Europe’s depression deepens

By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

Not that it should be a surprise to most MB [and NC] readers, but the economic data coming out of nations within the Eurozone is once again “worse than expected”. Last night it started with Italy:

Italy’s economy contracted more than expected in the first quarter of 2013, shrinking 0.5% from the previous three months as activity fell in all sectors except farming, national statistics institute Istat said Wednesday.
Gross domestic product in the euro zone’s third-largest economy has now contracted for seven consecutive quarters, the longest recession since Istat began compiling comparable data in 1990.

The preliminary figure, adjusted for seasonal factors and the number of working days, was markedly worse than the average forecast of a 0.3% quarterly contraction in a Dow Jones Newswire poll of 19 economists.
Italy’s GDP shrank 2.3% from the fourth quarter of 2012, Istat said, slightly worse than the average forecast of a 2.2% annual decline.

While dismal, Italy’s economy didn’t decline as sharply as it did in the final three months of 2012, when it shrank 0.9% from the previous quarter.

I’ve spoken about Italy a number of times previously, what the country needs is growth, it isn’t coming. From January 2012:

Italy does have the advantage that over 75% of its public debt is long term with an average maturity of approximately 7 years and only about 12% of that is variable interest rate. This means that even though Italian yields are high now ( 10yr @ 7.11) the flow-on effect to the overall deficit is relatively limited.

The real problem in Italy is that its economy has been stagnate for nearly the entire decade. According to the IMF between in 2000-2010 among all countries of the world Italy only grew faster than Haiti and Zimbabwe. In 2010, Italian GDP was only 2.5% higher than in 2000. This problem is actually made worse by the fact that this is such a long term trend. Italy’s per-capita GDP growth was 5.4% in the 1950s, 5.1% in the 1960s, 3.1% in the 1970s, 2.2% in the 1980s and 1.4% in the 1990s. Since the new millennium the country has hardly moved forward and if we extrapolate out that trend Italy will spend the next decade in contraction.

On top of stalling growth, Italy has a demographics issue. With a debt to GDP ratio at 120% along with a population with a median age of approximately 45 Italy really does look like the Japan of Europe. The only problem is Japan is competitive, runs a trade surplus and is sovereign in its own currency. Italy has none of these things.

Given all of these problems it will be interesting to see what Mario Monti can come up with to get the country back onto a path to growth while staying in the Euro and meeting the countries existing obligations. It would appear to be a monumental task.

And we can now see, even with the steerage of Mario Monti, nothing has changed. The long term trend of shrinking rates of GDP growth continues and, given current EZ policies, its hard to see that changing in the coming year. We’ve seen over the last month that the economic retrenchment is slowly seeping into the banking system through bad loans as unemployment remains over 10%. On top of that the latest PMI data continues to show that manufacturing is in contraction and forward looking data suggests it will stay there for the coming year at least.

But Italy certainly isn’t alone. France too, is back into recession:

France has entered its second recession in four years after the economy shrank by 0.2% in the first quarter of the year, official figures show.

Its economy shrank by the same amount in the last quarter of 2012.
President Francois Hollande has said he expects zero growth in 2013, lower than a 0.1% growth forecast by the French government.

Separate figures showed that the recession across the 17-nation eurozone has continued into a sixth quarter.
A recession is defined as two consecutive quarters of negative growth.

The economy of the 17-nation bloc shrank by 0.2% in the January to March period, according to the EU’s statistics office Eurostat, with nine of its members now in recession. Within the zone, France has record unemployment and low business and consumer confidence.

Again this should come as no surprise, I’ve been speaking about France for nearly 2 years. The structure of its economy at present is based on internal consumption which requires external capital. Attempted austerity in the government sector was always going to slow the economy, the issue now, as it is with many European nations, is exactly what is the credible plan to make the transition from this model to one of export-led growth in an environment of non-floating currency and while major trading partners are all trying the same trick. The most likely outcome, unfortunately, is a deflationary spiral across the zone leading to much higher unemployment, large loss of private sector wealth and eventually political and social unrest.

I’ve discussed previously that monetary policy of the kind being implemented by the ECB can only do so much and is very unlikely to be able to offset the fiscal policy being implemented across Europe, no matter what Mr Draghi says about it every month, and that continues to show in the data.

France now joins Greece, Spain, Italy, Cyprus, Portugal, the Czech Republic, Hungary, Belgium, Finland and the Netherlands into recession, but there will be more to come.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. Paul

    Unfortunately Italy’s woes go hand-in-hand with a rentier class who has busied itself building a fine mess of an Extractive Economy (obligatory reference to “Why Nations Fail”).
    Italy’s best talent has been forced to emigrate elsewhere, and that trend isn’t stopping.
    A crying shame, really.

    1. Middle Seaman

      A crucial question is whether the oligarchic system, including the US, will collapse or whether an insurrection will stop the rich from the ongoing destruction by returning control to a sane really free market. OWS established that the seeds for the insurrection were planted. Will OWS version 2 be strong enough, Western world Arab Spring, to prevail?

      1. Working Class Nero

        What is happening is that US-led neoliberal globalization is affecting a levelling move towards convergence between the wealthy First World and the less well of Second and Third World. This is a long term trend dating back at least thirty years. Both in social structure (a wealthy elite vs. a mass of disempowered peasants) and in relative standard of living — the wealth First World countries are getting poorer while some Third and Second World countries are getting slightly richer. Now if order to accomplish this, the elite First Worlders were lowering their own standard of living, that may be seen as a good thing. But no, the elite First Worlders have elected their bottom 60% to take the hit in their bid at global redistribution of wealth.

        The antidote to neoliberal globalization is nationalism. And you do see nationalist movements arising in many European countries. The complication is that domestically, one needs a more leftist outlook in terms of distribution of income. But beyond the nation’s borders, one needs to have a more traditionally right wing attitude and to accept that some nations will be rich and others poor. That doesn’t mean one should colonize or oppress those other nations, but a well organized and productive nation should not be ashamed of the fact that it has a higher standard of living than other nations. And the only way to protect against the levelling tendencies of globalization is through strong, well-conceived borders on issues of trade, currency, and immigration.

        But in Europe things are further confused by the ambivalence of the EU towards US-led neoliberal globalization. On the one hand the EU could be a “nationalist” entity; it could create strong borders against unfair trade and uninvited immigrants and be a large enough market to hold its own on the global scale. This is what the US / UK fear most and spend huge amounts of effort trying to avoid. On the other hand the EU can be a simple tool of US-led globalization to destroy the prosperity of its citizens in a do-gooder attempt at global levelling. Lately it is this latter tendency that one sees coming out of Brussels. For example this is how concern troll Peter Sutherland of BOTH Goldman Sachs and BP explains it:

        The EU should “do its best to undermine” the “homogeneity” of its member states, the UN’s special representative for migration has said.

        Peter Sutherland told peers the future prosperity of many EU states depended on them becoming multicultural.

        Mr Sutherland, who is non-executive chairman of Goldman Sachs International and a former chairman of oil giant BP, heads the Global Forum on Migration and Development, which brings together representatives of 160 nations to share policy ideas.

        He told the House of Lords committee migration was a “crucial dynamic for economic growth” in some EU nations “however difficult it may be to explain this to the citizens of those states”.

        So as Europe reacts against such machinations, we will see the rise of particularist nationalism which is going to eventually force the EU to take a side. If the UKIP continue to rise and are able to get Britain out of the EU (let us pray they do, although the US will never allow it) then there is a chance that the EU could adopt a “nationalist” strong borders policy. If not then the EU will crumble as the various local nationalists start winning power.

        In the US things are slightly different. There are a few paleoconservative groups that have a “citizens” approach but most right wing groupings in the US are hopelessly infected with the disease of Libertarianism which translates into open borders and “free” trade as well as a bunch of other stupid stuff. OWS, being a more left leaning group, did not manage to become a much of a force due to certain limitations. In order to “occupy” something it meant militants had to be on site most of the time which meant the movement was closed to most people with jobs or families. Worse it was often just a restatement of liberal priorities, it never was able to clearly articulate a message against outsource of jobs and the massive insourcing of low-skill labor. The partial exception I know if is in Oakland (people from NoCal just happen to be more clued in…) they did get it right and marched to the Port and tried to shut it down. I never saw anything about OWS being anything but for more mass third world immigration. For example an amendment to the latest “Amnesty” bill tried to limit to the number of new “American Dreamers” to 33 million per decade. This was voted down so we will likely get something like 50 million per decade. Given the already low participation rate for labor, is it really a good idea to add 100 million more mostly low-skilled people to the US in the next 20 years? No one from OWS or any right wing libertarian organization will be against this. Even environmentalists refuse to speak out about the Environmental Impact of so many new American Dreams. Only paleoconservatives are against it but there are not so numerous and many of them are compromised on other subjects.

        In Europe, the taboos are breaking down and more and more people are recognizing that a strong U-turn is required against neoliberal globalization. The left offers some good theory on the subject but not much in the way of on the ground political movements, so it’s to the right people turn. But the right in Europe sometimes are taking — at least in their rhetoric — a working class perspective on things (for example, Marine Le Pen in France). In the US, where globalization is the new nationalism, both the left and right are united in support of globalization and only very small groups exist to fight against it. The only way for these groups to grow and become effective is if people of both a left and right leaning perspective join together. But given the partisan heat in the US this is a tall order to fill.

        1. banger

          Nice comment. Indeed, in the U.S. at least the only chance to make positive change has to come from some kind of alliance between left and right–I think that most of the major political differences among young people, for example are cultural and those cultural, racial and regional differences are ruthlessly exploited by propaganda outlets by which I mean every single major outlet from Fox to Comedy Central. All these outlets should be ignored as honest presenters of the news except Colbert can still be funny.

          I find that young people in the South who favor conservative politics have a lot more in common with young people in the north even if they have different tastes in music. Both groups are much more skeptical of authority and the mainstream media than their parents and grandparents–so there is hope.

          1. Cynthia

            The power that the banks and financial institutions have obtained means they can frequently dictate policy to the government. In this new form of inverted totalitarianism, it will be interesting to see if this much power and influence in one sector of civil society will cause even more social unrest. Given what we have seen in Cyprus, Spain and Greece, my guess is yes.

        2. The Dork of Cork.

          Thanks for posting the obvious dark undercurrent within the plan.
          A certain section of the Hibernian / Anglo / Dutch elite are some of the darkest forces on the planet.
          These self same forces conspired to turn Ireland into some sort of sick gigantic ranch in the 16th & 17th century.

          The chaos on the shop floor of a typical Irish factory in the early /mid noughties was something to behold.
          Almost unlimited profits were to be had from the extraction of labour value.
          Given the astounding lack of wages & labour remittances relative to productivity domestic credit was produced to capture value……..malinvestment followed.

          I often imagined Mr Sutherland sucking the marrow from the bones of dumb Irishmen back them – which he was.

          The absence of even a doomed captain rock like rebellion in Ireland is mainly a result of a lack of cohesion and deliberate policies of social atomization beginning in the 1960s under state television

          Now that a estimated 25%~ of new mothers is of a non national extraction the pillage can continue without agrarian style interruption.

          As in the 1980s ………..get rid of the cohesive coal mine community and the rest will follow.

          It has moved on from lowly meat factory type operations to the once “protected sectors” – working its way up until all value is destroyed via extraction.

        3. Thor's Hammer

          Working Class & others
          Your analysis of the politics of class domination is spot on, as are the comments from others that followed.

          What is missing is a recognition of the underlying background conditions.

          Capitalism is a system of exploitation wherein power is invariably accumulated by a small group of owners of the means of production. They then use that economic power to achieve domination over the mechanisms of the state and means of violence and use this power to further their enrichment. Thus capitalism evolves into kleptocracy as a natural course of development unless countervailing events, social movements,or revolutions prevent it.

          However, capitalism grows not just by exploiting the surplus value of labor, but by exploiting the natural capital of the earth. And the natural laws of physics pay no attention to politics or economics.

          The industrial civilization that capitalism has built, and the productive output that allows seven billion people to live on a planet where only one billion lived formerly has only one real currency. Not gold, not the dollar— only energy derived from fossil fuels. And that energy source is finite. No amount of hopium and delusion can change that fact. Most of the noise around the energy sources of industrial civilization is just that– sometimes a few gigajoules of energy are freed up by new technologies or changes in the cost of extraction, but that doesn’t change the finite nature of the energy base of our civilization and only shifts the time frame by milliseconds of geological time.

          We have built that civilization upon the free ride of cheap fossil fuel energy, and that era has come to an end. The peak production of the most concentrated and transportable form, oil, has already passed. And the same will be true of coal and natural gas in a future measured in only decades or at most a generation or two. Not only have fossil fuel energy extraction costs reached a point where they limit future growth, but the ability of the planet to absorb the bi-products of burning them for energy has been exceeded, perhaps irreversibly.

          This is the underlying background in which the class struggles of the present and future will take place. Banksters and oligarchs are behaving as if they are competing in a zero sum game— which is in fact the case unless radical redistribution of human priorities were to somehow take place. Which of course would require the elimination of their power over the economy and ideology as a pre-condition.

          1. Tax Lawyer

            You quote: “Most of the noise around the energy sources of industrial civilization is just that– sometimes a few gigajoules of energy are freed up by new technologies or changes in the cost of extraction, but that doesn’t change the finite nature of the energy base of our civilization and only shifts the time frame by milliseconds of geological time.”

            A millisecond of geological time covers me, my children, grandchildren, great-grandchildren and a few more generations. Unless you are Hari Seldon in disguise, then you, like I should consider us to be very benevolent in giving our offspring so many years to solve the energy problem. If they cannot do it by then, any rationing by our generation is just self-defeatist and might just retard growth enough to prevent them from having the resources to find a solution. Of course, if there IS not solution, then we are ultimately doomed as a species anyway.

            The real crime consists of the extremely selfish republican party who would happily sell out our future for a short-term boost in their favorite stock’s price. They are they types who scream the loudest against “basic research”, which has so far led us to land a man on the moon, created the internet, and so much more. What a different world this would be if we simply imposed 5% annual wealth (not income) tax and devoted it to “basic research”.

      2. banger

        There is no possibility of an OWS 2 movement in the U.S. The trend is away from coming together and more towards everyone for themselves so to speak. More specifically, the trend is to have a circle of friends and family (or not) and focus on their needs.

        1. Another Gordon

          That is a lot like the traditional Chinese approach where the extended family is the only basis for social security AND, very often, physical security. It’s a sensible response to the lack of the Rule of Law. Basically, the US is becoming more like China in its dark years – a preserve of clashing warlords (read oligarchs and bankers) unrestrained by law or decency.

  2. mmckinl

    Unfortunately the author doesn’t get it … Austerity is all by design to save the banksters while eviscerating public services. So far the governments have done a masterful job of implementing just that program. A few protests and riots but nothing too threatening.

    The EU will see a shrinking economy for years to come. Between resource depletion and climate destruction only those countries with slave wages and lax environmental protections will manage to grow and slowly … Growth for the EU, US and Japan is now a relic.

    What needs to happen is planning for a sustainable economy that can’t rely on “growth”. Only with Public Banking can the financial sector survive the years and years ahead of de-growth in the developed world. Don’t let them fool you, this is all about protecting the plutocracy at any cost.

    1. skippy

      Its like watching plutocracy surf that big antonymous wave of electrons of price, seeing who can stay standing up the longest, as it washes over the globe.

      Skippy… and these – are not – zen surfers… this is the winner takes all… comp of all comps… the last wave thingy…

    2. Walter Map

      ‘What needs to happen is planning for a sustainable economy that can’t rely on “growth”.’


      Won’t happen, though, at least not anytime soon. It contradicts the greed goals of the terminally rapacious, and their control, for the time being, is total.

    3. banger

      Well, I don’t see why you say the author doesn’t get it–DE is just reporting on recession in Europe that seems likely to get worse. Other than that you make a lot of sense.

      I believe we will stumble towards developing new solutions to the extent we can deconstruct the mainstream narrative that exists, at this point in history, largely to deceive us. Great ideas, techniques, technologies are out there just waiting to be used that would allow us to bypass the robber-barons from collecting tolls each time we sneeze. Task number one is to deconstruct the narrative then we can get to work. The tragedy is that people think there are no solutions and that this system is all that is possible.

      1. mmckinl

        The author is calling for growth … Groth is largely over for the developed world … Japan, EU and the US.

        Resource depletion and climate destruction have already stagnated growth. It will only get worse.

        Yes there will be periods of growth … after severe downturns that once again collapse prices and wages.

        The picture is of a roller coaster ride descending with intermittent rises followed by rinse and repeat.

        1. banger

          Well I’m for growth–growth in the direction of actually trying to realistically solve our collective problems. This activity is what I would call growth.

          1. HotFlash

            I think this is an apt analysis. I believie that one of the (many) factors inhibiting recovery is our clinging to the GDP metric. Anybody got a better metric? GINI is not a lot better, but until the scoring method gets better, we will be working for bad goals. Which means we will never be able to win for losing.

            A beter metric, PLEASE!

        2. Alan H

          How can you say growth is over because of resource depletion. Every nation, including the developing nations, imports large parts of the resources they need. Every nation shares the climate. US growth is hindered because Corporations gave away the crown jewels of US research (taxpayer funded or partially supported) in exchange for the privilege to convert foreign labor to their purposes, thus maintaining margins on the goods they sell in the US and Europe. The lowest 30% in the US haven’t got what it takes to organize. The middle 50% are afraid to advance their own interest aggressively for if they do the top 1% will bribe the lowest 30% and part of the top 20% to put the 1% in power once again. The money of the very rich and very organized is used to maintain the status quo and inflict pain on any group that fights them. As ever.

    4. Doug Terpstra

      Agreed. Once again, the unstated premise is that the obvious consequences of austerity are purely unintended; that spreadsheet errors were entirely inadvertent; that kleptocrats are well-meaning really, just mistaken; that Obama is not Machiavellian, merely a tragically-inept negotiator who only becomes aware of his administration’s crimes when he first sees them on CNN.

      If only these shortsighted supply-siders could be encouraged to see the light, just a few more years of compelling proofs about the epic failures of free-theft pacts and gobal war and then maybe our basically-sound system of rigged-market cannibalism could be reformed and set back on the straight-and-narrow path of unbridled growth.

      Those who can’t or won’t recognize the malicious greed and powerlust driving disaster capitalism are really obscuring compounding the problem with inappropriate fixes. The system doesn’t need pruning; it needs to be uprooted and replaced.

      1. Cynthia

        The trouble is, many people see that much of the “austerity” checklist is also the playbook of those who would impose a form of corporate feudalism. The “austerity” measures tend to gut the middle class. The poor will remain poor, and the benefits accrue to the rich. By the time any benefits might “trickle down” to the middle class, there won’t be a middle class, because they’ll all be poor. Those who have benefited the most from the current fiasco will benefit again, and those who are paying the price will pay the biggest price. It’s only “austerity” for those who have gone along and upheld their end of the social bargain.

        Whether or not you agree with that assessment, that’s how a growing number of people worldwide see it. And that’s why there’s growing resistance. Perhaps an “austerity” that didn’t target the middle class, and affected all levels of society equally relative to their means would be less unpopular.

      2. banger

        I really don’t believe Obama is inept at all. He’s the administrator of an extremely diverse multi-polar, multi-agenda ship of state that is not even remotely unified. I’ve repeated many times that the President is not the power in Washington–he’s one actor among many–his function is administrative, ceremonial, and, mainly, he’s a power-broker dealing with a lot of very, very heavy hitters who don’t f–k around.

  3. The Dork of Cork.

    A interesting Irish economic paper by John Fitzgerald

    The Effect of Redomiciled Plcs on GNP and the
    Irish Balance of Payments

    But like all such papers it does have political consequences.

    “There is also a corresponding implied adjustment needed in the official current
    account figures, as shown in Table 2. This would imply that, instead of having a
    current account surplus of around 6.1 per cent of GNP in 2012, the underlying
    surplus was closer to 0.6 per cent of GNP.
    When these undistributed profits or retained earnings are taken into account, it
    makes a big difference to the headline numbers for Ireland for 2012. A current
    account surplus of close to 6 per cent of GNP would imply that there was 4 | Quarterly Economic Commentary – Spring 2013
    considerable scope for domestic demand to increase in the future, once
    deleveraging ends. However, if the true figure is closer to 0.6 per cent of GNP the
    scope for such an increase in domestic demand in coming years is more limited.”

    This is a very narrow way of looking at things.

    We live in a world without final settlement.

    Global rent flows into London and other financial capitals……
    The people with claims on so called sov debt , now private utilities & other more sophisticated methods of extraction burn real resources at others expense.

    Under a national free floating currency domestic demand should be a domestic affair and nothing else.

    The level of capture by global rentier forces is truly astounding.

    1. banger

      Indeed, I think the first thing all people have to do is to understand that the current system is morphing into new form of feudalism. The systems that rules us are being gamed systematically by an international oligarchy that is becoming indistinguishable from organized crime. This class is international in scope and loyalty–oligarchs have loyalty to their families, tribe/clan and to their peers not to their countries of origin.

      In American it is understandable that most people don’t get it though it’s beginning to dawn on more people–but in Europe which is not as insular as the U.S., I don’t understand why the people seem largely clueless about what is going on internationally. Europe has more real democracy than we do in the U.S. where we have a captive corporate media and two fake political parties with two right-wings.

      1. Paul W

        Banger, you captured our problem perfectly with your opening line: “the first thing all people have to do is understand”

        The majority do not want to understand. Even after it will be too late they’ll still be in a state of denial.

        1. banger

          I don’t think people want to be ignorant–I think that people are overloaded with having to deal with too much information and a mind-control regime engineered to weaken us intellectually, morally and spiritually so that we can be a food source for the oligarchs. Our shamanic class is centered in the advertising, PR, media and entertainment industries who profit directly from our weaknesses. If we can create counter-spells people will open up an flower.

          1. NotTimothyGeithner

            “I don’t think people want to be ignorant–”

            I think you hit the nail on the head, or at least the majority don’t want to be ignorant. Its the undeserving elite who are the problem.

            I use to be involved in Democratic politics, but there was a Repubican state Senator where I use to live who was conservative. He is a doltish believer. I’m confident there is no hidden malice. He had a few heavily African-American precincts who would give him votes or at least not vote against him. These were places where having a Republican sticker would mark it for being stolen. What happened? The answer was the Republican elected went or had his staffer go to every community meeting. The Democratic candidate was too busy worrying women not being allowed at Augusta and avoiding poor neighborhoods like the plague. The voters of these precincts more or less kept saying, “here is a candidate who we disagree with but respects us enough to come out and pretend he likes us, and here is a candidate affiliated with Team D who we never see and wants everyone to know how conservative they are.”

            The local Democratic elite would whine and complain about turnout, but if you suggested, they do something other than look for pats on the head from important state Democrats they would whine even more about voters being idiots. I think the voters in those precincts were making the best decision they could make with the digestible information available to them.

          2. David Archer

            Banger writes:

            “Our shamanic class is centered in the advertising, PR, media and entertainment industries who profit directly from our weaknesses. If we can create counter-spells people will open up an flower.”

            Yes. One of my constant themes, much more elegantly stated by Banger. Though it’s hard to blame them (us) when poverty is a very real alternative, the range of the sell out by our creative class – for crumbs or fortunes – can break one’s heart.

            This aspect of the over-all picture definitely needs more focus and attention, especially the notion of “real world” artistic or financial counter-spells to help bring on the flowering of our collective humanity.

  4. The Dork of Cork.

    A simple explanation why Irish Youth unemployment is not at Greek or Spanish levels.

    One of the reasons why Irish youth unemployment is lower then in Spain is that the birth rate in Ireland reached new lows in the early ,mid 1990s
    The domestic Irish women were having less kids back then.

    Just type in under one year , all sexes and all years.
    The estimated number of kids under one year reached a low of 48.2 thousand in 1995 rather then the current 70+ thousand.
    The 1995 group are now leaving school.

    This current high birth rate is chiefly a result of external workers which came into the country during the boom – these are generally workers in the 20s to 30s age group …….prime child bearing years.

    Now type in the 15 to 19 group (all ages and years)

    This Irish age group is back down to 1972 -73 levels.

    Please note that these numbers may seem small but of course in % terms these are the biggest rise and fall seen in euro area birth rates by a wide margin.

  5. Aussie F

    In Europe we’re witnessing the slow destruction of all humane and civilised values for the sake of a discredited economic theory and a handful of gambling banksters.

    It’s a major problem for everybody, because without wishing to ignore Europe’s history of atrocities and colonialism, in recent decades it’s slowly evolved into one of the most civilised places in the world, enjoying some major advances in social justice, social equality, and human rights.

    Now neoliberal orthodoxy reigns supreme, and another alternative to ruthless, corporate supremacy and unending war is being destroyed, closing down hope for millions.

  6. The Dork of Cork.

    On France
    “The structure of its economy at present is based on internal consumption which requires external capital.”

    Yes – Greek ,Spanish etc etc capital rations

    “What is the credible plan to make the transition from this model to one of export-led growth in an environment of non-floating currency and while major trading partners are all trying the same trick.”

    I don’t think thats the plan now.(at least in France)
    A country exports so as to afford car inputs.
    No cars and therefore no need to export.
    More wine is simply consumed.

    People need to ask where is the Greek capital ration going and why build such overcapacity in French public transport ?

    Just 420 people a day use this line which was relayed in 2010…..
    420 people
    they wish to extend the line south by 20 km to a few villages of 1000~ people.

    Why ?

    1. banger

      Since you aske “why” of course I don’t know the particular situation or the byzantine deals that underlie public spending in France but I can guess. Public morality and a sense of cohesion is gradually disappearing in Europe and that was easily predictable in a culture that is based on nationalism and cultural chauvinism. Multiculturalism does not sit well in Europe–they’ve done a great job in integrating other nationalities and radically different cultures but it just weakens cultural bonds and, in my view, increases corruption and the power of organized crime as a major factor in society.

      Europeans like Americans are losing faith in their institutions.

      1. The Dork of Cork.


        Unlike the Irish anti State the French state never does anything without a purpose.
        These investments have massive overcapacity for the moment.

        I think they are preparing for a time when oil will simply not be available in quantity.

        The experience of Norway during the war points to the possible direction of things.

        “The fuel shortage during World War II made trolleybuses extremely popular, since Norway had an abundance of cheap electricity.[2] After the war the construction of the 4.1-km line 5 started, and in 1950 tramline 3 was replaced with the new trolleybus line 5. By that time, five gasolene buses had been converted, giving a headway of 10 minutes. A year later, three more buses were bought from Strømmens Værksted and the headway was reduced to 7.5 minutes. The line was popular, and traffic increased. In 1954 the conversion of tramline 2 to trolleybus started, and in 1957 the 6.5-km line 2 opened with 18 new buses. The ridership reached its peak in 1959 with more than ten million passengers per year on the two routes. In 1960 the sale of cars in Norway was deregulated, resulting in fewer public transport riders”

        At the end of the day Cattle need to be shipped to market as the current breds can’t walk very far.

        Its the car or food.

        1. banger

          Thanks, good answer–I suppose I’m jaded since in the U.S. where I live corruption is very deep and ubiquitous. I lived half of my working life working in Washington DC and know how the system has radically degenerated.

          1. The Dork of Cork.

            Corruption is alive and well in Paris.

            They have turned the euro periphery into Imperial markets & now a negative energy hinterland.

    2. Walter Map

      Why? Because it costs a lot of money, so lots of money is spent. All money spent contributes to GDP, and if you spend enough money, GDP rises and the economy is ‘growing’.

      If the EU would simply print up $50 trillion or so and piss it away, GDP would go through the roof and everybody would be happy.

      Economics is easy.

      1. The Dork of Cork.


        I advise you to look at the history of French transport systems.

        They closed down the last of the rural branch lines in France in 1980…….
        The year of external $ hyperinflation.

        They are now opening a couple of these lines and relaying the stuff in disrepair.

      2. allcoppedout

        Spot on Walter – I’ll map out the necessary pub crawl and have the get out of jail free cards printed for those who get out of hand – though one has to consider whether these economic units would contribute more to GDP in the CJS and prison system.

        1. The Dork of Cork.

          Yee guys don’t understand the post Great war & certainly the post second war European economy.

          Its entire physical foundation orbits the car.

          Ireland is perhaps the most extreme example of this external input economy.

          It has probably more roads per person then any other country on earth.

          If you refer to British balance of payments data ……its income from the rest of the world reached a peak at Q1 2008 at I think £18 billion +
          Much of this was from Irish operations of its Scottish banks.
          Income from the rest of the world is now normally only a couple of billion a quarter.

          Income from the rest of the world was got through running oil mindlessly through sectors of the economy so as to get a return.
          Now the UK has decided to chose real goods over income.

          This means activity in conduit / Imperial markets nose dives.

  7. Walter Map

    The rentier class is doing just fine, so it’s really just a PR problem, and not an economic one. The people who matter aren’t suffering, and the people who are suffering don’t matter.

    And since it’s really just a PR problem, all that’s really needed is to fudge the data a bit more to provide the appearance of economic recovery, as is done in the U.S.: fix the data around the policy, make your own reality, and all that. Having the recovery official, however phony, makes it possible to say, with a straight face, that the impoverished have only themselves to blame, there’s nothing the government can do, and nothing the government should do, except rest on its laurels and get reelected.

    Problem solved. See how easy it is?

    The fact is, even if the rentier class wasn’t on a permanent world-wide pillage and all national economies were doing well, it still wouldn’t be possible to maintain flush times indefinitely. The present conventional economic paradigm of infinite growth in a finite world simply isn’t sustainable and sooner or later, and with much gnashing of teeth, it will be replaced, once global ecological collapse forces global economic collapse. Ugly doesn’t cover it: try weird ugly, so ugly and so weird you can’t even get your head around it. The petri dish of human civilization is already way past full, and such populations always and inevitably have massive rebalancing events. Always.

    Deal with it.

      1. allcoppedout

        Good stuff Terry – but can we do the sustainable in a manner such that big oil and rentier class thieves will just wither away simply by us ignoring them? I wish it were so.

      2. JeremyGrimm

        Growth — no growth — sustainable growth —- why can’t we have growth in culture and growth in knowledge? The GDP includes some factors to count these things doesn’t it? Why is growth always discussed in terms of material goods? How about a growth in leisure and recreation? I strongly favor growth in the areas I’ve mentioned and doubt that they will greatly impact the usage of petroleum. Why do discussions of growth seem so tied to material goods? Material goods are only a small part of the well-being of most (I hope!) people living in the United States and Europe.

        1. Kurt Sperry

          A heretic! This is a good point, some–many–of the things that increase the quality of life, like leisure time and a return to single income families would decrease rather than increase the drain on finite resources. As a thought experiment imagine a maximum 20 hour work week or say forty total for a family. Or people sharing cars and using them far less rather than every family having two or three and driving each an hour or more a day. Or not living in deserts essentially uninhabitable without air conditioning and water brought in from afar. A similar list could go on and on. Would this increase or decrease people’s quality of life?

  8. allcoppedout

    A quick scan of Lambert,rather more time with excellent comments and the esoteric delights of Norwegian bus timetables. The idea of being given money and forced to drink until we drop sums economics up to a T. It’s the sort of policy UKIP will adopt. Not quite as radical as Raving Looney’s ‘sell Britain to the Arabs and dole the money out on a per capita basis’ -I did vote for that one.
    I’m struck that austerity-pisspooronomics is well described by the very fact we are in here ‘chatting’. I was even over at Zerohedge for a few minutes reading some drivel on the UN being crap (true) and Mcdonalds marvelous (lunacy). Sad puppies like us who are motivated to work to spend time here rather than rushing off to India to eat curried Mcdonalds are the cause of the depression.
    We probably need to sack Wall Street and the City because our democracies don’t work. The choice is really between economics and democracy. We shut a dormitory for homeless people in Salford last week – clear need, no other provision, not much money needed. Google and Amazon dodge tax. Economics is the means tax dodging corporations use to hide the links to murder. It produces a high street of so little interest to me I’m here! A politics so dull I don’t vote. Products so dull and vile I don’t want them.

    What we need is something that would have allowed the ordinary sailors on both sides of the Armada to embrace and fight the real enemy (Brits actually enlisted to almost certain death from disease or starvation on not being paid). What we get is ‘big oil’, TBTF banks and the chance to eat burger “beef” grown on genocide-cleared land, lamb (China) made from rat – all while wearing clothes made by slave labour in buildings falling down around the workers.

    Maybe what decent economists should focus on is the abolition of economics as the divine right of kings? If we were sane we’d all be occupying. One has to think we are too scared – but what of and how do they do it to us?

  9. clarence swinney

    Clinton 8 years
    Revenue-12,097B Billion
    Surplus (+ 417 B)

    Bush 8 years
    Deficit (-3545)

    Obama–4 years and 4 Estimated in 2014 Budget
    Deficit (-7,160B)

    Those numbers justify a big Spending Cut and Increased Taxes
    Data from OMB.–The Budget for Fiscal year 2014 -Historical Tables

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