Now that the the­o­ret­i­cal jus­ti­fi­ca­tions for aus­ter­i­ty-onom­ics have been oblit­er­at­ed, it looks like we saw some sort of PR push­back in Europe this week as the usu­al sus­pects con­tin­ue to dou­ble-down on why more aus­ter­i­ty is the only way for­ward. As part of that PR push, one of the argu­ments we’re hear­ing is that aus­ter­i­ty alone can’t do get the job done. Instead, the only way for­ward for the ail­ing euro­zone economies is to see the pri­vate sec­tor dri­ve eco­nom­ic growth and for that to hap­pen we need aus­ter­i­ty AND “reforms”. Those reforms, it turns out, appear to look a lot like the same “aus­ter­i­ty” poli­cies we’ve been see­ing all along. “Expan­sion­ary aus­ter­i­ty”, as we’re learn­ing, was nev­er about expand­ing the econ­o­my. It was about expand­ing the aus­ter­i­ty:

Ger­many’s Merkel: aus­ter­i­ty is part of solu­tion to Europe’s prob­lems, but reforms need­ed too
Pub­lished April 26, 2013

Asso­ci­at­ed Press

BERLIN – Chan­cel­lor Angela Merkel has under­lined Ger­many’s insis­tence that aus­ter­i­ty is part of the solu­tion to Europe’s finan­cial cri­sis but empha­sized that reforms to make labor laws more flex­i­ble and encour­age pri­vate invest­ment also are essen­tial.

Calls are mount­ing across Europe for Berlin to relent on an aus­ter­i­ty dri­ve that’s become increas­ing­ly unpop­u­lar in oth­er coun­tries.

Merkel told a busi­ness con­fer­ence Fri­day that there’s much talk in Europe of growth “but some­times the under­stand­ing is that there can only be growth when the state invests.” She said that nor­mal­ly pri­vate invest­ment dri­ves growth.

Merkel argued that reform­ing Europe “is not just a ques­tion of aus­ter­i­ty, as it’s called today.” See­ing through oth­er eco­nom­ic reforms is also nec­es­sary, she said.

One of the open ques­tions in this entire eurode­ba­cle is just how much resent­ment and con­tempt will be devel­oped between euro­zone mem­ber nations if these poli­cies just con­tin­ue to drag on and on (or there’s a renewed mega-cri­sis) because based on what we’re hear­ing out of Berlin there’s pret­ty much no rea­son to assume eco­nom­ic stag­na­tion isn’t con­tin­ue to con­tin­ue for years. Is there going to be any trans-con­ti­nen­tal good­will left at the end of this? After all, was­n’t build­ing a sense of Euro­pean iden­ti­ty and a shared future half the rea­son for cre­at­ing the entire EU and euro­zone in the first place? Well, based on Wolf­gang Schauble’s recent com­ments it looks like maybe there is a plan to address this inevitable col­lapse of con­fi­dence in each oth­er: Wait it out, because you know that at some point the pro­les are going to for­give and for­get. It remains to be seen if lobot­o­mies will be required for this approach to work:

AFP
Schäu­ble: Cypri­ot anger at Ger­many will pass

Pub­lished: 28 Mar 13 14:01 CET

Ger­man Finance Min­is­ter Wolf­gang Schäu­ble said Thurs­day that he under­stood Cypri­ot anger over the tough terms of its inter­na­tion­al bailout but said it would fade even­tu­al­ly.

When times are very tough “then you look for some­one to project your anger onto,” he told local radio broad­cast­er SWR2, when asked about pub­lic ire in Cyprus against Ger­many, the Euro­pean Union and the Inter­na­tion­al Mon­e­tary Fund.

“That will pass. It is of course com­plete­ly unfound­ed,” he added.

...

Ris­ing anger against Ger­many as the pay­mas­ter for euro­zone bailout pack­ages and its most influ­en­tial mem­ber state has rat­tled offi­cials in Berlin.

Demon­stra­tors on the streets of Nicosia bran­dish­ing posters depict­ing Chan­cel­lor Angela Merkel as an Adolf Hitler fig­ure bent on Euro­pean dom­i­na­tion have received wide media cov­er­age.

Ger­man Jus­tice Min­is­ter Sabine Leutheuss­er-Schnar­ren­berg­er was quot­ed Wednes­day as say­ing that Euro­pean Com­mis­sion chief Jose Manuel Bar­roso and EU Pres­i­dent Her­man Van Rompuy ought to help rein in anti-Ger­man sen­ti­ment.

“Ger­many is show­ing sol­i­dar­i­ty so that in the end the cri­sis coun­tries have a future,” she told Munich’s dai­ly Merkur.

“So I would indeed ask that the peo­ple at the top – the Com­mis­sion pres­i­dent and the Coun­cil pres­i­dent – demon­strate sol­i­dar­i­ty with us and defend the Ger­mans against unjus­ti­fied accu­sa­tions,” she con­clud­ed.

“That will pass. It is of course com­plete­ly unfound­ed.” Wait­ing out the anger might seem like kind of a crazy plan con­sid­er­ing the years of stress that some of these nations are going through, but maybe it’s not so crazy:

Glob­al Post
Ice­land elec­tion looks set to turn the coun­try back to the right
Char­lotte McDon­ald-Gib­son April 26, 2013 06:00

Despite being the par­ties blamed for dri­ving them to the brink, Ice­landers are wide­ly pre­dict­ed to elect cen­ter-right lead­ers in Saturday’s key par­lia­men­tary vote.

BRUSSELS, Bel­gium — For a coun­try as depen­dent on fish­ing as Ice­land, the image is harsh but apt. “Mem­o­ries like gold­fish,” says polit­i­cal ana­lyst Sil­la Sig­urgeirs­dot­tir as she tries to explain why some Ice­landers might on Sat­ur­day vote for the par­ties blamed for the 2008 bank­ing col­lapse.

Hor­dur Tor­fa­son, a pop­u­lar Ice­landic folk singer, is more forth­right: “I don’t believe that peo­ple are so stu­pid as to vote for these par­ties.”

The polls, how­ev­er, paint a dif­fer­ent pic­ture. Par­lia­men­tary elec­tions this week­end are fore­cast to deliv­er a sting­ing rejec­tion of the cen­ter-left coali­tion led by Johan­na Sig­ur­dar­d­ot­tir, in anoth­er sign that Europe’s vot­ers are tir­ing of the finan­cial hard­ships gov­ern­ments demand of them as they try to get the economies back on track.

Ice­landers are instead expect­ed to flock back to two cen­ter-right par­ties — the Pro­gres­sive Par­ty and the Inde­pen­dence Par­ty — whose poli­cies of finan­cial dereg­u­la­tion were blamed for the col­lapse of the three largest banks, a default on $85 bil­lion of debt, and the nation’s worst reces­sion in decades.

“Peo­ple are strug­gling, and this group of peo­ple — main­ly mid­dle class — think that this gov­ern­ment has not done enough for them,” says Sig­urgeirs­dot­tir, a polit­i­cal sci­ence lec­tur­er at the Uni­ver­si­ty of Ice­land.

...

That the par­tic­u­lar oppo­si­tion par­ty now cam­paign­ing as the cham­pi­on of ordi­nary fam­i­lies is the par­ty whose poli­cies helped the nation accu­mu­late its crip­pling debt is an irony not lost on Sig­urgeirs­dot­tir.

“Peo­ple tend to for­get [that] it was the Pro­gres­sive Par­ty who offered in the 2003 cam­paign to raise the mort­gage lev­el up to 90 per­cent of the mar­ket price, and the house­holds now strug­gling are strug­gling because of that pol­i­cy,” she says. “And now they [the Pro­gres­sive Par­ty] say they are going to lift your bur­den.”

The Pro­gres­sive Par­ty leader, Sig­mundur David Gunnlaugs­son, has said he will force for­eign cred­i­tors to take a hair­cut on some of their frozen invest­ments and use the mon­ey to fund a cut in peo­ple’s mort­gages. Under­stand­ably, this pol­i­cy strikes a chord with vot­ers, even if econ­o­mists warn that it could back­fire and scare off fur­ther for­eign invest­ment.

Ana­lysts say the cap­i­tal con­trols mea­sures will be a key issue for any new gov­ern­ment. Busi­ness­es com­plain that the strin­gent restric­tions are pre­vent­ing invest­ment, but lift­ing them could spark a sud­den out­flow of cap­i­tal, caus­ing the kro­na to deval­ue fur­ther.

The Inde­pen­dence Par­ty has vowed to lift the con­trols and low­er tax­es. Its leader, Bjarni Benedik­ts­son, told the Finan­cial Times the con­trols “are like a ban­ner over Ice­land say­ing that the peo­ple don’t believe in their cur­ren­cy.”

Sig­ur­dar­d­ot­tir, Iceland’s first female leader and the first open­ly gay prime min­is­ter in Europe, is pop­u­lar and wide­ly respect­ed, but she announced last year that she would not run for re-elec­tion.

Her Social Demo­c­ra­t­ic par­ty is wide­ly seen to have mis­read the pub­lic mood and cam­paigned on join­ing the Euro­pean Union.

The emer­gence of small­er protest par­ties, like the ones that trans­formed Italy’s polit­i­cal land­scape ear­li­er this year, has also split the vote on the left, where many peo­ple are dis­ap­point­ed that the gov­ern­ment did not push through con­sti­tu­tion­al reform.

Polls sug­gest sup­port for the Social Democ­rats may drop to as low as 14 per­cent. The Pro­gres­sive Par­ty is pro­ject­ed to get up to 30 per­cent of the vote, and the Inde­pen­dence Par­ty a lit­tle less. That rais­es the like­li­hood of exact­ly the same Pro­gres­sive-Inde­pen­dence coali­tion that ruled Ice­land in the boom years from 1995 to 2007, which even­tu­al­ly led to the cat­a­stroph­ic bust.

That is almost unthink­able to the activists like Tor­fa­son. “Some­times humans have to walk into the wall and break our nose before we under­stand what we are doing,” he says. “I’m just hop­ing it will not hap­pen, but if it does hap­pen, I think I will have to move away.”

What’s that clas­sic H. L. Menck­en quote? No one ever went broke underestimating...something something...I for­get the rest.

http://www.gatestoneinstitute.org/3684/eu-propaganda

Euro­pean Union Spend­ing Mil­lions to Silence Crit­ics

by Samuel Westrop
April 25, 2013 at 5:00 am

Audi­tors have refused to sign off on EU accounts for 18 years in a row, and EU offi­cials have been sacked for expos­ing cor­rup­tion and fraud with­in the vast bureau­cra­cy.

The Euro­pean Union (EU) is pour­ing mil­lions of pounds into orga­ni­za­tions that advo­cate state con­trol of the press. For many, the fund­ing — uncov­ered recent­ly by Tele­graph jour­nal­ist Andrew Gilli­gan — is yet fur­ther evi­dence of the EU’s increas­ing­ly Orwellian, author­i­tar­i­an nature. The Sovi­et dis­si­dent Vladimir Bukovsky has for years referred to the orga­ni­za­tion as the EUSSR.

One recip­i­ent of Euro­pean tax­pay­ers’ mon­ey, Medi­a­dem, for exam­ple, has been giv­en 2.3 mil­lion pounds. Medi­a­dem describes its mis­sion as work­ing to “reclaim a free and inde­pen­dent media.” Address­ing the top­i­cal issue of how to restruc­ture the sys­tem of redress for those wrong­ful­ly accused or defamed by news­pa­pers, Medi­a­dem rec­om­mends the “impo­si­tion of sanc­tions beyond an apol­o­gy or cor­rec­tion” and the “co-ordi­na­tion of the jour­nal­is­tic pro­fes­sion at the Euro­pean lev­el.”

Medi­adem’s rep­re­sen­ta­tive, Dr Crau­furd Smith, has writ­ten, “Lib­er­al con­cep­tions of media free­dom focus on edi­to­r­i­al free­dom for gov­ern­ment inter­fer­ence.... [how­ev­er] states may also be required to take pos­i­tive mea­sures to cur­tail the influ­ence of pow­er­ful eco­nom­ic or polit­i­cal groups.... this entails that nei­ther the media, nor those indi­vid­u­als who own or work for the media, enjoy an absolute right to free­dom of expres­sion.”

This is not the first time the EU has sought to con­trol free­dom of expres­sion. In 2001, the Euro­pean Court of Jus­tice ruled that the EU was allowed to sup­press polit­i­cal crit­i­cism of its insti­tu­tions and of lead­ing fig­ures. The court ruled that the EU was law­ful­ly allowed to pun­ish indi­vid­u­als who “dam­aged the insti­tu­tion’s image and rep­u­ta­tion.”

The Euro­pean Court of Jus­tice is the EU’s high­est court. Its advo­cate gen­er­al, Dama­so Ruiz-Jarabo Colom­er, had pre­vi­ous­ly argued that a book crit­i­ciz­ing EU finan­cial pol­i­cy was akin to extreme blas­phe­my, and thus not pro­tect­ed by free speech laws.

The attack against free­dom of expres­sion has extend­ed to eco­nom­ic infor­ma­tion. In 2011, an EU offi­cial pro­posed a ban on the issu­ing of sov­er­eign cred­it rat­ings for coun­tries in bailout talks. Michel Barnier, a Euro­pean inter­nal mar­ket com­mis­sion­er, said, “I think it’s legit­i­mate to have a spe­cial treat­ment when a coun­try is in nego­ti­a­tion or is cov­ered by an inter­na­tion­al sol­i­dar­i­ty pro­gram with the IMF or a Euro­pean sol­i­dar­i­ty”.

In the wake of the Leve­son Report, a British par­lia­men­tary inquiry into the “ethics of the Press,” an EU report called for tighter press reg­u­la­tion and demand­ed that the EU should be giv­en new pow­ers to enforce fines or the sack­ing of jour­nal­ists against errant media out­lets.

Much of the EU’s keen­ness to inter­vene comes from its con­cern at the neg­a­tive cov­er­age it receives in the British press. When the EU is not propos­ing to reg­u­late the press, it is spend­ing vast sums on pro-EU adver­tis­ing. In 2012, the EU spent £682 mil­lion of British tax­pay­ers’ mon­ey on its enor­mous pub­lic rela­tions depart­ment.

Some of this mon­ey has been fun­nelled into the cre­ation of “Cap­tain Euro.” an online chil­dren’s com­ic book, in which the inte­gra­tionist super-hero bat­tles against an “evil orga­ni­za­tion” that is “hard at work in the shad­ows.”

Con­ser­v­a­tive MEP Daniel Han­nan has not­ed there is a whiff of anti-Semi­tism to the car­toon. The “ene­my” of Cap­tain Euro, called Dr Vider, has a promi­nent­ly hooked nose and uses the free mar­ket to make mon­ey, “no mat­ter if it might involve the suf­fer­ing of oth­ers.” It is fur­ther explained that, “Banned and ostracised from the finan­cial world for unpro­fes­sion­al con­duct he man­aged to escape arrest despite his involve­ment in finan­cial scan­dal.”

An inter­nal EU report goes some way in explain­ing the fond­ness for com­ic books, by con­clud­ing, “Chil­dren can per­form a mes­sen­ger func­tion in con­vey­ing the mes­sage to the home envi­ron­ment. Young peo­ple will often in prac­tice act as go-betweens with the old­er gen­er­a­tions, help­ing them embrace the euro.”

In 2012, the EU spent £106,000 on a video in which a white woman, dressed in EU col­ors, over­came threat­en­ing, dark-skinned mar­tial arts attack­ers. The video was with­drawn after com­plaints of racism. Fur­ther, var­i­ous EU youth groups have pro­duced music videos — in one of which, Euro­pean youths sing, “I am Euro­pean, and I love it to be, I am Euro­pean, it’s my des­tiny.”

While the EU is hap­py to use the Inter­net to dis­sem­i­nate pro-EU pro­pa­gan­da, it also advo­cates the reg­u­la­tion of Inter­net con­tent. In 2012, the EU pro­posed the “har­mo­niza­tion” of laws across the 27 mem­ber-states to force web­sites to delete infor­ma­tion short­ly after con­sumers request its removal. The EU also funds a num­ber of a projects designed to explore cen­sor­ship of “ter­ror­ist” con­tent on the Inter­net.

There is a joke in Brus­sels that if the Euro­pean Union were a coun­try apply­ing to join itself, it would be reject­ed on the grounds of being unde­mo­c­ra­t­ic. But it is not much of a joke. The EU is run by a body that com­bines leg­isla­tive and exec­u­tive pow­er, with an unelect­ed Pres­i­dent at the very top. Accord­ing to a recent Par­lia­men­tary report, wide­spread fraud has led to more than £4 bil­lion of tax­pay­er’s mon­ey “dis­ap­pear­ing” from the EU bud­get each year. Audi­tors have refused to sign off EU accounts for eigh­teen years in a row and EU offi­cials have been sacked for expos­ing cor­rup­tion and fraud with­in the vast bureau­cra­cy.

The Euro­pean Union’s flaws are best summed up by Sholto Byrnes, who wrote in the Inde­pen­dent: “All it takes to have a pro­found sus­pi­cion of the EU and its greedy accre­tion of pow­ers is this: to believe in trans­paren­cy and account­abil­i­ty; to feel in your bones that sov­er­eign­ty should not be passed from nation state to inter­na­tion­al body with­out the vot­ers being con­sult­ed; and to desire that those vot­ers should be as close as pos­si­ble to the rep­re­sen­ta­tives they elect. To be, in oth­er words, a demo­c­rat.”

Unable to coun­ter­act crit­i­cism of its fail­ings through mean­ing­ful reform, the Euro­pean Union is resort­ing to undis­guised pro­pa­gan­da and pro­posed reg­u­la­tion of its crit­ics.

You don’t have to teach an old dog new tricks if the old tricks still work. The small­er states out of which Ger­many was formed were sub­ju­gat­ed to the reich not by Bis­mar­ck­’s wars but by uni­form cus­toms laws. Loss of sov­er­eign­ty over finan­cial mat­ters is a total sur­ren­der of sov­er­eign­ty. EU coun­tries will get to keep their quaint names and dif­fer­ing col­ors on the map for all that those things are worth.

It would be a lot more reas­sur­ing if the voic­es that are con­stant­ly demand­ing more point­less aus­ter­i­ty shout­ing inside the heads of EU law­mak­ers were just audi­to­ry hal­lu­ci­na­tions:

Bloomberg
Euro Cap­i­tals Tight­en Fis­cal Leash as EU Polices Cuts
By Ian Wishart — Oct 17, 2013 4:04 AM CT

In Madrid, the gov­ern­ment is par­ing spend­ing on roads and rails. In Rome, state prop­er­ty is to be sold off. In The Hague, law­mak­ers agreed to the sec­ond set of extra­or­di­nary cuts in two years.

Even with the 17-nation euro area pro­ject­ing eco­nom­ic expan­sion next year for the first time since 2011, pol­i­cy mak­ers are keep­ing a fis­cal leash on growth by main­tain­ing aus­ter­i­ty poli­cies born in the fight to save the euro.

That’s because for the first time offi­cials in Brus­sels will get to review spend­ing plans before they are approved by nation­al par­lia­ments. The Euro­pean Com­mis­sion, the Euro­pean Union’s reg­u­la­to­ry arm, was empow­ered to demand revi­sions in a bid to impose dis­ci­pline and encour­age coor­di­na­tion.

“The pres­sure to con­tin­ue with aus­ter­i­ty is unabat­ed,” said Paul De Grauwe, a pro­fes­sor at the Lon­don School of Eco­nom­ics.

While there are no new penal­ties built into the sys­tem, the EU says that by point­ing out flaws in the draft bud­gets that had to be sub­mit­ted by Oct. 15, gov­ern­ments can mend their ways.

“Don’t under­es­ti­mate the impact of the upcom­ing so-called two-pack,” EU Pres­i­dent Her­man Van Rompuy said on Oct. 2 in Brus­sels, refer­ring to the two pieces of EU leg­is­la­tion that autho­rized the bud­get over­sight. “It won’t make Brus­sels more pop­u­lar in our cap­i­tals.”

Demands for rig­or fol­low three years of euro-area cost-cut­ting that totaled 216.7 bil­lion euros ($293 bil­lion). That exceeds the size of the Greek econ­o­my.

Pri­ma­ry Sur­plus­es

Cycli­cal­ly adjust­ed pri­ma­ry-bal­ance fig­ures, a mea­sure of fis­cal health before inter­est expense that attempts to fac­tor out eco­nom­ic swings, show the sav­ings since 2010. The euro area moved from an aver­age deficit of 2.3 per­cent of gross domes­tic prod­uct in 2010 to what the EU fore­cast in May will be a pos­i­tive bal­ance of 1.7 per­cent of GDP at the end of 2013.

In Ire­land, the cycli­cal­ly adjust­ed pri­ma­ry bal­ance will have moved from a deficit of 25.4 per­cent of GDP in 2010 to a 2.3 per­cent deficit in 2013, accord­ing to the EU fore­casts. Greece has seen a deficit of 2.6 per­cent in 2010 shift to a pre­dict­ed 6.3 per­cent of GDP pos­i­tive bal­ance in 2013.

Still, fol­low­ing six quar­ters of con­trac­tion, the longest slump since the euro’s debut in 1999, the debt bur­den has only grown. As a per­cent­age of GDP, debt has increased across the sin­gle cur­ren­cy region to an aver­age of 92.2 per­cent after the first quar­ter of 2013 from 85.6 per­cent at the end of 2010.

Debt Loads

Even after the biggest sov­er­eign restruc­tur­ing ever, Greece’s load rose to 160.5 per­cent at the end of the first quar­ter of 2013 from 148.3 per­cent at the end of 2010. In the same peri­od, Italy’s rose to 130.3 per­cent from 119.3 per­cent.

There has nev­er been a penal­ty imposed on a coun­try for exceed­ing the EU debt lim­it of 60 per­cent or its annu­al deficit ceil­ing of 3 per­cent.

“In case there is a devi­a­tion from the Euro­pean com­mit­ments by a mem­ber state and the Euro­pean Com­mis­sion has to say ‘sor­ry guys, please revise your bud­getary plan,’ most like­ly the mar­ket reac­tion will be quite neg­a­tive,” Olli Rehn, the EU’s eco­nom­ic and mon­e­tary affairs com­mis­sion­er, told a con­fer­ence in Vil­nius via video link yes­ter­day. He said the goal of the com­mis­sion was to pro­vide pol­i­cy advice dur­ing the plan­ning process, not to “veto nation­al bud­gets.”

The advice is being tak­en on board.

...

“Peer pres­sure is only strong if the case is con­vinc­ing,” Sven Giegold, a Ger­man mem­ber of the Euro­pean Parliament’s eco­nom­ic and mon­e­tary affairs com­mit­tee that helped shape the leg­is­la­tion, said in a tele­phone inter­view. He’s con­cerned that a lack of con­sis­ten­cy in advice giv­en to coun­tries may under­mine bud­get cops’ cred­i­bil­i­ty.

“Europe needs inte­gra­tion where com­pe­ten­cies are nation­al but not on an arbi­trary basis,” Giegold said.