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Posts Tagged ‘eurozone economies

EU Gripped by Growing Class War?

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from The Daily Bell
Originally posted Monday, October 18, 2010

Nicholas Sarkozy

Anti-austerity protests rock Europe … People demonstrate to say ”no to austerity” on September 29, 2010 in the Belgian capital, Brussels. Hundreds of thousands of people across Europe have taken to the streets to protest austerity plans, as major EU nations were hit by a wave of strikes. France has witnessed the most massive demonstrations as protesters in Paris and other large cities rallied to decry French President Nicolas Sarkozy’s (left) plans to increase retirement age from 60 to 62. The strikes have closed hundreds of schools, refineries and train stations and grounded flights amid concerns that the situation could get worse. – Press TV

Dominant Social Theme: EU citizens will simply have to swallow their medicine and realize that their greedy ways must be curbed by logical austerity. Their protests are nothing but tantrums.

Free-Market Analysis: We have tried as best we can to offer a counter-narrative when it comes to the EU, austerity and protests. The “alternative Internet news” approach is that the crisis has been cynically fomented to create a greater European Union. This has been our argument as well. But in our view, the elite has been caught by surprise by the truth-telling of the Internet and by the depth of monetary unraveling. This is having all sorts of unintended ramifications and is upsetting elite plans. The EU promotion is beginning to fail.

The mainstream press sees none of this. It has its own narrative of course, described in this article’s initial dominant social theme (above). But we would argue that what is going on now is increasingly a protest against the EU itself and the perspective that the EU elites expect middle class and working-class Europeans simply accept the radical diminishment of their lifestyles and opportunities. We see signs that these protests represent a populist statement that has as much to do with EU policies generally as any specific austerity measures.

Certainly, the protests continue to pick up – and the severity remains unreported in our view. In Greece the Acropolis is now being picketed. In Italy, thousands (or maybe a lot more) rallied against the Italian government and marched in Rome. Union leaders called for a general strike. In France, rolling strikes hit oil refineries and panicked the French government, which is now asking airlines to refuel overseas. In Iceland, as we reported the other day, protestors chased Iceland legislators out the back door of the Parliament building.

Perhaps the most interesting wrinkle was in dowdy old Britain. We have speculated in the past that the British psyche, conditioned from birth to a kind of institutional subservience to the upper classes and the Queen, would take a good deal of beating-up before responding. Certainly that thrashing has taken place. The arrogant upper classes have pounded unmercifully on the plebes. (As an aside, we cannot help but liken the Brits to hobbits with “proud feet” – slow to anger and determinedly attached to modest creature comforts and local society. Is it any coincidence that Tolkien presented the evil Sauren who wants to rule the earth as an all-seeing eye in his great Lord of the Rings fantasy trilogy?)

But for now, cameras watch the Brits wherever they go. If they attempt to defend themselves with guns or knives from burglars, even at home, they are apt to be cast in prison. If they throw away the wrong kind of garbage they may be brought up on charges. The school system barely functions. The health care system leaves women giving birth in taxis – as they have been refused entrance to hospitals. The government pursues a war on terror that is evidently and obviously fraudulent and continues to fight a war to conquer Afghanistan (for the second time!) and with no more success. For the privilege of living in a dysfunctional society, with its academics that still stubbornly celebrate global warming and global governance, British citizens are charged ever-higher amounts of taxes – even though most of Britain’s modern laws are now made in Brussels.

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Greek Saga Won’t Kill the Euro but the End May Begin Here

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by Liam Halligan
Originally published 13 Feb 2010

Could the endgame of this Greek tragedy be a eurozone break-up? The single currency’s supporters maintain that such an outcome is mere mythology.

GREECE ACCOUNTS FOR ONLY THREE PER CENT of the 16 member states’ combined GDP, they say, and has lower debts than some of the banks bailed-out during sub-prime. A loan of €20bn (£17.5bn) would do the trick, we’re told. That’s less than the British government injected into either Lloyds or the Royal Bank of Scotland.

Such analysis sounds vaguely plausible. But it is naïve and politically dishonest. Then again, the single currency was built on political dishonesty. That’s because, at the heart of the eurozone project there was always a fundamental contradiction – one that the architects of monetary union never dared to address. Now its being highlighted for them, whether they like it or not.

While the European Central Bank controls eurozone interest rates and the money supply, the size of each country’s fiscal deficit results from the spending and taxation decisions of its own sovereign government.

How can you enforce collective fiscal discipline in a currency union of individual sovereign states, each answerable to their own electorate? The truthful answer is you can’t – not unless you subjugate the autonomy of democratically-elected politicians and, by proxy, their voters.

Voters don’t like that. Neither do politicians. Faced with a choice between seriously annoying their own voters and seriously annoying the ECB, the most ardently “pro-European” lawmakers, even those with years of Brussels trough-nuzzling under their belt, will always side with their own. That’s why the eurozone will ultimately break-up – whether Greece is bailed out or not.

The eurocrats blame “speculators” for the single currency’s woes. That’s a bit like sailors blaming the sea. The eurozone is ultimately doomed because, in the end, economic logic wins and the will of each country’s electorate bursts through. This current Greek saga won’t end the eurozone – but future historians will identify it, perhaps, as the beginning of the end.

Many have said it’s hardly surprising that Greece (with its history of financial profligacy and capital flight) has emerged as the eurozone’s Achilles heel. A more germane observation is that, while fiscally wayward, Greece is also the birthplace of democracy. If the Greek population wants to get upset, throw out its elected politicians and reject austerity, it must be allowed to do so. I think they’d be mad, but it must be their choice.

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