Eurocrash: the EU needs a bailout
Thursday 4 April 2013
 Since the member states have so far refused to furnish additional funds, the EU is by any normal benchmark insolvent. As for the picture, DWN notes that for the EU grandees there are always enjoyable events for which, fortunately, others pay the bill. The picture shows a gala reception with a symphony orchestra in Tallinn on the occasion of the EU-accession of Estonia. But now, since the annual budgets contain no financial means to pay bills, the party should be over. DWN shows no mercy on this. Like any start-up, it says, the founders know that it is entirely irrelevant whether the partners (in this case the EU states), have any commitments to financing. Each manager of a limited company are obliged to register in this case the insolvency. If he does not, he is liable and must expect a prison sentence. In the EU, it says, the outstanding bills are astronomical - and nothing happens. By late 2012 the amount of outstanding obligations had reached the unprecedented level of €217.3 billion euros and they risk rising this year even further. The European Parliament is thus calling for member states to "break the vicious circle of unpaid debt". The unpaid bills should not pollute next year's budget with "illegal debt", it says. And now, with the Netherlands joining the UK in refusing to accept an amending budget, it looks as if the EU is badly in need of a bailout. Adopting the liberal and imaginative solution which the Commission proposed for Cyprus, we can see the obvious way out. The bank accounts of all Commission employees should be frozen, the assets of the EU institutions sequestered and then there should be a massive series of compulsory layoffs and a fire sale of property. But since, under EU law, the institutions cannot carry over debt from one year to another, we will have to express regret that we cannot lend and money to them. The whole lot will simply have to be wound up – terribly sad, we agree, but these things have to be done. COMMENT THREAD Richard North 04/04/2013 |
Eurocrash: so that's a "no" then?
Wednesday 3 April 2013
An opinion poll for Danske Bank carried out by Statistics Denmark found 15 percent of Danes agreeing with the idea of joining the euro. On the other hand, 56.9 percent decided that joining was definitely not a good idea.
This compares with 46.8 percent for, and 53.2 percent against in the 2000 referendum on joining the euro. Needless to say, the political establishment still have their ambitions. Says Klaus Rasmussen, chief economist at the Confederation of Danish Industry, " the euro has a lot of problems, and the Danes are obviously sensible enough to say that a membership discussion is not worthwhile, as long as the countries of the euro area have not solved their problems". He adds, that "It's a good idea to join the euro, but it's no surprise that the Danes have decided that now is not a good time". This rather typifies the breed. Unless or until the euro lies dead, with a steak through its heart, a silver bullet in its skull, and is buried in consecrated ground, surrounded by garlic and a moat of holy water, there will still be people who want to join it. COMMENT THREAD Richard North 03/04/2013 |
Eurocrash: Europe isn't working
Wednesday 3 April 2013
The serious bit of what was once the serious media is highlighting what is being described as a Europe-wide unemployment crisis, with the headline rate for the eurozone at 12 percent and the EU27 standing at 10.9 percent.
This is according to the latest data from Eurostat, which makes the comparison with last year when the unemployment rates were 10.9 and 10.2 percent respectively. By contrast, the unemployment rate in the US was 7.7 percent in February 2013 – the same as in the UK - and in Japan it was 4.2 percent in the January. For European Union countries, this toll of unemployment represents an estimated 26.338 million out of work, of whom 19.071 million are in the eurozone. The lowest unemployment rates were recorded in Austria (4.8 percent), Germany (5.4 percent), Luxembourg (5.5 percent) and the Netherlands (6.2 percent). Predictably, the highest rates were in Greece (26.4 percent in December 2012), Spain (26.3 percent) and Portugal (17.5 percent). Compared with a year ago, the unemployment rate increased in nineteen EU member states and fell in eight. The highest increases were registered in Greece (21.4 to 26.4 percent between December 2011 and December 2012), Cyprus (10.2 to 14.0 percent), Portugal (14.8 to 17.5 percent) and Spain (23.9 to 26.3 percent). The largest decreases were observed in Latvia (15.6 to 14.3 percent between the fourth quarters of 2011 and 2012), Estonia (10.8 to 9.9 percent between January 2012 and January 2013) and Ireland (15.1 to 14.2 percent). Outside the EU, much is made of the unemployment rate in Iceland, which has decreased to 4.70 percent in February of 2013 from 5.70 percent in January of 2013. Historically, from 1970 until 2013, the rate averaged 2.19 percent reaching an all time high of 9.30 percent in February 2010, after the financial crash. So remarkable has been the Icelandic recovery that this island nation has been mooted as a modelfor Cyprus. However, it should be noted that the recovery in Icelandic employment has been led by an expansion of the fishing industry and aluminium smelting, the latter relying on the cheap energy available from hydroelectric sources and hot thermal springs. The success of the fishing industry relies to a very great extent on Iceland not being a member of the EU and not being saddled by the CFP. Aluminium smelting has benefited from the closure of plants elsewhere in the EU, not least the UK. Arguably, therefore, Iceland's answer to the unemployment problem is to stay outside the EU, although if all the other member states followed suit, that advantage might be reduced. But it does seem to be the case that small economies can prosper from the wreckage of their larger neighbours, as long as they remain independent. How the larger continental land mass of Europe is going to resolve its unemployment problems, though, is a different question – and one which the "colleagues" seem unable to answer. While the European Union might be good at providing jobs for its own officials, it doesn't seem to have the knack of extending employment to the rest of the population. COMMENT THREAD Richard North 03/04/2013 |
Eurocrash: the dominoes start to fall
Wednesday 3 April 2013
 Sarris gives as his reasons the harshness of the bailout deal, but also the fact that he is under suspicion for warning insiders about the impending compulsory levy, thus enabling them to get their money out of the country. But, as an investigation commission is sworn in, president Anastasiades is also under considerable pressure to go. He too has been implicated in taking advantage of insider knowledge. For Die Welt, however, the commission is largely irrelevant as it will find nothing we didn't already know, yet will skirt round the most important facet of the crisis – that Cyprus was extremely badly governed. The main flaw, however, is rarely emphasised – the hubris of the "colleagues" in thinking that countries such as Greece and Cyprus could easily be absorbed into the eurozone, without penalty. But, given the hand they had to play, there were very few options available, especially when confronted with the particular structure of the Cypriot banking system. Nevertheless, there is thus a growing sense of irritation in Germany, mixed with concern verging on alarm, at the way it is being scapegoated, to the extent that, if the "German bashing" continues, there is a real fear that the project will be damaged. That doesn't stop the likes of Heffer sounding off about the "Fourth Reich", and Kavanagh in The Sunrailing against the "arrogant EU" sparking panic by "confiscating cash from ordinary savers". On a point of information, it was actually the Cypriots who proposed the levy for the sub-€100,000 depositors, but at least Kavanagh is right in averring that the likes of Greece and Cyprus should never have been admitted to the eurozone. But while this is at the heart of the current crisis, we need to remind ourselves that it is in no-one's best interest to see a disorderly collapse of the euro. The consequences would be dire, and the UK would not escape damage. And nor indeed is it in anyone's interest for corruption and mismanagement to be so prevalent in the "clubMed" countries. For this, as Sarris is now finding, there always had to be a reckoning, and it was never going to be painless. And for that, neither the EU nor Germany can be entirely blamed. If there are to be lessons learned from all this, then, it is that the people always end up suffering from the sins of their masters. If we are to prevent this, we must take a greater part in controlling our own destinies, and the conduct of our governments. |
Thursday, 4 April 2013
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