Haven't the French heard of Look Forward Not Backward?

Apparently not. From Aljazeera English, France's Sarkozy could face investigation 06/15/2012:



Tags: nicolas sarkozy

Angie: our plans to control Europe are proceeding nicely

These reports each emphasize a different angle on the Merkozy summit of Monday.

Shorter Angela Merkel: Ve are making progress on how to punish zhose who do not obey my orders!

From Aljazeera English, EU financial pact 'by March 1st' 01/09/2012:



From Euronews, Financial tax backed by Germany and France 01/09/2012:



From Reuters, Merkel tells Greece to speed up debt deal 01/09/2012



Tags: angela merkel, eu, euro, european union, nicolas sarkozy

Nick and Angie's pre-summit mini-summit

The Merkozy duo, German Chancellor Angela Merkel and French President Nicolas Sarkozy, met in Berlin Monday to prepare for the EU summit at the end of this month.

This is high politics and diplomacy, so it's better not to read too much into the public posturing over a meeting like this. One result of it is Nick got Angie to half-heartedly agree to a financial transaction tax (some form of what's also called a Tobin tax). Nick is up for re-election in May of this year and he needs some positions that he can take to the voters that aren't shameless pandering to the one-percenters. Angie gave him her "personal" agreement, whatever that means. Part of what it means is that at least the Free Democratic (FDP) part of her coalition government opposes it. But then, she could probably get the Social Democrats (SPD) to vote for it if she were serious about it.

Nick also managed to mention growth and jobs. But whether that indicates even a shadow of a divergence from Princess Angie von Merkel's insistence on austerity policies for all isn't obvious. Sarkozy and even Italian Prime Minister Mario Monti are trying to bring some pressure on Angie to agree to something that looks more like a stimulus package for Europe's economy, in which even the German economy is showing clear signs of going into recession again.

Some of Germany's bonds are for the first time selling at a real interest rate below zero, as have 3- and 5-year US bonds and even 10-year US bonds recently. This means that investors are willing to pay Germany to hold their investments in their sovereign debt, which is perceived as a safe haven.

This is good news for the German government's own borrowing needs. If Angie weren't such a stone conservative on economics, she would even use the opportunity to borrow. Negative interest rates on your bonds? Where's the downside in borrowing at negative interest rates?

But it's not necessarily a good sign for the eurozone. If investors are flocking to perceived safe havens - German bonds, US bonds, central bank deposits - it may also mean they are pulling back on lending to businesses and also are less willing to buy riskier eurozone countries' bonds.

Greece continues to skate on the brink of bankruptcy. The basics of Greece's situation haven't changed in the last few weeks. Greece will have to have even more writedowns than what their private creditors have agreed to accept, although the IMF is saying that the "haircuts" agreed to so far are sufficient. And as long as they are forced to operate under the EU/ECB/IMF "troika" demands for austerity policies in the middle of this depression, their debt situation will continue to worsen.

This is a mess. And what former Portuguese President Mário Soares says is true: if Angie had provided the necessary support for Greece in time, Europe wouldn't be in the current crisis situation. (Antonio Jiménez Barca, “La generación actual de políticos europeos no sabe decir no” El País 09.01.2012)

Angie and Nick will also be having separate high-profile meetings this week with Italian Prime Minister Mario Monti, the unelected head of the debt-collectors government they installed in Rome.

In a break from Angiedoxy, the American-educated head of the Czech central bank basically says the current Merkozy policy is not going to save Greece (Czech banker: Greece quit euro unless 'massive' funds given Athens News 01/09/2012):

Greece should leave the eurozone and devalue its new currency unless Europe is willing to provide "massive" funding for the indebted country, Czech central bank Governor Miroslav Singer said in a newspaper interview.

Singer told daily Hospodarske Noviny Europeans should focus on helping banks which may need recapitalisation and on issues that can be resolved, rather than devoting attention for years to Greece which represents just two percent of the European economy.

"If there is not the will to give Greece a massive amount of money from European structural funds, I do not see any other solution than its departure from the euro zone and a massive devaluation of the new Greek currency," he said in the interview to be published on Monday.

The key problem in the debt crisis has always been the European banking crisis. Angie and Nick have been using the sovereign debt crisis to address the weakness and undercapitalization of European banks through backdoor methods like subsidizing Greece's impossible debt payments, and the ECB and other central banks buying troubled sovereign debt from private banks to move risk to the public rather than private banks. As Miroslav says, "In connection with the Greek crisis, it will possibly be necessary to pour money even into quite large banks which will suffer losses. It is necessary to immediately focus on banks' problems."

A key aspect of what Angie calls "fiscal union" but is in reality only partially so is that all 26 governments in the EU-minus-one (the UK is the minus one) should agree to have the EU (read: Angie) have the final say over their national budgets. Sarkozy is pitching this idea as not additionally infringing on the sovereignty of the member country, which is quite an imaginative reading of it. It's difficult for me to believe that a number of EU countries won't balk at this before the end of March, Angie's deadline for the agreement to be approved. Especially since it's tied to a dogmatic, non-reality-based austerity economics conception that will only make the current economic and debt situation in the EU worse. I may be surprised. But it's hard for me to imagine that will fly.

See:

Juan Gómez, Merkel y Sarkozy refuerzan su apuesta por salvar el euro El País 09.01.2012

Deutschland leiht sich Geld zu negativen Zinsen Frankfurter Allgemeine Zeitung 09.01.2012

Cerstin Gammelin, Deutschland und Frankreich gegen die Schuldenkrise.Genug gespart, Kanzlerin Süddeutsche Zeitung 09.01.2012

EU, bondholders seek swift PSI deal Athens News 01/08/2012

Ricardo Martínez de Rituerto, Merkel y Sarkozy tratan de acercar posiciones para mantener el euro a flote El País 08.01.2012

Tags: angela merkel, eu, euro, european union, nicolas sarkozy

Angie sums up the year

Angie's end-of-year speech (German), Merkel: Deutschland lebt von der Tatkraft der Menschen 31.12.2011:



She says that Europe came into the current crisis together, and they had to work together to get out of it. In Angiespeak, that means: "Ze inferior nations of ze EU must do vhat zhey are told! Ve have vays of making zis happen!!"

Reports on her speech: Merkel ruft Europäer zum Zusammenhalt auf Deutsche Welle 31.12.2011; Merkel Tells Nation She’ll ’Do Everything’ to Save Euro in 2012 Bloomberg Businessweek 12/31/2011.

Someone produced an entertaining summary (also in German) of the year with Angie and Nick ('Dinner for one' feat. Sarkozy und Merkel 12/28/2011; explained in English by Allan Hall, Nicolas Sarkozy becomes Angela Merkel's tipsy butler in YouTube satire Telegraph 12/31/2011):



Tags: angela merkel, nicolas sarkozy

French Socialists call for resisting Angie's austerity politics

Miguel Mora reports for El País that the French Socialists are explicitly rejecting the deal that President Nicolas Sarkozy and the rest of the German-subordinated 26 members of the EU-minus-one accepted in the early hours of Friday morning. (Los socialistas franceses rechazan el acuerdo europeo por "injusto" 11.12.2011)

Based on an interview with Manuel Valls, spokesman for Socialist Presidential candidate for 2012, François Hollande, Hollande is opposed to the key demand of Princess Angie von Merkel that countries adopt binding regulations on budget deficits. Valls noted that if referendums were held on Germany's latest demands agreed to by the 26, the European peoples would likely reject them.

According to Mora, this was the first official reaction from the French Socialist Party. Hopefully, other democratic parties in Europe will quickly follow their lead.

This is not empty position. Sarkozy is Angie's junior partner in this disaster. And he needs Socialist support to pass the treaty he and Angie are trying to ram down the rest of Europe's throats. It takes a 3/5 vote in the National Assembly to approve the treaty, and the Socialists have a majority there.

Tags: eu, european union, nicolas sarkozy

Troubles of Europe

I hope the European Union can be saved, for the sake of peace and democracy in Europe. I hope the euro can be saved, because in practice the failure of the euro would be a tremendous setback to the EU itself.

Seeing the disaster that now seems to be accelerating into a new phase in Europe is truly sad. Here are some of the latest traumas.

The EU leaders have yet another emergency summit on Wednesday. (Didn't they just have one this past weekend?) You would think they might take the hint that with every new solution seemingly falling apart more quickly than the last one, they might want to re-examine their basic approach. But they don't won't to upset their main constituency, the giant banks, who are lobbying hard to squeeze every euro they can out of the taxpayers while imposing austerity policies that even bank CEOs should be able to see are disastrous. The banks are basically threatening to trigger another Lehman Brothers event that could set off a new world financial crash if they don't get their way. (Arthur Beesley, Banks threaten to derail EU debt crisis strategy Irish Times 10/26/2011)

The obnoxious Silvio Berlusconi, Italy's Rupert Murdoch but also its Prime Minister, faces a Wednesday deadline to knuckle under to new austerity demands from Germany and France. Berlusconi's coalition includes the nasty nationalist group the Northern League headed by Umberto Bossi, which is threatening to pull out of the coalition if Berlusconi gives in, which could bring down Berlusconi's government. (Fabian Reinbold, Berlusconi in der Krise: Italien schimpft auf Merkel und die Deutschen Spiegel Online 25.10.2011)

In general, support for "Europe" (the EU) has been strongest among left parties like the Greens and among mainstream conservatives and Social Democrats. Up until now, when the EU itself has become a tool for the financial elite to throttle democratic government and impoverish large portions of the European people, opposition to the EU has come from the right. Rightists are happy to take advantage of the current genuine crisis and the appalling failure of leadership in the EU to try to pull their countries out and undermine the whole democratic European project.

Britain's Prime Minister David Cameron, who himself is practicing a brutal austerity program in Britain that is damaging their economy badly, is dealing with anti-Europeans in his own Conservative Party. Rightwing as he is, he's not ready to flush the EU down the drain yet. (Elizabeth Rigby, Cameron pursues risky strategy on rebellion, Yahoo! News/Financial Times 10/24/2011)

Krugman sees a lot of chatter about how things are getting better in Ireland, thus supposedly validating the absurd notion of expansionary austerity. But he says it ain't so. (Irish Reality Check 10/25/2011)

And French President Nicolas Sarkozy apparently can't resist making snotty comments about the countries his austerity policies are damaging so badly. He says that people used to talk about Spain being an economic miracle and now nobody wants to be in their place. (Sarkozy: "Se hablaba de España como de un milagro, pero ahora nadie quiere estar en su lugar" EFE/El País 25.10.2011)

It's one of the mysteries of our present time why anyone listens to the crooked rating agencies any more. But Moody's is also threatening to downgrade France's debt. (Moody's warns on France's credit rating BBC 10/18/2011) So maybe it's not really the best time for Sarkozy to be trashing his EU partners.

Tags: eu, european union, nicolas sarkozy

EU leaders still heading happily for the cliff

Merkel: Nick, mein Freund, have we made das Volk in Greece and Portugal and Spain and Ireland poor enough yet?

Sarkozy: Naturellement non, ma Angie! But we must zertainly save les banques!

German Chancellor Angela Merkel and French President Nicolas Sarkozy have again met and agreed to serve the plutocrats of Europe by loyally cooperating to support the euro and provide public assistance to banks in trouble while insisting that the people of Greece, Ireland, Portugal, Spain and Italy continue to impoverish themselves with austerity economics in the middle of a depression. It's hard to exaggerate the failure of European leadership at this moment in history.

Euronews reports (Paris and Berlin join forces in fight for eurozone 10/09/2011):

The French and German leaders have held another crisis summit on the Euro in Berlin as the EU’s lead pair attempt to speak with one voice.

They agreed completely on a co-ordinated plan to recapitalise fargile [sic]banks, and said the eurozone's economies needed to be better co-ordinated. President Sarkozy also insisted that Europe needed to get its act together sooner rather than later.

"This crisis is a financial crisis that has created much suffering in our countries and in the entire world. We must give a sustainable and global answer to this crisis. We have decided to give this answer before the end of this month because Europe must have resolved these problems before the G20 summit in Cannes," he said.

I think the EU leadership, Merkel and Sarkozy in particular, has jumped the shark, screwed the pooch, whatever your favorite metaphor is for having gone so far that bad consequences can't be avoided. Greece's debt has to be written down in a major way; they're not going to pay it back. Instead, the EU keeps pumping money into Greece and other countries under attack by the bond markets to prevent the default (in Greece's case) that everyone knows has to happen. The form of the assistance is making public institutions take more and more of the bad debt risk. The whole program is concentrated on saving giant European (especially German and French) banks from the consequences of their bad risk practices. And doing so by a self-destruction austerity policy that is pounding the economies of Greece and other countries during this depression and thereby undermining their ability to service their debt.

Merkel and Sarkozy have taken the EU from being an institution that is an important support for peace and democracy to being an institution forcing the impoverishment of large numbers of Europeans on behalf of plutocrats. And undermining democracy in the process. They're practicing the kind of statesmanship that the Hohenzollerns, Habsburgs and Romanovs destroyed their dynasties practicing.

I always like to cite Krugman, so I will here. As he notes in Financial Romanticism 10/09/2011, bailing out major banks is necessary and, to a large extent, inevitable. How they are saved is another question. Putting a failed major bank into bankruptcy, reorganizing it with new management and requiring the stockholders take losses, is a very different and usually far more constructive way to do it than providing the failed banks extra funds, leaving the failed management in place and allowing them to do the same reckless things with inadequate oversight. Sadly, the latter has generally been the model the US and Europe have favored in this depression. Iceland is an exception. They took the former route and they are recovering much better than Ireland, who made a big bet on the latter route.

Tags: angela merkel, euro, european union, nicolas sarkozy