agenda robust enough to make governing possible -- but what if they did not? And what is most fundamental, could a political union ever really cohere if not preceded by continent-wide nation building aimed at forging a forward-looking common identity? What is crucial now, however, is recognition that the current system is not working and that closer, rather than looser, integration is the more sensible and attractive option.
In 1789, Alexander Hamilton, then the U.S. secretary of the treasury, proposed a strong federal system of government that would assume the states’ debts from the American Revolution while guaranteeing a steady future revenue stream, further integrating fiscal policy while preserving a large swath of local sovereignty on nonfederal issues. This was the first step in making the United States a continental and, ultimately, global power. So, too, in Europe, debt resolution can be the midwife of a political union that could make Europe a powerful pillar in the geopolitical order of the twenty-first century. The only way to answer Europe’s current challenge in the face of the many uncertainties is for Europe’s leaders, and its public, to at last commit to this transformation instead of remaining paralyzed with hesitancy.
Marek Belka, Tony Blair, Juan Luis Cebrián, Jacques Delors, Mohamed El-Erian, Niall Ferguson, Anthony Giddens, Felipe González, Otmar Issing, Jakob Kellenberger, Alain Minc, Mario Monti, Robert Mundell, Jean Pisani-Ferry, Romano Prodi, Nouriel Roubini, Gerhard Schroeder, Michael Spence, Joseph Stiglitz, Peter Sutherland, Matti Vanhanen, Guy Verhofstadt, Franz Vranitzky, and Axel Weber.
Blair, Schröder, Delores, Prodi and all the others know that a federal European state is a totally unrealistic scenario - an overwhelming majority of Europeans reject it. The real purpose of the article is, of course, to make ordinary Europeans forget that these are the people who through their failed policies to a considerable degree are to blame for the continuing European crisis.
PS
I find it surprising that professor Niall Ferguson has signed the article. It was not long ago, when he, very aptly, wrote this about the economic integration of Europe:
PS
I find it surprising that professor Niall Ferguson has signed the article. It was not long ago, when he, very aptly, wrote this about the economic integration of Europe:
Ultimately, it was a conspiracy by the European elite against their electorates.
Friday, 9 August 2013
Jürgen Habermas - a naive dilettante, with regard to Europe
German sociologist and philosopher Jürgen Habermas is said to be "one of the world's leading intellectuals". However, when it comes to the current euro crisis and the EU in general, he is nothing but a naive dilettante:
It's worth repeating again and again: The suboptimal conditions under which the European Monetary Union operates today are the result of a design flaw, namely that the political union was never completed. That's why pushing the problems onto the shoulders of the crisis-ridden countries with credit financing isn't the answer. The imposition of austerity policies cannot correct the existing economic imbalances in the euro zone. An assimilation of the different levels in productivity in the mid-term could only be expected from a joint, or at least closely coordinated, fiscal, economic and social policy. And if we then, in the course of countervailing policies, don't wish to completely turn into a technocracy, we must ask the public what they think about a democratic core Europe. Wolfgang Schäuble knows this. He says as much in SPIEGEL interviews, which, however, have no consequences for his political behavior.
European policy is in a trap that the political sociologist Claus Offe has sharply illuminated: If we do not want to give up the monetary union, an institutional reform, which takes time, is both necessary and unpopular. This is why politicians who hope to be re-elected are kicking the can down the road. The German government, in particular, is in a double bind, because it has already assumed pan-European responsibility through its actions. It is also the only government that can take a promising initiative for a step forward -- and should pursue France's support for such a process. It isn't a trifling project, after all, but one into which Europe's most prominent politicians have invested their best efforts for more than half a Century.
Read the entire article here
Of course Habermas is right about the design flaw with regard the euro. However, he should know that neither the Germans, nor the peoples of the other EU countries will accept a federal European state. Habermas accuses Angela Merkel of "soporific bumbling", but in reality he is himself the bumbler. Instead of stating clearly that he wants Germans (and others) to give up their national sovereignty, Habermas mumbles about "a democratic core Europé", "institutional reform" and "pan-European responsibility". Not very convincing!
It's worth repeating again and again: The suboptimal conditions under which the European Monetary Union operates today are the result of a design flaw, namely that the political union was never completed. That's why pushing the problems onto the shoulders of the crisis-ridden countries with credit financing isn't the answer. The imposition of austerity policies cannot correct the existing economic imbalances in the euro zone. An assimilation of the different levels in productivity in the mid-term could only be expected from a joint, or at least closely coordinated, fiscal, economic and social policy. And if we then, in the course of countervailing policies, don't wish to completely turn into a technocracy, we must ask the public what they think about a democratic core Europe. Wolfgang Schäuble knows this. He says as much in SPIEGEL interviews, which, however, have no consequences for his political behavior.
European policy is in a trap that the political sociologist Claus Offe has sharply illuminated: If we do not want to give up the monetary union, an institutional reform, which takes time, is both necessary and unpopular. This is why politicians who hope to be re-elected are kicking the can down the road. The German government, in particular, is in a double bind, because it has already assumed pan-European responsibility through its actions. It is also the only government that can take a promising initiative for a step forward -- and should pursue France's support for such a process. It isn't a trifling project, after all, but one into which Europe's most prominent politicians have invested their best efforts for more than half a Century.
Read the entire article here
Of course Habermas is right about the design flaw with regard the euro. However, he should know that neither the Germans, nor the peoples of the other EU countries will accept a federal European state. Habermas accuses Angela Merkel of "soporific bumbling", but in reality he is himself the bumbler. Instead of stating clearly that he wants Germans (and others) to give up their national sovereignty, Habermas mumbles about "a democratic core Europé", "institutional reform" and "pan-European responsibility". Not very convincing!
Sunday, 14 July 2013
A clear majority of Finns believe that the Eurozone will disintegrate within the next five years
The Finnish government still believes that the Eurozone is here to stay, but ordinary Finns are are much more realistic about the fate of the failed European common currency. A recent poll confirms that a a clear majority of Finns believe that the current Eurozone will disintegrate within the next five years:
Around 60 percent of respondents said they felt that in five years’ time the Eurozone will not have retained its present shape. Over a third responded that the current form of monetary union would not survive past 2018.
Lassi Ojala, a research leader at Think If Laboratories, the body that conducted the poll, claims that Finns seem to expect the weaker European countries to drop out of the monetary union.
Tuesday, 4 June 2013
Angela Merkel is right:"We are all in the same boat" - But she forgot to mention the name of the boat.
These are the only memorable words by Merkel in the interview:
We are all connected to one another, because for us in Germany, much depends on what happens in Portugal, Greece, Spain and other countries. We are all in the same boat.
How right Frau Merkel is - although she forgot to mention the name of the boat: the Euro-Titanic!
Monday, 27 May 2013
Serge Halimi, editorial director of Le Monde Diplomatique, on why elections do not matter anymore in the eurozone
The European Union, which gives lessons in democracy to the whole planet, has made this denial (to pay no heed to the electorate’s verdict) one of its specialities.
Serge Halimi
For eurozone countries, it does not matter who wins elections - the economic policy, dictated by Brussels, the ECB and IMF, will remain the same, according to Serge Halimi, editorial director of Le Monde Diplomatique:
Serge Halimi
For eurozone countries, it does not matter who wins elections - the economic policy, dictated by Brussels, the ECB and IMF, will remain the same, according to Serge Halimi, editorial director of Le Monde Diplomatique:
Once the formality of national elections is out of the way, Brussels, the ECB and the IMF send their road map to the new leaders so that particular campaign promises can be ditched immediately. EvenThe Wall Street Journal could not conceal its bafflement last February: “The French, Spanish, Irish, Dutch, Portuguese, Greeks, Slovenians, Slovakians and Cypriots have to varying degrees voted against the currency bloc’s economic model since the crisis began three years ago. Yet economic policies have changed little in response to one electoral defeat after another. The left has replaced the right; the right has ousted the left. Even the centre right trounced Communists (in Cyprus) — but the economic policies have largely remained the same: governments will continue to cut spending and raise taxes. The problem facing newly elected governments is that they operate within the institutions of the Eurozone. National governments must follow macroeconomic directives set by the European Commission. All of which means that, after the sound and fury of an election, national governments have little room for manoeuvre on economic policy” (15). “You get the impression,” Benoît Hamon admitted sadly, “that a leftwing policy or a rightwing one just administers different quantities of the same ingredients” (16).
When a senior official from the European Commission attended a meeting between his colleagues and the head of the French Treasury, he reported: “It was stunning: they [the Eurocrats] behaved like schoolmasters telling a poor student what to do. I was very impressed that the director of the Treasury kept his cool” (17). This scene brings to mind the fate of Ethiopia and Indonesia at the time when their leaders were reduced to the role of administering punishments which the IMF had decided to impose on their countries (18). Now Europe is getting a taste of the same medicine: in January 2012, the Commission in Brussels instructed the Greek government to cut nearly €2bn from its public expenditure within five days or face a fine.--
This intellectual school — which is fundamentally distrustful of democracy, “the tyranny of the majority” — postulates that political leaders are inclined to sacrifice the general interest (indistinguishable from the initiatives of business leaders) in favour of satisfying their clienteles and guaranteeing their own re-election. The sovereignty of such irresponsible people must consequently be strictly curtailed. That is the role of coercive mechanisms that currently provide the inspiration for the European project (the independence of central banks, the 3% budget deficit ceiling, the stability pact).
Read the entire article here
Wednesday, 22 May 2013
EU climate madness: ECOFIN conclusions on "climate finance"
Last week EU finance ministers rubber stamped a paper, written by bureaucrats working for EU's überwarmist Connie Hedegaard:
Council conclusions on climate finance – fast start finance
3238th ECONOMIC and FINANCIAL AFFAIRS Council meeting
Brussels, 14 May 2013
"The Council:
1. NOTES the EU and its Member States' commitment to provide EUR 7.2 billion cumulatively
over the period 2010 – 2012 to fast start finance; UNDERLINES that despite the difficult
economic situation and tight budgetary constraints, the EU and its Member States have more than fulfilled their commitment by allocating EUR 7.34 billion to fast start finance; ---
3. ... UNDERLINES the importance for the EU, together with other developed countries, of continuing to provide support beyond 2012 as set forth in the Doha decision and; REITERATES that in this respect the EU and its Member States are continuing to provide climate finance support after 2012 ; ---
4. RECALLS the Council Conclusions on climate finance of November 2012; REITERATES in this respect that the EU and other developed countries should continue to work in a
constructive manner towards the identification of pathways for scaling up climate finance
from 2013 to 2020 from a wide variety of sources, public finance and private sector finance,
bilateral and multilateral, including alternative sources of finance, as needed to reach the
international long term committed goal of mobilising jointly US$100 billion per year by 2020
in the context of meaningful mitigation actions and transparency on implementation
My conclusions:
1. I RECALL what I wrote on April 23:
Council conclusions on climate finance – fast start finance
3238th ECONOMIC and FINANCIAL AFFAIRS Council meeting
Brussels, 14 May 2013
"The Council:
1. NOTES the EU and its Member States' commitment to provide EUR 7.2 billion cumulatively
over the period 2010 – 2012 to fast start finance; UNDERLINES that despite the difficult
economic situation and tight budgetary constraints, the EU and its Member States have more than fulfilled their commitment by allocating EUR 7.34 billion to fast start finance; ---
3. ... UNDERLINES the importance for the EU, together with other developed countries, of continuing to provide support beyond 2012 as set forth in the Doha decision and; REITERATES that in this respect the EU and its Member States are continuing to provide climate finance support after 2012 ; ---
4. RECALLS the Council Conclusions on climate finance of November 2012; REITERATES in this respect that the EU and other developed countries should continue to work in a
constructive manner towards the identification of pathways for scaling up climate finance
from 2013 to 2020 from a wide variety of sources, public finance and private sector finance,
bilateral and multilateral, including alternative sources of finance, as needed to reach the
international long term committed goal of mobilising jointly US$100 billion per year by 2020
in the context of meaningful mitigation actions and transparency on implementation
My conclusions:
1. I RECALL what I wrote on April 23:
- Over 26 million people are unemployed in the EU countries
- Eurozone unemployment rate is 12%, a record since the single currency was created in 1999
- Youth unemployment in Greece is 58%
- Youth unemployment in Spain is 56%
- The eurozone economy has contracted for five consecutive quarters in 2011-2012
- Forecasts for the first quarter of this year, to be released in May, are not expected to show any improvement
2. I NOTE that the EU finance ministers, in the middle of the worst economic crisis probably since the Great Depression of the 30s, take pride in announcing that billions of EU taxpayers' money have been wasted on useless "climate finance" in Africa and other continents.
3. I RECALL that the percentage of European nationals who distrust the European Union is growing faster than ever. In November 2012 e.g., some 72% of Spaniards said they “tended not to trust the EU,” compared to just 23% five years earlier. In Italy, the figure has spiked to 56% from 41%, according to Eurostat figures. Anti-EU opinion is in a steep rise in almost all member countries.
4. I UNDERLINE that most ordinary EU citizens understand that "business as usual" is over. The fact that EU finance ministers, as well as other ministers, do not seem to understand that, most certainly will lead to even more anti-EU views (which as such is welcome, of course).
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