European Union – Page 45 – William Mitchell

Madness continues – macro conditionalities on regional transfers in Europe

July 15, 2013
bill
European Union
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When 17 countries together have failed to grow for the last 12 months and each successive quarter has seen the growth rate fall increasingly (-0.1 per cent June 2012, -0.7 per cent September 2012, -1.0 per cent December 2012 and -1.1 per cent March-quarter 2013) and the same 17 countries have seen the collective unemployment rate rise (or remain static) for the last 24 months from 9.9 per cent (May 2011) to 12.2 per cent (May 2013) when is it appropriate to conclude that the macroeconomic policy mix is wrong and substantial changes need to be implemented. Answer: Yesterday! Further, why would those same countries decide to implement further policy changes, which will not only make it harder to grow but go against the whole idea of the collective in the first place? Answer: Besotted by destructive neo-liberalism. Welcome to Europe and macroeconomic conditionality on regional funding.

Christmas is in decline in Greece

The alternative title for today could have been my award to the Euro elites for the title as Champions of Europe – for their consistent record-breaking feats – month after month – the unemployment rate rises. Eurostat reported on Monday (July 1, 2013) that – Euro area unemployment rate at 12.2% – up from 11.3 per cent in May 2012. That is an additional 1.4 million workers out of work in the 12 months. Unemployment is nearly reaching 20 million in the Eurozone. 3.5 million under 15s are now unemployed in the Eurozone (23.9 per cent up from 23 per cent in May 2012). Youth unemployment stands at 59.2 per cent in Greece, 56.5 per cent in Spain and 42.1 per cent in Portugal (and rising in all three nations). Talk about leaving a legacy for our grandchildren. Anyway. I thought I might just refresh my understanding of the Greek data today and ask some questions. What comes out is that Christmas is in decline in Greece – at least in a material sense. Which would be good if it was for the right reasons – that is, a renewed enlightenment towards non-material values. The problem is that it reflects a devastated economy being overseen by some bullies who not only fail in their own jobs but also want to make sure millions do not actually have jobs. The question (and there are a multitude of ways we could ask this) is Why?

Ireland still located in the Irish Sea despite multibillion-euro austerity drive

I get several E-mails a month telling me to pull my head in that because, apparently, Ireland is clearly demonstrating my claims that fiscal austerity will kill growth and cause even higher unemployment is plainly wrong – “just look at the data” – is a regular claim by these phantom contact form types. Heroic indeed. They should have realised by now that I love to “look at the data” and are also circumspect about data that will be revised in the course of time. Last week (June 27, 2013), the Irish Central Statistics Office (CSO) released the March-quarter 2013 National Account estimates – GDP decreased 0.6% (Q1 2013 compared with Q1 2012) – which also revised the December-quarter real growth estimates down to show a contraction. That is three consecutive quarters of negative real GDP growth. That should demonstrate some 4.5 years into their fiscal austerity experiment that it isn’t working. Time for change. So, all you phantoms, save your comments until you have something to say that transcends your blind free market ideology. And perhaps, get a life.

The case to defund the Fund

Imagine a patient that goes in for surgery to fix an in-grown toe-nail. She comes out in a wheelchair after the surgeon has trimmed a little more than expected from the toe. The result is she loses her whole leg in the operation. When challenged, the surgeon says that they underestimated how much damage would be caused when they starting trimming the toe-nail and realised too late that they had actually cut her leg off by mistake. The surgeon also admits that they had major differences of opinion with the other specialists involved in the assessment about the extent of the cutting required and the degree to which the surgery would deliver relief to the patient but chose not to disclose that to the patient before hand because they didn’t want to risk slowing down the rush to surgery. After all, surgeons know only one thing – cutting and stitching. The one-legged patient sues the surgeon under tort and the authorities prosecute under criminal law. The surgeon is found guilty of criminal malpractice and negligence, is ordered to pay out millions to the patient and is sent to prison. The reality of professional risk. While the analogy is not perfect it leads to this sort of question: Why should professional economists working for the IMF, the EC and the ECB be above the professional standards and accountability that apply throughout the professional world?

72% youth unemployment – the crowning glory of the neo-liberal infestation

It seems like everything is getting smaller in Germany. I read today that Germany’s longest word (63 letters) has been abandoned. It also seems that their jobs are getting smaller and more people are being forced into them. The so-called “mini-jobs”. Meanwhile Europe’s crowning glory and austerity’s greatest achievement lies a little south of the mini-job kingdom. Eurostat’s latest – Regional labour force data – tells us that in some regions in Spain and Greece, the unemployment rates of the 15-24 year olds have topped 70 per cent and will continue to rise. There are now an increasing chorus in the media from politicians and financial market types who are trying to dress all this up as good news. Apparently, the Greek share market is booming. The agenda is clear – if they can somehow convince the world that the devastation of Greece is “good news” then it will reduce the growing resistance to austerity that is starting to broaden the debate. The elites don’t want any moderation. So they have to re-construct devastation to appear to be bringing good outcomes. The madness continues. Tell the 15-24 year olds in Dytiki Makedonia that things are going along swimmingly!

I don’t care if every fact is correct

I thought it was hysterical when back in 2009 and 2010 there were papers written and conferences held which carried the theme of the “lessons learned from the crisis”. For example, the – 6th ECB Central Banking Conference (November 2010) – had an array of leading mainstream economists and central bankers telling us what it was all about despite these same characters previously representing a body of work that told us the macroeconomic problem (cycles and unemployment) had been solved. There were lots of papers, Op Eds and media commentary (every day on Fox News and its ilk) warning us of the worst unless governments imposed austerity. Even as recently as the last US election, the “skies are about to fall in” message was prominent and dominated the Republican campaign. Millions of people are unemployed as a result of these economists having sway with policy makers. The evidence denying their predictions etc started to slowly trickle in around 2008 and as the years of this madness have passed the evidence is now a dam break. At this point, the mainstream just talk among themselves and continue to bank their high salaries and take on lucrative consultancies. Denial of facts is their ultimate recourse.

Argentina and Greece – credible analogy or not?

There was a article in the UK Guardian yesterday (May 21, 2013) – No, Argentina is not a ‘cautionary tale’ for the eurozone. The basic tenet of the article, written by a Greek journalist is that there is no applicable analogy that can be drawn between the experience of Argentina during its crisis in 2001-2002 and the current crisis in Greece. The author rejects any attempts to draw a comparison because Greece would have to introduce a new currency and this would mean no-one would agree to hold it and this would prevent Greece from purchasing essential imports. The author claims that all Argentina had to do was break a pegged arrangement. My view expressed in this blog is that while there are technical differences in the way the monetary system would change in Greece if it abandoned the Euro and what happened in Argentina, the similarities between the two cases are greater. There is an applicable analogy and it scares those who want to hang onto the Euro at all costs.

It’s all been for nothing – that is, if we ignore the millions of jobs lost etc

The fiscal austerity imposed on the southern European nations such as Greece and Spain has been imposed by the Troika with two justifications. First, that the private sectors in these nations would increase spending as the public sector cut spending because they would no longer fear the future tax hikes associates with rising deficits (the Ricardian argument). The evidence is clear – they haven’t. The second argument was that massive cost cutting (the so-called internal devaluation) would improve the competitiveness of the peripheral nations, close the gap with Germany and instigate an export bonanza. It was all about re-balancing we were told. The evidence for that argument is clear – it was a lie. The massive impoverishment of these nations and the millions of jobs that have been lost and the destruction of a future for around 60 per cent of their youth (who want to work) has all been for nothing much. As was obvious when they started.

Incroyable! – France – cap-in-hand and grateful – and sinking fast

Mr Barroso, European Commission President has a way with words. In January 2013, he declared “that the existential threat against the euro has essentially been overcome”. More recently (April 3, 2013) he pronounced “that the EU has come through the worst of the crisis”. Really? And, just yesterday he was at it again, lecturing France on the need to hack into welfare payments and worker protections. Meanwhile, Eurostat released the first-quarter 2013 National Accounts publication – Euro area GDP down by 0.2% and EU27 down by 0.1% – a few hours after Barroso was on French radio delivering his threats. The data is shocking which is a euphemistic way of saying _ _ _ _ _ _ _ (fill in your own expletive). There are now 10 Eurozone nations in recession. The overall monetary union has been contracting for six consecutive quarters (that is, 1.5 years). And the situation will deteriorate even further. When does someone conclude that the current policy framework is a total failure and causing massive permanent damage? When will these lug heads in Brussels realise they are not only destroying the fabric of prosperity but also jettisoning their political aspirations – for one Europe? Amazing.

Neo-liberalism – the antithesis to democracy

I recall a professor in my student days (formal that is, given we are always students if we remain open) telling a postgraduate class that economic development could only occur if the social democratic pretensions of the left, including tolerance of trade unions, were suppressed – “in the interests of progress”. He laughed and said that it was no surprise that the most right-wing nations grew the fastest. His poster child was South Korea. I recalled that experience when I read two articles recently in the UK Guardian. They are reflections on how neo-liberalism is really the antithesis to democratic ideals. The so-called free markets have nothing to do with freedom or political inclusion.