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Die Welt: All's well in the austerity front. No, really!

by talos Mon Sep 10th, 2012 at 07:33:43 AM EST


This has to be read to be believed "Die Welt: Happy Days Ahead? Euro Zone Austerity Measures Starting To Work" [Original in German]:

If the numbers are right, the European crisis countries are apparently healing faster than the markets have realized -- or want to realize.

An astonishingly positive total picture emerges from the various statistics. The economies of the euro zone's periphery nations are more competitive than they were just a few months ago; their industries are selling more abroad, and trade deficits are narrowing.

"Blood, sweat and tears -- everything people in these economies have been through is paying off," says Bert Colijn, a jobs market expert with Conference Board, a private economic research institute." The competitivity of the crisis countries is improving, and these first signs of improvement are encouraging. The periphery countries are moving in the right direction."

front-paged by afew


What is this right direction that brings PIIGS singing out in joy at the good effects of austerity? Well people there are working for pennies now! And doesn't that make everybody happy?

One particularly salutary development is cheaper labor costs. In Ireland, Spain and even Greece, unit labor costs have fallen significantly over the past few years. Conference Board economist Colijn and his colleague Bart van Ark researched that development, and report that of all the euro zone countries, the one that has increased its competitivity most is Ireland. Unit labor costs in Irish industry have fallen by 41.5 percent since 2008, which means that labor costs in Ireland are lower than they are in Poland and other middle and eastern European countries.

So we're there? Ordoliberal austerity's Land of Canaan has been reached? Herbert Hoover has been vindicated? Well not quite yet... it remains for the Archons of Investment to take heed of the redemption of the sinners, and in, a not quite adequately determined time-frame, we will have in the broader Growth and Jobs:

It will take time before lower unit labor costs produce full effects, but already they have made goods from those countries cheaper. In the long run, it will make them more interesting to investors.

At the moment, however, uncertainty about the future of the monetary union is keeping companies from investing. Only when they start investing again can the results of lowered costs bear its real fruit in creating growth and jobs.

Yes. At last! We're talking low paying jobs of course. And no welfare state - goes without saying. Possibly a large spike at infant mortality. And those pensions? Well the good thing about a reduced life expectancy is that fewer will feel their absence...

But let's try to confirm the "competitivity" improvement under austerity for most of the PIIGS countries from 2008 to 2012. We'll be using The Global Competitiveness Report, a composite index that has more to do with an investor's take on how they would like a country to be, rather than anything else. As investor sentiment seems to be the driving argument in the quoted article it seems useful to check the related rankings... So:

  • In the Global Competitiveness Index rankings for 2007-2008, Portugal was ranked 43d, yet this year it is ranked 49th...

  • Ireland was ranked 22d in 2007-2008, and 27th this year (despite or probably because of the >40% drop in unit labor values there I wonder?)

  • Italy was the only one of the PIIGS countries to improve from 49th (2007) to 42d, possibly because it was the country least inflicted with austerity of the five

  • Greece has dived from 67th place to 96th, as its economy was destroyed by unprecedented turbo austerity

  • Spain dropped from 29th to 36th.

Is that an improvement or what?

The whole propagandistic tenor of the piece (fox news on weed) is breathtaking since it is running counter to pretty much every published assessment of the situation. For example Bloomberg recently wrote about Spain that:

"We fear that things are likely to get worse before they get better," said Martin van Vliet, an economist at ING Bank in Amsterdam, who expects Spain will seek additional financial aid as early as next month. "With much more fiscal austerity in the pipeline and unemployment at astronomic highs, the risks are clearly tilted toward a more protracted recession."

Separate data today from the ECB showed that private-sector deposits at Spanish banks fell by a record in July, dropping 74.2 billion euros ($93 billion), or 4.7 percent, to 1.51 trillion euros. That's the biggest decline since at least 1997, when the ECB's data series started.

As Migeru pointed out in an f/b conversation, this is running counter to Die Welt's other coverage ("Spain on the brink of bankruptcy" on Sept 7, just five days after the posted article).

Could it be some sort of sarcasm that is being missed in translation? Is it part of a propaganda effort to create a more positive atmosphere toward the south in German public opinion? What? I don't know but is sure reads funny in a dark and obscene way...

Display:
"Die Welt" is much more sophisticated than "Bild", because it uses subordinate clauses.
by Katrin on Mon Sep 10th, 2012 at 01:03:02 AM EST
If you're German, and you communicate in something other than pictures (e.g. Bild), you have to use subordinate clauses.  If a sentence isn't a page long, it can't be taken seriously.
by rifek on Fri Sep 21st, 2012 at 12:09:54 AM EST
[ Parent ]
Der Postillon: "Welt Online" in Wahrheit Trick, um Arschlöcher von restlichem Internet wegzulocken The postilion: "BBC News" in truth trick to lure Internet assholes residual
"Ja, es stimmt", gab ein Sprecher des Axel-Springer-Verlags zu. "Gemeinsam mit anderen Verlegern hat die Axel Springer AG im Jahr 1995 überlegt, wie wir möglichst viele Arschlöcher und Trolle aus den Kommentarspalten anderer Online-Publikationen abziehen und auf einen Punkt konzentrieren können: Das Ergebnis ist Welt Online, wo quasi jeder Spinner in den Kommentaren nahezu ungehindert seinen Rassismus, seine Arroganz und seinen Menschenhass ausleben kann." "Yes, it's true," admitted a spokesman for the Axel Springer publishing house. "Together with other publishers Axel Springer AG has considered in 1995, how we can remove as many assholes and trolls from the comment columns of other online publications and concentrate them on one point: The result is Welt Online where virtually every madman can live out almost unhindered his racism, his arrogance and his inhumanity in the comments. "
by Katrin on Mon Sep 10th, 2012 at 04:54:41 AM EST
Cute what the automatic translation does to "Welt Online" in the headline, isn't it?
by Katrin on Mon Sep 10th, 2012 at 04:55:36 AM EST
[ Parent ]
LOL

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Mon Sep 10th, 2012 at 04:59:39 AM EST
[ Parent ]
In an earlier version, they translated "Sarkozy" as "Blair".....
by gk (gk (gk quattro due due sette @gmail.com)) on Mon Sep 10th, 2012 at 05:07:31 AM EST
[ Parent ]
"If you repeat a lie often enough, it becomes the truth".

Goebbels

Note that they have very large megaphones to repeat their stuff.

by cagatacos on Mon Sep 10th, 2012 at 04:58:22 AM EST
Who are "Conference Board"?

We post most of the news here on ET and I haven't come across their research before. So we should think carefully before jumping on it.

Of course, the other issue is that labour is only part of the cost of a product...

by Metatone (metatone [a|t] gmail (dot) com) on Mon Sep 10th, 2012 at 05:24:55 AM EST
Well,  we can still jump on Die Welt for publishing this.

But Josef Ackermann  is one of the vice-chairmen of Conference Board

by gk (gk (gk quattro due due sette @gmail.com)) on Mon Sep 10th, 2012 at 05:29:30 AM EST
[ Parent ]
Yeah, stupid comment by me.

What I mean to say is, we should fisk them before we fisk their research results...

by Metatone (metatone [a|t] gmail (dot) com) on Mon Sep 10th, 2012 at 05:46:03 AM EST
[ Parent ]
Could it be some sort of sarcasm that is being missed in translation?

Considering the picture at the top of the story, it might well be...



If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa

by Migeru (migeru at eurotrib dot com) on Mon Sep 10th, 2012 at 05:54:22 AM EST
That's in Worldcrunch, but not in Die Welt.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Sep 10th, 2012 at 07:43:55 AM EST
[ Parent ]
(More's the pity)
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Sep 10th, 2012 at 07:55:22 AM EST
[ Parent ]
Unit labor costs in Irish industry have fallen by 41.5 percent since 2008
What, what?!

This must mean either that

  • nominal wages have fallen radically, which can't have happened due to downward nominal wage rigidity.

  • the euro has suffered massive inflation, which hasn't happened.

  • there have been massive improvements in the efficiency of Irish industry, which I should have heard about.

  • industries with higher unit-labour costs have been knocked out, resulting in lower average unit labour costs as only the industries which initially had lower unit-labour costs remain, and also in mass unemployment.

Hooray!

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Mon Sep 10th, 2012 at 08:06:02 AM EST
Nominal wages are only rigid in liberal democracies. In Troikastan they can be cut by administrative fiat.

European Tribune - Greece: they must not pass

Across the board cuts in nearly all of private sector wages and salaries to the tune of 22%. This includes the minimum wage (which will be now around 580 euros net, and under 500 euros if you are a new entrant into the job market). This affects all sort of benefits i.e. the unemployment benefit which is reduced to 369 from 461 euros. This in a country where the cost of living in its capital is still higher than that of Berlin
by generic on Mon Sep 10th, 2012 at 08:25:05 AM EST
[ Parent ]
1,4.

20% - 30% drops in nominal wages are not uncommon.

by Colman (colman at eurotrib.com) on Mon Sep 10th, 2012 at 09:04:17 AM EST
[ Parent ]
Here's Krugman earlier this year.


-----
sapere aude
by Number 6 on Thu Sep 13th, 2012 at 07:56:33 AM EST
[ Parent ]
Has Hollande officially gone over to the dark side yet?
by tjbuff (timhess@adelphia.net) on Mon Sep 10th, 2012 at 11:07:55 AM EST
Well, the short answer is maybe. According to some, he sees himself as France's Schröder.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Mon Sep 10th, 2012 at 11:45:06 AM EST
[ Parent ]
.. while others start seeing him as France's Zapatero (and JF.Copé sees himself as the French Rajoy).
by Bernard on Mon Sep 10th, 2012 at 02:22:18 PM EST
[ Parent ]
Nobody sees him as France's Papandreou?

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Mon Sep 10th, 2012 at 05:57:58 PM EST
[ Parent ]
senile and ruled by his mistress?
by IM on Tue Sep 11th, 2012 at 11:31:26 AM EST
[ Parent ]
No the 3d Papandreou. The Harvard scholar

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Tue Sep 11th, 2012 at 11:49:30 AM EST
[ Parent ]
Apparently he's faded out of collective memory real quick.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Tue Sep 11th, 2012 at 11:58:55 AM EST
[ Parent ]
On the contrary.

He was recently elected as president of European Socialists......

by Euroliberal on Wed Sep 12th, 2012 at 08:39:04 AM EST
[ Parent ]
<facepalm>

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Wed Sep 12th, 2012 at 09:17:58 AM EST
[ Parent ]
I still senile and ruled by his mistress is an attractive proposal Hollande should pursue. He already has jilted wife - now Valérie Trierweiler  should step up!
by IM on Tue Sep 11th, 2012 at 12:07:58 PM EST
[ Parent ]
He could also follow in the footsteps of Sarkozy - unhinged and married to his mistress, or DSK - senile and foaming at the mouth at mistresses.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Tue Sep 11th, 2012 at 12:10:26 PM EST
[ Parent ]
by Xavier in Paris on Tue Sep 18th, 2012 at 05:50:49 AM EST
[ Parent ]
I'm seeing reports of €30bn budget cuts...

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Mon Sep 10th, 2012 at 11:53:16 AM EST
[ Parent ]
36%, for 2013. Back to the 3% deficit...

He says 10% spending cuts, 26% tax rises, broken down into 6% rise already prepared, 10% more on business, 10% on private individuals skewed towards the more wealthy.

I suppose I'd better write something about it. :(

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Sep 10th, 2012 at 12:28:22 PM EST
[ Parent ]
I've read Fillon says France will be in recession in two years' time. I guess he's right, as

If France were to bring its Government deficit below 3%, it would destroy the ability of the French private sector to net-save, assuming the current account deficit stays on trend (and it should: Germany's 6% current account surplus is as stable as if it were a successful policy target, and the Eurozone's neutral current account balance is consistent with the ECB pursuing a non-interventionistic foreign reserve policy).



If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Mon Sep 10th, 2012 at 12:35:05 PM EST
[ Parent ]
Fillon should know, it was going to happen with him as PM.

It's fun to be in the opposition.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Sep 10th, 2012 at 02:48:00 PM EST
[ Parent ]
Not 36%, €36bn. grr
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Sep 10th, 2012 at 02:48:54 PM EST
[ Parent ]
sheen groots!

this time it's for real.

lovely language... where debt and guilt are synonymous, and welt means world.

ouch.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Mon Sep 10th, 2012 at 11:12:00 AM EST
What, exactly, are these theoretical investors supposed to invest in?

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Mon Sep 10th, 2012 at 12:20:22 PM EST
Why, investments!

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Mon Sep 10th, 2012 at 12:22:12 PM EST
[ Parent ]
if I get this right.

Investors invest in investments so they can invest the return on investment in more investments?

And banking!  (Somewhere in there, I doth believe.)

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Sep 10th, 2012 at 12:42:34 PM EST
[ Parent ]
What's the point of money except to make more money?

And what's the point of money management except to make even more money on behalf of people who don't know what to do will all the money they have already?

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa

by Migeru (migeru at eurotrib dot com) on Mon Sep 10th, 2012 at 12:53:25 PM EST
[ Parent ]
"And what's the point of money management except to make even more money on behalf of people who don't know what to do with all the money they have already? "

Excellent!

You can't be me, I'm taken

by Sven Triloqvist on Mon Sep 10th, 2012 at 01:03:42 PM EST
[ Parent ]
As Keynes said
We have to accept [the sufferings of unemployment] as an inevitable result of applying to the conduct of the State the maxims which are best calculated to "enrich" an individual by enabling him to pile up claims to enjoyment which he does- not intend to exercise at any definite time.


If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Mon Sep 10th, 2012 at 01:07:42 PM EST
[ Parent ]

Let's see how many get the connection with "The World Tomorrow".

You can't be me, I'm taken

by Sven Triloqvist on Mon Sep 10th, 2012 at 01:28:33 PM EST
[ Parent ]
And what's the point of money management except to make even more money on behalf of off people who don't know what to do will all the money they have already?

fify.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Tue Sep 11th, 2012 at 03:52:30 AM EST
[ Parent ]
Well, that too. But it's marketed the other way around and believed to work by the marks.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Tue Sep 11th, 2012 at 04:02:53 AM EST
[ Parent ]
They know it.
by PerCLupi on Wed Sep 12th, 2012 at 06:17:34 AM EST
[ Parent ]
Yes. At last! We're talking low paying jobs of course. And no welfare state - goes without saying. Possibly a large spike at infant mortality. And those pensions? Well the good thing about a reduced life expectancy is that fewer will feel their absence...

Why is Europe so Hell-bent on becoming the US?

by rifek on Tue Sep 11th, 2012 at 05:33:25 PM EST
We aren't. Europe is hell-bent on overtaking the US and becoming China. And then, when the last bit of the welfare state is butchered, and consumption of what Europe produces is at its lowest, then we will be the only ones who ship useful goods to the rest of the world in exchange for little pieces of paper.
by Katrin on Wed Sep 12th, 2012 at 01:56:00 AM EST
[ Parent ]
It's cultural: we spent the last 30 years learning english as a second language, and the last 70 admiring the US victory against Germany.

So, as language shapes thoughts, we now think american whenever we try to think "foreign".

As Europe is something foreign for everybody, I'm not surprised that english is becoming its communication language, and source of inspiration.

Note that the first attempts at federal Europe, in the early times of the EU, were more centered on the historical behaviours of european countries thant those of today, which are more american in nature. This reflects the change in generation, from german-speaking people, as were cultured people in the 30's in France, or french-speaking ones (as the germans were) to english-speaking ones.

Nowadays, everybody speaks english, but very few speak each other language directly. So everybody uses american-english concepts to communicate: it's normal that we have some problems having our own concepts getting through.

by Xavier in Paris on Tue Sep 18th, 2012 at 05:59:18 AM EST
[ Parent ]
It's cultural: we spent the last 30 years learning english as a second language, and the last 70 admiring the US victory against Germany.

And that includes the Germans...

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS

by Migeru (migeru at eurotrib dot com) on Tue Sep 18th, 2012 at 06:52:50 AM EST
[ Parent ]
Yes but the English get the language all wrong (Some day London Banker will see that remark and lob a grenade my way.).
by rifek on Fri Sep 21st, 2012 at 12:14:05 AM EST
[ Parent ]
I get it wrong too... I'm afraid. ;-)

i'm watching TV just now (in France).

Two different channels, two different debates: first one "State expenses are really too high"
Second one: "the state needs to stop wasting money"

Reminder: France public sector expenses corresponds to social redistribution (almost half of public money goes there), 5% to debt service, 15% to subventions and investments, and 35% to salaries and usual expanses (of which, education and army are the main bulk).

So public money not redistributed (actual public sector) corresponds only to 24% of PIB approximately.

I'm really getting fed-up by that, and dispaired by the way everybody seems to drink the lot of it.

by Xavier in Paris on Fri Sep 21st, 2012 at 06:04:14 PM EST
[ Parent ]
We never hear another version in the media.
by afew (afew(a in a circle)eurotrib_dot_com) on Sat Sep 22nd, 2012 at 01:48:46 AM EST
[ Parent ]
Just a second, have to chew some more peyote so austerity makes sense............................................................................................... .................................................................................................... ..oh wow,that saguaro cactus just asked me to dance, and austerity still looks bat crap crazy.
by rifek on Fri Sep 21st, 2012 at 12:18:34 AM EST


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