Showing posts with label European downgrade. Show all posts
Showing posts with label European downgrade. Show all posts

Saturday, April 6, 2013

Is the European Union insanity incurable? - Don't answer that.

Europe's current look.
"Insanity: doing the same thing over and over again and expecting different results." - Albert Einstein


The European heads of state and governments are sitting in a burning house haggling over the total sum they will have to rustle up for the water damages from putting out the fire. The reproach that they have lost contact with the citizens doesn’t ring true: the fact is, they never had any to start with. The system we live in neither provides for nor admits any legitimate representation for the citizens of Europe. 

Whoever makes “democratically legitimate” policy at the European level – that is, who has been elected to do so – has come into that position only through national elections and must, to survive politically, defend the fiction of “national interests”. Whoever today at the summits of the European Council always obstructs Community interests to win the approval of the national electorates harms all the others – and, considering how interlocked the nations are within the European single market and the eurozone, harms his own. 

I once had great hopes invested in the Frankfurter Allgemeine Zeitung invested. A newspaper so serious that it never used photographs in its first page when it was the standard practice. And yet I begin to read the note by noticing that the authors acknowledged that the current European Union deepest flaw was the lack of representativeness. A bunch of unelected, unaccountable bureaucrats in Brussels dictate to 493 million people how they will live, and always get away with it. 

Otherwise, the Euro project wouldn’t have been advanced in spite of the doom forewarnings that became true. The smart guys in the European room might have realized that the economic collapse with such an arrangement was inevitable, as it would be inevitable the proposed “fix”: a fiscal union, something closely resembling the French-and-Dutch-rejected constitution for the United States of Europe. The repudiation sent such intense shockwaves along the members of the EU, that no more referendums were held after these, leaving Austria, Germany, Greece, Hungary, Italy, Lithuania, Slovakia, Slovenia, Luxembourg and Spain completely flat. Of these countries, Greece, Italy and Spain are experiencing the worst crisis since the UE started. The water is boiling, but they insist to keep their hands in the heat. 

And that’s precisely the solution proposed by authors Ulrike Guérot and Robert Menasse: to “pay attention to the dreamers” and proceed with full steam to install a European Republic, i.e. keep the euro currency, implant a fiscal union and abolish all the nation states that conform the Union. 

Insanity...
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Friday, January 13, 2012

European Union or: how I learned to stop worrying and love the pensions bomb

No way out...?
You hear that Mr. Anderson?... That is the sound of inevitability... It is the sound of your death...

Agent Smith, The Matrix

It seems some people loathe my pal Agent P because he doesn’t like public servants that well. And we both dislike how governments recklessly spend our tax money. The #OccupyWallStreet movement protests the obvious carelessness of the incredibly short-termed mind of the current business model, sheltered by government old chums (They just don’t see that way). People good, corporate greed bad, we know that song.

Ever thought of government greed? Or public “servants” greed? You think that does not exist? Lookit shorty here: this Friday the 13th of January, Standard & Poor's will cut the credit ratings of Italy, Spain and Portugal by two notches and downgrade France and Austria by one notch. Yes, just like the USA were downgraded last year.

But didn’t Merkozy grab the bull by the horns and drove into submission the unruly PIGS? Didn’t France and Germany send the right signals to the markets? Apparently not. There are a lot of people not buying the White Knight rescue fairytale. You see, there’s some information that’s not a secret at all, but European politicians prefer not to talk about, because of the election cycle, they are as short-term minded as those ugly Wall Street capitalists.

Because of that it is a downright horror story, not a fairy tale what the Europeans prefer not to face: the state-funded pension obligations in France and Germany are three times the GDP of those two countries. Together they total 13.9 trillion Euros, very nearly half of the pension bills of the 19 nation States studied in this 2009 report of the Research Center for Generational Contracts from the Freiburg University.

Expert used to call that mess “the retirement bomb.” Sooner or later the public will realize that the lavish public employee pensions and most of the rest of the perks of the welfare state are impossible to meet by taxpayers. It has nothing to do with wealth redistribution; the pension liabilities exceed three times the GDP of two of the most stable and wealthiest states of the European Union. In three decades, there will be no wealth to be redistributed. Same goes for the PIGS and everyone else in the Union. Same goes for Medicare and Social Security in the USA.

If that’s not greed, to mortgage several times the future of their countries to satisfy public employees demands, then the definition must be changed.

The future is already here. After all, Greece and several other countries already spend way more than they earn.

Most of us will worry when we hear the downgrade news. But when they find out the bigger picture, they will consider this nothing compared with what lies beneath the abyss of the welfare state.


Keynes said “In the long term we all be dead”, but if he were alive today he would say “Who, me?”

H/T The Slog
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