"The Fiscal Pact mandates that all national governments in the European Union should achieve a “structural deficit” of no more than 0.5 percent of gross domestic product. I shall not again demonstrate that this concept is nonsense and, even were it not, 0.5 percent would be absurd, implying continuously deflationary fiscal policy. If the Pact is foolish, combining it with a “fiscal czar” (Merkel’s term, not mine) is authoritarian madness. It would abandon the pretense of electoral democracy within the European Union." (Source: Social Europe Journal)
Good critical analysis by John Weeks of recent developments in European governance structure. Pro-Europeans who welcome this as "more Europe" are either terribly naive or have a hidden agenda.
"This crisis offers a tremendous opportunity for Europe. It has defined the agenda for years to come: banking union, fiscal union, and political union. What remains missing is an economic-growth strategy for the crisis countries; but, given mounting unrest in southern Europe, such a strategy is inevitable. Europeans have reason to be optimistic if they recognize the opportunity that their crisis has created – and act boldly and decisively to seize it." (Source: Project Syndicate)
This opinion piece by Joschka Fischer in Project Syndicate clearly demonstrates how much the former Green rebel has become part of the European elites. No word about the detrimental social impacts of the EU’s neo-liberal ideology, no word about the sustainability crisis which caused global economic disruption in the first place.
EU Commission President José Manuel Barroso held his State of the Union 2012 Address in the European Parliament today.
His call for a "decisive deal for Europe" is nothing more than the usual lithany of neoliberal (growth and competitiveness first) and old-school EU Integration platitudes (more economic and political union, European parties) with a few words added to placate those in Europe who want real "new thinking" and a really convincing new European project: a socially just and green new EU.
O yes and we need a new European public space now that anti-EU sentiment in lots of EU member states is running high. Where have we heard this before? Margot Wallström, please come back!
“Italian premier Mario Monti and French leader Francois Hollande on Tuesday said Europe must urgently restore economic growth and create jobs as part of a wider plan to safeguard the 17-country euro currency union.” (Source: Foxnews)
Politically elected or technocrat, left or right – Europe’s elites remain stuck in old and failed ideologies (growth as the miracle cure) instead of preparing for the Prosperous Way Down. With a European Union like that, who needs the European Union? Time to prepare the alternative (which is not a “retour” to grand old nationalism by the way ): Phoenix Europe.
Help our EU leaders awake from their naive dreams and send them this 8-minute video from the Post-Carbon Institute of Richard Heinberg: Who killed economic growth?
“The finance, insurance and real estate (FIRE) sector has emerged to create “balance sheet wealth” not by new tangible investment and employment, but financially in the form of debt leveraging and rent-extraction. This rentier overhead is overpowering the economy’s ability to produce a large enough surplus to carry its debts. As in a radioactive decay process, we are passing through a short-lived and unstable phase of “casino capitalism,” which now threatens to settle into leaden austerity and debt deflation.”
The new book by economist Michael Hudson should be mandatory reading for anyone dealing with the global and European crisis.
Table of contents and an overview of the book on michael-hudson.com
“As some of the world’s top central bankers start to admit that standard quantitative easing is failing to generate growth, previously taboo ideas can be mentioned, including QE for the People, discussed here last week.” (Source: Reuters Blogs)
Interesting and provocative ideas from financial economist Anatole Kaletsky (author of "Capitalism 4.0"). Give the new money created by central banks to the people instead of the banksters.
The problem with Kaletsky’s potentially popular solution for our Great Depression? The money given to people should be used for new consumption. As in his famous book, Kaletsky does not question economic growth, the consumer society, inequality or capitalism. Worth reading nevertheless.
"… in any given year, maybe one per cent of the financial economy has anything to do with the production of real, nonfinancial goods and services.
The rest? It consists of ways to make money from money. That seems innocuous enough, until you remember what money actually is. Money is not wealth; it’s a system of abstract, culturally contrived tokens that we use to manage the distribution of real goods and services. A money system can simplify the process of putting energy, raw materials, labor, and other goods and services to work in productive ways; that’s the reason we have money, or rather the reason most of us are prepared to discuss in public. That’s not what the other 99% of the world’s financial assets are doing, though. They are there to ensure that the people who own them have disproportionate, unearned access to real, nonfinancial goods and services." (Source: Energy Bulletin)
John Michael Greer’s brilliant and must-read analysis of the current financial crisis with some very valid lessons and predictions for the Eurozone. Here are a few more interesting extracts from this fascinating article:
“Since the crisis dawned in 2008, EU policy has demanded that every other sector of the economy be thrown under the bus in order to prop up the tottering mass of unpayable debt that Europe’s financial economy has become. As banks fail, governments have been strongarmed into guaranteeing the value of the banks’ worthless financial paper; as governments fail in their turn, other governments that are still solvent are being pressured to fill the gap with bailouts that, again, amount to little more than a guarantee that even the most harebrained investment will not be allowed to lose money. “
“the financial industry has done a superb job of convincing people that what they do is important to the rest of us. It’s true, to be sure, that having currency in circulation makes economic exchanges easier, and the kind of banking services that people and ordinary businesses use are also very helpful, but governments used to produce and circulate currency without benefit of banks until fairly recently, and banking services of the kind I’ve just mentioned can be provided quickly and easily by a government that means business…”
“So the downside of any financial crisis, however grandiose, can be stopped promptly by proven methods. Then there’s the upside. Yes, there’s an upside. That’s the ultimate secret of the financial crisis, the thing that nobody anywhere wants to talk about: if a country gets into a credit crisis, defaulting on its debts is the one option that consistently leads to recovery. “ (see Argentina and Iceland).
"The EMU will eventually (that is, within the next few months) either have to endure a monumentally costly break-up, or forge a tighter fiscal union with “debt-pooling,” joint budgets and tax systems, and guarantees against default. The domestic political resistance to the latter would be prohibitive in several nations—and even a single country might be able to torpedo collective efforts to centralize and shore up the euro system. It’s just remotely possible that European political and financial leaders might be able to cobble together one short-term fix after another until some sort of workable long-term solution can be agreed upon—but that’s only possible if there is enough economic growth in the interim to keep all wheels on the tracks. Without growth, it’s difficult to see how a train wreck can be averted." (Source: Energy Bulletin)
Richard Heinberg provides a different and much more convincing narrative of the European debt crisis from the perspective of Europe being the first continent to taste the bitter pil of a post-growth society.
“As Europe’s debt crisis intensifies, top officials say the continent urgently needs a central authority with the financial muscle to fix its broken banks.” (Source: Business Week)
The flight forward for EU leaders: a "banking union". Finally full recognition that THIS European "Union" has always been a Europe for capital, never for labour and citizens. As long as things went well, we got the crumbs from the tables of the rich, now they send us back to the poor houses and debtors’ prisons.
In the end, this Europe will end up on the ash piles of history. Then it will be time for Project Phoenix Europe.
“Most of our credit system does not support economic growth in the sense of supporting transactions in goods and services,” he explains. “Most of our finance system, most bank loans, support increased asset prices, which have a number of detrimental effects on the economy.”
"The threat to growth today is not a shrinking of the financial sector, but it enormous size.”
Must-read article on the web site of the Institute for New Economic Thinking underlining the need for a radical reform of the financial sector.