[A-List] Fwd: [R-G] Whither or Wither Europe?

[Suzanne de Kuyper]

Gary is wrong that Paye is so on left field his analysis does not
apply to the realities on the ground.  Paye is right on, entirely.
Obama is doing a snow job as he did about the BP oil eruption, about
the Georgian War, and thousands more.

Assumptions can blind us as the Americans have know well.   Suzanne





---------- Forwarded message ----------
From: Gary Crethers <garyrumor2 at yahoo.com>
Date: Sun, Aug 22, 2010 at 5:40 AM
Subject: [R-G] Whither or Wither Europe?
To: Suzanne  de Kuyper <suzannedk at gmail.com>


Whither Europe?August 21st, 2010
I have read a couple of recent economic reports on the internet  and am
ruminating over the significance of them. One is fairly straight  forward from
‘Economy Watch’ It is a review of the statistics supplied  by Eurostat from 2009
to look at trends which they see as ominous in  particular the income
disparities between north and south Europe and how  the austerity programs will
hurt the south a lot more than the north.  The other is from ‘Spectrezine’ with
an article by Jean-Claude Paye the  Belgian Sociologist who sees an insidious
German and American conspiracy  to destroy the independence of the EU. According
to Paye the USA needs  Europeans to buy the American debt, and to warn China
away from buying  Euros by destabilizing the Euro. Germany is participating by
creating a  new two continent market as the EU can no longer absorb its
production. A  bit about Christina Romer from Wikipedia. From the ‘EUobserver’
we have  an article about the effects of IMF austerities on the Greek people.
The next piece is from the BBC and it is a summary from a liberal  British view
of the austerity measures. My last one is from WRAL.com,  with a bit about
Obama’s opposition to austerity measures by Europe  meaning Germany.
This is from Economy Watch.
“Eurostat Review Confirms / Upsets Conventional Views re Eurozone  Economies
14 August 2010
With the recent announcement of a post-unification “record” for  German economic
growth this past quarter - on which we will have more  next week - and the
equally bad news from Spain and Greece - we thought  it appropriate to consider
some of the revelations contained in the 2009  regional yearbook of Eurostat,
the EU’s official statistical agency.  Overall, the yearbook indicates the
danger of a two-speed recovery  across the 16-member euro zone is getting worse
with every new notch of  belt-tightening that European governments apply to
reduce high debts and  deficits. Forecasters, including the International
Monetary Fund, have  downgraded their growth projections through next year,and
anticipate  that the speed of recovery will vary greatly from region to region
as  austerity measures kick in. While some European countries are using
austerity as an opportunity to push improvements to productivity and
competitiveness for the long run, these measures may actually further  widen,
rather than bridge, Europe’s divide. That’s because cuts to  government services
and higher taxes will be easier to implement in  countries that have already
experienced faster growth, and a greater  challenge for slower-growth countries
that still need government  spending to boost demand. Fiscal tightening will
likely to be especially  challenging for the southern rim of Europe, parts of
which have long  been hindered by poor infrastructure investment and development
and a  lifestyle where flexibility for workers is a long-cherished ideal. There
are also political and cultural impediments to implementing austerity  measures
in some southern regions. Politicians know that voters pinched  by austerity
will surely express their grievances in future elections,  and workers used to
trading low-income, rote jobs for leisure time may  not want tip that balance
toward more work unless compelled to do so.  But in economic terms, it’s clear
that southern European countries will  have to fix these and other problems to
eventually catch up with their  northern neighbors. If such a divide widens, it
could pose problems for  the stability of the euro, and, in our view, sooner
rather than later.  Countries that have been plagued by an interior north-south
divide —  like Italy and Spain — will have an even greater hurdle to clear.
Politicians and businesses are being challenged as never before to  bridge a
divide that, if unchecked, can weigh on a country’s entire  macroeconomic
performance.
Eurostat’s 2009 regional yearbook also reveals a stark contrast in  unemployment
and working hours between northern and southern Europe, as  well as within
individual countries. One piece, based on 2007 data,  shows low levels of
unemployment recorded in all regions in the  Netherlands and Austria, the
northern parts of Italy and Belgium and the  southern parts of the United
Kingdom. Within countries, nearly the  entire Italian south and much of Southern
Spain logged jobless rates  that lagged the center and northern parts of the
nations. A separate  Eurostat chart, released last year using 2006 data, shows
the severe  divide within a country like Italy, where gross domestic product per
inhabitant was more than twice as high in the northern region of Bolzano  as it
was in Campania, the poor southern region where Fiat’s  lowest-producing factory
is located.
Finally, a note about working hours, according to this analysis from  the New
York Times.
Eurostat’s 2009 yearbook breaks down average working hours across  Europe. While
Spain and Italy show that there can be big variations  within a nation’s
borders, differences in time spent working are  generally greater between
countries than within any given country. The  data show that Eastern Europeans
spend more time at work than others in  Europe, while those employed in the
Nordic countries and Britain tend to  spend less time.
If that sounds counterintuitive, Eurostat goes on to note that the  average time
spent at work doesn’t necessarily translate into a strong  economic performance.
“In fact,” Eurostat observes, “it is precisely the  reverse.””
>From Spectrezine
Far from being the effect of the ‘invisible hand of the market’, the  crisis of
the euro is the product of a strategy carefully designed by  Christina Rohmer
and the White House Council of Economic Advisers. It is  a matter of saving the
American economy by forcing the European  capitals to take refuge behind the US,
and ultimately placing the Euro  Zone economies under US control via the IMF and
the European Union.  Jean-Claude Paye analyzes the first stage of the process
underway.
“The attack on the Euro and the dismantling of the European Union
August 17, 2010 17:02 | Jean-Claude Paye
The crisis of the euro results from a policy choice, that of the EU  authorities
pawning off the common currency, instead of restructuring  the Greek sovereign
debt. Such a restructuring could have safeguarded  the euro, but it would have
necessitated a cash injection from the  banks, which would have forfeited part
of their debt in the operation.  The French financial institutions are said to
have about €50 billion of  Greek debt on their balance sheets, whereas €28
billion is attributed to  the German banks.
However, the protection of several dozen billions of euros held by  the
financial institutions does not justify such risk-taking. The  fundamental
stakes, in putting pressure on the euro, is to make the  workers pay for the
crisis and thus to effect a gigantic transfer of  income from households to
business, principally towards the financial  institutions.
An American offensive
The scale of the transfer is such that it can only be managed by the  European
institutions, though it is actually driven by the markets and  their armed wing,
the US Administration. The euro crisis has been  triggered by the concentrated
attack of the American ratings agencies  Standard & Poor’s, Moody’s and Fitch
against the debt of Greece,  Spain and Portugal. The downgrading of these three
countries -  especially Greece - to the ’speculative investments’ category is
the  result of a concerted action. The downgrading follows a series of  repeated
and pressing decisions. These attacks have been endorsed by the  US-state
machinery, notably through the alarmist declarations of  Obama’s economic
adviser and former chairman of the American Federal  Reserve, Paul Volcker, who
spoke of a prospective disintegration of the  euro zone. The attack against the
euro appears like even more of a  pretext when considering that “we’ve known
since 2004 that the Greek  authorities have been lying”, which, however, induced
no reaction from  the ratings agencies.
This offensive against the euro is primarily intended to funnel to  the US the
foreign capital necessary to cover the growing US balance of  payments deficit.
It is a warning signal to countries like China which  has begun to rebalance its
currency reserves in buying the euro to the  detriment of the dollar. For the
US, this is a matter of urgency. Until  2009, the financing of its deficits and
the defense of the dollar were  assured by a positive balance of financial
flows. But, during that year,  the balance of financial flows turned negative
($398 billion), adding  to rather than offsetting the ongoing net foreign
borrowing requirements  of the US economy. At a purely economic level, the
offensive against  the euro is in the same vein as the struggle against tax
evasion,  initiated by President Obama in 2009. They are both a matter of
drawing  capital into the fold of the US.
An operation to dismantle the EU
This tactical action is coupled with a strategic operation, that of a  drive to
dismantle the EU to the advantage of an economic union  spanning the two
continents. The project to create a grand transatlantic  market  is the most
visible manifestation of this thrust. It is in  light of the second objective
that one is able to understand the  attitude of Germany which, just as readily
with the struggle against tax  evasion as with the attack on the euro, has
provided support for the  American offensive. This two-fold approach is
consistent with the  commitment of this European state to the establishment of a
transatlantic economic union.”
You can go to the Spectrazine website for the rest of the  article.
Here is a bit about Christina Romer from Wikipedia.
“Christina Romer (née Duckworth; born December 25, 1958) is the Class  of 1957
Garff B. Wilson Professor of Economics at the University of  California,
Berkeley and current Chair of the Council of Economic  Advisers in the Obama
administration. She will resign from her role on  the Council of Economic
Advisers on September 3, 2010, and will become a  member of the President’s
Economic Recovery Advisory Board.
After her nomination and before the Obama administration took office,  Romer was
tasked with co-authoring the administration’s plan to recover  from the 2008
recession. With economist Jared Bernstein, Romer  co-authored Obama’s plan for
economic recovery. In a January 2009 video  presentation, she discussed details
of the job creation package that the  Obama administration submitted to
Congress.”
I can’t verify that what Paye accuses Romer of orchestrating. I  suspect what is
considered to be business as usual in Washington is  considered to be economic
imperialism by countries like Greece.

This is from the EUobserver.
Amid mounting civil unrest, EU-IMF team gives Greece thumbs up
LEIGH PHILLIPS
05.08.2010 @ 14:31 CET
EUOBSERVER / BRUSSELS - The EU and IMF have endorsed Greece’s economic
programme, required in return for a €110 billion bail-out agreed in in  May.
Amid a paralysis of the country by striking lorry drivers, violent  clashes with
riot police and small-scale bombings, a team of staff from  the European
Commission, the European Central Bank and the International  Monetary Fund have
been in Athens this past week for the first  quarterly review of the
government’s austerity programme.
“Our overall assessment is that the programme has made a strong  start,” the
commission-ECB-IMF ‘troika’ said mid-Thursday in a  statement.
“The end-June quantitative performance criteria have all been met,  led by a
vigorous implementation of the fiscal programme, and important  reforms are
ahead of schedule,” the troika statement continued.
In May, the EU and IMF agreed to loan Greece €110 billion over three  years in
return for a programme of public sector cuts, privatization and  tax reforms -
the fourth such austerity package announced since the  beginning of the
country’s debt crisis - that if the government is able  to impose them despite
widespread popular opposition will thoroughly  transform the relationship of the
state to its people.
The troika reported that Greek authorities have “kept spending  significantly
below budget limits at the state level.”
The statement noted approvingly that these cuts at the national level  had
“offset slippages” in expenditure at the regional and municipal  level,
particularly regarding local government and funding of hospitals  and social
security.
“Impressive progress is being made on structural reforms. The mission  welcomes
the parliament’s landmark pension reform, which is  far-reaching by
international standards,” the troika said.
As part of the austerity programme, the government has indexed  retirement age
to life expectancy changes, equalised men’s and women’s  pension age limits and
raised the retirement age of public sector  employees from 61 to 65.
The changes to pensions led to pensioners in May throwing rocks at  the
parliament as other protesters attempted to storm the building.
There have been a series of one-day general strikes since the  beginning of the
year in opposition to the multiple austerity  programmes. In the spring, three
bank workers were killed when a  contingent of protesters set fire to a bank
during one of the general  strikes. Small-scale terrorist attacks blamed on
previously unknown  left-wing groups, have also returned, echoing the “urban
guerilla”  violence of the 1970s. Some 13 incidents, including bombings of
political party offices, MP homes, a bank, the Athens Stock Exchange and
government buildings, have taken place.
On Saturday, a guerrilla group called the Sect of Revolutionaries,  claimed
credit for the murder of Sokratis Giolas, a blogger journalist  close to
anti-terrorist police units. “Our guns are full and they are  ready to speak,”
the previously unknown group said in a communique. “We  are at war with your
democracy.”
The EU-IMF team also saluted the “substantive labour market reform  underway”
and the changes to the transport sector: “Important progress  has already been
made with liberalisation of road haulage and energy.”
The cheery approval of the changes, affecting lorry drivers’  licences, was in
stark contrast to the disapproval of those affected,  who had paralyzed the
country with fuel shortages, crippled its travel  industry and stranded hundreds
of thousands of tourists for much of this  week. The government had issued an
emergency decree and enacted ‘civil  conscription’ to try to force the lorry
drivers back to work. Some 500  strikers attempted to storm the transport
ministry and clashed with riot  police who managed to chase them away after
employing tear gas. It was  only when the government called out the army did the
truckers back down  temporarily in exchange for further talks.”
There is more to this article a well written commentary on the real  effects of
the austerities on a country that is on the front lines of  the attempt to
recoup profits on the backs of the working people of  Greece.

>From the BBC
Growth papers over Europe’s cracks
Gavin Hewitt | 10:51 UK time, Wednesday, 18 August 2010
The threats to the euro seemed to have passed. It was easier and less  expensive
for governments to raise money. The banks were put through  their stress tests
and most of them passed. Greece was praised for its  budget-cutting rigour.
And then growth - which had proved so elusive - returned. The  eurozone grew by
1% in the second quarter. That was more than many had  hoped for.
Firstly, Europe’s growth is hugely dependent on Germany. It is once  again an
economic powerhouse. Its exports are surging. Papers in Germany  are calling it
a new “economic miracle”. The economy is now growing at  its fastest in 20
years. If any country is hauling Europe out of  recession it is Germany.
In the eurozone there are really three economies. There is Germany  which in the
second quarter saw growth of 2.2%. It is way out in front  of the rest of the
pack.
Then there are the middle-rankers like the Netherlands and France  which saw
growth of 0.6%.
Then there are a clutch of weak countries at the back of the field.  Spain, with
a growth rate of 0.2%, is barely out of recession. The Greek  economy actually
shrank by 1.5%. Ireland is struggling.
So the great divide is widening. A relatively weak euro, brought  lower by the
difficulties in countries like Greece and Spain, is  benefiting Germany. Many
economists believe the euro is too strong for  the weaker eurozone countries.
Now Germany remains committed to austerity. Even though tax revenues  are
proving healthier than imagined, Berlin is committed to slashing its  budget by
80bn euros (£66bn) over four years. A spokesman for Angela  Merkel was quoted in
the Financial Times as saying that “consolidating  the budget is the main
priority”.
That is the message - get the deficits down, shrink the debt. Germany  could
ease off but it won’t; it fears other countries would lose their  appetite for
spending cuts. As Angela Merkel said earlier in the summer,  when defending her
austerity package, Germany has to set an example.
The EU and the IMF have heaped praise on Greece. It has made  “remarkable
progress” in cutting its spending. Down 40% this year. But  its economy is
shrinking. It contracted 1.5% in the past quarter and is  expected to decline by
4% for the year. Unemployment is 12% and rising.  Tax revenues are less than
predicted. Investment is down. It is unclear  where growth will come from.
Take Ireland. It was called the “poster boy” for attacking its  deficit. It
embraced austerity early and courageously. Not only were  public sector wages
cut, but benefits too. The pain was not spared.  Carers are having their hours
cut. Some hospital beds are being closed.  But more bad debt was discovered in
its banking system and its budget  deficit has actually gone up to 18.6%.
Meanwhile, all around are signs of deflation. In parts of the private  sector
wages have fallen by over 10%. Prices fell by 1.2% in July after  falling by 2%
in June. Rents are down. Unemployment is 13.7%. Ireland  has yet to pull out of
its dive.
Spain was always a reluctant budget cutter. The government resisted  until
outside pressure forced its hand. Its economy is so weak that  unemployment
remains over 20%. Public sector wages have been cut by 5%.  There are reductions
in benefits.
Many of the austerity measures are yet to hit. It is early days. The  stories
about medicines not being available on the state, or of  childcare being cut, or
of teacher shortages, are still anecdotal. What  is certain is that the public
sector is set to shrink. It is a fair bet  that sometime during the autumn some
governments will wobble over their  austerity programmes. There may even be
calls for fresh stimuli.
Europe’s bailout packages bought the eurozone time. There is serious  work going
on to address the problems. The Task Force on Economic  Governance, chaired by
Herman Van Rompuy, is acutely aware that the  crisis has not passed. Growth may
ease the stresses and strains, but the  big question remains unanswered: how can
countries with such different  economies inhabit a monetary but not a fiscal
union?”
This is from WRAL.com
“Obama, EU leaders to meet Nov. 20
BRUSSELS — The EU says U.S. President Barack Obama and European Union  leaders
will meet on Nov. 20 in Lisbon to discuss how to boost global  economic
recovery.
Obama has urged EU leaders to refrain from pushing through sweeping  austerity
plans in a bid not to threaten the economic recovery.
He raised European hackles at the beginning of this year with the  announcement
that he would forgo the annual summit meeting planned for  May. The move was
seen in Brussels as a diplomatic slap to the 27-nation  bloc.”
This seems to contradict the proposition that the USA is managing  this EU
crisis for its benefit. Personally I think Paye may be on to  something but it
is so far out in left field that it does not correlate  to the realities on the
ground. Unless Obama is strictly presenting a  snow job, for domestic
consumption, I believe that there is a difference  of approaches between the
Germans and the Americans. What we are seeing  is a robust Germany seeking to
continue to strengthen its position by  forcing austerity in an attempt to keep
the bankers and financial  establishments happy. There may be a long term plan
here to unite with  China and bring the USA down but at this time it looks more
like the old  pattern of everyone for themselves with the international
financial  community looking for an opportunity wherever it can be found. I
don’t  see the American-German conspiracy, only business as usual in unusual
times.



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