Two comments: note the emphasis on how bad things are in Finland and the Netherlands, and this:
Stripped bare, the strategy of the EMU elites is to bet/hope that the global economy is entering a fresh cycle of global expansion, and that nothing more is needed. The question is what will happen if we are instead nearing the end of a five-year growth cycle, with stock markets already looking frothy and overstretched. What if this is as good as it gets?
Indeed. I shouldn’t bet on getting the rest of the world getting Europe out of its crisis.
Ilargi: European Democracy is roadkill.
This bit says it all, and as I linked the Evans-Pritchard peace last week, it is hard to remain unshocked:
Together, they deliver the following storyline: EU leaders refused to let Greece have a referendum on its bail-out, and toppled PM Papandreou to kill it. Then, afraid that Italian PM Berlusconi would make good on his threat to return to the lira if they stuck to their bail-out conditions, they toppled him. What this means to Europeans is that if they elect a government for their country, and it subsequently falls out of favor with Brussels, they can expect to see it overthrown, and likely have it replaced by a technocrat handpicked by the EU leadership (as happened in Greece and Italy). Ergo: Europe is not a democracy, and pretending otherwise is foolish. Democratic elections in member states are merely empty lip service exercises, because on important topics governments of member states have no say.
“Crippled eurozone to face fresh debt crisis this year, warns ex-ECB strongman Axel Weber”
By Ambrose Evans-Pritchard.
I am not surprised that experts crush the jubilations of Barroso & co. There are simply too many parts in the puzzle that may go wrong, including asset/real estate bubbles, declining exports due to declining global demand (e.g. through the situation in China), banks that are not healthy, household debt that is too high…
Here, in a very tight post with lots of data. What did Marx again say about tragedies and farces? What did Einstein say about expecting different results from doing the same thing over and over?
‘ Italian showdown with Germany over euro looms closer’
I have to do a quick check, whether Finland would somewhat meet the same conditions (i.e. near primary budget surplus, gold reserves etc.) There is at least one big difference – Finland is just so small.
Via Ambrose Evans-Pritchards, we learn that the whole ‘rescue’ of Cyprus is even more botched than thought – the country is forced to sell off part of its gold reserves as part of the deal to get ‘help’!
It is not easy to keep trust in the European Commission and the Northern Countries driving these policies.
A quote from a long and insightful comment by Ambrose Evans-Pritchard
The report warned that “new divide” is emerging between the EMU core and those countries “that seem trapped in a downward spiral of falling output, fast rising unemployment and eroding disposable incomes The waive of austerity policies raise important questions about the viability of Europe’s welfare states,” it said. Indeed.
The Economist Poll of forecasters expects the eurozone to contract 0.2pc this year, with scant growth in 2014.
By then millions of people will have fallen into an “enormous poverty trap,” to borrow the words of EU jobs chief Laszlo Andor.
It is why Gustav Horn — head of Germany’s IMK Institute and one of the country’s five `Wise Men’ — called for an end to the contractionary torture last week. “It’s a vicious circle. Excess austerity is not reducing debt, it is causing debt to rise,” he said.
Dr Horn has concluded that the only viable way to close the gap is for Germany to tolerate an inflationary boom with 4pc wage growth for a while. He is right.
I haven’t been able to find Dr Horn’s comments but this is exactly the medicine also prescribed by e.g. Paul Krugman and Joseph Stiglitz, and other experts of the so-called Zero Lower Bound -economics. The IMK instute is a very respectable institute and I hope Germans finally take note. Last weekend I spoke with a German who complained that all European countries have lived above their means, and that deficits should be cut. I tried to discuss this issue, because it rather makes a difference if you have your own currency or not (see this already classic article by Paul de Grauwe) but to no avail – many Germans (and Dutch, and Finns) seem to have adopted the myth of ‘Mediterranean overspending/borrowing’. I really hope the European policy elites come to their senses, because the human suffering in the face of a bad diagnosis of the problem is too catastrophic too contemplate.