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Nigel Farage tactfully comments on the euro and the EUMay 1st, 2013 |
 17 comments to Nigel Farage tactfully comments on the euro and the EU |
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Isn’t the Euro-anthem the last movement of Beethoven’s 9th?
Maybe that is why Ron Paul laughed right when Nigil said “fifth”.
Interesting group of people – Jim Rogers, Ron Paul, Peter S…
And meeting in perhaps the only South American nation that is (inspite of its Communist student movement) releatively sane.
Chile is far from perfect – but there is not the vast gap there is here.
By “gap” I mean the gap between the living standards of the population and the economy.
Britain does have an economy (real goods are made here), but the real economy does not support the living standards of the population – living standards are vastly higher than the real economy would warrent.
The force of economic gravity will make itself felt – sooner, rather than later.
As for the high unemployment countries of Europe.
I detest the Euro (and the European Unin generally), but it is hard to pin high unemployment on it – not correctly anyway.
A country does like Spain does not have 27% unemployment because of the tight money policy of the Euro – because the Euro monetary policy is not tight (“cheap-money” is actually the mantra of the Euro Central Bank – just like the other Central Banks).
One can not even blame E.U. regulations generally – after all Austria is a member of the E.U. and has unemployment at less than 5% of the workforse.
The high unemploment nations of Europe (Greece, Portugal, Spain, France, Italy….) have their own welfare schems and LABOUR MARKET REGULATIONS to blame for it.
To blame the Euro is as correct as to do what Putin’s boy Max Keiser does and blame “the banksters” for the bankruptcy of Greece (and the comming bankruptcy of California).
Governments have made Welfare State promises vastly beyond the ability of the productive economy to pay for – so the governments go bankrupt.
It is bugger all to do with the “banksters”, and it is bugger all to do with the Euro (much though I detest the thing) either.
Brian and Midwesterner,
Know what irony is?
Napoleon preceded Hitler with Fascism, the E.U. is a Fascist state, what does Ode de Joy celebrate, he got it wrong, so what, whatitya going to do, take his birthday of him and how will you feel when Amerika nukes Fascist Europe like they should have done during the Second Transnational Unpleasantness of the Twentieth Century?
I like Farage, and vote for UKIP whenever I get a chance. He is a
> bloke who speaks his mind, and his mind is much more attuned to the ignored
> majority of this country.
>
> The mainstream parties are very rattled. The attack dogs are off the leash
> already, trying to rubbish UKIP in any way they can. Ken Clarke is hardly an
> attack dog more a supercillious lazy arsehole, who is so Europhile he didn’t
> even bother to read the Maastricht Treaty, just nodded it through, and his
> “They’re all racists and Xenophobes” rant has already backfired on him.
>
> The common wisdom is that UKIP take votes from the Tories alone, but this is
> not so. Old Labour were very anti EU. If the core Labour voters wake up,
> they are very likely to vote UKIP. I have said before that my old friend and
> neighbour, Viscount Tonypandy, told me in 1997 just before he died that he
> would have voted UKIP not Labour, as he didn’t recognise Tony Blair’s New
> Labour as being even remotely similar to the party he joined.
>
[Warning: long, wonky post – consume at your own risk, preferably with alcohol.]
Paul, blaming a single agent or factor for a particular outcome only works in small-scale, simple setups, never in macroeconomics (does not mean macroeconomists do not do it all the time). Thus, I’d agree that the policy of the ECB is not *the only factor* to blame for 27% unemployment in Spain. However, a fairly cogent argument can be made that the Euro and ECB monetary policy did play a big role in Spain’s economic implosion. Here it is:
The self-stated primary objective of the ECB’s monetary policy is “to maintain price stability. The ECB aims at inflation rates of below, but close to, 2% over the medium term.” It seems to target the Monetary Union index of consumer prices (MUICP) – although that’s my guess; I was unable to find a direct statement to that effect. I’ll leave it to the readers, if they have the time to waste, to try to find out how exactly the MUICP is calculated, although you will find plenty of statements that it’s done “according to a harmonised approach and a single set of definitions.” The problem is that while the ECB *may* have done a passable (I would call it pretty bad – look at the graph from 2007 through current) job of that, stable *average* prices over a set of national economies with low labor mobility but high capital mobility can still leave you with localized bubbles. That’s what Spain (and Ireland) got – interest rates that were too low for their overheating economies, although arguably well-suited for Germany’s moribund (at the time) economy. In Spain, these low rates, combined with warm climate and Mediterranean beaches, fueled a massive housing bubble. How massive? In 2007, Spain had 1/5 of the construction workers in the EU, at 2.9 mln people. Then, of course Stein’s law kicked in: “If something cannot go on forever, it will stop.” There are only so many Britons who want a condo in Spain. Housing prices imploded, a gazillion projects under construction were halted, millions of people in construction and all its satellite industries lost their jobs. Overall consumption shrank massively, so the economic aftershocks created added unemployment. What could Spain fall back on? Exports. Yes, but… no. Spain could not competitively devalue its currency – it was in the Eurozone, and over 2/3 of their exports were to Italy, France, and Portugal. The only option left is the so-called “internal devaluation” – wait for wages to adjust downwards. This can work if you let it work – see Estonia. However, unemployed populaces tend to un-elect politicians, and politicians tend to not like that, so right now Spain is getting the slow version of internal devaluation, which propagates through (more) unemployment that implacably rises. The rot of over-investment is not being allowed to burn and clear room for new investment, but rather it is slowly draining Spain of job skills and brains.
I will also take a (partial) issue with:
The bankers did what they did, and deserved to take generous losses, and go bankrupt where appropriate. They were a transmission mechanism. The big problem is that they were not allowed to. Why? The popular explanation is “too big to fail”. It’s also the proverbial explanation that is “simple, elegant, and wrong”. The biggest financial disaster in the US up to 2008 – the S&L crisis – was caused by a myriad of tiny (many single-branch) financial institutions, all following the same strategy for regulatory reasons. Why was Drexel Burnham not too big to fail, but Lehman was? Because Drexel Burnham was unique, and Lehman was not – all the other investment banks had portfolios similar to Lehman’s. The problem is not the size, it’s the uniformity, monoculture – an unintended and “totally unexpected” consequence of regulation. Regulation unwittingly creates identical incentives across institutions, who, predictably, take similar risks. Risk, as they say in finance, does not disappear, but it can get re-packaged and accumulated, until it cannot be contained anymore – and of course, next you get “The free market failed, we need more regulation.”
His Hollande line cracked me up. Since I live/work in France it is a bit of a wry smile, although there is some genuine pleasure watching the guy squirm as he is in a place where he needs to do the opposite of what he wants to do.
I lived in Spain in the early 1980s for a while. Unemployment was high then, Spain has a notoriously high level of unemployment.
I also noticed that in Spain, there were a great many banks, even in a remote fishing town, of 14,000 or so souls, there were several banks, all nicely air-conditioned (not common then) with granite or marble counters (cool to lean on), and no obvious reason for more than one bank being there. The fiat money from Madrid must have been propping the banks up.
Thank heavens for Paul Marks bringing some sanity to this thread!
My impression is that Farage is handicapped by 2 irrational attitudes: the eagerness to throw at the EU anything that MIGHT stick: Keynesian or Austrian; and deep in his psyche the Keynesian delusion that there is such a thing as a free lunch, ie if only the eurozone were to break up, the Greek debt would take care of itself.
Having said that, Plamus has half a point: low euro interest rates had a lot to do to with Spain’s (and Ireland’s) housing bubble. However I believe that Spain’s unemployment was high even during the housing boom.
Most important, housing bubbles have little to do with the crises in Greece and Italy. I suppose that Greek government debt would not have grown so big so fast, if the Greek gov could not borrow at the same rate as the German gov: hard to say what would have happened, but the experience of Argentina and others suggests that having your own currency does not prevent sovereign default.
Anyway, it was the Greeks who wanted to join the euro: the Germans did not want them, something that Farage and Dan Hannan conveniently forget.
Mr Ed and Snorri Godhi: it’s true that Spain’s unemployment was high to begin with (see here) – averaging close to 15% between 1986 and 2007. This is why I was careful to state the monetary policy was a factor, but by far not the only factor.
Plaumus: fair enough; but, without getting personal, just as an intellectual exercise (and please note that, following your advice, i consumed your comment with alcohol) let me point out 2 flaws in your position:
First, had Spain remained outside the eurozone, there is no guarantee that the Spanish central bank would have kept interest rates high enough. Central banks letting housing bubbles inflate is not an unknown phenomenon, particularly in the UK.
Second, if a case can be made that Spain & Ireland should have remained outside the eurozone to prevent their housing bubbles, then a case could also be made that California & Florida should have left the US currency union, in order to prevent their housing bubbles.
Plamus – if you say that European Union Cental Bank (ECB) policy was (and is) too lax, then I agree with you.
But that is not what the “anti austerity” people are saying – they are saying that if only the ECB had produced yet more money (from nothing) all would have been well. And these nutcases do not just include “anarchist” protestors, it also includes people who work for the British Daily Telegraph.
Alternatively we have the “leave the Euro and….” establish a hard currency?
Oh no – it is “leave the Euro and DEVALUE…..” more “print more money and we will be richer”.
As for the bankers – agreed let them go bankrupt (and the “depositors” find out that money given to bankers, for interest, is LENT OUT – there are no interest bearing “deposits”, the whole concept of an interest bearing deposit is impossible – the word “deposit”, in this context, is just flat wrong).
However, remember Mr Brown (and so on) did not love the bankers – he loved the TAX REVENUE that he was counting on getting from them. There was no other way of making the sums add up – the sums of the VASTLY EXPANDING Welfare State (in Britain and just about everywhere else) needed (desperatly needed) the tax revenue from the profits of credit bubble banking. Pity those profits are, in the long term, magic fairy dust and moonbeams.
However, I repeat, I utterly oppose the European Union – and always have.
So I will (if still around) have hard questions for the candidates of the European Union elections next year.
I do not dislike Bulgarians and Romanians – I taught some Bulgarians when I was at St. Peter’s Independent School in Northmapton, and one of the people I work with at Wicky park is a Romanian (a kind and decent person). So as the UKIP leaflet for the County Council elections here was all about how terrible having people from Bulgaria and Romania in Britain would be (not something I was aware that Northamptonshire County Council had any powers over – what are we supposed to do, set up check points at the County line?) I am not wildly interested.
However, I do hate the European Union – so (should I still be about) in the European Union elections next year…..
Paul Marks,
Fairy dust and moon beams are real other wise there’d be massive debt
Reginal – yes you are correct.
It is fortunate that magic fairy dust is real – otherwise we would indeed by massive (and ever INCREASING) debt.
You know who Farage sounds like, with his bluntness? Winston Churchill, warning the Commons about Germany and Italy during the 1930s.
Is due diligence at UK polling places as bad over here as it is in most U.S. states? Because if it is, I’m flying over there to vote for Farange/UKIP about 20-30 times.