The New Editor - Europe

How Germany's EU Partners are Using Blackmail in the EU Crisis

tpelia@yahoo.com (Tom Elia) — Mon, 11 Jun 2012 10:23:00 -0600

A reader sends along a couple of related articles...

From Agence Presse France: (emphasis added)

Ireland wants to renegotiate its rescue plan to benefit from the same treatment as Spain, which looks set to win a bailout for its banks without any broader economic reforms in return, European sources said on Saturday.

Here's a question: if Ireland wants to renegotiate its bailout deal, what about previously bailed out EU partners like Greece and Portugal -- do they get to renegotiate their deals?

Are the troubled EU partners just playing Germany now for the best deal they can get, avoiding the tough choices for themselves? Socialism almost always seems to boil down to other people's money, doesn't it?

Along those same lines, Der Speigel's Jan Fleischhauer writes: (emphasis added)

For Germany, being part of the European Union has always included an element of blackmail. France has been playing this card from the beginning, but now the Spanish and the Greeks have mastered the game. They're banking on Berlin losing its nerve.

France's newly elected Socialist government has just decided to lower the retirement age to 60. From now on, no Frenchman will be forced to work any longer just because it might help kick-start the country's flagging economy. And there's no way the French are going to work as long as their poor fellow Europeans in Germany, whose government is obliging them to labor and toil until age 67.

Blessed France, where the ruthless laws of the economy lose their ability to frighten people bathing in the eternal sunlight of socialism. Granted, this grand nation doesn't produce enough children to guarantee the prosperity of its inhabitants into old age. But in France, something that would elsewhere be viewed as a serious demographic problem demanding tough attention is seen as a mere misunderstanding that the strong arm of the president can simply dispel with the stoke of a pen, should he so desire....

We've now reached a phase in the euro crisis when everyone is trying to feather their own nest at someone else's expense. Hollande is campaigning to have the European Union help the Spanish rehabilitate their banks without involving itself in their business dealings. But, in doing so, he's much less focused on Spain's well-being than on France's. Once the principle stating that countries can only receive financial assistance in return for allowing external oversight has been contravened, one is left with nothing more than a pretty piece of paper to insure against the vicissitudes of economic life.
...

French foreign policy has always been plagued by an obsessive fear of German hegemony over Europe -- and the euro was supposed to be the way to prevent it. It's well-known that French President Fran?ois Mitterrand made his approval of German reunification contingent on German Chancellor Helmut Kohl's acceptance of the common currency.
...

The next stage in the crisis will be blatant blackmail. With their refusal to accept money from the bailout fund to recapitalize their banks, the Spanish are not far from causing the entire system to explode. They clearly figure that the Germans will lose their nerve and agree to rehabilitate their banks for them without demanding any guarantee in return that things will take a lasting turn for the better.

How soon we will see this political dynamic in the US, with financially-troubled states like Illinois and California seemingly almost destined to ask for federal bailouts?

French ex-President Jacques Chirac guilty of corruption

tpelia@yahoo.com (Tom Elia) — Thu, 15 Dec 2011 09:35:00 -0700

From BBC News:

President from 1995 to 2007, [Chirac] was put on trial on charges that dated back to his time as mayor of Paris.

He was accused of paying members of his Rally for the Republic (RPR) party for municipal jobs that did not exist.
...

Jacques Chirac, mayor of Paris from 1977 to 1995, is the first former French head of state to be convicted since Marshal Philippe Petain, the leader of the wartime Vichy regime, was found guilty in 1945 of collaborating with the Nazis.

Chirac should move to Chicago and run for office there. He'd be perfect in so many ways...

Barclays Report Says Italy Is Finished: "Mathematically Beyond Point Of No Return"

tpelia@yahoo.com (Tom Elia) — Wed, 09 Nov 2011 00:03:00 -0700

Zero Hedge has the ominous news.

Is Italy the Next Euro Battleground?

tpelia@yahoo.com (Tom Elia) — Sat, 05 Nov 2011 00:37:00 -0600

From Der Speigel:

Greece is a problem for the European common currency. But Italy could be a catastrophe. Prime Minister Silvio Berlusconi is losing support at home and on Thursday evening, he agreed to have his austerity efforts monitored by the IMF. Concern is rising that Italy could be the next euro battleground.

Is Germany Is Already Printing Money -- in Deutsche Marks?

tpelia@yahoo.com (Tom Elia) — Wed, 26 Oct 2011 10:31:00 -0600

If accurate, this would be known as "a tell."

From Seeking Alpha: (emphasis added)

By now everyone realizes that the euro is in major trouble and will no longer exist in its current form for much longer. However, the common view is that it is Greece and possibly other PIIGS countries who will be forced out if the eurozone is broken up.

But few are talking about another possibility -- of Germany leaving the EU.

One who is talking about this is Dr. Pippa Malmgren, a former economic advisor to George W. Bush and a Director for Deutsche Bank (DB). According to Malmgren, Germany has already ordered the printing of Deutsche Marks in anticipation of a possible withdrawal from the EU.
...

Something very bad is brewing behind the scenes. The Sarkozy- Merkel talks, the short-selling bans, the halted stocks, the leveraged EFSF, the hints of QE 3, all of this is telling us that the financial system is on DEFCON 1 Red Alert.

Ignore stocks, they're always the last to "get it." The credit markets are jamming up just like they did in 2008. The banking system is flashing all the same signals as well.

So if you have not already taken steps to prepare for systemic failure, you should do so now. We're literally at most a few months, and very likely just a few weeks, from Europe's banks imploding.

Italy and Spain must pray for a miracle

tpelia@yahoo.com (Tom Elia) — Tue, 12 Jul 2011 00:03:00 -0600

The Telegraph's Ambrose Evans-Pritchard writes, "Once again Europe's debt crisis has metastasized, and once again the financial authorities face systemic contagion unless they take immediate and dramatic action."

Pritchard further writes:

What can the eurozone now do to trump its last "shock and awe"? More loan packages solve nothing. Pretending that this is just a liquidity crisis will no longer wash.

What it will take is a belated recognition by Germany that this crisis is not a morality tale contrasting virtuous, thrifty Teutons, with feckless Greco-Latins and Guinness-befuddled Celts, but rather a North-South structural crisis caused by the inherent workings of monetary union.

The implications of this are profound. Germany must now be willing either to buy or guarantee Spanish and Italian debt, and in doing so to cross the Rubicon to fiscal and political union, or accept that EMU must break up with calamitous consequences for German foreign policy. Large matters, beyond the intellectual vision of Germany's current leaders.
...

Italian GDP has not grown for a decade. The official forecast is 1.1pc this year, 1.3pc in 2012, and 1.5pc in 2013, but outside analysts are gloomier.

David Owen from Jefferies Fixed Income says the "elephant in the room" is that Italy's debt interest payments will explode within three or four years if the average borrowing cost ratchets up 200 or 300 basis points. The apparently stable debt trajectory will take an entirely different shape. That is the fear now stalking markets.

It is almost pointless trying to establish exactly why this latest bout of contagion has erupted. You can blame Moody's for its downgrade of Portugal, or blame Germany's Krieg against private investors for forcing Moody's to act the way it did. The deeper cause lies in the entire machinery of wreckage created by the Maastricht process since the mid-1990s.

A full-throttle global recovery would mitigate this; a half-decade of super-easy money by the ECB to weaken the overvalued euro and stave off debt deflation would help, too. Without either, Italy and Spain can only pray for a miracle.

Read the whole piece.

Time for Plan B: How the Euro Became Europe's Greatest Threat

tpelia@yahoo.com (Tom Elia) — Tue, 21 Jun 2011 09:18:00 -0600

From der Spiegel staff:

The euro is becoming an ever greater threat to Europe's common future. The currency union chains together economies that are simply incompatible. Politicians approve one bailout package after the other and, in doing so, have set down a dangerous path that could burden Europeans for generations to come and set the EU back by decades.
...

The fact that the countries funding the bailouts are lacking democratic legitimization is now becoming the greatest impediment to joint crisis management. Gone are the days of subtle debate over whether the European Parliament involves citizens in a just and proportional way in the decisions reached by the European Council, the body headed by the leaders of the European Union member states, and European Commission, the EU's executive. When things get serious, as they are now, decisions will no longer be made in the somewhat democratically legitimized EU bodies, but at the more or less secret meetings of a handful of leaders.

During the German chancellor's and the French president's quiet walks together, and at the behind-the-scenes meetings of discrete central banks, policies are being made that are then handed to the parliaments to rubber-stamp, even though hardly any of their members understand them.
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The euro, created with the aim of permanently uniting Europe, has become the greatest threat to the continent's future. A collapse of the monetary union would set Europe back by decades, dealing it a blow from which it might never recover, especially with Europe's position already threatened by the fast-growing Asian economies. How is a fragmented Europe to prevail against this new competition?

This is why Europe's politicians want to defend the euro at all costs, and why they are approving one bailout package after the next. They are playing for time, hoping that the markets will settle down and the reforms will take hold.

Read the whole piece.

Protesting European Lefties Just Like to Get Naked

tpelia@yahoo.com (Tom Elia) — Mon, 06 Dec 2010 10:52:00 -0700

Some Berliners, outraged over high rents in Germany's capital city, are holding 'naked techno-dance parties' in order to protest what one member of a group called "Hedonist International" described as "illicit profiteering" on the part of real estate owners.

From AOL: (emphasis added)

Protesters outraged about rising real estate costs and gentrification in Berlin are scheduling appointments to view apartments they consider overpriced, then stripping naked and holding impromptu dance parties inside.
...

With their bodies painted with slogans such as "Too Expensive" and "Rip Off," the demonstrators dance around in their birthday suits to the beat of techno music, then flee before police arrive, according to The Independent.

In March 2010, some left-wing bureaucrats in Rome dropped trou in protest:

Italian legislators protesting something. (Photo from Agence France-Presse.)

Hey, do you disagree with developments in the world around you? Do you simultaneously lack the ability to construct a coherent solution to that disagreeable development?

Well then, why not get naked!

Europeans Attack Buffett-Gates Pledge as Undemocratic

tpelia@yahoo.com (Tom Elia) — Fri, 13 Aug 2010 00:02:00 -0600

Yes, you are correct if you think some Europeans are ridiculous socialists.

And no, let's not be more like them.

Europe warns Obama: this relationship is not working

tpelia@yahoo.com (Tom Elia) — Fri, 16 Jul 2010 00:03:00 -0600

The Times of London's Charles Bremner, David Charter, and Giles Whittell report: (emphasis added)

Europe's disappointment with Barack Obama's presidency is laid bare today as the EU's most senior figure calls for a dramatic effort to revive transatlantic relations.

The President of the European Commission told The Times that the new era at the White House was in danger of becoming a "missed opportunity" for Europe.

Jos? Manuel Barroso said that the EU-US relationship was "not living up to its potential" and was being marred by fundamental disagreements on how to deal with the economic crisis, climate change and trade reform.

The feelings of a deepening rift are mutual. Senior US figures said last night that Mr Obama could never live up to Europe's sky-high expectations.
...

A German government official said: "If our austerity cuts lead to street demos, the protesters will be shouting out phrases they heard from Obama. How do you think that makes us feel?"

Suspected Terrorist Abu Hamza's extradition to US blocked by European court

tpelia@yahoo.com (Tom Elia) — Fri, 09 Jul 2010 10:45:00 -0600

The Guardian's Vikram Dodd reports:

Europe's highest court today said it would not allow Abu Hamza and three other men held in Britain to be extradited to the United States to face terrorism charges until it is satisfied they will not be treated inhumanely.

The European court of human rights' decision released this morning means it will in effect sit in judgment on parts of the US's criminal justice system.

It will decide if practices such as subjecting prisoners to prolonged periods of isolation and sentences of life without parole fall short of international standards.
...

Barrister Julian Knowles, an expert in extradition, said: "What the court will be deciding is whether someone can be extradited to a sentence of life without parole, to be spent in solitary confinement, and whether that is compatible with the European system of human rights."

Greece urged to give up euro

tpelia@yahoo.com (Tom Elia) — Tue, 01 Jun 2010 07:33:00 -0600

The Times of London's Robert Watts reports:

The Greek government has been advised by British economists to leave the euro and default on its [$365 billion] debt to save its economy.

...Greece's departure from the euro would prove disastrous for German and French banks, to which it owes billions of euros.

McWilliams called the move "virtually inevitable" and said other members may follow.

"The only question is the timing," he said. "The other issue is the extent of contagion. Spain would probably be forced to follow suit, and probably Portugal and Italy, though the Italian debt position is less serious.

"Could this be the last weekend of the single currency? Quite possibly, yes."

Gordon Brown resigns as UK Prime Minister; David Cameron New PM

tpelia@yahoo.com (Tom Elia) — Tue, 11 May 2010 17:54:38 -0600

From BBC News.

When 14=12, and Other Fun Facts

tpelia@yahoo.com (Tom Elia) — Mon, 03 May 2010 09:16:00 -0600

Sometimes footnotes contain the darndest things.

If you wanted to see why European-style socialism is under such extreme financial pressure -- and is in large part unsustainable over the long term -- take a gander at these footnotes to the "review of minimum wage rates" at the Federation of European Employers Web site, which a reader sent along.

First, note that Austria, Greece, Portugal, and Spain all mandate that certain employees receive 14 months of pay per year: (emphasis added)

NOTES:
[1] Where official rates are expressed by the hour or week, they have been converted to monthly rates on the basis of a 40-hour week and 52-week year. Minimum wage figures are gross (pre-tax) rates and exclude any 13th or 14th month payments that may be due under national legislation, collective agreements, custom or practice.
[2] Austria: applies to certain industry sectors. Applicable to all sectors from 01.01.2009. Employees are entitled to 14 mothly [sic] payments each year.
...
[5] Greece, Portugal, Spain: white-collar workers only. Workers normally entitled to 14 monthly payments per year.

If you wanted to see why central planning is so onerous, note the complications mandated by various European central governments with regard to the minimum wage, and take a gander at some of these national regulations -- starting with the infamous work week in France:

[6] France: based on statutory 35-hour week.

In Greece, the minimum wage is different depending on your job, how long you've worked, and your marital status:

[9] Greece: Different rates apply to blue and white collar workers and vary by length of service and marital status.

In Hungary, the minimum wage has five different categories:

[10] Hungary: the minimum wage is 20% higher than the basic national minimum for those with secondary or vocational education but under two years' experience, and 25% higher for those with at least two years' experience or older than 50 years of age. Employees with university-level education are entitled to a minimum wage that is 60% higher than the basic national minimum.

In Malta, there are over 25 different classifications for minimum wage standards.

[11] Malta: Higher wage rates are set by order in the following sectors: agriculture, beverages, domestic work, clay and glass work products, food manufacturing, hire cars and private buses, hospitals and buses, jewellery [sic] and watches, leather goods and shoes, papers, plastic, chemicals and petroleum, private security services, professional offices, public transport, sextons and custodians, textiles, tobacco manufacture, transport equipment, metal, woodworks and private cleaning services.

Remember some of this the next time someone -- no doubt wiser than you -- explains why 'the US needs to be more like Europe.'

President of Poland, 95 Others Dead in Russia Jet Crash

tpelia@yahoo.com (Tom Elia) — Sat, 10 Apr 2010 07:47:00 -0600

From AP:

Polish President Lech Kaczynski and some of the country's highest military and civilian leaders died on Saturday when the presidential plane crashed as it came in for a landing in thick fog in western Russia, killing 96, officials said.

Russian and Polish officials said there were no survivors on the 26-year-old Tupolev, which was taking the president, his wife and staff to events marking the 70th anniversary of the massacre of thousands of Polish officers by Soviet secret police.

The crash devastated the upper echelons of Poland's political and military establishments. On board were the army chief of staff, national bank president, deputy foreign minister, army chaplain, head of the National Security Office, deputy parliament speaker, civil rights commissioner and at least two presidential aides and three lawmakers, the Polish foreign ministry said.

Here's a report from the Daily Mail.