Staring at the abiss with Paul Krugman | 235 comments (235 topical, editorial, 0 hidden)

Re: solidarity (none / 0)

Again - lower taxes and balanced budgets are NOT THE SAME THING. German austerians are not against tax increases to balance budgets. It's the combination with neoliberal policies which is absolutely toxic.

And when your creditworthiness is decided in London, being prudent with debt is not geostrategically silly. We worry about our energy coming from Russia, but we should worry about our money being valued by the Anglos.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Sat Mar 17th, 2012 at 06:54:30 PM EST
[ Parent ]

Re: solidarity (none / 1)

We should also worry about the ECB being the only sovereign in the Eurozone.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 06:56:07 PM EST
[ Parent ]

Re: solidarity (none / 0)

When will you drop the Anglo paranoia? There's enough idiocy on display in Brussels, Frankfurt and Basel without needing to blame the City.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 06:57:40 PM EST
[ Parent ]

Re: solidarity (none / 0)

I think I must agree with Migeru here. The rating agencies and Wall Street banks might carry huge culpability in creating the US crisis (as predicted by Jerome here on the ET), but the Euro crisis is entirely homegrown.

Remember; it's not like investors always even care about the rating agencies. Japan was downgraded years and years ago, and their sovereign rates have been falling ever since. When S&P downrated the US, US bonds soared, while it was the stock market which went into the toilet.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat Mar 17th, 2012 at 07:01:38 PM EST
[ Parent ]

caring about ratings (4.00 / 8)

is a purely anglo thing, coming from reliance on capital markets (rather than debt lending) for finance. It has led to the quest for valuing everything in monetary terms (so that it can be traded), liquidity (or lack thereof) in everything, the concept of riskless assets, and a general lack of due diligence in your lending practices. You rely on the rating rather than on your own analysis (and I've seen this from the inside - using ratings are the absolutely easiest way to be lazy inside a bank).

The lack of due diligence should not be a problem if the stupid money is punished (and not bailed out - this is where financial capitalism will break), but the reliance on monetising and valuing everything through the prism of finance brings short-termism, the "there is no society" mindset and, in the absence of a strong State, runaway greed & al.

So "anglo" is a short cut for the Reagan/Thatcher ideology, but there are roots for it where it came from.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Sat Mar 17th, 2012 at 07:17:44 PM EST
[ Parent ]

Re: caring about ratings (4.00 / 2)

using ratings are the absolutely easiest way to be lazy inside a bank

Heh. Everytime the guys from the bank come and suggest we buy this or that corporate bond (I help manage some research stipend money) and say that it has this or that rating, I give them a look and mutter something about MBS's or CDO's or the S&P downrate of the US, and then they look rather sheepish. :)

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat Mar 17th, 2012 at 07:23:44 PM EST
[ Parent ]

Re: caring about ratings (none / 0)

In a society where everything is market-based, everything has either a market value or no value. And no fair factoring back in the externalities the market makers have so cleverly swept under the rug.

I've always found it amusing that the Royals were generally fans of Maggie when her markets-ueber-alles approach was directly contrary to every interest and tradition of the monarchy.

by rifek on Thu Mar 22nd, 2012 at 05:31:22 PM EST
[ Parent ]

Re: solidarity (4.00 / 4)

Migeru:

There's enough idiocy on display in Brussels, Frankfurt and Basel without needing to blame the City.

If the City (and Wall St) impinge on the Eurozone situation, should that be ignored? When it's pointed out that either rating is a superfluous function, or should not be in the hands of private City/Wall Street corporations, the response is invariably, "the rating agencies didn't cause the euro crisis". No, but they have arguably exacerbated it at every turn by publishing (often correct) analyses and consequent rating changes with an acuity and rigour that were so strikingly absent concerning American financial bubble-and-fraud in the lead-up to the first leg of this crisis. Is it absurd to find logical that US interests (and those of Britain, the GBP having been sidekick to the dollar for decades) lie in avoiding the loss, in the financial crisis, of the world-reserve-currency status of the dollar, and therefore in seizing an opportunity to weaken the relative status of the main contender for replacement? Or that global financial capitalism (to a considerable extent offshore but pre-eminently centred on New York and London, currently at least) abhors the regulatory tendency the EU represents at world level?

Why place a theoretical ring-fence round continental Europe (where, I'm not denying, our "leaders" bear huge responsibility for driving us over the cliff) and ignore global power struggles? If, tomorrow, the euro fell apart and our countries were severally sovereign, would those power struggles have no relevance?

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Mar 18th, 2012 at 06:27:23 AM EST
[ Parent ]

Re: solidarity (4.00 / 2)

There is a line beyond which pointing out malign foreign interests becomes an exercise in excuse-making for domestic collaborators and general idiocy, rather than analysis. And reasonable people can disagree on which side of that line Jerome's comment is on, given that it is made in response to the observation that the Euro elevates liberal (neo- or ordo-, doesn't matter - they agree on this particular delusion) fantasy world economics into the law of the land.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Mar 18th, 2012 at 09:34:37 AM EST
[ Parent ]

Re: solidarity (4.00 / 5)

There may also be a line beyond which continually imputing defensiveness and excuse-making to other participants here may be improductive of debate and analysis.

I was not writing to defend Jerome's comment, he can do that himself, but to support the view that excluding global power struggles from the field truncates the discussion, which then appears to conclude that Europe's problems are solely self-inflicted and that sovereign nation-states will be either the inevitable result of those self-inflicted problems, or the correct response to them. Well-adapted macroeconomic policies for those states may be suggested (with great confidence, even), but it's legitimate to have doubts about, not their theoretical effectiveness, but their chances of being applied in real conditions - will global finance go away, will laissez-faire neoliberalism go away, will economists change their spots, will right-minded governments emerge from the polities we have, will global imbalances and their attendant pressure to race to the bottom disappear, because the euro is no more and we have independent nation-states? Luis's (self-admittedly) doomer scenario above has the merit of putting the subject on the table. It's not enough to reply (hyperbole for hyperbole) that what's happening within the euro is just as bad, or that all a government needs to do is this or that. A serious (probably multi-scenario) description of what might and what is likely to happen to our several nation-states in the event of leaving the euro or of a general euro collapse, is called for. Alongside which (though great doubts may be legitimate on this score too), the chances of a return to the '80s to re-debate and identify an acceptable construction sans Maastricht for what has become the EU (including what the outlines of an acceptable construction would be), need to be assessed. Vast programme.

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Mar 18th, 2012 at 12:47:43 PM EST
[ Parent ]

Re: solidarity (4.00 / 4)

I'm not sure I fully understood all of that and so my point may be similar: There is a distinction between academic and policy analysis. Academic analysis should be wholly objective/fact driven - but rarely is. Policy analysis focuses on the policy leavers and factors over which you actually have some influence/control. So it makes sense for those of engaged primarily in the EU policy/politics space to focus on the shortcomings of the EU/Eurozone itself. That is not to say anglo neo-liberal influences haven't exerted a baleful influence on EU policy/decision makers and may indeed be the cause for a lot of our ills. But it is easier to address the known and obvious defects in the design of the Eurozone project itself rather than to be tilting at generalised neo-lib shibboleths and windmills all the time... If we could fix the structural defects and lack of solidarity in the Eurozone architecture, we wouldn't have to worry over-much about what the City/Wall street are up to.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Mar 19th, 2012 at 11:11:46 AM EST
[ Parent ]

Re: solidarity (none / 0)

That is right. You could crowd out Migerus german paranoia.

by IM on Wed Mar 21st, 2012 at 06:47:13 AM EST
[ Parent ]

Re: solidarity (none / 1)

we should worry about our money being valued by the Anglos

Nothing secondary market purchases by the ECB with a stated cap on yields wouldn't solve faster than you can say 'Weimar'.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 07:02:43 PM EST
[ Parent ]

Re: solidarity (none / 1)

Were it not for the fact that the ECB has been busy undermining the credibility of its own sovereign debt purchases.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 07:03:51 PM EST
[ Parent ]

Re: solidarity (none / 0)

The EU is still trying to have a sovereign currency without a sovereign. Not a good mix.

by rifek on Thu Mar 22nd, 2012 at 05:34:57 PM EST
[ Parent ]

Re: solidarity (none / 0)

The ECB is the only sovereign, it just pretends that it isn't.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Thu Mar 22nd, 2012 at 06:03:42 PM EST
[ Parent ]

Re: solidarity (4.00 / 2)

On the contrary, it seems to rather enjoy being the sovereign. It's just an old-fashioned sort of sovereign. Specifically, the sort of which went out of style around 1792. For reasons and in ways that the ECB may yet come to experience first-hand if they persist in the destruction of European society.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Mar 22nd, 2012 at 08:47:15 PM EST
[ Parent ]

Re: solidarity (none / 1)

Again - lower taxes and balanced budgets are NOT THE SAME THING.

Low taxes is not the only form of fantasy economics practised on by the right wing.

Balanced budgets are fine, whatever, as long as they are regarded as an incidental circumstance rather than an actual policy objective.

And when your creditworthiness is decided in London,

... then your central bank is not doing its job.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Mar 17th, 2012 at 09:23:35 PM EST
[ Parent ]

Re: solidarity (4.00 / 5)

Jerome a Paris:

German austerians are not against tax increases to balance budgets.

Taxes on the poor is ok, but a luxury tax on cars in Greece was not allowed.

ReporterNet.com | Tax on Luxury Cars to be Abolished

The government is expected to abolish the luxury tax on private cars with ex-factory prices of more than €20,000 for new and €16,000 for used, according to statements by Deputy Finance Minister Pantelis Oikonomou, who cited European legislation.
"In order to prevent the country from being referred to the European Court, a draft provision has been prepared for the abolition of the luxury tax on private cars," he said in Parliament.
Luxury tax rates vary between 10% and 40%, depending on the ex-factory price.
Oikonomou said the ministry is also preparing a more favorable tax regime for imported used cars. Greece has already lost a case at the European Court on this issue.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Sun Mar 18th, 2012 at 03:50:33 PM EST
[ Parent ]

Re: solidarity (4.00 / 2)

Slashing the salaries of psychologists to less than what some would earn stocking shelves in a grocery store here, and then taxing them higher through their utilities, is Very Serious.

Just don't you dare tax BMWs.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Mon Mar 19th, 2012 at 09:52:51 AM EST
[ Parent ]

Staring at the abiss with Paul Krugman | 235 comments (235 topical, 0 editorial, 0 hidden)

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