Turkey’s President threatens to impose sanctions on the Netherlands and take it to the European Court of Human Rights over a recent speaking ban.
By Juan Cole | (Informed Comment) | – – German Chancellor Angela Merkel said at a campaign event on Wednesday …
A stunned European Union has urged Britain to leave as soon as possible amid fears its exit could spark more referendums.
Hundreds of leaked pages from the controversial Transatlantic Trade and Investment Partnership (TTIP) show that the deal could be about to collapse, according to campaigners. The huge leak – which gives the first full insight into the negotiations – shows that the relationship between Europe and the US are weaker than had been thought and that major divisions remain on some of the agreement’s most central provisions.
Has something gone adrift within the moral compass of our ‘news’ reporting? In the past week, 64 Afghans have been killed in the largest bomb to have exploded in Kabul in 15 years. At least 340 were wounded. The Taliban set off their explosives at the very wall of the ‘elite’ security force – watch out for that word ‘elite’ – which was supposed to protect the capital. Whole families were annihilated. No autopsies for them. Local television showed an entire family – a mother and father and three children blown to pieces in a millisecond – while the city’s
Barack Obama’s intervention in the European Union referendum was more spectacular than many in the In campaign dared to hope for. They will now dare to dream that it might prove a game-changer in the tight referendum race.
Last week began well for security forces. But then came the bombings. And then the realisation intelligence had failed to contain a group more durable than anyone expected
Millions are more likely to see an influx from Europe as a source of competition, for jobs, for houses, for everything.
By IMEMC | – – Palestinians are joining the Middle East exodus to Europe in greater numbers because of the …
Stefan Löfven speaks out after boy charged with assault at festival and police accused of withholding information about attacks
Hoping to show Europeans they have an alternative to the prevailing system of “authoritarianism” and austerity, former Greek finance minister Yanis Varoufakis has announced a new cross-continent movement with a “simple, common agenda:” To democratize Europe. The movement, known as the Democracy in Europe Movement 2025 (or DiEM 25), will be launched on February 9 at Berlin’s Volksbühne theater.
Most of the European Parliament’s members have voted in favor of asking its member nations to grant protection to the NSA whistleblower, Edward Snowden. The man himself has called this a ‘game-changer’ and a ‘chance to move forward’. The MEPs have asked EU …
Unlike Lebanon or Turkey dealing with over two million asylum seekers, the EU is not really facing ‘a crisis’, said Anas El Gomati of the Libya-based Sadeq Institute think tank. European politicians are flaming xenophobic sentiment to get political power, he adds.
In 1957 a little blue-eyed boy was sat on the desk of the Australian High Commission in Sri Lanka and closely appraised. His parents had applied to migrate to Australia, but his aunts and uncles had already been knocked back.On paper they were European descent and English speaking, as they needed to be in order to pass the test of Australia’s Immigration Restriction Act (1901) – the White Australia policy.
Europe is buckling under the weight of hundreds of thousands of African and Middle Eastern refugees trying to get into the EU. The Keleti train station in Budapest shut down Tuesday due to the number of migrants trying to get from Hungary to Germany; in late August, 71 refugees were found dead after suffocating in a refrigerated truck in Austria. Germany, meanwhile, is expecting 800,000 refugee arrivals this year.In response to the crisis, the tiny island nation of Iceland has only offered the smallest amount of aid, agreeing to take in a mere 50 Syrian refugees. That wasn’t nearly enough for popular Icelandic children’s book author Bryndís Björgvinsdóttir. She launched a Facebook campaign that asked her fellow countrymen and women to open up their homes and urge the government to do more, The Telegraph reports. In 24 hours, more than 10,000 Icelanders had offered their homes for refugees to stay in. Keep in mind that Iceland’s entire population is less than 330,000.”I think people have had enough of seeing news stories from the Mediterranean and refugee camps of dying people and they want something done now,” Björgvinsdóttir told Icelandic public television RUV in response to the overwhelming support.That seems to be true. “I’m a single mother with a 6-year-old son…We can take a child in need. I’m a teacher and would teach the child to speak, read, and write Icelandic, and adjust to Icelandic society,” one Facebook user wrote. “We have clothes, a bed, toys, and everything a child needs. I would of course pay for the airplane ticket.”The Icelandic government is now looking into how to accept more refugees. Whatever they decide, this much is for sure: The migrants they take in will have a warm welcome waiting for them. Jeva Lange
From laissez-faire economics in 18th-century India to neoliberalism in today’s Europe the subordination of human welfare to power is a brutal tradition
Starving people clamour at the gates of a workhouse during the Irish famine,’One eighth of the population was killed – one could almost say murdered – by the British refusal [to set] policies that offended the holy doctrine of laissez-faire economics.’ Photograph: Hulton
Greece may be financially bankrupt, but the troika is politically bankrupt. Those who persecute this nation wield illegitimate, undemocratic powers, powers of the kind now afflicting us all. Consider the International Monetary Fund. The distribution of power here was perfectly stitched up: IMF decisions require an 85% majority, and the US holds 17% of the votes.
The IMF is controlled by the rich, and governs the poor on their behalf. It’s now doing to Greece what it has done to one poor nation after another, from Argentina to Zambia. Its structural adjustment programmes have forced scores of elected governments to dismantle public spending, destroying health, education and all the means by which the wretched of the earth might improve their lives.
The euro will be stuck with austerity unless it learns to embrace democracy
The same programme is imposed regardless of circumstance: every country the IMF colonises must place the control of inflation ahead of other economic objectives; immediately remove barriers to trade and the flow of capital; liberalise its banking system; reduce government spending on everything bar debt repayments; and privatise assets that can be sold to foreign investors.
Using the threat of its self-fulfilling prophecy (it warns the financial markets that countries that don’t submit to its demands are doomed), it has forced governments to abandon progressive policies. Almost single-handedly, it engineered the 1997 Asian financial crisis: by forcing governments to remove capital controls, it opened currencies to attack by financial speculators. Only countries such as Malaysia and China, which refused to cave in, escaped.
Consider the European Central Bank. Like most other central banks, it enjoys “political independence”. This does not mean that it is free from politics, only that it is free from democracy. It is ruled instead by the financial sector, whose interests it is constitutionally obliged to champion through its inflation target of around 2%. Ever mindful of where power lies, it has exceeded this mandate, inflicting deflation and epic unemployment on poorer members of the eurozone.
The Maastricht treaty, establishing the European Union and the euro, was built on a lethal delusion: a belief that the ECB could provide the only common economic governance that monetary union required. It arose from an extreme version of market fundamentalism: if inflation were kept low, its authors imagined, the magic of the markets would resolve all other social and economic problems, making politics redundant. Those sober, suited, serious people, who now pronounce themselves the only adults in the room, turn out to be demented utopian fantasists, votaries of a fanatical economic cult.
Those sober, suited, serious people turn out to be demented utopian fantasists, votaries of a fanatical economic cult
All this is but a recent chapter in the long tradition of subordinating human welfare to financial power. The brutal austerity imposed on Greece is mild compared with earlier versions. Take the 19th century Irish and Indian famines, both exacerbated (in the second case caused) by the doctrine of laissez-faire, which we now know as market fundamentalism or neoliberalism.
In Ireland’s case, one eighth of the population was killed – one could almost say murdered– in the late 1840s, partly by the British refusal to distribute food, to prohibit the export of grain or provide effective poor relief. Such policies offended the holy doctrine of laissez-faire economics that nothing should stay the market’s invisible hand.
When drought struck India in 1877 and 1878, the British imperial government insisted on exporting record amounts of grain, precipitating a famine that killed millions. The Anti-Charitable Contributions Act of 1877 prohibited “at the pain of imprisonment private relief donations that potentially interfered with the market fixing of grain prices”. The only relief permitted was forced work in labour camps, in which less food was provided than to the inmates of Buchenwald. Monthly mortality in these camps in 1877 was equivalent to an annual rate of 94%.
As Karl Polanyi argued in The Great Transformation, the gold standard – the self-regulating system at the heart of laissez-faire economics – prevented governments in the 19th and early 20th centuries from raising public spending or stimulating employment. It obliged them to keep the majority poor while the rich enjoyed a gilded age. Few means of containing public discontent were available, other than sucking wealth from the colonies and promoting aggressive nationalism. This was one of the factors that contributed to the first world war. The resumption of the gold standard by many nations after the war exacerbated the Great Depression, preventing central banks from increasing the money supply and funding deficits. You might have hoped that European governments would remember the results.
Greek debt crisis: Tsipras gets ultimatum to reach deal or face Grexit – as it happened
On Sunday, European leaders will meet for a summit that will decide whether Greece gets another bailout or leaves the eurozone
Today equivalents to the gold standard – inflexible commitments to austerity – abound. In December 2011 the European Council agreed a new fiscal compact, imposing on all members of the eurozone a rule that “government budgets shall be balanced or in surplus”. This rule, which had to be transcribed into national law, would “contain an automatic correction mechanism that shall be triggered in the event of deviation.” This helps to explain the seigneurial horror with which the troika’s unelected technocrats have greeted the resurgence of democracy in Greece. Hadn’t they ensured that choice was illegal? Such diktats mean the only possible democratic outcome in Europe is now the collapse of the euro: like it or not, all else is slow-burning tyranny.
It is hard for those of us on the left to admit, but Margaret Thatcher saved the UK from this despotism. European monetary union, she predicted, would ensure that the poorer countries must not be bailed out, “which would devastate their inefficient economies.”
But only, it seems, for her party to supplant it with a homegrown tyranny. George Osborne’s proposed legal commitment to a budgetary surplus exceeds that of the eurozone rule. Labour’s promised budget responsibility lock, though milder, had a similar intent. In all cases governments deny themselves the possibility of change. In other words, they pledge to thwart democracy. So it has been for the past two centuries, with the exception of the 30-year Keynesian respite.
The crushing of political choice is not a side-effect of this utopian belief system but a necessary component. Neoliberalism is inherently incompatible with democracy, as people will always rebel against the austerity and fiscal tyranny it prescribes. Something has to give, and it must be the people. This is the true road to serfdom: disinventing democracy on behalf of the elite.
The global economy seems perplexing today: While all the traditional economic growth factors are in place (the world’s population is increasing, technical progress is huge, available savings are substantial, free trade is greater than ever), growth is slowing globally, save for the United States at this stage. And around the world, even in the United States, real unemployment has risen to record levels, investments are slowing down, inequalities are greater than ever before, especially in the United States. And the recent Baltic Dry Index (BDI) plunge (a number issued daily providing an assessment of the price of moving the major raw materials by sea, and which for a long time now has been a big indicator of impending crises) with its downward trend has caused panic to spread in the small circle of traders.
To deal with this problem, it seems that none of the conventional efforts are working: Interest rates are at their lowest; central banks are pumping an insane amount of money into the banking system; governments are plagued by record high deficits. Nothing is working. Nothing is starting. Everything is slowing down. Even prices.
What is wrong with the way the world has been functioning? How to explain that this incredible potential is not translated into practice? Economists, sociologists, political scientists throughout the world are discussing these issues ad infinitum without any convincing answer being given. And without anybody offering a new solution that is credible. Yet there is a critical need to understand the situation and to find ways to act. Otherwise, the global economy will plunge into a global depression with devastating political consequences. We will start seeing, we already see, those extreme parties taking power and democracy being questioned by the very people who pretend to speak on its behalf.
For me, the answer is obvious, although few people will admit it: The whole world economy is now a single economy. And one cannot understand it by juxtaposing the analysis of national economies and their trade exchanges. We must think of the world as a single economy; as a country. But a country without rule of law or regulatory state.
And such an economy, which was previously unknown in the real world up until today, can only, according to all existing theories, lead to an underutilization of the factors of production, that is to say to a shortfall in demand. And no regulatory state is there to compensate. In other words, the world is suffering from not having a tool able to create demand globally.
The ideal solution would be to create a World Central Bank, with democratic governance, with a world currency, able to pour massive resources on the world. In the form of money or in the form of investments in sustainable economy sectors.
The halfway solution would be to ask the G20 governments to agree to boost public investment massively, with recourse to heavy borrowing, forced if necessary, from large owners of capital.
The solution that is most in the interests of young people and employees would be a dramatic increase of all salaries throughout the world, and the acceptance of inflation. The one that is most in the interests of large owners of capital and seniors would be to make stock markets soar in order to create demand through the revaluation of wealth.
None of this will take place, of course. So the most likely scenario is that everybody will keep to oneself, to the point that they will isolate themselves from one another. But those who will create demand only at home, by massively increasing salaries or public expenditure, will quickly become dependent on imports, their currency will collapse. The United States may want to opt for this solution, as may Greece, on the other end of the spectrum. This will lead to protectionism, fragmentation, war.
It has become fashionable to say that we must think of the world as one, when talking about the climate change conference and its success. And yet, if ever there is a global conference that is urgent, it is rather one that would reform the IMF to make it more democratic and give it all its powers. Because if the world does not take action on the economy quickly, the problem of the emission of greenhouse gases will soon be resolved in the simplest way possible: There will be no one left to produce any.
NEW YORK — When the euro crisis began a half-decade ago, Keynesian economists predicted that the austerity that was being imposed on Greece and the other crisis countries would fail. It would stifle growth and increase unemployment — and even fail to decrease the debt-to-GDP ratio. Others — in the European Commission, the European Central Bank, and a few universities — talked of expansionary contractions. But even the International Monetary Fund argued that contractions, such as cutbacks in government spending, were just that – contractionary.
We hardly needed another test. Austerity had failed repeatedly, from its early use under U.S. President Herbert Hoover, which turned the stock-market crash into the Great Depression, to the IMF “programs” imposed on East Asia and Latin America in recent decades. And yet when Greece got into trouble, it was tried again.
Greece largely succeeded in following the dictate set by the “troika” (the European Commission the ECB, and the IMF): it converted a primary budget deficit into a primary surplus. But the contraction in government spending has been predictably devastating: 25 percent unemployment, a 22 percent fall in GDP since 2009, and a 35 percent increase in the debt-to-GDP ratio. And now, with the anti-austerity Syriza party’s overwhelming election victory, Greek voters have declared that they have had enough.
So, what is to be done? First, let us be clear: Greece could be blamed for its troubles if it were the only country where the troika’s medicine failed miserably. But Spain had a surplus and a low debt ratio before the crisis, and it, too, is in depression. What is needed is not structural reform within Greece and Spain so much as structural reform of the eurozone’s design and a fundamental rethinking of the policy frameworks that have resulted in the monetary union’s spectacularly bad performance.
Greece has also once again reminded us of how badly the world needs a debt-restructuring framework. Excessive debt caused not only the 2008 crisis, but also the East Asia crisis in the 1990s and the Latin American crisis in the 1980s. It continues to cause untold suffering in the U.S., where millions of homeowners have lost their homes, and is now threatening millions more in Poland and elsewhere who took out loans in Swiss francs.
Given the amount of distress brought about by excessive debt, one might well ask why individuals and countries have repeatedly put themselves into this situation. After all, such debts are contracts — that is, voluntary agreements — so creditors are just as responsible for them as debtors. In fact, creditors arguably are more responsible: typically, they are sophisticated financial institutions, whereas borrowers frequently are far less attuned to market vicissitudes and the risks associated with different contractual arrangements. Indeed, we know that U.S. banks actually preyed on their borrowers, taking advantage of their lack of financial sophistication.
Every (advanced) country has realized that making capitalism work requires giving individuals a fresh start. The debtors’ prisons of the 19th century were a failure — inhumane and not exactly helping to ensure repayment. What did help was to provide better incentives for good lending, by making creditors more responsible for the consequences of their decisions.
At the international level, we have not yet created an orderly process for giving countries a fresh start. Since even before the 2008 crisis, the United Nations, with the support of almost all of the developing and emerging countries, has been seeking to create such a framework. But the U.S. has been adamantly opposed; perhaps it wants to reinstitute debtor prisons for over indebted countries’ officials (if so, space may be opening up at Guantánamo Bay).
The idea of bringing back debtors’ prisons may seem far-fetched, but it resonates with current talk of moral hazard and accountability. There is a fear that if Greece is allowed to restructure its debt, it will simply get itself into trouble again, as will others.
This is sheer nonsense. Does anyone in their right mind think that any country would willingly put itself through what Greece has gone through, just to get a free ride from its creditors? If there is a moral hazard, it is on the part of the lenders — especially in the private sector — who have been bailed out repeatedly. If Europe has allowed these debts to move from the private sector to the public sector — a well-established pattern over the past half-century — it is Europe, not Greece, that should bear the consequences. Indeed, Greece’s current plight, including the massive run-up in the debt ratio, is largely the fault of the misguided troika programs foisted on it.
So it is not debt restructuring, but its absence, that is “immoral.” There is nothing particularly special about the dilemmas that Greece faces today; many countries have been in the same position. What makes Greece’s problems more difficult to address is the structure of the eurozone: monetary union implies that member states cannot devalue their way out of trouble, yet the modicum of European solidarity that must accompany this loss of policy flexibility simply is not there.
Seventy years ago, at the end of World II, the Allies recognized that Germany must be given a fresh start. They understood that Hitler’s rise had much to do with the unemployment (not the inflation) that resulted from imposing more debt on Germany at the end of World War I. The Allies did not take into account the foolishness with which the debts had been accumulated or talk about the costs that Germany had imposed on others. Instead, they not only forgave the debts; they actually provided aid, and the Allied troops stationed in Germany provided a further fiscal stimulus.
When companies go bankrupt, a debt-equity swap is a fair and efficient solution. The analogous approach for Greece is to convert its current bonds into GDP-linked bonds. If Greece does well, its creditors will receive more of their money; if it does not, they will get less. Both sides would then have a powerful incentive to pursue pro-growth policies.
Seldom do democratic elections give as clear a message as that in Greece. If Europe says no to Greek voters’ demand for a change of course, it is saying that democracy is of no importance, at least when it comes to economics. Why not just shut down democracy, as Newfoundland effectively did when it entered into receivership before World War II?
One hopes that those who understand the economics of debt and austerity, and who believe in democracy and humane values, will prevail. Whether they will remains to be seen.