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Austerity, Up Close and Personal, Part 3: The Continuation of War by Other Means

The German concept of liquidity

 COMMENT: Previous posts have highlighted the profound influence of Prussian military theoretician  von Clausewitz on the evolution, theory and practice of German power structure. We have also noted that the German insistence on austerity has had the effect of decimating the societies subjected to that doctrine and driving their populations in the direction of totalitarianism.

Recall that it was German chancellor Heinrich Bruning’s insistence on budgetary austerity that helped pave the way for the rise of Hitler.

As the European debacle continues, we are in a position to further evaluate the depth and scope of the social destruction stemming from it. 

A recent report notes that Europe faces several “lost generations” as impoverished young people incur the damage resulting from “austerity.” Interestingly and significantly, large numbers of desperate, unemployed youth are seeking work in Germany.

Ultimately, this figures to have the effect of increasing the social stress and pressure on the German workforce, who will face increased and intense competition for available jobs. “Anti-immigrant” sentiment has proved an effective recruiting tool for the far right around the world.

The dire circumstances in Greece have fueled the rise of the Golden Dawn–a Greek neo-fascist party that successfully exploits the social chaos in that country to increase its ranks. Golden Dawn has begun actively recruiting among Greek expatriates who have moved to Germany in search of work.

 The National Action Party, a Turkish fascist/nationalist party established a presence in the ’70’s and ’80’s among the “guest workers” in Germany. Golden Dawn may be attempting to re-create the success of the NAP.

Numerous posts and programs have discussed the European Monetary Union as the realization of the Third Reich’s goal of a German dominated economic union as a vehicle for world conquest.

Will the “lost generations” of Europe become the cadre for the successful rise of “Euro-fascism?” Is that precisely the goal of the Underground Reich and its economic foundation, the Bormann capital network? It would be foolish to overlook the possibility.

Recalling the theoretical tenets of von Clausewitz, what we are seeing is, quite literally, the continuation of war by other means.

All Honorable Men by James Stewart Martin; Little, Brown [HC]; Copyright 1950 by James Stewart Martin; p. 235.

. . . . The end of battle in 1945 had signaled the start of a new kind of war–a  post-war. Germany’s classical  military theorist, von Clausewitz, is famous for having declared that “war is the continuation of diplomacy by other means.”  In dealing with a Germany which had gone to school with von Clausewitz for generations, we knew that, conversely, a post-war is the continuation of war by other means.  Since Bismarck, wars and post-wars have formed a continuous series, changing the quality of the events only slightly from year to year, with no  such thing as a clear distinction between  heat of  battle and calm of  peace.  This  post-war of  the German occupation was  different from the  “cold war”  between the United States and Russia, which broke out at about  the same time. The latter complicated  the  diagnosis, like a man getting typhoid fever and pneumonia at the same time. . . .

“Austerity’s Chil­dren Becom­ing Europe’s ‘Lost Gen­er­a­tion,’ Rais­ing Fears of New Cri­sis” by Claire Davenport [Reuters]; Financial Post; 2/14/2013.

EXCERPT: Chil­dren across Europe are being dri­ven into poverty by harsh gov­ern­ment aus­ter­ity and youth unem­ploy­ment is soar­ing, threat­en­ing to cre­ate “lost gen­er­a­tions” that could fire up a new con­ti­nen­tal crisis.

Global char­ity Car­i­tas said on Thurs­day that around three out of every 10 chil­dren in Greece, Ire­land, Por­tu­gal, Italy and Spain are in or have been pushed to the brink of poverty.

Greece said its youth unem­ploy­ment had now exceeded 60%. Spain’s is above 50% and Por­tu­gal has just topped 40%.

Think tank Bruegel said the prob­lem extended well beyond the debt-laden periph­eral euro­zone economies and could come back to reverse Europe’s slow recov­ery from finan­cial crisis.

In a report, Car­i­tas said euro­zone coun­tries that have received inter­na­tional loans — plus Italy, which hasn’t — are cre­at­ing a huge class of poorly-educated and poorly-fed young peo­ple with low morale and few job prospects.

“This could be a recipe not just for one lost gen­er­a­tion in Europe but for sev­eral lost gen­er­a­tions,” Car­i­tas said, cit­ing the Euro­pean Union’s own statistics.
While these coun­tries’ future work­ers may suf­fer a loss of morale, qual­i­fi­ca­tions and prospects, those that strug­gle through are likely to take their tal­ents elsewhere.

Those with qual­i­fi­ca­tions are already leav­ing in droves to seek work else­where, par­tic­u­larly in Ger­many where the num­ber of Span­ish and Greek job­seek­ers almost dou­bled dur­ing the first half of 2012.

Bruegel econ­o­mist Zsolt Dar­vas said the relent­less rise in youth unem­ploy­ment not only destroyed morale at an impor­tant age of devel­op­ment but also threat­ened to reignite an eco­nomic cri­sis that appeared to be easing.

“This is not just a prob­lem for these (periph­eral) coun­tries. This is a Euro­pean prob­lem,” he said. Thir­teen of the Euro­pean Union’s 27 mem­ber states have youth unem­ploy­ment above 25%.

Since 2010, Greece, Ire­land, and Por­tu­gal have received bil­lions of euros in loans from the EU and the Inter­na­tional Mon­e­tary Fund in return for spend­ing cut­backs and tax rises. Spain has had its banks bailed out. . . .

… In 2010, 37.6% of chil­dren were at risk of poverty or exclu­sion in Ire­land and 28.9% in Italy. Fig­ures for 2011 are not available.

Chil­dren are defined as near­ing poverty and exclu­sion if they live in fam­i­lies with 60% or less the median income or have par­ents with lit­tle or no employ­ment or lack basic essen­tials such as protein-rich foods, heat­ing and clothes.

Car­i­tas said gov­ern­ments must ask them­selves what these trends will mean for chil­dren in the long run.

Stud­ies show chil­dren from poor house­holds are more likely to under­per­form at school and to strug­gle to find or keep a job.

“They are look­ing at a future where the prospect of unem­ploy­ment is stretch­ing out ahead of them,” de Burca said.

“Fears in Ger­many as Golden Dawn Moves in from Greece” by Kate Con­nolly and Helena Smith; The Guardian [UK]; 2/5/2013.

EXCERPT: Ger­man and Greek rightwing extrem­ists have been forg­ing close con­tacts in Ger­many in an attempt to strengthen their power base in Europe, accord­ing to Ger­man officials.

Mem­bers of the Greek neo-Nazi party Golden Dawn are believed to have set up a cell in the south­ern Ger­man city of Nurem­berg with the aim of recruit­ing young Greeks who have flocked to the coun­try in search of work.

Greek com­mu­nity lead­ers in Ger­many have con­demned the arrival of the party, also known as Chrysi Avgi, and called on author­i­ties to clamp down on a group that they said had shown its readi­ness to use vio­lence in Greece and could attempt to do the same in Germany.

Golden Dawn, which has close to 20 seats in the Greek par­lia­ment, has described the move on its web­site as the “answer of expat Greeks to the dirty hip­pies and the regime of demo­c­ra­tic dic­ta­tor­ship in our homeland”.

In a state­ment, the Bavar­ian office for the pro­tec­tion of the con­sti­tu­tion said: “We are keep­ing an eye on developments.”

It said Golden Dawn had “an inter­na­tional net­work of con­tacts, includ­ing con­tacts with neo-Nazis in Bavaria. These con­tacts are cul­ti­vated via mutual vis­its as well as at meet­ings at rightwing extrem­ist events in Europe.”

It con­firmed that mem­bers of Golden Dawn and far-right Ger­man groups had organ­ised rec­i­p­ro­cal vis­its to each other’s coun­tries as well as meet­ing at rightwing extrem­ist meet­ings out­side Ger­many and Greece. . . .

… An esti­mated 380,000 Greeks live in Ger­many, mainly in the indus­trial Ruhr val­ley, though the actual fig­ure, as – many do not reg­is­ter with the author­i­ties – is believed to be nearer 900,000. Roughly-speaking in mod­ern times they have come in three waves – after the sec­ond world war and then dur­ing the Greek dic­ta­tor­ship, when many Greek com­mu­nists were given refuge, par­tic­u­larly in East Ger­many.

The third wave is occur­ring now as many, par­tic­u­larly young Greeks, come to Ger­many look­ing for work and to escape unem­ploy­ment at home.German neo-Nazi groups, such as the Bavarian-based Freies Netz Süd, have been fol­low­ing the polit­i­cal suc­cesses of Chrysi Avgi for some time, mak­ing open ref­er­ence to the Greek party on their websites.

The anti-Nazi organ­i­sa­tion Nurem­berg Union Nazi Stop said it would be mon­i­tor­ing Golden Dawn’s activ­i­ties in Germany.

Over the past months Golden Dawn, which is widely con­sid­ered to be racist and anti­se­mitic, has been held respon­si­ble for numer­ous attacks on for­eign­ers in Greece. The party, whose sym­bol resem­bles the swastika, won 18 par­lia­men­tary seats in last year’s elec­tion. Its pop­u­lar­ity cur­rently stands at around 12%. . . .




15 comments for “Austerity, Up Close and Personal, Part 3: The Continuation of War by Other Means”

  1. And another country facing imploding banks and looming austerity negotiations appears to have decided that voting for the right-winger is the way to go:

    Runoff called in Cyprus’ presidential election

    MENELAOS HADJICOSTIS | February 17, 2013 04:35 PM EST

    NICOSIA, Cyprus — Cyprus heads into a runoff presidential election next weekend, with voters called on to select who will lead the country through a severe financial crisis after no candidate won an outright majority in Sunday’s vote.

    Nicos Anastasiades, a right-winger who presented himself as the most capable to negotiate a bailout with Cyprus’ European partners and who went into the election a strong favorite, won the first round with just over 45 percent of the vote. But he fell short of the 50 percent plus one vote needed for an outright victory.

    In the Feb. 24 runoff, he will face Stavros Malas, a left-winger who has advocated being more assertive in negotiations for bailout loans to limit the severity of austerity measures they require

    Final results Sunday night showed Anastasiades winning 45.46 percent, well ahead of Malas’ 26.91. Independent Giorgos Lallikas was a close third with 24.93 percent, and was eliminated from the running.

    The change in leadership, after unpopular President Dimitris Christofias said he would not seek re-election, comes at a crucial juncture for Cyprus. The other 16 countries that use the euro are expected to decide next month on a financial lifeline for the tiny country of less than a million people.

    Cyprus is fast running out of cash to pay its bills, and the new president faces the difficult task of overcoming skepticism from some bailout-weary euro-area countries to secure help.

    Cyprus got into trouble after its banks, whose assets are bigger than the country’s entire economy, took huge losses when Greece restructured its debt. The country has already reached a preliminary bailout agreement with its eurozone partners and the International Monetary Fund, and has enacted a raft of spending cuts and tax increases.

    “Cyprus needs an adjustment program, a comprehensive one,” Joerg Asmussen, a member of the European Central Bank’s executive board, told Germany’s ARD television Sunday.

    In order to secure debt sustainability, we will, for example, need far-reaching privatization – the current president had rejected that. Now we will see whether we can negotiate such a program sensibly by the end of March.”

    Malas rejects selling state-owned companies.

    Anastasiades said he would resist outright privatizations, opting instead for selling a minority stake to a strategic investor.

    Both candidates have said they would utilize the prospect of the natural gas riches from newfound offshore deposits to jumpstart the economy, but such potential revenue is still years away.

    The financial crisis has overtaken the country’s ethnic division as the primary campaign issue in some 40 years. Cyprus was split into an internationally recognized Greek Cypriot south and a breakaway Turkish Cypriot north in 1974, when Turkish invaded after a coup by supporters of union with Greece. The latest round of reunification talks between Christofias and Turkish Cypriot leader Dervis Eroglu resulted in deadlock.

    Given that the ECB’s board members appear to be demanding state asset privatizations it’s also noteworthy that Anastasiades has been able to successfully sell himself as the candidate best able to negotiate bailout terms with Europe’s leaders. After all, he’s been endorsed by Merkel. That’s, uh, kind of a “red flag” when you’re selecting a bailout negotiator:

    Financial crisis drives Cyprus presidential poll
    — Feb. 15 4:43 AM EST

    NICOSIA, Cyprus (AP) — Cypriots vote Sunday for a new president to guide them through a severe economic crisis as their country becomes the latest financially troubled European nation seeking international rescue money.

    For the first time in 40 years, the crisis has eclipsed efforts to reunify the ethnically divided country as the predominant pre-election issue. A shrinking economy, nearly 15 percent unemployment and salary cuts and tax increases demanded under a preliminary bailout deal with eurozone countries and the International Monetary Fund have cracked a veneer of prosperity partly built on Cyprus’ outsize banking sector.

    The financial woes have been compared to the economic catastrophe that befell the country in 1974, when a Turkish invasion following a coup by supporters of uniting the island with Greece split the country into a breakaway Turkish-speaking north and an internationally recognized Greek-speaking south.

    Sunday’s vote will take place only in the southern part of the country, which is the part needing a bailout.

    The winner will succeed deeply unpopular communist-rooted Dimitris Christofias, who is honoring a pledge not to seek a second five-year term if his negotiations with breakaway Turkish Cypriots to reunify the country failed.

    Opinion polls show Nicos Anastasiades, the 66-year-old head of the right-wing main opposition Democratic Rally (DISY) party, as the frontrunner.

    Seen by some as a polarizing figure, Anastasiades has never enjoyed mass appeal, and his critics have made much of his support for a 2004 U.N.-backed reunification plan that Greek Cypriots rejected. But he has masterfully tapped into public discontent with the outgoing government’s handling of the economy as well as events that led to a massive explosion of seized Iranian munitions in 2011 that killed 13 people and wrecked the country’s main power station.

    The victor will jump into the bailout fray immediately. Euro-area leaders are expected to decide on rescue package for Cyprus in the latter half of March and the country is fast running out of money to pay its bills. The new president will have to convince skeptical eurozone partners — especially bailout-weary Germany — that Cyprus is a credible partner that deserves help and isn’t a tax haven where Russian oligarchs park their dodgy money.

    With Cyprus’ fate in the hands of other euro area countries, campaigning has focused more on the candidates’ leadership mettle rather than fleshing out complicated economic issues.

    Anastasiades has close ties to European leaders on whose goodwill the country is counting, an image encapsulated in his ubiquitous slogan, “The Crisis Needs a Leader.” The idea has gained traction among Cypriots, most of whom favor a bailout.

    Last month, Anastasiades burnished his credentials with an endorsement from German Chancellor Angela Merkel during a meeting of European center-right parties. If he wins, he would enjoy the advantage of having the backing of parliament where DISY and its ally, center-right DIKO, hold a slim majority.

    “I ask from you a strong, clear mandate in order to immediately get to work covering lost ground, restoring our homeland’s credibility and safeguarding our national interests within Europe’s decision-making centers,” Anastasiades told a campaign rally in the capital Nicosia this week.

    An endorsement by Merkel may seem like an unlikely badge of honor in a country facing bailout terms, but it was Nicas Anastasiades’s dad that recently received an even more unlikely badge of honor. Chrysanthos Anastasiades, it turns out, was one of the leaders of the 1974 coup that trigger the Turkish invasion and divided the island. He was also given an award from the “Friends of Police” for a lifetime of service. This is an example of why reunification is normally the big issue of the day when the economy isn’t melting down: Coups can create complicated historical memories:

    AKEL blasts honour for DISY leader’s dad
    George Psyllides

    AKEL yesterday criticised the decision of the Friends of Police to honour opposition leader Nicos Anastasiades’ father, a police officer who according to the ruling party, had taken part in the 1974 coup to overthrow president Makarios.

    “A man who participated in the coup; a man who assumed leadership of the Limassol police administration after the coup and who effectively undermined and fought the Republic of Cyprus,” AKEL leader Andros Kyprianou said.

    Anastasiades, who is running for president in next year’s elections, had been honoured as the scion of a police officer for his father Chrysanthos’ services to the force.

    Kyprianou said Cyprus was a unique global phenomenon: the Friends of Police honour people who undermined democracy and fought against their country.

    “All other countries honour their heroes, the people who defend democracy, the people who defend their country,” Kyprianou said. “It’s a shame. I do not know what else to say.”

    The first reaction to the award came on Friday from the association of resistance fighters who expressed their indignation and questioned the reasoning behind the award.

    The association said Chrysanthos Anastasiades assumed the position of Limassol police director on July 16, one day after the coup had been launched.

    “This proves the very close relations he had with those who abolished democracy while at the same time opened the back door to the Turkish invader (five days later),” the association said.

    The friends of police attributed Kyprianou’s reaction to the expediencies of the presidential election but also added that Chrysanthos had never been convicted for any related offenses.

    Neophytos Papamiltiadous, chairman of the Friends of Police, said they knew there would be a misunderstanding and had already announced they were also honouring the other presidential candidates – AKEL-backed Stavros Malas and Yiorgos Lillikas – whose fathers fought against Turkish Cypriot paramilitaries as special constables in 1963-64.

    The events of that period, especially the Greek junta-inspired coup, are highly emotive issues for Cypriot society especially since no one – except the man who assumed the presidency briefly — has been brought to justice.

    Only Nicos Sampson, installed as president by the coupists and lasted eight days, stood trial and was sentenced to 20 years in prison.

    So Cyprus is about to elect the son of a coup-leader that’s been backed by Angela Merkel in order to extract favorable bailout terms austerity. And Cyprus just happens to have recently discovered perhaps hundreds of billions of dollars in natural gas reserves sitting off of its coast but the question who gets the rights to those reserves still needs to be worked out. Good luck with those austerity negotiations!

    Cyprus elections: pro-bailout candidate takes 45.4% of vote

    Conservative Nicos Anastasiades will face leftwing independent in runoff after failing to secure enough support for outright win

    Helena Smith in Nicosia
    The Guardian, Sunday 17 February 2013 14.01 EST

    Their country’s future as a eurozone member hanging in the balance, Cypriots voted on Sunday to elect a new president, with the pro-bailout conservative leader, Nicos Anastasiades, securing the biggest backing with 45.4% of the vote.

    Anastasiades is set to face a runoff next week after failing to gain enough support for an outright win. However, he is seen as the overwhelming favourite in that contest, against the communist-backed independent, Stavros Malas, who took 26.9% of the vote.

    The vote for Anastasiades and his DISY party is an endorsement of the pro-bailout policies advocated by a man who will face the arduous task of finalising a €17bn (£14.6bn) rescue package with the European Union and the International Monetary Fund to keep the country’s economy afloat. Last year Cyprus became the fifth eurozone state to ask for a bailout.

    On Sunday 545,000 citizens filed into polling stations to cast ballots in what was seen as the country’s most crucial election in recent times.

    “Whoever wins will preside over five very difficult years, first negotiating a rescue programme then possibly having to enforce new austerity measures,” said Hubert Faustmann, associate professor of history and political science at the University of Nicosia.

    No Cypriot election had been as closely watched by the international community. The divided island’s economic difficulties – triggered by losses its banking system suffered when Greece restructured its debt – have spurred concerns of a re-eruption of the eurozone crisis just when many had hoped progress in the bloc’s fragile periphery had been achieved.

    Brussels had not hidden its hope that Anastasiades would win. An advocate of neo-liberal policies who believes in breaking the power of trade unions, the 66-year-old lawyer has promised to reach a speedy agreement with would-be creditors at the EU, the IMF and the European Central Bank.

    “Above all else, we must unite forces to counter this economic crisis which unfortunately our homeland has never experienced before,” he said after casting his ballot.

    The outgoing president, Demetris Christofias, a veteran communist, had balked at the idea of meeting the tough terms foreign lenders had attached to a bailout, including calls to privatise state assets.

    The Mediterranean island has enough funds to get by until April after streamlining the economy and announcing pay, pension and benefit cuts worth about €1bn last year.

    Posted by Pterrafractyl | February 17, 2013, 8:32 pm
  2. Austerity: “There is no way back, there is no alternative…”

    February 27, 2013, 4:11 p.m. ET
    The Wall Street Journal
    Elections, Euro-Zone Style
    There are no angels available to govern, even in Brussels.

    The inconclusive result in Italy’s election this week has sent bond yields higher and equity markets tumbling, as investors try to sort out the risk to the euro zone of Italian gridlock.

    The outcome—with Pier Luigi Bersani’s center-left party slightly ahead, but lacking the votes to form a government—also has the EU doing what it does almost any time there’s an election in the euro zone these days. European Council President Herman van Rompuy made the obligatory noises about respecting voter choice, just before making it clear that he would do no such thing.

    It is up to leading politicians to negotiate to form a government with a stable situation so that reforms and consolidation of the budget can continue. There is no way back, there is no alternative,” Mr. van Rompuy said.

    German Foreign Minister Guido Westerwelle echoed the sentiment, insisting that the next government continue the policies of the previous one, led by the unelected Prime Minister Mario Monti, who raked in all of 10% of the vote this weekend.

    In other words, Italy—or Greece, or Ireland—can have all the democracy it wants, as long as the winners take their orders not from voters, but from Brussels or Berlin. That might seem an inflammatory way of putting it, but it’s hard to see what other interpretation is possible from these kinds of comments.

    Berlin and Brussels won’t put it so baldly. But their view is essentially this: We have decided on a course to save the euro from disintegration. Any deviation from that course is irresponsible. And they are counting on the political elites in Italy, Spain, Greece and elsewhere to hew to that course, come what may.

    There are at least two problems with this view. The most obvious is that it makes a mockery of democracy. If policies can’t be changed, regardless of the outcome of elections, then the elections themselves are a farce. They are the veneer of popular sovereignty without the substance.

    But even if you accept that this moment is too treacherous for democratic accountability—to accept that responsible leaders have no choice but to go along with the decisions made by the enlightened leadership of Europe—this course is already proving self-defeating.

    Posted by Pterrafractyl | February 27, 2013, 3:38 pm
  3. Merkel’s cabinet just lowered barriers to the hiring of foreign workers. There appears to be a particular interest in foreign labor for technical jobs ranging from those requiring vocational training to engineers so it looks like trickle-up austerity is migrating to Germany’s tech sector. One of the interesting socioeconomic experiments that we get to see unfold with the eurozone is the emergence of middle-income-guest-worker-nomics in a large union of nations that all have their own versions of long-term healthcare/retirement/social welfare systems. How all of those systems of handling long-term liabilities manage to function in future decades remains to be seen now that an entire generation of young skilled workers from the ailing economies are going to be spending a significant part of their careers working (and spending) in Germany. In the eurozone, economic “harmonization” requires a brain drain:

    Germany relaxes immigration rules to attract skilled labour

    By Stephen Brown and Holger Hansen

    BERLIN | Wed Feb 27, 2013 8:08am EST

    Feb 27 (Reuters) – Germany sought on Wednesday to make it easier for skilled workers from outside the European Union to take a job in the country, trying to alleviate chronic shortages in areas such as engineering, train driving and plumbing.

    Chancellor Angela Merkel’s cabinet passed new immigration rules which, pending approval by parliament’s upper house, aim to cut red tape for people in target industries, allowing them to get their qualifications recognised in Germany more easily.

    The rules would come into effect in July.

    With this new decree we are jettisoning 40 percent of the old rules and leaving the door wide open for the skilled labour that can help our country progress,” said Labour Minister Ursula von der Leyen in a statement.

    Germany has already introduced a “blue card” system making it easier to hire foreign academics and has also made it easier for foreign nurses to work here. But it now needs more train drivers, plumbers and waste-disposal workers, the minister said.

    In contrast to most of the EU, where joblessness has risen as a consequence of a global economic downturn and the euro zone debt crisis, Germany’s employment rate is at its highest since reunification in 1990.

    But an ageing population and relatively low immigration has created a lack of workers in certain professions and sectors, which free movement of labour in the EU has failed to resolve.

    The government has already introduced measures to cut bureaucracy and encourage companies to recognise qualifications from abroad, but critics say it is not enough.

    Immigration to Germany is growing as its economy outperforms most of Europe. Net immigration grew to 340,000 last year from 128,000 two years earlier, with many more arrivals from southern European countries hit by the debt crisis.

    But this month the Organisation for Economic Cooperation and Development (OECD) said Germany must liberalise the recruitment of foreigners to fill a projected shortfall of 5.4 million workers with vocational or tertiary qualifications by 2025.

    German business welcomed the new rules. The BDA employers’ federation said it would “facilitate the targeted immigration of badly-needed skilled labour also in non-academic areas”, citing a particular shortage of skills in engineering and electronics.

    Let’s hope the eurozone figures out how to maintain social-welfare systems that can provide for a decent long-term social contract in a “free movement of labor” world soon or later because these were pressing questions for a growing number of guest workers in the eurozone for a while:

    Christian Science Monitor
    Europe’s guest workers ask, ‘Where are our pensions?’

    As the US and EU eye new guest-worker initiatives, returned Spanish laborers try to collect retirement money.

    By Daniela Gerson, Contributor to The Christian Science Monitor / April 10, 2007

    Enrique Aviles Ruiz is ready to collect his due – from four countries. After laboring as a farmer in his native Spain and as a guest worker in Germany, France, and Belgium, he’s now navigating the labyrinth of international bureaucratic and legal systems to receive the pensions he is due.

    “I worked hard and I’m getting nothing,” he says ruefully in a strong Andalusian dialect.

    Known in Spain as retornados, these laborers planned to return to their native towns and cities after working abroad for years, even decades, and live out the rest of their lives in peace. Instead, many are finding the financial difficulties of returning greater than they could have imagined.

    While the exceptional number of countries where Mr. Ruiz worked complicates his case, millions of former guest workers, in Spain and around the world, are in a similar situation. Now hitting retirement age, they are being haunted by missing paystubs they unwittingly discarded 30 years ago, the overlap of multiple legal systems, and – in some cases – governments that wrongly refuse to pay up.

    With both Washington and Brussels considering new guest-worker initiatives, the situation of these retornados is a reminder that the challenges of such programs do not end with returning the workers home. Readjustment issues have reverberated from Turkey to Portugal among the countries that were main suppliers of European guest workers in the 1950s and ’60s. Across the Atlantic in Mexico, more than 40 years after the bracero guest worker program with the United States was canceled, former laborers there are still fighting to collect their pensions.

    Difficulty obtaining pensions is a recurring structural issue, and inherent to the complications of transnational bureaucracy, says Philip Martin, an agricultural economist at the University of California at Davis who’s studied migrant labor.

    Even for an American living in the US, he says, it’s common to have to make multiple trips to Social Security to clear up problems. Thus, it’s not surprising that someone who has worked abroad will face even more difficulties.

    “For almost all pensions systems there’s no checking on the wage records of Social Security systems until you apply for benefits, and many systems do not allow pension checks to be sent abroad,” says Dr. Martin.

    Manuel Rojas Castro, a lawyer based in Germany who for 31 years worked for the Spanish embassy there as a legal counselor to immigrants, goes further, maintaining that European countries are often biased against guest workers, denying them their rights.

    “The emigrants lose rights because of lack of knowledge from below, and discrimination from above,” says Mr. Castro. “The pension system for emigrants in Europe is very complicated because you need to know the law of each country and the communal law, which is enormous.

    In the case of Spain, for example, three types of law can hold jurisdiction: Spanish law, the laws of the host country where the emigrant worked, and either European communal law or a bilateral agreement. “There is a communal currency, the euro, but there does not exist a standard euro pension,” Castro notes.

    Posted by Pterrafractyl | March 3, 2013, 8:26 pm
  4. Well here’s some potentially good news coming out the eurozone for a change: Angela Merkel is citing Germany’s reunification as an experience the eurozone can learn from while trying to craft a policy to deal with the still-ailing economies:

    Merkel Cites East German Lessons for EU’s Problem States
    By Joseph de Weck – Feb 19, 2013 2:34 AM CT

    Chancellor Angela Merkel said that European countries burdened by the fallout of the euro-area debt crisis can learn from East Germany’s experiences of economic overhaul after the fall of the Berlin Wall.

    Merkel, Germany’s first chancellor from the former ccommunist east, said in a speech to regional professionals and trade-chambers representatives yesterday that her East German background had taught her there is no way around enacting reforms to become more competitive.

    “When we became part of the Federal Republic of Germany we had to carry out massive reforms to restructure our economy, also with great upheaval,” Merkel said in the western city of Mainz. “But this was necessary to create a solid basis of small and medium-sized companies in the new states.” While the eastern German regions have since been eligible for special European Union funds and subsidies, “at the end of a structural reform there must be a competitive company,” she said.

    Yes, it’s not a surprise that Merkel would draw lessons from the German reunification given the number of parallels between what a newly reunified Germany faced and what the eurozone faces. For instances, East Germany from forced to suddenly transition away from a communist basketcase and into a merger with a much stronger neighbor and an artificially strong currency. As Merkel indicated, many structural reforms were inevitable and East Germany come out of it stronger than before. The $1.9 trillion in state subsidies probably helped too:

    Washington Post
    Is German reunification a model for Europe?
    Posted by Brad Plumer at 05:36 PM ET, 12/01/2011

    American commentary on the euro zone crisis often insinuates that German leaders are being wildly unreasonable in holding up many of the proposed solutions favored by economists. Why won’t Angela Merkel just let the European Central Bank backstop Spanish and Italian debt? And what’s wrong with eurobonds? Sure, they could entail a German-financed bailout of irresponsible neighbors, but a bailout would still be cheaper than the consequences of having Greece — or even Germany — leave the euro. So why are they being so stubborn?

    Tyler Cowen has a thoughtful post at Marginal Revolution trying to see things from the German perspective. Among other points, he notes that Germany has some experience in standing firm in the face of expert carping after the fall of the Berlin Wall. “We” — meaning the Germans — “did a deal with East Germany, and the terms of that deal violated a lot of precepts of economic theory,” Cowen writes. “It even included an overvalued currency for the poorer region and a long period of adjustment. Yet we insisted up front that all dealings be done on the terms of the more successful region and culture, with very little compromise. This transition, for all of its short-term flaws, will go down in the history books as a great long-run success.”

    Fair enough. But it’s worth thinking through whether German reunification is really such a good model for European integration.

    When East Germany rejoined the West in 1990, it was indeed linked to an “overvalued” deutschemark. As a result, unemployment in East Germany exploded (the region lost 4 million jobs in the first five years alone, and the jobless rate peaked at 20 percent), as less-productive workers in the East suddenly found themselves being paid inflated wages. This is much like the situation that Greece and Ireland find themselves in now. Greece would benefit from being able to devalue its currency to improve its economic competitiveness, but it can’t, because it’s yoked to the euro.

    So what eventually happened in Germany? The answer involved lots of subsidies and wrenching transfers of wealth. West Germans paid about $1.9 trillion over 20 years, partly via a “solidarity surcharge” on their income taxes, to help modernize the East. That’s roughly two-thirds of Germany’s GDP last year. The subsidies helped cover East Germany’s budget shortfalls and poured money into its pension and social security systems. At the same time, nearly 2 million East Germans — a full one-eighth of the population — moved west to seek work.

    So does this mean that we can expect a new path for the eurozone’s “structural reforms”? One that involves things like a tax a new pan-eurozone “solidarity surcharge” income tax to finance sustained subsidies for the austerity-stricken members? Eh, well, judging by history, probably not:

    Merkel Calls on Italy’s Politicians to Stick to Reform Path
    By Brian Parkin – Mar 1, 2013 2:06 PM CT

    German Chancellor Angela Merkel urged Italy to stick to the path of reform after the success of anti-austerity parties in February’s election.

    “Now in Europe after the Italian elections it seems to be a case of either austerity and savings programs or growth, but that’s a completely false premise,” Merkel said today in a speech to an event in northeastern Germany hosted by her Christian Democratic Union party.

    Her stance on cutting deficits is “not about liking to whip people,” Merkel told CDU members in Greifswald, in her electoral district. Budget cuts are not incompatible with growth, rather growth depends on sound finances, she said.

    As Angela says, it’s “not about liking to whip people”. And that’s probably the best reform we can we can for at this point: austerity will continue, but it might ease up a bit to avoid complete collapse and austerity-advocates leaders will no longer derive enjoyment from it. It’ll be purely utilitarian whipping from here on out.

    Posted by Pterrafractyl | March 4, 2013, 9:38 pm
  5. Huh, so it looks like the official idea of “harmonizing” the eurozone economies via mandated austerity so that they all reach a similar level of economic “competitiveness” that we keep hearing as the justification for the eurozone’s suicide pact is getting replaced with a new vision: An endless race to the bottom:

    Analysis: German reform angst sets in a decade after “Agenda 2010”

    By Noah Barkin

    BERLIN | Fri Mar 8, 2013 6:33am EST

    (Reuters) – With its record low unemployment, thriving “Mittelstand” companies and consensus-seeking unions, Germany has been held up as a model of economic management at a time when many of its European partners are mired in crisis.

    But as the 10th anniversary of the reforms credited with fuelling Germany’s success approaches, a small but vocal group of politicians, businessmen and economists is sounding alarm bells over what they see as a dangerous policy complacency in Berlin that is putting the gains of past years at risk.

    Some warn that Germany could even return to being the “sick man of Europe” within a decade unless Chancellor Angela Merkel takes bolder action to build on the “Agenda 2010” reforms her predecessor Gerhard Schroeder unveiled in a speech in parliament on March 14, 2003.

    As southern European countries enact deep structural reforms of their own in response to the euro crisis, the worry is that Germany’s competitive edge will be eroded by rising wages, soaring energy costs and what some see as a growing state role in the economy that is discouraging investment.

    Critics also fault Merkel, in power since 2005, for failing to meaningfully tackle a looming demographic crunch that could hit the economy hard from 2020, and for not moving more aggressively to overhaul a complex tax regime and antiquated education system that is producing too few skilled workers.

    “No one knows what will happen in five to ten years, but it is likely that Germany will run into trouble again if new reforms are not put in place quickly,” Roland Berger, founder and honorary chairman of the business consultancy that carries his name, told Reuters.

    “We are running the risk of losing competitiveness. Next to nothing has changed in the labor market over the past five years. This government and the one before it have profited from the Schroeder reforms and become complacent.”

    Some economists argue that Germany is so far ahead of its partners on the reform front that it can afford to relax and pay its workers higher salaries after a decade of wage stagnation.

    But others point to hard data and anecdotal evidence that suggests Germany is losing competitiveness as a business location just as painful reforms and falling wages in countries like Spain are beginning to make them look more attractive.

    Hanns-Eberhard Schleyer, a member of the Hartz Commission that drafted Schroeder’s labor market reforms, sees parallels between the current environment and the period when Germany’s post-war “Wirtschaftswunder”, or economic miracle, came to an end amid bumper wage gains and a rise in regulation.

    “My big worry is that we row back on reforms that were important and necessary, that we lull ourselves into thinking we’ve done enough,” said Schleyer.

    The bitter irony is that Schroeder, a Social Democrat (SPD), was booted out of office in 2005 because of voter unhappiness with his shake-up of the welfare state, which initially led to a spike in unemployment.

    Merkel has been the chief beneficiary ever since and is favored to win a third term in September thanks in part to the resilience of the German economy during the euro crisis.

    Wolfgang Clement, who as economy minister under Schroeder played a key role in pushing through “Agenda 2010”, also fears Germany is squandering the economic dividends from the reforms. He believes Germany needs a new “Agenda 2020”, with investment in education and research as a top priority.

    “We are at risk of unwinding what we so painstakingly pushed through at the start of the century,” he told Reuters. “What is happening in southern Europe is impressive. We shouldn’t try to convince ourselves we’ve done enough.”

    Posted by Pterrafractyl | March 8, 2013, 10:57 am
  6. And we have a new record! This is a desired achievement, right? I mean, why else would the eurozone’s leaders continue to insist on self-reinforcing austerity if these record results were not what they desired?

    Euro-Area Unemployment Rises to Record 12% Amid Slump
    By Angeline Benoit & Jennifer Ryan – Apr 2, 2013 5:03 AM CT

    The euro-area jobless rate rose to a record 12 percent in early 2013, adding to signs that the currency bloc’s recession extended into the first quarter.

    Unemployment in the 17-nation euro area was 12 percent in February and the January figure was revised up to the same level from 11.9 percent estimated earlier, the European Union’s statistics office in Luxembourg said today. That is the highest since the data series started in 1995 and matches the median estimate of 31 economists in a Bloomberg News survey.

    The euro-zone economy has contracted for five straight quarters and that trend is forecast to continue in the first three months of this year, a separate Bloomberg survey shows. The European Central Bank, which holds a rate-setting meeting this week, forecasts the economy will shrink 0.5 percent in 2013. The ECB has held its key rate at 0.75 percent since July.

    “An end to the euro zone’s labor-market downturn is not yet in sight,” Martin van Vliet, economist at ING Bank NV, said in a research note. “We cannot fully rule out a surprise rate cut or new unconventional support on Thursday.”

    The euro was down 0.1 percent from yesterday and traded at $1.2836 at 10:37 a.m. in London.

    Today’s report showed that 19.1 million people were unemployed in the euro area in February, up 33,000 from the previous month.

    The European Commission predicts unemployment rates of 12.2 percent this year and 12.1 percent in 2014. ECB President Mario Draghi said on March 7 that “it is of particular importance at this juncture to address the current high long-term and youth unemployment.”

    Shedding Jobs

    Businesses ranging from banks to carmakers and airlines are trying to cut costs by shedding jobs. Spain’s CaixaBank (CABK) last week reached an accord with its unions to cut 2,600 jobs. Danone (BN), the owner of Evian bottled-water and Activia yogurt, plans to shed 900 jobs in Europe as demand weakens.

    Fiat SpA (F) Chief Executive Officer Sergio Marchionne last month spoke out against deeper budget cuts. “I understand austerity, but we can lose weight until we die,” he said.

    Renault SA (RNO) CEO Carlos Ghosn urged government spending to revive the region’s anemic car sales, which he forecast won’t recover for another three years.

    The strains in the region have spread to the U.K., where a measure of manufacturing contracted for a second month amid weak demand in Europe for British exports. A gauge of factory activity was 48.3 in March, the second month of contraction, Markit Economics said today.

    It’s always nice when you see a plan work.

    Posted by Pterrafractyl | April 2, 2013, 11:43 am
  7. Harvard economist and prominent austerity advocate Niall Ferguson just stepped in it: He made an off-the-cuff remark asserting that John Maynard Keynes was gay and therefore didn’t care about the future because he had no kids. The implication of the comment is that Keynsian economics is unsustainable and will inevitably lead to our grandchildren living in some sort of Weimar-like hellscape, so only someone without children could possibly justify such an abominable idea like stimulus spending in an economic downturn. People without children, obviously, must not care about the next generation because all sane people care only about themselves or direct family because family carries lots of their personal magical DNA that god thinks is extra special.

    Ferguson has since apologized and retracted his comments but it’s great example of one of the inherent pitfall is using finance to guide your society. If you screw up the implementation of that financial regime – whether it’s flawed economic theories or some ideological mandate – you just might end up advocating policies that destroy the lives of your grandchildren. And you might look like an asshole while you’re doing it:

    New York Magazine
    5/4/2013 at 10:45 AM
    Niall Ferguson Doesn’t Trust Gay Economists [Updated]

    By Caroline Bankoff

    Harvard historian Niall Ferguson has an interesting new critique of Keynesian economics (which calls for government stimulus spending and larger deficits when the economy is weak.) At a Thursday conference in California, Ferguson — an austerity advocate — told a crowd of 500 financial advisers and investors that John Maynard Keynes’s ideas should be dismissed because he was gay and childless, and therefore did not worry about about his philosophy’s effect on future generations.

    According to a report from financial writer Tom Kostigen, Ferguson explained that the “effete” Keynes preferred talking about “poetry” to having sex with his ballerina wife, and went on to suggest that people without children have no reason or ability to care about what happens to the world after they die. Hopefully, this will attract as much criticism as his Newsweek take-down of President Obama’s first term, though it should be much easier to pick apart.

    Update: Ferguson has apologized for his “stupid, “insensitive,” and “off-the-cuff” remarks. However, Cambridge’s Michael Kitson claims that Ferguson made similar comments during a seminar twenty years ago. Meanwhile, Ferguson nemesis Paul Krugman has taken the debacle as an opportunity to suggest that Ferguson has “forfeited any right to be taken seriously” because his offensive argument was based on a misinterpretation of Keynes’s assertion that, “In the long run we are all dead.”

    The original Financial Advisor report on this incident fleshes outs Ferguson’s happy comments:

    Harvard Professor Trashes Keynes For Homosexuality

    May 3, 2013 • Tom Kostigen

    Harvard Professor and author Niall Ferguson says John Maynard Keynes’ economic philosophy was flawed and he didn’t care about future generations because he was gay and didn’t have children.

    [Editor’s Note: 10:21 pm, May 4. Earlier today, two days after he spoke, Professor Ferguson issued an “unqualified apology” for what he termed his “tasteless” and “stupid” remarks.]

    Speaking at the Tenth Annual Altegris Conference in Carlsbad, Calif., in front of a group of more than 500 financial advisors and investors, Ferguson responded to a question about Keynes’ famous philosophy of self-interest versus the economic philosophy of Edmund Burke, who believed there was a social contract among the living, as well as the dead. Ferguson asked the audience how many children Keynes had. He explained that Keynes had none because he was a homosexual and was married to a ballerina, with whom he likely talked of “poetry” rather than procreated. The audience went quiet at the remark. Some attendees later said they found the remarks offensive.

    It gets worse.

    Ferguson, who is the Laurence A. Tisch Professor of History at Harvard University, and author of The Great Degeneration: How Institutions Decay and Economies Die, says it’s only logical that Keynes would take this selfish worldview because he was an “effete” member of society. Apparently, in Ferguson’s world, if you are gay or childless, you cannot care about future generations nor society.

    Since our individual DNA contribution gets cut in half for each successive generation (e.g. your kids have half your DNA, grandkids get a quarter, great-grandkids an eighth, etc), you have to wonder where the cutoff point is for people that care about the future only if it’s a future involving people with bits of their own special DNA. Would they still care about their great-great-great grandkids? Afterall, even if there are a lot of them scampering about each one will only have 1/32nd of their unique DNA specialness. Maybe he only cares about the “fittest” descendents that manage to have the have kids and pass on an ever-shrinking bit of that Niall Ferguson-specialness for one more round? One thing is clear, Niall cares about the future.

    Posted by Pterrafractyl | May 5, 2013, 7:29 pm
  8. Perhaps there’s an austerity-related lesson in this research:

    He studies where morals come from
    By Kelly Murray, CNN
    updated 10:25 AM EDT, Tue May 7, 2013

    (CNN) — Being nice to others and cooperating with them aren’t uniquely human traits. Frans de Waal, director of Emory University’s Living Links Center at the Yerkes National Primate Research Center in Lawrenceville, Georgia, studies how our close primate relatives also demonstrate behaviors suggestive of a sense of morality.

    De Waal recently published a book called “The Bonobo and the Atheist: In Search of Humanism Among the Primates,” which synthesizes evidence that there are biological roots in human fairness, and explores what that means for the role of religion in human societies. CNN’s Kelly Murray recently spoke with De Waal about the book.

    CNN’s Kelly Murray: Tell us about the title of your book.

    Frans de Waal: Well, the reason I chose that title is, when I bring up the origins of morality, it revolves around God, or comes from religion, and I want to address the issue that I think morality is actually older than religion. So I’m getting into the religion question, and how important is religion for morality. I think it plays a role, but it’s a secondary role. Instead of being the source of morality, religion came later, maybe to fortify morality.

    CNN: How would you say that ethics or morality is separate from religion?

    De Waal: Well, I think that morality is older. In the sense that I find it very hard to believe that 100,000 or 200,000 years ago, our ancestors did not believe in right and wrong, and did not punish bad behavior, did not care about fairness. Very long ago our ancestors had moral systems. Our current institutions are only a couple of thousand years old, which is really not old in the eyes of a biologist. So I think religion came after morality. Religion may have become a codification of morality, and it may fortify it, but it’s not the origin of it.

    CNN: Why do people need religion?

    De Waal: Well, that’s a good question. I’m struggling with that. I’m personally a nonbeliever, so I’m struggling with if we really need religion. … I’m from the Netherlands, where 60% of the people are nonbelievers. So in northern Europe, there are actually experiments going on now with societies that are more secular, to see if we can maintain a moral society that way, and for the moment I would say that experiment is going pretty well. … Personally I think it is possible to build a society that is moral on a nonreligious basis, but the jury is still out on that.

    CNN: So do you believe that people are generally good?

    De Waal: Yeah, my view is that you have two (kinds of) people in the world. You have people who think that we are inherently bad and evil and selfish, but with a lot of hard work we can be good, and you have other people like myself who believe that we are inherently good. There’s a lot of evidence on the primates that I can use to support that idea that we are inherently good, but on occasion when we get too competitive or frustrated, we turn bad.

    CNN: So when the stakes are higher for survival, we’re more individualistic than group-oriented?

    De Waal: Oh no, we very much survive by group life. Humans are not able to survive alone. For example, solitary confinement is one of the worst punishments we can give. We are not really made to live alone, we would not survive, and so when things get tough we would actually come together more and be more social when things get tough.

    Instead of looking at human morality as something we design in our heads — the philosophers want us to believe that by logic and reasoning we arrive at moral principles — I think it works very differently. We have a lot of feelings and tendencies that drive us to moral solutions, and yes, we often then later try to justify these solutions and come up with reasons for them, but that’s often secondarily.

    In primate behavior we can see they have a sense of fairness. They have empathy: they enforce rules among themselves, they can delay gratification and they can control their impulses. So many of these tendencies that go into our moralities can be found in other animals, but instead of them coming from logic and reasoning, they actually come from our primate psychology most of the time.

    So research suggests that primates tend to be inherently except when they get too competitive and frustrated and their bad sides come out. And when times get tough they tend to band together. And these moral or immoral responses appear to be deeply wired into our evolutionar primate psychology. So basically, we should expect austerity policies to subconsciously turn us into asshole chimpanzees:

    Golden Dawn MP ‘swung at mayor of Athens but hit 12-year-old girl instead’

    Member of parliament for Greek extreme-right party also accused of trying to pull out gun during incident at charity event

    Associated Press in Athens
    guardian.co.uk, Thursday 2 May 2013 13.40 EDT

    A member of parliament from Greece’s extreme-right Golden Dawn party allegedly tried to punch the mayor of Athens on Thursday, swinging at him but reportedly missing and hitting a 12-year-old girl instead.

    The confrontation came hours after police used pepper spray to prevent the nationalist party from distributing free food to Greek citizens only in the city’s main Syntagma Square in defiance of a municipal ban the mayor had vowed to uphold.

    Once a marginal group, Golden Dawn saw a meteoric rise in the polls in recent years, becoming the third most popular party as the country slid further into financial crisis and unemployment rocketed. Its members have been repeatedly accused of involvement in violent attacks against immigrants and others.

    “The only thing these people know is the language of violence,” said the mayor, Giorgos Kaminis, after the incident, in which he said MP Giorgos Germenis also tried to pull out a gun before being restrained by the mayor’s bodyguards.

    Germenis turned up at a charity event where Kaminis was handing out gifts to children of unemployed parents ahead of Sunday’s Orthodox Easter.

    “This man sneaked in, we didn’t notice him … and he tried to hit me,” Kaminis told Vima FM radio. “At the last minute my personal guards stopped him.” The mayor said Germenis had a gun tucked into the back of his waist band, and attempted to pull the weapon out.

    Television footage showed the mayor’s bodyguards struggling with Germenis as a woman carrying a baby scurried out of the room. The security guards pinned the MP against a wall before marching him out of the building.

    Greek media said the blow intended for Kaminis ended up hitting a girl, leaving her with a bruised forehead but no serious injuries. “Extreme actions, especially when their victims are innocent 12-year-old children, do not befit our democracy,” said government spokesman Simos Kedikoglou.

    Golden Dawn issued a statement denying a girl had been hit and vowing to sue Kaminis and his security guards. For his part, Kaminis intends to sue Germenis for the attempted attack, the municipality’s press office said. Police said they were investigating complaints against the MP for threats and brandishing a weapon.

    Golden Dawn had announced it would hand out free Easter food to Greeks only on Thursday. Kaminis had banned any such events in the city’s main square, and vowed Wednesday not to allow the “soup kitchen of hate” to take place.

    Though Golden Dawn rejects the neo-Nazi label, its website shows great fondness for Nazi literature and symbols.

    Posted by Pterrafractyl | May 8, 2013, 12:07 pm
  9. Remember, every economic contraction is an opportunity boom (if you happen to have lots of cash or credit lying around). And falling wages just means rising opportunities and higher quality! Down is up, pain is pleasure, and bad is good in the Paradise of the Elites:

    Recession is a good time to exploit cheap labour, says Cameron aide

    Lord Young says low-wage conditions are a bonus for business, drawing a furious response from the TUC

    Daniel Boffey, policy editor
    The Observer, Saturday 11 May 2013 16.02 EDT

    The prime minister’s adviser on enterprise has told the cabinet that the economic downturn is an excellent time for new businesses to boost profits and grow because labour is cheap, the Observer can reveal.

    Lord Young, a cabinet minister under the late Baroness Thatcher, who is the only aide with his own office in Downing Street, told ministers that the low wage levels in a recession made larger financial returns easier to achieve. His comments are contained in a report to be published this week, on which the cabinet was briefed last Tuesday.

    Young, who has already been forced to resign from his position once before for downplaying the impact of the recession on people, writes: “The rise in the number of businesses in recent years shows that a recession can be an excellent time to start a business.

    Competitors who fall by the wayside enable well-run firms to expand and increase market share. Factors of production such as premises and labour can be cheaper and higher quality, meaning that return on investment can be greater.

    A Downing Street spokesman said Young was merely stating a “factual point and nothing else”. But the comments were described as “appalling and ill-timed” by union leaders, with job-market figures due out next week expected to show that the initial resilience of employment has faded while wages are being severely tightened.

    UK employees’ average hourly earnings have fallen by 8.5% since 2009 in real terms, adjusting for inflation, according to the Office for National Statistics (ONS).

    Young was forced to quit just months into the government in 2010, after he was overwhelmed by condemnation of his claim that voters had never had it so good during the “so-called recession” due to low interest rates.

    The former trade and industry secretary also dismissed the 100,000 job cuts expected each year in the public sector as being “within the margin of error” in the context of a workforce of 30 million. He added that complaints about spending cuts came from “people who think they have a right for the state to support them”.

    Young quit but was quietly reappointed 11 months later.

    This is a moment when it might be useful to point out that even Hoover’s Treasury Secretary Andrew Mellon, known for his “Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate … it will purge the rottenness out of the system.”-mentality, eventually rejected this kind of destructive and predatory mentality:

    Father Cox, Andrew Mellon and a Huge March on Washington: Echoes
    By Philip Scranton Jan 10, 2012 9:28 AM CT

    The Depression hit Pittsburgh hard. As 1932 began, the steel industry in the city was operating at 12 percent of capacity and unemployment had reached 31 percent for white workers, 48 percent for black workers.

    Father James Cox — a former steelworker and the pastor at Old St. Patrick’s Church in Pittsburgh since 1923 — had run a soup kitchen for two years and helped build a Shantytown to house the foreclosed and the evicted. Late in 1931, Cox decided a march on Washington was the next logical step, recalling an 1894 trek from Ohio by Jacob Coxey’s “Army” of the unemployed during another depression. (Ironically, as Pittsburghers assembled on Jan. 5, 1932, Coxey had just become the Republican mayor of Massillon, Ohio.)

    Hoover initially planned to ignore the demonstrators, and had Cox investigated as a possible radical (he was not). But on learning that about 30 percent of the marchers were military veterans, Hoover met with Cox and a few others for about 20 minutes.

    The political impact of the protest was sizable — not in creating new public works for the unemployed, but in forcing a Cabinet reshuffle. Treasury Secretary Andrew Mellon, a Pittsburgher, thoroughly supported the march. When hundreds of Cox’s marchers missed their caravan’s departure home, Mellon paid $1,242 to cover their train fares.

    When people began asking how thousands of unemployed men could afford to drive the all the way to Washington, word trickled out that Mellon had “quietly ordered” the service stations of his Gulf Oil Co. “to dispense gasoline without charge,” as Kenneth J. Heineman notes in “A Catholic New Deal.”

    Once famed for his tough-minded Depression policies (“Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate … it will purge the rottenness out of the system.”), Mellon now rejected Hoover’s relative inactivity and his trust that market recoveries and charity would heal the damage. Within days of the march, Mellon and the president stopped speaking. Hoover secured Mellon’s resignation and arranged to ship him overseas as the ambassador to the U.K.

    A very bad year for the president had commenced.

    Posted by Pterrafractyl | May 11, 2013, 5:51 pm
  10. Posted by Pterrafractyl | July 12, 2013, 8:40 am
  11. One of the implicit but unspoken realities of the “internal devaluation” approach to debt reduction is that it mostly involves the permanent devaluation of people’s lives. And since the policy doesn’t seem to actually work and ends up breaking a nation’s internal economy and social fabric, the “internal devaluation” of people’s lives and futures just might be permanent:

    Greeks 40 percent poorer than in 2008

    ATHENS | Tue Oct 22, 2013 7:38am EDT

    (Reuters) – Greeks are on average almost 40 percent poorer than they were in 2008, data indicated, laying bare the impact of a brutal recession and austerity measures the government may be forced to extend into next year.

    Gross disposable incomes fell 29.5 percent between the second quarters of 2008 and 2013, statistics service ELSTAT said on Tuesday. Adding in cumulative consumer price inflation over the same period takes the decline close to 40 percent.

    Propped up by international aid since 2010, Greece is at loggerheads with its lenders from the European Union and International Monetary Fund over the size of its 2014 budget deficit.

    The discrepancy has prompted talk that Athens – which has ruled out across-the-board cuts in wages or pensions – might have to adopt new austerity measures.

    Spending cuts and tax hikes to meet the terms of its international bailouts, coupled with record unemployment, have eroded domestic consumption, which in Greece accounts for about three-quarters of gross domestic product, the biggest proportion of the 17 countries that share the euro.

    Total workers’ compensation has fallen 34 percent since the second quarter of 2009, the ELSTAT data showed. Over the same period, the government slashed social benefits by 26 percent.

    The statistics service said the deep economic malaise also affected household savings rates, which fell 8.7 percent in the second quarter of 2013 versus a 6.7 percent drop a year earlier.

    Based on EU/IMF projections, Greece’s battered economy is expected to contract 4 percent this year before recovering modestly in 2014. This would bring the total GDP decline in 2008-2013 to 25 percent – making it the country’s biggest peace-time recession.

    Posted by Pterrafractyl | October 22, 2013, 12:54 pm
  12. While the outrageous hats were no doubt totally awesome, you’d think they could have skipped the golden coach consider the content of the speech. ‘You’re on your own! So says the King’:

    Financial Times
    September 17, 2013 5:15 pm
    King’s speech to parliament heralds end of Dutch welfare state

    By Matt Steinglass in The Hague

    The Netherlands’ newly inaugurated King Willem-Alexander has made his first annual appearance before parliament one to remember, with a speech effectively announcing the end of the generous Dutch welfare state.

    The king delivered the speech as part of the annual celebration of “Prinsjesdag”, or “Prince’s Day”, when the Dutch live up to their money-conscious reputation by turning the government’s presentation of its budget for the forthcoming year into a whimsical political festival.

    Arriving at parliament in the royal family’s golden coach, and addressing an audience full of female MPs sporting traditionally outrageous hats, the new Dutch monarch delivered a sober, downbeat message.

    “Due to social developments such as globalisation and an ageing population, our labour market and public services are no longer suited to the demands of the times,” the king said, in a speech written by the Liberal prime minister, Mark Rutte, and his cabinet.

    “The classical welfare state is slowly but surely evolving into a ‘participatory society’,” he continued – one, that is, where citizens will be expected to take care of themselves, or create civil-society solutions for problems such as retiree welfare.

    The Dutch government is facing a vicious political fight to pass the latest of several rounds of austerity measures demanded by EU budget rules, including cuts to healthcare subsidies, pensions, and unemployment benefits.

    But the king’s speech to the joint session of House of Representatives and the Senate presented austerity not as a temporary belt-tightening episode but as a permanent shift to a smaller role for government, codifying the Netherlands’ decade-long trend away from the comprehensive egalitarian social model it built in the 1960s and ‘70s.

    The speech quickly proved the most controversial annual address by the monarch in years, evoking far more opposition than those given by King Willem-Alexander’s mother, the former Queen Beatrix.

    Geert Wilders, whose far-right Party for Freedom has ridden its opposition to EU-driven austerity to the top of the current Dutch polls, called the speech a “tale of horrors.”

    “This isn’t going to make anybody happier,” said Emile Roemer, whose far-left Socialist party has also gained popularity by opposing austerity. “It doesn’t show any hope, or trust in the future.”

    The speech by the king falls in line with efforts by the government, a coalition between Mr Rutte’s centre-right Liberals and the centre-left Labour party, to portray austerity measures as a matter of responsibility and historical necessity.

    The Liberals have been more forceful in making the case for smaller government, but the Labour party finance minister, Jeroen Dijsselbloem, has been among the chief proponents of strict budget discipline at the European level.

    Many Dutch voters on the political right and centre agree that the government ought to shrink, and cuts to foreign aid, public broadcasting, and subsidies for clean energy have much support. But cuts to social benefits, such as the country’s generously financed old people’s homes have proved extremely unpopular.

    Meanwhile, many commentators said the speech sent the wrong signal at a time of severe economic uncertainty. The Dutch economy has been in recession for well over a year, and low consumer confidence has left it failing to join in Europe’s nascent recovery.

    “They’re talking about a ‘participatory society’. That means effectively, you’re on your own,” said Arnoud Boot, an economics professor at the University of Amsterdam. “[The government] should have been talking about making investments in order to create certainty and security in the economy.”

    Posted by Pterrafractyl | October 23, 2013, 1:41 pm
  13. Well, now that we have Obama’s top economic adviser telling Democrats that the country is going to have accept long-term entitlement cuts (because we don’t want to burden future generations with the horrors of a highly efficient safety-net with low overhead costs) in exchange for ending the sequester ( thus pleasing the Great and Powerful Norquist), it’s worth taking a look at the awesome future this current generation is planning for their grandchildren. Meet your grandchildren’s future McSafety-net:

    A Help-Line Voice Saying What McDonald’s Won’t: Fast-Food Workers Need Aid
    By Susan Berfield October 25, 2013

    America’s low-wage, fast-food workers have been making a lot of news lately. Researchers at Berkeley released a report calculating that 52 percent of families of fast-food workers are enrolled in at least one public-assistance program, at a cost to taxpayers of about $7 billion a year. McDonald’s employees, working for the biggest burger chain in the country, accounted for about $1.2 billion of that total.

    Now a McDonald’s (MCD) help line for employees, called McResource Line, has come to broader attention, courtesy of an advocacy group called Low Pay Is Not OK. In a taped conversation published online, a help-line representative is heard offering to help one McDonald’s worker access a range public resources, from food stamps to Medicaid.

    The employee, Nancy Salgado, earns $8.25 an hour after working for a decade at a McDonald’s in Chicago. She can be heard describing the two kids she is raising on her own and asks for help to make ends meet. The McResource representative does her job well: She’s matter-of-fact about Salgado’s predicament, calmly explains the benefits Salgado might be eligible for, and answers all her questions. During the entire 14-minute conversation reviewed by Bloomberg Businessweek, Salgado doesn’t ask why the McDonald’s franchisee pays her less than she needs to raise a family, and the McResource representative never suggests Salgado should be paid more.

    It turns out that Salgado has brought this matter up before: She and other members of Fight for $15, a group calling for higher wages for fast-food workers, interrupted a speech by Jeff Stratton, president of McDonald’s USA, in Chicago earlier this month. “It’s really hard for me to feed my two kids and struggle day to day. Do you think this is fair, that I have to be making $8.25 when I have worked for McDonald’s for 10 years?” Salgado shouted out. Stratton, caught off guard, responded: “I’ve been there 40 years.”

    Of course, in the future, there won’t actually be all of these government programs for the poor so the McSafety-net will presumably have various modest proposals to offer to put food on the table. And while this may seem like a bold plan to secure a bright a vibrant future for our oligarchs, there are a lot of unanswered questions about how a return to the “you’re on your own” economy and society of centuries past is going to even function because the “you’re on your own” society of the future is going to be very different from the “you’re on your own” societies of the past in a critical way: Part of the previous social contracts involved the notion that you’re children and grandchildren will probably lead better lives than you or your parents did. That was a key psychological driver that people used to justified a life of poverty in a merciless economy. They were doing for their kids! And a better future! So now that the global oligarchy has decided that the arc of history must be driven into a ditch and the future must be more brutally competitive and less secure, how on earth is the oligarchy planning on creating any kind of hope that parents can have for the future? What’s going to replace a hope for a better future when the kids lucky enough to have jobs are destined to work until the day they die? Doesn’t removing hope and embracing endless austerity for future generations sort of destroy the mindset that drove wage-slave economies of the past? It seems like a question the oligarchs need to answer because the solutions the oligarch have for the McSaftety-net for the future might not be the same ones that the hopeless and hungry proles will have in mind.

    Posted by Pterrafractyl | October 25, 2013, 3:00 pm
  14. Since the NSA has been spying on leaders across the EU, can someone at the NSA please look over their archives of the EU’s economic policy planning for the last four years and tell us WTF the EU’s leaders have been thinking?

    Analysis: Convalescent euro zone seeks to escape debt overhang

    By Paul Taylor

    PARIS | Mon Oct 28, 2013 2:06am EDT

    (Reuters) – As the euro zone’s weakest members crawl out of their longest recession in modern history, their prospects of recovery are weighed down by a crushing mountain of debt far heavier than before four years of financial crisis.

    Italy, Greece, Ireland and Portugal all have public debt well in excess of annual economic output and risk a Japanese-style “lost decade” of grindingly low growth and high unemployment as they slowly repay their way out of trouble.

    The average ratio of debt to gross domestic product in the 17-nation single currency area stands at 95 percent – lower than in the United States and far less than Japan but dangerously high for ageing societies that cannot individually print money or devalue.

    The official European Union line is that each bailed-out country must clean up its own mess and grow its way back to health without debt relief or mutualization, except perhaps for Greece, which has long been declared a special case.

    “As Margaret Thatcher used to say: TINA – There Is No Alternative,” said Graham Bishop, an economic consultant. Fiscal discipline and pro-market reforms to liberalize labor contracts, break trade union wage bargaining power and curb welfare and pensions are the only road to salvation, he argued.

    Yet other economists – and a closet minority of EU officials unwilling to break ranks publicly with the orthodox line – say that policy prescription is politically and socially untenable and Europe will have to consider some form of broader debt relief, perhaps via the European Central Bank.

    “Ideally the euro zone would combine a symmetrical budget policy with debt monetization by the ECB,” Belgian economist Paul De Grauwe at the London School of Economics wrote in an essay for the Centre for European Reform.

    Under such a policy, low-deficit countries like Germany with room for maneuver would run a more expansionary budget to balance out spending curbs in peripheral states, while the central bank would buy up and retire weaker states’ bonds.

    Neither option is likely, given Germany’s fear of inflation and the vehement resistance across northern Europe to any perceived sharing of the burden of other euro countries’ debts.

    De Grauwe said the alternative was that countries like Greece and Portugal would default sooner or later, since politicians in those countries would not accept being forced to transfer resources for years to rich northern creditors.

    Yet default remains taboo in the euro area even after Greece’s imposition of losses on private bondholders in 2012.

    The rest of the article goes on to list a bunch of unorthodox debt-reduction strategies before concluding that the likeliest path forward is a lost-decade of policy muddling. So can the NSA detect a gnome infestation? If not, maybe someone should look into that. Gnome infestations are contagious and will destroy your society.

    Posted by Pterrafractyl | October 28, 2013, 1:48 pm
  15. What? You mean pointlessly making life harder and more insecure doesn’t just spontaneously make people stronger and more able to thrive? How could that be? I thought the whole point of have an austerity-induced ‘lost decade‘ was to make life better for everyone in the following decades by making us all hardier, better people. Maybe that was a dumb idea that only benefits those that desire a permanently disempowered underclass because it looks like the eurozone’s ‘internal devaluations‘ policies are devaluing that thing inside people’s skulls:

    ipj/jr (AFP, dpa)
    Study links job loss to cognitive decline
    Date 21.11.2013

    People who are laid off work or forced to work part-time can suffer mental skill losses later, according to a new European study. The OECD meanwhile says most rich nations have cut health spending.

    Recessionary layoffs or job setbacks that occur at the peak of a person’s working life can translate into later declines in cognitive skills, said the Journal of Epidemiology and Community Health in a new study released Thursday.

    Researchers based at the University of Luxembourg looked at data spanning 12,000 people aged 50 and older in 11 European countries. Volunteers had been tested on five skills, including memory, verbal fluency and numeracy.

    The study concludes that a stimulating job can boost cognitive reserves or abilities in later life. But if a job loss or a work downgrade occurs mental reserves needed in later life are prematurely eroded.

    Writing in the London-based journal, lead researcher Anja Leist said on average every recessionary event when a person is at his or her working life peak can later cost one year in cognitive skill.

    For example, someone who went through three job knockbacks would, at the age of 60, have the cognitive skills of an unaffected person aged 63.

    First study to establish link

    “To our knowledge this is the first study to show that economic recessions experienced at vulnerable ages in early and mid-adulthood are associated with lower cognitive function at older ages,” Leist said.

    Men were hardest effected by job loss or downgrading in their mid to late 40s. Women suffered the worst impacts in their mid-20s to mid-30s.

    The authors said their findings indicated that “policies that ameliorate the impact of recessions on labor market outcomes” might improve cognitive function in later life.

    Posted by Pterrafractyl | November 23, 2013, 6:11 pm

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