I agree that we should have speed limits and other traffic regulations to prevent mayhem and carnage on our roads. There are other laws I agree with such as protecting children from sexual predators and laws protecting citizens from police brutality and processes to allow us to monitor and prosecute corruption in public office etc. They all make sense to me. Many other laws I would scrap because they are petty infringements on our liberty. But I would never enshrine a particular fiscal policy stance in law or even in codes such as fiscal rules. Such practice defeats the purpose of having the fiscal policy capacities, which is to respond to economic circumstance such that public purpose including full employment can be maintained at all times. Creating legal frameworks that stop governments from exercising their discretion are not only counter-productive but also highly destructive as we are seeing now in the Eurozone. I prefer the people to be able to tell politicians what they should be doing in this respect not judges. However, the Euro elites have been moving towards making austerity law and eliminating political discretion that disagrees with them. And, come to think of it, when some judges disagree with them on a matter of law, the EU elites just instruct their puppets to ignore the courts and proceed as before.
When the Germans embedded a balanced-budget law into their constitution, which will outlaw budget deficits, austerity became law. Sure enough the Swiss government imposed a debt brake on itself in 2001 but I would not hold Switzerland out as an example of anything worthy given the way its economy is aided by the criminal money flows.
Please read my blog – Fiscal rules going mad … – for more discussion on this point.
The UK Guardian article (April 24, 2013) – Crisis for Europe as trust hits record low – reports on a new public confidence survey in Europe, which it says shows that confidence in the EU “has fallen to historically low levels in the six biggest EU countries, raising fundamental questions about its democratic legitimacy more than three years into the union’s worst ever crisis”.
The latest survey of the – Eurobarometer – shows “a vertiginous decline in trust in the EU in countries such as Spain, Germany and Italy that are historically very pro-European”.
The Survey found that:
After financial, currency and debt crises, wrenching budget and spending cuts, rich nations’ bailouts of the poor, and surrenders of sovereign powers over policymaking to international technocrats, Euroscepticism is soaring to a degree that is likely to feed populist anti-EU politics and frustrate European leaders’ efforts to arrest the collapse in support for their project.
The Guardian graphic is self-explanatory:
So what began as a financial crisis, which could have been relatively easily contained and the real economy insulated, if the Euro leaders had have:
1. Acknowledged the basic design flaws in their monetary system and instructed the ECB to fund expansionary deficits throughout the Eurozone.
2. Scrapped the pernicious but unworkable Stability and Growth Pact fiscal rules and allowed the deficits to rise to whatever level of GDP was necessary to keep growth going and employment high.
3. Quickly nationalised the banking system throughout Europe and stopped further speculative behaviour by the banks.
There would have been the slightest of downturns if at all and the relatively high deficits would have been required for many years while the housing markets were sorted out and the private sector restructured their balance sheets.
While the Euro monetary system is deeply flawed it would have survived if the ECB filled the gap where a properly functioning federal fiscal agent should have been created in the first place.
But the incompetence of the leaders has created so much damage, which will now endure for years to come, that they have not only destroyed their economic system but have now eroded the very thing that the whole European effort was set up to achieve – a sense of common purpose and trust between nations.
Germany is hated now – again! The racial divisions have widened. And crackpot right-wing extremists have credibility on the political stage. Wealth and income inequality has risen. And – the citizens, on average are much poorer.
The Guardian claims that:
EU leaders are aware of the problem, utterly at odds over what to do about it, and have yet to come up with any coherent policy proposals addressing the mismatch between the pooling of economic and fiscal powers and the democratic mandate deemed necessary to underpin such radical policy shifts
They won’t let go of the neo-liberal ideology. They read too much R&R. They need to radically abandon the whole Eurozone machinery and restore currency sovereignty to member states in an orderly manner. Otherwise, the wreckage will continue to stack up.
There was also a survey just released (April 2013) from the European Social Survey – Economic Crisis, Quality of Work and Social Integration.
This is a very detailed report but re-affirmed the following points:
1. “commitment to employment has come to be seen as a core aspect of social integration” in Europe. Employment is still seen as the “key to reducing levels of poverty and preventing social marginalization”. So for all those who claim my advocacy of full employment is outdated and not reflective of current sentiments I say, politely, think again.
2. For those who claim that the unemployed developed habits contrary to the work ethic, think again. The Survey found that:
… there is no evidence that the unemployed are less committed to employment than the employed. This was the case even for those with relatively long
spells of unemployment. In fact the unemployed tend to show higher commitment in some countries than those in paid work, especially in the countries that had experienced persistently high unemployment in the 2000s.
Okay, we won’t hear the claims that the unemployed are lazy again. They want to work but the policy makers are deliberately stopping them from working.
They have laws in place – austerity laws – to stop them working.
3. We also learned that those in insecure jobs have low commitment to them and this phenomenon is “particularly marked among young adults under the age of 30” which is problematic “given the importance of early attitude formation for longer-term orientations”
In other words, the combination of dramatically (obscenely) high youth unemployment and then access to poorly paid, insecure work is undermining the future productivity of European economies. The capacity to provide high standards of living in the future has nothing to do with the debt ratios etc but all to do with how productive the future workforce will be. The signs are not looking good.
4. “There is now consistent evidence that unemployment has a severe effect in reducing life satisfaction and that its scarring can persist over long periods of time. It also has a spill-over effect, reducing the life satisfaction of other members of the household”. The Survey found that the principle reason for the link between unemployment and life satisfaction was “financial deprivation”.
The Survey also found that in the Scandinavian nations this link is weakened because the “Nordic countries have welfare systems that provide much more generous financial support to unemployed people and this sharply reduces the financial deprivation brought by unemployment.”
In Southern European countries the experience is very different with very damaging effects of unemployment.
So not only are the political leaders in Europe aggressively pursuing austerity laws which they know pushed people into long-term unemployment but then, as they twist the knife a little more, they make the brutality of that unemployment experience greater by cutting the flimsy benefits they receive.
The Survey also considered issues of political legitimacy. They found:
5. “Sharply rising rates of unemployment and heightened job insecurity” undermined the “political trust and satisfaction with existing democratic institutions”:
There was indeed a decline between 2004 and 2010 in overall levels of political trust and satisfaction with democracy quite widely across much of Europe, but the extent to which this was the case varied considerably by country. It was significant in Britain, Belgium, Denmark and Finland; particularly notable in France, Ireland, Slovenia and Spain and reached truly alarming proportions in the case of Greece. Further, changes in political trust and satisfaction with democracy are significantly correlated with changes in GDP growth over the period
It was not just those who “those who had experienced its costs personally” that lost trust in the political system. There is now a broader malaise in Europe with “widespread anxiety about a country’s future even among those who did not experience hardship directly.”
The impact of the crisis on “satisfaction with democracy” is highest in the Eurozone nations. The citizens in those countries are finally realising that their governments signed away power to the bullies in Brussels, who have little stake in the prosperity of their nations. The bullies’ salaries don’t get cut, their travel is probably increased and they still eat and drink well and accommodate themselves in the best hotels.
A European legal reporter, Leigh Phillips wrote an interesting article earlier this month (April 8, 2013) – Portugal vs the Joffrey Baratheon of economic policies – and reminded us that:
… the European Court of Justice radical new powers to ensure compliance with permanent austerity in the eurozone and most of the not-so-eurozone (the UK and the Czech Republic excepted).
He now refers to the ECJ as the ” mouth-breathing, club-wielding mob enforcer for austerity” in Europe.
The European Union’s Fiscal Compact urges nations to make the so-called “implementation laws” permanent, in their constitutions. I wonder where they got that from (Germany).
And any breach of the revised SGP rules will see the ECJ penalise (fine) the “offending” nation a percentage of the current GDP.
Leigh Phillips says that:
The reason the court was given these powers was to remove the exiguous remaining sliver of democratic control over such matters. EU leaders of course don’t put it quite this way. They say instead that giving the court these powers will ‘depoliticise such decisions’. But it is exactly the same thing. De-politicise = de-democratise.
These developments have been aided and abetted by the hasty removal of the Greece Prime Minister by the Troika, bullying visits by the the Troika to struggling nations demanding they delay elections and get on with carrying out their instructions etc.
But what would we expect. The whole Eurozone treaty was an undemocratic affair. They were going to affirm each nations membership with national referendums (where appropriate) but that was soon abandoned after the bosses realised the common currency would be rejected if put to the popular vote.
Remember how vilified the Icelandic President was when he vetoed kowtowing legislation, which the politicians had agreed to and would have made that nation’s crisis even worse.
And then along comes a few judges in the Portuguese Constitutional Court who seem to understand the limits of how far the government can undermine the well-being of pensioners, and those on sickness benefits and others better than the pro-Brussels government – the puppets of Brussels.
Note the puppet masters in Brussels are themselves bullied by those to the east of them! Bullies bullying bullies.
The puppets were told by the bullies – okay – the Portuguese Constitutional Court is irrelevant – you can just cut harder in other areas – like education and health. The latter will sort out those on sickness benefits anyway – don’t deny them access to food and shelter – just cut their medicines and kill them that way!
This was clearly a case though of the unelected judges going feral. The EU bosses wanted these undemocratic institutions to take over decision making and push the austerity line, in the same way as the ECJ.
They didn’t want the design of policy to be determined by the people via the ballot box. They wanted austerity laws that police would ultimately enforce and it wouldn’t matter which flavour of politics was in power, all would obey.
The Portuguese Constitutional Court went a bit feral.
But never mind. Leigh Phillips reminds us of how the EC responded. Classic!
The attitude of the European polity and the bureaucracy it supports is exemplified in the April 7, 2013 – Statement by the European Commission on Portugal – which was its reaction to the decision by the Portuguese Constitutional Court to declare the 2013 national budget illegal.
The Statement is one of those extraordinary demonstrations of how deeply entrenched the dysfunction is in Europe these days.
The EC applauded the decision of the Portuguese Government to largely ignore the decision of the Court and to confirm:
… its commitment to the adjustment programme, including its fiscal targets and timeline … The Commission therefore trusts that the Portuguese Government will swiftly identify the measures necessary to adapt the 2013 budget in a way that respects the revised fiscal target as requested by the Portuguese Government and supported by the Troika in the 7th review of the programme.
The Commission reiterates that a strong consensus around the programme will contribute to its successful implementation. In this respect, it is essential that Portugal’s key political institutions are united in their support.
In other words, business as usual. And don’t worry about what the opposition will say to the people – Brussels will co-opt them too to make sure austerity is law and TINA prevails.
As Leigh Phillips notes:
Just so we’re clear here: Voters cannot be trusted with electing the right people, so we are taking fiscal decisions out of their hands and giving these powers to judges instead. Courts shall enforce austerity. Except of course if they don’t. In which case, courts shall be disregarded.
Austerity is the law. It is the permanent and irreversible law. Should any other laws conflict with this, austerity rests above these laws.
Basically, austerity has crowned itself king, untrammelled by the laws of men. It’s the Joffrey Baratheon of economic policies.
Which then makes it obvious why the citizens are expressing deep mistrust in their political systems and the quality and operation of their democracies.
Europe is no longer free (if it ever was). It is run by an oligarchy of socio-paths.
And these maniacs still receive plenty of support from the other side of the Atlantic.
One of the morons that became a mouthpiece for those Excel Champions R&R was Erskine Bowles, a former cabinet member in the Clinton Administration, who most recently co-chaired the National Commission on Fiscal Responsibilities and Reform with Alan Simpson. He then started the – Fix the Debt campaign – which is supported by a host of conservative organisations that demonstrate an advanced lack of understanding of how the economic system operates.
The National Commission on Fiscal Responsibility and Reform put out a report in 2010 – The Moment of Truth.
The plans they advocated, if implemented (including getting the US federal budget into surplus by 2015) would certainly drive the US economy back into recession and damage the prospects of millions of Americans in their search for work.
Bowles thinks the US government can go broke. Apparently, his “own personal experience – in both the public and private sector” has taught him that. Hmm, I wonder what planet he has been on.
He thinks the US government run out of dollars? Maybe, if they pass a law saying they have run out of dollars and obey the rule of law, unlike the bankers on Wall Street and the Ratings Agencies who seem to think the law is a meagre inconvenience.
For more on Mr Bowles, please read my blog – The brightest minds can be so dumb in particular circumstances.
Anyway, he is back into the news this week. Him and his partner in moronity Simpson released another Report – same story, new front cover. The last report went in the bin as its predictions became irrelevant before they had even finished typing them. So, with their egos clearly in need of stimulation, they had to get a new report out, attract some new press headlines and get paid a heap for some public speaking engagements.
The new Report seems to advocate getting the US public debt ratio below some sort of threshold around 90 per cent. I wonder where they got that from?
In an interview with the Financial Times (April 19, 2013) – US fiscal hawk warns on excessive debt – he admits to referencing the disgraced work of R&R “a number of times”. Many times in fact – do a Google search.
When you examine the proposals – same old same old – you will see they want to hack into medicare support for the poor, health care for the low income elderly, peg public retirement pensions, cut public agencies.
Who would have guessed?
Anyway, with R&R in disgrace now and likely to become irrelevant in the public debate (how will they respond to the press each time when they are asked to show their spreadsheet?), Mr Bowles has another angle to justify his austerity calls:
I know [Rogoff-Reinhart] had a worksheet error in the report – my understanding is that it does make a difference. But what it doesn’t change is the common sense,” said Mr Bowles. “My own personal experience – in both the public and private sector – is that when any organisation has too much debt, that is an enormous risk factor. If your risks go up, people who are lending you money will want more money for their money
On the errors that “common sense” lead one into please read this blog – When common sense fails.
Some questions for Mr Bowles:
1. What experience has he with a currency-issuing nation without foreign currency denominated debt and a floating exchange rate defaulting on its debts?
2. What experience has he with such a government running out of the currency it issues?
We could pose many more but I suspect he wouldn’t quite grasp the import of the two noted here.
Another highly esteemed public figure has also urged further austerity. His company, of-course helped cause the crisis and can hardly claim to be the exemplars of virtuous conduct.
Lloyd Blankfein invoked the now dead Witch’s TINA claim during an interview with the BBC (April 23, 2013) – Goldman Sachs boss says UK has no choice but austerity.
Here are his words of “wisdom”:
You would like at this part of the cycle not to cut, to push out austerity and not to shrink the economy … But if you have a big deficit you lose that optionality. The choices get taken away from you.
I guess his company has investments that pay off when unemployment and poverty rise.
The only question I have is why the border control in London let him in!
The austerity policy has failed in its narrow aims. But the unintended consequences will be great. The EU leaders are risking undermining the whole meaning of “Europe” which was, in part, to stop wars.
Speaking of which, today is – ANZAC Day – in Australia and New Zealand – a public holiday to commemorate the deaths and sacrifices of our soldiers in various wars, some legitimate (First and Second World Wars), some not so (Vietnam oblige!).
It is a day of conflict in many respects. We acknowledge how brave our soldiers were. They were definitely that.
But some of us also consider how used they were by colonial masters in Britain and later the US. Why were we fighting in the dank northern fields of France in 1917? Why did we get sent to our slaughter by British generals in Galipoli and a few decades later in Singapore?
Why do we treat the people of East Timor so ruthlessly now when they were angels to our soldiers during the Second World War?
Why do we not acknowledge how our own soldiers misbehaved with respect to local women in areas they were fighting in and were party to war crimes?
The book by Allan Clifton “Time of Fallen Blossoms” provides a detailed account of the rapes by Australian troops in Japan during the occupation. Here is a 2007 Review – Australian Military Gang Rape of ‘Fallen Blossoms’.
So it is a very complex day – some choose to just focus on the bravura and celebration, while other thinks a little more deeply.
That is enough for today!
(c) Copyright 2013 Bill Mitchell. All Rights Reserved.