The Eurozone Crisis Thread

Here is a piece by Thomas Jones on the aftermath of the Italian elections: https://www.lrb.co.uk/v40/n11/thomas-jones/short-cuts

As populists are reduced to making noises all that is left is to punish migrants - something the EU and many of its citizens don't have a problem with.

And this .ppt by Adam Tooze is very good on Italy:

https://adamtooze.com/2018/05/25/europes-political-economy-a-gamble-gone-wrong-notes-on-the-backdrop-to-the-italian-crisis/

the state of Japan on that debt/GDP chart!

Yes, but Japan can introduce fiscal policies that Italy (due to being a memeber of the single currency) cannot.

Its a point Larry Elliott made recently: https://www.theguardian.com/business/2018/may/20/italys-policies-make-sense-its-eurozone-rules-that-are-absurd

But hasn't Japan famously been unable to handle their crisis for, like, thirty years at this point? I'm not sure they're a good counterexample. Or have they gotten better?

No matter what, though, thanks for the links!

Wow, Conte gives up! President Mattarella won't accept a euro-skeptic finance minister. This won't end well...

Italy is not struggling because of the euro, but because of lack of structural reforms. Italy should do what France has started to do. Reforms, reforms, reforms, and Italy will be saved! #EPlenary 🇮🇹🇪🇺

— Guy Verhofstadt (@guyverhofstadt) May 30, 2018

I'm sure once Berlusconi is back in power everything will work itself out.

This fucking Verhofstadt guy.

I'm sure austerity will work out well in Italy rn

The reason is simple: the decline in EU support across Europe was primarily related to the so-called “refugee crisis”. Once this was “solved” by the EU-Turkey deal, support rebounded and support for rightwing populist parties started to decline again (while remaining higher than before). Italy bucked this European trend, because immigration remained a major problem in the country.

A year ago, at a workshop in Berlin, an MP for Italy’s then ruling centre-left Democratic party pleaded her social democratic colleagues to help with the country’s ongoing influx of asylum seekers. But, just like the pleas of her colleagues, they were ignored in Brussels. Scared that an acknowledgement of a “crisis” in Italy would bring the refugee issue back on the agenda in their own countries, and show that the “problem” had not been solved at all, Italy was sacrificed for the alleged good of the union.

https://www.theguardian.com/commentisfree/2018/may/30/eu-italy-crisis-refugees-populism?CMP=Share_iOSApp_Other

The reason is simple: the decline in EU support across Europe was primarily related to the so-called “refugee crisis”. Once this was “solved” by the EU-Turkey deal, support rebounded and support for rightwing populist parties started to decline again (while remaining higher than before).

Some victory.

This is a pretty good piece in describing the awfulness rn (the mention of Musil totally lands):

https://www.theguardian.com/commentisfree/2018/may/30/italy-regime-change-future-repressive-alliance-five-star-league

And the EU are doing zilch to alleviate the pain (EU grants that are squandered):

https://www.theguardian.com/commentisfree/2018/may/30/romanians-uk-tragedy-homeland-corruption-poverty

Hard to know what its good for. Open borders work only for so long if you are met with hate in the country you land in.

To be fair, we (Romanians) are also partly responsible for our inability to properly make use of EU membership beyond resorting to exile. More specifically, our ruling class is so utterly unable to divest itself of centuries-old habits (chief among them corruption, mistrust, superstition, fatalism, sexism, racism), further aggravated by half a century of so-called 'communism', that the country seems doomed to systematically sabotage itself until it perishes for good. I wouldn't mind a more interventionist EU (as regards Hungary and Poland as well), especially since the culprits are notorious and well aware that getting caught red-handed means nothing, but imagine the optics! Wouldn't it be an attack on Eastern Europe's relative sovereignty? As a result, mobster politicians will continue to line their own pockets with EU money then blame Germany or France or whoever for endemic poverty (worse yet in rural regions), and every time the election cycle comes full circle they are proven right, again and again, by their voters, who just lap it up. And they have the nerve to call themselves 'socialists'. Not that the EU is an ideal entity by any stretch of the imagination but it is not the be-all and end-all of its less successful members' problems.

That's true, but wrt Hungary and Poland why aren't threats made on their membership? After all they have denied Turkey so far (even before the events from the last few years).

I don't know about Hungary, but Poland's pretty substantial demographically and getting more so economically.

Not enough is being done, I agree, and it is a failure on the EU's part no matter which way you slice it. Orban in particular makes a habit of saying one thing when he's in Brussels and wholly another when he plays for a home audience. He is about as egregious as it gets.

xp

Easier to not admit than to kick out - though threats have been made against Poland’s ability to vote if PiS continues to muck about with the judiciary. Enforcement powers are subject to veto, though, and the Visegrad group have a collective interest, to some extent, in them not being voted through.

It’s pretty likely the rest of the EU will put some kind of financial pressure on them sooner rather than later though.

Didn't know where to put this, but Spain's Rajoy is almost certainly a dead man walking because of corruption.

Good riddance.

Lol what sort of cuck loses power cos of corruption in 2018

Tom D. otm. Particularly nice touch that it's five Basque MP's that are going to put him on the grill.

Long time comin

Interesting reading the Lisbon discussh upthread. I was just there last week. I hung out with an econ journalist friend of mine and he basically backed up everything Daniel was saying. Economy totally unbalanced towards tourism, it's changing the city centre and not for the better, house prices have gone through the roof because people can use their flats as tourism money-makers, actual people who live there now pushed out. Everything gentrified. Jobs are in the service/tourism industry. etc

yes I've heard the same thing from locals there. they're concerned that this tourism push is a last gasp effort to recover something of a european economy and that if it fails, there is no other hope, for what is at base still a small agricultural country.

Looks like I picked the wrong time to quit sniffing glue go to Lisbon.

I hung out with an econ journalist friend of mine and he basically backed up everything Daniel was saying.

Your friend sounds like a smart guy.

:D

this guy! http://www.jornaleconomico.sapo.pt/noticias/autor/shrikesh-laxmidas

B-but Portugal - unlike the childish Italians - got on with the programme. Why is this happening?

https://www.theguardian.com/commentisfree/2018/may/30/italy-brussels-descent-abyss-eu-economics

Well, the previous govt got with the programme. Current one - being as it is in an alliance with the communist and leftist parties - kind of a detour from that (though not as much as many would hope).

there seems to be a boom in call centers / outsourced service jobs in Lisbon/Porto - maybe this type of industry is temporary, but building up infrastructure/expertise couldn't hurt?

btw Tom D. I'm Lisbon based in case you fancy a tiny draught beer

Adios, cabron

Good news on the removal of Rajoy, but what's the expectation on how things pan out after this? I don't know anything much about Pedro Sánchez and PSOE.

Wow, Conte gives up!

Life comes at us fast... (is there Italy debacle discussion on another thread?)

there seems to be a boom in call centers / outsourced service jobs in Lisbon/Porto - maybe this type of industry is temporary, but building up infrastructure/expertise couldn't hurt?

You're probably a better judge of whether this is an new boom than I am at this stage, but call centre jobs were the main ppl hiring during the worst crisis years. People burn out on those jobs very quickly is the thing.

Excellent piece on Portugal:

https://jacobinmag.com/2018/06/portugal-left-bloc-socialist-party-austerity

Tom D. otm. Particularly nice touch that it's five Basque MP's that are going to put him on the grill.

― lbi's life of limitless european glamour (Le Bateau Ivre), Thursday, 31 May 2018 14:05 (two weeks ago) Bookmark Flag Post Permalink

hungry now

started on adam tooze’s history of the financial crises since 2007, Crashed. part 3 is entirely devoted to the eurozone which he sees as a “massive aftershock of the earthquake in the North American financial system of 2008” (his central contention is that europe’s attempts to pin the blame for that solely on the US are at best wrong and at worst mendacious and self-interested). these are his comments in the introduction:

It is a short step from there to concluding that the hidden logic of the eurozone crisis after 2010 was a repetition of the 2008 bank bailouts, but this time in disguise. For one sharp-tongued critic it was the greatest “bait and switch” in history. But the puzzle is that if this were so, if what was happening in the eurozone was a veiled rerun of 2008, then at least one might have expected to have seen American-style outcomes. As its protagonists were well aware, America’s crisis fighting exhibited massive inequity. People on welfare scraped by while bankers carried on their well-upholstered lives. But though the distribution of costs and benefits was outrageous, at least America’s crisis management worked. Since 2009 the US economy has grown continuously and, at least by the standards set by official statistics, it is now approaching full employment. By contrast, the eurozone, through willful policy choices, drove tens of millions of its citizens into the depths of a 1930s-style depression. It was one of the worst self-inflicted economic disasters on record. That tiny Greece, with an economy that amounts to 1–1.5 percent of EU GDP, should have been made the pivot for this disaster twists European history into the image of bitter caricature. It is a spectacle that ought to inspire outrage. Millions have suffered for no good reason. But for all our indignation we should give that point its full weight. The crucial words are “for no good reason.”

this whole section is savage on the european response:

This is not to say that the individual actors in the drama—Germany, France, the IMF—lacked logic. But they had to act together and the collective result was a disaster. They inflicted social and political harm from which the project of the EU may never recover.

Far from being beneficiaries of EU crisis management, business was one of its casualties, and the European banks above all. Since 2008, it is not just the rise of Asia that is shifting the global corporate hierarchy. It is the decline of Europe. This might ring oddly to Europeans used to hearing boasts of Germany’s trade surplus. But as Germany’s own most perceptive economists point out, those surpluses are as much the result of repressed imports as of roaring export success. The inexorable slide of corporate Europe down the global rankings is clear for all to see. Though we might wish otherwise, the world economy is not run by medium-sized “Mittelstand” entrepreneurs but by a few thousand massive corporations, with interlocking shareholdings controlled by a tiny group of asset managers.

If we take the cynical view that the basic mission of the eurozone was not to serve its citizens but to provide European capital with a field for profitable domestic accumulation, then the conclusion is inescapable: Between 2010 and 2013 it failed spectacularly.

"Millions have suffered because the Germans demanded it, and because it suited the political purposes of conservative elements in other EU countries who wished to weaken the welfare state, but economically speaking it was for no good reason."

fixed (xp)

and although he hasn’t got to it here yet, i have seen him explicitly show the link between Europe’s painfully slow and inadequate response to assisting countries around it, leading to the requirement for the US to find a way to get dollars to Poland and Hungary, in the end via the IMF, a necessary action due to europe’s *inaction* that directly assisted Orbán’s rise to power.

well, that’s not exactly what he says, obv, but it will be interesting to go into the detail of it - but he points to conservative politicians and dogmatic central bankers. the central problem as he presents it in this introduction at the moment is a failure of understanding of the problem and as it became clear a failure to act quickly enough. after all as he says, this wasn’t just a social disaster, it was a disaster for european capital, which those people in power, cynically speaking, would presumably be wishing to defend.

(xpost to the Big A)

The political-economic analysis of moneyed conservative EU interests in 2010 may not have proved correct in the event, but even capitalists sometimes approach politics with more bias than rationality.

The political-economic analysis of moneyed conservative EU interests in 2010 may not have proved correct in the event, but even capitalists sometimes approach politics with more bias than rationality.

semi-related tooze piece (a review of a history of neoliberalism):
https://www.dissentmagazine.org/article/neoliberalism-world-order-review-quinn-slobodian-globalists

the key point -- the (re)fashioning of a kind of "empire" of activity unconstrained by and in its turn constraining tendencies within national politics -- is obv relevant to the EU, but also i think more broadly to third-wayism in general. anyway it claims to have important implications for what the left has also not yet got its head round, re the collapse

I loved The Deluge + Wages of Destruction, so looking forward to Crashed.

I'm currently reading that book by Quinn Slobodian, and it's very good.

surely this is one of the most infuriating economic crimes in EU history: https://cumex-files.com/en/

is there a thread for shouting FUCK INVESTMENT BANKERS ?