Pass the salt, pass the government and no I did not ask for the check

How many European nations does it take to screw in a light bulb?

By Mark J. Grant

Twenty-seven. One from Brussels to identify that the object in question is, in fact, a light bulb. Someone from Northern Europe to hold the bulb. A group from Southern Europe to turn the guy holding the bulb around and around until the thing is screwed in. A person from Germany or France to flick the switch and then the rest of the group, after tea, strudel and champagne to stand in front of the microphones and laud the effort.

In the recent summit, however, they couldn’t even identify the light bulb. Since the European countries could not agree on almost anything they performed their usual trick once again. We will have a supervisor of banks in some fashion, at some time in the future, under someone’s direction that will supervise some amount of banks. More tea, more strudel, more champagne and at what time am I scheduled at the microphone?

Nothing is as foolproof as sufficiently engineered promises of future results.

Did the European summit deal with the Cyprus issue; no. Did they provide an answer for Greece or Spain; certainly not. Was anything of value accomplished at the European summit past platitudes and congratulatory speeches that they had come up with a few lofty notions of someone doing something with the European banks; decidedly a negative answer. More fluff, more stuff and more “pass the risotto if you please.”

Sorry, U.S. Recoveries Really Aren’t Different

Τhe popular term “Great Recession” is something of a misnomer for the current episode

By Carmen M. Reinhart and Kenneth S. Rogoff 

Five years after the onset of the 2007 subprime financial crisis, U.S. gross domestic product per capita remains below its initial level. Unemployment, though down from its peak, is still about 8 percent. Rather than the V- shaped recovery that is typical of most postwar recessions, this one has exhibited slow and halting growth.

This disappointing performance shouldn’t be surprising. We have presented evidence that recessions associated with systemic banking crises tend to be deep and protracted and that this pattern is evident across both history and countries. Subsequent academic research using different approaches and samples has found similar results.

Recently, however, a few op-ed writers have argued that, in fact, the U.S. is “different” and that international comparisons aren’t relevant because of profound institutional differences from one country to another. Some of these authors, including Kevin Hassett, Glenn Hubbard and John Taylor -- who are advisers to the Republican presidential nominee, Mitt Romney -- as well as Michael Bordo, who supports the candidate, have stressed that the U.S. is also “different” in that its recoveries from recessions associated with financial crises have been rapid and strong. Their interpretation is at least partly based on a 2012 study by Bordo and Joseph Haubrich, which examines the issue for the U.S. since 1880.

Demographic Dead End?

The Hubby State in Action

by Joel Kotkin  

Democrats have woken up to the huge political rifts that have emerged over the past 30 years—between married and single people, and people with kids and those who don’t have them. And save African Americans, there may be no constituency more loyal to the president and his party than the growing ranks of childless and single Americans. 

In the short term at least, the president and his party are seizing a huge opportunity. Since 1960, the percentage of the population that is over age 15 and unmarried increased by nearly half, 45 percent from 32 percent. Since 1976, the percentage of American women who did not have children by the time they reached their 40s doubled, to nearly 20 percent. 

And even as the president has slipped in the polls, the fast-growing Single Nation has stayed behind him. Unmarried women prefer Obama by nearly 20 points (56 to 39 percent), according to Gallup, while those who are married prefer Romney by a similarly large margin. 

Thoughts On Roman Circuses (And Ours)

Our circuses are virtual in that you carry them around with you, by the hundreds, in your pocket or purse or have it on your desktop

by Jim Quinn

From history, we can glean more than just the bare facts of the decline and fall of the Roman Empire.First, one has to understand that before Rome slowly toppled into dust, it was a very prosperous place. There was distinct upper, middle, lower and slave classes and, all in all, there was more than enough to eat and time to spare for numerous sports. Also, the Roman Legions were the largest and strongest, best trained and fed, best equipped with hardware aplenty of any nation-state-empire in the world at that time. Very similar, in fact to the U.S.A. (less a lot of technology). 

Like all civilizations, once in a position of being fairly rich, having food aplenty and the good life, the better classes of Roman citizens got bored with it all. I mean how often can you discuss the latest conquest of some unknown and barbaric place, long removed from Rome or a new and flavorsome dish imported for some outpost of the Empire, or the latest dalliance of the current Emperor with some Egyptian babe.

So, what to do. A bored lower, middle and upper class of citizens tend to get into mischief when not productively employed and, with having slaves in good supply, can afford a minimal workload. As time progressed and the spoils of Empire Building and Conquering Inc. flowed into Imperial Rome, there was a natural impulse on the part of the ruling elite to pass along a bit more of the spoils to the populous lest they become jealous or perhaps a bit rowdy at the obvious top-heavy distribution of the goodies. The elites lived very well in Imperial Rome.

Hegel and the Romantic Age

The German Romantics were immersed in religion and mysticism 

by Murray N. Rothbard

G.W.F. Hegel, unfortunately, was not a bizarre aberrant force in European thought. He was only one, if the most influential and the most convoluted and hypertrophic, of what must be considered the dominant paradigm of his age, the celebrated Age of Romanticism. In different variants and in different ways, the Romantic writers of the first half of the 19th century, especially in Germany and Great Britain, poets and novelists as well as philosophers, were dominated by a similar creatology and eschatology. It might be termed the "alienation and return" or "reabsorption" myth. God created the universe out of imperfection and felt need, thereby tragically cutting man, the organic species, off from his (its?) pre-creation unity with God. While this transcendence, this Aufhebung, of creation has permitted God and man, or God-man, to develop their (its?) faculties and to progress, tragic alienation will continue, until that day, inevitable and determined, in which God and man will be fused into one cosmic blob. Or, rather, being pantheists as was Hegel, until man discovers that he is man-God, and the alienation of man from man, man from nature, and man from God will be ended as all is fused into one big blob, the discovery of the reality of and therefore the merger into cosmic Oneness. History, which has been predetermined toward this goal, will then come to an end. In the Romantic metaphor, man, the generic "organism" of course, not the individual, will at last "return home." History is therefore an "upward spiral" toward Man's determined destination, a return home, but on a far higher level than the original unity, or home, with God in the pre-creation epoch.

Τhe intermediate society

Hometown Hero

Robert Nisbet

By SUSAN MCWILLIAMS

The town of Maricopa, in the southwestern corner of California’s San Joaquin Valley, has one diner and one gas station. Its landscape is all oil wells and sagebrush, grit and heat and dust, just as it was a century ago when the sociologist Robert Nisbet, one of the 20th century’s great conservative minds, grew up there.

It wasn’t a pretty hometown, not the kind of place you’d ever see pictured on a postcard or memorialized in a Norman Rockwell painting. Nisbet would later write, in his elegant and restrained tone, that Maricopa’s setting offered a “hostile challenge to the human spirit.”

Even so, he remembered life there as happy. If the residents were daunted by their bleak surroundings, they didn’t let on. In that unfriendly environment they thrived, largely by being friendly with one another. The Nisbets were part of an active small-community scene in Maricopa. His father had a regular poker game, his mother had her church friends, and Nisbet had devoted teachers and a well-stocked local library.

As a child, Nisbet felt the power of what would come to be a central focus of his work: the “intermediate society” that lies between the individual and the state and gives dignity and depth to both. Everywhere he went in his early years, Nisbet saw the influence of intermediate society: in the memories shared by his grandparents’ neighbors in Macon, Georgia; in the clubs that defined his high-school years in Santa Cruz; and in the bohemian subculture among his classmates at Berkeley in the early 1930s—the “Old Berkeley” he called it.

EU winning Nobel Peace Prize is beyond parody

There are words one can use to describe what is going on, but "peaceful" isn't one of them

By Iain Martin

Has the committee which runs the Nobel Peace Prize been infiltrated by satirists or opponents keen on discrediting the organisation? Norwegian radio reports this morning, carried by Reuters, suggested that the European Union is to be awarded the prize for supposedly keeping the peace in Europe for the last sixty years. Was this a Nordic spoof? Apparently not.

It is only a few years since President Obama was ludicrously awarded the Nobel peace prize for winning the 2008 election and not being George Bush. Since then Mr Obama has continued the war in Afghanistan, stepped up drone attacks and got America involved in Libya's bloody revolution, suggesting that it is better to hand out baubles after someone has finished their job rather than when they are just getting started or are half way through. Incidentally, the same stricture should have applied to bankers honoured by New Labour when they were still running banks which later blew up.

Millions Of Spanish Are Fleeing Or Trying To Secede

No rules exist to deal with the situation

By Wolf Richter

“Do you want Catalonia to become a new state within the European Union?” That may be the question on the referendum that is causing a constitutional crisis in Spain even before the final wording has been decided.

Efforts by Artur Mas, President of Catalonia, to pry his region loose from Spain are not only shaking up Spain but are pushing the European Union deeper into the conflict—just as Spain is plunging into a demographic nightmare.

A mass exodus. During the first nine months of this year, the number of Spaniards who were looking for the greener grass elsewhere jumped 21.6% from the same period last year to 54,912. And 365,238 immigrants bailed out too, for a total exodus of 420,150 people.

After taking into account returning Spaniards and arriving immigrants, net migration added up to an outflow of 137,628 people—25,539 Spaniards and 112,089 foreigners. It was the first time that all 17 autonomous regions booked a net outflow of Spaniards.

And Spain’s total population dropped by nearly 80,000 people! In nine months!

They left because things simply keep getting worse. September was a bad month—for the lucky ones who have jobs.

Islamabad’s Nuclear Leverage

Behind the dysfunctional relationship that destabilizes the region and imperils Afghan progress 

By DILIP HIRO

The United States and Pakistan are by now a classic example of a dysfunctional nuclear family (with an emphasis on “nuclear”). While the two governments and their peoples become more suspicious and resentful of each other with every passing month, Washington and Islamabad are still locked in an awkward post-9/11 embrace that, at this juncture, neither can afford to let go of.

Washington is keeping Pakistan, with its collapsing economy and bloated military, afloat but also cripplingly dependent on its handouts and U.S.-sanctioned International Monetary Fund loans. Meanwhile, CIA drones unilaterally strike its tribal borderlands.  Islamabad returns the favor. It holds Washington hostage over its Afghan War from which the Pentagon won’t be able to exit in an orderly fashion without its help. By blocking U.S. and NATO supply routes into Afghanistan (after a U.S. cross-border air strike had killed 24 Pakistani soldiers) from November 2011 until last July, Islamabad managed to ratchet up the cost of the war while underscoring its indispensability to the Obama administration.

At the heart of this acerbic relationship, however, is Pakistan’s arsenal of 110 nuclear bombs which, if the country were to disintegrate, could fall into the hands of Islamist militants, possibly from inside its own security establishment. As Barack Obama confided to his aides, this remains his worst foreign-policy nightmare, despite the decision of the U.S. Army to train a commando unit to retrieve Pakistan’s nukes, should extremists seize some of them or materials to produce a “dirty bomb” themselves.

Malala versus Sandra

What a nation of plunderers we have become!

By Ross Kaminsky

Malala Yousafzai can't speak for herself, and it remains to be seen whether she ever will again. For the crime of going to school -- and blogging about it -- she was shot in the head by a Taliban assassin while in her school bus.

Yousafzai, now 14, knew the risk she was taking when at the age of 11 and under a pen name ("Gul Makai") she began posting an online diary which then appeared on the BBC's website under the banner "Diary of a Pakistani schoolgirl." This followed the Taliban's 2007 overrunning of the Swat Valley where she lives, including the destruction of hundreds of schools for girls.

On Monday, Malala was flown to England for care, perhaps as much to protect her from another near-certainassassination attempt as to get better medical treatment than is available in Pakistan.

Malala's closest friend, Shazia Ramzan, was also shot by the Taliban assassin. Fortunately, her wounds, in her shoulder and hand, were not life-threatening. Shazia is giving voice to the millions of girls like herself and Malala, taking on a similarly brave mantle. In a weekend interview with the UK's Daily Mail newspaper, Shazia said "[Malala] will recover and we will go back to school and study together again."

Shut up and play nice

How the Western world is limiting free speech

By Jonathan Turley

Free speech is dying in the Western world. While most people still enjoy considerable freedom of expression, this right, once a near-absolute, has become less defined and less dependable for those espousing controversial social, political or religious views. The decline of free speech has come not from any single blow but rather from thousands of paper cuts of well-intentioned exceptions designed to maintain social harmony.

In the face of the violence that frequently results from anti-religious expression, some world leaders seem to be losing their patience with free speech. After a video called “Innocence of Muslims” appeared on YouTube and sparked violent protests in several Muslim nations last month, U.N. Secretary General Ban Ki-moon warned that “when some people use this freedom of expression to provoke or humiliate some others’ values and beliefs, then this cannot be protected.”

It appears that the one thing modern society can no longer tolerate is intolerance. As Australian Prime Minister Julia Gillard put it in her recent speech before the United Nations, “Our tolerance must never extend to tolerating religious hatred.”

A willingness to confine free speech in the name of social pluralism can be seen at various levels of authority and government. In February, for instance, Pennsylvania Judge Mark Martin heard a case in which a Muslim man was charged with attacking an atheist marching in a Halloween parade as a “zombie Muhammed.” Martin castigated not the defendant but the victim, Ernie Perce, lecturing him that “our forefathers intended to use the First Amendment so we can speak with our mind, not to piss off other people and cultures — which is what you did.”

Of course, free speech is often precisely about pissing off other people — challenging social taboos or political values.

Antiscience Beliefs Jeopardize U.S. Democracy

The United States faced down authoritarian governments on the left and right. Not any more

By Shawn Lawrence Otto

It is hard to know exactly when it became acceptable for U.S. politicians to be antiscience. For some two centuries science was a preeminent force in American politics, and scientific innovation has been the leading driver of U.S. economic growth since World War II. Kids in the 1960s gathered in school cafeterias to watch moon launches and landings on televisions wheeled in on carts. Breakthroughs in the 1970s and 1980s sparked the computer revolution and a new information economy. Advances in biology, based on evolutionary theory, created the biotech industry. New research in genetics is poised to transform the understanding of disease and the practice of medicine, agriculture and other fields.

The Founding Fathers were science enthusiasts. Thomas Jefferson, a lawyer and scientist, built the primary justification for the nation's independence on the thinking of Isaac Newton, Francis Bacon and John Locke—the creators of physics, inductive reasoning and empiricism. He called them his “trinity of three greatest men.” Ifanyone can discover the truth by using reason and science, Jefferson reasoned, thenno one is naturally closer to the truth than anyone else. Consequently, those in positions of authority do not have the right to impose their beliefs on other people. The people themselves retain this inalienable right. Based on this foundation of science—of knowledge gained by systematic study and testing instead of by the assertions of ideology—the argument for a new, democratic form of government was self-evident.

A Small Printed Note Saying "Wait!"

The Mothers of Intervention

by Mark J. Grant

To me, the world is running down a quite slippery slope in its attempt to avoid calamity. The political machines in Europe and the United States and to a real but lesser extent in China have passed the hat to their central banks because either they cannot or will not face up to the severity of their problems. Some have called it lack of leadership which may well be true and I have categorized it past that where there is a decided lack of agreement about how to settle important issues so that the three central banks are all that stand between farce and tragedy. The investment community, so long used to the invincibility of the Fed in particular, recognize the dire straits but continue to rally in equities or compress in bonds based upon their almost dogmatic faith  that each central bank can cure the problems by adding liquidity in ever increasing amounts to deal with the solvency issues that won’t go away. I would say that this “faith based initiative” is misplaced based first upon the caveat that the nations in question all have liability for their central banks, that one day, someday, the size of the national liabilities for their central bank will get counted and recognized and finally that the printing of money whether recognized or unrecognized eventually has consequences.

I have often heard it asked, and by some of the largest professional money managers in the world, why the markets are behaving in their current fashion. We get bad economic news, poor earnings, fiscal crisis in Greece, Spain, Ireland, Portugal, Cyprus and perhaps in Italy and still the markets rise. The reason for all of this is “intervention” which has resulted not just in liquidity but in the notion that the central banks will do anything/everything to cure the problems so that worse is better, white is black and rational judgment is transformed into lunacy. It is liquidity and faith that are driving the boat and derelict accounting that is providing the fuel.

Statism Means Culture War

From gay marriage to education, state intervention pits citizen against citizen

By ROBERT P. MURPHY

The news today is full of controversies having religious and cultural overtones, especially gay marriage and insurer coverage of contraception. Historians, philosophers, jurists, and theologians all make different and important contributions to the national discussion. Free-market economists also have something to add: these conflicts are greatly exacerbated by the huge and growing role of the state in our lives, and these issues will never be resolved so long as the government displaces other institutions.

Consider the issue of gay marriage. When pressed for justifications, its supporters make an “equal treatment” argument with reference to historical racial segregation, but then they also typically offer practical arguments about unfair tax treatment, life-insurance benefits, child custody, and so forth. None of today’s supporters of gay marriage go so far as to say, “And this is why the government should imprison any religious official who refuses to marry a gay couple.”

In other words, most of the supporters of gay marriage today don’t directly challenge others’ religious views. Instead, they argue that those religious views should not, through the coercive mechanism of the state, end up causing demonstrable harm to a citizen because of his or her sexual orientation. Cast in this light, the arguments do seem compelling, leading even many religious believers to say, “If the government is going to be defining marriage, then it doesn’t seem fair to enforce my own religious viewpoint…”

Does Government Debt Burden Our Grandkids?

Explaining the fallacy of 'we owe it to ourselves.'

By ROBERT P. MURPHY

In late 2011 and early 2012, there was a fierce debate among several prominent economists on the possible ways in which government deficits today could impose a burden on future generations. Specifically, Keynesian economists Dean Baker and Paul Krugman were arguing that right-wing concerns over the debt burden were nonsensical, because (for the most part) our grandkids would “owe the debt to themselves.”

At the time, GMU economics chair Don Boudreaux cited the work of James Buchanan to show verbally why Krugman’s arguments were simply wrong. Nick Rowe, a monetary economist in Canada, used simple numerical examples (which would appeal to professional economists) to try to make the same basic point. Many other economics bloggers (and their readers) weighed in, over the course of several weeks, in what was truly a remarkable discussion. I summarized the affair on my own blog in this lengthy post, for readers who want to see the complete history.

I was amazed, therefore, when Dean Baker on October 10 kept repeating the same basic mistake that—we had thought!—was cleared up back in January. Paul Krugman too doubled down on the error. Since this is such an important topic, and since the advocates of bigger government deficits keep repeating this incorrect argument in an attempt to make these deficits seem benign, it’s worthwhile to spell out in this forum exactly what their mistake is.

What Baker and Krugman want to explode is the man-on-the-street’s moralistic objection to government budget deficits as being irresponsible and a burden on future generations, who will have to deal with higher government debt. Baker and Krugman think that this is yet another example of where “micro” thinking breaks down when we try to aggregate it into the “macro” economy. They concede that it makes sense for an individual household to worry about irresponsibly running up debts today, and thereby imposing pain in the future when those debts have to be paid off—or at least, when more of the household’s income needs to be devoted to interest payments on the higher debt.

We Are Not All Westerners Now

The West, the Rising Rest, and the Coming Global Turn

By LEON HADAR

In Blind Oracles, his study of the role of intellectuals in formulating and implementing U.S. foreign policy during the Cold War, historian Bruce Kuklick equated these scholars with the “primitive shaman” who performs “feats of ventriloquy.”

We tend to celebrate foreign-policy intellectuals as thinkers who try to transform grand ideas into actual policies. In reality, their function has usually been to offer members of the foreign-policy establishment rationalizations—in the form of “grand strategies” and “doctrines,” or the occasional magazine article or op-ed—for doing what they were going to do anyway.

Not unlike marketing experts, successful foreign-policy intellectuals are quick to detect a new trend, attach a sexy label to it (“Red Menace,” “Islamofascism”), and propose to their clients a brand strategy that answers to the perceived need (“containment,” “détente,” “counterinsurgency”).

In No One’s World, foreign-policy intellectual Charles Kupchan—a professor of international affairs at Georgetown University and senior fellow at the Council on Foreign Relations—tackles the trend commonly referred to as “American decline” or “declinism,” against the backdrop of the Iraq War, the financial crisis, and the economic rise of China.

While I share Kuklick’s skepticism about the near zero influence that intellectuals have on creating foreign policy, I’ve enjoyed reading what thinkers like Charles Kupchan have to say, and I believe that if we don’t take them too seriously (this rule applies also to what yours truly has written about these topics), they can help us put key questions in context. Such as: is the U.S. losing global military and economic dominance and heading towards decline as other powers are taking over?

The good news is that Kupchan’s book is just the right size—around 200 pages—with not too many endnotes and a short but valuable bibliography. Kupchan is readable without being too glib. He is clearly an “insider” (he is a former National Security Council staffer) but exhibits a healthy level of detachment. And Kupchan displays a commendable willingness to adjust his grand vision to changing realities.

How The West Was Lost

Slopping out the Augean stables

By Tim Price

“Sir, I see Sir Mervyn King has signaled that he no longer believes that price stability should be the Bank of England’s primary objective. Perhaps if he had his gold-plated, index-linked pension replaced by a private sector annuity pension he would be more focused on reducing inflation.”

                   Letter to the Financial Times from Mr Tony Clarke of Plymtree, Devon, 11th October 2012.

A thousand years ago, back in 1999, a handful of technologist writers created something called The Cluetrain Manifesto. Cluetrain (as in “The clue train stopped there four times a day for ten years and they never took delivery” – said by a veteran of a fast-failing Fortune 500 company) was a reworking of Luther’s 95 Theses of 1517 – credited with sparking the Reformation. Cluetrain remains a strikingly prescient account of how the Internet will change Business As Usual. Among Cluetrain’s Theses:

• All markets are conversations; the Internet provides a means of connecting people and allowing them to engage and transact on a scale previously impossible;
• Hyperlinks subvert hierarchy; the ability of the Internet to link effortlessly to information outside the formal hierarchical structure of traditional business changes Business As Usual at a profound level;
• A metaphysical construct called ‘The Company’ is the only thing standing between internetworked markets and intranet worked employees; markets are getting more informed more quickly than companies are.

Tax-raisers lack compassion

Larger government means earlier deaths for the jobless

By Richard Rahn

If you were unemployed, would you prefer a job or a handout? Most people would say a job because of the self-respect that comes with being productively employed. What is not widely recognized is both the emotional and physical damage long-term unemployment does to many people.

Over the past several decades, there have been many studies about the effects of long-term unemployment on individuals. If you do a Google search of such studies, you will find a remarkable consensus among the researchers — even though some are funded by government, some by labor groups and some by employer groups. In sum, all agree that death rates increase markedly for those who lose their jobs. The unemployed, not surprisingly, are much more prone to develop stress-induced conditions such as diabetes and depression. Not being able to find work is stressful, particularly for those with family responsibilities.

It is interesting that even though nearly all agree that involuntary unemployment is harmful to the individual and society, many policymakers are willing to accept it rather than focus on what can be done to prevent it.

Most people understand why taxing those who create jobs (generally upper-income people) will mean the creation of fewer jobs. Economists may argue about how many jobs will be destroyed for any given tax increase on job creators, but no one who understands the law of supply and demand will argue that there is no effect. Likewise, most people understand that a business that has to endure many expensive regulations will not have the funds to create as many new jobs or will be forced to increase prices for its products or services to cover the cost of the regulations. Higher prices mean fewer sales and, hence, fewer jobs. None of the above is rocket science, so most people “get it.”

Our 'child protection' system is severely dysfunctional

The worst scandal I have seen in my 50-year career

By Christopher Booker

Scarcely a week goes by without more evidence emerging to indicate that our “child protection” system is so dysfunctional that it should be looked on as a major national scandal. On one hand, we see the number of applications by social workers to take children into care soaring to nearly 1,000 a month, having more than doubled in the four years since the tragedy of Baby P. On the other, we hear of horrific episodes, like those recently reported from Rochdale and Rotherham, where social workers and police turned a blind eye to the systematic mass-rape of underage girls, many themselves in state care.

For three years I have been investigating scores of cases of children seized from their parents for what appear to be quite absurd reasons. This outrage has not yet come to the centre of national attention only because our child protection system hides its workings behind a veil of secrecy. I have been amazed to discover how our family courts routinely turn all the cherished principles of British justice upside down. The most bizarre allegations, based on hearsay, can be levelled against parents who are then denied the right to challenge them.

Although I have reported on several such cases more than once, they drag on through the courts so long that I haven’t been able to explain how they ended. I summarise three of them here to indicate why this is the most disturbing story I have covered in all my years as a journalist.

My first case centres on a mother who, five months after the birth of her daughter, fell from a first-floor window. Lying in hospital, temporarily paralysed from the neck down, she took a call from a social worker who told her that her baby was being taken into care. Although no one had suggested that her fall was anything other than an accident, the social workers made out that it was a suicide bid and that she was an alcoholic and a drug addict. A psychiatric report and clinical tests found that none of these accusations were true.

Germany's Schäuble Presents Master Plan for Euro

New Powers for Brussels

German Finance Minister Wolfgang Schäuble is determined to end the euro crisis once and for all. On Sunday he effectively ruled out a Greek bankruptcy, and is now proposing far-reaching reforms to stabilize the currency union. Under his plan, Brussels would be granted far greater powers over national budgets.

By Spiegel

Wolfgang Schäuble knows that the quiet on the markets over the past few weeks has been deceptive and that the euro crisis could erupt again soon. After all, doubts remain about whether Greece can remain in the currency union in the long term. If it triggers a chain reaction, the entire euro project could collapse. In addition, the willingness of many euro-zone member states to eliminate the design defects of the common currency appears to be diminishing.

Cash-strapped Greeks, fatigued Europeans -- Germany now wants to solve both problems for the long term. "There will be no state bankruptcy in Greece," Schäuble said in a speech in Singapore on Sunday. He also wants to give a new boost to the reform impetus for restructuring the euro zone. "We now need to go a major step in the direction of a fiscal union that will go beyond the proposals made so far," Schäuble said on Monday night during his flight back to Berlin.

The finance minister, a passionate advocate of deeper European integration, has said he wants to concentrate on a small number of far-reaching reforms:

§  The European commissioner for economic and currency affairs is to become equally powerful as the commissioner for competition. The competition commissioner is entitled to make decisions independently and does not require the agreement of the other commissioners in making those decisions. If the currency affairs commissioner were truly independent when it came to decision-making, it would depoliticize that office holder's position. That would enable the commissioner to make decisions based on content rather than interests.