Europe: one currency, two souls?

It seems so obvious to me that the solution is to be centrally-bureaucratised, more cross border informal economic activity, more cross border organised crime and more cross border corruption.

Or to put it another way merge all the individual central banks and also admit that the markets outrank democracy. Governments can then openly roll on their backs and have their tummies tickled by their owners.

All this user's posts have been removed.Why?

'But logically if you are going to keep basket-case economies inside the Eurozone you have to help them become modernised, de-bureaucratised, less riddled with informal economic activity, organised crime and corruption.'

Yep, spot on.

The same is true for many parts of the UK also.

OK, perhaps not so much the organised crime in the UK but everything else could be equally written about Scotland, Wales, and the English regions outside of the South East.

Don't look for a Eurozone grand vision when one is sadly lacking within these shores.

Paul
The trouble is the locals in the South don't want to modernise, de-bureaucratise, abandon informal economic activity, organised crime and corruption. This is how they live and have always lived beyond the EU, beyond even their Fascist interlude.

It's funny I've always fancied trying to earn enough to buy that place in France, Spain, Greece or Italy, but could never see myself integrating in a society dominated by the Catholic/Orthodox church and associated local power architectures (Mayor, local gangsters etc.).
Loved the range in the post from the narrowest detail of Millwall supporting Finn to the very big picture.

''I am listening hard for that vision thing.''

Arn't we all, even Ed (The vacant eyed photo is hardly flattering in the context of the article but it says it all really).

https://www.bbc.co.uk/news/uk-politics-12859330


Another cracking post Paul, if many Journalists, as you say, are, to paraphrase -

'forced to attend meaningless briefings and are as non plussed as the rest of us on the lack of leadership and ideas to overcome the crisis of the century'

Why then do we not see more blogs like Idle Scraw, and more articles like Peter Orborne in the mainstream, what are journalists waiting for? Permission to report it how it is?

As for the vision thing, it would need fleshing out a bit but a good start would be.

1) Be honest, tell the situation as it is warts and all in both Europe and the broader global economic dynamic ... the physical limits of the model have been reached.. things can never be the same again.

2) Tell the markets - business as usual for now while a strategic plan is worked on, tell the people the same .. dont change your routine for now, at least their suffering may feel like it has a purpose then for people in austerity land.

3) Send all government advisors on gardening leave and replace them with a select single panel of proven business people outside the financial sector and organisations like NEF.

4) Develop a strategy for a sustainable europe which would play to the strengths of respective economies and lifestyles with the aim of being sustainable within european borders. All baseline human needs will be met by the state by a credit system - homes, food and energy within sustainable limits and a proportion of everyones time or funds (depending on situation)contributes to this (would not be much in the modern technological age). This could be being responsible for maintaining the local park or, if you are a busy doctor for example you could choose to 'pay extra tax' to avoid such duties. If you want more than the basic you have to work and trade something of value to get it but everyone would have the same baseline rights to basic needs (non tradable strategic assessts) irrespective of status and everyone would need to contribute the same towards maintaining it irrespective of status.


5) The above strategy would require a huge strategic investment and provide a lot of jobs during the transition but the end result would be a sustainable maintainable shared basic food, energy and shelter infrastructure that is NOT moneterised.

6) everything else can be moneterised bought and sold and traded be it a skill or a commodity or a manufactured item as it is now except there would be a much higher taxation for high energy - non sustainable goods which go beyond the individuals 'free' state provided limit. You can own a chelsea tractor - no problem and everybody will know that in so doing you are contributing (via a tax system) a large proportion of the running costs back into the sustainable state support system and you can afford it because you are a highly skilled doctor who studied hard and can improve lots of lives or you invented a new computer game everyone loves etc etc. Creativity and value generation is rewarded while everyone actively contributes to maintain a sustainable sub-structure which supports it but which is locked out of the 'money cycle' in recognition of its strategic importance and potential for abuse from those whom would make themselves wealthy from the misery of others.

7) abolish all income tax and replace it with smart VAT, a sliding scale depending on how unsustainable a product or service is as measured within Euro borders.



Sound like a resonable starting point ED?

How hard was that !!!!

Another factor to consider is how far can governments go on austerity which seems mainly to affect the poor and middle income sections who may want their Tahrir Square moments. How much piri-piri flavoured cold turkey will the Portuguese take before they wreck their adolescent democracy? The EU cannot afford to be laissez faire about the modernisation of these ailing economies and a Marshall style recovery plan with rescheduling sovereign debts at sensible interest rates. In the long term interests of the Portuguese (and Greeks, Irish) too.

@3 Tawse57

Seriously, what are you talking about?: "OK, perhaps not so much the organised crime in the UK but everything else could be equally written about Scotland, Wales, and the English regions outside of the South East."

So you are saying these countries and regions within the UK are riddled with bureaucracy (despite having the same laws with regards to business and investment as the rest of the UK), Informal economic activity and corruption as well as requiring moderisation? Do you have any evidence of this or are you just making a huge generalisation? What changes in particular would you bring in to moderise these place and stamp out the rampant corruption exactly? What pieces of bureaucracy would you remove?

Additionally, is there a particular reason you missed out Northern Ireland or did you simply mean that they have the same problems but also the organised crime?

is tomorrow our 'Tahir' square moment?

Isnt the reality that you have a group of states very keen to share in the benefits of a free market and single currency but not-so-keen to share the burdens of individual failure. The response ( looking at the ESM) is to create intricate firewalls and mechanisms to ensure private market lenders and banks share the in pain if all goes wrong. In other words, a partial liability union offset by the law of liquidation. Some might not say that is a vision, but it may be all you are going to see from the Europe of this decade.

Good commentary on the contradictions of the euro.

But don't forget the bigger, wider contradictions of the capitalist system.

When I first read Marx I thought he had neglected the supply side because capitalism must grow & the earth is finite.
But re-reading & thinking more about part 3 of volume III supply-side constraints are assumed.
He assumes the whole world is capitalist.
That there are just workers & capitalists.
That there is no population growth.
Hence there is no increase in absolute surplus value - once the physical limit of the working day is hit.
He then shows that the capitalists have to take an ever larger share of the cake that can't grow.
The increases in constant capital (e.g. new machinery) increase the organic composition of capital.
Without matching increases in the rate of exploitation the rate of profit falls.

What we can see clearly today is the importance of energy.
Cheap energy has gone.
When energy was getting cheaper the rate of exploitation can be increased without lowering the standard of living of the workers (the post-war period for the developed nations).
Now with energy getting more expensive the rate of exploitation needed to maintain profit levels requires cuts in wages, pensions, health spending, benefits, etc.
In other words, the capitalist need a larger share of the cake at the expense of the workers.
This is why we are in a revolutionary period.
Politics is now starting to catch-up with economics & there's nothing the ruling class can do about it.

I HAVE NOT READ MARX (#10)

Did he consider that - to all intents and purposes - apparent adults (grown-ups) are really immature (psychologically under-developed) juveniles MASKING their deficiencies (as we all do) while the LEAST SOCIALLY CAPABLE are driven to acquire HIGH OFFICE in a futile attempt to salve the pain of their inadequacy?

In consequence, governance is inevitably flawed, leading to the current tightening spiral of failure, as a consequence of juvenile imperatives: cheating, lying, killing, stealing, greed, oppression, pomposity, hubris and need to WIN at any cost.

ColtSeavers

I am sending out positive vibes to you. Can you feel them?

I am giving you a massive virtual hug of love. Can you feel the warmth and fuzziness?

Thank goodness Ireland has been fixed?

'BRUSSELS (Reuters) - Ireland (Berlin: IIK.BE - news) 's prime minister has made a new plea to the president of the European Central Bank to extend its lifeline to the country's banks, giving Dublin more time to tackle problems many fear are worse than forecast.'

#4 tonyparksrun

Forget about buying a place in France, Spain, Italy or Greece. China is the new Dubai when it comes to property speculation.

Why not buy one of the 64 million empty flats in China? Only 300,000 US Dollars to you for a 2 bed, assuming you can put down a 50 percent deposit.

Better get in quick!

Excellent Aussie TV report on China's property bubble.

https://www.sbs.com.au/dateline/story/watch/id/601007/n/China-s-Ghost-Cities

When this bubble bursts it will take out the Aussie economy so dependent are the Aussies on selling ores/commodities to China.

Would not surprise me for us to then learn that UK banks are up to their eyeballs in all this?

As a Brit living in Germany for the past 20+ years, I can confirm much of what Paul says. There is zero appetite amongst the electorate of the world’s 4th largest economy to take on the role of Europe’s bank of last resort and to continue to foot the bill for Euro-zone bail outs.

Cross-border cooperation with other European countries is generally seen as a good thing, and I would even go so far as to say that the Euro has been accepted as something worth “defending” (in the central bank sense of the word), but Germans are increasingly irritated by the frequency with which their government adds to the level of country’s indebtedness to fight off one crisis after another.

Opinions in Germany about the poor historical spending habits of “Southern” European governments are more neutral than in the UK, partly because of the high level of immigration and long standing family ties with those countries. (By comparison, there is a deep-seated reluctance to embrace Turkey’s desire to get closer to Europe).

There is no doubt that the level of independent and incisive reporting is far lower in Germany than the UK. For that very reason we invested a long time ago in a large satellite dish, so that we can watch UK TV. It is amusing to see German news channels re-broadcasting BBC footage from trouble hot spots, because their own journalists are not on the scene and often not even in the same country.

This does mean there is generally more willingness here to accept on face value the line fed to them from their politicians. However, this only goes so far, particularly when it comes down to the stability of the currency. The tribal memory of hyper-inflation is still very close to the surface.

Of course, it will be interesting to see if anyone here is willing to join the dots on fiscal integration, because until now there has been no public debate in Germany on the need for harmonisation of taxation and benefit regimes within the Euro-zone, or the potential political and economic consequences of such a path. I seriously doubt any German government could survive the attempt to sell this to their electorate.

#15

Useful to hear such perspectives.


If that is the prevailing attitude within the electorate in the engine room of Europe then the european project is screwed.

Perhaps the Portuguese crisis will mark the point when the cry from the bridge starts to go.

''every man for himself''

A sustainable economic model to replace the now flawed free market model could be done within country borders rather than european borders, perhaps that needs to happen first anyway, to change an economic system and a political one as radically as is required is probably too big a bite to try to take in one step.

Stevie: "is tomorrow our 'Tahir' square moment?"

Put the kettle on - milk no sugar.

My prediction: no. The British are conformist. TV is utter crap yet we watch on average 4 hours a day. If you build it, they will come. Looking forward to lots of placards about everything under the sun and Socialist Worker wasting more subs on posters. And the cops reading your every move via Twitter. Take a book.

Cheers for that Paul, there is more lucidity in the past two post about Europe than I've seen in a year or more.

The timing is looking interesting to say the least, they have about 9bn Euro of redemptions in the coming months not to mention coupon payments coming due, and I doubt they have the money, or the ability to procure it in a timely fashion. Part of me says the ECB will have no choice, but if Trichet continues to be doctrinaire about all this I wonder when, not if, the markets will take their ball home.

Like the man said, Spain will be "interesting"

Apologies for the double post but i am a tad inebriated and rather chuffed with this little number i rustled up in my blog troll like way on Marc urbans blog.


The really scary bit to the plot to the novel is where a war in the middle east is exactly what the shadow government (the hands up the backsides of the puppets - subconscious monsters from Freuds 'id' if you will) wants.

You see, we can either:

a) Pay back the huge debts via austerity which keeps the banks solvent and everyone in debt slavery- not very popular and starting to be voted against which is not going down well with banks and gov are doing all kinds of stuff like printing money to try to pretend the issue is not there.

b) Default on the debts and destroy the banking system and stop the countries who borrowed from borrowing more via an appauling credit rating ... sounds sensible except the shadow government does not make any money out of that one... they lose everything and become nationalised to a man.

or

c) Have a really nasty war which will re-set the debt clock (you dont have to repay debts to nations you are at war with apparently - I find it scary that there is even an accepted banking protocol for that scenario) and in the process re-shape the political landscape.


If I were to look at this from a psychologically needy meglomaniac sociopath's perspective I would go for option c every time.


So war it is then....

The really scary bit above the above post is that I am not sure if I am being serious or not.

One thing I have never quite got about this 'Germany paying for the party in the south' thing.

Germany gets huge benefit from the drag down in the value of the euro (in terms of purchasing power parity) by the naughty south.

If they had the Deutch Marc would they be doing nearly so well on the export market?

Who is subsidising whos party.. shireblogger ..anybody can you educate me on that point.. I would really like tio understand it because I done see anyone talking about it so either I dont understand it and it does not exists or people dont like to talk about that particular dynamic...so which is it?

@Jericoa

How do you propose to deal with the allocation of land to best use?

(Meant to post this here, so edited repost from previous blog)

Agree Telgraph piece is a good read - Oborne's libertarian credentials and my take on what Marx would make of current events on Paul's last Blog do seem to link up to some extent... scary

The question I have for those who blame the EU & Euro for everything is this:

if there had not been an EU or the Euro, what would have happened to the PIIGs?

Like it or not, the EU has led to the development of their economies, infrastructure and investment, plus delivered a big hike in living standards - I remember going to Barcelona when Franco was still alive - it was a third world country with prostitutes three deep all the way up the Ramblas - today the Spanish are a proud and successful nation that has put fascism behind them and built a society to be proud of.

Was the whole thing fated to end like this - was it always inevitable? Oborne's somewhat "culturalist" take on these economies always going bad offers an explanation which gets too close to a racial explanation for my liking...

The fact is that the industrial economies developed their financial infrastructure, whilst the agrarian/fishing periphery didn't, so we gained control of the instruments of international trade and the flow of investment and built huge amounts of capital.

Banking has come a long way since the founding of the EU and in the critical 1980s/90s those advocating deregulation and globalisation increasingly got their way, so an unholy deal of PIIG politicians wanting investment & jobs and bankers trying to cut big deals with them has led to an unsustainable level of lending and debt, whilst the bills for the borrowing have risen and risen.

What went wrong - and what should we do about it? I'd say deregulation and lack supervision was at the heart of it - and the aspirations - no the delusions of grandeur - of the PIIGs and EU simply sucked in the borrowing.

Clearly financial deregulation was and is totally irresponsible - it's just as much the greed for bonuses by bankers making these deals that fueled the problem as much as it was the aspirations of the PIIGs, whilst the "moral hazard" of governments being blackmailed to bail out bankers is no serious personal hazard at all to those responsible - one wonders if capital punishment might not be a possible answer?

The temptation to say let the banks go bust should be tempered by the realisaton that this would only result in their debts in turn be subsumed by government - who would in turn come round with the tax bill to our doorsteps to pay for it...

OK so we all want to move on from Marx - too much baggage/water under the bridge, etc - and I'm all for a new reforged model for how our economy and society should function, but all I can see is a chasm of debt and a mountain of loans - until one is used to fill in the other, we will never be on a level playing field again and right now I can't see how this can happen, unless the system collapses the heap into the hole.

I'm of the view that this is now probably inevitable and I wonder why politicians don't see this and try and manage the process rather than allowing a trainwreck to happen - but perhaps that's what the bailout process really is, after all - the managed twilight of the Masters of The Universe whose time is passing..?

no.21 carol wilcox

'what do you intend to do...'

If only it was in my gift to do anyhting except winge from the sidelines...optimists are activists apparently..pessimists ...well lets just say alot of pessimists reside in this blog space :)

Theoretically wrt best use of land... not very much. The people who own the land know the land, look what happened to production in Zimbabwe when the status quo was messed with.

For any strategic changes in the national interest that need to take place there is already a legal mechanism in place (compulsory purchase orders), that process should be simplified and be less tied up in red tape so if we want to build a severn barrage or a high speed rail link we just get on with it rather than the 10 year proceedural merry go round which happens now before a spade breaks ground. we dont have time for that in many of the decisions which need to be made and implemented.

Not sure if that was the exact thrust of your question but that is all that came to me by way of a esponse.

Hi Jericoa
Not quite sure what you are asking at #20. The benefits of a single currency with fiscal rectitude are well discussed. The socialised part of the bargain appears to be implemented through the Cohesion Fund and the European Regional Development Fund and other programmes designed to redistribute wealth from richer to poorer EU regions and create economic regeneration in uncompetitive EU regions. I agree that there is often no discussion of the success or otherwise of these programmes in addition to the bailout question.

@Jericoa

Land is a free gift of nature. It's value is created by human activity (all of us). It is therefore fair and efficient to pay for exclusive use of the land - the rent. It is useless to try to share the land by diktat. We don't even know who owns 45% of UK land by acreage. Let's make landowners claim their titles, lets value all the land (whether used or not) and revalue at frequent intervals, then send an annual bill for the rent payable to us, the citizens. Abolish Council Tax, business rates, stamp duty. The balance of revenue would be vast - enough to abolish income tax on low wages. No one would then want to own land except to use it (within democratically determined constraints). Tenant farmers would be paying the rent to us and not to the likes of Charles Windsor and Gerald Grosvenor. The capital value of all land would tend to zero, so homes would be affordable for all, more of us could afford to live near to where we work, relieving the pressure on transport. There are plenty of radical policies which could improve our lives but this is a real no-brainer.

@Jericoa

You say "The people who own the land know the land". You make the common mistake of believing that land is just about agriculture. Land seems to become invisible once it's built upon. The most valuable land is urban residential - look at the price of houses in Mayfair. Do you think that Gerald Grosvenor knows more about the huge amount of land he owns than his tenants?