Tag Archives: PIIGS

Jurgen Habermas

Jürgen Habermas during a discussion in the Mun...

Jürgen Habermas during a discussion in the Munich School of Philosophy (Photo credit: Wikipedia)

The politico-social disaster that will evolve with the breakup of Europe, has been referenced by the German Thinker and Philosopher Jurgen Habermas.

Habermas is a noted intellectual in Germany, and he has added his voice to the cacophony of thinkers pleading for a new enlightenment in political thinking, to avert the dissolution of the Union. It must be a truism, that an inability of our politicians to think beyond their local and national agendas is prescriptive for dissolution. Survival of the Union can only happen when there is integration oriented leaders, and visionary statesmen or women. It is the current pity that we do not seem to have anyone of stature at this stage to lead the continent. The sapping of political will is a key ingredient of the current crisis.

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George Soros

George Soros, billionaire

George Soros, billionaire (Photo credit: Wikipedia)

One can almost get encouraged when wise council abounds. However wise council is ignored, and partisan political interests prevail. Germans can see no further than their forthcoming elections, and are busy claiming the high ground as the tsunami of European Disintegration approaches. To quote Yeats “the best lack all conviction, while the worst are full of passionate intensity”. The crisis becomes more acute by the day, and the political inertia seems to deepen.

George Soros, has put forward a succinct analysis of the situation in The Guardian. He is saying what anyone with a brain has been saying since Cyprus. He has, however, put his mind to finding good constructs for the remedy of the situation. His options are the issuance of Eurobonds, or alternatively Germany leaving the Euro. Again, this is the choice between integration and dissolution, which has been a theme here at Paddyspiigs.

If Germany did leave the Euro, who else would go with them,- Austria? Denmark? Holland? This would lead to a two speed Europe with the separation of the Northern nations from the indebted nations. A natural consequence of the current political atmosphere. This is a solution that totally ignores the political, social, and strategic aims of the European Union. It would be a sad message to send out to the world at large.

Soros’s analysis does however make a significant contribution to the current debate. Hopefully someone will listen to him!

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Spain

English: Registered unemployment rate in Europ...

English: Registered unemployment rate in Europe (EU-27) – june 2009. Data from Portal Euro-Indicators on EU Commission website (Eurostat) Français : Taux de chômage enregistré en Europe (UE-27)- juin 2009. Données Portail Euro-Indicateurs sur le site de la Commission Européenne (Eurostat) (Photo credit: Wikipedia)

Spanish Unemployment Rate 27.2%.

6,202,700 out of work.

Spanish Youth unemployment of 57.22%.

Plan to pump €76 bn. euro into Spanish Banks.

Economist Fernando Fernandez says on CNN that it was a “good week for Spain”.

What else needs to be said?

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April 28, 2013 · 5:05 pm

Ivory Towers and Other Fantasies

As someone who’s appreciation of economics has absolutely no formal basis, I find the current debate about the Rogoff-Reinhart controversy quite surreal. Here are all these economists on both sides of the argument, discussing the relative merits of one form of analysis, versus another, and minimising or exaggerating the effects of a spreadsheet error. This issue is not an abstract philosophical discourse. The issue of how we view our society is of fundamental importance to every person in the world. Trust in our advisors is particularly relevant to Western democracies surviving. We have moved beyond the base economics, and we are talking about the shape of the Western liberal tradition. Over the last ten years or so, the rudder of Western Society has been firmly in the hands of the austerity driven economists, who, via the World Bank, via the ECB and via the Troika in Europe, have not only had the hegemony of policy, but also have esposed a monopoly on knowledge about the so called remedies for recovery. These policies have prevailed while 27 million people are unemployed in the E.U., and the wealth of middle class Europeans and Americans has dissipated.

Wile E. Coyote Business Card .. Genius .. Have...

Wile E. Coyote Business Card .. Genius .. Have Brain Will Travel .. Reverend Bill Proctor “stuck in Atlanta” (July 02, 2011) …item 4.. Comments are posted from viewers – We are not his preferred constituents (Feb 9, 2012 at 01:54 PM) … (Photo credit: marsmet523)

These policies bear no criticism. In the case of Ireland, this diminutive analysis portrays the entire Irish population as squanderers whose spendthrift ways are deserving of moral opprobrium and of the punitive austerity imposed as a remedy on the entire population. The fact that the gross excesses were limited to a minute proportion of the population, and there were many non-Irish players, including foreign banks with their snouts in the trough, does not seem to influence the Troika or the arbiters of the new order. The fact that much of the so called “Irish” debt was based in other countries, and not truly “Irish” in any real sense of the word, offers no respite. The undisputed fact that the recklessness of the banks contributed to the catastrophe, fails to provide any relief for the indentured population. Paradoxically, the only element of the population that is not suffering are the bankers, who continue their gluttony of bonuses and high salaries, while acting as the very agencies that are imposing penury on the general population.

So back to the debate over the R-R mistakes/omissions or whatever. The problem for me, an ordinary Joe, is not the semantics of the derivative implications of the subtle analysis that was presented. It was not the worry about the extrapolations of high financial equations. It was not even the arithmetic mistake that was made. It was however the sheer clumsiness, the appalling arbitrariness and the overwhelming subjective nature of the analysis that was most frightening. In my naivety, in my ignorance, I had always thought that economists dealt with the real economy. I considered that these people with their magic formulae, their alchemical spells, could conjure up, if not a view of the future, at least an understanding of the past. But oh! I was woefully wrong. The people who lay the fabric for the agenda of the rich and powerful, don’t do any of that. They decide for arbitrary reasons, to include or exclude countries from their analysis, they don’t bother to check for simple mathematical errors. They then defend themselves against criticism by saying that they were only small errors.

My problem, as a punter, is how the hell can I know what any of their prognostications mean. In fact, how can anyone know? I truly do not know anything of the mathematical formulae required to analyse economies. I know little of the nuances of Keynesian planning, though I understand enough to know that the wisdom of his thinking has been ignored in order to save the oligarchy of the financial elite.

What I do know is this – that the last five years have seen the greatest transfer of public wealth into private hands in the history if Western Society, the indenture of the whole population of the PIIGS countries, the decimation of the middle class, the dismantling of social services and the abolition of democracy in debt burdened nations. The banks have managed to privatise their profits and socialise their losses. Nations have not only lost the ability to decide on their own Government programs, but have had external programs imposed on them.

So what the nub of the problem for the man in the street is that the basis for all these austerity driven policies is not an analysis of tried and trusted methods of overcoming the debt crisis but rather the exact opposite. These programs are not only counter-sense, but they are an exact opposite of the methods that we have learned about dealing with recessions/depressions before. They are an attempt to create growth by shutting down economies. To raise taxes by strangling industry. To reduce social spending by increasing dependency. They fly in the face of the manifest truisms that you cannot create growth without a functioning economy, you can’t have an economy without cash flow, and you cannot have cash flow when you sacrifice individual effort in order to prop up failed financial institutions.

These counter-sense economic policies play straight into the neo-Weberian view of the world that economic collapse has a quasi-moral dimension to it, and that the nations who profited most by the European experiment in the terms of growth and centralisation of wealth are somehow on a higher plane than the peripheral economies that have floundered. Whatever truth there is in the supposition that the peripheal countries screwed up their economies independently of the centre (another manifest fantasy), the cure has nothing to do with the complaint. The cure is designed to tie those peripheral countries into a centralised low-inflation stangnant austerity that has nothing to do with stimulating growth. It has everything to do with economic dependency and indenture.

economics

economics (credit: Sean MacEntee)

This whole debate is not about a tweeking of an “Econ 101” freshman project. These data were presented as scientific fact, and a quick revision is not the solution. The basis of the austerity philosophy as applied to Europe is nationalist, pseudo racist, and highly questionable. It relies for intellectual legitimacy on the highly questionable views of the likes of Rogoff and Reinhart. So when you question how such philosophies have contributed to putting twenty seven million people out of work, you have to throw up when you find out that the whole basis of these concepts is faulty. Not only are the analyses subjective, arbitrary and variable, but you also find out that even the basic arithmetic is wrong. Closed prejudiced minds. Sloppy work, and sloppy thinking.

Reinhart and Rogoff – Responding to Our Critics – NYTimes.com

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Crying in the Wilderness.

Irish politician Michael D. Higgins of the Lab...

Irish politician Michael D. Higgins of the Labour Party. (Photo credit: Wikipedia)

 

“What oft was thought, but ne’er so well expressed”

I must say I never had a lot of time for Michael D Higgins. I did vote for him in the recent Irish Presidential Election but mainly because of the appalling panel of six opponents that he faced, ranging from a one issue Republican (not the American type, for those not in the know, but the born-again IRA type), to an ex-Eurovision singer with a right wing agenda. “Michael D” as he is affectionately known (is there a “Michael C”??)   has been hanging around politics with an Arts/Crafts – Left wing agenda for most of his life. He was the safer option. Although he is a well known orator, he had certainly never inspired me. I general found him insipid, and what the Irish would call “aeery faerie” – insubstantial and irrelevant. He went on to replace two fairly hard hitting Presidents, Mary Robinson, and Mary Mc Aleese, both of whom have made substantial contributions to world politics and society, way beyond the narrow confines of the titular position that is the Irish Presidency. Michael D. was generally believed to be a weak substitute.

However, Michael D. has proved me and others very wrong in our opinions and if he were ever to read this blog, he can take it as a public apology for my prior held unsubstantiated opinions. Last week in an address that brought the European Parliament to its feet (an achievement in itself), he set out a vision of Europe that has not been articulated for decades. A vision of a society that is not to be judged through the narrow prism of fiscal rectitude, but of a society that has a broader vision of what it is and what it wants to achieve. A foretaste of this powerful speech is quoted below

A European Union – if it is to be respected as the great project it is and can be – must draw on the intellectual heritage and the intellectual imaginings, and the existing talents and capacity of the peoples of Europe. It is a fully authentic Union if it is characterised by solidarity.

If it is not of this authentic character just now, it must be made so by changes in consciousness and commitment, and through reasserting the idealism, intellectual strength and moral courage that drove the founding fathers of the Union. European Member States are peoples, with history, with current needs, with possibilities to be shared.

If we were, as an alternative, to regard our people as dependent variables to the opinions of rating agencies, agencies unaccountable to any demos, and indeed found to be fallible on occasion, then instead of being citizens we would be reduced to the status of mere consumers; pawns in a speculative chess board of fiscal moves in a game derived from assumptions that are weak, untestable or more frequently undeclared.

If you want more please  READ THE WHOLE SPEECH

or better still watch it: –   Michael D Higgins addresses the European Parliament

Congratulations Michael D. – your latest fan!

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The Last of Europe?

Are we witnessing the break-up of Europe? Is the Grand Dream over, and was it ever a reality? Has the initial vision of Adenauer and his co-founders come to its conclusion?

Europe - Satellite image - PlanetObserver

Europe – Satellite image – PlanetObserver (Photo credit: PlanetObserver)

Has the pendulum moved from progressive integration to the rise of nationalism?

Over the last five years the European Union, in the face of the world monetary crisis, has shown itself unwilling to act or incapable of acting in a cohesive way. While the economists struggle with the budgetary implications of the crisis, the politicians seem incapable of seeing anything of the original vision. The cost of everything is calculated except for the cost of chaotic disintigration.

There are no good countries or bad countries in this crisis, though there is endless evidence of appalling and contradictory decisions being made by management. Voters tire of austerity and will always revert to secular self interest when push comes to shove. Ther is no affinity between Larnaca and Leipzig.  The pity is that every country is now only looking after itself, and the very democracy that Europe so espouses is the mechanism for bringing the house of cards down.

Like an observer looking at a fire in a house, hoping it will somehow go out, or be tamed, I am watching incredibly from the periphery of the continent. I am aghast at what I have seen in my own country, Ireland, and throughout the continent. After Ireland was bullied into underwriting international speculators, in the name of European Solidarity, we now find that it wasn’t necessary after all, and that Cyprus can not only “burn the bondholders” but also the ordinary citizens. Cyprus has reached new bounds in so many ways, and it points to a sad vista that undermines the very fabric of the EU, and paves the way for resurgent nationalism with all its nastiness.

I am starting this blog to document the crisis that is unfolding. I want to have an “ordinary person’ perspective on what is going on. I have no training in economics, and I consider that an advantage. My heart will always be hoping for European Integration in the greater sense. I would not care for integration that is based on a monetarist view of Europe that is schewed towards the transfer of power and money to the politico-industrial powerbase, and ignores the contribution of the periphery. Such a Europe is an anathema to the dreams of Adeneaur and Co.

Are we witnessing the end of his dream – Hopefully not.

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