Category: Europe

The Beatings Will Continue Until Morale Improves

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Unemployment in the Euro Zone has hit a record high, and there is still no sign of inflation:

The latest eurozone unemployment data, due at 10am BST, is expected to show the region’s jobless rate has risen to a new record high of 12.1% in March (from 12% last month).

Italy’s unemployment rate is also forecast to increase, showing the challenges facing its new government as it strives to drag the country back to growth.

And in Spain, new GDP data will doubtless confirm that the country’s economy contracted again in the first three months of 2013 (economists expect a fall of 0.5%).

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Eurostat also reported this morning that inflation across the Eurozone has fallen to just 1.2% in April. That’s a sharp fall on March’s 1.7%, and a much smaller rise in the cost of living than analysts had expected.

That makes it more likely that the European Central Bank will bow to pressure and cut interest rates at its next monthly meeting on Thursday.

Austerity is not working.

EU Bans Neonicotinoid Pesticides

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They are cioncerned that these pesticides are causing colony collapse disorder:

Environmentalists hailed a “victory for bees” today after the European Union voted for a ban on the nerve-agent pesticides blamed for the dramatic decline global bee populations.

Despite fierce lobbying by the chemicals industry and opposition by countries including Britain, 15 of the 27 member states voted for a two-year restriction on neonicotinoid insecticides. That gave the European Commission the support it needed to push through an EU-wide ban on using three neonicotinoids on crops attractive to bees.

Tonio Borg, the EC’s top health official, said they planned to implement the landmark ban from December. “I pledge to do my utmost to ensure that our bees, which are so vital to our ecosystem and contribute over €22bn annually to European agriculture, are protected,” he said.

Britain was among eight nations which voted against the motion, despite a petition signed by 300,000 people presented to Downing Street last week by fashion designers Vivienne Westwood and Katharine Hamnett. The Independent has also campaigned to save Britain’s bee population.

Four nations abstained from the moratorium, which will restrict the use of imidacloprid and clothianidin, made by Germany’s Bayer, and thiamethoxam, made by the Swiss company, Syngenta. The ban on use on flowering crops will remain in place throughout the EU for two years unless compelling scientific evidence to the contrary becomes available.

More than 30 separate scientific studies have found a link between the neonicotinoids, which attack insects’ nerve systems, and falling bee numbers. The proposal by European Commission – the EU’s legislative body – to ban the insecticides was based on a study by the European Food Safety Authority, which found in January that the pesticides did pose a risk to bees’ health.

The argument against this is that the evidence is not sufficiently conclusive.

Hopefully, the two year ban should provide some good data, though the Wiki indicates that the pesticide can persist in the environment for more than two years.

I Wonder if this is About Race

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The New York Times has an article about how the Danes are looking to roll back their social safety net:

It began as a stunt intended to prove that hardship and poverty still existed in this small, wealthy country, but it backfired badly. Visit a single mother of two on welfare, a liberal member of Parliament goaded a skeptical political opponent, see for yourself how hard it is.

It turned out, however, that life on welfare was not so hard. The 36-year-old single mother, given the pseudonym “Carina” in the news media, had more money to spend than many of the country’s full-time workers. All told, she was getting about $2,700 a month, and she had been on welfare since she was 16.

In past years, Danes might have shrugged off the case, finding Carina more pitiable than anything else. But even before her story was in the headlines 16 months ago, they were deeply engaged in a debate about whether their beloved welfare state, perhaps Europe’s most generous, had become too rich, undermining the country’s work ethic. Carina helped tip the scales.

With little fuss or political protest — or notice abroad — Denmark has been at work overhauling entitlements, trying to prod Danes into working more or longer or both. While much of southern Europe has been racked by strikes and protests as its creditors force austerity measures, Denmark still has a coveted AAA bond rating.

But Denmark’s long-term outlook is troubling. The population is aging, and in many regions of the country people without jobs now outnumber those with them.

Some of that is a result of a depressed economy. But many experts say a more basic problem is the proportion of Danes who are not participating in the work force at all — be they dawdling university students, young pensioners or welfare recipients like Carina who lean on hefty government support.

“Before the crisis there was a sense that there was always going to be more and more,” Bjarke Moller, the editor in chief of publications for Mandag Morgen, a research group in Copenhagen. “But that is not true anymore. There are a lot of pressures on us right now. We need to be an agile society to survive.”

The better term for an “Agile society” is a race to the bottom, and this really is the underlying principle of the Euro Zone, but I’m also wondering whether the fact that Danish society has become more multi-ethnic, and that there is a feeling, particularly amongst the nativist right, that taxpayer dollars are going to people who are not truly Danish.

It seems an unfortunate truism that attacks on the social safety net are frequently couched in terms of a condemnation of the lazy and undeserving “other”.

Why a Carbon Tax is Better than a Carbon Market, Part 3.1415926

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The EU which has the largest and most ambitious carbon market world, has effectively shut it down by refusing to subsidize it:

The European Parliament this week voted 334-315 (with 60 abstentions) against a controversial “back-loading” plan that aimed to boost the flagging price of carbon, which since 2008 has fallen from about 31 euros per tonne to about 4 euros (about $5.20). Since the vote, the price has fallen even farther, to 2.80 euros. The collapsing market is hardly the kind of firm foundation needed for building a clean-energy economy.

“Now, the market is dead, as far as I can see,” said Steffen Böhm, director of the Essex Sustainability Institute at Britain’s Essex Business School.

What will be the aftermath of the ETS collapse? Here’s a quick primer on what happened, and what it could mean elsewhere, particularly in California, which inaugurated a new carbon market at the start of this year. (Related: “California Tackles Climate Change, But Will Others Follow?”

The “backloading” is an indirect subsidy which would pull carbon credits off of the market to raise prices.

Cap and trade does not work without extensive government intervention, it costs more to administer, and it requires extensive and ongoing government subsidies.

Tell me again why cap and trade is better than a carbon tax again?

The only thing that I can figure out is tribalism:  It allows politicians to create yet another mechanism for them to throw profits toward their classmates from their “elite” schools who are working at Wall Street or the City of London.

Google Has Done the Impossible………

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Google has made me want to be a German:

Google received an ultimatum Thursday from German consumer organizations that want it to start answering questions from its users via email.

The Federation of German Consumer Organisations (VZBV) has asked Google to sign an undertaking that it will provide customer service by responding individually to users questions sent by email, said Carola Elbrecht, VZBV’s project manager for consumer rights in the digital world at the VZBV.

Signing such a document would expose Google to fines if it breached the undertaking. On the other hand, said Elbrecht, “If Google does not sign it, we’re going to court.”

Germany’s Telemedia Act requires businesses to provide an email address to allow customers to contact them quickly.

But, said Elbrecht, “It is not enough to just provide an email address that leads into emptiness, you also need to be able to communicate over it.” Responding to users attempting to get their questions answered with automatic replies, as Google does in Germany, is not sufficient, she said.

Seriously, dealing with issues on Blogger, or Gmail, or pretty much any Google product, you have no way of contacting a human being.

Their response is “check out the forums and support pages.”

The forums are where people go when they don’t have the answers, and it’s exceedingly rare when a Google staffer deigns to read and answer a question, and the support pages are frequently incomplete and/or out of date.

Fabulous!!!

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The French upper house has passed the same sex marriage law:

Following months of protests both for and against the measure, the French Senate on Tuesday night passed an important provision in a package of laws that would legalize same-sex marriage in the country. The vote is a political win for embattled President Hollande.

French President François Hollande has had precious little to celebrate since he was elected last May. His country’s economy has refused to ignite, unemployment is nearing record highs and his government has been rocked by recent corruption allegations.

But this week, Hollande was finally able to take a key step toward fulfilling a major campaign promise. After months of passionate debate both among lawmakers and on the streets of Paris, the French Senate late Tuesday passed a key provision of the package of laws that would ultimately place same-sex marriage on par with heterosexual marriage in the country.

Following a 10-hour debate, the Senate voted 179 to 157 in favor of an article allowing gay and lesbian couples to wed. The law will only go into effect once the Senate approves all of its component parts. A further article still pending approval would allow gay married couples in the country to adopt. The first article passed on Tuesday, however, was the most important and virtually assures the legalization of gay marriage in the country.

It could still take several weeks before all of the provisions of the law are passed in the Senate. France’s lower house, the National Assembly, passed the law in mid-February.

Good for them.

Margaret Thatcher, Dead at 87

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She was 87.

There is an argument that one should not speak ill of the dead, but Margaret Thatcher was a public figure, and her supporters are using this as an opportunity to shape her legacy, so I feel that speaking the truth is essential at this juncture in any public forum except for her funeral or wake.

In my case, I will start with a list of positive things about her:
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That is all.

Horny Man Says That He Won’t Cum In Your Mouth

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My bad, it’s actually a German banker saying that Euro Zone deposits are safe:

German Finance Minister Wolfgang Schaeuble has said savings accounts in the euro zone are safe, adding that Cyprus is a “special case” and not a template for future rescues.

 In an interview with Bild newspaper published on Saturday, Schaeuble distanced himself from comments on Monday by Eurogroup chairman Jeroen Dijsselbloem, who said the rescue programme agreed for Cyprus – the first to impose a levy on bank deposits – would serve as a model for future crises.

 “Cyprus is and will remain a special one-off case,” Schaeuble said.

 “The savings accounts in Europe are safe.”

If you believe a German Finance minister right now, I have a bridge in Brooklyn that I want to sell you.

Just a “special case.”  Yeah…Sure.

Because they Do Not Want to Pay to Get Screwed

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It appears the the Russians are not going to be extending additional credit to Cyprus, nor are they going to drop the interest or extend the loans that they have already made.

Felix Salmon is perplexed:

Paul Murphy, watching Cypriot finance Minister Michael Sarris returning empty-handed from Moscow, says that “Medvedev and co could not have played a worse hand during this crisis — and it’s not immediately clear why”. His point is that the most likely outcome right now — he calls it “popping the red pill” — is that big depositors at Laiki Bank (read: rich Russians) are likely to lose some 40% of their money. Since that will make Russia very unhappy, why is Russia doing nothing to prevent it?

I don’t pretend to understand Russian politics, but this move seems to me to be a classic high-risk, high-aggression play; think of Medvedev as a geopolitical hedge-fund manager or poker player, and it begins to make a bit more sense.

Firstly, it’s worth noting that Russia is actually moving backwards on the amount of help it’s likely to extend to Cyprus. When the bailout plan was first announced, it included Russia extending its existing €2.5 billion loan to the country by five years, as well as reducing that loan’s interest rate. Now, Russia is refusing to agree even to that.
More generally, Russia is taking an absolutist stance with respect to Cyprus. No, we won’t restructure the money you owe us. No, we won’t buy a bank off
you. No, we aren’t interested in your natural-gas reserves. And underlying it all, of course, an unspoken — and all the more powerful for being unspoken — physical threat to any Cypriot who causes powerful Russians to lose billions of euros.

I think, and noted in the comments, that there are a number of motivations for the Russians:

  • Medvedev and Putin believe that Frau Merkel (sound of horses whinnying) will demand a haircut of the Russians under any circumstances, both for political advantage, and because of the natural hostility of former residents of Warsaw Pact nations, who will gladly cut their nose off to spite the Russian face.
  • The second reason is that if the ultra-rich Russia tax evaders get dinged, in the future, they may decide to keep assets in, and pay taxes in Russia, because they see the cost of taxes being less than the cost of an IMF and an EU determine to f%$# them.
  • The third reason is that the Russians have been VERY concerned about their western near-abroad for centuries, it’s where they have been invaded from, and they feel that any expansion of the EU presages and expansion of NATO, which they see as a ring of steel intended to threaten them. If Cyprus, and honest hardworking depositors get boned, it is far less likely that places like the Ukraine, Georgia, Moldova, etc. will join the union.

Note that the reasons above are orthogonal, so it might be all of the above.

I do think that any tighter government integration in the EU will have to include some sort of government structure which prevents German hegemony, something like the bicameral structure of the US Congress, because this whole “Germany runs Europe” thing is working about as well as it did the last time.

I Like the Way that This (These) Guy(s) Think

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This proposal for Cyprus is brilliant:

So TMM propose the Cypriot Government do the following  – they’ll have to do it very quickly to avoid the ECB panicking and pulling back the ELA cash lent against dodgy collateral. Once done, the ECB will not be able to do anything about it.

  1. Transfer all bank deposits & unencumbered assets from the existing Cypriot banks to new bank holding companies: e.g. Cyprus Phoenix Bank. This should include the transfer of IT infrastructure, the branch network & any tangible assets like real estate (e.g. the banks’ HQs).
  2. Let the old banks go bankrupt, leaving the ECB with EUR 9bn of losses and wiping out both the subordinated & senior bondholders (EUR 1.75bn).
  3. These new banks are now adequately capitalised & under EU law, the ECB will not be able to prevent their participation in Target 2 via the Central Bank of Cyprus. The ECB may well kick & scream, but there will be nothing they can do about it.
  4. Domestic Bills/Bonds haircut by 80% for non-Cypriot banks. Although their non-bank ownership is small, every little helps, & using JPM’s ownership estimates, this would produce ~EUR 820m.
  5. The international bonds under UK (with a 75% CAC hurdle) are certainly tough to PSI, but let’s all be realistic, there’s no money left & government debt is at astronomically large amounts of GDP. TMM believe that Cyprus will be more successful than market punters reckon in restructuring this debt. And of course, they can also just unilaterally default on the debt. Again, an 80% haircut here sounds realistic, producing EUR 3.04bn.
  6. Adding the Gas reserve privatisation (which JPM estimate at EUR 4.2bn), TMM have found EUR 18.9bn. 
  7. Cyprus could also, of course negotiate with the Russians to restructure the EUR 2.5bn loan, and if they are able to get say 20% NPV reduction on this, they could make the terms on the international bond restructuring less-onerous.

I’m not a fan of the proposal to privatizing the gas reserves, I think that it’s stupid to sell the future for pennies on the dollar, but otherwise I like it.

It appears legal, and it legally f%$#s the powers that be of finance, and it doesn’t make the people of Cyprus pay for their banksters fraud.

Them that broke the world should pay, but that will never happen.

New Zealand Decides Looks at the Mess that is Cyprus, and Decides that it Has a Purty Mouth

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When Troika (really, the Germans) decided that the solution to Cyprus’ problem with its banks was to take money from insured accounts, they had no idea the firestorm that it would unleash.

It appears that the Troika (really, the Germans) have found the limits of the authority, and hence the misery, that they can inflict, and so the Cypriot Parliament voted down the proposal to take money from depositor accounts:

The Cypriot parliament has thrown out a controversial plan to skim €5.8bn (£5bn) from savers’ bank accounts, in a move that risks plunging the eurozone into a fresh crisis and heightens expectations that the cash-strapped country will seek a funding lifeline from Russia.

Cyprus has just 24 hours to find a solution to its funding gap before its banks are due to reopen following the dramatic no vote on Tuesday night, which failed to support a hastily renegotiated change to the original deal.

Late on Tuesday night the eurozone governments said that despite the vote Cyprus would still need to raise the €5.8 bn – a third of the €17bn bailout.

There are limits to bailing out hedge funds and large European banks, I guess.

Unfortunately, the good folks in New Zealand, which, as Yves Smith observes is already a haven for fraudulent corporations, had decided to abandon the whole concept of insuring bank deposit:

Picture this: you check your bank balance and see that your $1000 lies safely in your savings account.

That night you switch on the evening news and find to your horror that your bank has failed.

It turns out that the Government has had to move quickly, and has placed your bank in statutory management.

The next day you check your bank balance and you find that you have taken what is referred to in the banking industry as a “haircut”.

In other words, part of your savings remain, let’s say 80 per cent, but 20 per cent of it has been frozen – perhaps forever – while the statutory manager sorts out the mess.

You have just entered the world of Open Bank Resolution (OBR).

It may come as a surprise that the Reserve Bank already has the power to freeze bank deposits. The problem for the central bank has been a lack of technical infrastructure to implement the policy, should the need arise. The bank said last week that it was in discussion with the banks on “pre-positioning” their systems for OBR.

Un f%$#ing believable

A press release from the a New Zealand Green Party MP follows after the break:

National planning Cyprus-style solution for New Zealand

Tuesday, 19 Mar 2013 | Press Release
Contact: Russel Norman MP
Tags: Banking & Finance, Smart Economics, Economics

The National Government is pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.

Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.

“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.

“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.

“While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.

“Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.

“If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference.”

Dr Norman questioned the Government’s insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.

“Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people’s deposits up to a maximum ranging from $100,000 – $250,000,” Dr Norman said.

“OBR is not in line with Australia, which protects bank deposits up to $250,000.

“A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.

“Deposit insurance will, however, require the Reserve Bank to oversee and regulate our banks more closely – a measure which is ultimately the best protection against bank failure.”

“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.

“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.

“While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.

“Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.

“If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference.”

Dr Norman questioned the Government’s insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.

“Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people’s deposits up to a maximum ranging from $100,000 – $250,000,” Dr Norman said.

“OBR is not in line with Australia, which protects bank deposits up to $250,000.

“A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.

“Deposit insurance will, however, require the Reserve Bank to oversee and regulate our banks more closely – a measure which is ultimately the best protection against bank failure.”

Your Daily Grillo

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The 5 Star Party will ask the Italian President to form the next Italian government:

Beppe Grillo’s anti-establishment 5-Star Movement said on Sunday it wanted to lead Italy’s next government following last month’s inconclusive election and reiterated that it would not agree to an alliance with any other party.

The movement’s newly elected parliamentary leaders told reporters it would make this position clear to President Giorgio Napolitano when he begins consultations later this month on the formation of a government.

“Our proposal will be a 5-Star government,” the movement’s Senate leader Vito Crimi said after a meeting of its lawmakers in a Rome hotel.

It is unlikely that the other parties would accept a government led by the 5-Star Movement. This is partly because of policy differences and partly because although it was the most voted single party at the election, 5-Star has fewer seats in parliament than the center-left and center-right coalitions.

I think that Italian politics is going to get even more bizarrely surreal, which, considering Silvio Berlusconi’s multiple elections as Prime Minister, I did not think was possible.

BTW, here is a video of Beppe Grillo’s comedy routine from 1998.

Its a bit evocative of Carlin, though I think that there is a lot of Italian culture context that I am missing.

H/t Naked Capitalism for the vid.

God Bless the Swiss People*

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The Swiss voters just overwhelmingly approved a referendum for executive compensation reform, including binding shareholder votes on executive pay, bans on golden parachutes, and merger bonuses:

Swiss voters have approved measures to curb executives’ pay and outlawed golden parachutes that can result on directors pocketing multimillion-pound payoffs.

Exit polls suggested almost 68% of those who turned out for Sunday’s referendum, and all of Switzerland’s 26 cantons, were in favour of the measures, which also include giving shareholders a binding vote on executive pay, banning golden hellos and banning bonuses that encourage buying or selling firms. Boards of directors that fail to comply face jail terms.

………

Minder says the massive sums demonstrate that company boards have lost control of pay and prefer to fork out “astronomical” salaries rather than pay dividends to shareholders.

Minder told the Swiss daily Le Temps that the only solution was to give shareholders the power to set pay. If his law is passed all compensation packages to board members and company heads would need their approval.

According to the proposed law, executives of listed companies who failed to abide by the new rules could face up to three years in jail and fines amounting to up to six years’ salary.

Needless to say, the elites are freaking out over this:

The Swiss government and the upper house of parliament opposed the initiative, warning it could provoke an exodus of big companies.

Minder rejected this, saying that the level of disquiet over executive pay and bonuses in other countries meant his initiative could become Switzerland’s “best export product”.

“It’s a great advantage for investors,” he said, suggesting that instead of chasing companies away, such a law would entice investors to set up firms in Switzerland.

I’m inclined to agree that this will make businesses more competitive, not less competitive.

The amount of capital that has been wasted on paying people about whom little is exceptional but their own sense of self-worth is staggering.

If the Swiss vote triggers a race to the bottom in executive compensation, the rest of us will benefit.

*I cannot f%$#ing believe that I f%$#ing said that.

Quote of the Day

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Even though, as the headline shows, I have little Italian, and less Italian politics, I’m so chuffed that Beppe Grillo did well in yesterday’s Italian elections — even though he was neither a wizened, permanently tanned, and shamelessly unrehabilitated whoremonger nor a Goldman Sachs alumnus (sorry for the redundancy) — that I thought I’d do a wrap-up before conventional wisdom completely congeals. Alert readers will, of course, correct and amplify this post in comments!

—Lambert Strether of Corrente on the recent Italian elections.

(emphasis mine)

Of course, the whoremonger is Berulusconi, and the Goldman Sachs alum is Monti.

The election results were as follows:

Italy’s center-left coalition won the most votes in the parliamentary election, mustering 110,000 more votes than its traditional rival, final data from the Interior Ministry showed early Tuesday.

 The victory came thanks to inclusion of the SVP party, a regionalist movement that has long ruled the German-speaking South Tyrol region.

 Pier Luigi Bersani’s center-left coalition had 29.54% of the total vote while Silvio Berlusconi’s center-right coalition had 29.18% of the vote.

 Under Italy’s electoral law, the winner of the most votes wins 340 of the 630 seats in the lower house, while losers split the rest proportionally.

 “It’s too close to call,” said Angelino Alfano, the head of Mr. Berlusconi’s People of Freedom party, signaling he may demand a closer scrutiny of the vote tally.

 In fact, Italy’s two main coalitions of the past 20 years together claimed less than half of all eligible votes, and their combined total fell more than 10 million from the last national vote in 2008.

 Turnout was the lowest in Italian history at 75%, but the big surprise was Beppe Grillo’s Five-Star Movement, an anti-establishment party born only three years ago, which took 25.55% of the vote. Activists in his party said they had no interest in negotiating “little stitched-up backroom deals.”

 Outgoing Prime Minister Mario Monti’s centrist coalition won 10.56% of the vote as support for the two veteran politicians he chose to ally with collapsed. Gianfranco Fini, once Mr. Berlusconi’s virtual dauphin, won 0.465 of the vote while Pierferdinando Casini’s UDC party, which claims to be the heir of the Christian Democrat party that ruled Italy for decades, won 1.78%, final data showed.

I would disagree with the assessment on Monti’s lack of performance.

This vote, albeit one with low turnout by Italian standards, was about a rejection of austerity and German Hegemony in the EU.

Of course, it did not help that Monti was completely clueless about  how widely loathed the very serious people are loathed: (H/t Paul Krugman)

There was a symbolic moment in the Italian elections when I knew that the game was up for Mario Monti, the defeated prime minister. It was when in the middle of the campaign – in the midst of an anti-establishment insurgence – he took off to Davos to be with his friends from international finance and politics. I know his visit to the elite gathering in the Swiss mountains was not an issue in the campaign, but it signaled to me an almost comic lack of political realism.

(emphasis mine)

Yes, sipping champagne with the rich ratf%$#s who ruined the world economy, and then end up even richer, that’s a productive use of your time.

I’m with Simon Johnson on this:  We need to break the back of the privileged class that broke the world as a first step to fixing the world.

The so-called “Technocrats” like Monti are just water carriers for these folks, and as such, are a part of the problem, not a part of the solution.

To Be Fair, You Cannot Say this in The New York Times

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Krugman talks about Monti and his catastrophic embrace of austerity when he was installed by the European Union.

What I want to point out is this rather interesting paragraph buried toward the end of his OP/ED

For Mr. Monti was, in effect, the proconsul installed by Germany to enforce fiscal austerity on an already ailing economy; willingness to pursue austerity without limit is what defines respectability in European policy circles. This would be fine if austerity policies actually worked — but they don’t. And far from seeming either mature or realistic, the advocates of austerity are sounding increasingly petulant and delusional.

(emphasis mine)

It’s an odd turn of phrase, “The proconsul installed by Germany,” and I’m wondering if he is making an oblique reference to Vidkun Quisling.

Of course, were he to make a direct reference to the infamous Norwegian collaborator in the pages of The Times, at least in the terms of current policy and politics, he would not be in the pages of The Times for much longer.

Firewood Versus Honey Boo boo

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I’ll go with the aesthetic sensibilities of the Norwegian people:

The TV program, on the topic of firewood, consisted mostly of people in parkas chatting and chopping in the woods and then eight hours of a fire burning in a fireplace. Yet no sooner had it begun, on prime time on Friday night, than the angry responses came pouring in.

“We received about 60 text messages from people complaining about the stacking in the program,” said Lars Mytting, whose best-selling book “Solid Wood: All About Chopping, Drying and Stacking Wood — and the Soul of Wood-Burning” inspired the broadcast. “Fifty percent complained that the bark was facing up, and the rest complained that the bark was facing down.”

He explained, “One thing that really divides Norway is bark.”

One thing that does not divide Norway, apparently, is its love of discussing Norwegian wood. Nearly a million people, or 20 percent of the population, tuned in at some point to the program, which was shown on the state broadcaster, NRK.

In a country where 1.2 million households have fireplaces or wood stoves, said Rune Moeklebust, NRK’s head of programs in the west coast city of Bergen, the subject naturally lends itself to television.

“My first thought was, ‘Well, why not make a TV series about firewood?’” Mr. Moeklebust said in an interview. “And that eventually cut down to a 12-hour show, with four hours of ordinary produced television, and then eight hours of showing a fireplace live.”

………

But the real excitement came when the action moved, four hours later, to a fireplace in a Bergen farmhouse.

Perhaps you have seen a log fire burning on television before. But it would be very foolish to confuse Norway’s eight-hour fireplace extravaganza on Friday with the Yule log broadcast in the United States at Christmastime.

While the Yule log fire plays on a constant repeating loop, the fire on “National Firewood Night” burned all night long, in suspensefully unscripted configurations. Fresh wood was added through the hours by an NRK photographer named Ingrid Tangstad Hatlevoll, aided by viewers who sent advice via Facebook on where exactly to place it.

For most of the time, the only sound came from the fire. Ms. Hatlevoll’s face never appeared on screen, but occasionally her hands could be seen putting logs in the fireplace, or cooking sausages and marshmallows on sticks.

“I couldn’t go to bed because I was so excited,” a viewer called niesa36 said on the Dagbladet newspaper Web site. “When will they add new logs? Just before I managed to tear myself away, they must have opened the flue a little, because just then the flames shot a little higher.

Yes, this is deliciously weird, but this is a hell of a lot less pathological than the American regime of reality programing.

Attention Greece: You Now Have the Chance to Screw the Germans, Do IT!

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I was listening to NPR this morning, and discovered that the privatization/fire sale of Greek owned state assets that the IMF and the EU (really, the Germans) is not going as as quickly as expected, and one of the reasons is that some of the privatization deals actually effect the Germans and the rest as well, and they are objecting:

European governments, as well as Washington, are reportedly concerned over Russia’s possible expansion into Europe. Gazprom, Russia’s state-owned gas monopoly, has made a high bid for the Greek gas utility company. Media reports suggest the privatization agency has delayed choosing a buyer — under international pressure.

 There are also other strategic concerns, such as conflict with China over Greek ports.

 George Stathakis, an economist and lawmaker for the opposition leftist party Syriza, says China wants to expand its current control of a part of the Port of Piraeus and also buy the south-north railway link, raising fears China will flood the European markets with its inexpensive products.

 “German and Dutch interests are opposing the idea of using Greece as the primary source of Chinese trade with Europe,” Stathakis says.

(emphasis mine)

It’s not like the cheap Chinese crap will put Greek manufacturers out of business.  The Germans and the Dutch already did that.

Someone Greek will unload the ships, and someone Greek will fuel the ships, and someone Greek will operate the locomotives.

If some Germans lose their jobs over this, why should Greeks care?

Sauce for the gander.  The EU austerity caucus, with the Germans at the lead, had demanded, and got the dismantlement of the Greek public health insurance system.

Share the misery.

Some Good News

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It looks like Europe will be implementing a financial transaction song with teeth:

The details of Europe’s new financial transactions tax won’t be made public for a few weeks, but the FT’s Alex Barker has seen a draft, and it looks impressively robust. The tax is being implemented by 11 countries, including most importantly Germany and France, and it’s going to be levied at two levels: 0.1% on securities trades, and 0.01% on derivatives trades. It’s also going to be very difficult to dodge: any trader whose institutional headquarters is in one of the 11 countries will have to pay the tax, as will all transactions taking place in those countries, and all transactions involving securities issued in those countries.

The tax will have two main purposes. The first is to raise substantial tax revenues on the order of $45 billion per year; the second is to discourage financial speculation. I’m hopeful on the former, but less so on the latter.

As Robert Peston and Avinash Persaud pointed out back in 2011, financial transactions taxes work pretty well: even the UK, which is implacably opposed to the European tax and which won’t ever join such a scheme, levies a surprisingly large 0.5% tax whenever anybody — anywhere in the world — trades a UK stock. And yet, somehow, London remains the first choice for international companies looking for a place to list their shares.

I aggee with Felix Salmon’s closing:

So let’s hope that this tax gets introduced; that it works; and that the rest of the world, seeing the costs and the benefits, starts to follow suit and sign on too. The area covered by the initial 11 countries is big enough that the tax will work well at inception, but as more and more countries join the scheme, the tax will become increasingly efficient and effective. Maybe, eventually, it could even incorporate the U.S.

Personally, I would like to see the tax on securities should be a bit hither (about 0.3%) derivatives should be much higher (at least .1%, and better yet something north of ½%), but I really want to see this camel’s nose to get under the tent.