Mathew D. Rose: When European Politicians Cannot Read the Handwriting on the Wall

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By Mathew D. Rose, a freelance journalist in Berlin

Despite the alarming results of the European elections last week, German Chancellor Angela Merkel remained unflinching. The success of the elections, claimed Ms Merkel, confirmed that “We need a policy aimed at competitiveness and growth.” There might have been a few setbacks in the past six years, but for Ms Merkel the EU’s strategy is an unequivocal triumph. So what is missing? Her view: “Policy has to connect with the people.” In other words, austerity as usual needs to dressed in new, improved polemic.

Unfortunately Germany’s European policy has not only failed to connect with the people, even worse, it does not connect with reality.

The German ideology of austerity has led into a cul-de-sac of high unemployment, increased debt and recession for much of Europe. There is nothing wrong with trying to convince other people to believe in the confidence fairy as Paul Krugmann calls it, but it’s inherently off-base, even reckless, to believe in one’s own fable. Over the course of the current economic crisis in Europe, I do not believe I have ever heard so many references to the proverbial light at the end of the tunnel since the Vietnam War – and we know how that ended.

One thing is certain: The denizens of Europe, with the exception of the Germans, have lost faith not only in the confidence fairy and an EU economic recovery, but the EU as well. For many it has become a collection of corrupt politicians and quislings of the Germans.

Just to list of few highlights of the election: in Britain the explicitly anti-European-Union UKIP won the most votes. It was the first time in over a hundred years that one of the established parties did not win a national election. In France, another vehemently anti-EU party, the far right Front National trounced the mainstream parties. In Spain, for the first time since the return of democracy the two dominant parties together did not even secure half the votes, falling form 80 percent at the last European elections. Podemos, a party created just a few months before the election with the political goal “to stop Spain being a colony of Germany and the Troika” attained almost ten percent. In Greece, the leftist Syriza party, which has promised to revoke the bailout plan of the Troika, was the most successful party with over a quarter of the votes. Finally, in Portugal, the party responsible for the Troika’s austerity programme lost a third of its votes, being overwhelmed by the Socialists.

But there is more to the story. Although only 43 percent of the electorate cast votes, as in the 2009 elections, many were motivated by the opportunity to vote against the European Union and its austerity policy, or as in Germany, they had gone to the polls anyway to vote for referendums or in local elections. Of the 28 nations participating, only six had a voter turnout of over 50% and two of these, Belgium and Luxembourg, have compulsory voting. Four, Slovakia (13 percent), the Czech Republic (19.5 percent), Slovenia (20.96 percent), and Poland (22.7 percent) did not attract a quarter of their eligible voters. In fact only about 25 percent of voters in East European nations, the most recent EU members, bothered filling in a ballot.

While the EU leadership has over the years successfully rid itself of voter interference, which had precipitated apathy and resignation, it has now galvanized many others. While the EU nomenklatura is auspiciously ignoring this development, numerous politicians have gotten the message. While the leaders of Spain’s and Hungary’s Socialist parties and the Labour Party leader in Ireland resigned following the disastrous performance of their partes, the United Kingdom’s Prime Minister David Cameron is running amok. He has recognized that the EU crisis is radically transforming European politics, which now threatens the political predominance of his own party as well as his premiership in the upcoming general election next year.

The results of this EU election may not be repeated in national elections; still, this was unequivocally not a mandate for current EU policy. This has not fazed many EU member state politicians. Just how alienated European politicians are from the society they live in has become apparent in the follow up to the election. These officials seemed convinced that the European election rout was simply a flash-in-the-pan protest vote soon to be forgotten. Instead they are squabbling about who shall be named as the next EU Commission president.

In keeping with this attitude, the voter repudiation was followed by the EU commission asking member countries for a £3.8billion cash increase to its budget. Some of this is destined to support the new regime in Ukraine. Many EU nation governments will now have to explain to voters why they are subjected to severe austerity, while the EU spends billions of Euros to prop up a corrupt plutocracy in Ukraine that until recently was subsidized by Russia.

Probably the most puzzling aspect of the continuing EU crisis is the reaction of its youth in the affected countries, where unemployment for their age group can be as high as 50 percent, as in Spain and Greece. Many migrate, but there must be a great amount of anger and resentment when a young Spaniard with a master’s degree is forced to accept menial work in Germany, with little perspective of returning to a job at home, much less a well-paid one. Protest movements up to now have been ephemeral. A change here may well be the next major development.

Meanwhile the European Central Bank has promised major measures to combat the looming possibility of deflation in the EU, but this will as usual be too little and too late. As a solution to high unemployment and feeble growth or renewed recession it will certainly fail, as long as the German ideology demands more austerity.

The ECB’s Mario Draghi might wish for more potent measures, but he has been exposed as a feeble actor, powerless against German hegemony. His great moment is history occurred at the height of the Euro crisis in 2012 when he promised to do whatever was necessary to protect the euro zone from collapse. I cannot however imagine that the Germans ever planned to back this up with funds – which they never promised. After the success of the anti-EU party “Alternative for Germany,” the situation has markedly changed. The mobilization of German racism and chauvinism by Merkel’s government to force austerity down the throats of most of the EU has now escaped its cage and can easily turn on its creator.

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30 comments

  1. jgordon

    “Probably the most puzzling aspect of the continuing EU crisis is the reaction of its youth in the affected countries, where unemployment for their age group can be as high as 50 percent…”

    This is an either/or fallacy. Although austerity or stimulus policies would certainly result in different outcomes, the lives of the people dependent upon the industrial economy would in the main still get much crappier over time either way. A way of mitigating that outcome would be to just say to hell with money and start conducting economic transactions as if there were plenty of alternatives to it–which I am personally seeing a lot around where I live. This is a factor that may make the situations in Greece et al appear much worse than they actually are on the ground, simply because the selective pressure will serve to eliminate those who persist in trying to use fiat money to meet their basic needs. Some economist somewhere should try to model that; I bet it’d be amusing to see what he comes up with.

    1. lakewoebegoner

      “Probably the most puzzling aspect of the continuing EU crisis is the reaction of its youth in the affected countries,”

      my politically incorrect hypothesis—-with the widespread and relatively cheap availability, even in times of austerity, of pot, video games, porn, carbs, sugar, and prescription anti-depressants it’s pretty easy to enter a period of quasi-depression and tune out of the real world. A perverted 21th-century version of Roman bread and circuses.

      1. MtnLife

        We are in the US period of bread (sub-par, nutrient deficient, GMO bread) and circuses (quick, what are the Kardashians doing now?!). However, I find it interesting you glossed over the preferred drug of choice that TPTB have given to you, alcohol, and decided to deride pot, which they are fighting. In my experience, a greater percentage of pot smokers see through the veil of BS and a greater number of those who prefer alcohol favor the status quo. I’m always wary of anything they say is “in my best interest” or is being done “to protect us” because it is usually the exact opposite.

          1. Kurt Sperry

            This is to some degree likely. Consider that people who opt for an illegal recreational activity are already definitionally heterodox thinkers.

    2. Saddam Smith

      You might find resourced-based economics interesting. Economics based on available resources and know-how, carrying capacity, stuff like that (i.e. not money). Very fringe, but getting less fringy, to coin a phrase.

  2. John

    To add weight to the argument, When European Politicians Cannot Read the Handwriting on the Wall, here in Belgium we were treated to the recurring Ollie Rehn bromides yesterday. He claims they (EC) are holding back on fining Belgium for deficits that exceed the mysterious national debt target of 3% because we fell below it. He further cautioned us to:

    “…include tax reforms leading to lower taxation on labour. To rein in expenditure linked to the aging of the population, to reduce the gap between real and the actual retirement ages and to modify the retirement age to take account of increased life expectancy.

    ….increase participation in the labour market by reducing incentives not to work and to get more youngsters and members of the ethnic minorities in work. Favours of making the Belgian economy more competitive: with regard to the wage index this should happen in consultation with the social partners and following ‘national practices'”

    Luckily for us, we had real socialists running the country since the crises so we avoided implementing some of Mr Rehn austerity magical potions. As a result, Belgium fared much better than it’s neighbors economically. The socialists kept their hands off of the salary indexation and kept the retirement programs in tact. No cuts. As a caveat to the EC, Belgium raised all sorts of taxes to raise revenues.

    Of course Mr Rehn is irked. He does not like the welfare state. As he is about to walk out the door he took another stab at us. With a backdrop that blazed — The Road to Prosperity — he insisted the way to prosperity is for Belgium to boost the retirement age and to cut back on our generous unemployment payments — all in code language.

    For the pompous EC elites, it is business as usual. The recent election was just a formality. Nothing new here, move along.

    Folks like unelected Mr Rehn, who enjoys a generous salary, a golden retirement program, etc… inflicting pain on nation states is the ultimate delusion of grandeur. He can get away with it because we’ve set up a very undemocratic system of governing which makes him unaccountable and untouchable.

    1. Working Class Nero

      Are you joking about Di Rupo? The best thing that ever happened to Belgium was to not have a government for a year and a half. That’s because without a government you cannot have austerity.

      On 6 December 2011, Elio Di Rupo became Belgium’s first socialist prime minister since 1974 and his appointment by King Albert II followed 541 days of political deadlock, in which Belgium had no government. So far, however, it has not been plain sailing for Di Rupo. At the end of the year, an €11.3 billion austerity package was agreed and this has since been extended by €1.82 billion, designed to keep Belgium’s 2012 budget deficit within EU limits. These decisions by the Belgian government have been met by a number of strikes across the country by angry trade unionists. Part of the reason for the government’s decision to implement an austerity package was due to Belgium’s credit rating being downgraded to AA from AA+ by rating agency Standard and Poor’s – the country’s first down-grade in almost 13 years.

      I remember driving home from work a year or so ago and Di Rupo was on the radio explaining exactly why, with the increase in life expectancy, that pensions needed to be cut. Just like only Nixon can go to China, only Socialists can cut pensions. So I am not sure how you are claiming they did not cut pensions?

      The Socialists also froze the salary indexing. But of course you cannot have one party taking all the hits. So now, after the new elections, the N-VA will come in and be the bad guys. The Walloons will be told to STFU or risk getting their welfare checks cut off.

      Since there is no nationalist anti-globalization alternative in Belgium, the best we could ever hope for is another political deadlock for 541 days.

      But I have to admit, what is even pissing me off more than austerity are all these airplanes suddenly flying over my home at all hours of the day and night.

  3. Clive

    While I agree with what much of the feature is saying, it is definitely worth keeping in mind that for the European elections, voters do beleive that their votes don’t (superfically speaking) affect their national govenments* with the inevitable consequence that there’s a lot of votes given to non-maintream parties by elcorates who feel safe in the knowledge that, because it’s the EU, it’s safe and it doesn’t really matter.

    Voting intentions for national governments are altogether different.

    *which of course is where the danger comes; the EU looks remote, innocous — a bit of a joke even — but as the feature points out, is in fact a powerful neoliberal Trojan Horse (which the Greeks of all people should have spotted because they invented the idea).

  4. John

    One would be remise in talking about the calamity of bad policies here in the EU without talking about Portugal. Portugal has been the austerity poster child. Cutting salaries, pensions, etc.. has been a way of life for years. People have had enough and asked the courts to intervene. If you remember, Portugal received loads of bailout money from the troika. The condition to get it was to cut, cut, cut everything. However, last Friday the Portuguese Courts put a hold on pension, health care, and unemployment cuts.

    Just 2-weeks ago the EU was proudly touting Portugal’s exit from the bailout plan. As we’ve come to now realize there was no such thing as “exiting from the bailout plan.” The news logically was timed to coincide with European Parliament elections. Now that watershed moment is over it is back to back business. The “plan” all along has been to continue punishing the impoverished Portuguese. Unfortunately, more austerity was always the “plan.”

    Now that the Portuguese Supreme Court has effectively put the “planned” cuts on hold, (in effect, telling the troika to shove it) rest assured, the troika will be back to demand more sacrificial flesh very soon.

    1. EoinW

      Countries must cut their deficits in order to be entitled to more debt. Thus austerity = more debt. The counter argument against austerity at NC is pumping more money into the economies. Again more debt. Considering that too much debt has created this economic mess then how does more debt, whether through austerity or QE policies, solve the problem? It’s classic “kicking the can down the road” the only debate between economists being when we must pay for our excesses(which generation pays the most) and who must pay? Austerity has such a bad taste in people’s mouths because we see an elite forcing others to pay the price while they continue to live high on the hog. The other bad taste being it doesn’t reduce the debt at all – just the early stage of permanent, neo-feudal debt slavery for entire societies. Meanwhile QE is just as bad because those same elites determine who gets the money and who doesn’t.

      I think two things should be clear: 1) you let criminals run your society then nothing they do is going to be good. 2) the debt is simply too big for the problem to be solved. it’s just a question of the Baby Boomers taking responsibility for the first time in their lives and finally taking their medicine, or continuing to try to push the punishment on future generations.

      1. Park Nihrs

        By “Baby Boomers” may I assume that you mean the non-0.1% ? Most middle class baby boomers have worked longer hours with less vacation and possibly less total compensation than the WW II generation. (True if you compare my MD to my father’s PhD, though I have worked mainly public sector, and my father was GI Billed into the Golden Age of Science and great pensions) We do have more toys, and many of us stupidly borrowed against over-sized homes and to buy flat-land SUVs and lots of Mid East oil, to go with the iPhones and junk. But the total productivity was more than enough. OTOH, many of us borrowed against our homes to put our kids through college with reasonable levels of debt and some chance of making in the New World Order. Please give that medicine to Pete Peterson et alia. I’ve had enough!

        Debt is not always = debt. Please find a Primer on MMT. In the USA, because the “wealth effect”, if it works at all, has mainly worked through housing, and housing is still left for dead (zombies in some cities), QE, for the broad economy, has been pushing on a string. Luxury goods are appropriately stimulated. So are Dollar Stores.

        What is needed is FISCAL stimulus that goes to working people – jobs, infrastructure, government funded research, and more than anything energy: energy savings and retrofit, research on catalysis of water for fuel, solar, tidal energy (see Lockheed Martin on that) and energy storage. In the USA, that means either taxes raised on upper income levels at some point – an estate tax would be very nice – or we stop freaking out about deficit spending. Now, in theory, we could all learn about how fiat money really works, but in reality as defined by the oligarchs, the only we we stop freaking out, is through war. War? Sure – Spend all you want! That is what scares me.

  5. Banger

    Many migrate, but there must be a great amount of anger and resentment when a young Spaniard with a master’s degree is forced to accept menial work in Germany, with little perspective of returning to a job at home, much less a well-paid one. Protest movements up to now have been ephemeral. A change here may well be the next major development.

    This is all a puzzle. Youth in the West have a very uncertain future one would think there would be more concern. Austerity, if you use logic means, at best, sluggish growth for any economy and the globalist system means that wages are bid down. Had the youth of my generation been faced with such a prospect societies would not have been so peaceful.

    So what is going on here? I think the world system has been successful in delivering products and services that people really want. In part, I believe the mainstream media (including entertainment) have been able to both soothe and control the minds of everyone particularly youth. The online world has brought people together in a funny way—it is a world where commitment, constancy (essential for social movements) has been replaced by ephemeral relationships that come and go depending on whether those relationships are comfortable or not. And that’s the key isn’t it? Comfort. People are increasingly stressed so they seek comfort and the marketplace provides it–the globalist society the West has built works by providing marvels and satisfactions and comforts unknown to previous generations. People don’t have to agonize over social arrangements–FB and other services provide the setting. I can find a date or a marriage partner online–I don’t have to find social groups who meet in person every week or hang at the bar or pub of my choice in hopes of making a connection–I can find with a few hits and misses someone I want and will want me with relative ease (I’ve done it–I met my wife online). This is all very seductive. This is why the leaders of Europe know they can push harmful policies without significant protests–the oligarchs have delivered a world what the people want, more or less. That this narcissistic paradise for most is ultimately destructive not only to the human spirit but the planet doesn’t seem to matter to the majority–yes, they’ll cluck significantly over this or that but the fact remains virtually nothing is being done about climate change.

    In the U.S. we have the additional problem that dissidents can be “disappeared”, killed and tortured because habeas corpus and most Constitutional guaranteed civil liberties (other than guns) are no longer in place because we are, technically, in a state of permanent Orwellian war. So if change is going to come it will have to come from European youth.

    1. EoinW

      I’d like to see two polls conducted. 1) How many of this unemployed youth still have mobile phones? 2) How many of these households without a employed member still has internet service?

      To my simple mind, those are the first two luxuries you give up. But one should not underestimate the magic of debt. For its next trick, could it make this all last another 30 years for my sake?

      1. MtnLife

        Unfortunately, if you remove both mobile phones (employers prefer constant access to their slave labor) and internet access (a lot of places don’t even have paper applications anymore/depleting scarce funds on a wide geographical search) you are only further cementing their status as unemployed. Cable television, on the other hand, should be illegal to anyone on public assistance. Same with spending money on entertainment apps like Angry Birds, etc.

      2. guest

        “To my simple mind, those are the first two luxuries you give up.”

        In various European countries, the Internet is not a luxury, but a necessity. In Portugal, for instance, the only way to perform some administrative procedures, such as filling and sending your tax declaration, is via the Internet. Yes, it is a major problem for those who cannot afford it, or who do not know how to use it (such as very old people with little education). Yes, the systems are frequently overloaded or down, but this does not free you from respecting the deadlines.

        As for the mobile phone: many (precarious) jobs require you to be reachable at any time so that you be engaged whenever and wherever needed (e.g. zero-hour contracts). No, the employer does not necessarily provide you with a mobile phone with associated subscription.

      3. sharonsj

        I live in an area where mobile phones don’t work and we can’t properly receive either TV or radio signals ( mountains do that, you know). I’m not unemployed but I am handicapped and living on Social Security. The internet is my lifeline to the outside world. So don’t make ignorant comments.

    2. Ulysses

      “Without significant protests??!!???!??” I am stunned that you are so reliant on the U.S. MSM as to be unaware of the fact that there have been many more thousands of people in the European streets in the last few years than there ever were in 1968. You might want to check out this AP photo from yesterday in Madrid and see just how insignificant protesters looked when massed in their thousands waving republican flags.

      http://www.thejournal.ie/protests-spain-monarchy-1497450-Jun2014/

      1. Banger

        I’m reliant on MSM info? I don’t think you’ve been following my comments. I see the MSM as the single worst actors in our political landscape–worst than the Banksters. I believe nothing they say.

        Sure there have been protests here and there but I don’t regard them as “significant” which is a term that has to be defined–my definition is the following: do the protests indeed threaten the status quo? In the U.S., for example, the Occupy protests were much touted and were pretty intense in all kinds of ways but I did not then and don’t now consider them significant because they did not do anything at all to change the balance of power.

        Now, if the Euro demonstrations go on for awhile and create a solid committed cadre, unlike Occupy, then they may become significant–but haven’t yet.

        Protests in Ukraine had real results, protests in Tahir Square had real results and were “significant.”

        1. TheCatSaid

          “Significant” results (e.g. your examples of Ukraine and Tahrir Square) also carry a strong likelihood of having been influenced by non-obvious infiltrators. Hasn’t more information about this come out in the months and years since these protests?

          Infiltration seems ubiquitous these days by the really heavy hitters (USA).

          That’s not to say infiltrators will inevitably succeed in all their aims, but their track record is worryingly good. A much larger base is used, one that is sufficiently well-informed so as not to be led astray from its own intentions by those who would manipulate it.

  6. Chris Maukonen

    Merkel and all the rest who are so convinced that “The market will save them” reminds me of this:

    A major flood had stranded a very religious man in his house. As the water rose he climbed up to the second floor. Then the third floor. Peering out the window, he saw a someone coming is a boat. The yelled “Climb into the boat. Climb into the boat.”
    He replied, “No….no..God will save me.” and left the window. The water rose higher and he was forced to climb onto the roof of his house. He saw a helicopter approaching. It came closer and dropped a ladder and the pilot called “Grab the ladder and we will take you to safety.” The man said “No thanks,God will save me I am sure” and the helicopter left.
    Finally as the water rose higher yet, the man had to climb on to the to of the chimney. A second helicopter came and dropped a rope line. The men inside the helicopter yelled out “Grab the line man. Grab the line or you’ll drown.” The man yelled back “No I won’t. God will save me, I know.” The helicopter left.

    Then could hold on no longer as the water was too high. He was slept away and drowned.

    We he got to heaven he asked God “Why didn’t you try to save me ?” God replied, “I di try to save you. I sent a boat and two helicopters.”

  7. Paul Lafargue

    Re the disaffected youth of Europe I can recommend Guy Standing’s new book “The Precariat Charter: From Denizens to Citizens” – we need to circulate both “precariat” and “denizens” into our lexicon. And I agree with the sentiments that Austerity and Growth are false solutions to a problem that has a better answer, and necessary part of that answer is guaranteed annual income (Basic Income) which Standing advocates, amongst other things.

  8. readerOfTeaLeaves

    What wall….? Silly, silly.
    That’s merely a large vertical obstruction. It simply needs a better billboard. Newer lighting. Catchier copy. Also, a new color scheme.
    And that is not ‘handwriting’ on that large vertical obstruction, it is merely ‘gangsta graffiti’ to be ignored by Those In the Know.

  9. Roger Strassburg

    “His great moment is history occurred at the height of the Euro crisis in 2012 when he promised to do whatever was necessary to protect the euro zone from collapse. I cannot however imagine that the Germans ever planned to back this up with funds – which they never promised.”

    Nobody has to back it up with funds – the ECB can create them itself.

  10. /L

    From ILO latest report:

    “Box 6.3 Iceland: A socially responsive recovery from the crisis
    .
    Iceland repudiated private debt to foreign banks and did not bail out its financial sector, pushing losses on to bondholders instead of taxpayers. This was not a sovereign debt issue; according to the IMF, this debt was a result of privatization and deregulation of the banking sector, facilitated by easy access to foreign funding; the growing imbalances were not detected by Iceland’s financial sector supervision. Two national referendums, held in 2010 and 2011, allowed citizens to vote on whether and how the country should repay a nationalized private debt;
    .
    Icelandic voters delivered a resounding “no” to the orthodox policies that would have accompanied such a debt repayment plan.
    .
    Despite the pressures and threats elicited by Iceland’s heterodox policies – debt repudiation, capital controls and currency depreciation – the country is recovering well from the crisis (Krugman, 2012). It has regained access to international capital markets while preserving the welfare of its citizens, with support from the IMF. In 2012, Iceland’s credit rating was much higher than Greece’s.
    .
    As Iceland’s IMF Article IV Consultation stated:
    A key post crisis objective of the Icelandic authorities was to preserve the social welfare system in the face of the fiscal consolidation needed. Wage increases, agreed among the social partners in May 2011, led to a rise in nominal wages of 6 per cent and the unemployment rate fell to about 7 per cent in 2012. …
    .
    … In designing fiscal adjustment, the authorities introduced a more progressive income tax and created fiscal space to preserve social benefits. Consequently, when expenditure compression began in 2010, social protection spending continued to rise as a per cent of GDP, and the number of households receiving income support from the public sector increased. These policies led to a sharp reduction in inequality. Iceland’s Gini coefficient – which had risen during the boom – fell in 2010 to levels consistent with its Nordic peers. (IMF, 2012, pp. 5–6)”

    1. /L

      “We noted that there are two very different phenomena going on at the same time,” said Moazam Mahmood, Deputy Director of ILO’s Research Department and lead author of the report. “Many developing countries, notably in Latin America and Asia, are making efforts to tackle inequalities and improve job quality as well as social protection. By contrast, a number of advanced economies, notably in Europe, seem to be going in the opposite direction.”

  11. Ignacio

    Merkel said: “We need a policy aimed at competitiveness and growth.”

    It is competitivity OR growth. I prefer the latter Mrs Merkel

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