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“The Mindset”: Growing Number of Investment and Economic Analysts Grasping Reality of Eurozone Crisis

The Teu­ton­ic “Hair­cut”

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COMMENT: As “Europa Ger­man­i­ca” takes form and addi­tion­al sub­stance, the real­i­ty  of what Ger­many is doing is being rec­og­nized by a grow­ing num­ber of ana­lysts.

This is not to say that they are con­ver­sant with the fun­da­men­tal real­i­ties dis­cussed here–the Bor­mann cap­i­tal net­work, the pro­gram the­o­rized by Friedrich List, the Third Reich’s man­i­fes­ta­tion of List’s the­o­ries, the Third Reich’s plans to go under­ground, the West­ern Allies’ nega­tion of the de-Naz­i­fi­ca­tion edict for post­war Ger­many, the Webb-Pomerene Act and the World Com­merce Cor­po­ra­tion, the the­o­ries of Carl von Clause­witz–but they are grasp­ing the extent to which the Ger­man polit­i­cal and eco­nom­ic agen­da is bad for busi­ness.

Ger­man’s pow­er elite cer­tain­ly does not believe in col­lec­tive own­er­ship of the means of production–they believe in  Ger­man con­trol of the means of pro­duc­tion. Once termed “Nation­al Social­ism,” it might be labeled “monop­oly (or “car­tel”) impe­ri­al­ism.”

Their adher­ence to the bru­tal, thor­ough­ly dis­cred­it­ed “aus­ter­i­ty” doc­trine should be seen as what it is–waging war “by oth­er means,” as von Clause­witz put it. The post below has not­ed that: It is the occu­pa­tion of Poland in a very real sense just, accom­plished with­out tanks or blood­shed as mon­ey is used instead of arma­ments to dom­i­nate and con­trol a nation.” 

To those who might view this as an extreme analy­sis, recall that the fas­cist LAOS par­ty was installed in late 2011 as part of the pro­vi­sion­al gov­ern­ment in Greece, installed by “the troi­ka” (read Ger­many) with no input what­so­ev­er from the Greek peo­ple.

As not­ed in the remark­able piece repro­duced in its entire­ty below, the pro­gram Deutsch­land is impos­ing on Europe under­mines the secu­ri­ty of any wealth invest­ed in the afflict­ed nations. Any­one or any­thing fool­ish enough to invest in Europe should be pre­pared to have their assets appro­pri­at­ed and/or negat­ed at some point.

In addi­tion, one should not lose sight of the fact that the “Final Solu­tion to the Greek and Cypri­ot Crises” will, like pre­vi­ous, super­fi­cial steps to resolve the cri­sis, keep the Euro weak, ben­e­fit­ing Ger­many’s export-dri­ven econ­o­my.

One won­ders how much expo­sure U.S. banks have to Euro­pean finan­cial insti­tu­tions. If the fears of a con­ta­gion of bank runs and cap­i­tal flight destroys banks in the weak­er Euro­zone coun­tries, how will that affect Amer­i­can lenders?

The “Europa Ger­man­i­ca” is delib­er­ate and, to any hon­est ana­lyst famil­iar with the his­tor­i­cal record, pre­con­ceived.

The post below also notes the rel­a­tive eco­nom­ic weak­ness of Ger­many itself. Suf­fice it to say that most Ger­mans have not shared in the largesse of the past decade, although they have been spared the trau­ma vis­it­ed upon oth­er Euro­pean cit­i­zens. They are exceed­ing­ly vul­ner­a­ble to the pro­pa­gan­da of their own media estab­lish­ment. 

Kudos to “SWAMP” for research­ing this one for us. The post is repro­duced in its entire­ty here, with empha­sis added.

“The Mind­set” by Mark J. Grant [Author of Out of the Box] and Tyler Dur­den; Zero Hedge; 3/26/2013.

EXCERPT: In all of the tor­tu­ous moments that have tak­en place with the Euro­pean Union the one thing that has become appar­ent is a rad­i­cal change of mind­set. In the begin­ning there was a kind of demo­c­ra­t­ic view­point. All nations had a voice and while some were loud­er than oth­ers; all were heard. This is no longer the case.
There is but one mind­set now and it is decid­ed­ly Ger­man. It is not that this is good or bad or even some­place in between. That is not the real issue. The crux of the mat­ter is that not all of the peo­ple in the EU are Ger­mans and so they are not used to being treat­ed in the Ger­man fash­ion, they do not live their lives like Ger­mans and, quite impor­tant­ly, they do not wish to be Ger­mans.

There is the prob­lem.

The Ger­mans will do what is nec­es­sary to accom­plish their goals. There is noth­ing inher­ent­ly bad or evil about this but it is tak­ing its toll on many nations in Europe. In the case of Greece they went back and retroac­tive­ly changed the covenants of the bond con­tract. They did not actu­al­ly admit this of course and they called it oth­er names but that is what they forced on Greece. In doing so they got the bond hold­ers to shoul­der a good deal of the expense of the bailout of Greece. You can say, “Right,” you can say, “Wrong,” but that is what they did. They accom­plished their goal.

Always remem­ber that the Ger­mans are under severe finan­cial pres­sure. They are still pay­ing the bill for the East Ger­mans. They sup­port Target2 and their econ­o­my is just $3.6 tril­lion which is a frac­tion of the entire Euro­zone. They are try­ing to sup­port a house with less than desir­able sup­ports.

Then we come to Cyprus and they make it com­pli­cat­ed and put one bank with anoth­er bank and take mon­ey from depos­i­tors and call it a “Tax” and say that peo­ple and insti­tu­tions are liable for where they keep their mon­ey when it is more than 100M Euros. All true of course but they do not allow for any “Rule of Law” or “Due Process” by the judi­cial sys­tem but just man­date that the mon­ey will be used to help pay Europe for a loan to the sov­er­eign gov­ern­ment. Then they also tagged senior bond hold­ers revers­ing their posi­tion of the last years so now, so that it can now be said with accu­ra­cy; every­one is at risk. Con­se­quent­ly they have to pay less and they have accom­plished sev­er­al goals which are to pun­ish a “Casi­no Econ­o­my,” to put Cyprus in the same posi­tion as Greece, which is not only bank­rupt but a ward of the Euro­pean Union, and final­ly to insist, by the use of mon­ey, that Cyprus suc­cumbs to the Ger­man demands. Note that CDS in Europe (Mark­it iTraxx Finan­cial Index) has jumped 22% in just one week.

It is the occu­pa­tion of Poland in a very real sense just accom­plished with­out tanks or blood­shed as mon­ey is used instead of arma­ments to dom­i­nate and con­trol a nation. Polit­i­cal­ly you may “Hiss” or you may “Applaud” but there are con­se­quences here for investors that must be under­stood.

First and fore­most is that they will not stop. Noth­ing will be allowed to get in their way. It can be senior bond hold­ers one day, bank depos­i­tors the next, the dis­man­tling of some Par­lia­ment on the day after that, a wealth tax on cor­po­ra­tions on Thurs­day, the dis­al­lowance of div­i­dends on Fri­day; with every announce­ment to come on Sat­ur­day evening. The next week can be a cap on bank bonus­es, a demand that the cap on bank bonus sav­ings be returned to the State, a finan­cial trans­ac­tion tax that gets expand­ed and tax­es all bond coupons and the list goes on. What might be, could be, and noth­ing, absolute­ly noth­ing, will be allowed between Ger­many and her desire to con­trol all of Europe.

I do not speak of moti­va­tion here. I am not bash­ing Ger­many in the fur­ther­ance of their desires. That is a use­less and unnec­es­sary exer­cise. How­ev­er, what is pro­found­ly nec­es­sary, if you invest in Europe, is to under­stand the risks that you are tak­ing. If you place mon­ey in secu­ri­ties on the Con­ti­nent then what is yours is theirs when they want it. I sug­gest you clear­ly under­stand that propo­si­tion and allow for that occur­rence.

You no longer have any excuse after Greece and Cyprus. Every­thing may be called “one-off” but noth­ing is “one-off” as Ger­many expands its pow­er wher­ev­er they can and by any means nec­es­sary. If you believe the pro­pa­gan­da, if you believe what you are told every day by the Press then I can vir­tu­al­ly assure you that you will suf­fer dire con­se­quences at some point and you will now have no one to blame but your­self.

There is also one “unin­tend­ed con­se­quence” of Cyprus and Greece. No one is going to invest in the local banks. Keep­ing mon­ey in the Ger­man banks, the Swiss banks or maybe even the French banks may go on but the local banks in each coun­try are fin­ished. In a clever move, the prob­lems with Greece and Cyprus will dri­ve the mon­ey from the local bank­ing insti­tu­tions in the trou­bled coun­tries. Watch for cap­i­tal flights in Spain, Por­tu­gal and Italy as their banks will be found unsafe and with good rea­son.

It is unknown, as of yet, if Ger­many can win this game. What can be said though is that, nation or investor, you will put your­self at per­il by get­ting in their way. The cur­rent risks, in my opin­ion, are dra­mat­i­cal­ly more than imag­ined by many or gen­er­al­ly thought to be the case. There is no more invest­ing in Europe just gam­bling and spec­u­lat­ing and suf­fer­ing the con­se­quence of either. Any­thing can be changed, any­thing can be mod­i­fied, and when the for­fei­ture of peo­ple’s sav­ings is trum­pet­ed as a “Tax” then even the Eng­lish lan­guage has lost some of its mean­ing.

“Bet­ter to be safe than sor­ry,” has nev­er had such impor­tant con­se­quences as it does now in the Euro­pean are­na of the Great Game.


14 comments for ““The Mindset”: Growing Number of Investment and Economic Analysts Grasping Reality of Eurozone Crisis”

  1. It looks like some of Dijs­sel­bloem’s cohorts in Brus­sels are some­what miffed at him for reveal­ing anoth­er part of that “mind­set”: that upcom­ing 700 bil­lion euro “Euro­pean Sta­bil­i­ty Mech­a­nism” (ESM) fund that’s sup­posed to open next year might nev­er be used regard­less of the cir­cum­stances:

    Blunt Dutch­man casts doubt on Europe’s bank promise

    By John O’Don­nell

    BRUSSELS | Wed Mar 27, 2013 12:00pm EDT

    (Reuters) — Blunt remarks by a lead­ing min­is­ter say­ing Euro­pean sup­port for trou­bled banks is a last resort laid bare what has long been an open secret in Brus­sels: promis­es to cre­ate a euro zone back­stop for banks may nev­er be ful­filled.

    Designed to secure a lev­el play­ing field in the euro zone and pre­vent vul­ner­a­ble coun­tries hav­ing to con­tain finan­cial prob­lems alone, a Euro­pean bank­ing union was one of the biggest polit­i­cal com­mit­ments made to under­pin the euro.

    Com­ments from the head of the Eurogroup of finance min­is­ters this week that coun­tries which encounter bank prob­lems may have to cope alone, how­ev­er, under­score resis­tance to deliv­er­ing on last year’s promise.

    “Strength­en your banks, fix your bal­ance sheets and real­ize that if a bank gets in trou­ble, the response will no longer auto­mat­i­cal­ly be that we’ll come and take away your prob­lem,” Jeroen Dijs­sel­bloem told Reuters.

    “We’re going to push them back,” the Dutch Finance Min­is­ter said short­ly after announc­ing a bailout of Cyprus that forced the clo­sure of the coun­try’s sec­ond-biggest bank and imposed huge loss­es on big depos­i­tors.

    “That’s the first response we need. Push them back. You deal with them.”

    His can­did remarks, described by one EU offi­cial as “not the most bril­liant thing to say”, clashed with a com­mit­ment by euro zone lead­ers to club togeth­er when banks fail. They irri­tat­ed many in Brus­sels, used to gen­tler diplo­ma­cy.

    The com­ments also grat­ed in Dublin, which still hopes the euro zone will stand by a pledge to allow its res­cue fund, the Euro­pean Sta­bil­i­ty Mech­a­nism, to recap­i­tal­ize banks direct­ly.

    Bailed out by Euro­pean coun­tries and expect­ed to resume nor­mal bor­row­ing on mar­kets this year, Ire­land wants direct assis­tance avail­able for its banks should they get in trou­ble again to avoid the risk of adding to the coun­try’s debt...

    Recall that Ire­land’s 85 bil­lion euro “bailout” in 2010 came in the form of aus­ter­i­ty man­dates and an 85 bil­lion euro loan(it’s the “bailout” gift that keeps on giv­ing). All that that loaned mon­ey went to pay back the 85 bil­lion euros in pre­vi­ous loans Ire­land’s gov­ern­ment had to take out from Novem­ber 2008 (when the gov­ern­ment nation­al­ized all the pri­vate debt of their three largest banks) until the “bailout” in 2010. Those loans went to pay back most­ly Ger­man and French banks that fueled the real estate bub­ble in the first place. So the 2010 “bailout” was real­ly just a loan exten­sion that would allow Ire­land to pay back it’s pre­vi­ous 2008–2010 loans from the ECB/IMF/EU. That’s why Ire­land could have an 85 bil­lion euro “bailout” whle still need­ing its banks to be recap­i­tal­ized.


    It is also hop­ing the ESM will assume some of the bur­den of big recap­i­tal­iza­tions that have already tak­en place.

    “The prin­ci­ple which was agreed in June was to break the link between sov­er­eigns and banks and the clear under­stand­ing... is that the ESM ... of course will poten­tial­ly be used for recap­i­tal­iza­tions,” Ire­land’s Euro­pean Affairs Min­is­ter Lucin­da Creighton told Reuters. “That’s the whole point.”

    The euro zone’s three main triple‑A rat­ed states, Ger­many, the Nether­lands and Fin­land, said last year the ESM could only be used if trou­ble arose at banks under Euro­pean super­vi­sion in future, leav­ing “lega­cy” prob­lems to home coun­tries.


    Dijs­sel­bloem appeared to go fur­ther when he said the aim should be “a sit­u­a­tion where we will nev­er need to even con­sid­er direct recap­i­tal­iza­tion”.

    After remon­stra­tions from sev­er­al euro zone part­ners, he issued a state­ment clar­i­fy­ing that Cyprus was not a tem­plate but a spe­cial case.

    Anoth­er euro zone source said the Dutch­man, bare­ly one month in the job, had got car­ried away by his enthu­si­asm and need­ed to learn that, as head of the Eurogroup, “you must give up on express­ing per­son­al opin­ions”.

    Small coun­tries like Ire­land have every rea­son to be con­cerned. The clo­sure of banks in Cyprus and the impo­si­tion of con­trols on mon­ey move­ments once they reopen may achieve exact­ly the oppo­site effect of a bank­ing union.

    Cap­i­tal con­trols are a step back­wards from the inte­grat­ed finan­cial mar­ket with a sin­gle super­vi­sor and res­o­lu­tion mech­a­nism, designed to under­pin con­fi­dence in banks no mat­ter where they are based.

    “They have solved the prob­lem in Cyprus tem­porar­i­ly, at the cost of a high­er prob­a­bil­i­ty of future bank runs,” said Paul De Grauwe of the Lon­don School of Eco­nom­ics. That fol­lowed the deci­sion to hand loss­es to some big depos­i­tors, spar­ing those with less than 100,000 euros, who are pro­tect­ed under EU law.

    “The sig­nal has been giv­en very clear­ly. If a coun­try like Ire­land gets into trou­ble, deposit hold­ers will pay. That makes banks in Ire­land more frag­ile,” De Grauwe said.


    It’s going to be very inter­est­ing to see what hap­pens with Ire­land’s bank recap­i­tal­iza­tion ambi­tions. Back in Feb­ru­ary, the recap­i­tal­iza­tion of Ire­land’s nation­al­ized banks via the ESM appeared to look some­thing like this:

    Recap­i­tal­i­sa­tion of Irish Banks by ESM

    This post was writ­ten by Philip Lane

    The IMF Bank­ing Union has quite a bit to say about how the ESM should go about the recap­i­tal­i­sa­tion of banks, includ­ing in rela­tion to lega­cy prob­lems. The main quotes are below (includ­ing the lengthy sec­tion C)


    Mean­while, to delink weak sov­er­eigns from future resid­ual bank­ing sec­tor risks, it will be impor­tant to under­take as soon as pos­si­ble direct recap­i­tal­iza­tion of frail domes­ti­cal­ly sys­temic banks by the Euro­pean Sta­bil­i­ty Mech­a­nism (ESM). Fail­ing, non-sys­temic banks should be wound down at least cost, and frail, domes­ti­cal­ly sys­temic banks should be resus­ci­tat­ed by share­hold­ers, cred­i­tors, the sov­er­eign, and the ESM.
    ESM and cri­sis res­o­lu­tion. To be clear, the core pur­pose of ESM recap­i­tal­iza­tion of domes­ti­cal­ly sys­temic banks under­go­ing restruc­tur­ing must be to remove the resid­ual risk from the bal­ance sheet of a sov­er­eign whose finances are already strained. Unvi­able, non-sys­temic banks should be wound down at least cost; and sys­temic banks should be resus­ci­tat­ed by share­hold­ers, cred­i­tors, the sov­er­eign, and the ESM as the quin­tes­sen­tial patient, deep-pock­et investor. By delink­ing the sov­er­eign from future unex­pect­ed loss­es on bank bal­ance sheets, ESM direct recap­i­tal­iza­tion would remove future tail risks from the sov­er­eign bal­ance sheet; by ensur­ing that the banks have an own­er of unques­tioned finan­cial strength, it would improve bank fund­ing con­di­tions. Thus, the ESM would attack the sov­er­eign-bank link from both sides. In all cas­es, ESM involve­ment should be con­di­tion­al upon a deter­mi­na­tion of sys­temic risk, which could be as basic as a find­ing that the bank is too large for the sov­er­eign alone to wind up, giv­en the state of pub­lic finances. A robust mech­a­nism for the sys­temic risk deter­mi­na­tion will be crit­i­cal (Box 4).

    Now, pre­sum­ably, recap­i­tal­iza­tion looks some­thing like like this:


    Mean­while, to delink weak sov­er­eigns from future resid­ual bank­ing sec­tor risks, it will be impor­tant to under­take as soon as pos­si­ble direct recap­i­tal­iza­tion of frail domes­ti­cal­ly sys­temic banks by the Euro­pean Sta­bil­i­ty Mech­a­nism (ESM). Fail­ing, non-sys­temic banks should be wound down at least cost, and frail, domes­ti­cal­ly sys­temic banks should be resus­ci­tat­ed by share­hold­ers, cred­i­tors, the sov­er­eign, and the ESM.
    ESM and cri­sis res­o­lu­tion. To be clear, the core pur­pose of ESM recap­i­tal­iza­tion of domes­ti­cal­ly sys­temic banks under­go­ing restruc­tur­ing must be to remove the resid­ual risk from the bal­ance sheet of a sov­er­eign whose finances are already strained. Unvi­able, non-sys­temic banks should be wound down at least cost; and sys­temic banks should be resus­ci­tat­ed by share­hold­ers, cred­i­tors, the sov­er­eign, and the ESM as the quin­tes­sen­tial patient, deep-pock­et investor. By delink­ing the sov­er­eign from future unex­pect­ed loss­es on bank bal­ance sheets, ESM direct recap­i­tal­iza­tion would remove future tail risks from the sov­er­eign bal­ance sheet; by ensur­ing that the banks have an own­er of unques­tioned finan­cial strength, it would improve bank fund­ing con­di­tions. Thus, the ESM would attack the sov­er­eign-bank link from both sides. In all cas­es, ESM involve­ment should be con­di­tion­al upon a deter­mi­na­tion of sys­temic risk, which could be as basic as a find­ing that the bank is too large for the sov­er­eign alone to wind up, giv­en the state of pub­lic finances. A robust mech­a­nism for the sys­temic risk deter­mi­na­tion will be crit­i­cal (Box 4).

    Inter­est­ing indeed. At least Moody’s does­n’t seem to care about whether or not the ESM recap­i­tal­izes Ire­land or not...“in the short term” so that’s a plus. One might even say Moody’s is pos­i­tive­ly neg­a­tive on Ire­land’s future finan­cial prospects:

    UPDATE: Moody’s Ire­land Ana­lyst Upbeat on Ire­land, But Neg­a­tive Out­look Remains
    By Dow Jones Busi­ness News, March 28, 2013, 10:11:00 AM EDT

    (Adds fur­ther quotes, details, back­ground.)

    By Eamon Quinn

    DUBLIN–The lead ana­lyst for Ire­land at Moody’s Investors Ser­vice Thurs­day pro­vid­ed her most upbeat assess­ment yet of the coun­try’s prospects for emerg­ing on sched­ule this year from its inter­na­tion­al bailout, but warned the coun­try could be dri­ven off course by con­ta­gion from the wider euro-zone debt cri­sis in coun­tries such as Cyprus.

    In an inter­view with Dow Jones Newswires, Kristin Lin­dow, the new lead ana­lyst for Ire­land at Moody’s, said she was ” very impressed” with the many “accom­plish­ments” the Irish gov­ern­ment and its bailout cred­i­tors had achieved toward the goal of re-secur­ing Ire­land’s full place in debt mar­kets, say­ing the coun­try was now on course to exit its bailout when the Euro­pean Union and Inter­na­tion­al Mon­e­tary Fund dis­burse the last of their emer­gency loans lat­er this year.

    She said, how­ev­er, that Moody’s had no timetable in mind for remov­ing its cur­rent neg­a­tive out­look on Ire­land’s cred­it­wor­thi­ness, say­ing that Ire­land isn’t shield­ed from con­ta­gion from the wider euro-zone debt cri­sis and that recent devel­op­ments in Cyprus “pose risks that are clear­ly suf­fi­cient­ly large that they did not out­weigh the fact that [ Ire­land] coun­try-spe­cif­ic risks are dimin­ish­ing.”

    The Irish gov­ern­ment has expressed its impa­tience with and is close­ly watch­ing for any signs of change in Moody’s assess­ment of the coun­try’s rat­ing because many poten­tial bond investors are pre­clud­ed from buy­ing its sov­er­eign bonds while the rat­ings firm main­tains its non-investment–or junk–grade, on the coun­try’s debt.

    John Cor­ri­g­an, the head of Ire­land’s debt office, the Nation­al Trea­sury Man­age­ment Agency, said ear­li­er this month that Moody’s con­tin­u­ing neg­a­tive out­look and junk rat­ing is “some­what frus­trat­ing” for the Irish gov­ern­ment because Moody’s had­n’t altered its rat­ing since it down­grad­ed the coun­try’s cred­it­wor­thi­ness in July 2011, and despite Fitch Rat­ings and Stan­dard & Poor’s Corp. hav­ing raised theirs.

    Ire­land sold a sig­nif­i­cant amount of long-term debt in 10-year bonds in March–the first time since late 2010 when it was forced to strike a bailout–in a sign it is like­ly to secure full access to mar­kets from 2014.

    Were Moody’s lat­er this year to lift its threat to fur­ther down­grade Ire­land’s cred­it­wor­thi­ness, it would be a sig­nif­i­cant indi­ca­tion that the firm was prepar­ing in time to restore the coun­try’s invest­ment-grade sta­tus, and would like­ly help dri­ve Irish yields even low­er, some ana­lysts say.

    The coun­try needs its bor­row­ing costs to fall as low as pos­si­ble because it faces financ­ing a huge sov­er­eign debt pile of more than 120% of its gross domes­tic prod­uct, when it can no longer rely on offi­cial bailout loans from the EU and IMF at the end of this year.

    Ms. Lin­dow, who is one of Moody’s most senior ana­lysts, is also the lead ana­lyst of bailout-recip­i­ent Por­tu­gal, and was a for­mer region­al cred­it offi­cer for Europe at the height of the region’s debt cri­sis.


    Ire­land is already “well on its way” to qual­i­fy­ing for the Euro­pean Cen­tral Bank’s Out­right Mon­e­tary Trans­ac­tions pro­gram, the cen­tral bank’s still-untried bond-buy­ing pro­gram of trou­bled euro-zone nations’ debt, she said; access to the Euro­pean Sta­bil­i­ty Mech­a­nism, the euro-zone’s per­ma­nent bailout fund that has yet to start work­ing, will not influ­ence Moody’s deci­sion on Ire­land’s cred­it­wor­thi­ness in the short term, she added.

    Ms. Lin­dow said Moody’s believed that Ire­land’s bank­ing sys­tem would­n’t require more injec­tions of gov­ern­ment recap­i­tal­iza­tion cash despite the banks car­ry­ing many loss-mak­ing home-loans.

    On the issue of euro-area con­ta­gion, she said Moody’s had for a long time warned that the region’s debt cri­sis had­n’t been resolved. The Cypri­ot bailout–which in a first for the euro zone involved loss­es for the island’s bank depos­i­tors- ‑raised the ques­tion about what could hap­pen in oth­er poten­tial bailouts.

    Euro­pean author­i­ties had said the terms of the bailouts for first Greece and then Cyprus were sup­posed to be “unique cas­es”.

    “The wor­ry is, of course, that there will be anoth­er unique case,” Ms. Lin­dow said.

    The poor mar­kets. Dia­bol­i­cal­ly con­fus­ing mind­sets can be dif­fi­cult to deal with.

    Posted by Pterrafractyl | March 28, 2013, 1:42 pm
  2. Here’s anoth­er “Fam­i­ly” har­bor­ing dark and secre­tive eco­nom­ic par­a­digms and this one has kids too...some­one needs to call Child Pro­tec­tive Ser­vices:

    Analy­sis: Ger­many sees itself as Europe’s grown-up, chil­dren sullen

    By Paul Tay­lor

    BERLIN | Mon Apr 1, 2013 3:37am EDT

    (Reuters) — Buoyed by sol­id finances, roar­ing exports and low unem­ploy­ment, Ger­many increas­ing­ly sees itself as the only grown-up in Europe, respon­si­ble for bring­ing way­ward chil­dren into line to hold the fam­i­ly togeth­er.

    The chil­dren are not enjoy­ing it. Some, such as the Cypri­ots and Greeks and many Ital­ians and Spaniards, are open­ly resent­ful of “Mut­ti” (mum), as Berlin offi­cials pri­vate­ly call Chan­cel­lor Angela Merkel. Oth­ers, such as the French, are sulk­ing.

    The mood among Ger­man politi­cians and offi­cials is one of eco­nom­ic self-con­fi­dence tinged with a sense of parental duty to pro­vide the euro zone with stiff-backed lead­er­ship, even if that makes them unpop­u­lar in Europe.

    “Ger­man pol­i­cy­mak­ers have tak­en to their new found sta­tus with some­thing close to gus­to,” Simon Til­ford, chief econ­o­mist at the Cen­tre for Euro­pean Reform, said in the lat­est edi­tion of the Lon­don-based think-tank’s bul­letin.

    “They rou­tine­ly tell oth­er euro zone coun­tries how to run their economies, cit­ing Ger­many as a mod­el for the cur­ren­cy union as a whole.”

    The view from Berlin, set out by a range of pol­i­cy­mak­ers who spoke on con­di­tion of anonymi­ty, is that Ger­many has a unique respon­si­bil­i­ty for the sur­vival of the sin­gle cur­ren­cy area as its biggest and most dynam­ic econ­o­my.

    The sub­text is that since the Ger­mans are the main bailout con­trib­u­tors and have most to lose in any col­lapse of mon­e­tary union, they must ensure that their part­ners cut their deficits, imple­ment reforms and avoid mis­takes that could sink the euro.

    Ger­man con­fi­dence in the abil­i­ty of the Euro­pean Com­mis­sion and the Euro­pean Cen­tral Bank to hold to a firm course with­out yield­ing to polit­i­cal pres­sure is lim­it­ed.

    Hence Berlin’s insis­tence on involv­ing the Inter­na­tion­al Mon­e­tary Fund in all euro zone finan­cial res­cues and its own will­ing­ness to play bad cop, even if that means Merkel being burned in effi­gy or dressed in Nazi uni­form by pro­test­ers.

    Some Euro­pean part­ners and many econ­o­mists argue that her recipe of a syn­chro­nous fis­cal con­trac­tion across Europe is deep­en­ing reces­sion and rais­ing unem­ploy­ment and could turn the sov­er­eign debt cri­sis into a social and polit­i­cal tsuna­mi.

    “Pro­long­ing aus­ter­i­ty today risks not achiev­ing a reduc­tion in deficits but the cer­tain­ty of mak­ing gov­ern­ments unpop­u­lar so that pop­ulists will swal­low them whole when the time comes,” French Pres­i­dent Fran­cois Hol­lande warned last week.

    “I per­fect­ly accept that Euro­pean coun­tries have to be rig­or­ous, and France first of all. But not aus­ter­i­ty, because stick­ing with aus­ter­i­ty would con­demn Europe not just to reces­sion but to an explo­sion.”

    In Berlin, such com­ments elic­it a rolling of eye­balls. From Merkel on down, Ger­man lead­ers feel the French have not tak­en the mea­sure of the cri­sis fac­ing Europe and their own econ­o­my.

    “There is a lack of will, a lack of aware­ness. What is need­ed is an emer­gency U‑turn,” said a Fran­cophile Ger­man law­mak­er, adding: “There is still no clar­i­ty over their deficit reduc­tion plans.”


    Ger­man lead­ers like to remind vis­i­tors that a decade ago their own coun­try was depict­ed on the cov­er of The Econ­o­mist week­ly as the “sick man of Europe” for its rigid labor mar­ket, inef­fec­tive bureau­cra­cy and low com­pet­i­tive­ness.

    “We are quite a good exam­ple of a suc­cess sto­ry,” says one senior politi­cian who was in oppo­si­tion in 2003 when Social Demo­c­ra­t­ic Chan­cel­lor Ger­hard Schroed­er pushed through a tough over­haul of labor laws and reduc­tion in unem­ploy­ment ben­e­fits.

    Last mon­th’s bipar­ti­san cel­e­bra­tion of Schroed­er’s “Agen­da 2010” pro­gram high­light­ed a broad con­sen­sus that the reforms had trig­gered an exem­plary jobs mir­a­cle, even though many thou­sands in Ger­many now work for as lit­tle as 3 euros an hour.

    What­ev­er the out­come of Sep­tem­ber’s gen­er­al elec­tion, a “grand coali­tion” also exists de fac­to on many pol­i­cy issues between Merkel’s con­ser­v­a­tives and the Social Democ­rats.

    When Ger­man offi­cials are asked what joint lia­bil­i­ty they are will­ing to accept for bor­row­ing or insur­ing euro zone bank deposits in return for stronger cen­tral con­trol over nation­al bud­gets and eco­nom­ic poli­cies, the answer is to point a decade or more down the road with­out mak­ing a spe­cif­ic com­mit­ment.

    “The prob­lem is get­ting reforms in return for the present Ger­man sol­i­dar­i­ty in the cri­sis mech­a­nisms,” one offi­cial said.

    When she con­tem­plates the future of this age­ing con­ti­nent, Merkel’s “reform or die” out­look is shaped by her expe­ri­ence of wit­ness­ing the col­lapse of her native East Ger­many.

    At a mid-March EU sum­mit on eco­nom­ic reforms, she drew the lessons of a slide-show by ECB Pres­i­dent Mario Draghi, show­ing how wages had soared in south­ern states since the launch of the euro in 1999, far out­strip­ping pro­duc­tiv­i­ty gains.

    Merkel said the crash course in macro­eco­nom­ics high­light­ed how the gap had widened with­in the euro zone between coun­tries with cur­rent account sur­plus­es and those with deficits, and was an eye-open­er for many lead­ers.


    Faced with ever more unruly chil­dren, “Mut­ti” may even­tu­al­ly face a hard choice between the breakup of the fam­i­ly and more finan­cial sup­port for the poor­er rel­a­tives.

    Some notes for Child Pro­tec­tive Ser­vices on this case: The par­ent, Mut­ti, insists that she is jus­ti­fied in beat­ing her chil­dren because such a pro­gram of reg­u­lar cor­po­ral pun­ish­ment helped her over­come her own “sick­ness” last decade. We could be look­ing at a his­to­ry of abuse in the fam­i­ly. Mut­ti also appears to be unable to dis­cern the vast dif­fer­ences in the degree of beat­ings she received (it was more like a spank­ing) and the beat­ings she is issu­ing to her cur­rent chil­dren (signs of abuse are seen all over the body and per­ma­nent scar­ring is cer­tain). Mut­ti can­not rec­og­nize that much of the “mis­be­hav­ior” she is beat­ing her chil­dren over is due to stress­es caused by her pri­or beat­ings of the chil­dren. Her attempts to hold the fam­i­ly togeth­er are clear­ly what is break­ing it apart but she has yet to acknowl­edge this real­i­ty. A men­tal health eval­u­a­tion of Mut­ti by Child Pro­tec­tive Ser­vices is rec­om­mend­ed. We may be deal­ing with some form of unad­dressed men­tal sick­ness.

    Posted by Pterrafractyl | April 1, 2013, 9:40 am
  3. This also helps explain the aus­ter­i­ty mind­set: As is gen­er­al­ly the case in the US, if you’re an aus­ter­i­ty skep­tic in the EU these days, the pol­i­cy-mak­ing estab­lish­ment is, by default, skep­ti­cal of you and any­thing you say no mat­ter what:

    The New York Times

    Very Ern­stig Peo­ple
    April 1, 2013, 9:43 am

    Paul Krug­man

    The FT reports on the lone­ly life of an aus­ter­i­ty skep­tic:

    Mr Teul­ings’ CPB let loose with a report in March accus­ing Dutch politi­cians of ignor­ing a con­sen­sus among macro­econ­o­mists that cut­ting deficits does much more eco­nom­ic dam­age than usu­al dur­ing so-called “bal­ance-sheet reces­sions”, like the cur­rent one. Such con­trac­tions are dri­ven by con­sumers and firms try­ing to pay down heavy debt loads, leav­ing gov­ern­ment as the only actor in the econ­o­my still able to spend.

    The Dutch government’s inabil­i­ty to acknowl­edge the dam­age done by aus­ter­i­ty despite mount­ing evi­dence is a case of “cog­ni­tive dis­so­nance”, Mr Teul­ings told the Finan­cial Times. He said per­sist­ing with the pro­posed new deficit cuts, on top of planned aus­ter­i­ty mea­sures amount­ing to 8 per cent of GDP over sev­en years, would hurt con­sumer con­fi­dence.

    “There’s dif­fer­ent evi­dence that all fits [the argu­ment] that the costs of aus­ter­i­ty are cur­rent­ly high­er, because there’s ris­ing unem­ploy­ment, there’s a finan­cial cri­sis and we are close to the zero low­er bound [on inter­est rates],” Mr Teul­ings said. He referred to recent papers by the IMF’s Olivi­er Blan­chard and to work by Lar­ry Sum­mers, Paul de Grauwe and oth­ers that has rekin­dled the debate over the wis­dom of aus­ter­i­ty across the EU.

    Mr Teul­ings is not the only econ­o­mist in the Nether­lands scep­ti­cal of aus­ter­i­ty, but he has been the only one with any pol­i­cy influ­ence. Promi­nent aus­ter­i­ty scep­tics at uni­ver­si­ties and big banks say they have been shut out, not just from gov­ern­ment pol­i­cy-mak­ing bod­ies but from the coun­sels of polit­i­cal par­ties on both right and left.

    “It’s not only the cur­rent gov­ern­ment, basi­cal­ly all the sen­si­ble polit­i­cal par­ties have embraced aus­ter­i­ty,” said Bas Jacobs, a pro­fes­sor at Eras­mus Uni­ver­si­ty and aus­ter­i­ty-scep­tic. That includes the cen­tre-right Lib­er­als and the cen­tre-left Labour par­ty, who form the coali­tion gov­ern­ment, as well as most main­stream oppo­si­tion par­ties.

    Despite writ­ing about all this stuff for years, I’m still amazed not just by the way pol­i­cy mak­ers threw basic macro­eco­nom­ics out the win­dow, but by the absolute una­nim­i­ty of the turn to aus­ter­i­ty. After all, the crit­ics weren’t exact­ly invis­i­ble or inaudi­ble; how could every­one seri­ous be so sure that promi­nent macro­econ­o­mists were all wrong, and bureau­crats with no pre­dic­tive track record were right?

    Yelling “the Emper­or has no clothes” does lit­tle good when you’re sur­round­ed by the blind, deaf, and dumb.

    Posted by Pterrafractyl | April 1, 2013, 10:06 am
  4. The Bun­des­bank recent­ly put out a study pur­port­ing to show that Ger­mans and Aus­tri­ans were much poor­er, on aver­age, than their Span­ish and Ital­ian coun­ter­parts. Classy:

    Finan­cial Times
    March 22, 2013 5:13 pm
    Poor Ger­mans tire of bail­ing out euro­zone

    By James Wil­son in Frank­furt

    Ger­mans have nev­er warmed to the idea of using their finan­cial mus­cle to bail out strug­gling euro­zone neigh­bours. Per­haps for good rea­son. A cen­tral bank study shows most Ger­mans are worse off than those in some of the economies that have stoked the cri­sis.

    The typ­i­cal Ger­man house­hold is three times less wealthy than its Span­ish or Ital­ian coun­ter­part, accord­ing to a Bun­des­bank study of per­son­al wealth that was pub­lished this week. Where­as the medi­an Span­ish house­hold has net wealth of €178,000, the equiv­a­lent in Ger­many is €51,000.

    The find­ings con­trast sharply with oth­er aspects of euro­zone eco­nom­ic per­for­mance, with Germany’s aver­age gross domes­tic prod­uct per head almost a quar­ter high­er than Spain’s. Germany’s unem­ploy­ment rate is close to record lows at 5.3 per cent while Spain’s has soared above 26 per cent.
    Germany’s rel­a­tive­ly low lev­el of home own­er­ship is one of the prin­ci­pal rea­sons sug­gest­ed for the wealth dis­par­i­ty.

    The study – released as the bank­ing cri­sis in Cyprus reawak­ened fears of a rup­ture in the euro­zone – has prompt­ed online com­ments show­ing the hos­til­i­ty felt by some Ger­mans, who feel they are being asked to pay for the sins of oth­ers.

    “It gives the word cri­sis a whole new mean­ing. Has Ms Merkel seen this?” com­ment­ed one read­er on mag­a­zine Der Spiegel’s web­site.

    Anoth­er said: “South­ern Euro­peans have been get­ting rich for years at Germany’s expense.”

    The aver­age wealth of Ger­mans was behind that of the French and Aus­tri­ans, the oth­er coun­tries includ­ed in the com­par­i­son used by the cen­tral bank.


    Posted by Pterrafractyl | April 4, 2013, 7:08 am
  5. With Ger­many’s elec­tion sea­son heat­ing up, it worth keep­ing in mind that Merkel got extreme­ly lucky when it comes to her main SPD oppo­nent. Not only is Peer Stein­bruck Merkel’s own for­mer Finance Min­is­ter he’s also appar­ent­ly a gaffe-prone with an out-of-touch rich-guy flair. Yep, Merkel it run­ning against the SPD’s ver­sion of Mitt Rom­ney. Europe is so screwed. Peer­hic Vic­to­ry here we come:

    Spiegel Online
    Ama­teur Hour at the SPD: Merkel Chal­lenger Stein­brück Fails to Find His Feet
    Ger­many’s Social Democ­rats had hoped that for­mer Finance Min­is­ter Peer Stein­brück could top­ple Chan­cel­lor Angela Merkel in this year’s elec­tions. But his cam­paign has thus far been char­ac­ter­ized by a series of dam­ag­ing blun­ders. Sup­port from with­in his own par­ty is begin­ning to crum­ble. By SPIEGEL Staff

    Jan­u­ary 08, 2013 – 06:11 PM

    He does­n’t stride up to the lectern. In fact, he does­n’t look at it at all, shun­ning it as though it were the ene­my. Peer Stein­brück sticks one hand into his trouser pock­et, shifts his weight back and forth from his left to his right foot, and says: “If I stood behind it, I might make a remark that I would have to take back after­wards.”

    It’s Fri­day evening, and he is stand­ing in a con­cert hall in the north­ern Ger­man town of Emden, where he is set to give a stump speech ahead of the Jan. 20 state elec­tions in Low­er Sax­ony. The audi­ence laughs at his remark, know­ing full well what he means: Stein­brück has devel­oped a rep­u­ta­tion for putting his foot in his mouth. This time, though, his speech came off with­out any mishaps.

    These days, that qual­i­fies as news. Once Chan­cel­lor Angela Merkel’s respect­ed finance min­is­ter in the dark days of the cri­sis, he has since become the Social Democ­rats’ can­di­date to dis­lodge Merkel from the Chan­cellery in elec­tions this autumn.

    “He can do it,” for­mer Chan­cel­lor Hel­mut Schmidt said in Octo­ber 2011, a quote SPIEGEL used on its cov­er page at the time. But now one word in that sen­tence has changed, from “can” to “can’t.” It’s become a real pos­si­bil­i­ty that per­haps the SPD made a mis­take when it select­ed Stein­brück to car­ry its torch.

    Rarely has a can­di­date got­ten off to such a bumpy start, and rarely has a can­di­date been so con­tro­ver­sial with­in his own ranks as Stein­brück. On the Sun­day before last, he man­aged to make two sig­nif­i­cant gaffes in one sin­gle inter­view with the Sun­day paper Frank­furter All­ge­meine Son­ntagszeitung. First, he said that he found the chan­cel­lor’s salary too low, thus cre­at­ing the impres­sion that he is hop­ing to improve his own future income. Sec­ond, he claimed that cur­rent Chan­cel­lor Angela Merkel has a “female bonus,” even though many women jus­ti­fi­ably assume that they are in fact at a dis­ad­van­tage in pro­fes­sion­al life.

    It was not the first slip-up, and once again SPD mem­bers were left shak­ing their heads in dis­be­lief, as were politi­cians from the Green Par­ty, the SPD’s favored coali­tion part­ner. Mean­while, their polit­i­cal oppo­nents were hap­pi­ly exchang­ing high-fives.

    This week, Stein­brück has found him­self in the head­lines again. Accord­ing to the busi­ness dai­ly Han­dels­blatt, Stein­brück, as a mem­ber of ThyssenK­rup­p’s super­vi­so­ry board, offered last Jan­u­ary to pro­vide polit­i­cal sup­port should the com­pa­ny launch an ini­tia­tive aimed at achiev­ing low­er elec­tric­i­ty prices for indus­try. Stein­brück was a mem­ber of the board from Jan­u­ary 2010 until the end of 2012 and was also a mem­ber of Ger­man par­lia­ment dur­ing that time.

    Days of Peace Are Over

    The SPD, not sur­pris­ing­ly, is begin­ning to won­der whether Stein­brück is the right can­di­date for the chan­cel­lor­ship. It starts with Chair­man Sig­mar Gabriel, who was mea­sured in his com­ments on Stein­brück in a SPIEGEL inter­view. But in the can­di­date’s own camp, aides have long noticed that what Gabriel is say­ing off the record isn’t near­ly as con­ge­nial.


    Bizarre Behav­ior

    After the inter­view in the Frank­furter All­ge­meine, hard­ly any top politi­cian was will­ing to stand up for Stein­brück, with only Gen­er­al Sec­re­tary Andrea Nahles assum­ing the role of pub­lic defend­er. Even Stein­brück­’s sup­port­ers are speech­less about his poor judg­ment in mak­ing such remarks pub­licly, espe­cial­ly at a time like the Christ­mas hol­i­days, when there typ­i­cal­ly isn’t much else in the news. “The delib­er­ate traps in this inter­view should have been rec­og­niz­able,” says Rolf Mützenich, the for­eign-pol­i­cy spokesman of the SPD par­lia­men­tary group.

    The left wing of the par­ty is espe­cial­ly dis­ap­point­ed. It has long been irri­tat­ed by the can­di­date’s bizarre behav­ior but has said noth­ing. They are also crit­i­cal of Stein­brück­’s seem­ing unwill­ing­ness to fur­ther pol­i­cy demands that are cen­tral to the SPD’s left, a con­cern that many had even when the for­mer finance min­is­ter was cho­sen to rep­re­sent the par­ty. After the inter­view on the chan­cel­lor’s salary was pub­lished, senior left-wing lead­ers called each oth­er to dis­cuss their frus­tra­tions — and they decid­ed to break their silence and to pub­licly crit­i­cize Stein­brück.

    The group has called a meet­ing for the begin­ning of Feb­ru­ary in Berlin to con­sid­er Stein­brück­’s progress. “I expect that the SPD’s mes­sage become clear on issues such as the labor mar­ket, pen­sions and on climb­ing rents,” says Jan Stöss, SPD head in the city-state of Berlin.

    Stein­brück had­n’t expect­ed to be Chan­cel­lor Angela Merkel’s chal­lenger. After he and the SPD were vot­ed out of gov­ern­ment in the fall of 2009, he stopped lead­ing a seri­ous polit­i­cal life. He was still a mem­ber of the Ger­man par­lia­ment, the Bun­destag, but he seemed to devote more of his ener­gy to writ­ing a book and giv­ing speech­es, for which he was paid hand­some­ly. He was­n’t liv­ing the way a high-rank­ing rep­re­sen­ta­tive of the SPD should live, but rather the way pri­vate cit­i­zen Stein­brück prefers to live. Even after receiv­ing Schmidt’s endorse­ment, he did­n’t shape his life to con­form to his ambi­tions. He was now a gam­bler who had cho­sen a high-risk approach.

    Yet when he became the SPD’s can­di­date, he was sud­den­ly the cen­ter of atten­tion, and soon his sec­ondary sources of income became an issue. He had col­lect­ed €1.25 mil­lion ($1.64 mil­lion) in speak­ing fees between Novem­ber 2009 and July 2012. One fee seemed par­tic­u­lar­ly objec­tion­able: €25,000, for a rough­ly one-hour speech, paid by the pub­lic util­i­ty in the cash-strapped city of Bochum in the indus­tri­al Ruhr region.

    Stein­brück even­tu­al­ly decid­ed to utter a few words of regret about the Bochum case. Oth­er­wise, though, he insist­ed that every­thing had been per­fect­ly legal, and then pro­ceed­ed to accuse the media of hyp­ing the issue. He seemed not to under­stand that the SPD still wants to rep­re­sent the work­ing class and that some of its vot­ers might find it unfair that men like Stein­brück are paid a lot of mon­ey for lit­tle work, while they are paid lit­tle mon­ey for a lot of work. A few explana­to­ry remarks cer­tain­ly would have helped, but Stein­brück brusque­ly reject­ed such demands as an impo­si­tion. It had all been com­plete­ly above reproach, and that was that, he said.

    But that was­n’t that. In ear­ly Decem­ber, he cheer­ful­ly said: “I would­n’t buy a bot­tle of Pinot Gri­gio for only €5.” The con­nois­seur with exquis­ite taste isn’t exact­ly a stan­dard role in the world of Social Democ­rats.

    In the wake of this string of gaffes, it seemed odd for Stein­brück to be telling the Frank­furter All­ge­meine Son­ntagszeitung, on Dec. 30, that the Ger­man chan­cel­lor’s salary is too low, as if he were mak­ing sure that he would nev­er have to drink a bot­tle of Pinot Gri­gio for less than €20. Indeed, in the first weeks of his can­di­da­cy, Stein­brück has giv­en the impres­sion that mon­ey means a great deal to him — and that he has but lit­tle sym­pa­thy for the con­cerns of peo­ple with low incomes.

    In short, the sit­u­a­tion could hard­ly be worse after three months. How does the SPD expect to win an elec­tion with a can­di­date who alien­ates a large share of his par­ty, con­sis­tent­ly trips over his tongue and is engaged in a sub­tle feud with the par­ty chair­man?


    One of the pre­vail­ing assump­tions in the euro­zone cri­sis is that Berlin’s insis­tence on aus­ter­i­ty and puni­tive “bailout” terms will sub­side once the fall elec­tions in Ger­many are out of the way. It will be inter­est­ing to see if that pre­dic­tion is true fol­low­ing a right-wing elec­toral sweep by the most pro-aus­ter­i­ty par­ties:

    the Local.de
    Merkel’s coali­tion hits win­ning poll posi­tion
    Chan­cel­lor Angela Merkel’s coali­tion gov­ern­ment is doing bet­ter in polls than it has done for more than three years, with less than six months to go before the gen­er­al elec­tion, a sur­vey pub­lished on Wednes­day showed.
    qPub­lished: 10 Apr 13 14:23 CET

    If a vote were held now, her con­ser­v­a­tive Chris­t­ian Demo­c­ra­t­ic Union (CDU) and its junior part­ner, the pro-busi­ness Free Democ­rats (FDP), would win a clear gov­ern­ing major­i­ty, the For­sa insti­tute poll sug­gest­ed.

    The prospect of the coali­tion remain­ing in office has strength­ened main­ly because of the weak­ness of the cen­tre-left Social Demo­c­ra­t­ic Union (SPD), whose chan­cel­lor can­di­date Peer Stein­brück has had a poor cam­paign start, hob­bled by a series of gaffes and mis­steps.

    Asked which can­di­date they pre­ferred as chan­cel­lor, 57 per­cent of respon­dents opt­ed for Merkel against just 19 per­cent for Stein­brück.

    Under Merkel, the cham­pi­on of tough reforms and aus­ter­i­ty dur­ing the euro­zone’s debt woes, “peo­ple have the feel­ing that, in times of cri­sis, they are in safe hands with her,” said For­sa insti­tute chief Man­fred Güll­ner.

    “If the SPD had a charis­mat­ic chan­cel­lor can­di­date, then Merkel would also be viewed in a more crit­i­cal light,” he told the Stern news week­ly, which com­mis­sioned the week­ly poll along with RTL tele­vi­sion.

    The lat­est embar­rass­ment for the SPD came this week with the launch of their elec­tion slo­gan Das Wir entschei­det “The ‘We’ decides” which, it was revealed on Wednes­day, had already been used for years by a tem­po­rary employ­ment agency.

    “We had the slo­gan before the SPD — since 2007 in face,” Christophe Cren, Ger­man head of the firm Propart­ner, told Der Spiegel mag­a­zine.


    It was the first For­sa poll since elec­tions in late 2009 that indi­cat­ed a clear rul­ing major­i­ty for Merkel’s gov­ern­ment over the com­bined sup­port for the three main oppo­si­tion par­ties.


    Posted by Pterrafractyl | April 10, 2013, 7:16 pm
  6. Paul Krug­man makes an impor­tant point in his lat­est col­umn that’s crit­i­cal when try­ing to under­stand the forces at work in the euro­zone cri­sis: Even though the euro­zone isn’t tech­ni­cal­ly on the gold stan­dard, it’s effec­tive­ly run as if it that’s the case. Aus­ter­i­ty poli­cies mim­ic the kind of defla­tion­ary traps asso­ci­at­ed with gold stan­dards: fis­cal or mon­e­tary stim­u­lus is sim­ply much less of an option when a gold stan­dard is in place OR when there’s a “troi­ka” that’s man­dat­ing aus­ter­i­ty. And it does­n’t real­ly mat­ter if a gold stan­dard or aus­ter­i­ty ends up ruin­ing the econ­o­my because the ben­e­fits for impos­ing a gold stan­dard or aus­ter­i­ty aren’t real­ly about economic/financial ben­e­fits. They’re about psy­cho­log­i­cal benefits...people will feel bet­ter about the over­all “sys­tem” if they con­fi­dent that no one is get­ting any “free money”...especially the “moochers”. Con­fi­dence that euro­zone lead­ers (in Berlin) will impose pain on “moocher” nations is intend­ed to be sold as if it’s good as gold. And aus­ter­i­ty is, indeed, effec­tive­ly as good as a gold stan­dard when it comes to being as bad as a gold stan­dard can be for the econ­o­my. But that does­n’t seem to mat­ter. Gold is shiny and peo­ple just like shiny objects. Sim­i­lar­ly, aus­ter­i­ty is pain, and a large swathe of human­i­ty just seems to enjoy inflict­ing pain on each oth­er. Gold­en aus­ter­i­ty, it seems, is here to stay:

    The New York Times
    Lust for Gold
    Pub­lished: April 11, 2013

    News flash: Recent declines in the price of gold, which is off about 17 per­cent from its peak, show that this price can go down as well as up. You may con­sid­er this an obvi­ous point, but, as an arti­cle in The Times on Thurs­day reports, it has come as a rude shock to many small gold investors, who imag­ined that they were buy­ing the safest of all assets.


    So the finan­cial cri­sis of 2008 brought a surge in gold fever (although that surge has abat­ed a bit since 2011). But why?

    After all, his­tor­i­cal­ly, gold has been any­thing but a safe invest­ment. Some­times it yields big gains, as it did in the late 1970s and again between 2001 and 2011. But that 1970s run-up was fol­lowed by an epic plunge, with the real val­ue of gold falling by more than two-thirds.

    Mean­while, the mod­ern world’s clos­est equiv­a­lent to the clas­si­cal gold stan­dard is the euro, which puts Euro­pean coun­tries back under more or less the same con­straints they faced when gold ruled. It’s true that the Euro­pean Cen­tral Bank can print mon­ey if it choos­es to, but indi­vid­ual coun­tries, like nations on the gold stan­dard, can’t. And who would hold up these coun­tries’ recent expe­ri­ence as an exam­ple of some­thing we’d like to emu­late?

    So how can we ratio­nal­ize the mod­ern gold­bug posi­tion? Basi­cal­ly, it depends on the claim that run­away infla­tion is just around the cor­ner.

    Why have so many peo­ple found this claim per­sua­sive? John May­nard Keynes famous­ly dis­missed the gold stan­dard as a “bar­barous rel­ic,” not­ing the absur­di­ty of yok­ing the for­tunes of a mod­ern indus­tri­al soci­ety to the sup­ply of a dec­o­ra­tive met­al. But he also acknowl­edged that “gold has become part of the appa­ra­tus of con­ser­vatism and is one of the mat­ters which we can­not expect to see han­dled with­out prej­u­dice.”

    And so it remains to this day. Con­ser­v­a­tive-mind­ed peo­ple tend to sup­port a gold stan­dard — and to buy gold — because they’re very eas­i­ly per­suad­ed that “fiat mon­ey,” mon­ey cre­at­ed on a dis­cre­tionary basis in an attempt to sta­bi­lize the econ­o­my, is real­ly just part of the larg­er plot to take away their hard-earned wealth and give it to you-know-who.

    But the run­away infla­tion that was sup­posed to fol­low reck­less mon­ey-print­ing — infla­tion that the usu­al sus­pects have been declar­ing immi­nent for four years and more — keeps not hap­pen­ing. For a while, ris­ing gold prices helped cre­ate some cred­i­bil­i­ty for the gold­bugs even as their pre­dic­tions about every­thing else proved wrong, but now gold as an invest­ment has turned sour, too. So will we be see­ing promi­nent gold­bugs change their views, or at least lose a lot of their fol­low­ers?

    I wouldn’t bet on it. In mod­ern Amer­i­ca, as I sug­gest­ed at the begin­ning, every­thing is polit­i­cal; and gold­bug­gism, which fits so per­fect­ly with com­mon polit­i­cal prej­u­dices, will prob­a­bly con­tin­ue to flour­ish no mat­ter how wrong it proves.

    Posted by Pterrafractyl | April 11, 2013, 8:43 pm
  7. One of Merkel’s CSU allies recent­ly said that the Cyprus bailout showed what could be accom­plished when the remain­ing triple‑A rat­ing coun­tries all band togeth­er in the face of “prob­lem chil­dren” like France and Italy. Unfor­tu­nate­ly, this prob­a­bly isn’t the kind of rhetoric that will help forge a healthy and viable vision of Euro­pean “sol­i­dar­i­ty” as the con­ti­nent con­tin­ues to forge a com­mon future. The sen­ti­ments were cer­tain­ly an expres­sion of sol­i­dar­i­ty, just not the help­ful kind:

    Top-rat­ed euro states must band togeth­er: Merkel ally

    BERLIN | Tue Apr 2, 2013 9:52am BST

    (Reuters) — A lead­ing mem­ber of Chan­cel­lor Angela Merkel’s Bavar­i­an sis­ter par­ty has urged euro zone states with triple‑A cred­it rat­ings to band togeth­er to restore con­fi­dence in the cur­ren­cy bloc in the face of what he called “prob­lem chil­dren” like France and Italy.

    Hans Michel­bach of the Chris­t­ian Social Union (CSU) told the Han­dels­blatt news­pa­per that deep­er coop­er­a­tion between Ger­many, the Nether­lands and Fin­land on the recent bailout agree­ment for Cyprus had shown what the euro area’s top-rat­ed coun­tries could accom­plish when they stuck togeth­er.

    “This should set an exam­ple, it should spur deep­er coop­er­a­tion between the top-rat­ed states in the com­mu­ni­ty. That could help strength­en con­fi­dence in the com­mon cur­ren­cy among cit­i­zens and investors,” said Michel­bach, with­out pro­vid­ing details on what sort of clos­er ties these coun­tries should pur­sue.

    Lux­em­bourg, which depends heav­i­ly on its finan­cial indus­try, is the fourth euro mem­ber that is rat­ed triple‑A by the big rat­ings agen­cies. Although it had deep reser­va­tions about the Cyprus bailout because it effec­tive­ly crip­pled the island’s banks, Michel­bach urged it to join in with its top-rat­ed brethren in fight­ing for sta­bil­i­ty-ori­ent­ed poli­cies in Europe.

    He called France an impor­tant part­ner for Ger­many, but accused its gov­ern­ment of engag­ing in “social­ist exper­i­ments” that were hurt­ing the coun­try’s image. If Paris did not change course, Michel­bach said, it could turn into a “seri­ous prob­lem” for the euro zone.

    “We need strong part­ners to pur­sue poli­cies that ensure sta­bil­i­ty,” said Michel­bach, a mem­ber of the Bun­destag low­er house of par­lia­men­t’s finance com­mit­tee, adding that Italy was in urgent need of a sta­ble, reform-mind­ed gov­ern­ment.

    With enough selec­tive sol­i­dar­i­ty, aus­ter­i­ty = sta­bil­i­ty. Appar­ent­ly.

    Posted by Pterrafractyl | April 14, 2013, 10:14 pm
  8. Most “lost decades” aren’t planned in advance:

    Updat­ed April 17, 2013, 1:50 p.m. ET

    Wei­d­mann: Europe Recov­ery Could Take Decade


    FRANKFURT—Germany’s top cen­tral banker warned that Europe’s debt cri­sis would take as much as a decade to over­come, dis­miss­ing the view expressed by some polit­i­cal lead­ers that the worst of the cri­sis is over.

    In an inter­view with The Wall Street Jour­nal, Bun­des­bank Pres­i­dent Jens Wei­d­mann sig­naled that the Euro­pean Cen­tral Bank could reduce inter­est rates if incom­ing eco­nom­ic and infla­tion data sug­gest it is war­rant­ed. But he warned that such a move would­n’t turn around the euro bloc’s eco­nom­ic for­tunes, instead pin­ning respon­si­bil­i­ty on elect­ed lead­ers to find ways to kick-start growth and chan­nel mon­ey to small busi­ness­es.

    Mr. Wei­d­mann praised the agree­ment between Cyprus and its inter­na­tion­al lenders for a €10 bil­lion ($13.18 bil­lion) bailout that includes steep loss­es for large depos­i­tors of Cypri­ot banks. Though the deal isn’t a blue­print for oth­ers, it estab­lished the prin­ci­ple of a “peck­ing order” for stake­hold­ers of banks to bear the costs of their invest­ment deci­sions, he said.

    “Over­com­ing the cri­sis and the cri­sis effects will remain a chal­lenge over the next decade,” he said, con­trast­ing recent com­ments from Euro­pean Com­mis­sion Pres­i­dent José Manuel Bar­roso that the worst of Europe’s cri­sis is over.

    “The calm that we are cur­rent­ly see­ing might be treach­er­ous” if it delays over­hauls at the nation­al and Euro­pean lev­el, Mr. Wei­d­mann said. There can be no quick fix­es from the ECB either, he said.


    Many ana­lysts expect that with infla­tion below the ECB’s 2% tar­get, at 1.7%, and expect­ed to fall fur­ther, an inter­est-rate cut is like­ly in May or June. Mr. Wei­d­mann did­n’t rule out the prospect, but cast doubt that it would do much good.

    “We might adjust in response to new infor­ma­tion,” how­ev­er, “I don’t think that the mon­e­tary-pol­i­cy stance is the key issue,” he said.

    LOL, so Wei­d­mann rules out the util­i­ty of any fur­ther mon­e­tary action to help the ail­ing euro­zone economies, instead insist­ing that gov­ern­ments take the lead in stim­u­lat­ing growth. But the only growth stim­u­lus he approves of is fur­ther aus­ter­i­ty. Yeah, a decade might be opti­mistic:

    Merkel Says Aus­ter­i­ty Requires Sac­ri­fices for Growth
    By Patrick Don­ahue — Apr 17, 2013 3:27 AM CT

    (Cor­rects trans­la­tion of “vic­tims” to “sac­ri­fices” in head­line, first and third para­graphs of sto­ry that first appeared yes­ter­day.)

    Chan­cel­lor Angela Merkel said that aus­ter­i­ty in the euro area will require sac­ri­fices as Euro­pean lead­ers strug­gle to resolve the debt cri­sis, though the pain will be worth it to regain sus­tain­able eco­nom­ic growth.

    The Ger­man leader dis­missed the notion that increas­ing debt is nec­es­sary to gen­er­ate growth. She laud­ed Euro­pean lead­ers for cut­ting bud­get deficits in half dur­ing the years of cri­sis, cit­ing her cham­pi­oning of the bloc’s fis­cal pact.

    “We know that there will have to be sac­ri­fices in many coun­tries,” Merkel told a forestry con­fer­ence today in Berlin. “But I believe that in the long term we’ll have to have a growth strat­e­gy with­out always hav­ing to pile on debt.”

    The Ger­man-led strat­e­gy of scal­ing back deficits as a response to the three-year-old debt cri­sis has come under crit­i­cism from oth­er parts of the world because of reces­sion and record unem­ploy­ment in the 17-nation euro bloc.


    Merkel has insist­ed that any recov­ery must be pur­sued through con­sol­i­dat­ing bud­gets to win back mar­ket con­fi­dence and pro­vide a sus­tain­able basis for future growth.

    “I’m often sur­prised that as a mat­ter of course it’s often said in many parts of the world — even after the finan­cial cri­sis of 2008, 2009 — that the main thing is that we’re grow­ing again, at what­ev­er cost,” Merkel said today. “The pil­ing up of debt is often made into a type of oblig­a­tion to serve the prin­ci­ple of growth.”

    “All of that is false,” she said. “It’s not sus­tain­able in the long term.”

    Posted by Pterrafractyl | April 17, 2013, 2:16 pm
  9. Ha! So we have Euro­pean Com­mis­sion Pres­i­dent Jose Manuel Bar­roso claim­ing that we know that aus­ter­i­ty was the cor­rect pol­i­cy, but the time has come to retire aus­ter­i­ty any­ways because it needs pop­u­lar sup­port to real­ly work and for some strange rea­son the pro­les can’t accept aus­ter­i­ty’s grace grace­ful­ly. After you take ten steps back, maybe it’s time to stum­ble for­ward for a bit:

    Spiegel Online
    Time for Growth: Aus­ter­i­ty Has ‘Reached its Lim­its,’ Bar­roso Says
    April 23, 2013 – 02:01 PM

    Euro­pean Com­mis­sion Pres­i­dent José Manuel Bar­roso has said that Europe has reached the polit­i­cal lim­its of its aus­ter­i­ty mea­sures, sug­gest­ing that cri­sis coun­tries should get more time to con­sol­i­date their bud­gets. But Ger­many warned against chang­ing course on Tues­day.

    Strik­ing state­ments were made by one of Europe’s most pow­er­ful men on Mon­day night, when Euro­pean Com­mis­sion Pres­i­dent José Manuel Bar­roso said the strict aus­ter­i­ty mea­sures thus far imposed on the EU’s belea­guered economies may have reached their polit­i­cal lim­its.

    Although this pol­i­cy is “fun­da­men­tal­ly right,” it has nev­er­the­less “reached its lim­its,” he told a con­fer­ence in Brus­sels. “A pol­i­cy, to be suc­cess­ful, not only has to be prop­er­ly designed, it has to have the min­i­mum of polit­i­cal and social sup­port,” he added.


    On Tues­day, Ger­man For­eign Min­is­ter Gui­do West­er­welle main­tained Ger­many’s posi­tion, warn­ing against a move away from aus­ter­i­ty. “We are con­vinced that if we give up on the poli­cies of bud­getary con­sol­i­da­tion, if we fall back into the old poli­cies of rack­ing up debts, then we will cement mass unem­ploy­ment for many years in Europe,” he said in Brus­sels. Growth can­not be pur­chased with new debts, he added, say­ing that “growth and con­sol­i­da­tion poli­cies are two sides of the same coin.”

    At the same time, promi­nant aus­ter­i­ty-advo­cat­ing econ­o­mists are declar­ing that we don’t know that aus­ter­i­ty is the best approach any­more because economies have behaved so dif­fer­ent­ly from what the aus­ter­i­ty-advo­cates expect­ed that we should ques­tion what, if any­thing, we know about macro­eco­nom­ics at all. Lol, yeah, knowl­edge sure is a mys­tery.

    Posted by Pterrafractyl | April 23, 2013, 10:08 am
  10. As we’re learn­ing, they’re not exact­ly “oblig­a­tions”. More like help­ful sug­ges­tions:

    Unit­ed Nations: Finan­cial cri­sis caus­ing Greece to fall behind on human rights oblig­a­tions

    Pub­lished April 26, 2013

    Asso­ci­at­ed Press

    ATHENS, Greece – A senior Unit­ed Nations inves­ti­ga­tor says Greece is falling behind on its human rights oblig­a­tions and strong­ly crit­i­cized the “exces­sive­ly rigid” demands of the cri­sis-hit coun­try’s bailout pro­gram.

    U.N. inde­pen­dent expert Cephas Lumi­na said Fri­day that a surge in unem­ploy­ment and axed ben­e­fits had left a grow­ing num­ber of Greeks with­out health insur­ance and about 10 per­cent of the pop­u­la­tion liv­ing in “extreme pover­ty.”

    He said some 470,000 immi­grants with­out prop­er res­i­dence per­mits were among the most vul­ner­a­ble to labor exploita­tion and oth­er abus­es.

    He urged Greece’s bailout lenders — euro­zone coun­tries and the Inter­na­tion­al Mon­e­tary Fund — to include human rights con­sid­er­a­tions in Greece’s aus­ter­i­ty pro­grams.

    Ger­many’s Finance Min­is­ter also had some sug­ges­tions to EU lead­ers. Not all sug­ges­tions are help­ful:

    Ger­man finance min­is­ter hits out at Bar­roso over aus­ter­i­ty remarks

    BERLIN | Thu Apr 25, 2013 5:36pm EDT

    (Reuters) — Ger­man Finance Min­is­ter Wolf­gang Schaeu­ble lashed out at Euro­pean Com­mis­sion Pres­i­dent Jose Manuel Bar­roso on Thurs­day, telling law­mak­ers the euro zone’s woes had noth­ing to do with strict bud­get rules and “some­body should tell Bar­roso that”.

    Bar­roso said this week aus­ter­i­ty had reached the nat­ur­al lim­its of pop­u­lar sup­port, fan­ning a bit­ter debate over whether law­mak­ers should shift their focus from cost-cut­ting to stim­u­lus which has pit­ted Ger­many against many euro zone peers.

    Chan­cel­lor Angela Merkel said on Thurs­day Ger­many would con­tin­ue to work towards bal­anced bud­gets and she reject­ed French Finance Min­is­ter Pierre Moscovi­ci’s accu­sa­tion that Ger­many was too heav­i­ly focused on sav­ing.

    Posted by Pterrafractyl | April 26, 2013, 7:07 am
  11. We’re all in this togeth­er! sep­a­rate­ly!

    What did he mean by that?
    By Mike Pea­cock
    May 8, 2013

    “What did he mean by that?” 19th cen­tu­ry Aus­tri­an diplo­mat Met­ter­nich is said to have asked of Tal­leyrand when he heard the French states­man had died. The euro zone cri­sis, and the response of its lead­ers, has often required the same ques­tion to be asked.

    There were some care­ful­ly cho­sen words from Ger­many yes­ter­day with Finance Min­is­ter Wolf­gang Schaeu­ble say­ing that ele­ments of a bank­ing union would have to be pur­sued with­out lengthy and ardu­ous treaty change, some­thing he’d pre­vi­ous­ly said would be nec­es­sary.

    Now you could view this as a sign of soft­en­ing oppo­si­tion, cer­tain­ly the French read it that way. How­ev­er, the sub­text could just as eas­i­ly be that because treaty change takes too long, Berlin will pur­sue only those ele­ments of bank­ing union that don’t require it – i.e. bloc-wide reg­u­la­tion yes, but for­get about a bank res­o­lu­tion mech­a­nism let alone a joint deposit guar­an­tee. That would be a pale imi­ta­tion of what was pro­posed near­ly a year ago and wouldn’t pro­vide the sort of struc­ture that would fos­ter con­fi­dence that a future finan­cial cri­sis could be con­tained.

    Fur­ther­more, what did Schaeu­ble mean by an inter­gov­ern­men­tal or even bilat­er­al approach where nec­es­sary? That doesn’t sound like an over­ar­ch­ing euro zone bank­ing struc­ture at all.Ger­man dai­ly Sud­deutsche Zeitung reports, as we have pre­vi­ous­ly, that con­sid­er­a­tion is being giv­en to giv­ing the Euro­pean Com­mis­sion or the ESM bailout fund the pow­er to wind down strick­en banks rather than set­ting up a sep­a­rate author­i­ty. That would also skirt the need for treaty change.

    The bot­tom line is that Berlin is not keen on the most pro­found planks of a bank­ing union – a euro zone wide deposit guar­an­tee and a bank res­o­lu­tion struc­ture for the bloc – since the lia­bil­i­ties would be like­ly to fall dis­pro­por­tion­ate­ly on Ger­many. As ECB chief Mario Draghi keeps say­ing, this cri­sis won’t be over until a bank­ing union is estab­lished and it should be done as a mat­ter of urgency. This is sup­posed to be sort­ed at an EU sum­mit in June which both Schaeu­ble and his French coun­ter­part, Pierre Moscovi­ci, said yes­ter­day remained the aim. But it seems they are either a very long way off or have agreed to set­tle for the low­est com­mon denom­i­na­tor.


    The pro­posed bank­ing union has always looked rather omi­nous sim­ply because it’s always had a “to-be-decid­ed” struc­ture cou­pled with a man­date that any joint deposit insur­ance regime would come at the price of set­ting up an EU-wide nation­al bud­get over­sight regime. And now that the “fis­cal com­pact” treaty that pro­vides the demand­ed “over­sight” (loss of sov­er­eign­ty) has been put into place we’re find­ing that the “joint deposit lia­bil­i­ties” is no longer desired by Berlin. So the EU is get­ting the dam­ag­ing “fis­cal com­pact” treaty that’s going to ensure mind­less aus­ter­i­ty for years to come but with­out any sort of shared risk via a joint deposit regime. Even though a joint deposit regime would prob­a­bly do more do sta­bi­lize the EU finan­cial mar­kets than any­thing else at this point. I guess the cri­sis must be over.

    Posted by Pterrafractyl | May 13, 2013, 7:40 am
  12. Well look at that, the US deficit is ‘mys­te­ri­ous­ly’ shrink­ing on its own despite the lack of any mas­sive ‘Grand-Bar­gain’ austerity/privatization/deregulation scheme: Hooray! This is a com­plete dis­as­ter! The oppor­tu­ni­ty costs alone will be enor­mous:

    WSJ Mon­ey
    En Garde!
    As head of IMF, Chris­tine Lagarde must be ready for any finan­cial cri­sis. What wor­ries her now?

    May 17, 2013, 10:00 a.m. ET


    IT IS NO EASY JOB, being the grand nego­tia­tor at almost every finan­cial cri­sis in the world in these trou­bled times. But as head of the Inter­na­tion­al Mon­e­tary Fund, or IMF, Chris­tine Lagarde has played a role in deal­ing with every­thing from the Cyprus bank scare to Chi­nese exchange rates.

    A lawyer by train­ing, she came to the post after a six-year stint in the French cab­i­net. She is described as warm, informal—and high­ly dis­ci­plined. She was, after all, a mem­ber of the French nation­al syn­chro­nized swim team in her youth, and still hits the gym almost every day.

    Rumors per­sist that Lagarde may some­day return to France and run for pres­i­dent. But these days, her focus is on repair­ing bat­tered mar­kets and an ail­ing glob­al econ­o­my, a task that requires diplo­ma­cy and sta­mi­na. She recent­ly sat down in her Wash­ing­ton, D.C., office with David Wes­sel, the Jour­nal’s eco­nom­ics edi­tor, to talk about the state of the world. Her edit­ed remarks fol­low:

    Q: We’ve come through a dev­as­tat­ing finan­cial cri­sis. Are we out of this?

    A: We avoid­ed a col­lapse in 2012. We have to guard against a relapse, and we cer­tain­ly do not have the lux­u­ry of relax­ing. I think 2013 is going to be a crit­i­cal year.

    Q: In what sense?

    A: A lot of the advanced economies’ lead­ers, thinkers, deci­sion-mak­ers are tired with cri­sis man­age­ment. They want out of it. In a way, that’s good; but there is still work to be done. About 80 per­cent of the deci­sions have been made, for instance, in the strength­en­ing of the Euro­pean Union—a lot of the finan­cial sec­tor is bet­ter gov­erned, bet­ter cap­i­tal­ized, bet­ter super­vised. But if you don’t do 100 per­cent of it, you’re at risk again.

    Q: There seems to be an unfor­tu­nate but under­stand­able ten­sion, par­tic­u­lar­ly in Europe. When things start to get a lit­tle bet­ter com­pla­cen­cy sets in. It’s almost as if we need anoth­er cri­sis in order to get things mov­ing again.

    A: I don’t think it’s Europe spe­cif­ic. I think it’s also true in oth­er economies, includ­ing in the U.S. The fis­cal cliff is dealt with, and yet there is more to be done. The moment yes­ter­day’s cri­sis is dealt with, you want to for­get about tomor­row’s issues. The cen­tral banks have been very help­ful in that respect. They’ve accom­mo­dat­ed a degree of slow-paced reforms and grad­ual fis­cal con­sol­i­da­tion.


    Note to self: goals of present-day elites appear to be only achiev­able through the bru­tal appli­ca­tion of shock-doc­trine tac­tics.

    Note to self: need new elites.

    Posted by Pterrafractyl | May 20, 2013, 1:14 pm
  13. I get why a town might be des­per­ate enough to pull a stunt like this, but did­n’t any­one both­er to ask the G8 lead­ers them­selves if they want­ed to be shield­ed from the grim real­i­ties of a glob­al eco­nom­ic down­turn? After all, these are world lead­ers we’re talk­ing about here. Rev­el­ing in the impov­er­ish­ment of the mass­es while they give hap­py-talk speech­es is sort of their pur­pose in life. Maybe they want­ed to see the dev­as­ta­tion in the local econ­o­my. It was prob­a­bly going to be a high­light of the trip for them. Did­n’t any­one think of that?

    PRI’s The World
    North­ern Ire­land Town Fakes Pros­per­i­ty for G8 Sum­mit
    By Andrea Crossan · May 29, 2013

    A town in North­ern Ire­land is get­ting spruced up for the arrival of some spe­cial guests.

    World lead­ers are gath­er­ing in the town of Enniskillen for the G8 sum­mit next month.

    And to get ready, the town is putting up fake store­fronts on shut­tered busi­ness­es.

    Anchor Mar­co Wer­man speaks with Irish Times reporter Dan Keenan about the efforts to make the town look pros­per­ous.

    Read the Tran­script
    The text below is a pho­net­ic tran­script of a radio sto­ry broad­cast by PRI’s THE WORLD. It has been cre­at­ed on dead­line by a con­trac­tor for PRI. The tran­script is includ­ed here to facil­i­tate inter­net search­es for audio con­tent. Please report any tran­scrib­ing errors to theworld@pri.org. This tran­script may not be in its final form, and it may be updat­ed. Please be aware that the author­i­ta­tive record of mate­r­i­al dis­trib­uted by PRI’s THE WORLD is the pro­gram audio.

    Mar­co Wer­man: I do it. You do it. We all do it, I hope, espe­cial­ly if I’m com­ing to your house. We do it when we have spe­cial guests. Fresh tow­els in the bath­room, give the coun­ters a wipe, maybe even hide our dirty laun­dry in the clos­et. Well, the town of Enniskillen, in Coun­ty Fer­managh, North­ern Ire­land is spruc­ing up for some very spe­cial guests: Pres­i­dent Oba­ma, Ger­man Chan­cel­lor Angela Merkel, and Russ­ian Pres­i­dent Vladimir Putin, to name just three. In a lit­tle over two weeks they and oth­er lead­ers will gath­er for a G8 sum­mit at a golf resort in Enniskillen. And as the date approach­es the cleanup is mov­ing into high gear. It includes new coats of paint on hous­es, tidy­ing up lawns, and putting up fake store­fronts on shut­tered busi­ness­es. Irish Times reporter Dan Keenan vis­it­ed Enniskillen and saw the cleanup process. Describe these fake build­ings, first of all. What do they look like?

    Dan Keenan: These are basi­cal­ly emp­ty shops that are being now made to look as if they are thriv­ing busi­ness­es, and they’ve done that in a very clever fash­ion indeed.

    Wer­man: How do they do it?

    Keenan: What they’ve done is they have filled the shop front win­dow with a pic­ture of what was the busi­ness before it went bank­rupt or closed. In oth­er words, gro­cery shops, butch­er shops, phar­ma­cies, you name it, they have placed large pho­tographs in the win­dows that if you were dri­ving past and glanced out the win­dow, it would look as if this was a thriv­ing busi­ness. It’s an attempt real­ly by the local author­i­ty to make the place look as pos­i­tive as pos­si­ble for the vis­it­ing G8 lead­ers and their entourages, and it’s real­ly tried to put a mask on a reces­sion that has real­ly hit this part of Ire­land real­ly very bad­ly indeed.

    Wer­man: So it’s kind of like a trompe l’oeil, and I saw a pic­ture in one news­pa­per. I’m a lit­tle con­fused because the door looked open.

    Keenan: Yeah, it looks as if the door is open and inside you can see a well-stocked shop. It’s noth­ing of the sort. That door has been locked shut for well over a year because that par­tic­u­lar busi­ness went bust this time last year, and that is an image to make it look as if every­thing is nor­mal in the town and in the coun­ty, but unfor­tu­nate­ly it’s not. The Coun­ty of Fer­managh has suf­fered ter­ri­bly as a result of the cred­it cri­sis and the result­ing reces­sion.

    Wer­man: How are the cit­i­zens of Enniskillen react­ing to this? It’s kind of, not very fun­ny, is it?

    Keenan: It’s not fun­ny. We’re inclined to take a very light-heart­ed look upon it but the res­i­dents of this part of the world are look­ing upon the arrival of the G8 pos­i­tive­ly because at the end of the day, it’s not often you have the eight wealth­i­est and most pow­er­ful lead­ers on Earth vis­it­ing your part of the world. But on the oth­er hand, they are a lit­tle bit skep­ti­cal of real­ly very shal­low attempts like this to make the place look bet­ter than it actu­al­ly is. They would rather that it was an hon­est attempt to pro­mote Fer­managh in its most pos­i­tive light and real­ly they would pre­fer if these prob­lems were not masked in the way that they are.


    Posted by Pterrafractyl | May 30, 2013, 2:23 pm
  14. Aus­ter­i­ty: the gift that keeps on giv­ing:

    Aus­ter­i­ty-led brain drain is killing Greek sci­ence

    Lack of fund­ing and recruit­ment freezes are dri­ving young researchers out of the coun­try, warns Var­vara Tra­chana.
    17 April 2013

    Sci­ence in Greece is going back­wards. This month, researchers lost access to the jour­nal Bioin­for­mat­ics, a top-ranked title in math­e­mat­i­cal and com­pu­ta­tion­al biol­o­gy. Many more pub­li­ca­tions are like­ly to dis­ap­pear from Greek libraries. The Min­istry of Edu­ca­tion has not paid the bills for its sub­scrip­tion bun­dles. The largest pub­lish­ers — includ­ing Else­vi­er, Springer and Tay­lor & Fran­cis — have threat­ened to sus­pend access. Oth­ers have done so already.

    The denial of schol­ar­ly papers, the lifeblood of research, to Greek sci­en­tists could mark the begin­ning of the end for cre­ative sci­ence at uni­ver­si­ties and research insti­tutes. We will no longer be able to keep up with inter­na­tion­al con­tri­bu­tions. In areas such as bio­med­i­cine, it is cru­cial to have access to the lat­est infor­ma­tion. Many Greek researchers, unable to afford per­son­al sub­scrip­tions to their favourite jour­nals, are already con­sid­er­ing reviv­ing a prac­tice that was com­mon a decade or so ago — con­tact­ing friends and col­leagues in for­eign research cen­tres and ask­ing them to fax or e‑mail arti­cles.

    For many read­ers of Nature, the hard­ship faced by Greek sci­en­tists will come as no sur­prise. The coun­try is reel­ing from six straight years of reces­sion and unprece­dent­ed aus­ter­i­ty mea­sures. More than one-quar­ter of Greek peo­ple are out of work.

    I am one of them. I am a biol­o­gist with a PhD in bio­log­i­cal chem­istry from the Aris­to­tle Uni­ver­si­ty of Thes­sa­loni­ki. In 2003, I went to Spain to work as a post­doc at the Nation­al Cen­tre of Biotech­nol­o­gy in Madrid. In 2008, I returned to Greece as a research sci­en­tist with the Nation­al Hel­lenic Research Foun­da­tion in Athens, on a suc­ces­sion of short-term con­tracts. In March 2011, I was elect­ed assis­tant pro­fes­sor of cell biol­o­gy at the fac­ul­ty of med­i­cine of the Uni­ver­si­ty of Thes­saly in Laris­sa. But I nev­er began work there: I am one of about 800 fac­ul­ty mem­bers who are still wait­ing to take up appoint­ments around the coun­try because the gov­ern­ment refus­es to approve the bud­get nec­es­sary for their salaries. They are dis­tin­guished sci­en­tists, many with years of post­doc­tor­al expe­ri­ence, who have been select­ed through a long and demand­ing process and have been appoint­ed by the heads of their respec­tive uni­ver­si­ties.

    The depart­ments that select­ed these 800 fac­ul­ty mem­bers are strug­gling to teach their stu­dents. In 2011, for the first time in decades, the Min­istry of Edu­ca­tion placed no new uni­ver­si­ty pro­fes­sors. The sci­en­tif­ic and pro­fes­sion­al prospects of young schol­ars in Greece are evap­o­rat­ing; this will leave the country’s uni­ver­si­ties life­less and impo­tent. Bud­gets for research insti­tutes have been reduced by 30%. The 2013 edu­ca­tion bud­get will cut funds by a fur­ther 14% and con­demns Greece to sci­en­tif­ic and edu­ca­tion­al dor­man­cy.

    There are no signs that the Greek gov­ern­ment under­stands that long-term com­mit­ment to fund­ing sci­ence and edu­ca­tion must be part of the strat­e­gy to boost eco­nom­ic growth. In 2007, even before the most recent cuts, uni­ver­si­ty and research fund­ing in Greece stood at 0.6% of gross domes­tic prod­uct in 2007, already far below the Euro­pean Union aver­age of 1.9%.

    Wages of researchers and fac­ul­ty mem­bers have been reduced by 20%. If some­one tells you that the Greek econ­o­my fell because of giant pub­lic-sec­tor salaries, tell them that the aver­age month­ly wage of a uni­ver­si­ty lec­tur­er here is now around €1,000 (US$1,300). Researchers and pro­fes­sors who have spent years build­ing their careers are ask­ing whether it was worth it.


    Did­n’t the author get the mes­sage? If some­one tells you that the Greek econ­o­my fell because of giant pub­lic-sec­tor salaries you don’t cor­rect them with facts. Instead, you feed into their mis­per­cep­tions and just keep push­ing the wrong solu­tions. It’s the right thing to do.

    Posted by Pterrafractyl | June 28, 2013, 1:38 pm

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