Zeitgeist summary, featuring Greece, Italy and the US Democratic Party

I don't really think there is such a things as a Zeitgeist. A Weltgeist, maybe.

But if there were a Zeitgeist, Duncan "Atrios" Black sums up the American version of it remarkably succinctly here: "We're sort of reaching the breaking point of the decades long battle between the party that promises to kick those other people, and the party that promises not to kick them quite so hard." Nice Things Eschaton 12/23/2016

He elaborates:

ACA, for all its benefits, just couldn't be implemented without making it fucking hard for people. That the subsidies aren't generous enough makes it too expensive for people, and that's a problem, but it's one thing to be forced to buy a car you can't really afford, another to buy a car that you can't afford that you have to take in for repairs every other week. The government can't just provide the nice things it once provided because reasons. Hell, once upon a time they built community pools and golf courses. Now your HOA might have a pool.

We're the richest damn country in the history of the world (close enough, anyway). Life shouldn't be so hard. Not against The Data, but the data doesn't really capture what's going on for "the middle class." It isn't that wages are stagnant or shrinking - though that's an issue too! - It's that doing the right thing and having a tiny bit of luck is no longer enough to achieve economic security anymore. Life's a crap shoot from 18-67 (soon to be longer, if Republicans get their way). We're all one medium sized economic hit (including medical) away from the downward spiral. And thanks to that glorious bankruptcy bill, once you get into a hole you're probably trapped there. Bipartisany goodness to make David Broder swoon. 74-25 in the Senate, 302-126 in the House. But the Dems are the good guys! Yah, well, not enough of them and not consistently enough. Vote for Dems and the share of them voting for horrible things will shrink slightly!

He also makes a pitch for recognizing the dominance of the current neoliberal economic ideology in Europe and the US.

That dominance has been characterized more severely in Europe than even in the US by the capitulation of the center-left parties to Herbert Hooover/Heinrich Brüning policies.

The result in Europe is chronic crisis in the eurozone, now flaring up again in more urgent fashion in Italy (Philippe Legrain, Italy on the Brink Project Syndicate 12/08/2016) and Greece (Frances Coppola, Greece: The Game Is On Again Forbes 12/28/2016). But note that Legrain takes the neoliberal posture, lamenting that outgoing Italian Prime Minister Matteo Renzi "was the pro-EU establishment’s best – and perhaps last – hope for delivering the growth-enhancing reforms needed to secure Italy’s long-term future in the eurozone." Growth-enhancing reforms in the neoliberal vocabulary means deregulation, reduction of the public sector, weakening of labor unions and labor law, reduction of income for the majority.

I would read the failure of the Greek negotiating strategy against Angela Merkel in 2015 differently that Coppola does. But she's clear-headed about the stakes involved:

Now it is the IMF’s turn to misread the psychological framing. This is not a four-handed poker game, it is a duel to the death. And it is not really about Greece. The surface conflict is between Greece and its creditors, but the underlying power struggle is between the German-led creditor bloc and the European Commission. The eventual outcome will determine the shape of the Eurozone, and indeed the whole EU, in the future.

Neither the Greek government nor the European Commission want the IMF involved. The only reason the IMF is still involved is that the creditors want it to be. And the reason the creditors want the IMF involved is that they do not trust the Commission to deliver the harsh penance they have prescribed for Greece. The IMF has been cast in the role of creditors’ second.

Unfortunately, this is not how the IMF sees itself. It is still trying to act as a neutral broker, crafting a deal acceptable to both sides. It has repeatedly called for substantial debt relief, but has also demanded deep reforms to the Greek economy. But because it is no longer perceived as neutral, its call for debt relief is ignored while its reform initiative is inevitably seen as a disguised demand for more austerity.

And despite noises recently from the IMF that it may realize the disastrous effects of austerity policies, Coppola recounts how the European Commission (aka, Merkel) is actually defending a marginal departure from extreme austerity by the Greek government against the criticism of the IMF.

What.A.Mess

Euro crisis and its twin, the refugee crisis

Wolfgang Münchau is writing aboput Gemeinsame Währung: Die wahre Krise (Common Currency: The True Crisis) Spiegel Online 13.11.2015. His column is an early postmortum on the euro:

Die Flüchtlingskrise ist politisch wichtig, aber nicht wirklich ökonomisch. Sie wirkt kurzfristig wie ein leichtes Konjunkturprogramm und wird langfristig die deutsche Demographie etwas verbessern. Ich halte den Effekt für positiv, aber viel mehr ist dazu nicht zu sagen.

Die Eurokrise hingegen ist weder ausgestanden noch bewältigt. Sie wirkt weiter, jeden Tag. Sie wirkt ökonomisch auf Europa wie die Flüchtlingskrise politisch. Jeden Tag wird es schlimmer, weil man nicht das Problem löst, sondern weil man damit beschäftigt ist, irgendwelche Feuer zu löschen, die man durch die eigene Inkompetenz entfacht hat.

[The refugee crisis is politically important but not really economically. It has the short-term effect of a mild stimulus program and in the long run with improve German demography a bit. I see the effect as positive, but there's not a lot more to say about it.

The euro crisis, on the other hand, has been neither survived nor overcome. It's still going on, every day. It acts economically on Europe like the refugee crisis politically. Every day it gets worse, because the problem has not been solved, but we are rather busy putting out some fire or other that our own incompetence started.]

He actually uses the indeterminate "one (man)" where I translate "we." But I'm pretty sure the main "one" he means is Angela Merkel.

He also sees the growing German trade surplus as a problem in itself.

In a separate column, Münchau warns that Italy could soon find itself in the position where it finds the political and/or economic advantages of leaving the euro immediately compelling. (Italy’s economic recovery is not what it seems Financial Times 11/15/2015) He praises social-democratic Prime Minister Matteo Renzi for his important though relatively modest departures from Angela Merkel's austerity regime. "But," he writes, "what worries me is that the Italian government is not ready for when the impact of the slowdown in China and emerging markets hits Europe." And he observes, "Friday’s preliminary figures for eurozone gross domestic product show that the slowdown has started."

Andreas Schnauder calls attention to the connections between the euro crisis and the refugee crisis in Zwei Krisen, ein Versagen Der Standard 12.11.2015:

In Griechenland wird wieder großflächig gestreikt. Dadurch werden Erinnerungen wach, dass das Land vor nur vier Monaten noch am Abgrund stand und mehr als nur Spekulationen über einen Austritt aus der Eurozone die Runde machten. Inzwischen hat sich die Lage dank umfassender Hilfszusagen wieder beruhigt, doch gelöst wurden die Probleme nicht. Vielmehr hat sich die europäische Aufmerksamkeit zum Thema Flüchtlinge verlagert. Beide Krisen haben eines gemein: Sie waren lange vorhersehbar, ohne dass die EU rechtzeitig und richtig reagiert hätte.

[In Greece, there are again widespread strikes. Thereby memories are kept alive, the the country just four months ago stood on the abyss and not merely speculation was making the rounds about an exit from the eurozone. Since then things have calmed down, thanks to comprehensive promises of assistance, but the problems are certainly not solved. The attention of Europe has fastened much more on the refugee theme. Both crises have something in common: they were foreseeable long ago, with the EU reacting in a timely and correct way.]

Deutsche Welle English reports, Paris attacks stoke fears amongst refugees 11/17/2015:

Lisa Caspari in Der Anfang vom Ende Die Zeit 11.11.2015 takes note of how Merkel's attempt to create a short-term fix for this year's acute phase of the refugee problem is already looking like a failure.

Caspari takes the dissent withing the CDU/CSU against Merkel's refugee policies more seriously than I would. They look to me like the kind of political Kabuki on xenophobia that the CDU/CSU has used in the past, trying to have it both ways by having the leaders argue to respect law and human rights while dissenters argue for anti-immigrant, xenophobic position to protect their right flank politically. An ENSA poll commissioned by the sensationalist tabloid Bild-Zeitung is showing the far-right Alternative für Deutschland (AfD) as the third most popular party in Germany, after Merkel's coalition parties, the CDU/CSU and the SPD. But (CDU/CSU stoppen Umfrage-Absturz Bild-Zeitung 17.11.2015)

Yiannis Baboulias also describes the political tensions within the EU, even before last Friday's terrorist killings (The refugee crisis is tearing Europe apart Aljazeera America 11/05/2015. He also points to the cheap nationalist spirit Merkel and her CDU/CSU/SPD government promoted over the euro crisis:

The political divisions between the EU’s richer and poorer members are also growing. Treaties are being thrown out the window, as country after country is building walls and reinstating passport controls even for EU citizens. Activists took to the streets last weekend near Greece’s land border with Turkey, demanding to open the fence that was built there three years ago. They were met with riot police and tear gas. Opening the border is not a decision the Greek government can make alone; if they do so unilaterally, it’s almost certain every border north of Greece will be sealed. Greece would become a purgatory for hundreds of thousands of people who don’t want to be there. There is virtually zero chance European leaders will ever allow for this safe pathway to open.

As with the battle over austerity, the refugee crisis has turned into a class issue and a cultural divide. In northern Europe, the scorn facing “refugees” and “economic migrants” mirrors that facing “lazy, profligate southerners” in countries such as Greece and Spain. [my emphasis]

Sad state of the EU

Wolfgang Münchau warns, "The eurozone is once again in a position where economic recovery is weakening before it really started, where the global risks are rising, and where inflation remains way off target." (Draghi must be more unconventional Financial Times 10/25/2015)

Yanis Varoufakis says, "Europe’s crisis is poised to enter its most dangerous phase." (Schäuble’s Gathering Storm Project Syndicate 10/23/2015)

Münchau there is writing more narrowly about the course of the eurozone economy. But Varoufakis is writing about that, too, as well as the political dimensions of the crisis. But in his FT piece, he notes of the Italian situation, "Matteo Renzi, the Italian prime minister, is currently using every trick in the book to circumvent European budget rules. His previously planned spending cuts are lower; the tax cuts are bigger — and of the wrong kind; and against the advice of the European Commission, he is now cutting unpopular property tariffs instead of labour taxes."

Varoufakis also discusses Italy's bucking of Germany's domination of the eurozone economy:

Renzi has come close to demolishing, at least rhetorically, the fiscal rules that Germany has defended for so long. In a remarkable act of defiance, he threatened that if the European Commission rejected Italy’s national budget, he would re-submit it without change.

This was not the first time Renzi had alienated Germany’s leaders. And it was no accident that his statement followed a months-long effort by his own finance minister, Pier Carlo Padoan, to demonstrate Italy’s commitment to the eurozone’s German-backed “rules.” Renzi understands that adherence to German-inspired parsimony is leading Italy’s economy and public finances into deeper stagnation, accompanied by further deterioration of the debt-to-GDP ratio. A consummate politician, Renzi knows that this is a short path to electoral disaster.

He also discusses the increasingly public dissent by the Socialist government of France to German misrule in the eurozone.

Ambrose Evans-Pritchard reports France signals EU treaty change to avert Brexit, warns on euro survival Telegraph 09/24/2015:

Mr Macron had even tougher words for Germany, warning that the eurozone will disintegrate in a storm of populist revolt unless Berlin drops its vehement opposition to fiscal union and large transfers to the poorer regions.

The former Rothschild banker said the currency bloc is fundamentally unworkable without a joint budget to back it up and will leave debt-stricken countries on the periphery in permanent trouble.

“If we don’t move forward, we are deciding the dismantling of the eurozone. We have to choose: is it a fixed exchange system or a monetary union?” he said.

He called the struggle over the euro a new Thirty Years war in Europe between Calvinists and Catholics. "The Calvinists want to make others pay until the end of their life. They want reforms or no contributions toward any solidarity. On the other side are the Catholics, largely on the periphery,” he said.

"At every eurozone summit, at every Eurogroup, we have this same dilemma between member states. We have to exit this religious war," he said. [my emphasis]

Varoufakis seems to approve Macron's use of "Calvinists" to describe the supporters of Angela Merkel's ruinous austerity economics.

Neither France nor Italy is mounting the kind of challenge that Greece did earlier this year. But their situations are also not nearly as desperate as Greece's is. But Münchau in Spiegel Online recommends Renzi's example along with that of the Canadian Liberal Party's leader Justin Trudeau as potential models for the German Social Democratic Party (SPD) as to how they might revive their steadily declining political prospects: by offering meaningful alternatives to austerity policies. (So könnte die SPD zum Erfolg zurückkehren 23.10.2015)

Michael Krätke writes (Das Problem ist Deutschland Der Freitag 14.12.014), "Die Euro-Krise signalisiert seit mehr als fünf Jahren, dass die Währungsunion umgebaut werden muss, um zu überleben." ("The euro crisis signaled more than five years ago that the currency union had to be reconstructed to survive.")

He's right. But Angela Merkel continues to milk the eurozone arrangements for the narrow benefit they can provide for Germany. And the walls between EU members continue to go up.

Meanwhile, a majority left bloc in the Portuguese Parliament is now confronting President Aníbal Cavaco Silva over his attempt to keep a pro-austerity government in power after the recent elections there. When it comes to enforcing austerity, Merkel and her allies aren't terribly scrupulous about this whole democracy business.

Greek crisis: Tsipras' mistake in negotiations with the Troika

Georg Diaz in a thought-provoking column, Glossar zur Krise: Der Wandel in den Worten Spiegel Online 24.07.2015, talks about how the euro "crisis" has morphed into a permanent condition, a kind of state of emergency as normalcy.

So there will continue to be new chapters of the Greek crisis. Here I want to comment on what I understand to be the fault of Alexis Tsipras' government in the recent negotiations.

My perspective is very different from the disputes within his Syriza Party. One of Tsipras' responses to his internal Syriza critics is provided by The Greek Analyst, Tsipras’s nonpaper slamming SYRIZA dissenters 07/21/2015.

Tsipras made a very practical call taking into account the risks and opportunities within the very narrow range of options that German Chancellor Angela Merkel had successfully established as the dominant leader in the EU. Syriza had a clear policy of solving their debt crisis within the eurozone. It was the program on which they were elected. It was established in internal discussions and disputes within Syriza. It was a clear distinction from the explicit goal of leaving the eurozone and establishing a separate currency, which everyone seems to assume would be called the drachma, like the last separate Greek currency.

That goal was advocated by the Communist Party and the far-right Golden Dawn, as well as by some members of Syriza. But that approach was rejected by Syriza. Part of Syriza's hope, which presumably persists, is that hopefully sooner than later, they will gain effective allies in other eurozone countries. Upcoming Portuguese and Spanish elections could provide some of that support. In fact, Merkel's hardline opposition to any departure from the draconian austerity program in Greece is due to her determination to scare Portuguese and Spanish voters from elected anti-austerity governments.

How realistic Syriza's hope in that regard is, is another question. Recent public grumbling by the social-democratic governments of France and Italy have provided some encouragement on that front. On the other hand, France's President François Hollande was elected in 2012 promising to oppose Merkel's austerity program. Once elected, he hardly made any pretence of resistance to it. Maybe one of these days, he will actually get around to it.

Prime Minister Matteo Renzi of the Democratic Party in Italy has even more rational reasons than the government of France to oppose austerity measures. But since taken office in early 2014, he has been singing from the neoliberal hymnbook pretty faithfully. And the language of faith is appropriate here. Austericide economics is very much a faith-based devotion, not evidence-based economics. Susanna Böhme-Kuby in Bulldozer Renzi Blätter für deutsche und internationale Politik 07/2015 describes his demonstrated commitment to deflationary, neoliberal policies.

The one big miscalculation that I can see in the Tsipras government's approach to the negotiations is that, given the enormous determination by Merkel and her Finance Minister Wolfgang Schäuble to crush Greece's political resistance to their austerity program was that to attain meaningful concessions within the eurozone, he had to be prepared to actually exit the eurozone. And that Tsipras wasn't willing to do.

Wolfgang Münchau describes this correctly, if in a way somewhat less sympathetic to Tsipras' dilemma than I would be, in Grexit remains the likely outcome of this sorry process Financial Times 07/19/2015

Alexis Tsipras should never have hired Yanis Varoufakis as his finance minister. Or he should have listened to him, and kept him on. But instead the Greek prime minister chose the worst of all options. He followed Mr Varoufakis’ advice of rejecting the offer of the creditors - until last week. But having done this, Mr Tsipras committed a critical error by rejecting Mr Varoufakis’ plan B for the moment when the country’s banks closed down: the immediate introduction of a parallel currency - IOUs issues by the Greek state but denominated in euros. A parallel currency would have allowed the Greeks to pay for their daily transactions when cash withdrawals were limited to €60 a day. A total economic collapse would have been avoided.

In Wie Deutschland den Euro sprengt Spiegel Online 20.07.2015, he emphasizes how shortsighted a self-destructive Germany's behavior in those negotiations really were. The short-term destruction, of course, hits Greece. The longer-term destruction will eventually wreck Germany's leadership in the EU if it is not corrected by future, post-Merkel governments. There he writes:

Die Griechenlandkrise hat uns gezeigt, dass eine ökonomisch nicht nachhaltige Situation in kürzester Zeit alle politischen Tabus sprengt. Das Primat der Politik kann sich langfristig nicht über ökonomische Logik hinwegsetzen.

Aus ökonomischer Sicht ist Griechenland im Euroraum nicht mehr lebensfähig. In diesem Punkt hat Wolfgang Schäuble recht. Aus griechischer Sicht wäre ein Austritt besser.

[The Greece crisis has shown us that an economically unsustainable situation can int the shortest time blow up all political taboos. The primacy of politics cannot in the long run prevail over economic logic.

From an economic point of view, Greece is no longer viable in the euro area. On this point, Wolfgang Schäuble is correct. From the Greek point of view, an exit would be better.]

Christiane Amanpour interviewed Varoufakis for CNN International ( Mick Krever, Varoufakis: 'We made mistakes' 07/20/2015):

Varoufakis said he had sympathy for his former boss [Tsipras].

"He was faced with a choice: Commit suicide or be executed."

"Alexis Tsipras decided that it [would] be best for the Greek people for this government to stay put and to implement a program which the very same government disagrees with."

"People like me thought that it would be more honorable, and in the long term more appropriate, for us to resign. This is why I resigned. But I recognize his arguments as being equally powerful as mine."

The video is here, Varoufakis: 'We made mistakes' 07/20/2015:

Why debt sustains corruption in Greece and vice versa

Christos Koulovatianos, John Tsoukalas Vox 20 July 2015

Olaf Boehnke (Greece and Germany's game of chicken European Council on Foreign Relations 07/17/2015) holds out optimism that Merkel may come to her senses:

Although many observers expected that Angela Merkel and Wolfgang Schäuble would have been feted for their victory upon their return to Berlin, the exact opposite has been the case. The tersest reaction came from Thomas Strobl, vice chairman of the Christian Democrats (CDU) and Schäuble’s son-in-law. Prior to the CDU’s steering committee meeting after the euro summit last Monday he said: "The Greek has now annoyed long enough." While Strobl has since been heavily criticised for this remark, this chauvinistic attitude does reflect strongly the sentiment of many people in Germany and in Strobl’s party in particular. ...

These elements - plus the broadening criticism of German hegemony in Europe- may well bring her to the point where she has to demonstrate political leadership in a way Mario Draghi did when he announced that the ECB will “do whatever it takes to preserve the euro”. Once all Eurozone member states have agreed to the new negotiations it would be wise for Merkel to demonstrate her political commitment to the Greek people with a speech in front of the Greek parliament or a public place in Greece in order to reinforce what she has been best at: getting conflicting parties back to the table and finding a compromise. In her speech today, she paid special attention to the importance of the French-German cooperation. If she is really interested in achieving a reliable solution for the current crisis, she and Francois Hollande must include Alexis Tsipras in finding a political agreement which gives him and the Greek people real, not forced, ownership of such a deal.

I don't think Merkel sees the world that way. She the leader of the economically most powerful country in the eurozone and she's done very well from her German point of view with her strategy of domination. One of the greatest risks for political and business leaders is there is an inevitable tendency to continue doing what has been successful in the past. Unfortunately for the eurozone and for the periphery countries especially, what has been successful for Merkel and her hardline neoliberal outlook is horribly destructive for the countries practicing her austerity policies, especially for Greece.

Jamie Galbraith and Ambrose Evans-Pritchard on Greece

The Institute for New Economic Thinking has an interview by Lynn Parramore with economic Jamie Galbraith, The Greek Revolt Against Bad Economics Threatens European Elites 07/09/2015. Definitely worth reading the whole thing. Here's part (emphasis in original):

What happened on the 26 th of June was that Alexis (Tsipras) came to realize, at long last, that no matter how many concessions he made he wasn't going to get the first one from the creditors. That's something Wolfgang Schäuble had made clear to Yanis (Varoufakis) months before.

But it was hard to persuade the Greek government of this because its members naturally expected, as you would when you're in a negotiation, that if you make a concession the other side will make a concession. That isn't the way this one worked. The Greeks kept making concessions. They'd present a program and the other side would say —as you can read in the press — oh, no, that's not good enough. Do another one. Then they'd complain that the Greeks were not being serious.

What the creditors meant by that was this: when you come around and agree to what we tell you, then you're serious. Otherwise not. This is the way bad professors treat extremely recalcitrant students. You come in with a paper draft and they say, no, that's not good enough. Do another one.

Galbraith also refers to this article, which he says "is very much on the mark": Ambrose Evans-Pritchard, Europe is blowing itself apart over Greece - and nobody seems able to stop it Telegraph 07/07/2015:

This ultimatum came as a shock to the Greek cabinet. They thought they were on the cusp of a deal, bad though it was. Mr Tsipras had already made the decision to acquiesce to austerity demands, recognizing that Syriza had failed to bring about a debtors' cartel of southern EMU states and had seriously misjudged the mood across the eurozone.

Instead they were confronted with a text from the creditors that upped the ante, demanding a rise in VAT on tourist hotels from 7pc (de facto) to 23pc at a single stroke.

Creditors insisted on further pension cuts of 1pc of GDP by next year and a phase out of welfare assistance (EKAS) for poorer pensioners, even though pensions have already been cut by 44pc.

They insisted on fiscal tightening equal to 2pc of GDP in an economy reeling from six years of depression and devastating hysteresis. They offered no debt relief. The Europeans intervened behind the scenes to suppress a report by the International Monetary Fund validating Greece's claim that its debt is "unsustainable". The IMF concluded that the country not only needs a 30pc haircut to restore viability, but also €52bn of fresh money to claw its way out of crisis.

SYRIZA, Greece and the eurozone

Aljazeera English has a couple of opinion pieces offering different perspectives on whether a left-leaning, anti-austerity contagion of sorts might be in the works if SYRIZA led by Alexis Tsipras win the January 25 elections in Greece.

Current SYRIZA poster featuring Alexis Tsipras (Aλέχης Tσίπρας)

Matthaios Tsimitakis in If Greece turns left, will Europe follow? 01/01/2015 thinks it's likely:

Despite the fact that both the German and the Greek conservative governments present the current bailout programme as a "success story", most analysts around the globe agree that it has actually failed. Six years of continuing recession have resulted in a loss of 25 percent of GDP and a rise of unemployment to 27 percent.

Greek debt is well over 170 percent of GDP now and according to Troika estimations it will be no less than 120 percent by 2020.

These facts translate to two things. Firstly, there can be no development under austerity policies for the majority of the population, even if the Eurozone fixes its competitiveness problem and exits deflation and the Greek economy starts developing at a growth rate of over 4 percent - which is highly unlikely.

Secondly, there can be no functioning democracy so long as Greece is not given choices other than poverty, degrowth and exclusion. Greece is in the state of protectorate at the moment, bound in a bailout agreement that strips its ability to produce and reject different solutions.

And, as he says, "it's not just Greece."

Austerity is also failing with varying degrees of harmful consequences for the population in Ireland, Italy, Spain, Portugal and even France. Even Austria, which has tended to be one of the countries relatively benefiting from the euro currency, is suffering unusually high unemployment.

In this environment, a SYRIZA victory would mean two very important things; the return of the power to decide to a democratically elected government and the restoration of inclusiveness and national sovereignty and the opening of a new chapter in European politics, where the parties and the organisations who challenge austerity will have the momentum. [my emphasis]

That seems to be a statement of hope as well as analysis, and I share that hope. It certainly looks realistic to me. It's worth noting in this regard that the left-leaning Podemos party in Spain is now leading the polls there: Anabel Díez, Podemos consolida su ascenso y Ciudadanos irrumpe con fuerza El País 11.01.2015. Similarly to SYRIZA in Greece, Podemos has captured to anti-austerity, center-left political space that their respective social-democratic parties abonaded in favor of crass Herbert Hoover/Heinrich Brüning austerity policies.

Menelaos Tzafalia and Thanassis Koukakis, on the other hand, seem to think Greece is condemned to the austerity road, no matter what. (The empty threat of Greece leaving the euro 1/07/2015):

If Greece defies its euro area creditors, some argue it will have no choice but to pick the "Grexit" path which in turn will lead to even tougher fiscal austerity and unprecedented shortages in imported goods and raw materials. The country also would experience a collapse in investments, further exacerbating the situation after six years of painful recession.

Others argue that by leaving the euro, reverting to its own currency and charting its own monetary policy, Greece quickly will recover. But even for proponents of this scenario, the recovery will take place in an unfriendly international environment.

Whatever comes to pass and until a resolution is reached, the pain for euro area and Greek taxpayers will be great. Much greater than what it already is.

There are a lot of factors affecting this. Germany and the ECB could credibly threaten to shut the Greek banking system down by cutting of the liquidity for which Greek banks depend on the EU. That would be incredibly heavy-handed, but no less so than Merkel's brutal Hoover/Brüning austerity policies and the pressure she used to oust elected governments in Greece and Italy.

Tzafalia and Koukakis also explain why Merkel's threats to kick Greece out of the eurozone if the Greek voters don't knuckle under to her massively destructive demands are mostly hot air. Although given her dogmatic adherence to the Hooover/Brüning policies and her Brezhnev-like approach to leading the eurozone, she might try to bulldoze ahead with the idea despite the risks. Tzafalia and Koukakis give figures on the amount of debt other nations in the eurozone hold that would potentially evaporate in the event of a "Grexit."

Joe Stiglitz looks at the eurozone now stuck in a deflationary situation as a result of Europe’s Lapse of Reason Project Syndicate 01/08/2015:

Now Greece is posing yet another test for Europe. The decline in Greek GDP since 2010 is far worse than that which confronted America during the Great Depression of the 1930s. Youth unemployment is over 50%. Prime Minister Antonis Samaras’s government has failed, and now, owing to the parliament’s inability to choose a new Greek president, an early general election will be held on January 25.

The left opposition Syriza party, which is committed to renegotiating the terms of Greece’s EU bailout, is ahead in opinion polls. If Syriza wins but does not take power, a principal reason will be fear of how the EU will respond. Fear is not the noblest of emotions, and it will not give rise to the kind of national consensus that Greece needs in order to move forward.

The issue is not Greece. It is Europe. If Europe does not change its ways – if it does not reform the eurozone and repeal austerity – a popular backlash will become inevitable. Greece may stay the course this time. But this economic madness cannot continue forever. Democracy will not permit it. But how much more pain will Europe have to endure before reason is restored? [my emphasis]

Ambrose Evans-Pritchard in EMU deflation is the final betrayal of southern Europe The Telegraph 01/07/2014 seems to have a pretty vague idea about the structural problems of the euro, for which he uses the term European monetary unit (EMU): "The Telegraph has argued since Maastricht that a currency union of disparate cultures with no EMU treasury or political authority to guide it would end in paralysis, with feedback loops entrenching divisions over time." A term like "disparate cultures" doesn't really tell us much about the euro and its problems.

But he does give us an idea of how a deflation situation like that now in the eurozone can lend an up-is-down aspect to more conventional economic assumptions:

A chorus of economists began warning two years ago that the region was sailing close to the wind by letting inflation drift ever lower, leaving itself one shock away from a loss of policy traction. That shock is now hitting in successive waves: the Russia crisis; China's over-investment glut; and now the collapse of oil prices.

Textbook theory suggests that a halving of energy costs should be cause for celebration, a tax cut for consumers. It is very different calculus when inflation is already zero, bond yields are plummeting to 14th century lows across the world, and market psychology is becoming "unhinged" - to use central banking vernacular.

“Normally, any central bank would prefer to look through a positive supply shock," said Peter Praet, the European Central Bank's chief economist. "But we may not have that luxury at present. Shocks can change: in certain circumstances supply shocks can morph into demand shocks via second-round effects."

Mr Praet said families and firms are already adapting pre-emptively to the new order, describing what amounts to a classic deflation trap. "There is a risk of a real economic vicious cycle: less investment, which in turn reduces potential growth, the future becomes even grimmer and investment is reduced even further," he told Börsen-Zeitung. [my emphasis]

Greece's current situation has important similarities to that Argentina faced in the financial and political crisis of 2001-2. This Spanish-language report from TV Pública argentina, V7inter - Grecia y Syriza desafían a Europa 01/10/2015, describes the current SYRIZA campaign and its Keynesian solutions to the immediate crisis, including a reduction of the debt burden which the eurozone's so-called rescue policies have made even more severe. And the fear-mongering campaign that the current Angie-bot conservative Prime Minister Georgios Samaras is waging to keep his government and Merkel's austerity policies going:

The commentators call attention to the absurdity of Merkel's government, including its Hoover/Brüning Social Democratic junior partner, accusing Greece of blackmail. In the German government's view, when the victims of their failed, destructive policies put up resistance, that is the blackmail. (The commentators say explicitly that they've been almost promoting SYRIZA on their "Vision 7" program.) This report also suggests that Georgios Papandreou's new social-democratic party may be an attempt to steal a critical margin from SYRIZA in the election by attracting left-leaning anti-austerity voters that may be scared off from SYRIZA by the propaganda blitzkrieg against it.

Marcus Bensasson reports for Bloomberg News that SYRIZA is still in the lead in polls two weeks out from the election, Samaras Still Trails Syriza 14 Days Before Greek Election 01/11/2015:

Tsipras ... reiterated his party’s plan to direct social spending toward households reduced to poverty during Greece’s economic crisis. Speaking in Corinth, Tsipras also pledged to raise the tax-free income threshold to 12,000 euros ($14,000) and hit back at Samaras for trying to link the Paris attacks with Syriza’s policies on border control.

“It was a mistake by Samaras to try to link the very unfortunate events in France to the flow of uncontrolled migration into Greece,” said Sotiropoulos. “This kind of reaction alienates the centrist voters who could have voted for Samaras.”

Also in a very interesting development, economist Yanis Varoufakis is running for a Parliamentary seat on the SYRIZA ticket, as he explains in Why I am running for a parliamentary seat on SYRIZA’s ticket 01/09/2015. I'm quoting a large part of that post announcing his candidacy here:

As the Eurozone’s inevitable crisis was addressed by a cynical transfer of banking losses onto the shoulders of the weakest taxpayers, politicians and commentators who tied their colours onto the so-called bailouts’ mast demonstrated precisely no interest in rational debate.

Instead of discussing, in the European Union’s fora, the nature of our systemic crisis, the powers-that-be were busy fiscally waterboarding proud nations, letting them take a few short breaths before submerging them again into the waters of illiquidity. Thus Europe began to lose its integrity and its soul, turning from a realm of shared prosperity to an iron cage, a debt prison, a form of Victorian workhouse.

At the economic front, this crisis-denial led to contagion in the sovereign bond markets, beginning with Greece where the combination of savage austerity and huge loans was tried and tested, before being exported to the rest of the Eurozone. Predictably (as this blog was illustrating day in day out) the contagion was only made worse, reaching Italy with extreme prejudice and forcing the ECB to step in in the summer of 2012 with Mr Draghi’s famous “whatever it takes” moment. Only the crisis never went away but, rather, it was transferred from the bond markets to the real economy, yielding vicious deflationary forces that have now rendered Spain, Italy and France fiscally unsustainable.

At the social front, crisis-denial and the logic of the bailouts gave rise to a humanitarian crisis that Europe should be deeply ashamed of. Again predictably, the result was the fanning of the flames of misanthropy, of racist nationalism, of all those sinister forces that are demolishing European democracy and replacing it with self-propagating authoritarianism. The results of the last European Parliament elections confirmed that sad truth but did nothing to sway the powers-that-be away from the policies of deconstruction that are behind the emergent bigotry.

Greece is where all this started. It must be where a reversal of Europe’s fragmentation begins too. Regular readers of this blog are familiar with my efforts to come up with a sensible, modest proposal for resolving the euro crisis. Such proposals have no chance, I have now understood, until and unless they are tabled at the Eurogroup, in Econfin at the EU summit.

This is the reason that when Alexis Tsipras honoured me with the offer to run for an Athens parliamentary seat, and with a view to play a role in Greece’s negotiation with Berlin, Frankfurt and Brussels, I could not but accept.

Surprising pushback in Europe against Angela Merkel's threats to Greece

Austrian Chancellor Werner Faymann (SPÖ) is somewhat surprisingly pushing back against German Chancellor Angela Merkel on her threats toward Greece, along with Austrian Finance Minister Hans Jörg Schelling (ÖVP).

They are referring specifically to comments by Merkel, her Finance Minister Wolfgang Schäuble and her sadly compliant Social Democratic Grand Coalition junior partners that a "Grexit," a Greek exit from the eurozone, would be no big deal and easily manageable. It's a crass threat to the Greek voters that they better not elect SYRIZA, the anti-austerity party headed by Alexis Tsipras.

Faymann called the threats "unnecessary Wichtigtuerei," the latter meaning something like "a lot of hot air."

Nachrichten.at (Faymann: "Grexit-Diskussion ist unnötige Wichtigtuerei" 06.01.2015) quotes Faymann as follows (my translation follows):

Ich halte es für entbehrlich, einem Land, das vor Wahlen steht, auszurichten, was man da alles wie sieht. Die griechische Bevölkerung hat das Recht, ein Parlament und eine Regierung zu wählen, wie sie das für richtig halten. Griechenland hat in der Vergangenheit die Verpflichtungen eingehalten. Für mich gibt es da keinen Zweifel, dass das auch in Zukunft so ist.

[I consider it inappropriate to tell a country that stands before elections how they should see things. The Greek population has the right to elect a Parliament and a government that they think is right. Greece in the past has complied with its obligations. For me, there is no doubt that it will also be the same in the future.]

In the context, this is a clear statement of support for Greece and a criticism of Merkel's arrogant, bullying threats.

The part about Greece's "obligations" is more ambiguous. Greece can't meet its current debt and budget-reduction obligation without enduring years more of depression.

On the other hand, when the current conservative government of Greece is still claiming it will meet those obligations, the Austrian Chancellor can't very well take a position that the eurozone should recognize reality on Greece's "obligations" when the Greek government isn't defending such a position itself.

Even the head of the Österreichische Institut für Wirtschaftsforschung (WIFO) is objecting to Merkel's highwire threats about kicking Greece out of the eurozone:

Auch Wifo-Chef Karl Aiginger hält die Debatte über einen Euro Austritt Griechenlands für "absolut entbehrlich". Sie würde Griechenland und Europa schaden und die Autorität von EU-Kommissionschef Jean-Claude Juncker untergraben.

"Griechenland hat hohe Opfer auf sich genommen, aber zu wenig an einer eigenen Strategie für die Jugend, neue Arbeitsplätze und Gründung von neuen Firmen gearbeitet. Zu viele alte Privilegien, von Schiffsreedern, Militär, Kirche, übergroßem Staatssektor und die Dominanz von Old Boys Networks wurden erhalten, mit geringem positiven Einfluss europäischer Programme zur Veränderung der Strukturen und zur Erneuerung", sagte Aiginger.

Europa brauche Griechenland, weil es ein Brückenkopf sowohl zu Nordafrika, als auch zu Arabien und zum Schwarzmeerraum sei. "Ohne Griechenland wird die Integration des Balkanraumes in das Europäische Projekt gestoppt", warnt Aiginger am Dienstag.

[Even WIFO chief Auch Wifo-Chef Karl Aiginger considers the debate about an exit of Greece from the euro to be "absolutely inappropriate." It would damage Greece and Europe and undermine the authority of EU Commission President Jean-Claude Juncker.

"Greece has accepted great sacrifices, but has worked too little on their own strategy for the youth, new jobs and the creation of new businesses. Too many old privileges of the big shippers, generals, the Church, a bloated state sector and the dominance of Old Boys Networks have been maintained, with little positive influence of the European program for structural change and renewal," said Aiginer.

Europe needs Greece, because it is a bridgehead to North Africa, as well as to Arabia and to the Black Sea area. "Without Greece, the integration of the Balkan area in the European project will stop," warned Aiginger on Tuesday.]

Aiginger is repeating the austerity mantra of "reform," not surprisingly for the head of a very establishment, business-oriented group. But he sounds pretty alarmed at Merkel's arrogant threats.

Other countries seem to be positioning themselves to take advantage of the opening a SYRIZA victory in Greece would create. Nachtrichten.at notes that Italy's social-democratic-led government has so far been restrained in its public statements. But it quotes Gianni Pittella, chairman of the Social Democratic caucus in the European Parliament and an ally of Italian Prime Minister Matteo Renzi, "Das Ausscheiden Griechenlands aus dem Euro hätte einen Domino-Effekt für die gesamte Eurozone" ("The separation of Greece from the euro would have a domino effect for the whole eurozone").

French President François Hollande, who nominally resists Merkel's hardline austerity but has a pitiful record when it comes to actually resisting it, also said on Monday that Greece alone would decide on its continuing participation in the eurozone. About as decisive as soggy toast, but still a distancing from Merkel's arrogant posture.

The mainstream El País editorializes in Respetad a los griegos 06.01.2015 warning against the possibility of a new contagion of crisis around the potential German confrontation with a new anti-austerity government in Athens. El País also expresses alarm over the threats that "some European institutions and leaders" have been making to the Greeks on how they should vote - this basically means Angela Merkel and the German government - and warns they could be counterproductive.

In a statement that sounds downright nostalgic, the editorial notes:

Hay que respetar la libertad y la voluntad de los griegos — siempre que se plasme en alternativas respetuosas con el Estado de derecho — por principio democrático, porque la Unión es una comunidad de derecho y una federación de democracias.

[The freedom and the choice of the Greeks have to be respected - as long as they are expressed as respectable alternative within the rule of law - for the democratic principle, because the Union is a community of law and a federation of democracies.]

It's becoming harder for anyone to pretend that Angela Merkel observes such niceties. And the EU's much-discussed "democratic deficit" is becoming harder and harder to ignore. (See also, Hungary, Orbán government)

Without specifying Angela Merkel as the main leader doing threats, the editorial notes that the "stupid general threat of expulsion from the euro" is not only "imprudent" but could facilitate "catastrophe."

Also in El País, Claudi Pérez (La Comisión Europea enfría los temores de salida del euro en Grecia 05.01.2015), quotes a former adivseity supporter:

“Es indignante que Berlín chantajee a los griegos si eligen democráticamente a Syriza, que ha prometido un alivio de la deuda que el país necesita desesperadamente”, apuntó el analista Philippe Legrain, ex asesor de José Manuel Barroso. “Ese tipo de comportamientos, condicionados por los intereses egoístas de los acreedores, han transformado la comunidad de iguales que era la eurozona en una cárcel para los deudores”, , añadió. “La austeridad ha sido desastrosa en Grecia y si los líderes europeos no ofrecen un acuerdo favorable a Atenas la crisis será inevitable.

["It is outrageous that Berlin is blackmailing the Greeks if they democratically elect SYRIZA, which has promised a reduction of the debt that the country desperately needs," indicates the analyst Philippe Legrain, ex-adviser to José Manuel Barroso. "The type of behavior, conditioned by the egoistic interests of the creditors, has transformed the community of equals that was the eurozone into a debtors' prison," he added.]

Wow, I guess it's not just "heterodox" economist like Jamie Galbraith and Yanis Varoufakis or New Keynesians like Paul "the Shrill One" Krugman saying stuff like this any more!

Jürgen Habermas on EU politics

The "second generation" Frankfurt School philosopher Jürgen Habermas granted an interview to the Frankfurter Allgemeine Zeitung (FAZ) on last week's European election, Jürgen Habermas im Gespräch: Europa wird direkt ins Herz getroffen 30.05.2014. He gives this following description of the drastic change in perspective of German leadership from one of promoting European integration to one of nationalist advantage-seeking:

In der Bundesrepublik hat seit der Wiedervereinigung ein politischer Mentalitätswandel stattgefunden. Deutschland fühlt sich wieder als ein normaler Nationalstaat – und unsere Regierung benimmt sich auch so. Damit hat die Europäische Union gerade in ihrer schlimmsten Krise die leise, aber beharrlich auf eine weitere Integration drängende Stimme der alten Bundesrepublik, die sich ihrer Ausgangslage nach 1945 noch bewusst war, verloren. Diese wichtige, über Tagespolitik und Machtopportunismus hinausweisende Stimme war nie so nötig wie heute. Statt den schwächsten, nur scheinsouveränen Gliedern der Europäischen Währungsgemeinschaft einen Kurs aufzunötigen, der Opfer nur von den anderen verlangt, hätte die deutsche Regierung unter Inkaufnahme eigener Vorleistungen die Politik von Adenauer, Helmut Schmidt und Kohl fortsetzen müssen.

Aber ungerührt von den obszön ungleichen Krisenschicksalen, hat Deutschland von der Krise auch noch profitiert. Dieses unsolidarische Verhalten muss auf uns zurückschlagen. Wir müssen aufhören, eine hochgefährliche halbhegemoniale Stellung, in die die Bundesrepublik wieder hineingerutscht ist, in alter deutscher Manier rücksichtslos auszuspielen. Sollten die Wahlergebnisse in anderen Mitgliedstaaten davon wirklich unberührt geblieben sein?

[Since reunification {1990}, a change of political mentality has taken place in the Federal Republic {Germany}. Germany against feels itself to be a normal national state - and are government conducts itself that way, as well. Because of that, the European Union precisely during its worst crisis lost the voice of the old Federal Republic, which was still conscious of its starting point in 1945 and which carefully but persistently pressed for further {European} integration. This voice, which went beyond day-to-day politics and opportunistic power politics, was never so necessary as today. Instead of requiring the weakest, only apparently sovereign members of the European currency community to follow a course that demands sacrifices of the others {i.e., besides the Germans}, the German government have to move forward the policy of {Konrad} Adenauer, Helmut Schmidt and {Helmut} Kohl, taking account of their own compromises.

But unmoved by the obscenely unequal fates during the crisis {of other eurozone countries}, Germany even profited from the crisis. This unsolidarish conduct has to bounce back onto us. We must stop playing out in the old German manner a highly dangerous, half-hegemonic position into which the Federal Republic has again slipped. Should the election outcomes in other members states really not be touched by that?

Habermas talks about the horse-race aspects of the contest for the Presidency of the EU Commission. This basically has to do with whether Jean-Claude Juncker
the lead candidate of the party with the largest plurality in the EP elections, the conservative (pro-Europe/pro-austerity) European People's Party (EPP), will be chosen as the EU Commission President. The EU Council actually chooses the Commission President. They are required to take account of the results of the EP vote, but not required to select the top vote-getter as President.

To take an example from one type of parliamentary system, like those of Germany and Austria. Normally, the head of state (the elected President in those two cases) would "invite" the party winning the largest vote to form a government. If the largest party has a majority, that's pretty straightforward. If they have a minority, they have to work out deals with other parties for a coalition, like the current Grand Coalition (GroKo) in Germany, headed by Angela Merkel and her CDU, with the SPD as the junior partner. If the lead party is unable to form a government, then the head of state would as the second-largest vote-winning party to form a government.

Merkel has toggled back and forth over whether she will support Juncker as Commission President, even though her CDU is part of the EPP and he was the EPP's candidate. Reportedly he was also Merkel's top choice for that role. Late last week, Merkel's was taking a classica Mugwump stance: «Wir haben Jean-Claude Juncker für das Amt des Kommissionspräsidenten nominiert. Die ganze Agenda kann von ihm, aber auch von vielen anderen durchgesetzt werden. Daran habe ich keinen Zweifel.» ("We nominated Jean-Claude Juncker for the office of the Commission President. The whole agenda can be put through by him, but also there are many others who could do it. Of that I have no doubt.") At a Brussels summit this past weekend, Juncker's candidacy faced headwinds from some of his nominal supporters in the election: British Prime Minister David Cameron, Hungary's authoritarian Prime Minister Viktor Orbán, Swedish Prime Minister Fredrik Reinfeldt and Dutch Prime Minister Mark Rutte. (Juncker gerät bei EU-Gipfel zwischen die Fronten Lausitzer Rundscahu/DPA 28. Mai 2014)

By Monday, Von Merkel the Great had decided to back Juncker. (If only to show she can slap down Cameron and Orbán?) Her junior coalition partner, the SPD, supposedly pushed her in the direction of backing the European popular vote. How much of this is a genuine difference between Merkel and the SPD and how much political Kabuki is hard to say.

Habermas, who has long been very concerned and outspoken about what's known as the "democratic deficit," puts a high value on the Council respecting the EP vote in this regard. In the interview published Saturday, he was pretty sour about Merkel's posture on Juncker's selection: "Merkel, die Patronin der Geberländer, will das Fenster, das sich mit der frischen Luft der Europawahl für einen solchen Politikwechsel geöffnet hat, möglichst schnell wieder schließen." (Merkel, the patron of the giver countries {the northern European countries in the eurozone}, wants to close the window as soon as possible that was opened for the fresh air of such a political change by the European election.")

Habermas also takes a dig at the quality of the EPP's own "pro-Europe" credentials:

Zum ersten Mal erfährt das Europäische Parlament eine tatsächliche Legitimation – gerade dadurch, dass die Europagegner nach scharfem Meinungskampf Sitz und Stimme erlangt haben, um so die schlappen Europafreunde wachzurütteln – und die Böcke von den Schafen trennen. Man fragt sich ja, auf welche Seite eigentlich eine EVP-Fraktion gehört, die sich nicht einmal zu ihrem eigenen Kandidaten Jean-Claude Juncker zu bekennen wagt. Während sich die CDU zu Hause immer noch als europafreundliche Partei aufplustert, denkt deren Parteienfamilie im Europaparlament offensichtlich nicht daran, „Parteifreunde“ wie die offen europafeindlichen Orbán- und Berlusconi-Abgeordneten aus ihren Reihen auszuschließen.

[For the first time, the European Parliament is experiencing an actual legitimation - precisely thereby, that the enemies of Europe {anti-EU nationalist parties} after a sharp battle of opinions gained a place and a voice, in order to shake the flaccid friends of Europe awake - and to separate the sheep from the goats. One must certainly ask on which side the EPP caucus, which isn't even trying to support its own candidate Jean-Claude Juncker, actually belongs. While at home the CDU puffs up its feathers as a Europe-friendly party, their party family in the European Parliament clearly isn't thinking about removing from their ranks "party friends" like the openly Europe-hostile representatives of Orbán {Hungarian authoritarian conservatives} and Berlusconi {Italian plutocratic conservatives}.]

Italy's social-democratic Prime Minister Matteo Renzi has been making anti-austerity noises recently, which Wolfgang Münchau seems to take seriously. (Stunde der Schuldenmacher Spiegel Online 26.05.2014) "Renzi weiß, dass er nicht gleichzeitig sparen und reformieren kann." ("Renzi knows that one cannot at the same time pursue austerity policies and put through reforms.") Just how seriously Renzi is about opposing Merkel's austerity drive remains to be seen. It's a surprise to see he's doing this much.

Renzi over the weekend announced his, not opposition, but skepticism to Juncker as EU Commission President. As Ian Traynor reports for The Guardian, Italy's Matteo Renzi joins stand against Jean-Claude Juncker for European post 06/01/2014:

On Sunday, the Italian prime minister, Matteo Renzi, signalled that Juncker may not be acceptable to him. And after losing the elections in France to the far-right Front National, François Hollande is also said to oppose Juncker, allegedly telling the German chancellor, Angela Merkel, that the job should go to the French, preferably his former finance minister Pierre Moscovici.

Merkel, Europe's most powerful leader, is seen as the pivotal figure in seeking a compromise over the commission post. She has remained equivocal over Juncker's prospects, although formally, as Germany's Christian Democratic leader, she supports him.

On Renzi's position, see also Lizzy Davies, Is Matteo Renzi the man to save Europe's soul?
The Guardian 05/31/2014; Andrea Bachstein, "Wir sehen Deutschland nicht als Gegner, sondern als Vorbild" Süddeutsche Zeitung 31.05.2014.

Renzi seems to be tying his reserve on Juncker's EU Commission Presidential candidacy to his anti-austerity gestures. I want to see more before I start sharing Münchau optimsim about hims. As Davies notes, "His critics say it has barely begun, and, where it has, for instance in modest labour reform, it threatens to change the country for the worse, not the better." Althoug in the article she links, the grumping seems to be about Renzi not doing enough to push down living standards, which is a major goal of what is called "reform" in the neoliberal vocabulary: Gavin Jones, Italy's modest labor reform shows Renzi's momentum faltering Reuters 05/15/2014. If by "faltering" that means he's not doing enough to promote destructive neoliberal austerity, that's may be a good sign!

In any case, Habermas thinks it would be a very bad thing if neither of the two leading candidates were actually selected for the EU Commission Presidency. "Wenn diese Runde wirklich eine andere Person als einen der beiden Spitzenkandidaten vorschlagen sollte, würde sie das europäische Projekt ins Herz treffen." ("If this round really puts forward another person besides one of the two leading candidates, that would strike at the heart of the European project.")

Although Habermas has no sympathy for the xenophoblic program of the actual anti-Europe rightwing nationalist parties, he does encourage the supporters of the EU to think carefully about the strong performance of such parties in the EP election:

Ich finde es gut, dass die Europagegner ein Forum gefunden haben, auf dem sie den politischen Eliten die Notwendigkeit vor Augen führen, die Bevölkerungen selbst endlich in den Einigungsprozess einzubeziehen.

Der Rechtspopulismus erzwingt die Umstellung vom bisherigen Elitemodus auf die Beteiligung der Bürger. Das kann dem europäischen Parlament und seinem Einfluss auf die europäische Gesetzgebung nur guttun. Anders verhält es sich mit den Auswirkungen auf die nationalen Szenen in den Mitgliedstaaten. Hier mag in einigen Ländern die Gefahr entstehen, dass sich politische Parteien einschüchtern lassen und auf einen Anpassungskurs à la CSU umschwenken.

[I take it as a good thing that the opponents of Europe have found a forum in which they are bringing before the eyes of the political elites the necessity of finally bringing the population itself into the unity process.

Rightwing populism requires the adjustment of the elite mode up until now on the participation of the citizens. That can only do good {!!} for the European Parliament and European lawmaking. There is a different effect with the implications in the national scenes in the member states. Here there could develop the danger in some countries that political parties could allow themselves to be frightened and veer toward a course of accommodate à la the CSU.]

The CSU is the especially conservative, traditionalist Bavarian sister party of the CDU, which normally acts together with the CDU on the national level. They are known for resorting to anti-immigrant demagoguery and other hardline gestures to prevent any party from developing political strength to their right.

Tags: angela merkel, austerity economics, eu, euro, european union, italy, jürgen habermas, matteo renzi

Social Democratic German Foreign Minister to Greece: follow Angie the Great's orders!!

German Foreign Minister Frank-Walter Steinmeier headed down to Greece last week to praise the Greek govenrnment for knuckling under for years to German Chancellor Angela Merkel's ruinous austerity policies. And to tell them they had to keep on doing it. (Severin Weiland, Besuch in Griechenland: Steinmeiers schwierige Mission Spiegel Online 09.01.2014)

According to Weiland's report, there had been hope in Greece - presumably he means in the current Greek government - that a new Grand Coalition government in Germany might pursue a less ruthless economic policy toward Greece. How anyone thought that was likely in a government headed by Merkel with an SPD that has consistently supported her previous eurozone policies, Weiland does not explain, beyond the fact that in a pre-election visit to Greece Steinmeier had offered vague platitudes about lightening up on Greece. But eurozone policies were scarcely if at all a topic of the coalition negotiations with Merkel after the election. The SPD meekly agreed to continue Merkel's Herbert Hoover/Heinrich Brüning economic policies for the eurozone periphery nations like Greece.

Solidarity among countries and peoples is supposed to be one of the key features of the EU project. Steinmeier's main solidarity in this situation is with his Grand Coalition government headed by Merkel. The SPD's nominal sister party in Greece, PASOK, is on the verge of fading into political irrelevancy. It's continuing embrace of Merkel's austerity extremism has ruined its ability to compete to head a Greek government any time in the foreseeable future.

The Greek prime minister, Antonis Samaras, proudly defends ruining his country's economy by implementing Merkel's neoliberal "reforms." Greeek Foreign Minister Evangelos Venizelos plays the bad-cop role by warning anti-European parties could come to power in Greece with dire consequence. Actually, the largest opposition party, the left SYRIZA party, seems to be serious about keeping Greece in the EU and the euro currency zone, but demands an alternative to endless, crushing austerity policies. (Gregor Peter Schmitz, Griechischer Premier beklagt sich über die Deutschen Spiegel Online 10.01.2014)

But if the periphery countries have any prospect of forcing a break with the Hoover/Brüning policies imposed by Germany via the Troika (EU, ECB, IMF), it seems to me that it would have to involve one or more countries being willing to take matters to the brink of a eurozone exit to insist on an end from austerity economics.

Not much leadership in that direction is likely to come from France's Socialist President François Hollande. He was elected in 2012 criticizing Merkel's austerity policies, then proceeded to adopt a version of them. He's been far more interested in conducting war in Africa than in developing a realistic alternative to Merkel's euro policies. But there's an entertaining rumor making the rounds about his having an affair with a French actress. According to Raniah Salloum in Angebliche Liebesaffäre: Der Präsident und die Schauspielerin Spiegel Online 10.01.2014, "Er ist so unbeliebt wie kein französischer Präsident vor ihm. Dafür legt die extreme Rechte zu. Bei der Europawahl im Mai könnte der Front national sogar stärkste Kraft werden" ("He is more unloved than any French President before him. And because of that, the extreme right is gaining in strength. But the European election in May, the [far-right] National Front could even become the strongest political power.")

I'm referencing Der Spiegel here a lot. But their reporting on Greece could be better. This article from Spiegel International, Economic Health: Has Greece Turned a Corner? by Christoph Pauly, Gregor Peter Schmitz and Christoph Schult 01/08/2014, reads a lot like what one would expect from a press release out of Wolfgang Schäuble's Finance Ministry:

Greek Prime Minister Antonis Samaras has pledged that Greece's leadership will mark a presidency of "hope" -- a word he applies to his own country, which, he says, brings a "positive balance" into the six-month position of prestige. But it has often been the case that good news from Greece is coupled with the next set of demands -- such as the current request for a renewed debt reduction. Such a move would hit European taxpayers hard, particularly those in Germany.

Greece has undeniably made progress when it comes to reducing its budget deficit, improving its economy and ramping up exports, much of which came as a result of severe cuts to public spending, pensions and salaries. This year, the economy is even expected to grow for the first time since the crisis took hold, by 0.6 percent. The budget deficit is set to shrink to 2 percent this year and 1 percent in 2015. The improved macro-economic indicators are important conditions for the payout of the next tranche of aid from Europe and the International Monetary Fund.

Indeed, Athens has been praised even by one of Europe's senior-most crisis managers. "Greece is surely more than halfway there," says Klaus Regling, 63, head of the European Stability Mechanism (ESM), the EU's crisis backstop. "I am confident that further successes will materialize if they continue down this path."

But beyond such numbers, Greece remains what it has long been: a country without an efficient state apparatus. A closer look at the country's administration, judiciary and political structures raises doubts as to whether Greece will ever regain health. Improvements have been insufficient.

And this just reflects lazy conventional wisdom:

EU experts, though, say that a willingness to compromise, create consensus and engage in domestic political dialogue are still lacking. Instead, Samaras's government is being radically attacked by left- and right-wing extremists. This fundamental opposition has vowed to turn the European election in May into a pure protest vote. From the far left (Syriza) to the fascists (Golden Dawn), the purported goal is to send a crop of monsters to Brussels.

The reader would never know from this article about the economic devastation that the current depression has brought about in Greece, greatly increasing by Germany's Hoover/Brüning policies imposed on Greece.

Severin Weiland's article quoted above at least includes a sentence referencing the high unemployment in Greece, well over 50% among the young, and the debt ration of 175% of GDP, completely unsustainable. In the articles I've cited here, the reader would be more likely to get the impression that the main problem in Greece consists of lazy bureaucrats and whiny politicians.

But sticking with Spiegel a bit longer, they also have an interesting report on Italian politics by Hans-Jürgen Schlamp, Italiens Polit-Hoffnung Renzi: Das Jahr des Verschrotters 11.01.2014, about a social democratic leader in the ruling Partito democratico (PD), Matteo Renzi, the mayor of Florence who has also been the PD's chairperson for the last month, making him officially the Party leader. The PD's Enrico Letta - a former Italian Communist - as the Prime Minister obviously has a more senior role within the party at the moment. At first glance, one might think that Renzi is some kind of left-leaning reformer, because he criticizes the EU deficit limits. But actually Renzi is attacking Letta's government for not pushing neoliberal "reforms" hard enough. And by reforms, Renzi seems to have in mind speeding up the weakening of labor laws, lowering taxes (always a favorite nostrum of conservatives, it seems) and cutting back gubment. But he throws the customary rhetorical bone to the need for better education. Measures to directly address the economic problems Schlamp squeezes into a paragraph: nearly 50% youth unemployment, increasing bankruptcies, rising debt loads, stalled investment, those Renzi doesn't seem too hot on.

A Reuters piece on Renzi by Steve Scherer, Italy's Renzi ratchets up pressure on PM Letta over reformsItaly's Renzi ratchets up pressure on PM Letta over reforms 01/12/2014, puts it this way:

Italy's centre-left leader Matteo Renzi said the next two weeks will be "decisive" for Prime Minister Enrico Letta's government, which has so far struggled to make incisive reforms.

The government is supported by a broad left-right coalition. But since the 39-year-old Renzi was elected last month to lead the Democratic Party (PD) - Letta's own party - he has frequently criticised the government's choices and called for it to accelerate institutional and economic reforms.

He does call for a financial tax to offset the revenue loss from other tax cuts.

In this 01/03/2014 cartoon by Yannis Ioannou, he depicts Greece's six-month position in the rotating Presidency of the EU during the first half of 2014 as a "Puppet President" (Le Guignol President) of Angela Merkel. The Puppet President is addressing the EU wealthy countries France, Britain, the Netherlands, Denmark and Austria, who are demanding to know, "But how can we have as President of Europe ... Greece? Angie joins the wealthy nations griping about and ridiculing Greece, "Will he protect me?", even while she controls her handpuppet Greece in the EU Presidency:

Tags: angela merkel, austerity economics, enrico letta, eu, euro, european union, france, françois hollande, italy, matteo renzi