Unsurprisingly, Barroso, Van Rompuy and Schulz weren't exactly elbowing their way to the front of the queue to pick up the award, which was ultimately handed to EU Social Affairs Commissioner László Andor.
This was the only (relatively) light-hearted moment of a day which saw anti-austerity protests degenerate into violent clashes between demonstrators and the police in Italy, Spain and Portugal - while marches were also staged in several other European countries. Some Spaniards even rallied in Smith Square, London, in front of the European Commission and European Parliament's offices (see the picture, which was posted on Twitter yesterday evening).
We have stressed on several occasions that these protests are the inevitable consequence of the clash between eurozone membership and national democracy.
While structural reforms and fiscal consolidation are needed for struggling eurozone countries to try to regain competitiveness within the single currency, what the European Commission should be most concerned about is the fact that citizens in the weaker eurozone countries increasingly see the EU (and certain creditor member states) as the cause of their pain.
As we noted in a recent briefing, the average level of trust in the EU in Greece, Spain, Portugal, Ireland and Italy has reached an all-time low. Again, it is impossible to know where the tipping point lies exactly - but the recent episodes seem to confirm that the number of those who see the EU as a positive force is rapidly decreasing.
There's no recovery possible within the euro.
ReplyDeleteExit is the only rational strategy.
As John Mills writes in his excellent new book Exchange rate alignments, “the choice will be between the single currency breaking up to allow for large-scale devaluations in the weaker Eurozone economies or severe deflation and austerity in the weaker countries as far ahead as anyone can see.”
Greece will leave the euro, then Portugal, Ireland, Spain and Italy, then France and Belgium. Currencies will fall in value, either by policy choice, in an orderly way, or, after a long, damaging and unnecessary delay, through a disorderly rout.
Extremes of poverty and hopelessness lead to war. Let us hope that these nations can get out of the euro before the situation lead to war. We are already seeing racial and ethnic violence erupting. It will continue to get worse as the economies disintegrate under the leadership of the Kommission, just as in the Soviet Union.
ReplyDeleteIs that John Mills, of the excellent Labour euro Safeguards Cttee? If so where can I find his article.
ReplyDeleteI was rather amused by the above article's line
"We have stressed on several occasions that these protests are the inevitable consequence of the clash between eurozone membership and national democracy."
Amused because some 6 months ago at your "Spain - too big to fail?" debate 5 speakers (3 economists, 1 FT journalist and one MEP spoke for an hour and half without (as I pointed out from the floor) ever mentioning "the people" or that whatever new wheezes and scams the politicans and economists come up with to keep this Titanic afloat, "the people simply will not put up with it."
My distinct impression was that Matts Persson, chairing the debate, was not at all happy that I had pointed out that the panelists were talking nonsense and that, in the end, the people will have their way.
But perhaps it was as a result of my pointing that out that Open Europe "stressed [it]on several occasions"?
Does anyone here STILL believe that the euro can survive such problems in anything like its present form?
@Rollo
ReplyDeleteI doubt that. The Soviet Union fell apart without effectively no wars. While the situation and poverty was much worse and armies available (not the standard European handbag brigades , but real ones). Only Yugoslavia which was not really in the USSR block and the Caucasus where they were finish fighting perpetually until Stalin took over (as he shot everybody who didnot stop)and continued with it when they got unleashed again. Sort of Arabs but ones that donot back off when shot at. Wonder why Stalin never got a Peaceprize for that btw, would fit perfectly in the tradition of the Nobelprize committee.
Massdemonstrations most likely but wars? Repression also likely most of the East and South and especially the South East are also within the EU at best semi-democraties.
And anyway with them leaving 'Europe' I donot see the chance of wars (allthough small and almost certainly marginal) much reduced compared to the present situation. Clear like with the Euro before who will be the troublemakers. Get Kosovo, Albania and Serbia in eg and the chance of a war within the (former) EU will at least double. Problem is more there is not enough money (the not black variety) to get their economies going, EU susbsidies decreasing (massive corruption not accepted anymore as a condition for aid) massive corruption itself, and growth from trade with the EU will be zeroish.
More like a haven of poors that will look to earn an 'alternative' buck or will be distracted by their undoubtly corrupt leadership from the real problems.
@Idris
ReplyDeleteDoubt that many politicians still think that they can get around the people. It will take at least a decade (both North and South), so several elections, to solve and likely referenda as well.
With the topic at the top of the voter-agenda. Simply unthinkable it can get around the voter.
Economists: there are probably a lot around that see it as a pure economic problem (you get that with specialists). Anyway no decisionmaker pays any attention to them. For themn it is just: staying alive (by the brothers Gibb of course).
Best compared to people who want to apply the rules of gymnastics on a game of rugby. This is 80-90% politics and it goes by those rules and not by others.
However there is imho a clear distinction between the street (not the Street) South and the street North. The North has an expensive option to get out and survive.
The South that is very doubtful, governments first have to go to a primary (plus) surplus. Very doubtful if the bunch of imbeciles they have usually voted in as government there will otherwise be able to manage that process properly in a default. I sincerely doubt that for all of them. Greece will collapse. Monto very likley will be able to manage it when given the chance. Spain's governments make Manuel from Fawlty Towers a completely realistic figure.
Furthermore the standard of living is still way too high for a sustainable (the not organic soy bean variety but an economic/financial one) economy. One way or another they still will have to drop more in living standards and there looks still a long way to go.
Doubtful if taxing the rich will help. These probably have already moved their resources anyway and an 'fairer' society is probably part of the problem (they could not afford it in the first place). So the man in the street in the South hasnot seen the worst yet. The North doesnot have that problem.
@Idris
ReplyDeleteMany thanks for your comments. We agree that the clash between national democracy and the eurozone crisis is a fundamental problem and one which we have covered extensively, see the links below:
http://blogs.telegraph.co.uk/finance/matspersson/100014896/democracy-and-transparency-remain-the-biggest-victims-of-the-euro-crisis/
http://www.openeuropeblog.blogspot.co.uk/2012/08/youre-wrong-signor-monti-national.html
http://www.telegraph.co.uk/news/worldnews/europe/eu/9486683/Showdowns-that-will-define-Europes-future.html
We also recently wrote a report looking at the impact of austerity or ‘internal devaluation’ on these countries (see final part for discussion of democracy)
http://www.openeurope.org.uk/Content/Documents/Pdfs/Internaldevaluation.pdf
Thanks to Rick and Open Europe for the replies.
ReplyDeleteLike everyone these days I suffer greatly from information overload - it is simply not possible to keep pace with it all. I mention that because while I am pleased to see that Open Europe has been plugging the democracy deficit, I was not until now aware of those items.
Indeed I sat down at midnight with a coffee intending just to clear any last few emails of the day, and here I am at 3.30 am still trying to stem the tide.
Talking of tides - the tide of converts to getting all the way out of the EU gets stronger every day, and according to many reports even the most enthusiastic about the EU are increasingly realising that the game is up - see for example
http://conservativehome.blogs.com/thecolumnists/2012/11/bruce-anderson-cameron-should-tell-merkel-that-quitting-the-eu-is-an-option-not-a-nightmare.html
So perhaps I should take Bruce Anderson's advice in that article, and relax because the game is all-but over and the result now inevitable.
@Idris
ReplyDeleteCameron should imho get the exit option on the negotiating table. It simply creates a lot of extra pressure even if at the end of the day it would not be used and even if Cameron would 'hide' behind the UK voter and the bankbenchers in his party for it.
Starting the proces by saying: 'we would like to stay in but if necessary and we get no proper result we will be out', is much better than his original position (only based on staying in).
Anyway the EU have shot themselves again in the foot by the report of the budget without the UK. Cameron could not have hired a better PR agency than Barosso&Van Wetragpuy. They make themselves even more unpopular than they already are (which is an achievement as such) and make it look like a fight (which is what Cameron needs towards his electorate). Should not go smooth as that is bad for his credibility at home in this matter (and that clearly needs some brushing up).
This one is less of a joke than the first one.
ReplyDelete