Spanish politics and the EU

Yanis Varoufakis evaluates Spain's recent, rather inconclusive national election in Only Europe's Radicals Can Save the EU Newsweek 07/08/2016. Varoufakis thinks that it could turn out to be "a pyrrhic victory for Spain’s establishment":

British Tories, like Michael Gove and Boris Johnson, knew they could draw mass support from a slogan like “We want our country back!” The Spanish establishment cannot do this. And they cannot do it because, over the last four decades, they managed to retain control by offering voters an unlikely deal: “You keep us in government and we shall do what is necessary to rid you of us, by transferring power to Brussels and to Frankfurt.” Calling for a restoration of sovereignty now would strike Spanish voters as backtracking on the promise to rid them of their local rulers. But, then again, this promise is under increasing strain at a time when the process of Europeanization is in serious trouble.

Spain’s establishment is in a bind. To stay in power it must continue with the narrative of Europeanization and of continual transfers of authority away from itself toward the EU’s technocracy. At the same time, however, it is clear to a majority of the Spanish citizenry that the EU’s technocracy has lost the plot, has inflicted upon the European periphery unnecessary recession, has lost the support of a large majority of Europeans, and is now losing control of important EU realms, like the U.K.

The surprising underperformance of the left party Unidos Podemos, Varoufakis explains this way: "The reason why Brexit helped PSOE pip Podemos at the post was very, very simple: the theme of Europe’s disintegration entered the election campaign with a bang, with three days to go until Spain voted."

Unidos Podemos (Ana Pardo de Vera, Iglesias pide a Podemos mirar al "futuro" y construir un "bloque histórico con movimientos populares" Público 09.07.2016). Negotiations are still under way to form a new government.

Long-festering problems in the EU

The unsolved major problems of the EU and the eurozone continue to snowball in a way that makes the survival of the former and even more so of the latter more problematic all the time. Cooperation within the EU has broken down over the refugee problem and the influx of refugees is providing a newly growing target for far-right parties. Germany has joined its very junior EU/eurozone partner France in participating directly in the Syrian civil war, the prolongation of which will worsen the refugee problem. France may use its war costs to demand loosening of its requirements under the stone-conservative Fiscal (Suicide) Pact of 2012, which could lead to further conflict with Merkel and the stone-conservative Herbert Hoover/Heinrich Brüning economic policies to which she is committed. Not to mention the incredibly complex and risky politics of the Syrian civil war itself.

The devastating extent of the post-2008 depression in the eurozone "peripheral" countries like Greece, Ireland, Italy, Portugal and Spain is largely due to the effects of the Hoover/Brüning policies Merkel imposed on them. Especially Greece. Merkel's insistence on the Hoover/Brüning policies led to various "regime change" operations in pursuit of them, including actual regime changes in Greece in 2011, Italy in 2011, even in Greece of 2015. The Merkel-bot President of Portugal in 2015 tried to block a majority left coalition from taking power after they won a majority in the elections. We'll see what happens in Spain as the new left majority there seeks to form an anti-austerity government. Such high-handed efforts to dominate and impose on other "partners" a highly destructive and massively discredited economic policy has naturally given reason for them to suspect the value of German domination of the EU and the eurozone.

Now Merkel needs other countries in the EU to support her refugee policy, which is a genuinely European problem. In particular, the Germans want Greece to do a better job in retaining refugees from outside the Schengen Area there so they won't come to Germany. But they are getting the best cooperation from their partners! Who could have foreseen such a thing?

All these problems are the culmination so far of Merkel's nationalist approach to EU affairs, by which she insisted on retaining maximum influence and advantage for Germany at the expense of the "partners." And which led to her characteristic approach to EU and eurozone problems, "extend and pretend." Postpone reaching a substantive and permanent solution to the problem, whether it is bank regulation, refugees or the unending euro crisis. Just to mention a few.

The euro crisis is still likely to be the one that provokes formal splits. Wolfgang Münchau continues in his weekly columns to point out the various reasons for his. (Daran wird der Euro zerbrechen Spiegel Online 25.12.2015

But it can't be seen in isolation to the other problems. The crass xenophobia against Greece and other "periphery" countries encouraged and in a real way propagated by the German government, including Merkel's junior coalition partner the SPD, was picked up not just by the Stammtisch (good ole boy opinion) but by both the boulevard and the "quality" press. The Austrian government was as extreme in promoting nationalist hostility as Merkel's has been. But a very similar process took place in Austria.

That nationalist sentiment carried over to the refugee crisis, which in turn reinforced it. It has led to new border controls, which partially removes one of the most concrete benefits most people have seen from the EU. Münchau puts it even more strongly: "The influx of refugees into Germany and the terrorist attacks in France have put a de facto end to Schengen. National border controls have been reinstated in many places." (Fighting Brexit with fear will backfire Financial Times 12/20/2015) Even new walls along national borders, like in the good old days of the Berlin Wall, though so far with less lethal enforcement. And the increased nationalism presents a problem for security cooperation among EU members against terrorism, while terrorist attacks increase xenophobia against immigrants, which in turn strengthen nationalism and xenophobic fear.

You're doing a heckuva job as EU leader, Angie, a heckuva job!!

Jürgen Habermas has been a sympathetic critic of the EU for a long time. In the conventional political vocabulary, "Eurocritic" has referred to supporters of the Union who argued for urgent reforms to integrate the members countries more; "Euroskeptic" has referred to usually nationalist/rightwing opponents of EU membership. After Germany's handling of the Greek negotiations in 2015, it is clear that as long as Merkel remains in powers and/or her austerity doctrine in force, any country seeking to put an end to austerity for themselves will need to be prepared to leave the eurozone if they don't get agreement. Because without a thoroughly credible threat to exit, they have to expect to be crushed like Greece was.

A 2006 article by Habermas, "Die Bewährung Europas" Blätter für deutsche und internationale Politik 12/2006, serves to illustrate the long-standing and chronic nature of the EU's current problems. The euro crisis hadn't yet broken out, and it is not on Habermas' 2006 list. A number of economists had warned that the construction of the eurozone was flawed from the start in a way that made it particularly unsuited to deal with a depression crisis like the one that struck in 2008. But Habermas pointed to real problems that today are intertwining with the euro crisis. In a perceptive observation, he described there nine years ago how neoliberal economic assumptions were already promoting a nationalism among EU nations that has now become toxic to the point of threatening the entire "European project," as it is called:

Die Rückwendung zum Nationalstaat hat in vielen Ländern eine introvertierte Stimmung gefördert: Das Europa-Thema ist entwertet, man beschäftigt sich lieber mit der nationalen Agenda. Bei uns umarmen sich in den Talkshows Großväter und Enkel in der Rührung über den neuen Wohlfühlpatriotismus. Die Gewissheit heiler nationaler Wurzeln soll eine wohlfahrtsstaatlich verweichlichte Bevölkerung für den globalen Wettkampf „zukunftsfähig“ machen. Diese Rhetorik passt zum gegenwärtigen Zustand einer sozialdarwinistisch enthemmten Weltpolitik.

[The return to the national state has promoted an introverted mood in many countries: The theme of Europe is devalued. One prefers to concerns themselves with the national agenda. With us [Germans], grandfathers and grandsons hug each other with emotion over the new feel-good patriotism. The certainly of healthy {heiler} national roots is expected to make an welfare-state-produced effeminate population "ready for the future" of the global competition. This rhetoric belongs to the present situation of an unleashed Social Darwinist world politics.]

Habermas nine years ago pointed to the following visible, major problems in the construction of the European Union:

1. The "democratic deficit," the phrase Habermas uses here. More and more decisions were being take at the EU level that were obligatory on the members without the same kind of meaningful electoral input the citizens have at the national level being in effect at the EU level.
2. The failure to achieve a cohesive foreign policy. Only a united Europe could successfully lead the pressure on the United States for "die Fortentwicklung des klassischen Völkerrechts zu einer politisch verfassten Weltgesellschaft" ("further development of the classical international law to a politically secured world community.")
3. The ongoing "Unterminierung menschenwürdiger sozialer Standards" ("undermining of humane social standards.")
4. The culturally fundamentalist divisions within Europe and within EU members states. This is a reminder that integration of national, ethnic and religious minorities as well as the handling of new immigrants certainly didn't first become evident in 2015: "Es geht darum, die Angehörigen fremder Kulturen und fremder Religionsgemeinschaften gleichzeitig in ihrem Anderssein zu respektieren und in die staatsbürgerliche Solidarität einzubeziehen." ("It has to do with respecting the members of unfamiliar cultures and unfamiliar religious communities in their difference and bring them into the solidarity of citizens.") And he makes the important point that the success of social integration of minorities within member countries also contributes to the success of international integration within the EU.
5. Habermas doesn't make the following a separate point, though in my mind it needs to rank with the others as (5): "Wir sollten George W. Bush nicht auch noch in der Militarisierung des westlichen Geistes folgen." ("We [Europeans] should also not follow George W. Bush in the militarizing of the Western spirit.")

Habermas' comment on the intersection of the second and third problems is revealing:

"Erst eine Europäische Union, die außenpolitisch handlungsfähig würde, könnte auf den Kurs der Weltwirtschaftspolitik Einfluss nehmen. Sie könnte die globale Umweltpolitik vorantreiben und erste Schritte auf dem Wege zu einer Weltinnenpolitik machen. Damit könnte sie anderen Kontinenten für den Zusammenschluss von Nationalstaaten zu supranationalen Mächten ein Beispiel geben. Denn ohne Global Players dieser neuen Art kann ein Gleichgewicht zwischen Subjekten eines gerechteren Weltwirtschaftsregimes nicht entstehen."

Here the failure of the one-time center left parties, the Social Democrats, is a central component of this interweaving of problems. With reference to Germany, Albert Scharenberg wrote in 2007 ("Dem Morgenrot entgegen?" Blätter 5/2007):

Die regierende Sozialdemokratie brachte durch ihre den Sozialstaat deformierenden „Reformen“, insbesondere durch Hartz IV, ihre ureigenste Klientel gegen sich auf – Gewerkschafter und Arbeitslose.

[The ruling Social Democracy through their "reforms" that deformed the welfare state, especially with Hartz IV {that allowed for lower-paid and less secure jobs than before in Germany}, turned their most basic supporters against them - unions and the unemployed.]

This is not just true of the German SPD, but also of the social democrats in France and other countries, including Spain. The latter party, the PSOE, has the chance to form a government in Spain after this month's elections. But their ability to do so and their ability to successful press an anti-austerity program in office has been significantly compromised by their previous embrace of Merkelnomics. (Antoio Avendaño, Un muerto viviente llamado Pedro Sánchez Andaluces.es 27.12.2015)

Spanish election - more problems for Angela Merkel's austerity program

Angela Merkel's neoliberal eurozone saw another crack open today as a result of elections in Spain.

In Sunday's national election, Mariano Rajoy's conservative People's Party (PP) lost the parliamentary majority it has held for four years. They came in first with, according to current projections (La izquierda podrá formar Gobierno Público 21.12.2015) with 122 parliamentary seats, with 176 needed for a majority.

The social democrats (PSOE), which embraced Merkel's austerity policies at the onset of the euro crisis, managed to come in second with 91 seats. That doesn't give the long-dominant two major parties a majority even between the two of them.

The new Podemos party led by Pablo Iglesias came in third with 69 seats, a real surge for the left. The PSOE has made some gestures in the way of criticizing austerity and Merkel's Herbert Hoover/Heinrich Brüning economics. With votes from some of the smaller left parties with seats in Parliament, the PSOE and Podemos could form a left government.

I should note here that when I talk about austerity, there are degrees of it that vary from country to country. It has not been been nearly so severe in Spain as in Greece, for instance. But it's been enormously damaging in Spain nonetheless.

A new rightwing party, Ciudadanos, captured 40 seats and fell short of general expectations.

I guess Angela Merkel is not Person of the Year in Spain.

And probably not in Italy, either: Francesco Guarascio, Italy's Renzi blasts German policies at EU summit Reuters 12/18/2015.

Angie's World: French/Andalucía edition

Heckuva job, Angie, heckuva job!

The French Socialists, the ruling party since 2012, are celebrating because in Sunday's local elections they came in - third.

The Socialists won the Presidency and a majority in Parliament in 2012 campaigning against Angela Merkel's austerity policies. But President François Hollande scrambled to adopt Merkelist austerity policies at an embarrassing speed.

Now in local elections, the Socialist finished with 20% behind the first-place conservatives (UMP) with around 31%, the far-right National Front with around 25%. This was a first round of elections with the top two candidates in each locality having a runoff next Sunday. So in places where the Socialists came in first or second, they still have a shot next Sunday. Christian Wernicke, Konservative UMP klar vor dem Front National 22.03.2015)

If the social-democratic parties in countries like France, Germany and Spain faithfully endorse Merkel's Herbert Hoover economics, why would anyone besides habitual partisans vote for them? Without any distinguishing economic policies, they are opening the way to parties to their left and to demagogues from the right.

In local elections in the Spanish state of Andalucía, the pro-austerity social-democratic PSOE came in first, inflicted big losses on the conservative Partido Popular (PP). Podemos, the left party founded last year and which has been leading in national polls, came in third. The PSOE's results were similar to their last one in 2012 there. The PP's results were the worst in 25 years. The PP is currently the ruling party nationally. (Ana Pardo de Vera, El PSOE toma oxígeno, Podemos se consolida y el PP se desmorona Público 23.03.2015)

I'm sure the significant losses by the pro-austerity ruling parties in both France and Spain will be on Angie's mind when she meets with Greek Prime Minister Alexis Tsipras in Berlin Monday.

Greece, Italy, Spain and the fight against austerity economics

Greek Prime Minister Alexis Tsipras paid a visit to his Italian counterpart, social-democrat Matteo Renzi, Tsipras’ Roadshow taz 04.02.22015 reports:

Gelöst und gut gelaunt wirkten Italiens Ministerpräsident Matteo Renzi und Tsipras schon am Montagabend, als sie in Rom vor die Presse traten. „Wir sprechen die gleiche Sprache“, versicherte Tsipras. Renzi stellte zwei Dinge klar. Erstens sei auch Italien Griechenland-Gläubiger; und zweitens hätten die beiden „über technische Lösungen nicht gesprochen“. Dann aber legte er nach, gerade als Gläubiger habe Italien keinerlei Interesse, „den Schuldner zu erdrosseln“. Auch Italien will schließlich seit Monaten „Europa dazu bringen, dass mehr über Wachstum gesprochen wird“; das sei zwar „keine einfache Schlacht, aber „etwas in Europa ist in Bewegung geraten“.

Renzis Botschaft war klar. „Bei allen Meinungsverschiedenheiten im Detail“ sieht er Tsipras auch als Verbündeten, dem „wir helfen müssen, auch wenn wir ihm nicht immer recht geben“. Schließlich seien die beiden 40-Jährigen „geeint durch die Idee, der Politik wieder die Möglichkeit zu geben, die Dinge zu ändern und die jungen Generationen wieder näher an den Staat heranzuführen“. Ein Bonmot erlaubte sich Renzi dann auch noch: „Ich habe mein erstes Jahr als Premier damit zugebracht, in Europa als gefährlicher Linker und in Italien als gefährlicher Rechter angeklagt zu werden. Für mich ist es ein echter Segen, dass jetzt Tspiras auf der Bühne ist!“

[Italy's Prime minister Matteo Renzi and Tsipras seemed to be easy-going and in a good mood already on Monday evening when they appeared before the press in Rome. "We speak the same language," assured Tsipras.
Renzi made two thing clear. First, that Italy is also a creditor of Greece; and, second, the two "had not spoken about technical solutions." But then he added that precisely as a creditor, Italy has no interest "in strangling the debtor." And Italy wants finally after months "to bring Europe to the point where we talk more about growth." He said that was "not an easy battle["], but "something has started to move in Europe."

Renzi's message was clear. "Despite all the difference of opinion over details," he also sees Tsipras as an ally who "we must hep, even when he's not always right." In the end, the two 40-year-olds "are united by the idea on once again giving politics the possibility to change things and to draw the young generation back closer to the state." Renzi also allowed himself one more bonmot: "I spent my first year as Prime Minister being accused of being a radical leftist in Europe and in Italy a dangerous rightist. For me it's a real blessing that Tsipras is now on stage!"]

Euronews reports on Greek eurozone diplomacy, Greek PM Tsipras eyes debt help in Brussels talks 02/04/2015:

Lynn Parramore interviews economist Mario Seccareccia in Greece Shows the Limits of Austerity in the Eurozone. What Now? Institute for New Economic Thinking 01/29/2015. Seccareccia evaluates the results of Angela Merkel's Herbert Hoover/Heinrich Brüning austerity economics:

Deficit hawks started preaching long-term austerity, and we’ve seen the awful consequences ever since. People have suffered terrible hardship and dislocation, with countries such as Greece and Spain reaching rates of unemployment worse that what happened in the United States in depth of the Great Depression. You’d be hard-pressed to find examples of such a severe collapse historically, with the possible exception of certain Latin American countries, such as Argentina in 2001. Those who predicted that that this austerity policy would eventually lead to an economic turnaround because of the belief in private sector rebound obviously got it wrong. After five years of negative economic growth, the Greek electorate — with incredible courage — told the so-called Troika that they had had enough, especially with these deep cuts in wages, employment, and pension transfers. ...

the experience of the 1930s, which is being repeated with such vengeance in the Eurozone since 2010, is that pursuing austerity policies alone without some other outside stimulus, say, from increased net exports, can’t lead to balanced budgets. Instead, it leads to disaster. These policies destabilize the private sector to such an extent that they actually jeopardize chances of any future recovery. Many Greek citizens felt that they had reached this threshold and wanted a reversal of policy. [my emphasis]

He also discusses one idea in play as a possible tool for Greece in the near future, a parallel currency:

A lot depends on how big the European Central Bank is willing to go with its plans. If the action was bold enough, Greek banks could benefit indirectly and it could give the Greek government some breathing room and prevent a default, assuming its current creditors demand payment. In the medium term, Greece could create some form of parallel currency set at par with the euro, like Argentina did in the early 2000s. The government in Argentina used “patacones” to buy things and pay employees and they became quite acceptable because ultimately regular people could pay taxes with this currency. The Greeks could have a parallel national currency without altogether abandoning the euro.

Greece says will not cooperate with 'troika' or seek aid extension Buenos Aires Herald 01/30/2015

GERD HÖHLER, Abfuhr für Troika in Athen Frankfurter Rundschau 30.01.2015

Beatriz Talegón writes about related political development in Spain, Un cambio en marcha El Plural 02.02.2015. Talegón is a left-leaning activist of the social-democratic PSOE and head of a group called the Foro Ético. In this piece she talks about how the new Podemos party is attracting support from former PSOE voters disillusioned with the PSOE's capitulation to neoliberal austerity policies. She's very interested in seeing the PSOE make a turn toward cooperating on policy with Podemos instead of capitulating to the neoliberal policies of the current conservative government headed by the Partido Popular (PP).

Resisting European austericide: Spain

Felipe González Márquez, a former Socialist Prime Minister of Spain, seems to be a bit befuddled by the surprisingly good showing of a new left grouping Podemos - I guess we could call it the "yes we can" party, but Podemos probably works just fine in English, too.

González referred to their winning five seats after only four months of existence as a party as a sign that a Venezuela-style Bolivarian Revolution "is becoming fashionable" in Spain. (González dice que la revolución bolivariana está "de moda" Público 27.05.2014) Since he seemed to be pretty clearly criticizing even his own party for having embraced austericide policies, he doesn't seem to have meant the ironic reference to Bolivarian Revolution in entirely disapproving terms.

The United States could clearly have done more in the way of countercyclical, stimulative policies to counter the slump of 2007-8, and still could and should.

But Paul Krugman and others rightly compare the US experience with the stimulus of 2009 favorably to the more strict austerian policies pursued in Europe and in the eurozone in particular. And that's what González was doing in his speech. He was pointing the actual US experience as a more positive and constructive approach than what the eurozone under German Chancellor Angela Merkel's direction has done. That was the context of his Bolivarian Revolution quip, that he wasn't suggesting that drastic a change, although such a thing "is becoming fashionable" as evidenced by the vote for the left.

One of the encouraging results of the EP elections this past weekend is that the Spanish Socialist Party (PSOE) is at least nominally recognizing that there is a problem with their neoliberal, pro-austerity position. A little more than nominally, perhaps. SPOE Secretary General Alfredo Pérez Rubalcaba is stepping down from the top leadership position. More base-oriented social-democrats like Beatriz Talegón are interpreting his decision to ask for a special party conference to choose the new party leader as a move to substitute another adherent of the neoliberal gospel for himself.

In Se les terminó el chollo, se terminó nuestro silencio Foro Ético 28.05.2014, she notes with approval the electoral performance in last weekend's election of the left groups Ciutadans, Equo, Izquierda Unida and Podemos. But she also stresses that until the left - by which she seems to understand an SPOE that starts to reject neoliberalism - can unite behind a pro-Europe/anti-austerity message, they won't be able to change Spain's austerity course.

Critics of the neoliberal course of the PSOE use a term all-too-familiar to the Democratic Party base in the US, "bipartisanship" (bipartidismo). (El mejor análisis de las elecciones lo escribió Pérez Galdós hace más de un siglo Público Strambotic Blog 26.05.2014)

In the case of the PSOE and the Christian Democratic Partido Popular (PP), that means on the most critical and genuinely matter of economic policy, Merkel's austerity program, both the two major parties, center-right and center-left, have been in complete agreement in supporting it despite the obvious damage it is doing to millions of Spaniards.

The most promising development for Spain would be if the SPOE adopts a pro-Europe/anti-austerity program and is willing to unite with the left parties on the basis of such a program and commit to actively opposing Berlin's austerity program.

Last weekend's elections drastically diminished for the foreseeable future the already thin possibility that active resistance to austericide economic policies would come from the European Parliament. Now the most likely option would be for an individual country to resist demands from Merkel that they continue with ruinous austerity programs and be willing to push it to the point that Merkel would have to relent or push to kick them out of the eurozone.

Otherwise, countries like Spain are currently looking at depression into the indefinite future.

Krugman's post-EP-election blog post European Green Lanterns 05/26/2014 was grim:

Sitting in a room listening to EU officials reacting to the European Parliament elections — and it seems to me that they’re deep in denial. Barroso just declared that the euro had nothing to do with the crisis, that it was all failed policies at the national level; a few minutes ago he said that Europe’s real problem is a lack of political will.

This is quite amazing, in a really bad way.

Sorry, but depression-level slumps didn't happen in Europe before the coming of the euro. And we know very well what happened: first the creation of the euro encouraged massive capital flows to southern Europe, then the money dried up — and the absence of national currencies meant that the debtor countries had to go through an extremely painful process of deflation. How anyone could deny any role for the currency ...

And if there’s one thing Europe has, it’s political will. All across the southern tier, governments have dutifully imposed incredibly harsh austerity in the name of being good Europeans. [my emphasis]

That's why any country's resistance to Merkel's austericide would have to be determined and ready to push it to the point of forcing Merkel to start breaking up the currency zone before they can effectively push back austerity.

Tags: angela merkel, austerity economics, eu, euro, european union, spain

Spain in the austerity trap - and not only Spain

Stuart Medina, Debate sobre España y el Euro El Diario 02.02.2014

España lleva más de un lustro reptando por el fondo de una prolongada depresión, secuela del estallido de la burbuja inmobiliaria agravada por la crisis de deuda en la zona euro y la austeridad. Las cifras de la devastación son de sobra conocidas: más de un 25% de paro, 56% entre los jóvenes; una losa de deuda que obstruye el flujo de crédito a empresas y familias; unas cuentas públicas cada vez más deterioradas; más de 400.000 empresas desaparecidas; y un retroceso de las rentas y del consumo a niveles de los 90.

[Spain is having more than a five-year crawl out from the bottom of a prolonged depression, consequence of the bursting of the real estate bubble aggrevated by the debt crisis in the euro zone and austerity. The numbers of the devastation are very well known: more than 25% unemployment, 56% among the young; a millstone of debt that obstructs the flow of credit to businesses and families; some public accounts deteriorating more and more; more than 400,000 businesses disappeared; and a rollback of incomes and consumption to the levels of the 1990s.]

In this video from The Real News, Bill Black talks about European Officials Pushing Austerity in Spain to Boost Corporate Profits By Repressing Unions 02/05/2014:

Black writes about it in Spain Rains on Rehn’s Austerity Victory Parade: Unemployment Rises to 26% New Economic Perspectives 01/25/2014.

German economist Heiner Flassbeck talks about the danger of a global recession in this video, also from The Real News, Danger of Global Recession After 30 Years of Neoliberal Counterrevolution - Flassbeck (3/3) 02/03/2014:

The first two segments of Flassbeck's participation are:

Krugman is Wrong About the Market and Hot Money - Flassbeck (1/3) 02/01/2014

Finance is Super Rational about Profits, Irrational about Global Economy - Flassbeck (2/3) 02/02/2014:

Tags: angela merkel, austerity economics, eu, euro, european union, spain

Grand Coalition governing agreement reached in Germany

German Chancellor Angela "Frau Fritz" Merkel and her CSU/CDU party have negotiated a coalition deal with the Social Democratic Party (SPD), chaired by Sigmar Gabriel. (Deal reached on new government for Germany under Merkel BBC News 11/27/213) A CDU/CSU/SPD coalition is known as a Grand Coalition. This would be the second Grand Coalition with the SPD that Frau Fritz has headed. The SPD base still has to approve of it in a referendum.

Klaus Stuttmann in this 26.11.2013 cartoon catches the political essence of the deal very well:

That's Angie, of course, as the crocodile and SPD Chairman Sigmar Gabriel celebrating being dinner.

The official coalition agreement just concluded, Deutschlands Zukunft gestalten, deals with EU issues in Chapter 6, 12 out of 185 pages. Basically, the SPD agreed to support Angie's catastrophic austerity policies for the eurozone and the EU, which they backed in Parliament anyway when they were a nominally opposition party.

"Das europäische Einigungswerk bleibt die wichtigste Aufgabe Deutschlands," it says. ("The work of European unity remains Germany's most important task.") I guess we can give them credit for a dark sense of humor, since the austerity policies are wrecking the prospects for the continued existence of the euro and the EU.

This is the key element of the Grand Coalition's eurozone policy (p. 157):

Damit Europa dauerhaft einen Weg aus der Krise findet, ist ein umfassender politischer Ansatz erforderlich, der Strukturreformen für mehr Wettbewerbsfähigkeit und eine strikte, nachhaltige Haushaltskonsolidierung mit Zukunftsinvestitionen in Wachstum und Beschäftigung in sozial ausgewogener Weise verbindet.

[So that Europe can find an enduring way out of the crisis, a comprehensive political approach is necessary, one that binds structural reforms for more competitiveness and a strict, enduring consolidation of budget with future-oriented investments in growth and employment in a socially equitable manner.]

Short version: austerity and more austerity, austerity in good times, austerity in bad times.

Meanwhile, Portugal is imposing new austerity measures. Spain's economy continues to stall. The EU is pressing for new austerity measures in Greece, where the OECD is predicting debt-to-GDP ratios of 160% or more until 2020, far beyond what is considered sustainable, and even farther beyond the 60% EU Fiscal (Suicide) Pact requires. The Very Serious People have declared Ireland a success story for austerity (again!) based on pretty much nothing but the declaration itself.

This will not end well.

There may be some hope in the fact that the SPD has agreed to a referendum among the SPD base before the final approval on the coalition pact. (Mitgliederbefragung: SPD-Basis muckt gegen Große Koalition auf Spiegel Online 24.11.2013) The party leaders will of course bring tremendous pressure for a "yes" vote. But rejection is a possibility.

Tags: angela merkel, austerity economics, eu, euro, european union, greece, ireland, portugal, spain

Merkel's high point (let's hope!) (Updated)

Angela "Frau Fritz" Merkel may be a terrible leader for Europe. But she's a great politician inside Germany. At least until her euro crisis policies unravel and German voters themselves have to face the realities of her dogmatic, brutal and stone-conservative economic policies.

Her current coalition partner party, the Free Democrats, failed to achieve the 5% vote hurdle needed to get seats in the Bundestag for the first time in the history of the Federal Republic. The SPD gained back some of the votes it lost in 2009 after its stint as Grand Coalition junior partner with Merkel and her CDU in her first government. The drop in vote percentage for both the Greens and the Left Party would indicate that some voters unhappy with the SPD's performance in that coalition moved by to the SPD.

In other words, despite their lackluster campaign and pathetic Chancellor candidate this time around, the SPD managed to regain some of the ground it lost as the compliant junior partner to Angela Merkel previously.

Only parties that get 5% (or three direct mandates) get Bundestag seats. The seats are apportioned among the parties with representation according to their vote percentage. The vote of the parties in the new Bundestag based on Sunday's election will be, according to the breakdown on the front webpage of Die Zeit at this writing break down this way:

CDU/CSU: 41.7%;296 seats
SPD: 25.6%;182 seats
Left Party: 8.5%;60 seats
Greens: 8.4%;60 seats

Those totals account for all 598 Bundestag seats. The parties that passed the hurdle received 84% of the vote.

Update:In the German system, depending on the final votes, the total number of seats can vary. As the Deutscher Budestag English-language website states of the outgoing Bundestag, "The 17th German Bundestag has 620 Members, eleven more than in the last electoral term."

As of around 4:15 Monday morning German time, both Die Zeit and Spiegel Online have the seat count at 630 seats. The revised breakdown for both sources is:

CDU/CSU: 41.5%;311 seats
SPD: 25.7%;192 seats
Left Party: 8.6%;64 seats
Greens: 8.4%;63 seats

The parties that passed the 5% hurdle received 84% of the vote.(End Update)

With that count, Merkel's CDU is three seats short of an absolute majority. She can form a CDU-only government if the other parties, or even one of the other three parties, agrees to it. In terms of right-to-left configuration, a CDU-green coalition would be the most likely majority coalition. But in current conditions, that sounds unlikely. The big question will be whether she will try to form a Grand Coalition with the SPD as junior partner. (A CDU-Left coalition isn't even a consideration.)

An obvious implication of this is that if the SPD wants to increase its own voting percentage - which normal Madisonian political thinking would assume that it wants to - their most obvious road to doing that would be to (l) stay out of a Grand Coalition; (2) establish a distinct oppositional profile to take maximum political advantage of the all-but-inevitable unraveling of Frau Fritz' euro policies; (3) develop the kind of cooperation with the Greens and the Left Party that could lead to a red-red-green government after the next election. And there's a good chance that the next one won't be so long as four years from now when the euro policies unravel.

Lenz Jacobsen discusses that option in Opposition ist doch kein Mist Die Zeit 22.09.2013. He reports that SPD Chancellor candidate Peer Steinbrück, in perhaps the best thing he's done in the whole campaign, is recommending that the SPD pursue the opposition course. Jacobsen notes that the SPD's vote was 16% below the CDU/CSU, which means that Angela Merkel is the only mass German Party at the moment. ("Angela Merkel ist jetzt die einzige wahre deutsche Volkspartei...") If the SPD cares about competing as a mass party with the CDU/CSU, they have to distance themselves from Merkel.

That in itself won't be enough if they faithfully agree to everything Frau Fritz wants to do, especially her neoliberal eurozone policies that are not only bad in themselves but will at some point start blowing up politically.

The fact that it would make sense politically and serve the interests of the voting base of the SPD do pursue such a course does not mean that they will, though. Merkel may try to rope them in to a Grand Coalition, which she knows could put the CDU on the road to being an actual majority party and hammer the SPD at the next election.

Jacobsen also points out the combined SPD/Green vote of 34% is so far from the CDU's 42% that a red-green coalition no longer looks so good as a strategic option. This creates a strong incentive to work on the red-red-green option.

Making the eurozone work is not identical to saving the EU, which is also threatened by Britain's strong inclination at the moment to bail out of the whole project, given the increasingly nationalistic inclinations of David Cameron's government.

But the failure of the eurozone would, at best, set back the European project to something like the pre-1992 state. Not only will saving it not be easy. But if there is going to be anything "left" to the left/center-left parties, they have to demand drastic changes to the basic EU organization. As long as it continues in its existing form, its going to be a neoliberal death-trap for progressive social and economic policies. The Fiscal (Suicide) Pact, to take just one example, essentially bans counter-cyclical (Keynesian) economic policies in recessions and depressions. Even requires pro-cyclical ones in a recession, because it requires arbitrary deficit and debt limits, the latter tied to percentage of GDP.

As Andreas Fisahn puts it in "Vier Jahre Merkel, vier Jahre Eurokrise," Blätter für deutsche un internationale Politik 09/2013

Tatsächlich ist die aktuelle Krise keine Euro- oder Schuldenkrise, sondern eine Krise der europäischen Wirtschafts- und Finanzverfassung. Ein emanzipatorischer Ausweg aus der Krise kann daher nur in einer grundsätzlichen Revision der Europäischen Verträge bestehen.

[In reality, the current crisis is not a euro or debt crisis, but rather a crisis of the European economic and financial constitution. An emancipatory way out of the crisis can therefore only occur in a basic revision of the European treaties.]

Frau Fritz has been so consistently nationalistic in her approach to the euro crisis that it's hard to see her pulling such a thing off. More accurately, maintaining the neoliberal structure and restrictions of the current EU has been so central to her policies, she would probably prefer to take down the EU altogether than let it be saved by an "emancipatory way out of the crisis." For her, the European project is a One Percenter affair.

How that is playing out for the people of Spain right now, Paul Krugman explains in part in The Pain In Spain Is Not Hard To Explain (Wonkish) 09/22/2013. The pseudo-economics that austerity advocates have been using to justify their policies assumes that a 25% unemployment rate - one out of every four people in the labor force without a job - is pretty much normal. As his title explains, Krugman gets into the weeds on what that means. It has to do with the EU Commission's official estimates of the output capacity of the Spanish economy being unrealistically low and then using that over-conservative number to minimize the real harm that their austerity policies - largely dictated by Frau Fritz - are doing to people in Spain.

Tags: angela merkel, austerity economics, eu, euro, european union, german politics, spain

Visions of sugar-plum austerity economics

As Paul Krugman has frequently noted - and mocked - advocates of austericide economics keep pointing to Latvia and Ireland as austerity success stories. In Ireland Is The Success Story Of The Future, And Always Will Be 08/16/2013, he notes dryly of Ireland's experience, "This is not exactly a policy triumph."

In a similar spirit, this post by Ronald Janssen Can Spain Achieve What Ireland And Latvia Did? Social Europe Journal 15.08.2013 writes:

Jobs destruction over this period [since 2007] has been similar, if not higher, in Latvia and Ireland compared to Greece, Spain or Portugal. ...

There is nothing in these pictures to suggest that [EU] Commissioner's [Olli] Rehn assertion that those economies which embraced the agenda of structural reform and wage devaluation have done really better in terms of jobs performance. What Latvia and Ireland 'managed to achieve' was to destroy around one fifth of jobs. Spain would do well to stay clear from the type of reform measures the Commission and the IMF are trying to sell to economies in distress. In the best case, the reforms suggested are irrelevant and do not make any difference. In the worst case, these reforms may even push the economy and job performance further down.

Tags: austerity economics, eu, euro, european union, ireland, latvia, spain

Harmony in the EU, Britain-Spain-Gibraltar edition

As if the EU didn't have enough problems right now, Britain is huffing and puffing over Gibraltar, one of its pitifully few remaining colonial possessions which Spain claims as their territory. Guy Jackson, Gibraltar row heats up as Spain, Britain make threats AFP 08/13/2013:

As the threats were made over the British-held territory, British warships began setting sail for the Mediterranean for a naval exercise that will see the frigate HMS Westminster dock in Gibraltar.

Helicopter carrier HMS Illustrious steamed out of Portsmouth, to be followed on Tuesday by the type-23 frigate HMS Westminster, which is set to arrive in Gibraltar within a week.

The defence ministry has stressed that the deployment of the ships for the exercise is "routine" and "long planned".

But in a hardening of Britain's tone, a spokesman for Prime Minister David Cameron said the government was considering taking legal action over the checks by Spanish guards on the border of the rocky outpost on Spain's south coast.

BBC News breaks down the competing claims (08//12/2013):

Spain believes Gibraltar was taken in the context of a Spanish dynastic dispute and contests UK sovereignty over the entire peninsula. It also insists the cession in the Treaty of Utrecht 1713 did not include the isthmus with the airport on it and territorial waters.

Spain cites the UN principle of territorial integrity, through UN Resolution 1514 (XV) - which says "any attempt at the partial or total disruption of the national unity and the territorial integrity of a country is incompatible with the purposes and principles of the Charter of the United Nations".

This dispute has being going on a while, i.e., since before the American Revolution. A favorite trick of Britain, which they've also used in the Malvinas/Falklands, is to hold a referendum among the mostly-British inhabitants of the disputed territory:

There was a referendum in Gibraltar in 1967, which called on both Spain and the UK to take into account the "interests" of the people of Gibraltar. In it 12,138 of the 12,237 voters chose "voluntarily to retain their links with the UK". The referendum was condemned by the UN General Assembly, and not recognised by any international body or state. The UK promulgated the Gibraltar Constitution Order in 1969, in which it was stated that: "Her Majesty's government will never enter into negotiations under which the people of Gibraltar would pass under the sovereignty of another state against their democratically expressed wishes."

This Stratfor video discusses the current conflict and its background in Tensions Rise Between Spain and the U.K. Over Gibraltar 08/05/2013:

Spain and Argentina have had high-level discussions about making a common united front against Britain over Gibraltar and the Malvinas at the United Nations. () The ongoing diplomatic controversy over Argentina's nationalization YPF, an energy company previously owned by the Spanish corporation Repsol, is a complicating factor. (Gibraltar y Malvinas, ¿juntos? 12.08.2013)

Tags: britain, eu, gibraltar, spain

Angie and Spain

German Chancellor Angela "Frau Fritz" Merkel isn't happy with her Spanish subjects. (Griselda Pastor, Alemania pasa a la defensiva Cadena SER 15.05.2013)

Spain's banks are still shaky, i.e., under-capitalized. Frau Fritz' government is complaining that Spain didn't take enough EU money. Under Angienomics, the aid to the banks would become a debt obligation of the Spanish government. But for Frau Fritz, that would be a good result. Because it would give her even more leverage to accelerate the neoliberal "reforms" (lower wages, deregulation, privatization, etc.) that both the current Spanish government and its Socialist predecessor have been implementing already.

One of the neoliberal "reforms" they are pushing on Spain comes from EU Commissar for Labor László Ándor. It's something they haven!t even pushed onto Greece, Ireland or Portugal yet, something called the "unified work contract" (contrato único). Like other neoliberal schemes, it's basically a way of reducing workers' rights, income and job stability and weakening unions. It's such an obnoxious idea that even Mariano Rajoy's conservative, austerity-committed government is willing to embrace. (Ana Bravo Cuiñas, ¿Contrato único? El Gobierno se decanta por la contratación simplificada El Mundo 19.05.2013)

But Rjoy's Partido Popular (PP) have taken it seriously in the recent past. (Mercedes Serraller, El PP propone un contrato único y flexible 'anticrisis' Expansión 19.07.2011) As Cuiñas points out, one element of the contrato único proposal has similarities to a workers' capitalization fund arrangement currently used by Austria, Denmark and the Netherlands. But László Ándor's proposal taken literally "tendría equivalente en ningún otro país del mundo" ("would have no equivalent in any other country of the world"). And for workers, that would be not in a good way.

The eurozone has turned into a laboratory for how far neoliberal, anti-labor "reforms" can be enacted without setting aside parliamentary government.

Tags: angela merkel, austerity economics, eu, euro, european union, spain

European austerity

Aljazeera English's Counting the Cost program recently looked at austerity in Europe, Austerity debunked 04/27/2013, for the first 14 minutes or so of the 25-minute program:

It includes news from developing economic issues in eurozone member Slovenia and also in Spain, which has just experienced its first annual decrease in population on record.

There is an accompanying article, Austerity debunked 04/27/2013:

Greece has had to sell off its islands; Ireland has proposed selling its national forest. Britain has forced the disabled to go to work; in Spain there is the kind of unemployment levels that have in the past led to the creation of a military junta; there have been riots, and the near collapse of the currency.

And it has all been because of one thing, one overriding necessity forced on the people by the political class of a continent: austerity. ...

Europe's austerity drive is also partially to blame for Slovenia's economic troubles. It is in recession for the second time in four years, and racing to avoid becoming the sixth eurozone nation to need a bailout.

As demand for its exports declines, Slovenia's banks are sitting on bad debts worth an estimated $9bn, or a fifth of its economy. It also needs to raise almost $4bn this year to refinance debt, a budget shortfall, and the banks which alone need to raise a billion dollars - a figure which international organisations and credit ratings agencies think is not enough.

Tags: austerity economics, eu, euro, european union, slovenia, spain

If the center-left disappears in the EU ...

It could be that if the center-left parties in Europe and the US become enough like the conservative parties, that people will stop voting for the conservative party because they are so happy that now the once-center-left parties can't be easily distinguished between the center-right parties. Unless, say the conservative policies advocated and implemented by the once-center-left parties works out badly, and the voters decide they prefer the center-right.

In this 05/03/2013 cartoon from Yannis Ioannou, Angela "Frau Fritz" Merkel (Deus Merkel) and her archangel Wolf (Finance Minister Schäuble) lord it over the mere mortals of the eurozone

The European social-democratic parties seem determined to give that option an extensive test.

Here's Juan Fernando López Aguilar, the President of the Spanish delegation of the social-democratic party (PSOE) wringing his hands over the fact that some parties are actually protesting the destructive effects of the austerity policies that are devastating a number of EU countries, Spain very much among them. From Beppe Grillo resucita a Berlusconi Huffington Post España 03.05.2013:

A un año de distancia de las próximas elecciones europeas, fines de mayo de 2014, se intensifican las señales de alarma que las anuncian minadas por el espectro del antieuropeísmo, cualquiera que sea su ropaje: nacionalismo, xenofobia, nueva extrema derecha y populismos eurófobos.

[A year away from the next European elections at the end of May 2014, the alarm signals are becoming more intense that announce undermining by the specter of anti-Europeanism {i..e, opposition to the EU}, whatever its guise may be: nationalism, xenophobia, new extreme right and europhobic populisms.]

Are you kidding me? The distrust of the EU in Spain is up north of 70%, and this is all the opposition party has?

French President François Hollande's Socialist Party celebrates it first year since the victorious election of May 6, 2012. And his popularity has plummeted. He got elected promising to defy the austerity policy of German Chancellor Angela "Frau Fritz" Merkel, and embraced it almost as quickly as he was sworn in. Then he got into a war in Mali.

Reuters titled a story of French protests against austerity, Far-left protesters reject austerity on Hollande anniversary by Muriel Boselli 05/05/2013. But in fact, Hollande's center-left Socialist Party got elected by a majority just one year ago on opposing austerity. Boselli reports, "With France on the edge of recession, unemployment at an all-time high and euro zone partners pressing him to cut the budget deficit, Hollande has suffered the sharpest fall in popularity of any president in more than half a century." So it's not just the "far left" that's unhappy. (See also: Stefan Simons, Proteste gegen Präsident Hollande: Enttäuschung, Frust, Wut Spiegel Online 05.05.2013)

From the headline of this article, I learned a new word for austerity policies in the middle of a depression, "austericide", El 'austericidio' ya afecta a todos: Europa se contraerá un 0,4% en 2013 Público 03.05.2013. The article is about the latest EU projections for growth this year. Negative growth, that is. They are now projecting a 0.1% GDP drop for the EU as a whole, 0.4% for the eurozone and 1.5% in Spain, which is already experiencing the highest unemployment in its history.

English News Today reports, 'EU economic growth not just around the corner' 05/05/2013:

Duetsche Welle English's report, Report predicts crisis in eurozone will deepen 05/03/2013

In face of the catastrophically bad results of continued austerity, EU leaders and their master, Frau Fritz, appear to be in a circle-the-wagons mood. EU Commission President José Manuel Barroso, a former conservative Prime Minister of Portugal, last week said in public that austerity along wasn't going to solve the problem, and was immediately blasted by German allies of Frau Fritz. In an interview with Die Welt, he enacted the ritual familiar to Americans who have seen Republican officials or Members of Congress criticize chief Party ideologue Russ Limbaugh and then abjectly repent in public a day or two later. (Florian Eder et al, "Merkel versteht am besten, was gerade in Europa passiert" 04.05.2013)

It's an open question in my mind still whether Frau Fritz sees herself more as Leonid Breshven directing the Warsaw Pact or as meaner version of Helmut Kohl absorbing East Germany after the fall of the Communist regime. But having grown up and made the first (non-political) part of her career in East Germany, she must have reoognized - and no doubt appreciated - the tone of the repentant heretic in Borroso's Welt interview. No one understands the problems of today's Europe in as insightful and unselfish a way as Frau Fritz, to hear Borroso tell it. And Frau Fritz, with her deep and perceptive insight into the scientific principles of Marxism-Leninism Ordoliberalism, has brilliantly defined the nature of the present world situation from the standpoint of the working class One Percent.

Borroso actually said, "Es ist nicht Frau Fritz' Merkels oder Deutschlands Schuld, was in Frankreich oder Portugal passiert. Jeder sollte vor seiner eigenen Türe kehren, da gibt es genug zu tun. Es ist völlig unfair, Maßnahmen als Zwang eines einzelnen Landes oder einer Institution darzustellen." ("It is not Frau Fritz' Merkel's or Germany's fault what happens in France or Portugal. Everyone should put their own house in order, that enough to do. It is completely unfair to represent {austerity} measures as pressure from one single country or a single institution.")

He made a similar statement to Bloomberg Businessweek's Diane Brady in European Commission President José Barroso on His Job's Challenges 04/18/2013. "We have a problem of leadership," he said. But he didn't mean that the problem was his own or Frau Fritz' leaderhsip:

We need leaders who can tell their people, "Our problems were not created because of what others are doing. It’s because of past mistakes in our own country." You have to have the courage to explain that to your own people. There is a tendency to Europeanize the problems and to nationalize the successes. When things are going well, it reflects my merit as a prime minister or minister. When things go badly, it's the fault of those guys in Brussels. I believe that’s holding us back from making faster changes.

Maybe one day, not so long away, someone can do a monument to the former European Union in the shape of a giant tombstone and right that on it.

Here's Valentí Puig singing the same song in Regeneración o antipolítica El País 04.05.2013

Meanwhile, there's this. Lucía Abellán y Alejandro Bolaños, La Comisión Europea empeora la previsión económica de Rajoy para 2013 El País 03.05.2013

And next door in Portugal, more austericide! Portugal se aprieta más el cinturón y despedirá a 30.000 funcionarios Público 03.05.2013. Euronews reports on the ugly news in Portuguese PM looks for unity over austerity cuts 05/04/2013:

He called for unity. Good luck with that!

Heckuva job, Frau Fritz! Heckuva job! Boaventura de Sousa Santos in El Diktat alemán Público 03.05.2013 provides a more reality-based view. He relates how German Finance Minister Wolfgang Schäuble recently told US Treasure Secretary Jacob Lew that there was no contradiction between austerity policies and growth, and that we should just forget about such a false debate. This is even more delusional than EC President Barroso said in the Businessweek interview quoted above, "The existential crisis regarding the euro is behind us." We seem to be look at some big-time denial of basic economic realities here.

Sousa Santos describes the current Diktat from Frau Fritz as national-authoritarian on Germany's part, an accurate description. And he says that finding politically viable alternatives to it is "el mayor desafío que hoy han de afrontar las sociedades europeas" ("the greatest challenge that European societies have to confront today.") Now, he's really reaching when he traces Frau Fritz' tendencies toward authoritarian rule in the eurozone to the philosopher Johann Gottlieb Fichte (1762-1814). Der alte Fritz himself would be a more plausible predecessor if we're going back that far.

But he's right in saying that "es preocupante comprobar que el poder económico alemán se ha convertido en una fuente de ortodoxia europea que beneficia unilateralmente a Alemania, en contra de lo que quieren hacer creer" ("it's disturbing to realize that the German economic power has been converted into a source of European orthodoxy that benefits Germany unilaterally, in contrast to what it would have us believe.")

As Wolfgang Münchau notes, Frau Fritz' dogmatic adherence to austerity economics even seems to hold in the face of the current weakening economic condition of Germany itself. (Die letzte Waffe der EZB Spiegel Online 01.05.2013) The ECB just lowered interest rates in face of the weakening conditions in the EU and the eurozone, setting off silly but predictable howls of impending inflationary dangerous from the defenders of austericide policies. But with interest rates already up against the zero lower bound, the ECB's ability to stimuluate much if any economic activity by lower interest rates is doubtful in the extreme. For the same reason, the inflation fears are spurious. But the only other way to stimulate the eurozone economies is for Germany in particular to pursue expansionary fiscal policy in the form of higher government spending. Instead, Frau Fritz, supported by the main opposition parties the SPD and the Greens, is sticking to austericide.

Frau Fritz is obviously happy representing the interest of the European One Percent at the expense of everyone else. If the supposedly center-left parties in the EU want to represent any wider public than the One Percent, they'd better get it together soon and start doing so aggressively. Because even uglier advocates of One Percent rule are working hard on figuring out how to take advantage the misery that the German austerity Diktat is causing. So are more unapologetically left groups, some of whom probably will do a much better job of representing the majority interest than most of the EU social-democratic parties have done so far in this depression. The social-democratic parties could find themselves in the state of their sister party PASOK in Greece, which has collaborated its way to near-nonexistence already.

Tags: angela merkel, austerity economics, eu, euro, european union, france, françois hollande, greece, portugal, spain

Light at the end of the austerity tunnel in Europe?

Patrick Smith thinks the recent IMF position may mark a turning point for the gruesome economic austerity in Europe European Austerity Does a 180 as Lagarde Weighs In The Fiscal Times 04/22/2013:

The IMF and the World Bank, notably by way of IMF Managing Director Christine Lagarde, have put in sharp focus the core components of a recovery strategy. It focuses on two questions:

• What is the optimal degree of austerity, meaning contraction as opposed to stimulus? Up to what point is it necessary, and at what point does it become counter-productive — that is, when does it start inhibiting growth instead of fostering it? How does demand management fit in?
• How much public debt—debt as a proportion of GDP — can a nation carry when it is in or near recession? What is the relationship, if any, between debt and growth? Is cutting debt so simple as cutting spending?

But there is no sign that the main source of the austerity demands, Germany and their Chancellor Angela "Frau Fritz" Merkel is backing off their program.

José Manuel Barroso came out publicly with a suggestion that it was time to back off some of the austerity. But he immediately faced punliv criticism from German leaders, including Foreign Minister Guido Westerwelle. (David Böcking, EU-Streit über Sparkurs: Wie Barroso sich kurz eine eigene Meinung erlaubte Spiegel Online 23.04.2013)

In this Klaus Stuttmann cartoon of 04/24/2013 German Finance Minister Wolfgang Schäuble discusses the situation with Frau Fritz:

As Frau Fritz reads about the German auto industry stagnating, Finance Minister Wolfgang Schäuble tells her, "How often I've preached to the southern Europeans: save, save, save - so that you can buy German cars! But nobody listens to me!"

Wolfgang Münchau has been a consistent critic of Frau Fritz' austerity program. But he argues in Warum Barroso falsch liegt Spiegel Online 24.04.2013 that Barroso isn't addressing the problem on an eurozone-wide scale, but rather as the former Prime Minister of Portugal. Münchau argues that without a common economic policy for the eurozone that encourages faster growth in the richer countries like Germany including higher inflation than at present, the euro currency trap will continue to crush economies like those of Cyprus, Greece, Ireland, Italy, Portugal and Spain. He comments that Germany's self-chosen austerity and the Fiscal Pact (which I call the fiscal suicide pact) that Merkel insisted that eurozone economies adopt have the result, "Wir haben uns durch Schuldenbremse und Fiskalpakt das wichtigste Instrument der makroökonomischen Steuerung in Krisenzeiten freiwillig entzogen." ("Throughout the fiscal brakes and the Fiscal Pact, we have freely removed the most important instrument of macroeconomic steering in crisis times.") The Fiscal Pact was an insane idea, effectively outlawing Keynesian economic stimulus during recessions and depressions.

The failure of Frau Fritz' European leadership, along with that of France and Britain in particular, has diminished the support for "Europe" (the EU) considerably in the EU countries with the largest economies, as Ian Traynor reports for The Guardian in Crisis for Europe as trust hits record low 04/24/2013:

After financial, currency and debt crises, wrenching budget and spending cuts, rich nations' bailouts of the poor, and surrenders of sovereign powers over policymaking to international technocrats, Euroscepticism is soaring to a degree that is likely to feed populist anti-EU politics and frustrate European leaders' efforts to arrest the collapse in support for their project.

Figures from Eurobarometer, the EU's polling organisation, analysed by the European Council on Foreign Relations (ECFR), a thinktank, show a vertiginous decline in trust in the EU in countries such as Spain, Germany and Italy that are historically very pro-European. ...

The most dramatic fall in faith in the EU has occurred in Spain, where the banking and housing market collapse, eurozone bailout and runaway unemployment have combined to produce 72% "tending not to trust" the EU, with only 20% "tending to trust".

But in our era of the dominance of neoliberal doctrines among both conservative and center-left parties in Europe and the US, the political system is increasingly disconnected from the level of discontent even over the most important issues among the publics they supposedly serve. As Colin Crouch writes in The Strange Non-Death of Neoliberalism (2011):

There is a widely accepted view that inequality does not matter provided nearly everyone (within the boundaries of a particular nation-state) is reasonably well off. Provided everyone has a sound and warm house to live in, does it matter if some people have vast estates and luxury yachts? Their yachts do not diminish our houses . But this misses the point about inequality of wealth: It leads to inequalities of power that reach out from one arena of society into many others in a concentrated, centralizing way. (p. 169)

Money talks, as the old saying has it, And, he writes, "At every point we find that democratic market societies under the influence of neoliberal ideas throw more and more power, influence and privilege at the extremely wealthy, especially the wielders of large corporate resources." Multinational corporations get great benefit from the EU structure. And the political elite in Germany, including to a shameful extent the leaders of the opposition SPD, are working for them, not for the well-being of the people of Europe, in supporting the current austerity policies.

Euronews reports on the now-record unemployment in Spain, as the depression there grinds on with no hope for relief in the foreseeable future under Frau Fritz' austerity fist, Spain's jobless total reaches a record six million 04/25/2013:

But for the public, there are always police available to deal with their protests, as we see in the one, Clashes in Madrid as Spain announces record jobless levels Euronews 04/26/2013:

Katrina vanden Heuvel describes the current austerity fog this way (Austerity doctrine is exposed as flimflam Washington Post 04/03/2013):

Sadly, austerity’s reign of misery continues, even as it has been demolished in theory and practice. President Obama has ceded ground to the austerity hawks, proposing cuts to Social Security and Medicare as means to reduce government debt. On the other side of the Atlantic, austerity is spreading economic contraction across Britain and the continent. The Federal Reserve is even under pressure to roll back its expansionist monetary policy. We will be freed of austerity’s grip only when those in power return to common sense, fact-based politics and when we hear much more from the unemployed and the immiserated and much less from bankers and their favored economists.

Tags: angela merkel, austerity economics, eu, euro, european union, spain

9th anniversary of the March 11 attacks in Spain

March 11 is mostly over in Spain itself as I'm posting this.

But it's the ninth anniversary of the deadly 2004 subway bombing carrying out by Muslim extremists. This song by the group La Oreja de Van Gogh is a moving tribute to those whose lives were lost that day, Jueves (Version Grupo) 10/24/2009.

Tags: 11.marzo, la oreja de van gogh, spain

The Marea Ciudadana ("tide of citizens") in Spain protests Rajoy's version of Angienomics

The protest movement Marea Ciudadana ("tide of citizens") has brought large crowds to the streets all across Spain on the 32nd anniversary of an attempted coup against the then-new democratic government to protest against "the financial coup d'tat" or the "coup of the markets."Notable protests took place in Madrid, A Coruña (in Galicia) Ávila, Barcelona, San Sebastián, Santander, Zaragoza and other locations. (Luis Giménez
San Miguel, Todas las mareas unidas marchan contra los recortes sociales Público 23.02.2013)

Spain's 'tide of citizens' takes to the streets Euronews 02/23/2013:

Marea Ciudadana is a coalition of various labor groups, the indignados of the M-15 anti-austerity protests of recent years, and left-wing parties and sects.

The protest Saturday was directed against the continuing austerity politics of conservative Prime Minister Mariano Rajoy. Although they are more severe than those of the previous Socialist (PSOE) government of José Luis Rodríguez Zapatero, it was Zapatero's government that first began knuckling under to the demands of German Chancellor Angela "Frau Fritz" Merkel for brutal austerity policies in the face of attacks by bond speculators in the wake of the bursting of the Spanish housing bubble.

Zapatero's government was a model for the role of "left" parties in neoliberalism: give the markets free play, adhere to basically conservative economic policies, and (in the eurozone) to conform to the dictates of the Troika (EU Commission, IMF, ECB), which in turn are largely driven at present by the nationalistic economic policies of Germany under Frau Fritz' leadership. Zapatero pursuing socially liberal policies, such as legalizing gay marriage and appointing the first female Defense Minister. And he defied the Cheney-Bush Administration upon taking office in 2004 by pulling Spanish troops out of Iraq (though Spain continued to fight in Afghanistan). But defy Angie and the banksters over economic policy? No way.

Rajoy is no doubt more enthusiastic in implementing austerity policies than Zapatero was. They are formally not operating under the Troika's direction as Greece, Ireland and Portugal have been. But the governments of both Spain and Italy are de facto acting as administrators for the Troika and Frau Fritz' crippling austerity policies that are imposing so much needless suffering in their countries.

The current SPOE leader, Alfredo Pérez Rubalcaba, is griping about Rajoy's austerity policies, sensibly hoping to get some political benefit from doing so. (Rubalcaba: Rajoy tiene que rectificar su política económica para evitar que en 2013 haya más desempleo y sufrimiento tal y como advierte la UE SPOE website 23.02.2013) But the SPOE had their chance while they were in office to resist Germany's austerity demands, and they folded without a fight. The SPOE's sister social-democratic party in France under François Hollande took power last year promising to resist Frau Fritz' demands, and could hardly take office before they were rushing to capitulate and to impose a neoliberal austerity program in France. Greece's Social Democratic party PASOK will be lucky to survive as a functioning political party at all.

Meanwhile, Italy has parliamentary election on Sunday and Monday, which are likely to have big implications for the eurozone. The current Prime Minister Mario Monti is a technocrat essentially installed at Germany's demand, barely within the confines of legality, to do the bidding of Big Capital as interpreted by the Troika. Which meant, of course, Angienomics, i.e., austerity, austerity, austerity. The last polls prior to the election didn't indicate that his performance was terribly popular, as Catherine Hornby reports for Reuters in Italy urges high turnout in key election for euro zone 02/23/2013:

Monti, an economics professor and darling of the markets, is believed to be fading after a lackluster campaign, and some experts have said he may fall below the 8-percent threshold to win Senate seats in some regions.

Whatever government emerges from the vote will have the task of pulling Italy out of its longest recession for 20 years and reviving an economy that has been stagnant for two decades.

The main danger for Italy and the euro zone is that the election produces a weak government incapable of taking firm action, which is likely to rattle investors and could ignite a new debt crisis.

Monti replaced [Silvio] Berlusconi in November 2011 after the media billionaire brought the euro zone's third-largest economy close to a Greek-style financial meltdown while he was embroiled in a series of scandals.

The former European Commissioner launched a tough program of spending cuts, tax hikes and pension reform which helped to sharply reduce Italy's borrowing costs and restore the country's credibility abroad.

But economic austerity has fuelled [sic] anger among Italians grappling with rising unemployment and shrinking disposable incomes, encouraging many to turn to [anti-EU protest candidate Beppe] Grillo, who has tapped into a national mood of disenchantment. [my emphasis]

In AusteritySpeak, "a weak government incapable of taking firm action" means one that is not willing to punish its own voting base and their own country by following the dictates of Frau Fritz for austerity policies that continue to shrink their economies and make the public debt ratios worse.

Wolfgang Münchau has been highly critical of the austerity policies of Angienomics and of Germany's generally irresponsible approach to the euro crisis. But in Italien: Schicksalswahl für den Euro Spiegel Online 20.02.2013, he agrees that Italy's election is likely to be a decisive one for the future of the euro and therfore the EU, and that a weak governmental coalition is probably the worst outcome. Or, more precisely, that a weak governmental coalition would lead to the chain of events that constitute the worst outcome from the point of view of preserving the euro and the EU: "Der wäre politische Instabilität, eine andauernde Wirtschaftskrise, verbunden mit Zweifeln an Italiens Willen und Fähigkeit, im Euro-Raum zu bleiben." ("That would be political instability, a continuing economic crisis, combined with doubts on Italy's will and ability to stay in the eurozone.")

But, he concludes, "Es ist laut Prognosen der Wahlausgang, der am wahrscheinlichsten ist." ("It is, according to the prognoses for the election outcome, the one that is the most likely.")

Heckuva job managing the euro crisis, Frau Fritz!

Tags: angela merkel, austerity economics, eu, euro, european union, france, françois hollande, greece, italy, spain

General strike in Spain and Portugal

Spanish unions staged a general strike on Wednesday to protest the conservative government's crippling austerity policies. Democracy Now! reports, General Strike Sweeps Europe as Millions Reject Austerity as Solution 11/14/2012:

The piece references this piece by María Carrión, Spaniards Take On the Banks The Progressive Nov 2012:

Under Spanish law, banks have the right to claim full payment of debt even after repossessing the property, including the difference in value—which in some cases can be as much as 40 percent due to falling prices.

“The banks go after them like sharks: As soon as people find employment they garnish their wages,” says Vicente Perez, spokesperson for the Platform in Madrid, whose “Stop Evictions” campaign has successfully intervened in more than 100 repossessions in the region. “They seize homes that other family members put up as collateral. The family’s credit is ruined; they cannot get loans, pay anything with credit, or even rent. They live on the margins of the economy.”

As the Rajoy government negotiates conditions with the EU for the 100 billion euro bailout of Spain’s banking system, rotten to the core due to its reckless lending practices during the housing bubble, 15-M and other social movements are asking that banks turn part of the millions of empty properties they amassed through repossessions and debt swaps into affordable rentals. About 5.6 million homes, 20 percent of the total, remain empty in Spain either because they have not been sold or because they were seized by banks.

Carrión in the video talks about the eviction situation.

Here is a shorter video from Euronews on the Spanish strike, Spanish anti-austerity protesters clash with police 11/14/2012:

This is a Spanish-language report from TV Pública Argentina, Huelgas masivas en España y Portugal 11/14/2012:

Público reports that there was an impressive turnout in cities all over Spain: La huelga general culmina en una marcha gigantesca en Madrid bajo el lema: "Nos dejan sin futuro" 14.11.2012. The main slogan for the general strikes was, "Nos dejan sin futuro. Hay culpables. Hay soluciones." (They are leaving us with no future. There are guilty ones. There are solucions.")

Portugal's unions also staged a general strike, and there were work stoppages in Greece and Italy, and notable solidarity demonstrations in Belgium, France and Germany. (See Europa se cubre de manifestaciones contra los ajustes Público 14.11.2012; Trabajadores europeos, a las calles Página 12 14.11.2012. Here are reports on Greece and Italy from Euronews.

Greek workers show solidarity with suffering in Spain, Portugal 11/14/2012:

Italy's anti-austerity protests erupt into violence 11/14/2012:

Tags: austerity economics, eu, euro, european union, portugal, spain, greece, italy

Angie's hammer in Greece, Portugal and Spain

This brief report from Aljazeera English gives a glimpse at the results of German Chancellor Angela Merkel's austerity hammer in three of countries at which it is targeted: Greece, Portugal and Spain (Greek unemployment to top Spain 10/31/2012):

Tags: austerity economics, greece, portugal, spain