Europe’s voters say ‘No’ to economic reality

Kicking the can down the road is increasingly not an option as the end of the road is now in sight

by DETLEV SCHLICHTER

“Europe fights back against austerity” was how The Daily Telegraph headlined its weekend election coverage. “Anti-austerity movements are gathering pace across Europe following political earthquakes in France and Greece. A total of 12 European governments have now been dismissed in three years.”


As the European welfare state is officially in its death-throes none of us should be surprised if political strife gets cranked up to eleven. I firmly expect that we will see much more of this in the future. While I can understand the anger of the electorate and sympathize with the sense of desperation and foreboding, I can, however, not consider the electoral choices of the weekend particularly enlightened, and I do not think that they reflect a coherent, let alone intelligent strategy as the Daily Telegraph headline seems to imply. If those who ‘won’ the election deliver on their promises, economic disintegration will only accelerate. What is being offered in terms of ‘solutions’ is a dangerous assortment of economic poisons, more suitable to describe the European disease than provide a recipe for stronger growth.

Recovery through early retirement and infrastructure spending? – C’mon. Nobody can take that seriously.

"Mr. Tsipras' bluff will be called"

After that, Athens could literally be sitting in the dark

           The Germans are not prepared to pay for anyone's 'vacation from reality'

German news magazine 'Der Spiegel' occasionally puts together an overview of  voices from the German press to give readers the overall flavor of editorial opinion in Germany when important events occur.

It has just done so again after the Greek election and the Kabuki theater that followed in their wake.  The entire article is well worth reading, and we bring a pertinent excerpt below, from an editorial that appeared in the conservative daily newspaper 'Die Welt'.

“The election results are also a defeat for Germany. The Greeks and the French have rejected what they see as a German austerity and reform diktat. That is certainly unfair, given the massive obligations and risks that Germany took on to save the EU's problem countries from bankruptcy. And Germany's capability is being greatly overestimated by those who say Berlin should shell out even more money for things such as growth programs. But in the end, the results are also proof that Europe doesn't work.

France also takes a permanent vacation from reality

Socialism In France

Another country that is chock-full of politicians and trade unionists that are apparently on a permanent vacation from reality is France. We have just come across an article that explains why there are so many companies with precisely 49 employees in France. Read it and weep (of course this nonsense is not going to be rescinded by Mr. 'Pro Growth' Hollande).

“Here’s a curious fact about the French economy: The country has 2.4 times as many companies with 49 employees as with 50. What difference does one employee make? Plenty, according to the French labor code. Once a company has at least 50 employees inside France, management must create three worker councils, introduce profit sharing, and submit restructuring plans to the councils if the company decides to fire workers for economic reasons.

Italy takes a 'vacation from reality'

Monti's Growth Fantasies

Another reality vacationer is found in Rome - Italy's prime minister Mario Monti, who increasingly looks like a zombie, which is to say his outward appearance is beginning to reflect that state Italy is in.

In order to get 'growth' going in the euro area, Monti now wants to change the way in which budget deficits are calculated. No, we're not pulling your leg.

He's also still going on about 'euro bonds', which is a complete waste of time and effort. Germany's constitutional court has already put paid to the idea, as this would make Germany liable for the debts of other nations. It's just not going to happen.

“Prime Minister Mario Monti on Tuesday set out Italy's priorities for growth in the euro zone, calling for changes in the way budget deficits are calculated and urging the EU Commission to be more active in setting a growth agenda.

Rome Didn't Fall in a Day either

At some point we will find that the road is a dead end

by Chris Sullivan

Back in the '70s, I used to expect the government to suffer a financial collapse at which time it would have to quit doing most of the things it's doing because it would run out of money. That isn't what has happened. Instead of cutting spending it has printed more money and tried to increase taxes on various things.

Like many things historical, there's a precedent for this. There's a proverbial saying that "Rome wasn't built in a day," but it didn't collapse in a day either. Probably most of the Romans who lived as the Empire was collapsing didn't realize that was what was happening, but plenty of them realized they weren't living in the good old days.

New Democracy and Pasok destroyed Greece in an attempt to escape responsibility.

How a Radical Greek Rescue Plan Fell Short

By MARCUS WALKER

Above all, Greece's example illustrates the conflict between Germany's tough terms for aiding other euro members and the amount of pain other societies can bear. Greece's fate shows that what it takes to sell bailouts to a skeptical German public can be politically calamitous in Europe's indebted south.

"The program is suicidal, not only for Greece but for the euro," says Louka Katseli, a former Greek economy minister. "In Spain, Portugal, Italy—everywhere, the same mistake is being made," she says, referring to the European Union's insistence on slashing spending in a recession.

Stimulus Spending Keeps Failing

If austerity is so terrible, how come Germany and Sweden have done so well?

By Robert Barro

The weak economic recovery in the U.S. and the even weaker performance in much of Europe have renewed calls for ending budget austerity and returning to larger fiscal deficits. Curiously, this plea for more fiscal expansion fails to offer any proof that Organization for Economic Cooperation and Development (OECD) countries that chose more budget stimulus have performed better than those that opted for more austerity. Similarly, in the American context, no evidence is offered that past U.S. budget deficits (averaging 9% of GDP between 2009 and 2011) helped to promote the economic recovery.

Google's Revolutionary Self-Driving Car

Google's breakthrough truly is a game-changer

By John C. Dvorak

Google has managed to get its self-driving car licensed in Nevada, though someone must still be in the car at all times. Essentially, the automobile was not given a license, but rather a learner's permit. It's a start.

Google's whole robocar idea has been overlooked in general. This is probably one of the greatest inventions of the last 100 years and people are fairly ho-hum about it. In fact, it addresses numerous transportation issues and is simply revolutionary. Google is poised to make more money with this device someday than it ever has with search.

I predict that at some point in the future, nobody will drive cars. We'll get into these things and program (or tell) the car where we want to go. Fleets of cars could actually be shared the way limousines are shared. You could have your car drop you off at the airport and go home, then return to pick you up at a later date.

Keynesianism Is The New Black Death

Keynesianism may wipe out a third of Europe’s GDP

By Louis Woodhill

One election at a time, voters in Europe are tossing out politicians associated with “austerity”.  This week, it was national elections in France and Greece, and state elections in part of Germany.  Nicolas Sarkozy became the eighth leader of a eurozone member country to lose his job in a little over a year.

The voters of Spain, Greece, France, etc., understand that their governing elites have pushed their economies into austerity death spirals, and they have been expressing their unhappiness at the ballot box.

No hope for Europe

France rejects austerity without trying it

By Nita Ghei

The victory of socialist Francois Hollande in France on Sunday and the resounding defeat of the parties trying to push through bailouts in Greece amount to a clear rejection of austerity in Europe. That’s particularly troubling because the Continent has never actually tried to reduce its spending.

Europe is the epicenter of the debt crisis because it has built a lavish welfare state that feeds off the private sector’s productivity. Lightening the burden on private enterprise would free up some growth potential, but European politicians refuse to cede control. The result has been predictable: shrinking economies and higher unemployment.

On Europe, Paul Krugman Seeks to Rebut Keynes!

The actual alternatives are “reality” and “fantasy

By Kyle Smith

Casting our gaze over the history of World War I, it’s easy to see the horrible insanity that accompanied the forging of each link in the chain of causation. The horrible insanity, and also the horrible logic. Once it got started, how could it have happened any differently? Internally, it all made sense. And so did the resolution, which would unleash far greater horrors, and which was built on three words: Make Germany pay.

It’s ironic that the Nobel-winning economist Paul Krugman is today’s great defender and apostle of John Maynard Keynes, because Krugman’s prescription for the disease ravaging Europe is Make Germany Pay. Yet Keynes made his name by exposing the folly of that phrase in his monumental work “The Economic Consequences of the Peace.” Not that Krugman’s ideas much matter, because Germany isn’t going to pay again, the Euro will fall apart as a result and nobody can say exactly what the consequences will be, except that they will be dire.

Greece: Voting Itself Out Of The Eurozone?

Hoping for an orderly structured default

By Marco Vicenzino

The Greek election exposed an inherent contradiction. When polled, most Greeks favor remaining in the Eurozone. Yet the election results amounted to a clear rejection of austerity and the means necessary for remaining part of monetary union. Furthermore, the convoluted result and ensuing ambiguity on the next government’s composition, and viability, increases the risk of another election.

This political uncertainly increases the potential for Greece’s Eurozone exit and threatens the next tranche of international financial assistance due in June. The probability of renegotiating its terms remains low. In particular, Germany will not agree to concessions anytime soon. At most, rhetorical amendments may be introduced but fundamentally the plan’s core will not change.

Secrecy and corruption in Washington DC

Sibel Edmonds Finally Wins

by David Swanson

Sibel Edmonds' new book, Classified Woman, is like an FBI file on the FBI, only without the incompetence.

The experiences she recounts resemble K.'s trip to the castle, as told by Franz Kafka, only without the pleasantness and humanity.

I've read a million reviews of nonfiction books about our government that referred to them as "page-turners" and "gripping dramas," but I had never read a book that actually fit that description until now.

From Sweet Science to Sour

Walking away is the best policy, and brave men do it all the time 

by Taki Theodoracopulos

Briefly home from boarding school back in 1951, I went to a bar with a phony draft card, ordered a beer, and watched Rocky Marciano knock out my idol Joe Louis. Joe was 37 and trying for a comeback, as he was broke—and as he sat in his stool after having been counted out, he looked a lot older. Rocky crossed over from his corner, bent down to speak to Joe, and began to cry. Joe was his idol, too. Rocky went on to become world champ and retired undefeated after 49 fights, only to die in an airplane accident.

Knowledge is truly the mother of all resources

Expanding 'Depletable' Resources

Italian Immigrants arriving at Ellis Island 1903

"I'm sorry for you—coming to Texas [in 1915] to look for oil. Don't you know there is no oil in Texas?!" —Wallace Pratt, Consultant, "Oil Finding—the Way it Was," Petroleum 2000 Issue, Oil & Gas Journal, August 1977, p. 144

By Robert L. Bradley Jr.*

If resources are not fixed but created, then the nature of the scarcity problem changes dramatically. For the technological means involved in the use of resources determines their creation and therefore the extent of their scarcity. The nature of the scarcity is not outside the process (that is natural), but a condition of it. —Tom DeGregori (1987). "Resources Are Not; They Become: An Institutional Theory." Journal of Economic Issues, p. 1258.

Mineral resources, not synthetically producible in human time frames,1 are fixed in the earth. As each is mined, less supply remains, suggesting that cost and, thus, price must increase as production cumulates.

Yet, for virtually all minerals, the opposite seems to be true: As more is mined, more is discovered to be mined. Prices and costs do not inexorably rise. What was high-cost yesterday has become lower-cost, undercutting the perennial complaint that "the easy stuff has been found." Overall, there seems to be little difference between minerals and general goods and services.

Big Oil Goes Mining for Big Data

As petroleum production gets trickier, digital innovation becomes more crucial

BY JESSICA LEBER

The world isn't running out of oil and natural gas. It is running out of easy oil and gas. And as energy companies drill deeper and hunt in more remote regions and difficult deposits, they're banking on information technology to boost production.

Data, in this case, really is the new oil. "It's pretty sweeping," says Paul Siegele, president of the Energy Technology Company at Chevron. "Information technology is enabling us to get more barrels of each asset."

Oil companies are using distributed sensors, high-speed communications, and data-mining techniques to monitor and fine-tune remote drilling operations. The aim is to use real-time data to make better decisions and predict glitches.

Europe’s Misguided Search for Growth

What can Europe do to create growth? The honest answer is: rather little

By Daniel Gros

A few months ago, 25 of the 27 members of the European Union solemnly signed a treaty that committed them to enshrining tough deficit limits in their national constitutions. This so-called “fiscal compact” was the key condition to get Germany to agree to increase substantially the funding for the eurozone’s rescue funds, and for the European Central Bank to conduct its €1 trillion “long-term refinancing operation” (LTRO), which was essential to stabilizing financial markets.

Greeks May Hold $510 Billion Trump Card in Renegotiation

Not counting the money owed by private debtors, including banks.

By John Glover

Greek voters are demanding their leaders renegotiate the terms of rescue packages that have imposed unprecedented austerity on the country since 2010. One potential prime minister, Syriza party leader Alexis Tsipras, has pledged to tear up the EU-led bailout agreement. With Greece owing a sum roughly equal to Switzerland’s economy, the fallout for taxpayers could be calamitous if the country walks away.

“Greece has got some strong cards to persuade them to go easy on austerity,” said John Whittaker, an economist atLancaster University Management School in England. “Everyone fears a Greek departure from the euro because they’ll lose money and lose political capital.”

Euro Integration

European governments have poured money into Greece since its first rescue was agreed in April 2010 in a bid to keep the country in the euro and prove that monetary union, a symbol of European post-war integration, is irrevocable.

Hollande has lived inside the fishbowl his entire adult lives

Political Science

"The French are a free people, who will not allow their future to be determined by the pressure of markets or finance."

       ~ French presidential candidate François Hollande, Ecole Nationale d'Administration (ENA), class of 1980

By Fred Sheehan

Hollande expressed an ardent belief of every ENA graduate (popularly known as énarques, a popularity not often witnessed beyond the campus gates.) Economics professors from Harvard, Princeton, and Oxbridge also dismiss markets. They went so far as to claim all markets identify the right price all the time, thus avoiding the need to understand them. Markets are there to be used: a means to institute public policy. Such policies are imposed by the ruling few.

The Bretton Woods gold standard constrained the ambitions of superior persons. When President Nixon defaulted on the United States' gold payment obligation in 1971, he opened the floodgates to Policy Making without Consequences.

Class War by Judo

The old-fashioned wrestling for crumbs

By Anthony de Jasay

Marxists and most Frenchmen hold that since all value is produced by labour, all of it should be paid out in wages except the part taken by the state, a body which by rights ought to belong to the workers anyway. All private profit is stolen from the working class. It is incumbent on the state to claw it back from the capitalists.

Class warfare is the mode of clawing back the profit, through complete success requires actual revolution. For the hard Left, this is the true aim of class warfare. For the soft Left, well-drilled labour unions in closed shops squeezing profits by tough collective bargaining are fighting the good fight. A more formidable arm of class war as practised by the soft Left is the collective mandate an electoral majority hands to the state to "slice the national cake" by transfer payments and public goods, so that its distribution will be more favourable to the working class than the original distribution intended by those who had arranged the baking of the cake in the first place.