- Pesmerga
- Aug 1, 2005
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So nice to eat you
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Left Bloc and CDU are Portuguese national parties, I believe.
They are. CDU is the Coligação Democrática Unitária, which is a union of the Portuguese Communist Party and the Greens, who are situated in the GUE/NGL and G/EFA blocs of the European Parliament respectively. The Left Bloc (Bloco de Esquerda) are a left-wing party who are also in GUE/NGL.
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Apr 15, 2014 12:33
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May 22, 2024 10:30
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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How much direct interaction do European civil servants have with MEPs?
I'm sure Junior G-man knows better than me, but from what I do know, it's quite substantial, particularly as regards interaction between the European Commission (which really constitutes the bulk of the EU civil service), and MEPs. If you've got one body with the right of legislative initiative, and two other bodies that are involved in approving, modifying or rejecting legislation, a certain level of coordination is essential to making sure everything works.
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Apr 28, 2014 13:37
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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On this topic, there was an article last week about Van Rompuy, and his attitude towards the election of the President.
European Voice posted:Van Rompuy casts doubt on value of Spitzenkandidaten
The president of the European Council says voters know decisions are taken by national governments as well as by MEPs in the European Parliament elections
Some MEPs have reacted with predictable indignation to remarks by Herman Van Rompuy, the president of the European Council, that cast doubt on the value of the Spitzenkandidaten exercise by which European political parties are putting forward candidates to be president of the European Commission.
In an interview with German newspaper Süddeutsche Zeitung that was published over the Easter weekend (19 April), Van Rompuy said that turnout in European Parliament elections was low because citizens knew that decisions were taken by national governments as well as by MEPs. “This difference between the Parliament and those who really decide is very clear to citizens,” he said.
Van Rompuy declared that he was not “an enthusiastic supporter” of the idea of Spitzenkandidaten, put forward by European political parties ahead of the European Parliament elections. He doubted whether the choice would influence the behaviour of voters since election results depended on “national sensitivities” that had nothing to do with Europe or with candidates from the political groups.
Hannes Swoboda, leader of the Socialists and Democrats group of MEPs, responded via Twitter that the interview was “scandalous”. “Clearly he [Van Rompuy] doesn't understand democratic process of #EP2014 elections” he said. Andrew Duff, a British Liberal MEP, referred to Van Rompuy's “contempt” for MEPs.
Swoboda's reaction was hardly a surprise. He is (until the elections) leader of a group whose candidate for Commission president, Martin Schulz, has run a more effective campaign than many observers expected. Whereas Van Rompuy is a Christian Democrat, whose political party has put forward Jean-Claude Juncker, a former prime minister of Luxembourg.
Van Rompuy's criticism challenges one of the main arguments made by proponents of the Spitzenkandidaten exercise, namely the idea that a contest between political rivals for the Commission presidency would invest the elections with greater importance and boost turnout.
Interestingly, Van Rompuy did not acknowledge that the Parliament's powers have increased since the last European Parliament elections in 2009. The same Lisbon treaty, that created the position of European Council president that he now occupies, also gave MEPs greater decision-making powers, most notably the power to reject international trade treaties. By implication, Van Rompuy is saying that citizens have not noticed and that the Lisbon treaty changes will not be enough to improve turnout.
Swoboda and other MEPs were already suspicious that Van Rompuy was not committed to the Spitzenkandidaten exercise. They suspect him of preparing the ground for the European Council to ignore the results of the Parliament elections when it nominates the next European Commission president. Van Rompuy has called an informal dinner of EU leaders on 27 May, two days after the results of the elections are known to begin discussions on the nomination. When that meeting was announced, MEPs saw it as an attempt to pre-empt the Parliament's choice.
Whatever his motives, Van Rompuy is surely right to observe that the credibility of the Parliament requires an improved turnout. Even if EU leaders followed the Spitzenkandidaten process to the letter and accepted one of the official candidates of the political groups as president of the Commission, if turnout in the election falls, then the Parliament will be damaged. Equally, if the Spitzenkandidaten process is not followed, then, as Joseph Weiler, president of the European University Institute, pointed out in European Voice edition of 10 April, the reputation of the Parliament will suffer.
A further decline in voter turnout will weaken the Parliament, as my colleague Tim King argued in his speculation as to the different scenarios that might follow from the elections.
It may be a little early to judge the success of the Spitzenkandidaten exercise. The candidates have yet to make a Europe-wide impact, but the election campaigns are still in their early stages. A debate between the candidates for the Commission presidency will be held next week (28 April) and further debates will follow before the 22-25 May elections. a difference. But Van Rompuy is surely right to point out that the Spitzenkandidaten exercise is no panacea for the EU's problems, which will be made much worse if voter turnout suffers a further decline.
Courtesy of European Voice - http://www.europeanvoice.com/article/2014/april/van-rompuy-causes-a-stir/80615.aspx
Really, it's essential that as many European Union citizens turn out to vote as possible. If the European Parliament is going to be seen as a legitimate player in European politics, and indeed, to raise the quality of the MEPs and their active participation in policy making, increased public involvement and scrutiny is one of the only ways to ensure this.
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Apr 28, 2014 14:58
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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You can always look at doing a master's or other postgraduate at the College of Europe which is supposedly a very good way into sneaking your way in the door. Competitive and expensive though.
Definitely a great way of getting in, it's informally called the 'Commission training school' for a reason. It's very heavily focused on policy and works with the assumption the people there are planning on that career path. They generally say that if you've got a genuine interest in the European Union and how it works, you go for the College of Europe if you want to run it, and the European University Institute if you want to study/criticise it.
Lemon Drizzle posted:Van Rompuy does kind of have a point - how many European citizens have even heard of Schultz or Juncker, never mind actually wanting one of them to have arguably the most powerful job in EU politics?
Sorry, just saw this as well. He does have a point, but the question is why he is making it. There's a certain level of anti-populist style sentiment he's demonstrated in the past, which while reasonable when referring to more extremist elements such as Golden Dawn, for example, in his case it seems to be heavily influenced by the Belgian political system and all its troubles. As such, he doesn't seem to have much time for parliamentary bodies from what I can see, and besides, it's pretty bad form for the ostensible head of the EU to be talking down the importance of one of its key institutions, essentially referring to them as powerless and unimportant, particularly given the ordinary legislative procedure of the EU now includes codecision by the Parliament. And rumour has it that the Commission and Council were more than a little irritated by the sudden relevance of the Parliament when it rejected the Anti-Counterfeiting Trade Agreement.
Pesmerga fucked around with this message at 16:08 on Apr 28, 2014
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Apr 28, 2014 16:04
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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Pesmerga, are you based in Brussels too?
I'm not, but I do study the EU. I go there for interviews now and again, and funnily enough my current work is on lobbying processes within the European Union (although predominantly focusing on the Commission rather than the Parliament). I also know quite a few people who now work for the Commission and the EU legal service.
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Apr 28, 2014 16:16
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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Hey so I'm a European right, and I just read your OP, and this guy sounds alright. So how do I vote for him?
Oh. Oh right... Well then. It's not really a democracy is it?
By this benchmark, can anything really be a democracy?
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May 1, 2014 12:40
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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You could encourage engagement in politics and strengthen civil society in your country in order to protect your rights and hold your politicians accountable, instead of putting your faith in an external party which is even less accountable to your country's electorate.
The public's lack of enthusiasm for the EU project is directly tied to the EU's visible failures and its lack of noteworthy accomplishments. But there's a great quote from the current president of the European Commission related to this sentiment: "Decisions taken by the most democratic institutions in the world are very often wrong."
You imply that Reagan might not have been the best US president, despite what his popularity might indicate. But so what? It doesn't matter if a democracy makes what you or I think is the "right" or "wrong" decision. What matters is whether people are in charge of their own country or if a bunch of equally incompetent but unelected technocrats are.
What is the basis for your statement that the EU lacks noteworthy accomplishments?
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May 4, 2014 14:13
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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The northern european public will not accept Eurobonds, it's really that simple. Yes the German SPD was in favor of it for a certain time, but as soon as election time got closer they did not want to talk about it at all.
I dont think that the people in the EU are ready for an even closer integration. They still feel like they are German, French, Greek as their primary identity and are not willing to allow further centralizing of the EU. They dont want to pay for the southern states, because they feel that they lived beyond their means and the austerity measures are the only way for them to get back onto the right track. Thats why EU and Euro sceptic parties had so many victories on Sunday.
In my opinion it is important that the will of the people is respected and they dont want more EU they want less.
Furthermore it is comical to me that southern europe still does not get that austerity is the only way. The idea of "lets spend more and it will get better" is absurd, its throwing good money after bad. If spending more money than you can afford is such a brilliant policy, why is Germany, who never used fiscal policy for anything but a strong DM, the strongest economy and not Greece or Spain, who spend so much more?
Yeah, this isn't really true at all. Germany was frequently over the debt to GDP ratio (which was largely ignored), and its current policies of austerity for everyone is pretty reflective of a 'beggar thy neighbour' approach to the fiscal crisis that has been criticised by both the IMF and Commission as largely self-defeating.
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May 28, 2014 07:24
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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Is this a joke post or something? I don't need to give a poo poo about the guy on the other side of a trade when I buy stocks to pay fair value, just like investors don't need to give a poo poo about the national economy for the assets they buy from the government to be fairly priced.
Sounds like you could outsmart these idiots and make a lot of money???
Vulture capitalism, something to be proud of internationally.
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May 28, 2014 18:05
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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That's probably going to work; the UK is too important and too pissed off to give a lovely posting too. They're also losing Ashton as the EU foreign affairs chief, so they're gonna have some vouchers to cash in.
I wonder who's going to get shafted with the shithole DG's like 'consumer rights'.
They could give the UK Enterprise and Industry, it sounds important and keeps them away from IM&S and Economic Affairs, both of which I'm sure the UK would like to have.
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Jul 15, 2014 11:36
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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Mentioned this in the UK thread, but I find that leak somewhat dubious. In particular, the apparent disappearance of DG Internal Market and Services, arguably one of the most important positions in the Commission, is very strange. I could see a division between internal market and financial services, but for internal market to seemingly disappear makes this seem either: -
a: highly unlikely to the point of being absurd, or;
b: a complete loving disaster, with huge overlaps between some DGs, the complete disappearance of others, and no seeming coherency behind the design.
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Sep 4, 2014 18:34
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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The grauniad has an interesting take on Juncker's appointments: he's basically saying "if you have a problem with [thing], fix it" to Europe's loudest whiners. France moans about wanting the regulations on budget deficits relaxed and its troubles with hitting the 3% ceiling, so their commissioner is put in charge of economic and monetary policy; Hungary is run by neo-fascists who want to create an "illiberal" society so they get put in charge of human rights; Greece complains that migrants use it as an entry point for the rest of the EU and other member states don't share the burden so it gets put in charge of migration and justice; the Dutch complain about EU overreach and the failure to delegate decision-making to the national governments so they get put in charge of subsidiarity; and the UK has had running battles with Brussels for years over regulation of the financial services sector so it gets put in charge of the continent's banks.
http://www.theguardian.com/world/2014/sep/10/european-commissioners-jean-claude-juncker-bluffs
Luddites complain about new-dangled steam technology, put in charge of technological development.
Or, maybe we could go with South Africa has mild problem with black people, put in charge if equality.
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Sep 10, 2014 19:54
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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Once you realise that current tax codes wage structures are like Swiss cheese full of holes (exceptions and special grants), starting over with a flat tax single equal income irrespective of type of work and no exceptions looks like a pretty good idea.
The results are the same as with any tax system system of income: some win, some lose; lots of complaining.
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Jan 26, 2015 10:42
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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Aren't the "Independent Greeks" a right-wing populist party? Well I guess it's the coalition of the populists in Greece now.
I hope they bring up the "German war reparations" again, just to have Mr. Schäuble laugh in their face.
With your views on debt, I would've thought you'd like war reparations.
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Jan 26, 2015 11:55
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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Nope, the London Agreement of 1953 deferred them and than the 4+2 Treaty of 1990 made no mentioning of them, which means they no longer exist. You can make an argument that the Four Powers sold Greece out in that respect, but who cares. They decided to not declare it a final "peace treaty" to circumvent issues like the further war reparations or the fact that the German constitution (the Grundgesetz) would have to be rewritten in that case.
Ah, so it's a case of legalism then rather than a stance on debt? In that case, I expect you to be totally cool with a rewrite of the bailout conditions for Greece. Sure, it may sell out Germany in that respect, but who cares.
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Jan 26, 2015 12:20
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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They have not done all reforms outlined in the referendum and it's not the only factor. Additionally it's important to understand that those reforms take time to really take effect. Oh and the fact that there is a lot of insecurity about the future political direction of Greece probably doesn't help either. You can see the benefits of such reforms in Germany, which was the ill-man of Europe in the late 90s and early 2000. It's the achievement of Gerhard Schröder and Franz Müntefering that they did the Hartz reforms as part of their Agenda2010. Their votes of course deserted them before the benefitial effects of the reforms could be observed and now Mutti takes all the credit. Even though it pains me to give the SPD credit, they deserve it (and todays SPD has abandonend their enlightened ways anyway).
So public sector jobs pay for them self because they are paying taxes? Sorry that doesn't make any sense.
If you mean you want to tax other people and than use that money to employ people, sure that works, but it doesn't really increase the GDP, unless the person you tax doesn't spend or invest the money in your country.
You keep spouting competition and austerity like a mantra. 'Competitive' in comparison to what? Germany? How can a country the size of Greece (in terms of population, industrial base, and all sorts of other indicators) render themselves 'competitive' in comparison? And your approach to austerity, irrespective of the negative human impact, seems to be 'it would've worked too, if only they did it enough/properly/recovery was just around the corner'. Schumpeter made exactly the same sort of comments about the Great Depression in the US as well - the austerity drive they went on would have worked, if only they'd stuck at it and if people had done it properly. He also saw the Neal Deal as being a huge moral failing. Do you feel the same way about that too?
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Jan 26, 2015 20:22
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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Restructuring in the form of extending the maturity of the debt, cutting the interest rate, and maybe introducing further interest payment holidays was put on the table by the creditors right at the beginning. Syriza rejected them all because it prefers to go on about writedowns and a grand European debt conference.
Also, this happened on the BBC last night:
https://www.youtube.com/watch?v=BiIO4YciewU
Yikes.
You're saying yikes because of how bad the interviewer is, right?
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Jan 31, 2015 10:20
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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Both how bad the interviewer is and how Varoufakis clearly doesn't know how to deal with a hostile interviewer. He's trying to treat it like an academic - funny little digressions, longwinded explanations and whatnot - when he needed to be far more like a regular politician. He and Syriza more generally also need to get a lot better at dealing with the media and getting their message across because right now they're failing horribly. For example, he says his comments about the Troika were misinterpreted and that Greece is happy to deal with the Troika, it just doesn't want to deal with a specific subgroup of Troika auditors charged with overseeing the progress of the mandated reforms. Here are a selection of headlines:
Greece says will not cooperate with 'troika' or seek aid extension - Reuters
Athens Finanzminister gegen Kooperation mit Troika - Die Welt
Greece will no longer deal with ‘troika’ - FT
La Grèce ne veut plus discuter avec la troïka - Libération
Good narrative control there, chap!
Narrative control is an incredibly difficult thing to achieve in these circumstances. Journalists are not neutral arbiters of information, and will spin a headline in any way that they can for either maximum controversy or to push a particular agenda.
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Jan 31, 2015 10:46
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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Yeah, about that.
Michael Hudson and Jeffrey Sommers in the Financial Times posted:Latvia is no model for an austerity drive
Austerity’s advocates depict Latvia as a plucky country that can show Europe the way out of its financial dilemma – by “internal devaluation”, or slashing wages. Yet few of the enthusiastic commentators have spent enough time in the country to understand what happened. Its government has chosen austerity, its people have not. Finding no acceptable alternative, much of the labour force has elected to emigrate. This is a major factor holding down its unemployment rate to “just” 15 per cent today.
Latvia is not a model for austerity in Greece or anywhere else. Both the impression that neoliberal policy has been a success and the claim that Latvians have voted to support this failed model are incorrect.
Latvia’s one year of solid economic growth since its economy plunged by 25 per cent in 2008-10 is billed as a success. Then, unemployment soared above 20 per cent as the shutdown of foreign capital inflows (mainly Swedish mortgage loans to inflate its real estate bubble) left Latvia with a deep current-account deficit. It had to choose between devaluation or maintaining the euro peg.
It chose the latter in order to proceed towards euro accession. To meet the eurozone criteria it cut public sector wages by 30 per cent, driving down overall wage levels and consumption to match its low labour productivity. The doctrine was that this shock therapy and poverty would soon restore prosperity.
What enabled Latvia to survive the crisis were EU and IMF bailouts – whose repayments will soon fall due. Relatively low public sector debt (9 per cent of gross domestic product at the start of the crisis) also provided some protection from bond traders. Latvia’s problem was mostly private sector debt, especially mortgage debt, which is secured not only by property but by the personal liability of entire families of joint signatories. The bank insurance agency insisted on this measure as it saw unaffordable housing prices being inflated by reckless bank lending. (Its job was to protect the banks, not the economy.)
The resulting austerity programme is anything but popular. Latvia’s parliament often polls approval ratings in the single-digits. Yet the government has survived two elections. How is one to read this?
Chiefly by ethnic politics. [The biggest party opposing the austerity programme (Harmony Centre) largely represents ethnic Russians and had no chance of winning given its focus on rights for Russian speakers. The smaller parties run by post-Soviet oligarchs also are seen as being in league with Russia and are widely resented for fiscal imprudence during the boom years, when oligarch-controlled parties were part of the governing coalition. So the only political force left is the “austerians”. While most voters dislike their economic policy, a majority are convinced that they are best able to resist Russia’s embrace. All other issues come a distant second for Latvian voters.
That said, Latvians have protested against austerity. In January 2009, in the dead of winter, 10,000 protested in Riga. Teachers, nurses and farmers held demonstrations of their own. The police were called to suppress protests over the closure of a hospital. After these protests subsided, Latvians resigned themselves and began to emigrate. Demographers estimate that 200,000 have left in the past decade – nearly 10 per cent of the population – at an accelerating rate that reflects the austerity being inflicted.
Why have so many left Latvia if it is such an economic success, with such popular support for austerity as the advocates claim? Birth rates fell during the crisis – as is the case almost everywhere austerity programmes are imposed. Only now is Latvia seeing the social effects of austerity. It has among Europe’s highest rates of suicide and of road deaths caused by drink driving. Crime is high because of prolonged unemployment and police budget cuts. There is less accessible, lower-quality education and there is a soaring brain drain alongside blue-collar emigration.
The moral for Europeans is that a Latvian economic and political model can work only temporarily, and only in a country with a population small enough (a few million) for other nations to absorb émigrés seeking employment abroad. Such a country should be willing to have its population decline, especially its prime working-age cohort. In Greece, this could only worsen an already serious demographic challenge.
Politically, it helps to be a post-Soviet economy with a fully flexible, poorly unionised labour force. Above all, the population needs to put an almost blind faith in “free market” central planners. Ethnic divisions can distract voters from complaints against austerity. Only under these political conditions can austerity be considered a “success”.
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Jan 31, 2015 23:25
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- Pesmerga
- Aug 1, 2005
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So nice to eat you
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Interesting commentary on the ECB's actions last night.
Coppola Comment posted:The ECB has abruptly announced withdrawal of the "waiver" under which it was prepared to accept Greek sovereign bonds as collateral for liquidity. This created a considerable Twitter storm, with lots of angry people saying the ECB's action was beyond its mandate and far too precipitate: it should at least have waited for the Greek Finance Minister, Yanis Varoufakis, to meet his German counterpart, and it should not be acting as if the bailout programme was ended when negotiations were still proceeding. I admit, I was one of those people.
And I stand by my views. The ECB is acting far beyond its mandate in seeking to influence negotiations between Eurozone member states regarding the terms and conditions under which member states lend to their distressed partners. It has no business interfering in fiscal policy: if the Greek government decides to run 1.5% fiscal surpluses instead of 4.5%, hike minimum wages and create lots of government jobs, it is none of the ECB's business. The ECB's monetary policy failures are legion: it should put its own house in order, rather than interfering with the conduct of fiscal policy. And worse, its persistent interference in fiscal policy is a clear conflict of interest, as the Advocate General of the European Court of Justice noted in relation to the OMT programme. It should not be a member of the Troika at all, and certainly should not use changes in fiscal policy by a democratically-elected sovereign government - even one that has inherited an economy in tatters with a massive debt burden - as justification for limiting liquidity to that country's banking system. Monetary policy should never be used to serve fiscal or political ends. Not ever.
OK, rant over. I've thought about this a bit more now. Something doesn't quite add up.
Firstly, there is the timing. The Syriza government has now been in power for ten days. Why did the ECB wait until now to pull the plug on the waiver? It might simply be that today was the first planned meeting of the Governing Council. But that doesn't exactly suggest that this is an urgent problem - so why is the ECB doing this now, given that the bailout extension is not until 28th February and Greece has already asked for time to come up with an alternative plan?
Secondly, there is the timing. (Yes, I mean that). Varoufakis met ECB chief Mario Draghi yesterday and he meets German Finance Minister Wolfgang Schäuble today. In between those two meetings the ECB pulled the waiver. Why? Well, Schäuble is openly hostile to Varoufakis's ideas of debt relief and an end to austerity, while Draghi has so far kept very quiet (though his deputy Vitor Constancio has been more forthright). Schäuble will no doubt be looking for explicit backing from the ECB. Should this action be taken as the ECB's governing council signalling whose side it is on?
Of course, today's action is not pulling funding from Greek banks, since they can still pledge other assets at the ECB. But all funding using any form of Greek sovereign debt must, from 11 February, be obtained from the Hellenic Central Bank under the Emergency Liquidity Assistance (ELA) scheme. And the ELA scheme itself is under the control of the ECB and reviewed bi-weekly. The ECB could pull it at any moment.
Varoufakis's comment is undoubtedly a reference to the fact that pulling ELA from Greek banks would cause their sudden disorderly collapse. The ECB has used this trick before: it threatened to pull ELA from Irish banks in 2010, and it actually pulled ELA from Cyprus's Laiki Bank and the Bank of Cyprus, forcing immediate closure and restructuring. This second piece of brinkmanship resulted in the worst bank bailout decision in the history of the planet, which was (fortunately) subsequently overturned by the Cypriot legislature. Undermining deposit insurance is almost criminally insane.
But pulling ELA from Greek banks would have a much larger impact. Germans fantasise that ELA can be pulled without systemic impact, but this is not remotely credible. The impact would be smaller than it would have been in 2010, but it would still be highly destabilising to the global financial system. Such an action would greatly enhance the ECB's reputation for incompetence and probably end the careers of its senior officials.
If the collapse of the Greek banks precipitated the disorderly exit of Greece from the Euro, there would be significant losses for the ECB itself, the other Eurozone governments and probably the IMF. The impact on the European economy would be devastating and it would send shock waves around the world. And it would set an important precedent. If one member state can leave, so can others. How can the ECB have any credibility as guardian of the Euro if it is seen to be actively forcing out member states?
If the ECB forced a banking collapse by pulling ELA, Greece might try to limp on within the Eurozone as Cyprus did, using capital controls to prevent capital flight. But this would be the worst possible situation for Greece and it seems highly unlikely that the Greek government would even consider it. Greece's economy is already in worse shape than Cyprus's was at the time of its banking collapse, and Cyprus's banking system was crippled but not destroyed by the restructuring. Greece's banking system would be wrecked beyond repair. Greece would have no choice but to create a completely new currency and reflate its economy directly via the central bank. That means leaving the Euro, at least temporarily.
So as Varoufakis said, the ECB's threat to pull ELA appears to be empty. I said on Twitter that I thought the ECB's action was sabre-rattling. Karl Whelan, it seems, thinks so too. "Relax, it’s no big deal. Just some muscles being flexed." he says at the start of this blogpost. But whose feathers is the ECB trying to ruffle? Lorcan thinks the target is Greece:
"So, all together, the move from the ECB should have very little immediate effect on the Greek banks, provided there is not a complete loss of confidence in the Greek banking system in the coming days, and should be viewed as what it is: The ECB is pressuring the Greek government. Greece's finance minister, Yanis Varoufakis, has been agitating for Greek debt relief since his appointment after January's election. Today the ECB gave its answer to his moves. If the Greek government does not agree to reenter a program, the ECB will not allow its debt to be used as collateral."
I don't believe it. If this is the ECB's intention, it is playing right into Varoufakis's hands. It's as if a chess player deliberately chose to adopt the exact game strategy that his opponent, six months before, had published in a chess magazine. Draghi is every bit as good a game theorist as Varoufakis, and the two men met before the ECB's decision. It's just not credible that Draghi would unintentionally adopt Varoufakis's game strategy.
Is it possible that this is not an antagonistic move at all, from Greece's point of view? Could it be that far from kicking Greece, the ECB's real target is Germany? For some time now, it has been evident that Draghi is no fan of Germany's "Austerity Forever" stance. Pressuring Germany into negotiating might be his intention. But if so, it is a highly risky strategy. Pulling the waiver is likely to increase capital flight from Greece and raise Greek bond yields still further, putting further pressure on Greece's fragile finances. How exactly would this help Greece?
Alessandro Del Prete helpfully sent me this piece by Jacques Sapir which explains how weakening Greece's position could actually strengthen its hand (my emphasis):
"In this strategic game, it is clear that Greece has deliberately chosen the strategy qualified by Thomas Schelling, one of the founders of game theory, but also of nuclear dissuasion, as « coercive deficiency »[5]. In fact, this term of « coercive deficiency » was imagined by L. Wilmerding in 1943 in order to describe a situation where agencies enter into expenses without prior financing, knowing that morally the government will not be able to refuse funding them [6]. Schelling’s contribution consists in showing that this situation can be generalized and that a situation of weakness can reveal itself to be an instrument of coercion upon others. He also showed how it can be rational for an actor knowing himself to be in a position of weakness from the start, to increase his weakness in order to use it in negotiation. Reversing Jack London, one can speak in this instance of a “strength of the weak.” [7]. It is in this context that we must understand the renunciation by the Greek government of the last slice of aid promised by the so-called « Troïka, » amounting to 7 billion euros. Of course, having rejected the legitimacy of said “Troïka, » it could not logically accept to take advantage of it. But, in a more subtle way, this gesture is putting Greece voluntarily at the edge of the abyss and demonstrates all at once its resolve to go the bitter end (like Cortez burning his ships before moving up to Mexico) and to increase the pressure on Germany. We are here in a full blown exercise of « coercive deficiency »."
This explains Varoufakis's "Do ahead" (he probably meant "Go ahead"). He stands at the edge of the cliff, and the ECB says "Do what we want or we will push you over". His response: "Go on then, push".
It must be remembered that this game is being played on a global stage. The US President, Barack Obama, has openly sided with the Greeks, warning that "You cannot keep on squeezing countries that are in the midst of a depression. At some point there has to be a growth strategy in order for them to pay off their debts and eliminate some of their deficits". And the UK's George Osborne, while calling for the Greek finance minister to "act responsibly", also criticised the Eurozone for its lack of a coherent plan for jobs and growth. Calling for the two sides to strike a deal, he warned that the standoff between Greece and the Eurozone is the "greatest risk facing the global economy". This seems like hyperbole to me, given the continuing crisis in Ukraine and military game-playing in the South China Sea, not to mention the Islamic insanity in the Middle East. But it all helps the Greek cause.
Varoufakis is gambling that the Eurozone, and more particularly Germany, will not dare to push him off the cliff because of the consequences for international political relations. If Germany was seen to force Greece out of the Euro by refusing to negotiate, it would become an international pariah. There are already voices reminding Germany of its own debt forgiveness in 1953, and anti-austerity movements in many other Eurozone countries would only be encouraged by Germany and/or the ECB looking like bullies. Forcing Greece out of the Euro could result in the disorderly unravelling of the whole thing.
I may be completely wrong, but this looks far more plausible to me than a simple explanation that fails to take account of the signals given by both Varoufakis and Draghi. In which case, Schäuble should beware. His position is nowhere near as strong as he thinks. He is dangerously close to the cliff edge himself. If Germany pushes Greece over the edge, Greece may well take Germany down with it.
http://coppolacomment.blogspot.co.uk/2015/02/what-on-earth-is-ecb-up-to.html
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Feb 5, 2015 11:08
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- Pesmerga
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From the above, I like how she says
When in fact this is ENDING the use of monetary policy for fiscal and political ends. Find one other central bank in the world that accepts junk rated collateral in exchange for bank funding.
If you believe this, I have some sub-prime mortgages to sell you.
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Feb 5, 2015 11:25
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Samaras seems to be making a speech in Parliament that indicates that New Democracy think they're going to be back in power soon...
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Feb 5, 2015 12:45
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- Pesmerga
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Germany does not want to change the agreements, Greece wants.
Germany is not trying to intimidate the Eurozone to change agreements that everyone agreed upon, Greece is.
Germany is not getting money from the Eurozone, Greece is.
It's pretty clear that Greece is trying to bully it's way to more money.
Poor plucky Germany, if only it would rise up to face the threats of these European oppressors.
While wearing ties, obviously.
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Feb 5, 2015 12:50
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We go back in time and change syriza's campaign to focus exclusively on destroying corruption and vested interests in the greek economy. Once elected, they seek a short-term bailout extension, to be reviewed in a year's time, taking the concessions that europe was putting on the table from the beginning. They then implement the anti-evasion tax collection measures that they believe will yield an extra €12 bn of revenue over the year. At the next yearly review, they say "well, you've had a year to get to know us, we've shown that we're serious about reforming the Greek economy and stamping out corruption, here's what we'd like to do with the extra revenue we've collected, and here are some other economic reforms we'd like to make now that we've succeeded with the tax system."
The sad thing about this is that with a bit of patience, Syriza could've had most of what they wanted but because they tried to do everything all at once without building up any credibility first, they've shoved their country right onto the edge of the cliff.
When princes defaulted on their debts to lesser banks, ruined bankers sold their wives and children into slavery and opened their own veins. When princes failed to repay the Iron Bank, new princes sprang up from nowhere and took their thrones.
Despite disagreeing with you on some points, your fiction is one of the highlights of this thread.
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Feb 5, 2015 12:56
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He is just quoting A Song of Ice and Fire (Game of Thrones)
I know.
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Feb 5, 2015 13:01
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Giant German fatcats lend Greeks money and sell them BMW's and act surprised and morally outraged when they can't pay them back and insist they implement operation hairshirt . News at 11.
Merkel makes a pained expression and a triangle with her hands. An Excellent Chancellor.
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Feb 5, 2015 13:08
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Schauble is like a freight-train, only one direction, there is no alternative always forward always forward. I wonder if he stares in blank comprehension if he's given semi-skimmed milk, just repeating 'but it is supposed to be full-fat. Full-fat. I committed to full-fat, you committed to full-fat' for the next three days.
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Feb 5, 2015 13:27
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Hahahahaha, 'but we will send 500 German tax officials to Greece'. The guy has all the tact and subtlety of a hammer to the face.
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Feb 5, 2015 13:29
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What is really interesting is how black and white Greece sees the world.
This is hilarious coming from you.
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Feb 5, 2015 21:05
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Well, the Troika gave Greece certain freedoms because it is a free country and they are not the elected government. The Greeks could have elected a party that goes "we like what the Troika says and we will focus more on taxing the rich/broadening the tax base" but they didn't. Thats not the fault of the Troika but the fault of the people in Greece.
Does austerity work?
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Feb 6, 2015 10:29
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- Pesmerga
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Why do some people think 'being more competitive' is a magical fix-all? 'More competitive' is a context dependent comparative assessment, and if you look at the EU as a whole, how can Greece be competitive against nations like Germany, France and the UK, and even against Spain and Italy? Competitive in what? And in what way, given the shackles of Euro membership? If everyone is so concerned about competitiveness, maybe Germany should leave the Euro. With Germany's trade surplus largely being funded by it, Germany should find another way to be competitive - it would immediately up the competitiveness of countries like Greece. Are you all for it?
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Feb 10, 2015 08:24
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Competitive = produce enough goods or services of value to pay for the things you consume.
That's not competitiveness. Competitiveness is being able to produce goods or services desired by trading partners, which may relate to quality, but more likely relates to price. Ultimately, competitiveness in terms of production is about economies of scale - Greece cannot compete with Germany in terms of industrial output. If it wanted to try, it would need significant spending and investment, neither of which the Troika seem willing to commit to. If the OECD is saying that there's too much focus on raw GDP and that some more intelligent spending policies are needed, something is up.
quote:Pretty simple and something every country should be doing. If you guys insist Greece will never be able to produce anything of value, then they should just consume less. Of course, it's not true that Greece will never be able to produce anything, and most of you are just making excuses for why Greece shouldn't have to change anything.
If the Eurozone was a proper fiscal union your corrupt government would have been taken apart and the public sector reforms would just have happened sooner, because there's no way a European electorate would have accepted what was going on in Greece. There would also have been transfers OUT of the overheating Southern economies into the Northern economies from 2003-2009. I'd love to have seen your posts in that alternative universe complaining about how you have to give away money to the rich Germans. I'm guessing your idea of a fiscal union is basically "less conditions for bailouts, no reforms for Greece" aka "fiscal union in bad times, leave us alone in good times".
More likely what happens to Greece if it tries going alone will just give more ammunition to the rest of the Eurozone when another country comes to ask for a bailout. "Oh, you don't want our conditions? Ok, well you can always do what Greece did..."
Also, thanks partly to Syriza, all those parties are already surging in the polls. Our electorates just LOVE giving more money and debt relief to the Greeks.
If they had a problem with corruption, they wouldn't have been backing New Democracy so hard. Unfortunately Northern Europe has bought into the myth of this north-south divide that doesn't really exist. You want to see an impressive collapse, just wait until people really start looking at the Dutch housing market. Belgium isn't exactly a success story either.
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Feb 10, 2015 12:25
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I like the tone of basically everything Varoufakis says.
That probably means he comes across as an arrogant, stilted academic to most people.
I like him but I may also be an arrogant, stilted academic. Also, Gaussian, if you think that getting orders from home saying not to ratify is at all unusual in international relations, this must be the first time you're following intergovernmental agreements.
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Feb 12, 2015 10:42
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I would have said discipline over empathy, myself.
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Feb 12, 2015 13:49
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Fair enough.
That sounds like a compliment to me.
I thought it would.
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Feb 12, 2015 13:59
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I could now list the universal healthcare, the free universities, the murder rate and many other things that are "better" in the eyes of the left, but I'm just going to point to the (shale) oil boom that helped the US with their recovery.
Yeah, drat that universal health care and free universities! And why is the murder rate so low, Europe? It's like you're not even trying.
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Feb 13, 2015 21:13
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Also, don't underestimate the influence of the Bocconi Boys, who wrote the right paper at the right time (despite being absolutely wrong).
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Feb 14, 2015 01:11
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ADBOT LOVES YOU
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May 22, 2024 10:30
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- Pesmerga
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Just quoting the European Commissioner for Economic and Financial Affairs, Taxation and Customs, member of the Socialist party, on the topic of Greece.
In other news: High5s all around for Portugal repaying the IWF loans early.
High5s all round, let's just ignore the human cost.
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Feb 16, 2015 19:43
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Apr 15, 2014 12:33
