This is Naked Capitalism fundraising week. 402 donors have already invested in our efforts to shed light on the dark and seamy corners of finance. Join us and participate via our Tip Jar, which shows how to give via credit card, debit card, PayPal, or check. Read about why we’re doing this fundraiser, what we’ve accomplished in the last year, and our current target.
Yves here. The word “collapse” may seem overwrought when applied to Europe, but cold-blooded, clear eyed colleagues who have good connections and have spent a bit of time there recently say things that are broadly similar to Ilargi’s take. Despite the conventional wisdom that the cost of a Eurozone breakup is catastrophically high and thus will never take place, that confidence may prove to be the currency union’s undoing. Ideological rigidity about austerity is leading to policies that are crushing large swathes of the population. And Europe, unlike the US, had enough of a tradition of popular revolt that that uprisings, either on the street or in the ballot box, are real possibilities, as the sudden rise of the anti-EU right shows.
My sources, who also read the foreign language press, say that political fracture is underway and the Eurozone leadership is not taking anything remotely resembling adequate measures to halt its progress. That does not mean upheaval is imminent. But the flip side is this sort of unraveling tends to progress not via an clearly discernible decay path, but through sudden state changes.
By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth. Originally published at Automatic Earth
For me, the quote of the day is this one: “If there’s a periphery of the eurozone’s periphery, that’s Naples.” The city of Napoli hosts ECB boss Mario Draghi and the heads of Europe’s central banks this week in some very posh former Bourbon family royal palace, and the contradictions involved couldn’t be more striking.
Napoli is home to an immense amount of poverty and misery, and the advent of the EU and the euro has done absolutely nothing to make life in the city any better. Quite the contrary. And there’s not a single thing in sight that holds any promise of alleviating the deepening Italian downfall. Therefore things can, and will, only get worse from here.
And that’s not just true for Italy, or Napoli. It’s true for all of Europe. That is not because Mario Draghi hasn’t spent enough money, or too much of it, or that he’s spent it in the wrong places. It’s because Naples is not Berlin or Frankfurt, or even Milan in the much richer north of Italy. And because Italy is not Germany, and Greece is not Finland, and trying to force all of them into one and the same economic mold can only possibly end in the poor getting poorer.
Unless there would be a massive wealth transfer from rich to poor, from north to south, but that’s never been in the cards. The intention was always to make the EU a tide to lift all boats, or even, in the wildest dreams, a boat to lift all tides. That intention has failed in dramatic fashion. But not one single one of the architects and present day leaders is ready to fess up to their failures.
Almost 15 years after the euro was introduced, the battlefields are littered with dead and wounded bodies. And the only answer that comes from Brussels is to strengthen the – financial and political – army. The only answer that comes from Brussels is that Europe, including Italy, Greece, Spain, needs more Brussels, more centralized control.
And Napoli is not the only place that can lay claim to the title “periphery of the eurozone’s periphery”. Spain and Greece have unemployment numbers just like Napoli, only for them it’s in their entire countries. All have had youth unemployment at well over 50% for years now, a sort of real life version of throwing your babies away with the bathwater. And all have regions and cities where things are much worse still.
Oh well, at least Bloomberg has a poetic headline for once:
Draghi Takes ECB to Land of Gomorrah as Naples Prays
As Europe’s central bankers gather in Naples to discuss the state of the region’s economy, the city stands as a stark warning of just how bad things can get. “If there’s a periphery of the eurozone’s periphery, that’s Naples,” said economist Riccardo Realfonzo, a former councilman of the Southern Italian city. “The gap between the debate at the Royal Palace in Capodimonte and everyday life can’t be filled with just monetary policy.”
In Naples “there is a hunger for bread and justice, hope and future, work, legality and planning,” local Catholic Archbishop Crescenzio Sepe on Sept. 19 told the faithful gathered in the city’s medieval cathedral for the ritual of the so-called miracle of San Gennaro, the patron saint.
Last year, Naples scored the highest among Italy’s main cities on the misery index, a gauge which combines unemployment and deflation. With a reading of 26.7% it stood above Greece. Much like Greece, Naples, hard hit by Italy’s longest recession on record, risked default this year after a court rejected plans to cut municipal debt of about €1 billion ($1.3 billion). [..] Naples’ 2013 gross domestic product per capita was one-third less than Italy’s average and its unemployment was more than double the national average at 25.8%.
The outlook for the future is far from rosy after Italy entered a new recession in the second quarter and the government was forced to cut the country’s growth forecast. Finance Minister Pier Carlo Padoan said yesterday 2014 GDP is seen shrinking 0.3%, compared with an April forecast of a 0.8% expansion. The government also sees GDP growing just 0.6% next year, compared with a previous estimate of 1.3%.
In that setting, or rather overseeing it from a heavily guarded and inaccessible palace, enjoying the best food and wine freshly printed money can buy, Europe’s central bank bosses are planning their next moves.
And still the only answer is more Brussels. Where Mario Draghi now wants to start buying up Greek and Cypriot junk loans, simply because that’s all they have left to sell. That’s where we stand today. We’re back to toilet paper as the only thing that represents any value.
And, you know, if a country like Spain, with 25% unemployment, can get investors to nevertheless buy its bonds with real yields below zero, maybe there is some – although doomed – logic somewhere in Draghi’s ideas. If you distort and pervert values enough so nobody knows what anything is worth anymore, and you still have all these big funds needing to roll over their ‘investments’, you have them trapped, or at least temporarily.
The question is, for how long?
European Bond Yields Go Negative
Record-low interest rates in Europe have flipped bond investing on its head. Some bond buyers, typically paid for lending out their money, have begun paying borrowers to look after their cash. In September, yields on two-year Irish government debt dipped below zero for the first time, just four years after the country needed a €67.5 billion ($85.6 billion) bailout to avert a banking-system collapse. At the height of the eurozone’s debt crisis, Ireland’s two-year bonds were yielding more than 14%.
Now, they are yielding about minus 0.01%. Yields move inversely to prices. The sharp drop in Ireland’s borrowing costs marks a rapid return of investor confidence, but the recovery is also part of a wider theme in Europe: central-bank policy pushing interest rates ever lower, and in some cases, turning bond yields negative.
[..] “We think negative yields will spread, because the impact of the ECB’s rate cut is ongoing,” said Mr. Bayliss. Yields will continue their decline as short-term debt matures and cash is reinvested, he added. “You’re going to see more countries and longer maturities in the negative-rate camp,” he said. Given that backdrop, one way investors can boost returns is by buying longer-dated bonds. Spanish government debt maturing in July 2017, for instance, yields roughly 0.5%, according to Tradeweb.
By instead lending to Spain for 10 years, yields jump to about 2%. Another way to snag higher yields is to buy riskier bonds with lower credit ratings. Ben Bennett, a credit strategist at Legal & General Investment Management, says that with investment-grade corporate bonds yielding so little the only way to get a reasonable return in Europe is by lending to junk-rated companies or by buying junior bonds that are first to take a hit if a company defaults on its debt. “This should work out fine if the ECB’s policies kick-start the European economy, but they don’t have a very successful track record in recent years,” Mr. Bennett said.
They sure don’t. And that’s not even Draghi’s fault, he’s just a clown. The entire structure of the EU is to blame. Draghi won’t be able to buy any toilet paper unless Merkel gives in. But the EU economy has now started to drag down Germany as well, so she will have to choose to protect her own people first. Which is precisely where the EU fails, that that is still possible.
In the US California can’t say screw Kansas. In the EU, that is an option. The richer nations only signed up to the project to get richer off it. The same as the poorer. Nobody ever gave any thought to what should be done is everybody got poorer, and if they did, it certainly wasn’t put into written words. So Germany CAN elect to put itself first, and try to boost its economy at the expense of Spain. And that’s what it’ll do, especially after the recent rise of anti-euro sentiments.
Sentiments that will crop up and grow in ever more places in ever stronger ways. Because there is no way to save the pan-European ideals within the settings laid out inside the EU. You can’t turn Spain into Germany overnight, for the same reason that you can’t demand the Spanish turn to beer and bratwurst from one day to the next.
There is not one reason why Europe couldn’t be a looser organization of nation states, each with their own currency if that works better for them, but still with many ties defined by those things that do indeed bind them. The thing is, France has close ties to Spain, they share the same border, and France has similar ties to Germany, but Germany and Spain don’t have those ties.
It’s much easier to resolve regional differences within a country the size of France or Spain that it is within a 28-member EU. The differences have become too overwhelming. People from Finland vote on issues in Greece, but they have no idea about those issues. While the Greeks sink into desolation:
60% Of Greeks Live At Or Below Poverty Line
Three in every five Greeks, or some 6.3 million people, were living in poverty or under the threat of poverty in 2013 due to material deprivation and unemployment, a report by Parliament’s State Budget Office showed on Thursday. Using data on household incomes and living conditions, the report – titled “Minimum Income Policies in the European Union and Greece: A Comparative Analysis” – found that “some 2.5 million people are below the threshold of relative poverty, which is set at 60% of the average household income.” It added that “3.8 million people are facing the threat of poverty due to material deprivation and unemployment,” resulting in a total of 6.3 million people.
In the medium term, Europe will fall to bits. It’s inevitable. The crumbling of the walls could only be prevented by overall increasing wealth, but the very structure of the Union doesn’t allow for that to happen. And neither does the global economy.
As for the cheap loans and the yields on peripheral sovereign bonds, the money that investors have out there will flee in a massive move to the global financial center, the US, as soon as interest rates there are raised. Which is another major reason why they indeed will be raised. Come to daddy.
And the EU will go from the lofty ideal of a peacemaker to the reality of being a cause for unrest and then war. It has already made that switch, but nobody notices yet.
63 comments
Comments are closed.
Yawn. More imminent Euro-doom fearmongering from the Anglo-Saxon media. A tired story.
Your view is looking mighty dated.
Yes, we should look at the bright side of things, like the TTIP.
Oh ya think do you ? I’m sitting here typing this in a coffee shop in the most respectable heart of Middle England imaginable and I’ve just overheard a conversation muttered by two middle aged upper middle class (if you’re brought up in the country you notice these things almost intuitively / automatically) women the likes of which are an unfortunate scourge of this sort of place here who just said in that sort of quiet but loud enough to be clearly audible to their intended victim voice “well of course they’re as thick as shit I don’t suppose they even have schools there…” after the girl waitressing made a mistake with their order. Our waitresses poor English language skills were scarecely her fault and she certainly didn’t deserve that sort of treatment. And the obnoxious customers clearly understood nothing and cared less about why she was so far from home in such a (on occasions, like this one) vile place.
I mention this not because it is the worst such example of the underlying attitude exhibited and not because it is unique. I mention it because it is so prevenlant and so near the surface you don’t have to scratch very far to find it. Right here in supposed tolerant, multicultural Britain.
So, we’ve got an indigenous population who resents and blames an outsider group and treats them with, as a minimum, casual callousness on a routine basis. Hmm… I’m sure I’ve heard of that happening before somewhere… What could possibly go wrong for here ..?
Multiculturalism is a huge mistake. You can not force different peoples to like one another. In Yugoslavia Tito was able by sheer force to hold together for a awhile a bunch of peoples who hated each other. But in the long run this doesn’t work as we are seeing all over the world in places like Spain, Iraq etc.
No, you can’t. But if you are powerful enough you can emphasize whatever differences people may have instead of emphasizing their common needs and their common enemy.
As has been said a gazillion times, in the South you may have been a dirt poor white person, but you shouldn’t complain about things because at least you weren’t black.
I had an “ah-ha” moment when reading the above feature.
For a while now (a little more than a year perhaps) the big consulting firms have been allocating Italian “resource” to the account where I (what I laughingly call) work. They are, generally, extremely bright, motivated, knowledgeable and highly skilled. Well, as skilled as any person who is picked up off the street and dropped into a project (let’s say to do with “compliance”, “ForEx”, “liquidity” or some such), things which take many many years to get properly acquainted with but which the big consultancy companies like to pretend — and their stupid clients like to believe — you can pick up in a day or two by reading some documentation. What they lack for in in-depth experience, though, they make up in enthusiasm. Mostly, anyway.
These Italians have replaced the Indians which fulfilled the same “body shop” fodder role in the previous 5 years. Now, I could understand why non-EU citizens were getting increasingly difficult to bring into the UK under our equivalent of the H1B visa. It was getting to be a real political hot potato. But in the EU, you can go and work wherever you can get a job. “Free movement” is a core principle of the EU.
Dimwits that we were, many in the EU might naively thought this freedom to work wherever you wanted was for our benefit. But of course, it isn’t. It’s now obvious what it’s all about. It’s to constrain wages. The Italians have the same sense of supressed desperation that the Indians did. They are willing to work for pretty much anything, so long as it’s a job. The consultancies are happy to pay them as little as they can get away with — certainly they’re on less than UK contractor rates (and, natch, no modern company wants to train anyone, we’ve covered that ground on NC before). So they’re exporting Italian deflation and importing deflation into the UK labour market. (Not that I blame the individuals, we’re all victims of neoliberalism here).
What I couldn’t figure out until I read the feature was, why ? Putting it bluntly, if I lived in (what I’d idealised as) Italy, the last place I’d come to work was the South East of England. But of course, if you’re young and bright but unemployed in your home country, you’re a prime candidate to want to try and make it in a different country. Human capital flight in action. But life has to be pretty unappealing for most people to consider moving from their home country (culture, family, language are all strong ties). What, I had wondered, in my ignorance, could make so many Italians want to come to not-that-brilliant England..? Can you understand now why I had my “ah-ha” moment…
For the rentiers, it just keeps on getting better. Not only do you get to depress wages, the people who are desperate enough to leave their home country have to live somewhere. So if you have constrained housing supply (which we do in South East England) and you own some of it, or can leverage that asset class, you’re a double winner. You get capital appreciation too. Neoliberalism 2, Social Cohesion 0.
Clive, sounds like we work in similar firms. I recently heard during a project run through that some compliance work from UK was being “onshore offshored” to southern Italy. First confusion then despair.
These Italians are still getting a good deal compared to the uni-educated Spaniards/Portugese who serve coffee in the Costa (a posher UK Starbucks, definitely better coffee) next door.
True. And the spaniards and Portuguese are still above the multi year winners of the Worst Outcome of EU Mismanagement Award, which goes to those seemingly enduring the unending suffering of being refugees from neoliberalism… Which goes to… Drumroll please… Latvia ! Let’s hear it for Latvia everyone (except of course, no-one ever does, unless they have the misfortune to spill the beverage of some all too full of himself City boy type in the Docklands branch of Costa Coffee. Regular NC readers excepted of course http://www.nakedcapitalism.com/2014/05/stockholm-syndrome-in-the-baltics-latvias-neoliberal-war-against-labor-and-industry.html)
Of course you are correct about EU mismanagement. However, for some countries, the EU mismanagement was preceded by decades of Soviet mismanagement. All of the poorest countries of Europe were once part of the Soviet Empire. The poorest one, Moldova, is not (yet) a member of the EU. Here’s a some information about the relative economic status of European countries:
http://en.wikipedia.org/wiki/List_of_sovereign_states_in_Europe_by_GNI_(nominal)_per_capita
Members of the EU:
http://en.wikipedia.org/wiki/Member_state_of_the_European_Union
I wonder if you are not mistaking the real reasons for southern Europe’s decline, and projecting this on “Europe” as a whole. I speak as someone who has been living and working in Greece since 1995, in the investment and management consulting field.
In general, and according to “rational” macroeconomic theory, the Eurozone is a good thing. It lowers interest rates by pooling sovereign currency risks, especially now that the ECB is acting as a lender of last resort. You probably don’t recall Greece before the Euro, but inflation was over 25% in the 1980s and between 9-15% in the 1990s. The Greek Drachma was devalued every few years. This can also be a positive strategy, if the strategy is to attract foreign investment, make exports more attractive, and devalue debt held in the national currency. But this strategy also carries tremendous costs, which I am sure you are well aware of if you reflect on US economic history in the Carter years.
People often confuse is the Maastricht treaty. The two main clauses of this treaty require:
– Public debt should be 60% of GDP or trending downward
– The annual public deficit should be less than 3% of GDP or trending downward
There is absolutely nothing wrong with these two conditions— they are very sensible. And there is flexibility to incur higher debts via public spending in a crisis, i.e. to prime the Keynsian pump.
Now, let’s look at Greece and Italy:
– Consistently high public spending, deficits and debt. Greece has had a debt-to-GDP above 100% for years before the crisis. Why? Because the government took advantage of lower interest rates after Eurozone entry to borrow money on unproductive investments. In other words, it used Euro lending to conceal consistent problems in the Greek public sector.
– Huge bureaucracy, with very low productivity. Government operations are characterised by multiple permissions, stamps and authorisations. Nothing is streamlined. Government workers DO NOT WORK. Government processes DO NOT FUNCTION. It takes 23 signature to export one container: the height of stupidity. This can be measured objectively, and is by various sources and surveys (World Bank Doing Business Survey, Davos rankings, etc)
– Government is corrupt. For years, a political-business elite have been siphoning off kickbacks from European funded construction projects and all kinds of other capital expenditure: hospitals, schools, etc. They have also misused programmes going for operational expenditure (like subsidies for corporate investment or employment that is diverted to political favourites, or awarded only after a 10% kickback to the evaluation committee members). All these facts are indisputable and well-known. Lots of evidence.
– In Greece and Italy, the justice system deliberately doesn’t work: it takes 10-15 years to resolve a civil case. This is no accident.
– In Greece and Italy, the education system is dominated by the state. Again, no accident.
– In Greece and Italy, political patronage is used to hire voters, swelling the bureaucracy.
– In Greece and Italy, the media is controlled by political parties. No accident.
This list goes on for quite a while.
So my point is: the Euro and the Maastricht criteria have nothing to do with the present “destruction” of Europe. The only negative effect of Euro entry that I can see is hidden inflation, which has not been measured or controlled. Again, this is an institutional issue: suppliers are mis-using the institution. This also had a dynamic feedback effect with the credit boom. Again, not the fault of the Euro: the fault of those institutions (the Central Bank of Greece) which should have acted to restrict domestic consumer lending and regulate the banking sector.
The European project is, at its heart, a fundamentally liberalising one: free movement of goods, people, capital and services. Countries which do not adapt to these threats — and opportunities — encounter problems. Greece has never adapted. But that is the fault of Greece. Greece does not even have a viable national tourism strategy, believe it or not, and this is what drives its economy at the present time.
Greece had a one-in-a-millenium opportunity at European Union entry. It went through 3 successive EU Budget cycles from 1981 to 2013. It received hundreds of billions of Euro in grants and capital expenditure, and technical assistance. No other country has been so generously rewarded with “free wealth” (grants and low interest loans) from other European taxpayers. Rather than use this funding to develop a new society and a competitive economy, it used it for boondoggles, bribes and political patronage. (I exaggerate: there were many good projects). But the political class has corrupted and sickened the body politic, the state, the justice system, the media, and the voting public.
And there hasn’t been a single move (nearly) to stop it. The only pressure has come from European Court of Justice fines against Greece for violating European law, which Greece has agreed to uphold, and has incorporated into its own law.
All in all, a very disappointing and sickening situation. And one that will not change, given the current generation of political leaders, oligarchs, teachers, unionists, justices and media moguls. But it should be clear that this is not the fault of “Europe”: It is the entirely the fault of certain European states and, by extension, certain national European political parties and political systems.
I disagree.
You are correct in a lot of your points, possibly all. But all of them were known at the time of Greek/Italian entry into EU, and EU had levers it could use. But it didn’t, for purely political reasons. You can compare Greece getting into EU with Romania/Bulgaria (where the corruption is epidemic, known, EU had condition around it and nothing happened).
But it’s actually not Greece where we can see EU not working as expected. We can look at Spain and Ireland. Spain was good girl, and Ireland was a poster boy (despite both of them having some of the problem, like entrenched political parties with effectively nepotistic leadership etc. etc. but is it different from US really? Who had two Bushes, and could have had – and still can – two Clintons in space of 30 years), yet both of them suffered badly.
Excellent reprise of free market bunk. The common currency has created less and little more than a Fourth Reich (well, the proles did get to travel, migrate really), and the only plus was no shots had to be fired. It is not surprising to get businessmen cheerleading about this, but the end of human existence is not good business, especially now that the product of business is mostly useless and often toxic drek.
Incidentally, interest rates in the US aren’t going up in the forseeable future. The next financial implosion would immediately result from the tiniest movement in that direction. Even the clowns at the Fed understand this.
The next move will be determined by politics,not economic twaddle.
Yes, the European Project was a means to foster a race to the bottom by outflanking socialist and Christian Social voters who supported a welfare state. Most people in Europe were doing quite nicely, thank you very much, and did not need “market discipline” and a chance to become “wealthy entrepreneurs” to enjoy a good lifestyle and standard of living. That carrot and that stick were imposed so that the rich could get richer and the middle class get greedier and more striving (not in a humanistic but in a materialistic way). And the Greeks got the money so they could buy crap from Germany and let German companies come in and make a killing. The idea that the money given to Greece et al. was some kind of “gift” is laughable.
And also laughable will be the moment of realization when it dawns on the oligarchs how economically sound good social benefits are.
good comment, agree about interest rates; all the MSM blablah seems to be setting the stage for very long term low zirp interest rates – this is how they salvage what remains of “free market capitalism” – otherwise interest rates would be crushing us all.
I’m certainly not going to cut the EU any slack because I see the type of people running it and that’s all I need to know. Of course the same can be said of every western government.
However in a world where it’s fashionable to blame every ill on someone else, I think it would be far better if people started taking some responsibility for their problems. Every member of a society makes that society what it is. Therefore every member shares responsibility for what it becomes. Would it not be better for people to take that responsibility then proceed to fix things? Instead we get this endless “innocent victim narrative”. Not only were they helpless and taken advantage of, they’re now helpless and unable to change anything for the better. It really shows how spoiled we westerners are. We embrace our powerlessness like a security blanket and cling to it even more tightly when things go wrong. Thus we wait for the people who led us into the crisis to save us or for more proactive elements of society to rise up, risk all, and violently make the changes they desire. Not going to end well either way. How can it end well when most good people have taken themselves out of the equation and are simply watching what’s going on like disinterested spectators? Even though their very livelihood is at stake!
Your rant is typical neo-liberal twattle. The Greek socio-economic system worked just fine for Greeks for milenia.
I was going to comment that, to me, the situation is completely confusing and, if nothing else, you have brought a sense of clarity to the matter lacking in the post so we have something more grounding to work with in thinking about the EU troubles. However, I agree with Vlade. I, for one, never understood why the EU expanded as rapidly as it did–it seemed reckless then and now we see why. Anyone who has “hung out” in societies that do not have, at their heart, some version of the “Protestant Ethic” (doesn’t have to be Protestant of course), knows that “corruption” is at the heart of these societies. The normal form of government resembles the structure of the mafia with capos or the structure of arab society with its sheikhs. Basically these are clan/tribal forms of government where, once nation states are established, use patronage to gain support. This is the way human societies have prospered over milenia. It is only in “modern” times with the rise of nation-states and national bureaucracies and rule-or-law rather than custom that clearly established boundaries were established that were superior to the tribal/clan boundaries. In Europe the countries at the core of the EU had fought for centuries against each other and tempered their central governments through necessity.
Italy was not a country until 1870 and even then never really united culturally. Milan is the center of one country and Naples another. Greece was dominated by the Turks for centuries where, at the end, corruption was systemic. We see the mess of the Middle East, once a part of a mighty Empire–those societies never developed a nation-state mentality and when they tried to the West, whenever it felt like it, undermined and destroyed their governments.
My point is that we have to see things as they are. The Eurocrats saw spreadsheets, I guess, if they are anything like U.S. bureaucrats and whatever was on paper and made decisions on that basis. They most certainly did not hang out in cafes and bars and marketplaces getting the sense of what life is like on the streets. Since I know Italy, I know that what is on paper has very little to do with what’s on the street–there was always a very vibrant economy “sotto il tavolo” style particularly in the South.
I really blame no one here, not even the clueless Eurocrats, greedy capitalists, greedy capos and fixers in Greece and Italy. The fault lies in History–we are moving from someplace to someplace new and complaining about it, as people here (including me), may not be the best course. We know this system is crumbling and we need to begin to pick up the pieces and re-arrange them. Perhaps the under-the-table mentality needs to be strengthened and not penalized so new structures can emerge. We are fortunate in having the internet that offers us a highway to do this–human beings never had anything like this before so we are still clueless on how to use this medium to create the major change that History and Nature demands.
We Americans here in the US are hyper-organized with superficial details. And we take them as gospel. It’s the way we do “business” – sort of ignoring things like demand, or how expensive it is going to be to reclaim the planet or mitigate a climate holocaust. Or how in hell we are going to come up with basic science in time to clean up all those escaped radionuclides. So your comment that we shouldn’t be so buttoned up; that we should allow “new structures to emerge” certainly speaks to me. We should encourage it and create a safety net for everyone so they can march to their own drummer. If solutions are possible they will be found. As long as nobody is starving to death.
http://gizmodo.com/the-mob-is-secretly-dumping-nuclear-waste-across-italy-1513190243
Are you implying that the current regime of austerity is the correct medicine for Greece; punish the ordinary citizen, the unionist, the government worker, dismantle the social safety net, and this will bring about the desired reforms for Greece. Why no mention of specific Oligarchs, companies, justices, legal firms and politicians, who created the conditions to cause this crisis. Why no assessment of the root cause of the crisis? I agree with you, corruption is the disease to be addressed in Greece, but austerity for the entire nation will not affect the rich and powerful perpetrators, so it will not cure the problem.
My sense is that he is merely saying that those societies are corrupt and, implying at least, the situation is not resolvable and that perhaps it is better to not throw good money after bad.
My greek grocer , a hardworking successful small business man w/ an 8th grade education (quite proud of his freshly minted US passport) observes : “they just stole too much this time”
Greece entered the EU on false pretenses and then embroiled in corruption. To quote one article of many which have been written over the last years. All sources for the article are posted at the end of the quoted articles., see link for these quotes.
And then to add to the malaise was the corruption of the rich :
from article written by Marjolein van der Veen @
http://www.alternet.org/economy/which-way-out-greek-nightmare-and-crisis-europe
Is it a collapse or is it a controlled demolition? ‘Fuck the EU’ – is that a clue?
I never read anything conclusive about what the EU did or is doing slowly to keep defaults from triggering all those CDSs. Have therefore assumed that austerity is actually imposed by us on the EU. Did they (Deutschebank) write any of their own CDS for southern Europe? It is a liitle strange that credit default insurance serves to prevent default.
Naples has been run by the mafia for many decades, perhaps centuries. Nothing moves without paying someone off. There really is not much hope for southern Italy, nor for southern Spain. Naples is kind of like a smelly armpit.
This week we had the honor of watching the ‘questioning and answering’ of the Commissioner candidates. The ‘show’ epitomized what is wrong here in Europe. ilargi mentions the euro but there is also another major problem which divides the continent: language. We don’t have a common language which is easily convertible like money from country to country or from province to province. Yesterday we were treated to Marianne Thyssen, new EC, on TV listening to questions in English but responding in Dutch.
Suppose I am from Naples listening to this. How can someone there be informed about what her thinking is going to be? She will lead the Work & Social Affairs department — which will have a direct hand in border control and safety net programs for the EU — something that would be of high interest to Italy. Most of the recent migrants fleeing Africa and Middle East are making their way to Italy.
Language and culture should not be taken for granted. Ukraine, Scotland, Catalan and Flanders are wake-up calls to the further fragmentation of Europe. Just because Brussels ignores the root causes of these movements does not mean they will go away.
ilargi alludes to this blind ambition when he says the ….”Almost 15 years after the euro was introduced, the battlefields are littered with dead and wounded bodies. And the only answer that comes from Brussels is to strengthen the – financial and political – army. The only answer that comes from Brussels is that Europe, including Italy, Greece, Spain, needs more Brussels, more centralized control.”
Brussels must be touched…hard.
Touch comes before sight, before speech. It is the first language and the last, and it always tells the truth. M.Atwood
Nice quote.
“Smelly armpit??!?” This smacks of the kind of racist ignorance I heard from Lega Lombarda types when I was living up in Como. Like any city, Napoli has its problems, but I would rather live there than San Diego, Cleveland, L.A., Frankfurt, or any number of other cities in the world!!
BTW, while I deplore the violence and immorality of the Camorra, they at least don’t pretend to be anything more than powerful criminals– unlike the far more powerful bankster criminals, like the hypocrite Jamie Dimon, who pretend to be pillars of the community.
Good point. The criminality on Wall Street and the even worse criminality in Washington DC is in a different dimension of evil.
No, what’s worse is the smug, satisfied denial that they are anything but criminals, scammers, and freeloaders. Both DC and Wall St act like they’re doing God’s work and should be worshipped
I thought the Camorra, and not the Mafia, is the Neapolitan crime syndicate.
Just another indicator of “John’s” complete ignorance– and another reason not to put too much stock in his racist slur against Napolitani.
This leaves me with very little hope. I look forward to the stress test results. I’m sure that they will be reassuring?
Lasciate ogne speranza, voi ch’intrate…
clive’s comments indicate part of the reasons why the supposed better European employment protections (discussed elsewhere in the blog) are, in fact, a dead-letter for most intents and purposes. Since the continent-wide economy is in full-on depression–claims to the contrary about the damned illusory “recovery” notwithstanding–people are in desperate competition for work in which they are blatantly expoited. In France, for more than a decade, the government has all but begged French youth to seek a job and a life somewhere else than in France. The reasons are as simple as they are blind, stupid and cruel: those with the most enviable circumstances are in no mood to share any of their good fortune. Instead, they’d rather cannibalize their own nation’s young or leave them to languish in under-employment or unemployment. Meanwhile, everything possible is done to strip out, by hook or by crook, any unemployed claimants considered “dead wood.” So, ever more impossible demands are placed on benefits claimants and, when they cannot meet them, they are struck off the unemployment rolls. There’s a word for this: bureaucratic fraud–and it’s deadly.
In Britain, the circumstances are, if anything, even more cynical. Britain actively recruits the most desperate from outside the country to come and work in conditions only slightly better than slave-labor conditions. Of course, there is also slave labor in every sense of the term going on in Britain. People, lured under false pretenses find themselves confined, trapped and forced to work. They’re dependent on their captors for everything and are terrified of what they’re told shall happen to them (or their families back home) if they seek rescue from the police. But that rescue is not likely anyway since the police are another feature of public service which is in dilapidation, unable to cope with the conditions they face, corrupt and often simply inept.
It is in no way an exaggeration to say that Europe is, in so many ways at once, in full and open collapse–socially, morally, economically and, not least, politically. Turn where you might, wherever you look public authorities are failing their responsibilities to the public –now called “customers”– through a deliberate and cynical combination of being under-staffed and under-funded, leaving them overwhelmed by worsening conditions, morally and emotionally dismayed and defeated, and, with all that, faced with superiors who are vile, corrupt sell-outs to the system which has rewarded their connivings–managers skilled at lying and cheating and making excuses for their own corrupt malfeasance.
This goes right to the very top of government. At the Conservative party conference Prime Minister Cameron was applauded for announcing to his fellow party members that the government intended to extend even further savagery which is now the common lot of the most vulnerable by cutting public support even more. Taxes will be slightly lessened on the middle-class and a bit more of the most desperate poor will be excused from income tax. Meanwhile, the richest will reap the biggest gains in tax reductions and this is to be paid for by further gutting the vital and useful aspects of public services–education, transport, infrastructure maintanence, etc., even as pork-barrel projects in some of these same are wastefully pursued to the immense profit and pleasure of the corporate interests which bid for and snap up the public contracts on offer from their crony friends.
Such is the “domestic” scene. Abroad, powerfully connected corporate interests extract value from the human and the natural resources found in third-world countries, raping and pilaging the environment and leaving the local populations to bear the consequences of the degradation as profits are shared between the corrupt national government–if there even is one–and the corporation’s management and shareholders.
Talented young folks are packing their bags and heading to greener pastures. This is a bad sign. Lots of immigrants are flooding the Chunnel heading towards the UK.
The whole world is screwed, isn’t it?
European society has collapsed already. (much like how Irish society imploded under Cromwell)
What we are witnessing now is simply how the dark financial power can avoid further losses on its human assets /slaves. (sometimes this is done by writing them off the books)
I can’t believe how people cannot make the analogy with the developing UK union of the first half of the 19th century and todays union.
You had major famines in Ireland and Scotland (the periphery) at that time – not because of local food shortage but because the nature of post Tudor commerce was structured around export (using ranches) rather then intensive local production & consumption with the remaining surplus exported in return for wine.
Banking propaganda goes very deep , all of our understanding of history has been shaped by these artificial scarcity bastards.
http://www.youtube.com/watch?v=R6JczvS1PL4
In this phase we are moving out of the post Napoleonic banking collapse stage and into the major famine period.
This can be seen starkly in Ireland.
Prices are rising again but wages continue to fall.
These Venetian type of guys know exactly what they are doing.
It most certainly is not a mistake on their part.
What better way to write them off the books then a little Ebola pandemic.
Yasu from greece.
I´ll make it short:
If we “PIGS” are your “hope” for a revolution that will change the world we are all in a deep mess.
Most of what you hear and read about us is only partly true.Yes we are in deep shit.No doubt about that.The war the troika/IMF is leading against us has led to the worst crisis in decades.Things we never saw before since 1950 are again here:Homeless people,soup kitchens,jobless youth etc..
I´ll give you some facts about the humanitarian crisis in greece:
http://www.athensvoice.gr/article/ειδήσεις/150000-μερίδες-συσσίτιο-μέρα
Some 150.000 people need the food assistance whic is given daily by the church,state and other private organisations.Most of these people in athens.The situation in the other parts of greece is less dire.The second biggest city of greece (Thessaloniki) needs to give food assistance to 2000 people:
http://www.sarc.gr/readmore.php?id=1040850&grp=486010
The situation with the homeless:
Earlier estimations said that there are maybe some 20.000 homeless all over greece.Latest surveys show that there are over 1000 homeless people in greece,Almost all of them in athens:
http://www.ethnos.gr/article.asp?catid=22768&subid=2&pubid=63992951
Indeed these numbers are for us greeks a humanitarian crisis.We have never seen this since the civil war in the late 40´s.
As for some other numbers (as the “60% of greeks live in poverty) I will not agree.And I will tell you why:It does not help the cause.When there is a country with 11 million citizins with some 5 million households but you have over 5,6 million homeowners you will understand.
http://www.kathimerini.gr/494955/article/oikonomia/ellhnikh-oikonomia/56-ekat-idiokthtes-akinhtwn-8a-plhrwsoyn-foroys-415-dis-to-2014
Some 90% of the athenians are living in their own homes.If I am not wrong some “other nations” who tried the same stunt some time ago just went bankrupt in 2008.And no..we greeks did not achieved this through “bad loans”.
The number of greeks who are in danger to loose their house is 27.000:
http://www.kathimerini.gr/494955/article/oikonomia/ellhnikh-oikonomia/56-ekat-idiokthtes-akinhtwn-8a-plhrwsoyn-foroys-415-dis-to-2014
It is also hard to understand for me how it is possible that all the world is talking about that greece has a youth-unemployment of over 60% and that “every second young greek between 15-24 is jobless” when 80% of the greeks till 24 are still in school of are studying.I found an answer here:
http://www.voxeu.org/article/youth-unemployment-europe-it-s-actually-worse-us
As far as I know over 50 million people in the USA are on food stamps?
In the (as the article says) “wealthy germany” right now some 2-2,5 million germans need food assistance:
http://www.neues-deutschland.de/artikel/932122.tafeln-versorgen-mehr-als-zwei-millionen-menschen.html
The numver of homeless in germany and specially in the USA must be unbelievable.
Don´t expect the “revolution” to start in south europe.Better you guys start to bring your own people to the street before it is to late.
Greetings from a PIGS..
I suggest you get up to speed about how economic statistics are constructed.
Unemployment is defined as people who are actively looking for a job who can’t find one. Students do not count among the pool of unemployed.
60% youth unemployment is a big deal.
If your comments on unemployment is on par with the rest of your analysis, it is not to be taken seriously.
Have you read the link I gave you.It is written by this guy:
“Jacob Funk Kirkegaard
Research Fellow, Peterson Institute for International Economics”
My other links are from official sources (greek church) or the biggest newspapers in greece.
What about them is “not serious”;Maybe because they don´t say that all of us PIGS are lying starving in the streets of athens,lissabon and madrid;Is this what you want to hear;
As the years gone by since 2008 I have the gowing impression that the “leftists” in the USA,germany,france,UK are completely incompetent.This article does not make me feel better about this.With 50 million US-citizins on SNAP you should not wait for the doomsday in the periphery of europe.It is your duty to bring the citizins of the USA to the streets.
The Peterson Institute is a major promoter of neoliberalism and not an unbiased source.
I never said the US was a paradise. You clearly aren’t familiar with this website and have a very obvious chip on your shoulder. And my comment re your understanding of unemployment statistics stands.
Why are you insulting me all the time as “not serious” and having a “chip in my shoulder”;
Obviously a lot of people want only to hear that we in the euro-periphery are starving.The neoliberals because we are “lazy,corrupt and indebted” and the leftists because we are “poor,third world and the victims” of of a late neoliberal capitalism which does only harm to the “weak” countries and not “so much” to the “wealthy” USA and northern europeans.Either way.This is a chauvinistic view of things.And wrong.The numbers ie food assistance and homeless people I see tell the truth.Also the numbers of the millions of US-citizins who lost their homes since 2008.
Does any one over there has recognised that we greeks and the southern europeans in general have prepared “for the next big crisis” since the mid-70s;Since the system has “allowed” us to get rid of our dictatorships(from portugal till greece all in the same time frame from 1974 to 1980) only to install a corrupt political elite which NOT A SINGLE greek,italian or spaniard has ever put even 1% of trust in;
So we have prepared ourselves because we always knew that the next big fuck up will come for sure.This is the reason why we put all our money into our own homes without to take huge loans from the banks(at least the italians and the greeks).We did this since the 70s.For at least two decades till the mid 90s.When the rest of the “developed world” spent their money on cars,holidays and consume.
Now you better do not worry about us.More so since we have been and always be the first to get on the streets to rage against the system.Better ask how you can raise the people in the USA or germany.This should be your concern.
After all it does not matter what happens in the “periphery” but only what happens in the big and important countries like the USA,germany,france,UK,Japan etc.As long as we don´t see any kind of revolt and uprise there nothing will change.You should know that.
Perhaps he means 60 % of Greeks live without adequate purchasing power to engage with society.
In a Industrial setting this is akin to housing a sheepdog within a apartment.
Collies are the must self aware and highly strung of dogs – if they cannot find anything useful to do they going bloody crazy.
Need I remind you the largest building in Cork is a victorian madhouse.
A hard hard money period gives you predictable results…………
http://www.youtube.com/watch?v=ZCZ31RvEUrQ
The above is the smaller of the two buidings !!!!!!!!
The larger was of course developed recently into ….you guessed it ………..apartments.
The most important type of character within this time of flux and collapse are the mid level functionaires with their toes in both the old world and the newer ever more centralized state beyond.
But this particular chaps story is a cautionary tale.
The Cecils of this world are not honourable people and cannot be trusted.
http://en.wikipedia.org/wiki/Nicholas_White
Just to repeat the collapse of the periphery is needed so that the center of the banking union can prosper.
The euro system must rape its hinterland if it is to survive.
William Petty was another likely lad in this mould.
Indeed a terrible person.
Alas , the interest bearing money vortice rewards such people.
Notice his need for full employment (when labour still had value) simply so he could extract a yield and not create wealth (well being).
The scheme for full employment in Anglo countries is not working out too well either.
With a massive production / consumption crisis ramping up to very high levels as a result of using various measures such as Industrial sabotage they now call privatisation.
Nothing annoys me more then this constant pressure to “switch” within a natural monopoly.
Its better to not work at all then to waste ones time & energy doing a pointless job over a phone and computer.
PS
I quite enjoy the Beeb horrible histories.
It takes quite some doing to make a childrens history programme more accurate then official accounts from the British banking demons.
The often absurd power dynamics within the dark halls of power are wonderfully protrayed is this sketch.
http://www.youtube.com/watch?v=pkHe4YCHd8o
What I would add to the great comments is to suggest that there really isn’t any political entity or society or common culture called ‘Europe’.
***
There is a hope for such a Europe, and it certainly sounds like an obvious arrangement to those of us in the US of A. But there is no US of E. The past couple decades haven’t made people want more international integration. If anything, they’ve made people want to break up the nations cobbled together over the past few centuries. Yugoslavia is gone. So is Czechoslovakia and the USSR. The Ukraine is in the process of such change. The UK and Spain face serious regional independence movements. Italy wasn’t a country that long ago. The Austro-Hungarian empire was until the 20th century. Belgium has had difficulty forming a government. Poland’s borders keep changing. There is almost no transnational migration of people (in other words, most people in Germany are German, France are French, Ireland are Irish, Sweden are Swedish, etc.) And so on.
The UK hasn’t even given up the pound or the monarchy. Wake me up when those things happen.
And then of course there’s NATO, the overarching, transnational governance for ‘Europe’.
Hmm. IIRC, the US of A has had some difficulty with the U part, Articles of Confederation, various rebellions including a memorable Civil War not all that long ago. More than a few secessionists around today (take Texas — please!) and of course the have and have-not states. Henry Ford raided the south for cheap, reliable workers for his auto factories, Okies migrated to California — not all that different, really.
Yes, but our roots are not so deep as Europe’s, and then there is the common language (more or less). These two features make the US fairly different from Europe. Just because most in Europe know English is very different from communicating with it exclusively. If the State governments were strong(er), maybe similarities to Europe could be better made, but the Federal government has the lion’s share of the power, so the comparison between the States and the European Nations is not that strong.
That being said, if the European young are moving away from their home nations in droves for work, the Nations’ individualities will lessen, and in a generation or two, Europe will more resemble the gumbo pot that we have here in the US.
I hear what you’re saying, but I would offer a different opinion on that. I’d say the Constitution settled the Articles question, and the Civil War settled the Union question, in a way that Europe has never settled the question of regional vs. continental governance. If anything, I’d say the ‘costs of non-europe’ mentality is being replaced by the independence mentality thanks to how badly the elites are running the world.
‘And then of course there’s NATO, the overarching, transnational governance for ‘Europe’.
And then there’s NATO’s next project, the Ukraine, where events are developing not necessarily to our advantage:
http://www.bbc.com/news/business-29454965
Oops … there go the IMF benchmarks! Not that it will prevent the next tranche from being ladled out.
“But not one single one of the architects and present day leaders is ready to fess up to their failures.”
Whether or not confessed, a flawed idea cannot be realized even by the most able execution.
“And the EU will go from the lofty ideal of a peacemaker to the reality of being a cause for unrest and then war. It has already made that switch, but nobody notices yet.”
What an outrageous denial of fact. Farage has been explictly warning about that outcome for several years. Those who chose not to notice are those who believe “the dream” can be willed into reality over the heads of the people by fiat treaty.
The solution to the European crisis is simple and obvious: The US must run large current account deficits again. It must import from the European periphery and the Core Euro, in quantities large enough to offset surpluses in the private and public sectors. This is how Asian nations recovered from the 1997 financial crisis and this is how Europe must recover today.
“The interests of property are among the most powerful of all political forces, and, faced with loss, the owners of
property will move heaven and earth to invent means to shift the burden upon the shoulders of the public.”
Frederick Soddy, Wealth, Virtual Wealth and Debt, 2nd edition, 1933, p. 267
A lot of Greeks have migrated to other countries in the last years, and when they come to the U.S. they are surprised to find a reality completely different from what they knew from the internet. That’s because the U.S. is a big country, and every place is different. You can live in an area such as the north burbs of Chicago (home to close to 3 million middle class people) and never see a homeless person. As a matter of fact most Scandinavians would be envious of that area… Then you go elsewhere and see poverty.
Every area lives its own reality.
If there’s a civil war in Iraq, it doesn’t mean bullets are hitting people in Cyprus. That said, I don’t understand why people make such generalized comments (“in the U.S.”…. “in Europe”… “in China” … those are all very big places people!).
As far as “poverty level” – this is very different in each country. A government assisted person in California or Illinois or Philadelphia has a higher purchasing power (in real goods) than a private employee in today’s Greece.
If some countries in the Euro-zone are struggling with the use of one currency for different countries, what are about the rest of the world as there have been calls of such. this article clearly shows that it will be impossible for the world to have one currency