Category: Europe

Well Duh!!7

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Reviewing recent events, French President Nicolas Sarkosy has concluded that Greece should never have been admitted to the Euro zone:


French President Nicolas Sarkozy has said allowing Greece into the eurozone in 2001 was a “mistake”.

He said Greece was “not ready” at the time. But, he added, it could be rescued thanks to Wednesday’s EU deal on the euro debt crisis.

This should surprise no one.

Greece, except by virtue of its geography, is closer to a 3rd world nation than it is a 1st world nation.

Any sensible individual would have noted that Greece was iffy for entry into the EU’s free trade zone, so it was always clear that a common currency would be a stretch.

What happened was that the Eurocrats in Brussels, Paris, and Bonn/Berlin thought that the post Berlin Wall Unity Schtick European Union trumped reality.

FWIW, I stil think that the solution here, at least in the short term, is to kick Germany out of the Euro, and allow. A rising Deutsche Mark to fix imbalances.

It’s the Vampire Squid’s World, We Just Live in It

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So when Goldman Sachs gets caught helping clients evade taxes, and British authorities hand them a get out of jail free card:

Britain’s tax authorities have given Goldman Sachs an unusual and generous Christmas present, leaked documents reveal. In a secret London meeting last December with the head of Revenue, the wealthy Wall Street banking firm was forgiven £10m interest on a failed tax avoidance scheme.

HM Revenue and Customs sources admit privately that the interest-free deal is “a cock-up” by officials, but refuse to say who was responsible.

Documents leaked to Private Eye magazine and published in full by the Guardian record that Britain’s top tax official, HMRC’s permanent secretary Dave Hartnett, personally shook hands on a secret settlement last December.

Hartnett is due to be questioned on Wednesday by the Commons public accounts committee. The leaked documents suggest that a previous PAC chairman, Edward Leigh, was misled when he was told it was illegal to reveal details of such cases to parliament.

Leaked legal advice from James Eadie QC, which the Guardian also publishes today, says the opposite. Hartnett has discretion to reveal such facts to the parliamentary watchdog, according to the advice.

………

In the 1990s, Goldman set up a company offshore in the British Virgin Islands. This entity, called Goldman Sachs Services Ltd, supposedly employed all of Goldman’s London bankers, who were then “seconded” to work there.

The device appears to have been designed to conceal the size of the bonuses. Judge David Williams said in 2009 that it was “a way of keeping information about the GS accounts and payroll out of the public domain and confidential”.

Goldman also begrudged paying its share of UK national insurance on the six-figure bonuses. Court judgments disclose that a typical Goldman bonus to a junior banker was £143,000 in 1998, and £191,000 the following year.

The company, along with 21 investment banks and other firms, purchased blueprints for an avoidance scheme called an employee benefit trust (EBT). The bonuses were indirectly invested into elaborate share option schemes.

It took the Revenue until 2005 to demonstrate in court that these EBTs were merely illegitimate tax avoidance devices. The 21 other firms surrendered, and handed over what they owed.

But Goldman Sachs refused to pay its £30.81m bill. Instead the city firm Freshfields and the tax QC David Goldberg fought tooth and nail on Goldman’s behalf through the courts. By 2010, according to a public judgment, the unpaid bill with accumulated interest had mounted to £40m.

Seriously, we need to take these muthas down hard.

Stage Two of the Phone Hacking Scandal

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It looks like the government and the police are using Britain’s odious Official Secrets Act in an attempt to ferret our the leakers:

The Metropolitan police are seeking a court order under the Official Secrets Act to make Guardian reporters disclose their confidential sources about the phone-hacking scandal.
In an unprecedented legal attack on journalists’ sources, Scotland Yard officers claim the act, which has special powers usually aimed at espionage, could have been breached in July when reporters Amelia Hill and Nick Davies revealed the hacking of Milly Dowler’s phone. They are demanding source information be handed over.
The Guardian’s editor, Alan Rusbridger, said on Friday: “We shall resist this extraordinary demand to the utmost”.

Tom Watson, the former Labour minister who has been prominent in exposing hacking by the News of the World, said: “It is an outrageous abuse and completely unacceptable that, having failed to investigate serious wrongdoing at the News of the World for more than a decade, the police should now be trying to move against the Guardian. It was the Guardian who first exposed this scandal.“

The first rule of law enforcement is that the Cops will go after you if you embarrass them, and so now they are going after the paper that broke the story.

They haven’t invoked the Act againt the Murdoch papers, where police took bribes for information, but they are going after the Guardian, where police misconduct was revealed.

The fact that they are bringing out the big guns indicates that this is going to be getting a lot worse very soon.

Another Gift from the Austerity Confidence Fairy

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Thankfully, it’s the UK, and not us, but this is unbelievably grim:

George Osborne’s austerity programme will cut the living standards of Britain’s families by more than 10% over the next three years as those on the lowest incomes suffer most from the tax increases and spending cuts designed to reduce the budget deficit.

A study from the Institute for Fiscal Studies, the UK’s leading experts on the public finances, concludes that the chancellor’s strategy will result in greater inequality and rising child poverty, throwing into reverse progress made in the final years of the last Labour government.

The bleak picture painted by the IFS will be used by opponents of the chancellor’s austerity measures to call for a plan B to generate faster economic growth. There is likely to be further pressure on Osborne on Monday as the head of his independent commission on banking, Sir John Vickers, outlines measures for banking reform.

I’m more of a cynic than the author, Larry Elliott, economics editor of The Guardian, because I believe that part of the reason that Osborne is supporting this is because of the, “greater inequality and rising child poverty, throwing into reverse progress made in the final years of the last Labour government.”

They are determined to roll back whatever minor progress occurred under Blair and Brown, and move back to where Thatcher and Major left the nation.

And once they’ve done that, they want to take Britain back to the Dickensian standards of the middle of the 19th century.

It’s Probably Just a Bait and Switch…

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But as a part of the joint announcement by Sarkosy and Merkel on greater EU integration to fix the current series of debt crises they have proposed to impliment a Tobin tax on financial transactions:

The French president, Nicolas Sarkozy, and German chancellor, Angela Merkel, announced the dramatic proposals after a two-hour mini-summit. They also called for the imposition of tighter restrictions on member country’s deficits and announced a synchronising of the tax policies of their own two countries. Sarkozy has also secured the support of Merkel for a Tobin tax – a financial tax on all international transactions – to raise funds to ease the crisis engulfing the European economy.

The amount of money generated by a Tobin tax would actually be smaller than generally anticipated, because much of the financial activity is pure short speculation, where extremely short term bets with payoffs of a fraction of a percent, create profits for doing nothing.

The banks suggest that such a tax is a bad idea because it would discourage such activity, but I consider it to be an even more valuable feature than any potential revenue raised.

Much of the unproductive rent seeking that occurs in our economy is an artifact of just such a behavior.

So, to paraphrase this xkcd cartoon, Mission F%$#ing Accomplished:

Of course, in reality, it’s just smoke and mirrors:  The Tobin Tax proposal is just a way to sell their idea for a European balanced budget amendment, and at the end of the day, the Tobin Tax will go away, and the Banksters will get what they want, because that’s how the game is played.

Mark Thoma has a good analysis of the tax, and you can also check out the Wiki page.

ECB Concludes that Gasoline is not the Best Way to Put Out a Fire

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David Bowie Says the Same

The European Central Bank has caught a clue, and realized, for this month at least, that there is no threat of inflation, so they are buying bonds and not raising their interest rates.

So, after pointless and stupid rate hikes in the teeth of a recession, they have decided that perhaps they were being stupid with their focus on non-existent inflation.

Seriously, if there has been a central bank that a greater record of rank incompetence on dealing with a recession, I’d be hard pressed to name it.

In all fairness, I would note that ECB is very limited in its charter.  Unlike the Federal Reserve, for example, is has no duty to maintain stable employment, just to forestall inflation, and so it’s all that they look for.

BTW, It Ain’t Just US Conservatives Who Want to F%$# Us All

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Because British Prime Minister David Cameron’s brain trust is hard at work:

Ministers yesterday disowned controversial ideas floated by David Cameron’s strategy guru, including the scrapping of maternity leave and consumer rights and the closure of jobcentres.

Steve Hilton came under fire after it emerged that he had put forward numerous proposals to boost Britain’s fragile recovery. His friends blamed the disclosure on obstructive civil servants who do not admire his free-thinking approach to policy.

The 42-year-old former advertising man, who cycles to work and walks around Downing Street in a T-shirt and socks, is seen as one of Mr Cameron’s closest two advisers – the other being the Chancellor, George Osborne. The Prime Minister admires Mr Hilton’s original thinking although he often backs Mr Osborne when the two men clash. Insiders say Mr Hilton has a “scattergun” approach to policy ideas, many of which do not get off the ground. The suggestions leaked yesterday look certain to join the list.

What the f%$3 is wrong with this people?

Helmut Kohl Excoriates Angela Merkel

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And it’s not just the former German Chancellor, (with the caveat that he is denying that he said this now) who was at one point considered her mentor, as well as much of the CDU’s old guard have not taken to harshly criticizing her behavior in the crisis.

This is rather unsurprising.

Unlike in America, the mainstream right (the CDU) finds the idea of hosing down taxpayers to pay off bankers, particularly when it won’t solve the problem, to be a bad thing.

Hopefully this is a step in realizing that the problems with the Eurozone, at least those not centered in EU HQ in Brussels, flow from Germany, and how it used its influence to structure the Eurozone.

I Think that Jimmy Murdoch is Going to Jail…

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Of course, if the Parliamentary inquiry committee had sworn him in, it would have been even more likely.

You see, according to tow of James Murdoch’s staffers, he was specifically made aware of the phone hacking when he signed off on settlements with litigants:

James Murdoch has been accused of misleading the parliamentary select committee this week in relation to phone hacking, igniting yet another fire for the embattled News International boss to extinguish.

In a highly damaging broadside, two former News of the World senior executives claimed the evidence Murdoch gave to the committee on Tuesday in relation to an out-of-court settlement to Gordon Taylor, chief executive of the Professional Footballers Association, was “mistaken”.

The statement came as something of a bombshell to the culture, sport and media select committee, which immediately announced it would be asking Murdoch to explain the contradiction.

Colin Myler, editor of the paper until it was shut down two weeks ago, and Tom Crone, the paper’s former head of legal affairs, said they had expressly told Murdoch of an email that would have blown a hole in its defence that only one “rogue reporter” was involved in the phone-hacking scandal.

This contradicts what Murdoch told the committee when questioned on Tuesday.

As an aside on the media, if you want to follow this, I recommend two sources, the Guardian, which really went out on a limb in following this for years, and Keith Olbermann who has been on this like white on rice.

Here’s a Bit of Etiquette for All You Pie Flingers

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If you are going to fling a pie at some rich pig as a way of publicly taking them down a peg, the preferred, and traditional, pie is a cream pie, but you should include both a crust and a filling, even if the latter is just whipped cream (kind of lame).

That being said, I do not approve of the actions of comedian and political activist Jonathan “Jonnie Marbles” May-Bowles, who flung a pie tin full of shaving cream at Rupert Murdoch when he was testifying before Parliament. (His wife deflected the projectile, that’s love … and good reflexes)

Mr. May-Bowles, if you are to fling a pie at Rupert Murdoch, make it a real pie.

Murdoch Drops BSkyB Bid

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With almost every member in Parliament, of all the parties, chomping at the bit to pass a law to ban his bid to take over the UK’s biggest satellite network, he has announced that he will withdraw the bid:

Rupert Murdoch withdrew his bid for broadcaster BSkyB on Wednesday, as outrage over alleged crimes at his newspapers galvanized a rare united front in parliament against a man long used to being courted by Britain’s political elite.

The Australian-born billionaire’s U.S.-based News Corp, thwarted in a key move to expand its media empire in television, said it would keep its 39 percent of the highly profitable pay-TV network, but left investors guessing over whether it might try again to buy up the rest, or even sell up.

The withdrawal removes the most pressing political conflict the company faced. But a police probe and new public inquiries into the scandal and into media regulation as a whole may keep an unflattering spotlight on it and weaken the influence the 80-year-old media magnate has enjoyed in Britain for decades.

I think that this is a tactical move.  He’s holding onto his 30% stake in BSkyB, so if everything is back to business as usual in 9 months, I expect him to go for another bite at the apple.

I’m kind of hoping that  things won’t be back to “business as usual” in 9 months.

Rupert Murdoch Craps His Pants

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H/t Calculated Risk for the vid which puts everything in context nicely

In response to revalations that his one of Newscorp’s paper, News of the World, had hacked voice mails of dead soldiers’ families and a missing girl (later found to be murdered), Rupert Murdoch has decided to shutter the 168 year old tabloid:

Beset by a widening phone-hacking scandal, media mogul Rupert Murdoch pulled the plug Thursday on his News of the World, Britain’s best-selling weekly tabloid newspaper, which will shut down after publishing Sunday’s issue.

In a surprise announcement to the paper’s staff, James Murdoch, a top executive of the tabloid’s parent company and son of Rupert Murdoch, said the July 10 paper “will be the last issue of the News of the World.”

The feisty, hugely profitable paper, which has been continuously published for 168 years, “has a proud history of fighting crime, exposing wrong-doing and regularly setting the news agenda for the nation,” James Murdoch said. But those attributes “have been sullied by behavior that was wrong,” he said. “Indeed, if recent allegations are true, it was inhuman and has no place in our company. The News of the World is in the business of holding others to account. But it failed when it came to itself.”

Referring to the phone-hacking scandal, the younger Murdoch, deputy chief operating officer of his father’s News Corp., said the newspaper “failed to get to the bottom of repeated wrongdoing that occurred without conscience or legitimate purpose.” He added, “Wrongdoers turned a good newsroom bad and this was not fully understood or adequately pursued.” He pledged that “those who acted wrongly will have to face the consequences.”

BTW, it’s not just 1 dead girl, it appears that they hacked the phones of parents of some other missing girls.

People have already been arrested, specifically Andy Coulson, former editor in chief of News of the World, and former communications director for British Prime Minister David Cameron, as well as Clive Goodman, their former royal editor, who has been arrested on this matter before.

Additionally, it appears that this scandal has queered the deal that Murdoch had to buy satellite TV provider BSkyB, for the near term at least.


Pass the Popcorn

That being said I don’t think that it’s the business repercussions that have Murdoch running scared, it’s the possibility that he finds it likely that he, son James, could shortly be working in the prison laundry next to Conrad Black.

Heh.

How the Russians Develop Weapons

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The Russians have now successfully test-launched their Bulava missile:

Russia successfully tested on Tuesday its new Bulava intercontinental missile which Moscow aims to make the cornerstone of its nuclear arsenal over the next decade.

The Defense Ministry said the 12-meter long Bulava, or Mace, fired from a submarine near Russia’s border with Finland, successfully hit its target some 6,000 km (3,370 miles) away on the peninsula of Kamchatka in Russia’s far east.

“The launch was successful in all respects. The Bulava missile delivered its warhead to the target area in the Kura testing site in the Kamchatka Peninsula region,” spokesman Colonel Igor Konashenkov told Interfax.

The Bulava, which will face four more trials this year before being introduced into service this year or next, had failed half of its previous fourteen trials, calling into question the expensive missile program.

The program was never in serious question.

The Russians do missile testing: test, fix, test, fix.

Americans just do tests to validate their analysis, we operate under the assumption that our missiles will, after a few decades of simulation and systems analysis will work perfectly out of the box.

One of these methods is faster and cheaper, but it is not ours, and catches serious problems early enough that when you do catch a stinker, you don’t have so much invested in your techno whiz bang that you cannot abandon it.

Germany F%$#s Up Again

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While I believe that the dissolution of Yugoslavia was inevitable once Milosevic took control of the executive council, the German decision post unification to feel their diplomatic oats to recognize the independence of Slovenia set in motion a cascade of events that led to the orgy of violence and Genocide in the former Yugoslavia.

Well, the just did it again, by recognizing the rebels in Benghazi as the government of Libya :

Germany, which declined to participate in the NATO air campaign against Libya, on Monday recognized the opposition National Transitional Council as the legitimate representative of Libya, Foreign Minister Guido Westerwelle said during a visit to the rebel capital of Benghazi.

The announcement by Mr. Westerwelle comes after weeks of hesitation by Germany over which rebel leaders or movements, if any, it would recognize as an alternative to the government of Col. Muammar el-Qaddafi.

“The Transitional Council is the legitimate representation of the Libyan people,” Mr. Westerwelle said after arriving in Benghazi. “With this council, we want to support the building of a democratic and law-abiding Libya.”

Germany will open a small mission in Benghazi, joining the United States, the European Union, the United Nations, Britain, France, Spain, Malta and Qatar, which have established a presence there in the past several weeks. Washington, however, has not extended diplomatic recognition to the council.

This has fiasco written all over it.

Italian Voters Finally Refuse to Cover Berlusconi’s Ass

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I think that the Italian people may finally had their fill of Silvio, because they repealed a law granting him immunity, along with repealing laws restarting the Italian nuclear program,. as well as one privatizing the water supply:

Prime Minister Silvio Berlusconi suffered a stinging political defeat on Monday when voters overturned laws passed by his government that would have restarted Italy’s nuclear energy program, privatized the water supply and granted him immunity from prosecution.

Analysts said the government was not likely to fall immediately over the results, which came from a popular referendum — the first since 1995 to draw the quorum of 50 percent plus one vote required to overturn the laws.

But just weeks after Mr. Berlusconi’s candidates lost mayoral races in Milan and Naples in elections he had billed as a referendum on his own popularity, Monday’s results pointed to a new reality: the man who once had his finger on Italy’s pulse appeared to be losing touch.

The truth, for course, is that he’s never really had his fingers on Italy’s pulse.

What he has had is a monopoly on private TV in Italy, and control over all the television in Italy while he is in power.

Come to think of it, what Silvio Berlusconi has is a microcosm of America’s media oligopoly.

Imagine what the world would be like if Sarah Palin were Rupert Murdoch, and you will understand the hell that was Italian politics.

Pleasant dreams.

It’s Official, Libya is a Bug Hunt

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So a NATO Spokesman has just admitted that NATO is attempting to assassinate Muammar Gaddafi:

A U.N. resolution justifies the targeting of Libyan leader Moammar Gadhafi, a senior NATO military official with operational knowledge of the Libya mission told CNN Thursday.

Asked by CNN whether Gadhafi was being targeted, the NATO official declined to give a direct answer. The resolution applies to Gadhafi because, as head of the military, he is part of the control and command structure and therefore a legitimate target, the official said.

NATO has been ramping up pressure on the regime, employing helicopters last weekend for the first time against Gadhafi’s forces. Explosions are heard often in Tripoli, evidence of allied air strikes.

NATO began bombing Libya on March 31, under a U.N. mandate to protect civilians who have been targeted by Gadhafi’s military.

Unsurprising. Since Gadhafi’s forces are not folding up under the air assault, the French and the British are desperate to avoid defeat, or worse, the need to send in ground troops, either of which will sink both UK PM Cameron and French President Sarkosy.

This was intended to be a neat neo-colonial adventure with the attendant electoral boost,  killing a few “wogs” for a few votes, but now its looking like a complete clusterf%$#.

It Appears that My Prescription for Europe is Not Completely Nuts

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Because Roosevelt Institute fellow Marshall Auerback thinks that the solution is to get Germany out of the Euro zone as well:

…

Perhaps we’re looking at this the wrong way around: Given the continued German aversion to more broadly-based pan European style fiscal programs, which its populace continues to see as nothing but bailouts for lazy Mediterranean free-loaders, there is another way to solve the euro crisis.

Let Germany leave the euro zone.

Let’s leave aside the politics for a moment as there are many who believe that a German exit from the euro zone in effect means the end of the euro because a number of other countries would leave.

So consider this exercise solely from an economic context: The likely result of a German exit would be a huge surge in the value of the newly reconstituted DM. In effect, then, everybody devalues against the economic powerhouse which is Germany and the onus for fiscal reflation is now placed on the most recalcitrant member of the European Union. Germany will likely have to bail out its banks, but this is more politically palatable than, say, bailing out the Greek banks (at least from the perspective of the German populace).

I’m not sure if it is reassuring or terrifying that some people who actually know about this sh%$ are agreeing with me.

Fundamentally, the Euro, at Germany’s insistence, was constructed as a bankster’s paradise, and their actions since the meltdown have only made this worse.

Read the full article, and the comment thread, it’s good stuff.