Yves here. Wolf Richter’s latest post may seem a bit breathless, but my assumption is that this rhetorical choice is an effort to try to penetrate Eurocrisis fatigue. The continuing decay, the ongoing last minute patch-ups, the Punch and Judy show between Germany and anyone who dares say anything bad about its perverse creditor moralism, is feeling so stale that it’s easy to tune out.
Yet even though the headlines all seem to be of a muchness, they mask an ongoing deterioration that at some point will produce a state change. For instance, the data Wolf cites points to an acceleration of a bad trajectory in Spain, both on the political and economic front. And even though Spain mavens may discount the number of people who demonstrated in favor of independence for Catalonia (it’s a perennially popular cause), what I found more disturbing was the thuggish threat by Supreme Court Justice Ruiz-Gallardón recounted in Wolf’s piece.
While Spain implodes, things are not looking much better in its neighbor Portugal. As Delusional Economics recounts in a quietly grim post, “IMF ambulance too late for Portugese suicide.” Even though Christine Lagarde last week said it would be better to give countries who had made “reforms” more time if they were missing their austerity targets, Portugal apparently did not get the memo on time and instead is doubling down. As he explains (emphasis mine):
Overall the basics of this plan is to restructure the economy to get the external account in surplus within a time-frame that the entire thing doesn’t blow up due to social and political unrest. Obviously writing off foreign debts would be a very quick way of helping this adjustment take place (as with Iceland) but for reasons of their own the Northern creditors of Europe think this is a bad idea and have been slowly jawboning the southern debtors into legally binding programs.
The problem is that Greece, Spain and Portugal certainly appear to be reaching the upper limits of what their citizens will endure but these countries are yet to reach external surpluses because there existing debt burdens are still too large. In other words the EZ has spent the last 2-3 years dismantling their existing economic structures but so far they have little to show for it. In fact by most macro-economic metrics these nations are far worse off, and therefore by definition so are their creditors.
As I have explained before what we tend to see when a nation reaches these limits is an attempt to implement even stricter fiscal tightening in the misguided belief that the problem has been that they’re just not trying hard enough….
Last month I noted that Spain had reached the point where it had begun to once again increase taxes which signaled to me it was about to take another leg down based on the dynamic I explained above.
Unfortunately overnight I read that we are about to see the same from Portugal:
The Portuguese government was all set to push ahead on Monday withmassive tax rises in a draft 2013 budget just two days after mass street protests against further austerity. The new measures, a condition of debt-rescue funding, are known to target income tax, pensions, and unemployment and sickness benefits.
Wolf’s post, “Spain Is Losing Its People, Catalonia Fights For Independence, And The EU Gets Pushed Into The Conflict,” is comparatively short, and I’m reproducing it in full:
“Do you want Catalonia to become a new state within the European Union?” That may be the question on the referendum that is causing a constitutional crisis in Spain even before the final wording has been decided. Efforts by Artur Mas, President of Catalonia, to pry his region loose from Spain are not only shaking up Spain but are pushing the European Union deeper into the conflict—just as Spain is plunging into a demographic nightmare.
A mass exodus. During the first nine months of this year, the number of Spaniards who were looking for the greener grass elsewhere jumped 21.6% from the same period last year to 54,912. And 365,238 immigrants bailed out too, for a total exodus of 420,150 people. After taking into account returning Spaniards and arriving immigrants, net migration added up to an outflow of 137,628 people—25,539 Spaniards and 112,089 foreigners. It was the first time that all 17 autonomous regions booked a net outflow of Spaniards. And Spain’s total population dropped by nearly 80,000 people! In nine months!
They left because things simply keep getting worse. September was a bad month—for the lucky ones who have jobs. They experienced the steepest plunge in purchasing power in 27 years. Prices jumped 3.4% year over year, while wages rose only 1.3%. Unions and employers had signed collective bargaining agreements earlier this year that would freeze wages in 2012 and 2013. Average wages under these new agreements rose only 0.7%—a harbinger of things to come.
This “internal devaluation”—long a factor in many Western countries, including the US—has now hit Spain. Over time, the workforce will become more competitive with cheap countries, like China. Despite its insidious impact on the population (the lucky ones who have jobs) and on consumption, internal devaluation is at the core of all “structural reforms.”
Spain exists in a surrealist new world: a debt crisis that is draining the central government and the autonomous regions, a banking crisis, unpopular “structural reforms,” unemployment of over 25%, youth unemployment of over 50%, a recession, and a population that makes its discontent known with often violent demonstrations. So, 84% of the people have “little” or “no” confidence in Prime Minister Mariano Rajoy. The fate of Alfredo Perez Rubalcaba, leader of the opposition, is even worse: 90% of all voters distrust him! Those are the two top political figures of the two major political parties, and the utterly frustrated and disillusioned Spaniards are defenestrating them both [Punishment Of The Spanish Political Class By The People].
This is the backdrop to Catalonia’s strife for independence. It all came to the forefront on September 11. Between 600,000 and 1.5 million Catalans—8% to 20% of the population!—angered by the stiff austerity measures that the central government had imposed on their bankrupt region, protested in the streets, demanding independence. Nobody could ignore that. And now, 74.1% of the Catalans support holding the referendum, 19.9% are against it, with 6% undecided. And over half of them would vote for independence.
Like the Scots, who were able to negotiate an independence referendum with the British government, Artur Mas wanted to negotiate the referendum with the Spanish government. Catalonia will hold early elections on November 25, and Mas, who is expected to renew his majority, was planning to hold the referendum during the next four years. But Rajoy and his government were in no mood to negotiate. Instead, they promised to lean on the Spanish Constitutional Court to get it to declare the referendum unconstitutional.
Then the shot before the bow. It would be a “crime,” declared Justice Minister Alberto Ruiz-Gallardón, if Mas refused to stop calling for a referendum after the Supreme Court declared it illegal—apparently, a crime of disobedience, as defined by the Penal Code, punishable by up to a year in prison and disqualification form public office by up to two years. María Dolores de Cospedal, Secretary-General of the governing People’s Party, emphasized that the government would use all “legal instruments at its disposal to prevent this situation,” adding that “there are already mechanisms in place to stop the referendum.”
The fear is enormous: Catalonia’s independence “would do away with Spain, because Spain makes no sense without Catalonia,” Gallardón lamented last week. The status of an independent Catalonia with regards to the European Union is uncertain as well. No rules exist to deal with the situation. As different officials say different things, the European Commission is being pushed ever deeper into the conflict. And it infuses the impending bailout of Spain with qualities of a Dali painting.
Neither banks nor public workers have ruined Spain, but politicians, a separate class born out of the “Transition” from the Franco dictatorship to democracy. And the old power structure is thriving under a new “democratic umbrella.” Read….. Spain’s Unfinished Transition From Dictatorship To Democracy
The critical point is that long-simmering, popular grievances are serving as rallying points for dissent against deservedly unpopular and visibly counterproductive policies. That makes it easier to organize protests and this is in nations where demonstrations are seen are more legitimate vehicles for political action than they are in the US. The coming winter may be a much hotter affair than usual.
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It’s not Mas who is pushing for independence… it is the Catalan People, with pro-independence figures at 5/7 of those who answer in either way, with million (million-and-a-half, two million maybe) demos in a country of just 6 million inhabitants, who are pushing Mas and really anyone who wants to remain relevant in Catalan politics to demand independence.
Mas would like a new statute in fact, one that would give Catalonia at least partial fiscal control (with 14% of the Spanish GDP and with Spain’s taxes perceived as a drain to favor other “more loyal” but also chronically underdeveloped regions), but Rajoy would not accept even that. No wonder: Spain as state already has a huge fiscal deficit and they need more and not less taxes to pay for former IMF Director Rodrigo Rato’s excesses.
In turn Catalonia is being forced to ask for a bail out and to keep public workers waiting for their salaries to be paid, when it could surely be well-off with its own resources.
So both are in a situation of damned if you do, damned if you don’t. Never mind their respective ideologies.
On top of that add that there is a clear anti-Catalan segregation in Spanish politics. While Catalans make up almost 15% of Spanish citizens, there has not been a Catalan Prime Minister or President in Spain since the quite exceptional and short-lived First Republic (1873-74).
In 2008, I made an exercise (http://leherensuge.blogspot.com/2008/09/ethnically-speaking-who-rules-spain.html) of figuring out who rules Spain ethnically speaking, and came out with the following figures:
The 115 historical Spanish prime ministers were from:
– 47 Castilian (wider region, incl. Asturias, Cantabria, La Rioja, Muria, Extremadura, both Castile-named regions and Madrid)
– 26 Andalusian (could well be considered part of Castile also)
– 7 Galicians [8 with Rajoy]
– 4 Valencians
– 3 Basque
– 3 Catalans (!!!)
– 2 Aragonese
– 2 Balearic
– 1 Canarian
– 6 from other European origins (mostly in the 18th century: 2 Italians, 2 French, 1 English and 1 Irish)
– 6 from former colonies (mostly in the 19th century: 2 from Argentina, 2 from Cuba, 1 from Mexico and 1 from the Philippines)
– 8 I could not locate their origins with certainty
Estimating that Castile and Andalusia have very marked positive discrimination rates (+48% and +53% respectively), while Catalonia, Valencia, Southern Basque Country and Canary Islands have very marked negative discrimination rates in Spanish politics: (-80%, -60%, -49% and -77% respectively of what would randomly correspond by population).
If everything would be equal, with no discrimination, Catalans should be much more prominent in Spanish politics, more so considering the economic weight of the smaller country, but truth is that they have been so extremely discriminated against in Spanish politics that they only achieved any prominence in the brief Federal Republic.
These ethno-political confrontations do not come out of the blue: there is a deep history behind them.
Anyhow, Mas as a (moderate) right-wing politician would like a compromise but may be forced to push things much farther than he would have ever dreamt. It’s a “Croatia moment” for Catalonia and, less clearly so maybe, also for the Basque Country.
The situation can only get worse, much worse, before it gets any better.
spot on Maju, I live in Barcelona, and I am local
just correction of some of your figures
catalan gdp is 19% of spanish, tax% is 22%, exports 28%, population 16% and political representation 13%
Meanwhile, avge on the last 20 ears of central governement investment has been 12%
belonging to Spain is a rip off, so some or most of us, prefere to leave a country where we are not wellcome
kee well
Thanks for the corrections, Joseph.
I just say that we Basques should also take that train because it’s probably a situation of now or never.
Funny thing is that the worst threat other than applying their unilateral law or military intervention that Spain can manage to issue is that we’d be forced out of the European Union, what sounds these days almost as a blessing.
Still, it’d be fun to watch the Spain-to-Germany-and-back trucks paying heavy tolls for using our roads and harbors, so, really, they have to accept us in the Schengen area because they can’t be functional otherwise.
“The continuing decay, the ongoing last minute patch-ups, the Punch and Judy show between Germany and anyone who dares say anything bad about its perverse creditor moralism, is feeling so stale that it’s easy to tune out.”
What’s the matter of American liberals with Germany? This blog as well as Krugman’s are frequently bashing Germany writing silly childish things like the quote above.
You know, Germany is a lot more liberal (sensu USA) than Spain. Germany has better environmental and labor laws, more opportunities for training of young workers, much less income inequality, higher salaries, more decent politicians. Spain has the highest income inequality of all of Europe, less government transparecy, much much more corruption, nepotism and cronyism.
Germany is leading a fron of European nations that care a lot more about their workers, against a front of neoliberal southerners that exploit and rob their populations to the point of breaking, of social fracture.
But there you go again self-righteous American liberals. I think your error comes from projection of American politics. For you it’s like this: GOP austerity BAD ergo Germany austerity BAD. Get a grip man, or lady, it’s more complex than that.
Quote “You know, Germany is a lot more liberal (sensu USA) than Spain. Germany has better environmental and labor laws, more opportunities for training of young workers, much less income inequality, higher salaries, more decent politicians. Spain has the highest income inequality of all of Europe, less government transparecy, much much more corruption, nepotism and cronyism.”
Sounds to me like you have missed all significant changes made during the last decade in all those policy areas you mentioned. Alternatively, you may have become fully victimized by the near perfect propaganda machinery of the German neo-liberal class. Do you know that there’s no minimum wage in Germany? That you drop to the absolute bottom of society after just 12 months of unemployment? That inequality is rising fast? Wages stagnated or declined? Labor laws were loosened? Retiree poverty is on the rise? etc.etc. The German business model is unsustainable. Watch & listen: http://www.youtube.com/watch?v=TmfhDEaw3l8&feature=plcp&noredirect=1
And, sure , there’s no corruption in Germany if you want to believe that. So, it’s just “nice” to offer the Deutsche Bank’s then-CEO Ackermann the opportunity to fete his 60th birthday in Merkel’s Chancellor office leaving it fully up to him to invitate anyone he’d like to. He said afterwards “She might’ve thought I deserved a favor”. Nice of her, isn’t it? And Mappus (then-head of state in Baden-Württemberg) was just one singular “bad apple” in the hands of Morgan-Stanley-banker Notheis, wasn’t he? Yeah, exactly. When it comes to the matrix everyone has to choose between the red and the blue pill.
The reality is that the poor in Germany are better off than they are almost anywhere in the world, including Spain or the United States. Entering the euro, a currency union with many low-wage countries compared to Germany, made Germany’s economy uncompetitive overnight. The Agenda2010 reforms allowed Germany to be competitive with the euro. Either you believe Germany should’ve never adopted the euro, or you think that they should’ve learned to live with 10%+ unemployment and the resulting negative budget impact. Otherwise, I don’t see an alternative to Schroder’s reforms; the anti-reform left certainly didn’t offer an alternative.
running constant surpluses within a common currency area without any fiscal mechanism to counter the resulting imbalancies lies at the root of the increasing eurozone instability.
“The German wage developments have a number of consequences, of which the emergence of huge external imbalances across the euro area is but the first. Those
consequences are harmful not only to Germany’s euro area partners, but also to Germany itself. Germany’s GDP gains actually represent its partners’ GDP losses. While actually
representing a loss, the trade deficit allows current domestic consumption-cum-gross capital formation to exceed domestic production. However, when a country’s actual
absorption is in excess of its own production (viz. Greece), it implies incurring foreign debt of whatever kind (or sale of domestic real assets to foreign parties, for example, via privatization). Sustained and rising external deficits are tantamount to accumulating net external debt. Mirroring the situation of a deficit country, a chronic surplus country (such as Germany) produces more than it can actually use (its domestic absorption is lower than
domestic production). In effect, the surplus country accumulates claims against its partners; in essence, it is lending to them – one way or another.”
http://www2.euromemorandum.eu/uploads/ws5_podkaminer_laski_paradigm_change.pdf
I suggest you read this post, and the paper that is embedded, and then we might have an intelligent conversation.
http://www.nakedcapitalism.com/2012/07/josh-rosner-eurozone-crisis-no-more-safe-havens.html
You look to be a victim of domestic propaganda. The Germans are pushing for things that are contradictory: continued trade surpluses with the periphery and forcing austerity on them.
And your discussion of German liberalism or lack thereof is utterly irrelevant. Germany is pursuing policies that are extremely destructive to the periphery and will eventually infect the core nations. We’ve set forth the case in over numerous posts. Sticking your fingers in your ears and yelling “Nah nah nah” which is basically what you are doing, does not change the outcomes. History will take a very harsh view of the actions taken by the Trokia.
Stop shooting messengers when they point out failed policies. This site is hardly a cheerleader of what is going on in the US, so you are also off base in accusing us on being particularly hard on Germany. Frankly, you wouldn’t be so defensive if what we were saying was removed from reality.
“You look to be a victim of domestic propaganda. The Germans are pushing for things that are contradictory: continued trade surpluses with the periphery and forcing austerity on them.”
How are Germans pushing for continued trade surpluses? This is a bizarre statement. Germany had perennial trade surpluses before the euro. Like Sweden, Switzerland, Korea, etc., their culture and economic structure results in trade surpluses. Also, what you call Germany forcing austerity on the periphery is Germany demanding that countries receiving a German supported bailout make extensive reforms. What’s the politically feasible alternative for German politicians?
“Extensive reforms” that’s the key.
News flash: Corruption in Italy costs the country 60 billion euros annually, lower estimate according to Monti:
http://internacional.elpais.com/internacional/2012/10/16/actualidad/1350381576_521186.html
In Spain there isn’t an estimate but the news about corruption cases come every day, and they affect from the royal family down to municipalities. Greece, well, need not say more.
The problem is, particularly in Spain and Greece, that the austerity-driven reforms are directed to the working classes instead of to the vast parasitic political class and to other non-productive areas. Of course that kind of austerity is devastating their economies and of course extensive reforms are more difficult because the same people benefiting from the sickened State status are directing the reforms. But Germany is right to stress the need for _extensive_ reforms.
You really need to get up to speed on this.
1. Go look at some data. Over 60% of Germany’s trade surpluses for years (IIRC< since 2003, maybe earlier) have been with the rest of the EU. Countries that run persistent trade surpluses finance their trade partners. That is inherent to the relationship. No more loans to the periphery, bye bye German trade surpluses. The only way for this to work out well for Germany is for the euro to go to somewhere between 60 and 80 on the dollar, and the US will not tolerate that, we'd intervene in currency markets to prevent that. And don't tell me persistent deficits can't be sustained inside a currency union. As Maju points out. Catalonia runs persistent surpluses with the rest of Spain, and similarly in the US, California and New York run what amount to persistent trade surpluses. The Germans, by contrast, want to have their cake and eat it too. 2. The "reforms" don't work. We and others have written about this a zillion times, it's even set forth in the post above. They make matters worse off. The economies contract faster than the debt levels, leaving debt to GDP ratios worse off. These aren't "reforms", they are gross economic malpractice. 3. You also ignore that the reason debt levels blew out was as a result of the crisis, not "profligacy". Both Ireland and Spain ran budget surpluses prior to the crisis. By contrast, Germany failed to meet its Maastrict targets for 7 out of 10 years. This matters because the punishment of the periphery is actually a back door bailout of French and German banks. So the people who caused this mess, the bankers, are getting rewarded at the expense of the periphery. But no, you run the PR that it's all the lazy Latins' fault, when Greeks work more hours than the people of any country in the eurozone.
I cannot be a victim of German domestic propaganda, believe me.
I read that post you linked and yes there are serious risks for Germany by imposing structural reforms on those countries whose gov’ts request German help. But the options are very limited, there cannot be unconditional bailouts. What else can German politicians do? Engineer increasing inflation as recommended by Krugman? Mutualize debt without improvements in the structure of southern States? Absorve toxic assets from Spanish cajas by bailing them out retroactively? From my POV, Germany, the Netherlands, and Finland, only have one choice: help (thus helping themselves) but conditionally, conditional on _extensive reforms_, this is the right time for correcting the so many serious defects of political and economic organization in the southern countries.
But look what the Spanish gov’t is doing now, in spite of the strong pressure by its own bougeoise, and its partners in Europe, the Spanish leader is marking time before asking for the coming rescue to help his comrade win Galician elections! And meanwhile, during the crisis, income inequality has increased in Spain:
http://sociedad.elpais.com/sociedad/2012/10/14/actualidad/1350245239_192913.html
thus departing even more from the northern cuntries model.
My point basically is that austerity in Europe has more complex underpinnigns that the class war in the USA, so American observers should be more alert than simply writing: “[…] and anyone who dares say anything bad about [Germany’s] perverse creditor moralism […]”.
I’m sorry for adorning this point with facts that might make you be more sympathetic to Germans, probably you are right, these facts are rather irrelevant.
We’ve posted quite a few possible remedies on this site. Start with Yanis Varoufakis’ “A Modest Proposal.”
You need to get your mind around the fact that you NEED to run fiscal deficits during a recession, or else the economy contracts and it makes matters worse. Cutting government spending now is like taking blood from a patient that is already in the hospital for anemia. We’ve also put up a lot of posts on this. Here are some examples:
http://www.nakedcapitalism.com/2010/06/parenteau-marching-to-austeria-and-other-neolib-fibs.html
http://www.nakedcapitalism.com/2011/10/marshall-auerback-and-rob-parenteau-the-myth-of-greek-profligacy-the-faith-based-economics-of-the-‘troika’.html
http://www.nakedcapitalism.com/2012/09/were-not-broke-and-the-clinton-surpluses-destroyed-the-us-economy.html
“You need to get your mind around the fact that you NEED to run fiscal deficits during a recession, or else the economy contracts and it makes matters worse. Cutting government spending now is like taking blood from a patient that is already in the hospital for anemia. We’ve also put up a lot of posts on this.”
Yes Ives, but there is an assuption in this line of reasoning, that all fiscal spending has the same multiplier. Going with your analogy, cutting a gangrenous arm from a patient does not have the same effect as cutting a healthy arm. Deficit spending at this point of time in Spain, Italy, Greece, Portugal, will encourage the so many inefficient spending and plain corruption these countries are suffering from. I posted yesterday the news that a lower estimate of the cost of corruption in Italy is 60 billion euros a year. That’s why deficit spending does not convince northerners, even in a recession. An additional problem is that Euro countries in practice are indebted in a foreign currency, so deficit spending is not so straightforward as in the USA.
IF, as it seems to be the case, euro countries are indebted in “a foreign currency” and the BCE does not serve European citizens… that is the problem and no other.
Unlike what Yves says, I think that EU could and should devaluate the euro (let the USA do what they must or can: not our problem – we can always hire Russia for a nuclear umbrella if need be) and “cheap” necessary bond-buying by the ECB is the way to do it.
Or rather “was” because if something I’m sure about is that this scheme should have been got to work in 2008 or even earlier (as the euro has been overvalued since at least 2003) and we are already many years late and paying the cost of that lack of European service by the ECB.
The exact terms should be debated but keeping the euro above dollar parity more or less is suicidal and is pushing for the collapse of all EU. Sooner than later a Eurozone state will begin issuing their own currency and the whole EU system will collapse overnight. The only alternative is to get the ECB to work for the real economy by devaluing the euro and buying bonds under market price, two things that can be done simultaneously.
you’are kidding, aren’t you?
“Germany has better environmental and labor laws, more opportunities for training of young workers, much less income inequality, higher salaries, more decent politicians.”
That’s what I would call a self-righteous attitude. Well, living in Germany myself, I think there are a lot of people who, having experienced the impoverishing and disenfranchising Hartz IV process, are most likely to disagree
“ILO blames Germany’s low-wages policy as contributing to the Euro debt crisis”
http://en.mercopress.com/2012/01/31/ilo-blames-germany-s-low-wages-policy-as-contributing-to-the-euro-debt-crisis
and for the allegedely more decent german politicians – are you aware that Germany is one of the very few countries (in company with Saudia Arabia, Sudan, Syria) whose parliament refuses to date to ratify the UN convention against corruption?
http://blog.transparency.org/2011/05/16/in-the-fight-against-corruption-germany-falls-behind/
and no, I’m not one of those self-righteous US American liberals :-)
“you’are kidding, aren’t you?”
I’m deadly serious, man. Check out the Transparency Internation website, under the What We Do pull-down menu
http://www.transparency.org/country
What’s the difference in several scores between Germany, on the one side, and Spain, Italy, Greece, and Portugal, on the other?
Spain is behind Germany but not very different (rank 14 and 31 out of 183, the USA ranks 24th – for contrast).
I’m rather surprised that Spain is so much ahead but I guess that the fact that there are corruption scandals even in the Royal Family, means that some persecution and control exists.
However the big fish like Urdangarin (royal in-law) or high profile politicians almost never end up in jail and that is a big problem because the message being sent is that if you have the right contacts (very high up in the power hierarchy) you will definitely get away.
Now Italy and Greece, ranking 69th and 80th respectively, are another story. Italy has a chronic deeply rooted mafia problem, while Greece’s modern economy was since the beginning conceived as some sort of “fiesta” concept, in which the big financiers and ship industrials could party forever… or almost.
But it’s very unfair to blame the Greek People when not even one of those corrupt oligarchs has still been jailed. And neither Germany, nor Brussels nor the IMF show even the slightest interest in repressing those corrupt businesspeople, who are obviously their close friends.
I don’t see how this ranking might legitimize the refusal to ratify the UN convention against corruption.
It doesn’t, I’m not saying it does. The convention should be ratified.
BTW, Spain ratified the convention, and subsequently the Spanish Parliament approved a transparency law that forces the gov’t to answer citizen’s requests for info on gov’t spending and other matters, BUT the cunning Spanish politicians included in the law a proviso for the gov’t to respond to such requests with … silence. And that’s what it does. To the question of how much the leader spent on attending the Eurocup soccer final in Poland just after he approved savage cuts to social security the gov’t responded like this ” “.
Part of the problem is Germany is indeed in lockstep with Western imperial policies that are enslaving the world.
Germany is helping to attack Syria and supporting warmongering regimes like Saudi Arabia: http://www.jpost.com/Defense/Article.aspx?id=228450
http://www.haaretz.com/news/middle-east/syria-rebels-aided-by-germany-intel-ship-in-fight-against-assad-forces-report-says-1.459268
This is not the first time Germany has engaged in illegal and immoral war against sovereign nations.
It did so in Libya as well: http://articles.cnn.com/2011-07-24/world/libya.germany_1_rebel-council-libyan-rebels-zintan?_s=PM:WORLD
It has contributed to the death and destruction of Afghanistan.
Of course Germany is now taking orders from the terrorist colonizer state, Israel, and is engaged in spying and helping conduct illegal assassination and war: http://www.islamist.com/index.php/imperialism/1428-pakistan-arrests-3-israelis-with-german-passports-ordering-pak-army-uniforms
Ironically, Germany has also armed Israel with nuclear submarines [!]: http://www.haaretz.com/news/diplomacy-defense/report-german-officials-confirm-submarines-sold-to-israel-can-fire-nuclear-tipped-cruise-missiles-1.434080
Germany was brought to its knees the last century. It is now completely run by fascist war criminal bankers from the West. Sure, there are a few liberal policies on the books to make the German people docile–like relatively good worker protections.
But Germany seems to be the bulwark client state in Europe for the the neo-liberal killers running the world.
Let’s welcome Germany to the League of Terrorist States y’all!
Left out a link about Mossad using German passports to assassinate an alleged Hamas leader in Dubai: http://www.reuters.com/article/2010/08/13/us-germany-israel-idUSTRE67C2Z120100813
One would think Germany would object to the use of its passports to carry out assassinations, but no:
“German authorities have released a suspected Israeli spy on bail pending a decision on whether he was involved in the falsification of a German passport linked to the killing of a Hamas leader in Dubai.
A spokesman for state prosecutors in Cologne said Uri Brodsky had been freed from police custody just before 1000 GMT on Friday and that he would not have to stand trial in Germany.”
Here’s an alleged German spy caught in Lebanon in 2010: http://www.jpost.com/International/Article.aspx?id=182778
Germany publicized its operations in the Middle East in 2006 claiming that it was helping Israel hunt for kidnapped soldiers: http://www.spiegel.de/international/crisis-in-the-middle-east-german-spies-in-hunt-for-kidnapped-israeli-soldiers-a-427915.html
I mindlessly repeated the propaganda . . . Germany was hunting for ‘captured’ Israeli soldiers, not “kidnapped” soldiers.
I remember this propaganda at the time and now realize it was used to justify greater German spying and involvement throughout the region. Not to mention the fact Germany was taking over the Northern region of Afghanistan in 2006.
Germany had already ramped up its warmongering during its adventure following Bush into Afghanistan. Here’s an interesting panel discussion on PressTV regarding German involvement in Afghanistan: http://www.youtube.com/watch?v=O114bgmFtdo
[btw, Europe is banning PressTV!! http://www.presstv.ir/detail/2012/10/15/266831/eu-bans-broadcast-of-iranian-channels/ Fascism is alive and well in Europe! Where are you supposed liberals and progressives??? Where are you while Syria, Iran, and the Middle East burns? We are surrounded by finks and criminals.]
Spain (specially under the Right) is much more USA-style than Germany: less public sector, massive housing bubble and even joined in the invasion of Iraq… Its conservatives are identical to Paul Ryan and Sarah Palin… It’s more like Florida than New England but a lot like the USA, really (except that quite less powerful).
Anyhow: austerity is bad. In Europe as in the USA as in the neo-colonies. Not a single state submitted to IMF Neoliberal programs succeeded ever. Not one: all just collapsed, sold away their resources and even then, they remained tied in perpetual debt-bondage or had to declare bankruptcy one way or another. Europe is not different.
Destroying the internal market of EU is a very bad idea, no matter how you look at it. If you want to contain Chinese/US imports there are other ways like protectionism.
You could implement austerity maybe if you had a plan to also make sure that prices get lower but instead what you do is to raise prices and taxes and kill the goose of the golden eggs by means of axphysia.
Never mind the uprisings, of course.
I emphatically agree with you, Ruben.
Many liberals in the US claim that Germany can’t continue to sustain its trade surplus without the Euro and the non-core nations. I say BS.
I believe that Germany would sustain its trade surplus even with a more expensive Drachma. It would find a way.
Furthermore, I ask my liberal friends, what’s your solution to the Euro problem?
Do you want the German voter, who was explicitly promised (i) no monetization of non-core debt and (ii) no fiscal transfers from core to non-core nations, to accept that German sovereignty no longer matters?
You can’t have it both way. Either you believe in democracy and the right of the German voter to say no to monetization and fiscal transfers, or you believe in the US of Europe, based in Brussels, run by a “small group of far-sighted statesmen”.
It’s really frustrating how much tolerance US liberals have for authoritarian governments in Europe, compared to the US.
‘The status of an independent Catalonia with regards to the European Union is uncertain as well. No rules exist to deal with the situation.’
Good point, Wolf! Every time politicians form a club, it’s expected to last forever, and no one is permitted to withdraw.
Such reasoning helps explain why official creditors loaded Greece with so much debt that even AFTER a huge haircut for private creditors, Greece is STILL drowning in debt and soon will default again. The EZ club must be defended at all costs — up to and including ‘destroying the EZ village in order to save it,’ as the U.S. reasoned in Vietnam.
Meanwhile, this morning Bloomberg fires a salvo across Rajoy’s bow, warning that the market chaos he seems intent on provoking could easily veer out of control:
To put a fine point on it, while Rajoy dithers, Spain’s deposit flight only accelerates. By the time the weakest link in the chain breaks, with depositors lined up outside its doors, European aid may be too late to stem the bank run.
Rajoy shouldn’t play chicken with the markets while wearing a turkey costume.
Rajoy shouldn’t play chicken with the markets while wearing a turkey costume.
LOL, great image! I couldn’t resist looking for a relevant cartoon. http://www.zazzle.com/funny_thanksgiving_cards_fun_and_games-137233962544563442
On this phrase:
“Over time, the workforce will become more competitive with cheap countries, like China”
I disagree. Over time, with plunging investments, Spain will be less competitive overall and won’t expand its economic activity to other manufacturing areas.
Somebody or something is hacking away at what remains of the Spainish nation state and me thinks its London.
Imagine a simple but extreme slave state / trade model.
England is the primary consumer of goods for its Villas such as marble products , fine wines , refined metal work etc etc.
The Rhine / Rhur region is the producer of these goods.
But the crops (bread) which supply the energy for its slaves is reducing by 2% a year.
To continue to do what it does the Rhine Rhur Jurisdiction decides to increase efficiency rather then productivity. ( productivity = investing more in agriculture which is really energy in a slave state)
However it gets the same or more goods for less by reducing the calories of its workforce……this appears to work until you finally hit a entropy wall.
The modern German production machine which orbits the Rhine / Rhur is the most efficient in the world , however it has become efficient by destroying its long term productivity.
http://www.youtube.com/watch?v=aRghETHFvYs
(its energy density declines year after year because for example it has given up the Nuclear energy thingy which is very capital intensive , it therefore prefers to run down its capital and express a short term profit.)
Eventually deficit England will not receive the goods.
These weird trade systems have very little redundency……they were built that way to increase their short term labour arbitrage profits as global finance houses control the money supply of these former nations.
However a vast amount of capital (oil and stuff) is lost in this from a global perspective pointless trade.
The UK is perhaps the most extreme deficit large country whose credit based demand can shift capital allocation worldwide.
PS
The UKs primary trade “partner” is Germany but it has a larger trade deficit with China which is a extreme colony.
The UKs trade deficit with China was -£22,203 in Y2011 although it has come down a bit since Y2010 and is showing continual signs of weakness.
China will come out worst from this crash but there is really nothing there withen the UK….its a empty box.
It all starts with the credit note and not the production process.
Need I say this is game theory played at the highest level possible.
On cue from ACEA
“In September, the EU* recorded a total of 1,099,264 new cars, or 10.8% less than in the same month a year ago. Looking at the major markets, the British was the only one to expand, while Germany (-10.9%), France (-17.9%), Italy (-25.7%) and Spain (-36.8%) all faced a double-digit downturn.
From January to September, the EU* market shrank by 7.6%, compared to the first nine months of 2011. Results were diverse across markets, as the UK posted growth (+4.3%), while Germany saw its demand fall by 1.8% and Spain (-11.0%), France (-13.8%) and Italy (-20.5%) contracted more severely. ”
The British are the last men standing with a credit note…………they are simply wasting Europe to a point they are getting negative income from the rest of the world (which is almost unheard of in the UK as they have always earned a income from the planet)
The Brits want real goods from the Rhine /Rhur region over and above income.
This is very very big news people
Again the UK engages in almost no rational energy /transport investment.
Its fixed capital investment is almost third world.
But its sov nature withen the Euro soup enables it to buy real goods from non sov states who must export to earn a income.
The Euro region is a colony of the UK.
Case closed.
The UK is stripping consumption from the PIigs so as to feed itself.
It once earned a income from Ireland and Spain , now it does not.
But it does not care – whats more important is REAL GOODS.
Spain needs a Fiat King.
Otherwise its investments ,some of which were quite good will disappear into a entropy pit.
This example speaks volumes……I think it needs 2.2 million or so to get going but they don’t have the money , this means more diesel is burned for no return subtracting from domestic demand.
This tram ran for 2 weeks in 2011 and then stopped for lack of symbolic tokens because of the debt build up.
es.wikipedia.org/wiki/Tranvía_de_Jaén
http://www.vialibre-ffe.com/noticias.asp?not=9164
A new existing but short line take out of commission so that the guys up North can have the capital to build more of the same in France !!!
Its both crazy and wildly corrupt.
It looked very busy in this video from spring 2011.
http://www.youtube.com/watch?v=gZmPh3b6yfM
The problem with Europe me thinks is that it ain’t using its existing capital stock too well
The Euro can only grow outwards through waste production as it is not really a currency , its a yield vehicle.
The central question of our times is why or to be more precise – who benefits ?
PS
I have never been to Jaen but looking at at it from Google earth it is a compact city with the tram line reaching north to a light industrial area with a large car park for people who wish to enter the city without the need to idle your engines in city centre traffic all day.
Spain has more real physical capital then the UK which has the third lowest fixed capital investment in Europe (2011) after Ireland and Greece but the UK wants it back.
http://www.panoramio.com/photo/56446505
Jaen tram with the light Industial area to the west and the car park to the north.
Not operational …………….
The EIB has Committed more of its quasi -fiscal money to Spain then any other Euro nation this year at 6.15 billion euros.
next upItaly :3.752 B
But interest revenue from this is to bail out probally external actors that are underwater.
Its as if they don’t care wether these investments physically work or not as that is not their purpose , their purpose is to return a yield even if it destroys the commons from which all true wealth is based.
We are living withen a truely sick system , the local authorties don’t have money for brand new Grot and these international players just keep on making more stuff.
When these tickets were free the system worked…many of these commons investments do not work when you seek a yield off of society as society begins to break down under such extreme market state forces.
http://www.panoramio.com/photo/10168319
University along the line……..must be full of American students who drive to work.
It is important to remember who the real enemies are. They are not the Spanish, German, and Catalonian 99%s. These are the gougees, the lootees. Setting the 99%s against each other is just a tactic of class warfare. The real culprits are the 1%s. They are the ones who blew the bubbles, profited off them, dumping their downside losses on everyone else, and using all this as an opportunity to extend their looting even further.
And re a comment above, the German government/elites are not bailing out the periphery. It is bailing out its own banking sector. All the bailout money that heads south turns around and heads straight back north. Where is it written in stone that the periphery has to pay out the bad bets made by Northern banks? What is really happening is that this manufactured crisis is being used by elites, both local and European, to beat the 99%s into submission with debt.
Nonsensical. These are democratic countries and the borrowed funds were spent on national priorites esablished via elections. There would not be giant amounts of social discontent if the borrowed funds had not been used in socially useful ways. The borrowed money funded programs of importance to the “99%” and that’s what’s got everyone riled up. Had these countries used the funds in idiotic and/or corrupt ways, they would simply need to stop acting like corrupt idiots to solve most of the problem.
Do you really believe that Bankia would have been bailed out would the matter have been put to popular vote? The absolute answer is no.
Do you believe that the expenditure of sending forces to Afghanistan would be supported in a referendum? That the general military expenditure, which is a useless burden for most of the people would have been voted in a referendum? That the salaries of the politicians or the king would be suppported in referendum?
Do you even think that the payment of debt interest rates at the cost of pensions would ever be approved in referendum or that people would rather support the risks of bankruptcy?
Today (in August) the two main institutional parties barely gather a 30% of th voters’ intention (after both plumetted). This would translate as much more in elections because of abstention but that is what those policies have as actual support: less than 35%.
You can’t run in elections with program A and the apply program B: either you are coherent or your legitimacy plummets in a matter of weeks.
Last year’s elections’ legitimacy was spent (wasted wildly) in less than six months. If a government has no legitimacy, new elections should be called or is as good as Hitler, really.
You are absolutely out of your mind.
The bailout of Irish banks by the government was the work of one man, the head of its central bank, a remarkable act of treason. We chronicled that at length. The Spanish government entered into a deal over the summer for a bailout of its banks, directly, not funded by its government. Germany has decided to retrade that and the Trokia has fallen in with Germany.
More generally, the explosion of deficits is the result of the financial crisis, as in actions taken by banks (both big banks in the US and the major Eurobanks, such as UBS, SocGen, Deutsche), not by elected governments. Tax revenues fell and some “automatic stabilizer” payments rose (these by the way are considered sound policy by economists). In fact, the US was yelling at some European countries to more discretionary spending, not understanding how the automatic stabilizers worked.
The financialization of Europe. No wonder London won’t join. And per DofC above saying: “The euro can only grow outwards thru waste production because it is not a currency, it is a yield vehicle.” and “It all starts with the credit note and not the production process.” – I read the Reuters’ article this morning on CNBC about the EU’s prospects of survival – and there was a sentence which implied serious talks were underway to forgive, or restructure, national bank debt.
Then there is the China deal. If the ECB can only buy bonds on the secondary market that means they will buy them back from China. Clever little laundry.
And then a bit about the possibility of a two-tiered Eurozone – the core and the periphery, and the UK was mentioned not as a participant but as a promoter of two tiers. I got the impression the UK is dedicated to financial control over Spain, maybe others.
And Bill Gross? He wants Spain to bite the bullet before anything can wipe out his interests? Whatever.
If not adopting austere public policy lowers the default risk on soverign debt by encouraging growth, why isn’t it better for Spain or Portugal to simply tell the EU that they’ll run the deficit they need, tell the ECB that they do not want an OMT program and go the debt market and place higher amounts and spend it in the most useful way possible for their national situation? What has been described as austerity should have no traction at all, but seems to have plenty of it. Most investors I know are pretty unemotional about risk; provided they are compensated reasonably, they’ll buy into it. You would almost think that they do not believe that more debt now lowers repayment risks for some of these countries.
Most investors know squat about monetary operations or the difference between gold standard and fiat currency nations. You discredit yourself in citing them as authorities on this matter. Look, Bill Gross sold out of Treasuries prior to the downgrade by S&P. We said the downgrade would be a nothingburger. In fact, Treasuries ROSE in price.
You also really don’t get that the problems the periphery countries are having are the direct result of the defective design of the eurozone, something its creators were well aware of and expected the needed integration would occur in a crisis. Well guess what, it isn’t happening.
You are so far behind on this topic I honestly don’t know where to begin with you.
Yves, do not toss off too many of your pearls when, repeatedly, they do no good.
Follow the money… The european bailout is for the banks. Why is it necessary to cut pensions, lower wages, put people out of work. To pay back the banks. If A gives B money to buy a motocycle that they both agree is worth buying and the day after A makes the purchase it break down. Is A responsible to repay the full amount. If A and B are both honest men, then the answer is no, they will meet and come to some agreement of what amount should be repaid. If bank A loans country B $100 billion beause it knows that country B is not so credit worthy and so it can charge a couple more basis points on the load. And make a lot more money then loaning to country C which would be charged lower interest. Then country B goes broke and bank A is an honest broker shouldn’t it try to work out a fair agreement for repayment knowing that it made a loan that had a lot more risk built in? If a country C incourages banks to make risky loans to other countries because it wishes to be able to sell it’s goods to those countries and the the countries default on the loans. Shouldn’t country C be responsible for paying back some of those loans. The Germans are mad because they don’t want to have to pay for the bad loans the other countries made. The banks are demanding 100% repayment on the loans they made. The people all away around are made to suffer, why? They did play a roll in all this, but should all the burden be put on them? This not about Germany or Spain or any national region. It’s about doing business and who is responsible when business goes bad. Why did it go bad, was it doomed to fail from the beginning? Study the root causes, learn what is going on. Then comment from a position of power, knowledge is power. Yves is right on, she has power, because she has the knowledge. Pay attention!
This is completely wrong and aimed to conceal the real culprit.
Spain like the rest of Europe (world) has been bankrupted by its automobiles and the trillions of euro-denominated debt taken on to put them on the roads and to keep them running. As long as Europeans could borrow cheaply from international finance, it could afford to send euros to Saudi Arabia and Iran for a capital good that was burned up for absolutely nothing in return.
Today, Spain doesn’t have the euros, it doesn’t have the capital, either. It has smog and used cars.
Here is the problem: driving a car does not pay for the car, nor does it pay for the fuel needed the car and just about everything else that goes along with the car-program … unless the driver operates a taxi, a farm tractor or a delivery truck. Driving a car does not pay for anything: the trillion$ squandered on ‘infrastructure’, on oil-wars, on finance … along with bloated governments with their perpetual deficits needed to keep the entire enterprise afloat.
Analysts point their fingers at everything other than the real problem because doing so would lead to the inescapable conclusion that all the cars must be gotten rid of immediately.
Of course, the cars are going, anyway: http://www.spiegel.de/international/business/auto-sales-in-germany-slump-in-september-joining-european-trend-a-859221.html
If the force of events does the heavy lifting the consequences will be unimaginable hardship and suffering for everyone on Planet Earth. I personally guarantee you what is underway in Greece, Portugal and Spain — conservation by other means — is at its very start. The endgame is all of Europe to be as ruined as Somalia or Yemen or Haiti … with dozens of nuclear reactors that cannot be tended! This is not something to occur into the far distant future, either. If everything remains perfect in this world there are two or three years’ time within which to take appropriate action:
http://www.economic-undertow.com/wp-content/uploads/2012/10/CLB-100812.png
Nothing will remain perfect. Argue all you like but do so with Mr. Entropy. He never loses, hasn’t for billions of years.
Um … sorry to spoil the wishful thinking party: adults make choices, they put away the toys, they decide what it is they must do to survive and let the rest go. The choice is between having cars or having humans vs. no cars and no humans. Right now there are no other choices and time is running out fast.
Well, the real question is when the revolutions start happening.
I’m still expecting Spain to go first. Ireland *should* go first but there seems to be a cultural malaise in Ireland, a willingness to suffer unnecessarily.
I’d be gladly surprised if the Spanish people(s) is able to make some sort of a revolution. For the last two decades at least they have been brainwashed into conformism.
They are responding much better than I expected in terms of street mobilization but they clearly lack the honest and widespread class organization structures (and consciousness) that Greece for instance managed to preserve through the illusory gilded period of the 1990s and 2000s (the bubble). Hence there’s some risk that fascist or quasi-fascist vectors may capitalize discontent and turn into submission.
Also there is the national problem, what makes Spain the best candidate to be Yugoslavia II in all Europe probably.