Not countercyclical enough, then or now

The Free Exchange blog at the Economist’s website makes the point that the flip side of postulating that the Irish and Spanish governments were insufficiently countercyclical during the boom is that countercyclical deficits are symmetrically helpful during downturns. (Self-publicity disclaimer – the post cites my work with Agustin Benetrix on fiscal cyclicality).  Of course, the asymmetry of credit constraints means that countercyclicality during downturns is more possible for governments that retain the trust of the sovereign debt markets.  More generally, even for countries that must rely on official financing, it indicates that the speed of adjustment must be carefully designed.  Indeed, as emphasised by quotes from Olli Rehn in this FT article yesterday, the EU fiscal framework recognises that flexibility is needed in the interpretation of fiscal rules.

“The stability and growth pact is not stupid,” Mr Rehn will say, according to a draft of his address seen by the FT. “Yes, the EU fiscal framework is rules-based … but at the same time, the pact entails considerable scope for judgement when it comes to its application.”

82 replies on “Not countercyclical enough, then or now”

This line of reasoning merely tells us that EMU would work just fine if only governments were exceedingly wise. Sadly, they’re not. Flexible exchange rates economise on the need for virtue. If governments run inflationary policies the FX market punishes them pretty quickly. The moral is that we shouldn’t be looking for ways to save EMU, we should be looking for ways to reverse out of it with the minimum of damage.

Good to see Olli recognising a slice of reality ….

One of the realities is that strict adherence to the Fiscal Corset would, quite simply, destroy Spain.

In solidarity with Iberian Citizenry – I vote NO to Angela’s Corset.

Need a proxy SPV that allows the ECB to fund states once and massively …. French vote today is critical.

Nobody in France doubts that Hollande will ratify the treaty.He will get a vaguely worded codicil stating that “growth is good ” or something of that kind . Nobody believes that France should go into Keynesian deficit spending ,we are broke ,unfortunately!

@Kevin Donoghue
But is there any plausible, non-catastrophic way out of the euro? It kinda looks like we’re stuck with it.

@Kevin Donoghue
But is there any plausible, non-catastrophic way out of the euro? It kinda looks like we’re stuck with it.

@Kevin Donoghue
Is there any conceivable way out of the euro ? It looks a lot like we’re stick with it.

@Overseas
commentator
While id share your skepticism about Hollande, surely though it’s not just about France – at a European level there’s lots that could be done. The ecb can print billions of euros when the security of the banking system gets called into question. If there was an inclination it could help governments and the unemployed . Now in don’t think it’s likely to happen but it should. Certainly since France would surely be in a much stronger position if it was monetarily sovereign it seems naturally that it should strive for a more lax monetary policy.

@Ciaran
There’s a conceivable, non-catastrophic way out, but I don’t say it’s plausible. France could assemble a coalition of countries opposed to current ECB policies. For example, they might push for a 3.5% medium-term inflation target. If the Germans find themselves in a minority on that they would most likely quit the EZ, reintroducing the D-mark to get themselves off what they would see as a slippery slope to hyperinflation. The rump ECB becomes the more accommodating central bank of France and her allies.

@PRGuy

On one occasion During the Eurovision Song Contest, a conductor, they often had a big band or near orchestra in those days, was introduced and walked on to the vast stage. He had a lot of hair oriented as if gelled just before its owner had been dragged through a hedge backwards. Terry Wogan’s genius allowed him to instantly quip “Some of these people have never heard of hairspray.” while the audience were still trying to convince themselves that there was nothing too odd about the guy’s hair and that it would be rude to laugh.

For some reason Olli saying this:

“The stability and growth pact is not stupid”

and the classic Nixon foot-pop: “People have got to know whether or not their president’s a crook. Well, I’m not a crook.”

reminded me of the Eurovision.

Some of these people have never heard of
a) Nixon
b) PR
c) irony
d) the international space station.

Hey Kevin , thanks for the response. Well I suppose it could work , although I’m not too sure about the institutional workings of the ecb. Though really i can’t see Germany wanting to leave the euro, it seems like they’re getting a pretty great deal as it is .

@ Overseas commentator

How right you are!

http://www.bloomberg.com/news/2012-05-04/schaeuble-says-germany-will-negotiate-with-hollande-on-growth.html

Notably;

“Neither should the European Stability Mechanism, the euro region’s financial backstop, be allowed to help recapitalize Spanish banks directly, he said.

“The answer is no,” Schaeuble said”.

But, as I have pointed out another thread, there is an univited guest at the party viz. the international financial markets. Their reaction Monday to a Hollande victory will be the decisive consideration.

@ Overseas commentator

By the way, as the discussion on several other threads reveals, there is an undertone of farce in the referendum debate as it is patently obvious that the TSCG is not an appropriate subject for decision by popular consultation. No other representative democracy in Europe would even attempt such an exercise.

@ Philip

Finland provided for the rainy day while McCreevy engineered a huge bonanza to coincide with the 2007 general election.

‘For years we have been bled white – now it’s payback time’

http://www.finfacts.ie/irishfinancenews/article_1019384.shtml

@ DOCM

Some of the NO advocates presumably would wish for eurobonds but the path to such a significant development would likely have to begin with a treaty whether the current one or another.

@ Kevin Donoghue

France isn’t going to cause a historic rupture with Germany.

Regarding the original post it would seem that Governments saving a surplus during expansion to spend as a deficit during contraction is a reasonable approach.

To implement this though we have to get out of this recession. That can’t happen under the current system of money creation/deletion.

Since digital money comes from bank loans every digital euro has a corresponding debt. Any money required to grow the economy will also have a corresponding debt. This is the first recession in which cash has been negligible and mortgages cannot increase in duration. Hence we’re in a very unique position.

One solution would be to declare digital money as legal tender since the Central Bank could create it for the treasury in the same way they create cash.

It would also control the root cause of the debt crisis since banks would no longer record a debt to every digital euro.

Paul Ferguson
Sensible Money

@Philip

“…makes the point that the flip side of postulating that the Irish and Spanish governments were insufficiently countercyclical during the boom is that countercyclical deficits are symmetrically helpful during downturns.”

Paul Hunt was going on a bit yesterday about effective communications from the cream of Ireland’s intelligentsia. I have to confess that I read that twice, perhaps not focusing like a laser-beam on deciphering it. I couldn’t be bothered to do so again, but I did bother to look at the link – after which the meaning was less elusive. My English Comprehension skills are reasonably good.

I think Paul Krugman does his campaign for fiscal stimulus in the US and wider EZ no favours by refusing to acknowledge what many people have communicated to him directly and what you point out in your analysis. It wrongly makes him look like a PR Guy for lefties and weakens his arguments – he either hasn’t done the work to understand what hapenned in places like Ireland (and it wouldn’t exactly be hard) or he thinks it is OK to manipulate his readership.

He beats you hands down though for writing in a style that is clear even to the distracted, tired, buzy or less clever reader.

..actually, given docm’s spot about French admiration for Irish tactics over ‘renegotiation’ there is a fairly consistent picture emerging.

@DOCM
There is a more than 90% probability that Hollande will be elected (a 4% spread is a lot more than the sampling errors at a 99% confidence level) ,the markets know this and yet the French borrowing costs have never ben lower ,AAA rating or not.
I am a lot more worried about a gridlock in Greece ,nobody can predict what will happen then!

If Ireland and Spain ran larger surpluses during the bank credit boom they would have had to buy more equities for their pension funds would they not ? as you cannot have a negative debt/ money – creating a further bubble in equities……..

This journey always comes back to the banks…..and credit money.
In many ways this credit hyperinflation episode is much worse then the free banking crisis of the 19th century as they did not use the coin of the realm when they engaged in criminal enterprises.

Now Treasuries give letter of comfort all over the shop.

Fiscal discipline means credit hyperinflation as you therefore cannot have growth without it.
The reason why Europe must have fiscal discipline is article 123 which prevents CBs recycling interest back to the treasuries.
Therefore it must always come to a point when countries cannot service this debt.
The fact that article 123 was broken with respect to Anglo is beside the point although quite funny in a way – Anglo was not illiquid – it was probably the most bust bank in the history of banks.

The cartel is in the process of “structurally readjusting” Europe – using these strange laws to create a NWO of European serfs licking the stolen boots of bankers.

Grumpy funnily enough krugman has made the same point, maybe this will make more sense to you:

But here’s my thought: do
all the people who believe
that it’s appropriate for
governments to run big
surpluses to offset rising
private-sector leverage also believe that it’s
appropriate to run big
deficits to offset large-
scale private deleveraging — which is what’s
happening now? If not,
why not? Why the
asymmetry? Inquiring minds want to
know.

krugman.blogs.nytimes.com/2012/04/25/leveraging-deleveraging-and-fiscal-policy/

@ Overseas commentator

I was aware of this. It simply confirms that the market operators, in Europe at least, have correctly read the tea leaves as far as to Hollande’s future trajectory. What I had in mind was the wider international financial community which may not be as well informed on the finer points of European politics. As to Greece, the contagion problem has been overcome (even if the Norwegians are outraged at losing some money). The same holds true of Ireland.

Spain is seen as a bigger problem. However, the country is no pushover. Schaeuble in his comment recognises this. But, on past experience, some financial support will be made available.

Incidentally, and again back in the Irish arena, the best performers in the referendum debate are hitherto, in my opinion, to be found in the ranks of the disgraced Fianan Fáil party, notably its leader. Fighting for political survival evidently sharpens the faculties.l

@DOCM

By the way, as the discussion on several other threads reveals, there is an undertone of farce in the referendum debate as it is patently obvious that the TSCG is not an appropriate subject for decision by popular consultation.

Care to tighten that noose around your own neck any tighter?

It is a common feature of the group of neoliberal miscreants, malefactors of great wealth and assorted European institutional insiders that after making such an unholy mess of EMU and managing to make the European component of the global financial crisis worse than the market failure that spawned it the one thing they insist on is that the public should not be allowed to get involved – the hoi-polloi would make a mess of it. Both utterly loathsome and suggestive of serious psychiatric issues.

@grumpy on Ollie Rehn’s unintended moment of clarity.

“The stability and growth pact is not stupid”

and the classic Nixon foot-pop: “People have got to know whether or not their president’s a crook. Well, I’m not a crook.”

Like the repeated use of the word quality when describing a product the need to explain that an initiative as significant as the Fiscal Compact is not stupid suggests that everyone not involved in selling it thinks the reverse.

The Fiscal Compact is stupid. The stability and growth pact that it is intended to make an essential requirement for European Union membership seems to be leading to civil unrest and recession.

How much longer will advocates of the treaty be able to live with themselves for not highlighting that it represents dangerous nonsense.?

@Shay, so often these days I’m reminded of this:

After the uprising of the 17th June
The Secretary of the Writers Union
Had leaflets distributed in the Stalinallee
Stating that the people
Had forfeited the confidence of the government
And could win it back only
By redoubled efforts. Would it not be easier
In that case for the government
To dissolve the people
And elect another?

Bertolt Brecht

@Kevin O’Donoghue

This line of reasoning merely tells us that EMU would work just fine if only governments were exceedingly wise. Sadly, they’re not. Flexible exchange rates economise on the need for virtue. If governments run inflationary policies the FX market punishes them pretty quickly. The moral is that we shouldn’t be looking for ways to save EMU, we should be looking for ways to reverse out of it with the minimum of damage.

It is a cousin to the theory that the best way to encourage safe driving is to mandate that a large spike be placed at the center of the steering wheel, all other things being equal….

Even if the strictness of the Fiscal Compact guidelines did encourage governments to operate in a wise (read: hard Keynesian, non ordoliberal) manner the idea of having an economic policy that restricts what you can do rather than sets the priorities for what you should do is straight from confidence fairy central ( where economic shocks have been made constitutionally illegal).

I know Jagdip Singh suggests the the Fiscal Compact should be called the “Bank Debt Treaty” but The Stupid Treaty captures it for me better.

An aside: I realized yesterday that the neoliberal goals of the Fiscal Rule enthusiast could be thought as a kind of Soviet central planning in reverse – Instead of mandating targets for economic growth and setting ambitious social, scientific and infrastructural goals the Fiscal Compact is all about ensuring that the state can not plan to do anything more significant than saving to bail out its financial sector.

Everything else in our new market states will be taken care of by the spirit of Hayek emerging and guiding beneficial economic growth (exactly like it just did not) and then hoping there will be no wars, natural or man made disasters or disruptive technological changes that require more economic flexibility.

In truth Soviet central planning had a lot more going for it, it was not a faith based initiative like the S&GP and its sharp toothed offspring.

@Kevin Donoghue’s knows Brecht

How lovely. That could not be apposite, thank you.

Bear in mind that DOCM may be an elaborate situationist art project, he, she or they are too widely read to be serious about believing in the current European establishment position. Whether the goal of any of the apologists for the ECB position is to preserve the status quo or provoke a bloody revolution and replace it is very much open to question.

@Ceterisparibus

I always feel dirty when I agree with an Irish Independent opinion piece but with the Irish Times now being indistinguishable from a version of Pravda edited by Phil Hogan much of anti-establishment position seems to end up in the Indo.

Mad world. Dogs lying down with cats and all that.

On the articles substance neither Gilmore or Kenny has the nous to postpone the referendum on the economic suicide pact and like the rest of the European Establishment they would rather demonstrate the strength of their determination rather than their flexibility and quick thinking.

Who will be left in Ireland with any popular political credibility after this?

@Ceter
What makes you think Hollande will do anything differently ?

The Socialists were up to their tits with the EMU experiment – indeed in many ways it was their baby.
The Mitterrand adminstration destroyed France.

You would want be out of your freaking mind putting your trust in those guys.

Above a certain point, positions re cyclical or countercyclical deficit reductions turn into jabber and become nonsense. I’m not a fireman, but I imagine with enough experience a fireman can arrive at the scene of a fire and make an accurate assessment of whether the building can be saved, or not. In economics, debt overhang of 100% of GDP in a low growth/nogrowth scenario an economy is heading for default. At 120% GDP, an economy with growth at (.5 – .7)% is facing the inevitability of rising debt levels with inevitability of eventual default. The only question is do pro cyclical or countercyclical policies prolong or shorten the inevitable outcome. At best such concepts are a diversion away from focus on the need and inevitability of default. We’ve plenty of diversionary distortion of reality about at present. We have false growth projections of circa 2.5% which are turning into a merry go round. Noonan used such a projection in 2010 for 2012, we have reviced it down to .7%. He’s using circa 2.3% now for 2013; it will not come to pass. Another distortion in the ether is the need for a second bailout based upon the argument we will not get a bailout from anywhere else. The failure of the present bailout is not discussed. The lack of burden sharing, haircut to the guarantee we’ve given on odious bank bailout, is put beyond discussion. Instead, the prospect of another bailout, a second bailout, we have to pony up ¢1.5 bn to buy entry to this game of blackjack in the ECB/ESM casino of debt is dangled before us. This will enable us to get a future bailout under ESM but also bail out Spain and maybe Portugal, Greece(again) and Italy. Along with austerity, the reduction of fiscal deficits accelerating due to the extra repayments against new debt burdens, growth is turning into recession. Economies across Europe under the guise of the moral benefits of austerity, are being lured by the financial sector
into a draconian and machiavellian conspiracy of politicians and the financial sector against the taxpayers of Europe. Their goal is to extract maximum tribute in the form of guaranteed return on the usorious lending policies of the financial sector.

Sofar in the Referendum debate ‘Its time to leave the euro project’ is a subject that is verboten; debt writedown, the failure to negotiate same, the need to do so, is not on the agenda. Instead, the lure of further bailouts with draconian and penal conditionality, the language of threat and fear is being dangled before the electorate.

Its time to say NO 🙂

@ Colm

“We have false growth projections of circa 2.5% which are turning into a merry go round”

Brilliant. You rederence the IMF when it suits, and then ignore them when it doesn’t. You’re just making this up as you go along aren’t you?

@ Bond,

You give me a right laugh, as a sweeper for the financial services, austerity brigade and a campaigner for the Y, I see you on a big horse behind Lord Cardigan in the Charge of the Light Brigade heading into the guns of the ECB/ESM, as they eye up the Irish Financial Services Sector ready to cull Corporation TAX and Financial Transaction Tax after they loot Irish taxpayers.

Elaine Byrne has a good piece in todays Sindo, p6 describing the efforts to prevent the 0.01% raising .5 bn to share the austerity of Irish taxpayers.

“The EU, through taxpayers money, has so far spent ¢4.6 trillion in bailing out the financial sector.

So, instead of the taxpayers being lumped with all the bailout costs, the financial sector would have to share the burden. A sector, by the way, that does not pay any VAT.”

Decommissioning the deregulated derivative market, imposing FTT and VAT, transparency and accountability in market transactions, along with burden sharing and debt write off, now we’re talkin….The debt balloon will burst eventually, why postpone the inevitable.

So, lets talk about leaving the euro Zeppelin 🙂

@ciaran

Yes, that was one of his less simplistic posts, but you missed out the immediately preceding…

“But, say some commenters, this was nonetheless malfeasance on the part of the authorities; they should have been running even bigger surpluses to offset the private credit bubble.

One answer is that at the time there was no consensus that it was, in fact, a bubble — conventional sources like the IMF and the OECD did not assert that there were big problems…”

Its that “One answers is..” that too easily seeks to excuse the maladministration of boomtime governments and to deny that there is any problem in the public sector of cost overhangs from those booms. Lots of people – or should I say talented economic analysts, including PK, were recognised there were bubbles. That the on occasion drippy IMF didn’t, should not be wheeled out as an excuse.

If you say that booms should never be taken into account because there will always be people who don’t recognise them, then you are attempting to lock in asymmetry in that large deficits should be run during recessions, but large surpluses need not be run during booms.

@Shay b

You might be interested to know that the “stability and growth pact” was commonly referred to in the City as “the stupidity pact” years before Germany asked for its get-out.

@ All

A blast from The Economist from the past which seems uncannily similar to the present.

http://www.economist.com/node/1402102

To quote Forrest Gump “stupid is as stupid does”. As the doing involved not actually following the prescriptions of the pact, it has hard to see how responsibility for the subsequent mess can be laid at its door.

@Dork

I don’t think Angela will be able to handbag Hollande. Trust is a different issue.

@Shay

I think it will be taken out of their hands. Events will overwhelm over the next few weeks,.
It looks like stalemate in Greece..so back to square one.

More Good News

“Sunday’s election in Schleswig-Holstein didn’t go well for Chancellor Angela Merkel’s conservatives, whose coalition with the pro-business Free Democratic Party was voted out of office in the small German state. “

@ceterisparibus

Re “square one’

The EU has had great success in many areas especially in the area of foreign relations and bringing countries closer together. Unfortunately, the EMU has been a disaster. It would be important in the ensuing unravelling of the EMU that the EU project that lies beyond the financial sector be rescued. New thinking in the replacement of the EMU structure perhaps with the demise of the ECB and its replacement with national Central banks in a new currency order, with free trade agreements and new currency structures, should be topics for research. The present mess cannot continue forever. Simplest structure of all would be a return to national currencies. However, some contentious proposals refer to a new world reserve currency, the Bancor. There are obvious fears of world government and other issues, interesting discussion here:

http://theeconomiccollapseblog.com/archives/bancor-the-name-of-the-global-currency-a-shocking-imf-report-urges-the-world-to-adopt

@ Colm B

200 or so words which dealt in absolute no way, shape, or form with what i said. Congrats, your bizarreness increases by the post.

@ Colm

By “square one” I meant the Greek Crisis. They obviously won’t be able to implement the Program agreed with the Troika.
The big surprise is Pasok being beaten into third place.
‘Nicolas Sarkozy, defeated after one term in office, became the 11th European leader to be swept from power since the economic crisis in 2008.’

Angela next?

@ All

Getting back to the subject matter of the thread, the essential question seems to be that posed in the Economist blog.

“The insight that the fiscal policy stance in the periphery prior to this crisis was insufficiently counter cyclical also allows for a more convincing argument against the German emphasis on austerity: if they criticise the periphery’s fiscal policy before the crisis on macroeconomic grounds, they should be in favour of more fiscal stimulus and less austerity now”.

It seems that they are (if the recent comments by Schaeuble are any guide).

http://www.google.com/hostednews/afp/article/ALeqM5gwbWoVjbPancZz6-bu-BbPCbV9Og?docId=CNG.4de4ad3bdb819df19fef2b80c4972801.401

Update:

Blind Biddy dancing a jig on Nikki’s golden butter box (picked up in Marseilles) while tuning in to France 24 and sipping some Remy ..

Might need to open a second bottle of Remy … Austerity Postponed & The Bazooka Reloaded … I hear that Tull has joined the ULA … & DOCM has rejoined Fianna Fail … strange times …

@Schleswig-Holstein [h/t ceteris – u got a link?

FDP – do the decent for Europe and GO.

@Bond
I won’t mention “City”

Hi grumpy, am yes I agree it really annoys me when krugman refers to the Spanish and Irish governments as If their boom time government were models of fiscal probity , it’s cringe inducing . At the time I would modestly suggest that a currency union that requires Nordic levels maturity and sensible governance to function ,isn’t a very good or stable system.

“I am about to become an average French person again.” Nikki

No comment.

@ceterisparibus

Ta. Drat – 8% for FDP … their equivalent of Mick-El-een Luch [aka Mick PD McDowell] will hang in there … & Mer will soldier on …

@David

That’s not an accurate translation of what he said. He said: “je m’apprête à redevenir un Français parmi les Français.”

I’m preparing to once again become a Frenchman among other Frenchmen.

@Ceter
I see Gilmore is doing the classic socialist tactic of promising a few sweeties for everyone.
Republics were always about a balance of power between the executive and the banks (although not the Irish fake republic which never had a balance of money power – at least the council has done us a favour in that regard)
Post Cabinet war republics were formed by a conspiracy of the Bankers and the people against the King.
Socialists are traditionally closer to the bankers because of this historical event.
When the Pols have their head down in the mud they might come to realise this political constant.
I fear it takes a even greater pillage to wake up the poor sorry stupid bastards.

Judging from Marios unsure latest ECB press conference – I can see that the ECB is beginning to fear the people waking up from their money slumber.
The socialists will try to buy people to further this demonic integration project – don’t buy their product please.

It will lead to further disaster.

@Ordinary Man

Ta for Greek update. Fragmentation no surprise.

@Ernie

Ta. My source: France24 newz channel.

@ECB

Print a few Trillion for Sovereigns or admire the second most expensive painting in the universe; for the most expensive, hear the voice of European citizenry.

@Remy Martin

Hmmmmmmmm

@ Ernie Ball
“A Frenchman among Frenchmen” who gets to holiday on an billionaire’s yacht. Oh yeah, slumming it!!!

@The Dork from Cork

Mario Draghi speech in Barcelona here with a comment from Delusional Economics

Draghi Departs the Solar System
http://www.nakedcapitalism.com/2012/05/draghi-departs-the-solar-system.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

You can find the latest PMI and employment data from Eurozone here along with information about Eurozone lending here. You can make your own assessment about the data, but I can find nothing in any of the latest information to show anything that I would define as a “stabilisation”. The latest unemployment figures from the Eurozone show that 170,000 people lost their jobs in March and the unemployment rate is the highest it has been in the area since the monetary union has formed. There are now more unemployed people in Europe than there are people in Australia. How anybody can keep a straight face while making these statements is beyond me. This is an economic tragedy, and the worse thing about it is that it has only just begun.

In the Q&A session, usually the most interesting, Mario Draghi went on to say that the “Fiscal compact” and the “Growth compact” are not mutually exclusive. Although Mr Draghi attempted an explanation I still have absolutely no idea what anyone actually means by a “Growth compact” so I can’t make a fair assessment of that statement. But given history, as I have said previously, I am still unconvinced that Europe’s financial leaders have simply re-branded the failed “expansionary fiscal contraction” to pretend they have a new plan.

Draghi also stated that he expected to see economic activity to recover gradually over the course of the year but latest signals from euro-area survey data highlight prevailing uncertainty. This just sounds like wishful thinking to me.

@David
Why do you think the Scream went for what was , $100 million + or something ?
You see the rich hold much of the worlds paper wealth but do not burn most of the energy …. thats the poor and the middle mostly.
All it takes is to fly to the auction and make the bid…..a $1000 to $100,000,000 energy ratio.
The Scream is now a form of money.
Quite appropriate really.

If they spent all of their wealth on private Jumbo jets (with the exception of the Saudis) their wealth would disappear in this leverage envoirment.

So with the exception of the Nice & Monte Carlo type Yacht stuff they now hold Leveraged empires on a collective level.

@ grumpy

Even allowing for the undoubted electoral element in the comment by Schaeuble, there is no disguising the change in political mood in Europe, including Germany. There will be no re-opening of the TSCG. The change in mood will, however, see Merkel outflanked or, as far more likley, a pirouette to catch up on her part. The substance of what can be decided by way of a stimulus package, however, remains to be seen.

@The Dork

The Norwegian nation ‘owns’ the other three ‘Screams’ …. this one was sold by a private Norwegian citizen for around 130mill or so … they also dumped all Irish bonds the other day …

& Blind Biddy posed for Picasso’s ‘Bust’ .. in her bohemian days … I notice that wry smile every time she hears the word ‘bust’ – she smiles more than the Mona Lisa these days – but thankfully, she is now off of Nikki’s golden butter box and back polishing her bazooka – the Remy must be going down well!

@ Dork
The betting there is that cultural and symbolic capital will retain or increase its relative value, perhaps because the barbarians need to possess the symbols of the fallen west.
Bourdieu did a lot of work around the theme of art as the religion of secular society.
‘ literary and artistic culture remains the form par excellence of disinterested culture, and consequently the most legitimate of the marks of distinction from other social classes’
http://en.wikipedia.org/wiki/La_Distinction

From an orthodox economic point of view, I guess the price is mostly driven by QE funds in search of a return.

@ernie

I cited precisely as France24 presented/translated Nikki’s comment in English. You might send them an email …

Hic! (-; Biddy – Sthay away from dat butter box – Hic! (-;

@ Shay Begorrah

It is a common feature of the group of neoliberal miscreants, malefactors of great wealth and assorted European institutional insiders…Both utterly loathsome and suggestive of serious psychiatric issues….I realized yesterday that the neoliberal goals of the Fiscal Rule enthusiast could be thought as a kind of Soviet central planning in reverse…In truth Soviet central planning had a lot more going for it…Whether the goal of any of the apologists for the ECB position is to preserve the status quo or provoke a bloody revolution and replace it is very much open to question…I always feel dirty when I agree with an Irish Independent opinion piece but with the Irish Times now being indistinguishable from a version of Pravda…

What a bucketful of venom this individual can deploy. A camel and its hump come to mind.

The extremes of the two great ‘isms’ of the past century and a half, had much in common as was illustrated by the common cause made by Europe’s greatest mass-murderers, in 1939.

Today the slow death throes of communism are being played out in a vast family-run prison in Asia, while being prolonged by food aid from a mainly capitalist neighbour.

It’s an irony today that the working conditions for many in China are closer to what Friedrich Engels had observed in Manchester in the nineteenth century, than what exists today in the dystopian neoliberal wasteland conjured up here.

The truth is that among the Irish insiders were the trade unions with an input on policy and the chief buckcat sat on the board of the Central Bank, from start to finish of the bubble – – 15 long years.

Even if someone finds that an ancestor of President-elect Hollande came ashore at Glengarriff from General Hoche’s fleet, I doubt if Ireland will appear on his radar. Shur, haven’t we loads of allies already?

A permanent campaign about Europe would be as good as Prozac to keep our attention from drifting towards thorny issues at home.

What is striking is that the only remedy for Irish unemployment that is being touted is the old reliable – – construction..

Another alluring solution would be to replicate the model of the ESB. It would of course increase inequality but the insiders would be happy (just in case any Neanderthals here may jump out of their skins, this is not an argument for electricity privatisation).

It’s inconvenient for some that structural problems in some economies predate the launch of the euro and therefore cannot be easily solved.

Spain’s record unemployment rate high of 24.5% in 1994 has yet to be reached. Ireland has had a poor export performance over the past 60 years.

Has Gilmore lost the plot completely…he says no change…Irish referendum to go ahead as planned…I think he missed the following…..

“Without sustained action on employment, Mr Hollande will not muster the 60% majority he needs in the French parliament to pass the treaty — rendering it useless without the support of the euro’s second largest member. This would mean that Ireland held a deeply divisive referendum for nothing, although it would not change the austerity measures demanded by the bailout programme.”

Read more: http://www.irishexaminer.com/ireland/french-election

And just to reinforce the idiotic stance of the Irish government…

“From the town of Tulle in his rural heartland of Corrèze in southwest France, Hollande declared victory. “May 6 should be a great date for our country, a new start for Europe, a new hope for the world,” he said. “I’m sure in a lot of European countries there is relief, hope that at last austerity is no longer inevitable.”

He said his mission was to go to European leaders to demand measures for “growth, jobs and prosperity”. Hollande’s first move as president will be to push Germany to renegotiate Europe’s budget discipline pact to include a clause on growth.”

And our leaders are insisting on voting for austerity only. They are rapidly losing all credibility .

@ Ceterisparibus

Maybe you are losing the plot yourself?

Another oracle declared last week: “Ireland could ride to salvation on the back of François’s victory.”

There is no lottery ticket to the Promised Land.

So would you vote for the treaty if FH gives his imprimatur after discussions with Merkel?

It seems ridiculous to me that an Irish government would suspend a national referendum to await on what commitments Hollande could get on growth?

It would then effectively have to play up the commitments even though in practice they may not be significant as a stimulus across the EMU.

How many would be really persuaded? We didn’t get our fair share from the EIB; France is getting more, blah, blah. The mirage on the white horse has disappeared from the sky.

Statements at a time of victory should not be taken as gospel. A fox ate the tooth fairy.

@CP: “Has Gilmore lost the plot completely…he says no change…Irish referendum to go ahead as planned…I think he missed the following…..”

No, never had it. But do any of our leaders in Leinster House know what the story line actually is? I doubt it. They do have a story line alright, but its not the real one.

Now let me do a few sums. Less employment means more/less taxes paid? More/less taxes taken in means Gov decides to spend less/more?

Our Gov (and many folk with very short attention spans) seem to believe, with all the sinserity of a six-year old (that Santa is real), that they do not have to (a) reduce all state and semi-state salaries and wages (b) abolish all allowances (c) increase income tax to 80% for salaries/wages in excess of 100,000 (d) set income tax at 100% for salaries/wages above 150,000 (and please do not give me any guff about folk not wanting to work – they jolly well will*) (e) embark on a sustained programme to reduce energy use (f) force widespread debt write-downs and write-offs (government and private).

Forget about the markets. We will not be able to borrow. That predicates ‘growth’. And ‘growth’ is not about to re-occur any time soon. Dumping money into the system is inflation. Creates further problems.

We are not going to get any statistically real increase in employments. It simply cannot happen (except in the short-term in the advent of a general election), when the data is fudged. This is not wishful thinking on my part. Please study what has happened (and is happening) in Japan. The employment data in the US is phoney. Iceland took a corrective (dumped debt) to protect its citizens form the worst effects of impoverishment. It not been a complete success, but it sure as hell is not a successful failure.

Our lot by comparison? Dreadful. Bye-the-bye, what are the expert advisors doing? Do they understand the predicament?

* unless you believe that 100% of zero is worth more than 50% of something! Amazing how may folk believe this silly little fairy tale.

@Paul
For a medium of exchange to work it needs just 2 parties that are in agreement I Guess.
Since many of what you describe –
” literary and artistic culture remains the form par excellence of disinterested culture, and consequently the most legitimate of the marks of distinction from other social classes”

@Ceter
Funnily enough I agree with Micheal but for different reasons.
Hollande has accepted the fiscal compact but wants some growth in there somewhere….this is not achievable in this leverage envoirment.
That means more Bank credit / debt , more leverage etc etc.
Europe is all leveraged out I am afraid.
It desperatly needs money growth that pays no interest , not bank credit growth.
The Socialists will not you help you there.

@ DOCM

Re “One wonders if the Irish media even bother to consult Continental sources!”

I agree, blindfolds are sometimes put on horses during the summer time to prevent their eyes being bitten by flies. If there is a fire, they can be used to guide the horse away from the fire and to prevent the fear that would otherwise distract them.

Irish papers and generally Irish media coverage, tv and radio, should have a eurodesk with space allocated for coverage.

If there were such a thing, the election of Francois Hollande may not have proven to be such an embarrassment for Labour/Fine Gael. Instead of consultation re the Hollande Protocols that need to be included in the new version of the Fiscal Compact, we have the current embarrassing situation of Labour/Fine Gael forging ahead with a version of the ‘Compact’ Hollande is committed to changing?

Is that why Gilmore is in PAris at the moment? After Fine Gael and Labour doggedly deciding to hold the Referendum on May 31 to allow them to enjoy the holidays, they must have hoped Sarkozy would have won through, now they’ve put a Referendum before the Irish people that is insulting to Francois Hollande’s vision for a new Europe without Hollande’s protocols for growth.

The article above speaks of bonds from the French Central Bank to target poorer regions of France. Similar logic could be applied to the construction of bonds for regions in Europe, Ireland forced by Europe to absorb odious debt from casino banks?

Francois Holland has a good sense of humour. Perhaps he may help Kenny, Gilmore and Bruton extract the Irish tooth of debt?

The Three Stooges 🙂

http://www.youtube.com/watch?v=dcELyKkOAak

Hope you know waht yur doin?

We could get fired for this?

@DOCM

Having read the above le monde link, it does not alter my view that the French election result, although narrow, has radically altered the political line up in addressing the crisis.
It is true that France will still have a deficit of 3.9 % in 2013, but there are many ways of tackling a deficit. Hollande will have less cuts but more taxes. We can be sure of that. A FAT tax must now be surely and firmly on the EZ agenda.
His biggest initial test will be whether to concede Schauble as head of the Euro group. This would be a mistake. He should not do it but if he does I do hope he extracts the maximum for it.

Germany is now virtually isolated in pursuing a policy that want was definitely good for Germany but clearly disastrous for Europe. I note from a comment on another thread from @Mickey Hickey that the German export machine is beginning to slow in the face of the crisis of confidence.
Whether Europe and the EZ in particular can come up with a solution that prevents the slide to chaos is another matter.
[With respect to @MH re Spanish unemployment having been at these levels in the early nineties, my definition of chaos would be current Spanish unemployment rates]
The bottom line here is that Germany has imposed a solution on Europe that did not work and is not working, while she herself was protected from the worst ravages of the crisis.
The solution is not working and is no longer politically acceptable.

People may want simple growth narratives but apart from the examples of Ireland and Spain where property bubbles provided the only growth in the last decade, the US is producing more goods and services than it did when the recession officially began in December 2007, but with about 5m fewer workers.

The Great Recession is the biggest since the global market became an actual global market and with tepid growth, commodity constraints are already evident.

At the current rate of domestic oil consumption, Saudi’s full production would go to meeting domestic needs by 2028.

In Europe, increasing demand won’t be enough to address the crisis. The region had been experiencing what Americans called ‘sclerotic growth’ for a long time before the 2008 crash.

@ Joseph Ryan

The problem is that public debts are generally high and continuing to rise in many countries.

Yes a stimulus program would help but without reform of costly public services and improving the environment for new startups, it will not work or have credibility.

Can Hollande deliver reform on his own turf? – – doubtful because the issue was ducked during the election campaign.

The shifts in the political landscape across the EU – both overt in France and Greece and covert as the general mood music shifts in favour of growth-enhancing structural reform – makes the esoteric witterings of our public intellectuals and the disingenuousness and hypocrisy of the principal proponents and opponents of the fiscal compact even more surreal. These have all the characteristics of muffled signals from another planet.

There is far less to the shift in France than meets the eye. The Socialists ability to raid, tax and spend is enormously constrained. But, true to form, they will have to try until reality dawns. It’s amazing that the response to deep-seated structural and behavioural problems is to raid, tax and spend rather than imposing structural reforms and enhancing competition that would benefit the economy and consumers far more comprehensively. But some people have to keep re-learning some basic lessons.

However, it appears that a majority of the Greek people have decided that a national common bond no longer exists to secure the integrity of its polity or the sustainability of its economy.

It would be sad and tragic if a majority of Irish people were to come to the same conclusion. The likelihood of such an outcome increases by the day.

Off-topic, but entertaining. Academic commentary from today’s XKCD performed on YouTube.

‘The “dismal’s” fine – its’s “science” where they patently prevaricate’.

@ Ceterisparibus

You seem to be oversensitive to a robust response to your rubust criticism of Gilmore.

I don’t do insults either.

You didn’t answer the key question in my post.

So would you vote for the treaty if FH gives his imprimatur after discussions with Merkel?

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