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

 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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