Friday, July 06, 2012

EU summit a week later: Angie triumphant

A week after the latest in the unending series of EU crisis summits, last week's looks to have been as stage-managed as a US political party national convention.

The headlines were that Italy and Spain, with Italy's Prime Minister Mario Monti leading and support from France, forced German Chancellor Angela Merkel to accept stimulus measures which were some major concession from her rigid austerity policies. I saw one version, presumably reflecting a French spin, in which it was French President François Hollande who had lead the charge against Angie. But Monti was the hero of most versions. The Hollande version was kind of like an alternative ending on the DVD version of a movie.

The actual result was that Angie steamrolled Monti, Hollande and Spain's Prime Minister Mariano Rajoy. Hollande's high-profile campaign issue to demand renegotiation of the Angie's fiscal suicide pact (Intergovernmental Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union) wasn't worth the hot air it took him to state it. In exchange for a "stimulus" package that apparently consists of the same kind of hot air, he agreed to ask the French Parliament to ratify the fiscal suicide pact he and his Party just got elected campaigning against. Now there's a new EU slogan, Stimulus Plus Austerity, aka, austerity, aka, Angienomics.

Monti the Angie-slayer had the Princess Angela von Merkel as his guest in Italy this week. They both talked about how their were totally in agreement about the EU policy, which Monti demonstrated with an announcement after her visit of new domestic Stimulus Plus Austerity, only without the stimulus. (Gee, who could have foreseen that?) Monti the ferocious opponent of Angienomics of a week ago in the media fantasy world declared after the visit, with no obvious diplomatic irony intended, "For me it's always a pleasure to meet with Angela Merkel." (Demonstration der Einigkeit Spiegel Online 04.07.2012)

The Italian people, already facing an economy in recession, may not be so full of pleasure at the results. As BBC news reports (Italy approves deep cuts in national spending 07/06/2012):

Italy's government has agreed to cut spending by 26bn euros (£21bn, $32bn) over the next three years to plug the gap between spending and income.

The cuts, approved after seven hours of talks, include a 10% reduction in the number of civil servants and cuts to healthcare. ...

The cuts will also halve the number of provincial governments across Italy to about 50.

They aim to trim 4.5bn euros this year, with a further 10.5bn euros in 2013 and 11bn euros in 2014. ...

The Italian economy is in its fourth recession of the past 10 years. Earlier this week, Italy's employers' group, Confindustria, forecast it would shrink by 2.4% this year.
Angienomics at work. In Italy. Angie isn't pursuing such an austerity program in Germany.

In fact, one of the big political disconnects within the eurozone is that the German economy is still largely enjoying the benefits of being in the euro currency union. Germany is a large exporting country, with a big portion of its exports going to the eurozone. The euro is lower in its international exchange rates than could be expected of a separate German currency. So far, it's largely been countries other than Germany - like Greece, Ireland, Italy, Portugal and Spain - that have been experiencing the negative side of the currency union.

Last Friday, German Social Democratic Party (SPD) leader Sigmar Gabriel gave a speech in the Bundestag, in which he stressed that Germany had benefited from the euro, Sigmar Gabriel zum ESM und Fiskalpakt SPDvision 06/29/2012 (in German):

The video contains some entertaining shots of a tired Angie making faces and grumpy gestures.

Angie: What do I care what you say, SPD punk? I own you.

But the context is important. The SPD had completed capitulated and agreed to support the fiscal suicide pact, which was one of the two main topics of the Bundestag debate. Once the SPD caved on that, they had basically nothing to offer as an alternative to her disastrously bad EU policy. So she didn't need to care what the leader of the opposition party was speechifying about that day. She had him and his party in her pocket, on board with her rush-to-the-cliff EU course.

He did call for stricter regulation of European banks and the separation of investment and commercial banking (associated with the Glass-Steagall Act of 1933 in the US) in an interview published on Sunday. But he spoke in vague opposition to the already vague EU summit agreement on dealing with failing eurozone banks by directly loans from the ESM European emergency fund, connecting that opposition to the call for better regulation. But he and his party gave Angie the vote she wanted on the ESM Friday a week ago without demanding such concessions! (Sigmar Gabriel. "Wir stehen vor einer Neugründung der EU" Welt am Sonntag 01.07.12) Sounds like Obama-style postpartisanship to me.

So the political dialogue in Germany isn't focused on preserving the EU as a long-term benefit to Germany and its people, but rather on how whether to support Angie's austerity policies for their EU partner countries or to criticize her for giving too much German money away. It's not surprising that her coalition partners the Christian Social Union (CSU) and the Free Democrats (FDP) are criticizing her for not being harsh enough on Greece, Ireland, Italy, Portugal and Spain. CSU leader Horst Seehofer was making rebellious noises this week about Angie's supposedly soft-on-Europe policies. Nor especially surprising that conservative German economists are grumbling along the same lines. (Markus Sievers, Alarmruf aus dem Elfenbeinturm Frankfurter Rundschau 06.07.2012)

But the SPD is also so immersed in the neoliberal lingo and outlook that it can barely articulate any more constructive criticism. They even backed off advocacy of eurobonds, a critical measure if they actually want to save the euro, because it polled poorly. They are in a situation too sadly reminiscent of the US Democratic Party, which has adopted so much of its conservative rival parties outlook and terminology that they find it difficult to articulate any clear and distinctive policies of their own. At this point, Angie's major EU policies have more loyal support from the SPD than from her own coalition. Pitiful. If the SPD agrees at some stage to again enter a Grand Coalition (CDU/SPD) with Angie as the Chancellor that will be downright pathetic.

Consequently, as Angie wrecks all chance for the eurozone's and maybe even the EU's survival, her favorable approval rating in and ARD-Deutschlandtrend poll published this week finds her with a 66% approval among German voters, the highest since the end of 2009. That includes 58% approving of her handling of the euro crisis. (Deutschlandtrend-Umfrage. Kanzlerin so beliebt wie seit Jahren nicht Süddeutsche Zeitung 06.07.2012) Given the feebleness of the other parties' criticism of her in that regard, it's amazing that her approval rating on the euro crisis isn't higher. She may be wrecking the European economy, destroying the "European project", and leading by far in the quest to be the Heinrich Brüning of the 21st century. But her ratings are good, and the vassal nations her European partners are pretty much kowtowing to her wishes, so I'm guessing she thinks she's a real success.

While here in what we quaintly call "the real world", economists like Paul Krugman and Joe Stigliz, as well as pro-EU advocates whose minds are marinated in neoliberal ideology, are wondering when the fatal bank run in Spain is going to start. Krugman wrote on Thursday, "The euro could be saved. I’m really doubting whether it will." (ECB Death Wish 07/05/2012)

And, oh yeah, democracy is deteriorating rapidly in EU member Romania, following a similar development in EU member Hungary. And also not unlike what recently happened in Paraguay. (Barroso spricht mit Ponta. EU-Kommission besorgt über Lage in Rumänien FAZ 06.07.2012) But those developments in Europe barely make the news. In theory, the European Union was primarily about promoting peace and democracy. But Angie is focused on reducing the people of Greece, Ireland, Italy, Portugal and Spain to poverty. And we probably need to add Cyprus and Slovenia to that list. In Latin America, the breaches of democratic governance in Honduras (2009) and Paraguay (2012) have excited far more official opposition and vocal criticism than those in Hungary and Romania are generating in the Angiefied EU.

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