Britannia Radio

Mr Michaels paints an overall picture of Europe today with which we 
can largely agree.  But he pulls it all togetherr. I, for instance, 
have been puzzled at the lack of economic news and horror stories 
from France.  Well he brings us up to date.
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Watchers of Newsnight  (in particular) will have been glad to see the 
return of the BBC's brilliant economics editor Stephanie Flanders.  
Her blog is on http://www.bbc.co.uk/blogs/thereporters/
stephanieflanders/

It's tough thinking and definitely not for wimps !!!
xxxxxxxxxxxxxx cs
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TELEGRAPH   28.1.09
Europe's winter of discontent
Thursday's French national strike reflects growing despair on the 
Continent with the way governments are handling the recession, says 
Adrian Michaels.

By Adrian Michaels

The French are in revolt. On Thursday, teachers, television 
employees, postal workers, students and masses of other public-sector 
workers will be united in a hugely-popular strike with car workers, 
supermarket staff, journalists and thousands of others in the private 
sector.

One poll said that 75 per cent of the public supported the action, 
which has the backing of the large union groups and opposition 
socialists. It will be a big test for President Nicolas Sarkozy but, 
more importantly, the strike will mark the biggest protest so far in 
one of the world's largest economies against the grief and distress 
being caused by the catastrophic global downturn.

A depression triggered in America is being played out in Europe with 
increasing violence, and other forms of social unrest are spreading. 
In Iceland, a government has fallen. Workers have marched in 
Zaragoza, as Spanish unemployment heads towards 20 per cent. There 
have been riots and bloodshed in Greece, protests in Latvia, 
Lithuania, Hungary and Bulgaria. The police have suppressed public 
discontent in Russia, and will be challenged again at large 
gatherings this weekend.

This is turning into Europe's winter of discontent. Protests are 
widespread and gathering pace. It seems to be about national 
interests superceding the common cause that has united countries for 
decades.

Comparisons with the Thirties have tended to focus on the numbers - a 
lack of growth and waning consumer confidence, an increase in 
business failures and job losses, collapsing stock markets and 
currencies and panicky runs on banks.

But the Thirties were so much more than that. Economic hardship 
spawned demonstrations. It allowed extremists to gather support after 
a loss of faith in mainstream political movements. Economic 
catastrophe bred Franco, Mussolini and Hitler.

Do the protesters across Europe sense once again that their 
governments do not know what to do? Or is it melodramatic to worry 
about such a parallel?

Politicians are being assailed for their lack of competence. 
Mainstream parties - the Left in France and Germany, for example - 
are bickering and in crisis. France's mainstream unions have, in some 
cases, been following the actions of more radical groups such as SUD-
Rail, which called a wildcat strike at a Paris rail station and 
stranded thousands of commuters. In Italy, traditional scapegoats 
such as immigrants are being expelled by populist politicians.

The Continent has been turned upside down as governments struggle to 
cope. Whatever was bad - state aid, bigger budget deficits, mass bail-
outs - is now good. "Governments are making it up as they go along," 
says Alan Ahearne, an economist at the Bruegel think-tank in 
Brussels. "They are doing it on the fly."

Is it any wonder that the public finds it hard to imagine that our 
leaders have the ability to cope with such immense challenges when 
they have no rulebook?

Worse is that the institutions created to keep the peace after the 
Second World War are being over-ridden. The European Union, formed in 
the Fifties mainly as a way to stop the citizens of France and 
Germany from killing each other, is having its rules ignored as 
countries take unilateral action to safeguard jobs and businesses.

A bail-out of banks by individual countries might have been 
essential, but early EU efforts to stop healthy banks receiving money 
as well as unhealthy ones were quickly abandoned. But we are now 
seeing support for car companies, including that announced yesterday 
by our own government, and for airlines.

Once the precedent has been set, many in Brussels understand that 
Sarkozy or Silvio Berlusconi, Italy's prime minister, can hardly be 
stopped from helping Fiat, Renault or Airbus. Voters may believe that 
those very large employers are hardly less deserving than banks. 
Besides, this is a global economy. Europe says it must respond if 
America is bailing out its car companies in Detroit and distorting 
competition. But there are undeniable abuses. It is incredible to 
stretch the argument, as Sarkozy has done, to subsidising newspapers.

Brussels has made token noises about the rules of the single market 
being respected again some day, but its guidelines on bail-outs 
merely follow actions by member states. Only now do we hear that the 
EU is unhappy with the way our government is running Northern Rock.

It is very hard to see when the authority of Brussels will be 
restored, but Neelie Kroes, the competition commissioner, makes a 
compelling case for remembering why the EU has been successful. "The 
current global crisis will not be solved through local regulation or 
through a protectionist renationalisation of global markets," she 
said this month. "Social justice will be achieved.through free and 
competitive markets. Yes, the market economy comes with bubbles and 
recessions, but the long-term trend has been towards prosperity. 
Nobody can deny that competitive and open markets have been a main 
force behind the wealth and prosperity that the world has obtained so 
far."  [For a start I'll deny it!  A large slice of fake prosperity 
was built on insustainable debt and this is what has so disastrously 
collapsed -cs]

The people on the streets are not listening. Iain Begg, a professor 
at the London School of Economics's European Institute, believes the 
protests in Latvia represent a loss of faith in the European project. 
He says that entry into the EU sparked spectacular growth, but there 
is disillusion now that growth has ground to a halt. Latvians may 
have had freedom of movement while seeking work, but there is no work 
any more.

Another reason for discontent is that this is the euro's first 
recession.

Eurozone countries can no longer devalue and boost exports, assuming 
anyone still had the money to buy goods. And, while Germany and 
France can boost domestic spending, Portugal and Greece do not have 
the money. In smaller countries, people are protesting because all 
they see in their future are cuts in wages, reductions in living 
standards, spending cuts and tax increases as their governments 
struggle to restore order. "The public wants to see an equitable 
sharing of the burden," says Ahearne.
François Chérèque, the leader of France's moderate CFDT union, says 
the mass strike is a "cry of anger" by workers who feel the 
government has given billions to banks and industry, but not improved 
the "purchasing power" of ordinary people.

In such chaotic circumstances, extremism can flourish. But before we 
start waiting for collapsing governments, racism, murder, anarchy and 
world war, there are very important differences between today and the 
Europe of the Thirties.

International institutions and co-operation are far from dead. There 
are efforts to co-ordinate fiscal stimulus packages. Governments show 
an understanding that trade wars and the protectionist tariffs of the 
Thirties made the Depression worse. They have been throwing the 
kitchen sink at problems instead of allowing companies and 
livelihoods to founder through inaction.

In April, the G20 group of developed and developing nations will 
gather in London and have another chance to set the right planning 
and communications strategy. Barack Obama has started telling 
Americans that they will have to take a share of the pain, and that a 
fix will be a long time in the making.

This important step of managing expectations has not yet been taken 
by many European politicians. Americans generally believe that they 
have selected the right person for the job. Polls show they are 
prepared to give him plenty of time.

In contrast, Europe's leaders are struggling to convince their 
peoples to do the same. Instead, disgruntled voters sense chaos and a 
lack of purpose