Tag: EU

Lest Ireland forget

Daniel Hannan’s little photo essay reminds everyone that the Irish government and all the major Irish parties forced the Irish people to vote a second time on the EU ConstitutionLisbon Treaty and sold it to them on the basis of economic recovery, specifically including more “jobs and investment”.  And he asks “Well, guys, here we are a year on. How’s the recovery working out for you?”

One has to wonder about a “bailout” courtesy of governments who are already robbing pension funds in order to continue their maddened spending:

>Asset managers will have the chance to get billions of euros in mandates in the next few months for the €36bn Fonds de Réserve pour les Retraites (FRR), the French reserve pension fund, after the French parliament last week passed a law to use its assets to pay off the debts of France’s welfare system….

The move reflects a willingness by governments to use long-term assets to fill short-term deficits, including Ireland’s announcement last week that it would use the country’s €24bn National Pensions Reserve Fund “to support the exchequer’s funding programme” and Hungary’s bid to claw $15bn of private pension funds back to the state system.

Don’t worry, it’s not as if the US government is heavily indebted or would ever even contemplating the seizure of pensions or tax-free retirement funds….

Krugman dabbles in Austrian theory

Needless to say, he doesn’t do so consciously nor does he show any signs of having learned the relevant empirical lessons. But in this particular situation, he is correct in placing the blame for the present Irish debacle on a credit bubble and in recommending the right economic policy:

The Irish story began with a genuine economic miracle. But eventually this gave way to a speculative frenzy driven by runaway banks and real estate developers, all in a cozy relationship with leading politicians. The frenzy was financed with huge borrowing on the part of Irish banks, largely from banks in other European nations.

Then the bubble burst, and those banks faced huge losses. You might have expected those who lent money to the banks to share in the losses. After all, they were consenting adults, and if they failed to understand the risks they were taking that was nobody’s fault but their own. But, no, the Irish government stepped in to guarantee the banks’ debt, turning private losses into public obligations….

In early 2009, a joke was making the rounds: “What’s the difference between Iceland and Ireland? Answer: One letter and about six months.” This was supposed to be gallows humor. No matter how bad the Irish situation, it couldn’t be compared with the utter disaster that was Iceland.

But at this point Iceland seems, if anything, to be doing better than its near-namesake. Its economic slump was no deeper than Ireland’s, its job losses were less severe and it seems better positioned for recovery. In fact, investors now appear to consider Iceland’s debt safer than Ireland’s. How is that possible?

Part of the answer is that Iceland let foreign lenders to its runaway banks pay the price of their poor judgment, rather than putting its own taxpayers on the line to guarantee bad private debts. As the International Monetary Fund notes — approvingly! — “private sector bankruptcies have led to a marked decline in external debt.”

Where Krugman goes awry is in stating that the Irish are “bearing a burden much larger than the debt — because those spending cuts have caused a severe recession so that in addition to taking on the banks’ debts, the Irish are suffering from plunging incomes and high unemployment.”

It’s not the spending cuts that have caused the severe recession, it is the debt-deflation that inevitably followed the end of the credit bubble that caused it. And while Krugman is correct to note that the Keynesian solution to “restore confidence” is not working, he doesn’t realize that is because it is irrelevant and cannot work. He does, however, recognize that his usual recommendation of currency devaluation (printing away the debt) is not an option due to the financial straightjacket imposed by the Euro, which leaves the correct option of the Irish government defaulting on the bank debts, which is exactly what Austrian theory dictates should have been done in the first place.

Liberty in the UK

It is long past time for Britain to move from euroskepticism to exiting the European Union:

THE Daily Express today becomes the first national newspaper to call for Britain to leave the European Union. From this day forth our energies will be directed to furthering the cause of those who believe Britain is Better Off Out.

The famous and symbolic Crusader who adorns our masthead will become the figurehead of the struggle to repatriate British sovereignty from a political project that has comprehensively failed.

After far too many years as the victims of Brussels larceny, bullying, over-regulation and all-round interference, the time has come for the British people to win back their country and restore legitimacy and accountability to their political process.

Here is to the Daily Telegraph, the Sun, and other major British newspapers soon following suit. The European Union is an anti-democratic, anti-human liberty, totalitarian institution that is the realization of Napoleon’s dream. Like Napoleon’s empire, it will collapse, and the sooner Britain is out of it, the better.

The evictions continue

If the multiculturalists are upset over the ongoing French Roma expulsions, just think how apocalyptic they’ll sound once Sarkozi or his eventual successor begins to tackle the challenge of the banlieus.

The truth is that there is a long tradition of open hostility towards Roma, one with uncomfortable echoes of the open hostility shown towards another ostracised minority in the past. Right across Europe, including in Britain, casual anti-Gypsy remarks are simply not taboo in the way that slights on other ethnicities mostly are today. Some of this, it is true, can be explained by distinctive facets of Roma culture, which do not fit comfortably within contemporary capitalist societies. Rolling caravans do not lend themselves to rooted integration, and especially when they are decoupled from standard western ideas about property rights. The latest French crackdown followed on from rioting that was sparked by the shooting of a young Roma man, and with dire school drop-out rates Gypsy communities tend to rub up against authority more often than most.

I like that. The Roma aren’t dirty and useless thieves, they’re just “decoupled from standard western ideas about property rights”. Actually, that would explain a lot about Goldman Sachs and the Supreme Court’s Kelo decision, come to think about it. It’s fascinating to see how conflicted eurofascists are already calling for France to be kicked out of the European Union over these racial expulsions; the EU is certainly showing stress fractures in some interesting and unexpected places.

Crackpot credentials

VDH considers the other European volcano.

Few wanted to listen when it was pointed out — well before the Greek meltdown — that on key questions of demography and immigration, the future of the European Union was bleak. The very idea that, in historical terms, socialism, agnosticism, pacifism, and hedonism were not only interrelated and synergistic, but also suicidal for civilization, was considered crackpot.

I seem to recall a certain cowardly atheist who thought I belonged in the category. I didn’t mind that characterization in the least because the reality is that most intelligent and independent thinkers are considered crackpots and lunatics by the unthinking masses, right up until the moment that they are proven correct.* And, of course, at that point, everyone who previously dismissed them immediately begins to pretend that what they had once characterized as “crackpot” was never anything out of the mainstream.

Today, the smarter progressives and equalitarians find themselves in a state of intellectual shock. The foundations of the erroneous beliefs for which they have so confidently thrown away centuries of history and tradition are crumbling before their eyes and they have literally nothing upon which they can fall back. The less intelligent ones, of course, have no idea that anything out of the ordinary has been happening in the diverse areas of economics, genetic science, and government pensions and so they continue to blithely advocate their empty progressive, equalitarian, big government ideas even as a world that has been built upon them teeters on the verge of complete collapse.

This most certainly does not mean that a freer, more traditional, more capitalistic world is in the making. The opposite is more likely true, at least in the intermediate term. But the truths of these matters will be known and the seeds of future freedom find fertile soil in which to grow.

* A relevant quote from Mises happened to pop up today: “Education rears disciples, imitators, and routinists, not pioneers of new ideas and creative geniuses. . . . The mark of the creative mind is that it defies a part of what it has learned or, at least, adds something new to it.”

The end of capitalism

Fresh from its successful bailouts of GM (bankrupt), Fannie Mae (-$16.3 billion in Q1), and Freddie Mac (-$6.7 billion in Q1), the Federal Reserve is joining the ECB, the BoC, the BoE, and the SNB in an attempt to preserve the European Union:

European policy makers unveiled an unprecedented loan package worth almost $1 trillion and a program of bond purchases as they spearheaded a global drive to stop a sovereign-debt crisis that threatened to shatter confidence in the euro….

The Federal Reserve is going to reopen a program set up during the financial crisis, to make sure foreign banks have the dollars they need, the European Central Bank announced late Sunday. The Fed will ship dollars overseas through the Bank of Canada, the Bank of England, the ECB and the Swiss National Bank. The Bank of Japan will be considering similar measures soon, the ECB said. The facilities are designed to help improve liquidity conditions in U.S. dollar funding markets and to prevent the spread of strains to other markets and other financial centers, the ECB said in a statement on its web site.

This isn’t about economics or the euro. This is about preventing the banks that hold sovereign debt from going under and maintaining the geopolitical order that presently sustains the global financial system. And, of course, it’s not going to work. It cannot since it is literally designed to do nothing more than soothe those problematic animal spirits when the core problem is the magnitude of the debt. The problem has always been rooted in debt. And now that genuine capitalists have no interest in purchasing Greek debt at any price and are increasingly unwilling to purchase Portuguese debt, that leaves the money planners to step in and attempt to fill in the gap with their ability to create money by “expanding the balance sheet”.

Once this belated band-aid fails in a few months, the next pitch will be to replace the various currencies with the global currency that the Economist once described as “the Phoenix”. This is an appropriate title because there should be no shortage of ashes from which the phoenix can rise.

By the way, don’t get too excited about the big, but short-term Wall Street rally that is certain to commence. No market goes straight down or straight up. And big up days are indicative of bear markets, not bull markets. This is just the reactive wave and is an artifact of the massive government intervention.

Capital controls

The EU has abandoned Europe’s Christian tradition and appears likely to drop its capitalist tradition as well:

This document is sitting in a drawer at the Directorate of Economic and Monetary Affairs in Brussels. It was written by a small cellule of EU officials in 2003 or 2004 (If I remember correctly) under prodding from Paris. It explores the legal basis for measures to stabilise the euro and EMU. After combing through the EU treaties and court judgments, it concluded that Brussels may impose “quantitative restrictions” on capital inflows. Free movement of capital in the EU is not an “absolute freedom” and could be limited in an emergency. “Should extremely disturbing capital movements endanger the operation of economic and monetary union, Article 59 EC (Maastricht) provides for the possibility to adopt restrictive measures for a period not exceeding six months,” it says.

It would be renewable every six months. Any decision would be taken by EU finance ministers under qualified majority voting, so no country could veto it.

So much for the oft-heard Europhile defense of the EU as a free market entity. This is why no government or bureaucracy should ever be permitted to have “emergency” powers. It’s rather like telling a rapist that as long as he cries “emergency” first, it isn’t rape, it’s just emergency sex.

UKIP in the UK

Peter Hitchens, a longtime Tory, explains why a victory for David Cameron’s Conservative Party would actually mean a terrible defeat for England:

I beg and plead with you not to fall for the shimmering, greasy, cynical fraud which is the Cameron project. You will hate yourself for it in time if you do…. He is truly what he once said he was – the Heir to Blair.

If he wins, he will – as the first Tory leader to win an Election in 18 years – have the power to crush all his critics in the Tory Party.

He will be able to say that political correctness, green zealotry, a pro-EU position and a willingness to spend as much as Labour on the NHS have won the day.

He will claim (falsely) that ‘Right-wing’ policies lost the last three Elections.

Those Tory MPs who agree with you and me will be cowed and silenced for good. The power will lie with the A-list smart set, modish, rich metropolitan liberals hungry for office at all costs who would have been (and who in the case of one of the older ones actually was) in New Labour 13 years ago.

And then where will you have to turn for help as the PC, pro-EU bulldozer trundles across our landscape destroying what is good and familiar and replacing it with a country whose inhabi­tants increasingly cannot recognise it as their own?

The Liberal Democrats? They agree with David. The Labour Party under exciting, new, Blairite Mr Miliband, heir to a Marxist dynasty?

He agrees with David, too. You will look from bench to bench in the House of Commons and see nothing but the people whose ideas have wrecked a great country in half a century, and who still won’t admit they’re wrong.

Britain is going to end up having to turn to UKIP anyhow, unless the EU collapses under the weight of its economic malfeasance before Cameron imports another 15 million Polistanis and forces Britain into the Euro. So, you might as well vote for them now.

A moment of clarity

Gordon Brown’s “bigoted woman” remark demonstrates the contempt of the modern transnationalist politician for the very people who keep him in power:

There is intense anger among large parts of the electorate at what is happening to this country, and in Mrs Duffy that discontent found its voice. In her encounter with Gordon Brown, she raised the two issues – the deficit and immigration – that have until now hardly featured in the campaign, even though they are of overwhelming concern to millions of voters. Rarely has the gulf between the political elite at Westminster and the people they are supposed to represent been more graphically illustrated.

Such encounters used to be the stuff of election campaigns and, in truth, Mr Brown handled the exchanges perfectly well. It was his extraordinary private remarks to an aide afterwards, picked up by an open microphone, that did the damage. His own insecurity was exposed when he described the encounter with Mrs Duffy as a “disaster”. It was not; he was courteous and they parted on good terms. Mr Brown’s curious over-reaction seems to confirm the view, widespread in Whitehall, that he regards a contrary point of view as a personal affront.

But it was his characterisation of this Labour-voting pensioner as “just a sort of bigoted woman” that is genuinely shocking. What message does it send when the Prime Minister (who once talked of “British jobs for British workers”) brands as “bigoted” anyone who dares raise the issue of immigration in a conversation with him? Such arrogance plays straight into the hands of the British National Party.

It is ironic, of course, that aside from the BNP and UKIP, the British political parties, Conservative, Labour, and Liberal-Democrat, are all hell-bent on destroying Great Britain and rendering it nothing more than a non-sovereign county in the great trans-European nation at the very same time that the fundamental economic idiosyncrasies are threatening to tear apart its bureaucrat-imposed political structure. I can’t imagine the Greek/Portugese/Spanish debt crisis is doing wonders for the pro-Euro stance of the major parties either.

It is long past time that people like Mrs. Duffy learn to stop voting for people who despise them and are working to their detriment.

The breaking of the Euro

While the Euro is still much more valuable than it was ten years ago when it was trading at .88 to the dollar, the inherent problems of both the currency and the political entity has never been more obvious. The European Union cannot survive the dissolution of the Euro. And the Euro cannot survive the intrinsic economic contradictions of the various member states. For years, Europhiles have scoffed at my prediction of a complete Eurofailure in which Britain and a few of the smaller member states would withdraw from the EU while Northern and Southern Europe break into two or more apolitical economic blocs, but I don’t see anyone scoffing at the fears of George Soros and other professional investors who follow the European economic scene.

Morgan Stanley has warned that the Greek debt crisis is setting off a chain of events that may prompt German withdrawal from the eurozone, with grim implications for investors caught off-guard. “The backstop package for Greece and the ECB’s climb-down on its collateral rules set a bad precedent for other euro area states and make it more likely that the euro area degenerates into a zone of fiscal profligacy, currency weakness, and higher inflationary pressures over time,” said Joachim Fels, head of research, in a note to clients.

As socionomics predicts, political unity is a consequence of economic growth and positive social mood. As the economy and the social mood worsens, we can expect movement away from political unity in both the USA and Europe. Since there are very strong indicators of further economic contraction, we can safely expect further trouble for the EU and the Euro.