Austerity could only ever bring Europe so far

Austerity may not be dead..yet..
http://www.reuters.com/article/2013/05/27/us-eurozone-austerity-idUSBRE94Q02T20130527
Meanwhile we continue to decline with April retails figures down 0.5% yoy
According to report in the Examiner.

Almost 19,000 people apply for 11 jobs in Spain €13k/annum as security guard in Museum, hmm this austerity thing is working alright…..:(

http://www.faz.net/aktuell/wirtschaft/europas-schuldenkrise/spanien/jugendarbeitslosigkeit-in-spanien-19-000-arbeitslose-konkurrieren-um-elf-festanstellungen-12197834.html

But not to worry because Bundesfinanzminister Wolfgang Schäuble and Minister Ursula von der Leyen (both CDU) travel to Paris today for a ‘Town Hall’ type summit with colleagues Moscovici and Sapin. After, they will meet Hollande. That’s ok so, because, they’ve done so well thus far….:( Livestream on the link: http://www.faz.net/aktuell/wirtschaft/europas-schuldenkrise/gipfel-gegen-jugendarbeitslosigkeit-deutschland-und-frankreich-suchen-nach-loesungen-12196788.html

“contained depression” apparently describes what Ireland is experiencing….

http://www.cnbc.com/id/43572289

Right, Hugh.

Because nothing in the adjustment has as yet had an impact on salaries, privileges or pensions…

If only these people were in positions of power. .. Oh wait

No! If we keep squeezing the poor and middle classes, Europe can rise to new heights of aristocratic decadence and inequality. The continent can become a new Latin America! Ireland is in with a chance of becoming the Panama of Europe, finance-wise anyway.

Latifundisatas, Rent seekers, corruption, supressed scandals, outright larceny of public funds: None of this would be possible without the social, moral, and economic decline that austerity promotes.

If Ireland is to finally return to Great Famine emigration levels, we cannot roll back on austerity now!

Consider this: there are two parallel processes.

The theoretical (carefully designed and constructed to a detailed blueprint with precisely dimensioned Lego-bricks) and its practical counterpart (a Heath-Robinson contraption constructed a confused plan and with bricks of many different dimensions). The Austerity programme espoused by those who will be little effected by it, and the actual consolidation programme which will have a significant impact on the rest of us folk. Like bad!

You must carefully interrogate the proposers (if you can even get close enough) about the outcomes they expect. Forget the majority of MSM – they could hardly beat their own way out of a wet paper bag. If that process fails to elicit the information you need, then just believe the evidence of your own eyes on the matter. Its bad! That’s it! The rest is simply bar-stool gossip.

At some point a deathly realization may dawn. You cannot unwind 300 years of European political and economic development. If you do attempt this – you will fetch up with a disagreeable surprise in the form of barely governable states – not one, but several contiguous ones – with substantial populations of p*ssed of citizens. We’ve been there! The only reason capitalism has succeeded – so far anyway, is the presence, and maintenance, of the Rule of Law and the consent of the populations to be so governed. Its the Rule of Law that is being undermined by the elites proposing Austerity. They became affluent by persuading their political supporters to waive, suspend and even delete laws which protected ordinary citizens against financial malfeasance. That works – for a good while anyway. But eventually – like now, things start to unravel. Austerity’s proposers and supporters need to take greater care what they wish for!

A well-argued letter, but the fourth point is particularly important and deserves special attention:

“Fourth, Europe’s monetary policy must become more expansionary. …… it is becoming increasingly clear that Europe’s financial crisis cannot be overcome in a deflationary environment, so a different inflation outlook is necessary. We must rethink the ECB’s role and powers.”

The flawed monetary policy architecture of the ECB is a substantial reason for the very slow (almost nonexistent) recovery. The ECB will claim that they are only following the rules as laid down in their charter, but those rules are deeply flawed and causing enormous, preventable hardship for many EU citizens.

@ Gregory

Did you not wonder listening to Chopra last week why there was no safety net designed for the EZ? No Bank recap scheme, no LOLR, nothing. And every bailout has been cat. What were they thinking of at the time they designed the rules ?

@ DOCM
Its not too much to ask you know – a Europe wide health budget with transfers to fund it.
Huge efficiencies and the right thing to do. Disgusting to watch the Greeks run out of medicine.

@ Eureka

Dream on! Even in Canada, as I understand it, the cost of health care is carried mainly by the provinces (although the federal government has a decisive guiding and equalising role).

The intriguing question posed by the compare and contrast exercise indulged in by Mark Carney, IMHO, is whether the hasty and not fully thought out decision to create a single currency can lead to a higher level of federalisation in Europe, reversing the order in which such developments have occurred in the course of history.

@ DOCM
It’s a shared system.
I have never quite figured you out – you seem to be pro-European but have absolutely no idea of what that Europe should stand for.

@ Gavin Kostick

It’s cat malojan altogether!

Used also in Cork

@ All

I have killed two birds with the one stone here:

http://www.finfacts.ie/irishfinancenews/article_1026053.shtml

@ Ernie Ball

Here’s a story on how the Chinese comrades took the so-called ‘iron rice bowl’ from most civil servants:

http://www.finfacts.ie/irishfinancenews/article_1026043.shtml

@ Brian Lucey

Sweden, Finland and that other tax haven, Switzerland, would be more my cup of tea.

All workers having equal rights — surely not revolutionary?

As for dictatorships, the embattled Spanish government has interesting priorities.

It plans to have the mausoleum where the former Spanish dictator Franco lies buried, the Valle de los Caídos, renovated and put out a bid for tenders worth 300,000 euros for the project in mid-May.

La Repubblica of Italy comments : “The wind of the Counter-Reformation that is blowing through the ranks of Rajoy’s People’s Party could already be felt when the proposal to designate July 18 as the ‘Day of Condemnation of the Franco Dictatorship’ was rejected. … The day of Franco’s coup and the start of the Civil War should, the Socialists had proposed, be made a day of remembrance and of condemnation of all forms of political violence and dictatorship. And now, even in a country with empty state coffers, money has been found for the restoration of what half Spain sees as a desecration of the memory of those who were defeated in the Civil War.”

The El Mundo newspaper reported last week on the latest developments in the submarine saga that has given Spain’s defence department a sinking feeling.

The €2.2 billion contract to design and build four S-80 underwater craft, billed as “the most modern submarine in the word” has been put on red alert after engineers found flaws in the plans and sounded the klaxon.

€530 million had already been spent when calculations made by engineers at Navantia, the construction firm, revealed that the submarine as designed would dive to the bottom of the sea and stay there due to excess weight.

Re “cat” I don’t think it is from Irish. “Cat melodeon” is used in Connacht and in Ulster. It’s is often used to describe GAA performances. Eg Down were cat yesterday.

Noël Coward had a variation on the theme

http://en.wikipedia.org/wiki/After_the_Ball_(musical)

“I have been having a terrible time with After the Ball, mainly on account of Mary Ellis’s singing voice which, to coin a phrase, sounds like someone f*cking the cat”

Can anyone explain why there was no safety net for the EZ when TSHTF?
Chopra described what such a system would look like last week in his presentation about how to move forward on banking regulation. Colm McCarthy has been banging on about it for some time.

The ad hoc approach is a mess and none of the bailouts have been “least cost”. Cui bono?

@ Eureka

I will come out with my hands up.

To sum up my position (i) I consider the European Union to be a noble cause; if contrasted with what has gone before in Europe (ii) it is made up of nation states that have agreed to act in common (to take the simple language of the French constitution) in a manner which can, and has, led to quasi-federal action (iii) the sine qua non is that the states involved honour their commitments regarding the objectives set out in the treaties (“pacta sunt servanda”) and (iv) that these are achieved as soon and as effectively as possible.

If I want to find out “what Europe stands for”, I refer to these elements.

What Europe should be in an ideal world, I leave to others. The political actors arguing for this or that change are usually trying to camouflage their failure to live up to their existing commitments.

The current crisis response mechanism is a mess. Trust breaks down at the first sign of trouble. The equivalent of a fire panic in a theatre unfolds. Better informed punters get out first. Efficient markets my a*se. Same story for Ireland, Greece, Portugal and Cyprus. Costs are multiplied and the crisis deepens.

There is zero transparency. Add this to austerity without anything done on capital imbalances and you get to where we are now.

http://www.ft.com/intl/cms/s/2/d3508ac0-c687-11e1-943a-00144feabdc0.html
“I turn to the ECB’s insistence that governments, particularly in Ireland’s case, should not allow default by their banks to creditors. What was the thinking behind that?
“This was something which was very lengthily and thoroughly discussed,” says Trichet. “And the judgment was that at that time and in these circumstances, the threat of contagion in Ireland itself was such that it would have been extremely dangerous [to allow the Irish banks to default].””

Chopra’s view was that it’s far too expensive to leave the response to people like Trichet. Why don’t we have mechanisms in place to deal with market failure?

Here’s something from the latest issue of Private Eye (no link available)

“A judicial review brought by campaigners UK Uncut Legal Action against HM Revenue and Customs’ dodgy deal with Goldman Sachs, first revealed in Eye 1287 2 years ago , exposes how craven the tax department is when up against big business- and deepens concerns over the National Audit Office’s whitewash of the deal.

An internal mail from Dave Hartnett, the tax boss who in November 2010 shook hands on the deal that let the great vampire squid off a GBP 20m interest bill on an old national insurance avoidance scheme reveals how the tax man gave in.

When the settlement was rejected days after the handshake by an HMRC
board set up to review big settlements, Goldman’s UK tax director “went off the deep end” ”

Voilà

And how do economists price influence and corruption into their models ?

http://www.guardian.co.uk/politics/2013/may/28/contributions-welfare-debate

“Now let’s get this straight (Aditya Chakrabortty, G2, 28 May): even in “prosperous” Sweden 25% of young Swedes are out of work, and 40%-plus in Spain and Portugal. Yet we apparently are faced with too many older people for the working population to support. Why is the top priority not to convert these millions of unemployed into earners who can support the ageing, rather than negatively reduce the living standards of both groups? Has nobody any constructive ideas? Anyone who has visited less-developed countries will have seen the crowds of unemployed young men who, probably out of resentment and boredom, are available for any kind of incitement to unrest.
Ralph Gordon
Romford, Essex “

The problem that I have with this letter is that it’s ineffective. The arguments it contains may have merit, but at whom are they directed? And to what end? Apart from the political curiosity of having Joan Burton’s signature, as the only currently elected politician and serving member of a national government, appended to it, it has attracted little or no media or political interest.

You get one shot at something like this. If you miss, it’s dead as a dodo. So I would have thought that a more suitable target for publication of such a missive would have been the FT, since that is the acknowledged ‘journal of record’ for the Brussels’ elites and for most of their national political counterparts throughout the EU; and thereafter, publication in all national ‘papers of record’ of eurozone MS. That way it stood a chance of either creating some momentum behind its proposed plan of action or generating national commentary and political discussion. The Guardian ‘Comment is Free’ section hardly fits the brief, and it’s not yet clear what other EZ mainstream press outlets were supposed to run with it. As it stands, it appears to have had about as much impact as throwing a small pebble into a large lake.

@ Michael

Stewart Lee continuing the theme of government tax based support and what it means

http://www.ft.com/intl/cms/s/2/bea2c458-14fd-11e1-a2a6-00144feabdc0.html

“He especially regrets the disappearance of the old “support networks”, such as the unemployment and housing benefits, that enabled artists to live cheaply and find their way. “It’s all over. There’ll come a point when somebody will suddenly realise – there’s loads and loads of Coldplay but there isn’t a Radiohead, there’s loads and loads of ITV1 sitcoms, and things with Robert Lindsay in a house, but there isn’t a League of Gentlemen. Someone will be reading an embossed novel about a missing artefact, and they will suddenly think, ‘Didn’t there use to be books that were not just a list of events?’ ” (Lee’s well-known parody of a typical Dan Brown sentence goes: “The famous man looked at the red cup.”) In 40 years, he reckons, people will be saying, “Where’s all that stuff gone that was … good?””

Are some of you guys confusing ‘cat’ with ‘cac’ ??

@ DOCM
Let me make this simple for you:
What’s the buy-in for Europes citizens?
As far as I can see citizenship of Europe is serfdom. No right to health, no right to education, no right to vote for Europes president or directly elect the commission.

Europe, as it stands, means nothing.

Are you French by any chance – your arguments are often quite circular

@ Eureka

Bien sur que non!

@ Paul Quigley

To coin a phrase; it takes two to tango! One of the partners in this curious relationship can step, and has stepped, on every toe in town. I am not defending it. Simply pointing out that the initiative hardly lies with the junior partner.

@ DOCM

Ireland is to become the paragon of international taxation virtue? Where, exactly, do you see the benefit in that?

Ireland will likely do nothing — I’m not naive.

However, it is for example reasonable to expect given the coordination between the UK, Germany, France, the OECD and G-20 coupled with EC moves on tax transparency and public outrage, that for example Amazon’s tax-free status in the UK, its biggest market, is unlikely to continue.

Yesterday, the Swiss breached their own banking secrecy fortress and there is more to come.

@ Eamonn Moran

I have more detail here on different levels of company compliance in Ireland or none.

http://www.finfacts.ie/irishfinancenews/article_1026060.shtml

@ DOCM

How many decades has it been now since we ceased, at official level, even to think about any other strategy ?
Sleepwalking.