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Europe: All your money are belong to us
Yes.
Here at the G20 summit in Los Cabos, Mexico, European leaders are making the claim that the credibility of the G20 is at stake if G20 members don’t step and kick in to a US$430 billion International Monetary Fund to help Europe sort out its fiscal crisis. So far, Prime Minister Stephen Harper has said Canada will not contribute to such a fund. He believes that Europe has enough financial firepower of its own to deal with the euro crisis.
This morning, European Commission Jose Manuel Barroso and European Council President Herman Van Rompuy held a press conference to make that claim — that they expect the G20, including Canada, to do its part to help Europe out of its mess.
During the question period, I put this question to those two gentlemen:
Why should North Americans risk their assets to help the largest and one of the wealthiest economic areas in the world? Shouldn’t IMF resources be used to help out developing countries and not the richest economic area in the world? What do you make of Prime Minister Harper’s contention that Europe has enough financial firepower on its own to deal with this crisis? …
Barroso: … By the way, this crisis was not originated in Europe. Since you mentioned North America, this crisis was originated in North America. And many of our financial sector were contaminated by – how can I put it? – unorthodox practice by some sectors of the financial market. But we are not putting the blame on our partners. What we are saying is let’s work together when we have a problem like the one we have today.
Oh well.
A Time for Choosing
So, crushing austerity and the Euro, or total default and a new currency?
I think that’s the real choice facing Greece.
There’s also news from France, which popped up on the Greek election livestreams.
19.05 It’s become a sideshow to the Greek election, but France’s Socialists have won control of parliament. That gives Francois Hollande a convincing majority with which he can push through his tax-and-spend agenda.
1903: Election news from another eurozone state: Francois Hollande’s Socialist Party have won an absolute majority in the lower house of parliament, on the basis of exit polls. This should strengthen Mr Hollande’s hand in pushing for growth action in the EU.
Heh.
One man’s meat is another man’s poison.
Grelection
I’d forgotten that Sunday is election day in Greece.
One interesting thing: here’s a Greek economist on why he’s backing (and advising) Syriza.
And Germany is telling Greece it can’t change the bailout terms.
Mind you, I think the economist, Yanis Varousfakis, has a point: Greece CAN just say, we’re not taking the money and we’re not making the payments. Greece already did an 80% default — it can do a 100% one…
Acropolis, adieu… and others too!
So, the Greek coalition negotiations are collapsing, and the anti-austerity party is expected to make gains come the re-vote in June.
Tsipras, however, stuck to his position, insisting that supporting a pro-bailout government would be a betrayal of his pre-election platform.
“After today’s meeting it is obvious they are demanding that Syriza become an accessory to a crime,” he said after the discussions with the president. “In the name of democracy, of our patriotic duty, we cannot accept this shared guilt. We call on all Greeks to condemn once and for all the forces of the past and to realize that only one hope remains: unity against blackmail in order to prevent the continuing barbarity.
“Fellow Greeks, we can assure you of one thing: we will not betray you.”
Tsipras will also have his eye on recent opinion polls which show his party would gain strength if Greeks go to the ballot box again next month.
A poll published by To Vima newspaper Sunday indicated Syriza would come first in new elections with 20.5 per cent of the vote — less than the 28 per cent an earlier opinion poll published Thursday gave him, but still well ahead of New Democracy. Although it would not be enough to form a government, it would put him in the dominant position to form a coalition with smaller anti-bailout parties.
Where does that leave us? Well, there’s the Krugman scenario:
1. Greek euro exit, very possibly next month.
2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.
3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.
3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.
4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:
4b. End of the euro.
And we’re talking about months, not years, for this to play out.
Granted, Krugman has been predicting the end of the Euro for some time now.
But its time may have come.
Update: What does history tell us? Well, prepare for soldiers with guns on the street. And surprise moves, in order to defeat market adjustments.
Sarko goes dark-o
I had no great love for Sarko — not after what he did to Cameron.
But this IS significant. It’s one of the two core states of the EU rejecting the Sarkozy-Merkel approach. (And Merkel didn’t have a great day either.)
I think we can safely say that the plot has thickened re the European future…
Update: It should be noted, too, that Cameron is going through rough waters now, too.
I’m inclined to say that part of it all is that the European project just isn’t that popular, either with the left or the right.
It’s fundamentally anti-democratic, and that ruffles feathers on both sides.
As it should.
Update, next day: There are a few cranky articles.
Today, Hollande’s opponents seem incompetent to fulfill this task. But whatever the institutional preparedness of the French right appears to be, France will face the kind of historic moment that makes great statesmen, not waits on them. France’s savoir won’t be Hollande, thanks to the one-two punch of his orthodoxy and his disposition. His administration will exacerbate the troubles that already dwarf him. Whether he is aware of this or not, the outcome will be the same.
There’s something in that, I suppose.
Paul Wells’s column from over here perhaps best sums up some of the feelings on the right:
Sarkozy is essentially a silly man and France is well rid of him. François Hollande, the new president-elect, is no providential talent. He’s loaded up the agenda for his first year in power with busy work that probably won’t help. … But his election is encouraging for two reasons. First, it’s possible he’ll manage the economy about as well as anyone in France ever does, as his Socialist predecessor François Mitterrand eventually learned to do. Second, it gets Sarkozy out of the way. If he’d hung on, his country would have been absurdist performance theatre for another five years and the Socialists would be guaranteed of victory in 2017. This way his party has a chance of finding a serious candidate for that next election. I nominate this guy. Meanwhile it’s still a pretty country.
And, I tend to agree with Daniel Hannan’s diagnosis:
Yesterday’s elections in France and Greece were the first of what will surely be many advances by the populist Left. In both places, candidates were elbowing each other aside during the campaign to demand more intervention and an end to cuts.
The new French President is an unapologetic Socialist of the kind we haven’t known in this country since Michael Foot. François Hollande wants wealth taxes, stimulus spending and a massive expansion of the state payroll.
He understands that this might lead to dismay in the international markets, but he has an answer to that: he will create a French credit ratings agency which, unlike the American ones, will tell him what he wants to hear. …
The truth, of course, is that France has already pushed tax-and-spend to its limits. The government accounts for an extraordinary 56 per cent of the economy, and the French budget was last in balance in 1974. If state expenditure really had a stimulus effect, France would be the wealthiest country in Europe. …
Not a single candidate argued for smaller government, freer competition or greater international trade. All ten offered more of the medicine that had sickened the patient. …
The fact is that fewer and fewer private sector workers are paying higher and higher taxes to sustain larger and larger governments. This is unsustainable. But no one wants to hear it.
All over Europe, state employees demand to be exempted from the austerity measures that the private sector must make. Beneath all the slogans about fairness and compassion lurks a remarkably selfish sentiment: ‘Make future generations pay my pension!’
Oh well. Something that cannot go on forever… won’t. That’s the simple truth of it. It’s perhaps a painful truth, as Europeans will learn again, but that’s life.
Sarkozy failed, and looked like he would keep on failing. I don’t blame the French for firing him.
Can Sarko do it?
Sarkozy places second behind Hollande in the first round.
French Socialist Francois Hollande has won most votes in the first round of the country’s presidential election, estimates show.
They suggest he got more than 28% of votes against about 26% for centre-right incumbent Nicolas Sarkozy.
The two men will face each other in a second round on 6 May.
Mr Sarkozy said it had been a “crisis vote” and called for three presidential debates before the run-off. The poll has been dominated by economic worries.
We’ll see.
Hollande appears to be running well — he hits the right combination of personal austerity and rejection of state austerity that a socialist candidate should have.
If I were French, I’d probably rather unenthusiastically vote for Sarkozy. But I don’t care how the French economy does, and I kinda hold the EU dust-up with Cameron against him. So I don’t really care.
It’d be interesting to see an anti-austerity candidate win, I suppose…
“Captain Capitalism”
Watching public opinion turn…
Apparently a whole bunch of Russians are turning against Putin.
Remember that pop song, “Такого как Путин“, in which two very attractive women sing about how they want a man like Putin?
Well, the same song-writer has a new one out — “Наш Дурдом (голосует за Путина)” — that’s “Our Madhouse (votes for Putin)”:
The author of the sycophantic pro-Putin anthem “Takogo kak Putin,” or “I want one like Putin,” has released his latest video “Nash Durdom (Golosuet Za Putina)” “Our nuthouse (votes for Putin),” which has gone on to take the Russian internet by storm.
Change of mood
“I think it is the whole country evolving,” the author Alexander Yelin said, explaining the change in the public’s mood. “Everyone liked [the situation] at first, and then they stopped liking it at some point. At first there was a little bit of a woman’s excitement, and now it is a fully male bewilderment, disappointment and confusion. We are reflecting the situation that exists,” Newsru.com quoted him as saying on Wednesday.
C’est la vie. If you overstay your welcome, well, it happens.
A poll conducted a week after the elections and released on Friday showed 51% of Russians approved of how the Russian prime minister had done his job, down from 61% in November and 68% at the beginning of the year.
The survey by the state pollster VTsIOM highlighted a growing discontent and fatigue with the 59-year-old leader as he prepares for a presidential election in March that he is widely expected to win, but not as easily as seemed likely a month ago and perhaps not in the first round. …
Tens of thousands of people protested last Saturday to call for a rerun of the 4 December parliamentary election, which opponents say was rigged to benefit the ruling United Russia party. It lost ground, receiving 49.3% of the vote, and the party’s opponents said even that figure was inflated by fraud. International monitors also said the vote was slanted to favour United Russia.
The VTsIOM poll put Putin far ahead of the pack in the presidential election, with 42% of respondents saying they would vote for him. Next was the Communist party leader, Gennady Zyuganov, with 11%.
Dmitry Medvedev’s approval rating also fell sharply in the poll, to 51%, down from 60% in November and 66% in January.
Can Putin win the presidency when that election comes, if it actually were a fair fight?
Probably still is in that position — I mean, if Zyuganov is the top opposition candidate, and no other figure is allowed to emerge, he can sneak through. But it’s a lot closer than people would have thought — like when Bloomberg went for his third term — and if the opposition were allowed to mobilize, they’d have a good chance at knocking him off.
I’m interested to see what happens next — it’s going to get interesting.
Update: Note that the opposition is using humour.
That’s tough to fight against.
Update again: For the Russian-speakers among you, who understand plussing and minusing on YouTube, here’s a little pun, from the original band’s video posting.
The second-most liked comment was, “Наш дурдом минусует за Путина.”
Heh.
Update the third: That said, I can’t see the middle of the electorate being swayed by a video of a man dancing around in a codpiece. Maybe that’s just me.
But it’s interesting seeing opposition movements start to coalesce, the way they do in liberal democracies.
