As the euro continues to dance on the brink of calamity, the people responsible for the deepening debacle have finally come up with a scheme that will save it once and for all. It’s a cunning plan that draws heavily on that old joke about a European heaven and hell. You’ll be familiar with it: in heaven the police are British, the cooks are French and the engineers are German; while in hell, the police are German, the cooks are British and it’s all organised by the Italians.
The euro version goes like this: fiscal policy is run by the Greeks, the Spanish and the Italians; interest rates are set by a central bank in thrall to politicians in France and Italy, and it is all organised by a Portuguese socialist and a Belgian. The idea will go down a treat in places like France, Greece and Portugal. But if you’re German — an increasingly disgruntled citizen of Europe’s largest and most productive economy — you might be starting to think it represents a final signal to get the hell out of there.
I exaggerate, of course. The EU summit is destined to break up without any firm plan being agreed. The hope in European capitals is that the E750 billion bailout plan announced early last month will provide enough sticking plaster to get them through the next few months and perhaps into some kind of tolerable recovery.
But it’s a forlorn hope. The euro continues to plummet on foreign exchanges. This week all eyes are on Spain, where investors are betting a Greece-style bailout is coming down the tracks. As various disaster scenarios are pondered, a consensus is forming among moneymakers and policymakers: the euro, in its current form, cannot survive.
There are only two ways out of this bind: forward or back, more Europe or less. Closer integration of economic policies, or an acknowledgement that the euro itself was a step too far on the path to integration. More integration or less? It does not take a student of European politics to know which way Europe’s political elites are likely to go.
The plan being discussed is extraordinary. Like gamblers increasingly obsessed with the idea that their string of mounting losses will eventually pay off with an even bigger win, the European chiefs in Brussels are convinced that if they just double down one more time on their integration project, they will finally achieve victory. So the plan being dreamed of is a radical fix that would create a eurozone-wide fiscal policy.
Until a few months ago Jean-Claude Trichet was insisting, like the Duke of Wellington on the English constitution, that the euro was more or less perfect. Now, he is calling for a new ‘budgetary federation’ to keep the project afloat. In Brussels and Paris, and at the ECB headquarters in Frankfurt, officials talk openly of what this would look like. At minimum, a powerful new agency, administered in Brussels, would scrutinise the tax and spending plans of all members of the eurozone. It would be empowered to order a profligate government to rein in its spending, or face unspecified penalties.
Such an agency would represent a eurocrat’s dream. But it is fraught with difficulties. First, the existing eurozone rules are supposed to keep everyone’s deficits to a prudent limit. And then, what is to be done to the likes of Greece? There is enough protest at its attempts at cuts: the idea of imposing a fine on countries already in budgetary disaster is like something out of Ionescu. It calls to mind the slogan on a T-shirt I saw at the beach once: ‘The beatings will continue until morale improves’.
In theory, the only way of ensuring stability within monetary union, as most economists will tell you, is to go for full-fledged fiscal union. In other words, to make the Greek budget a section of the budget for the whole eurozone. So Greece could nestle safely in the harbour of German taxpayers’ vast funds. But in the case of the eurozone, such a fiscal union is likely to result only in deeper economic peril, social unrest and political disarray. And it would mark an almost complete repudiation of what the euro was supposed to stand for when it was hatched almost 20 years ago.
In so many ways, the Germans do not deserve this. While the British have usually been regarded as the most eurosceptic of Europeans, it’s easy to forget that the Germans were never very enthusiastic either. Helmut Kohl was desperate to secure French support for the reunification of Germany — over the stiff opposition of Margaret Thatcher and the British. So he agreed to French demands to support a currency union. It was a quid pro quo. Just as a united Germany was the Chancellor’s political dream, so monetary union was the dream of François Mitterrand, the president of France…
Thursday, June 17th, 2010
While Barry was busy community organizing, writing memoirs and becoming a perfessur, millions of citizens built the Internet into something grand.
Now his know-it-all regime wants to regulate it.
Proposed regulation of high-speed Internet service providers by the U.S. government could cost the economy at least $62 billion annually over the next five years and eliminate 502,000 jobs, according to a study released by New York Law School.
The report estimates that broadband providers and related industries may cut their investments by 10 percent to 30 percent from 2010 to 2015 in response to additional regulation. At 30 percent, the economy might sustain an $80 billion hit, according to Charles Davidson, director of the law school’s Advanced Communications Law & Policy Institute, which released the report on June 16.
“There will be follow-on effects in the whole ecosystem,” said Bret Swanson, president of technology researcher Entropy Economics in Zionsville, Ind., who co-authored the study with Davidson. “A diminution of investment by the big infrastructure companies will reduce network capacity, new services, and investment by all the ecosystem companies,” such as application providers and device manufacturers, he said in an interview.
“I saw a werewolf drinking a pina colada at Trader Vic’s
And his hair was perfect.” — Warren Zevon
HT: Susan Gertson
Turkey’s leaders have made a lot of news lately, and it’s been ugly: holding hands with Iran’s Mahmoud Ahmadinejad, blessing the lead role of the terror-linked Turkish IHH foundation in last month’s Gaza terror flotilla, and voting last week against new sanctions on Iran in the United Nations Security Council.
So what’s a prestigious Washington foreign policy think tank to do? It looks like the Woodrow Wilson International Center for Scholars is about to bestow an award — yes, you read that right, an award – upon the chief strategist behind Turkey’s increasingly toxic foreign policy, Turkish Foreign Minister Ahmet Davutoglu. Unless it’s been called off since Tuesday afternoon — and there is no news of that so far — the Wilson Center plans to present Davutoglu with the Woodrow Wilson Award for Public Service — yes, Public Service — at a dinner ceremony in Turkey this Thursday, June 17th.
This would be revolting enough were the Wilson Center an entirely private foundation. But American taxpayers are forking out for the institution hosting this stunt, whether they know it or not. The Wilson Center was created in 1968 by an act of Congress. As the Center itself details on its website, about one-third of its operating funds every year come from “the U.S. government,” a.k.a. American tax dollars (scroll down to the end of the page in this link).
I wanted to get a better understanding of the variations in government dependency. Is there a greater willingness to sign up for income redistribution programs, all other things being equal, from one state to another?
The “all other things being equal” caveat is very important, of course, since the comparison produced by CIS may simply be an indirect measure of the factors that determine welfare eligibility. One obvious (albeit crude) way of addressing this problem is to subtract each state’s poverty rate to get a measure of how many non-poor people are signed up for income-redistribution programs. Let’s call this the Moocher Index.
Follow the link to see the chart.