We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
|
They said it would never be agreed. Then they said it would never be launched. Then they said it would fail. When it was a success, the euro-haters still insisted that the single currency was a recipe for economic chaos and political instability. The phobes are proving to be wrong again. At a time when so much of Europe’s political leadership is in flux, the single currency is the steadying point in an uncertain and worrying world.
Imagine that the recent turbulence on the continent had occurred when Europe still traded in pre-euro currencies. What would have happened to the French franc when neo-fascist Jean-Marie Le Pen forced the Prime Minister to quit? The franc would have plunged. What would have happened to the Dutch guilder when an anti-immigration party with a dead leader impelled itself into government? The guilder would have plunged too. Before a German election too close to call, even the stolid old mark would be gyrating. And instability in currency markets would be fuelling even more political chaos: a vicious, downward cycle.
That this has not happened is thanks to the euro. The single currency has taken all this political upheaval in its calm stride.
– From an anonymous editorial in the Observer headed “A tolerant euro”.
From 2002, in case you were wondering.
He wastes no time in twisting the knife of truth in this thrillingly irreverent talk. No, he probably will not ever be invited back.
O’Leary’s conference bio should have foreshadowed to organizers that they would not be getting the traditional, polite, boring PowerPoint presentation.
I enjoyed this thoughtful article in the Telegraph by Ronald Stewart-Brown on the ramifications of Britain’s leaving the EU. He seems to think it wouldn’t be too bad because an acceptable trade agreement would be fairly easy to come by. As he says:
We could negotiate at least as good access to other EU services markets as we have at present. We would no longer need to contribute towards the excessive levels of trade-distorting agricultural subsidy other EU member states dish out under the Common Agricultural Policy.
Personally, I wouldn’t be too sure about that – I think we could be in for a fair amount of vindictiveness. But that’s by the by. My real question is whether we need or, indeed, should want trade agreements at all. After all, if we can’t sell to them, how will they be able to sell to us?
One of the main arguments made in favour of Britain’s continued membership of the European Union is that such membership is the only way Britain can exert “influence” over European Union decision making. If we are on the outside “we” (whatever that might mean) will be ignored. So, goes the argument.
I suppose this presupposes that British influence is a “good thing”, something I find rather surprising because for many euro-federalists it seems that one of the primary attractions of the EU is its un-Britishness. But I digress.
Assuming they are being honest the question has to be: is it true? Do you have more influence by being inside the tent or outside?
There are some pretty compelling counter-examples. I think we can agree that Britain had much more influence by being outside Nazi Europe than inside. Ditto Britain and the Soviet Empire. The American War of Independence seems to have been a spectacular example: improving life both in the United States and the British Empire – by warning the British of the likely costs of being unduly oppressive.
But there are examples from other walks of life. Does anyone seriously think that Steve Jobs or Bill Gates would have had anything like the impact they have had by being corporate insiders?
A lot of this assumes that Britain is in the right. What if she’s not? What if Britain is wrong? Well, that’s fine too. If we discover that the EU is right that’s fine. All we have to do is to adopt EU policies. There’s no need for membership.
All of which rather puts me in mind of something that Natalie Solent wrote a few years ago, picked up here by Brian. The world needs diversity.
There’s another part to this that bugs me. To have influence pre-supposes disagreement. You can’t have influence over a decision if you and every other party to it already agree. And if there is disagreement that implies that influence can only be bought at the price of others going against their perceived interests. Now, that’s all very well if you’re dealing with a bunch of tribesmen who don’t have machine guns but in the case of Europe you’re not. You are dealing with countries that are just as modern and as powerful as you are. If you succeed in exercising your “influence” and by doing so make them go against their perceived interests that is at very least going to cause resentment and probably lead to some continental “influence” against your perceived interests.
Oh, and Happy New Year, by the way.
Ten years ago today a Guardian headline read Euro lobby demands stronger lead.
Lord Heseltine effectively accused Mr Blair of a lack of nerve as he dismissed the government’s five economic tests as a “protective barrier” behind which it could “cower in order to have apparently intellectually defensible reasons for putting things off”.
On the next day, 1 January 2002, the same newspaper reported on the launch of the Euro.
The mood was uniformly upbeat at parties, pageants and ceremonies bidding farewell to once-treasured marks, francs, pesetas and lire.
“Our countdown is leading towards a new era,” Wim Duisenberg, the Dutch president of the European Central Bank (ECB), declared in Frankfurt. “By using euros, we will give a clear signal of the confidence and hope we have in tomorrow’s Europe.”
On a day of highs, Gerhard Schröder, the German chancellor, hit the highest note. “We are witnessing the dawn of an age that the people of Europe have dreamed of for centuries: borderless travel and payment in a common currency,” he said in a new year message.
Mr Prodi marked the change by buying flowers in euros, not schillings, on a visit to Vienna. And in remarks that will alarm a British government watching uncomfortably from the sidelines, the former Italian prime minister pledged that the arrival of the euro in people’s pockets would lead “ineluctably” to more economic coordination – the great fear of sceptics.
Lest anyone be tempted to gloat, here is a final quote, this one dating only from a month or two ago, from Patrick Crozier of this parish:
How to stop worrying about “contagion”
Just remember that every country in the Western world already has the disease.
It’s been pretty quiet here today, and all the things I’m am personally working on need more working on before they’re ready. But, if it’s true that a picture is worth a thousand words, well, here are a thousand words:
I found this at the top of a piece by Daniel Hannan about how Britain might just be being pushed out of EUrope and back into the Anglosphere.
I won’t be holding my breath, but I have long thought this to be an attractive idea.
“Yes indeed, Britain is on the outside: left out of this idyll of anti-competitive regulation and tax harmonisation. I can remember when the greatest Eurosceptic nightmare was a “United States of Europe”. They should be so lucky. The United States of America has nothing like this ferociously imposed central control over the budgets of its member states. Nor does it require tax harmonisation among them. The states of the American union have independent tax systems: apart from federal income tax, the taxes that US citizens pay are determined by the states they are in. Some of those states have high property and death taxes – others (like Nevada, where the revenue from gambling pays for almost everything) have low ones. Some have sales taxes and specific duties which others do not. Hence the great American tradition of driving across state lines in order to buy cheaper alcohol.”
– Janet Daley.
I cannot claim to grasp much of the detail of all the drama now surrounding the EUro. This photo, taken by me yesterday, captures the feeling of it all quite well:
Click to get that bigger and more legible.
Is all this drama being cranked up to enable Cameron to take the credit from us Brits for bollocking up the Euro, and simultaneously to enable everyone else in EUrope to blame us? Just, as Americans say, askin’.
One little titbit of news that does strike me as particularly interesting is this, in the Wall Street Journal, about how various governments are quietly pondering EUro-alternatives. At the very least, someone at the Wall Street Journal is asking about alternatives.
It all makes me think of those bridges that Julius Caesar burned, so that his army then knew that they would either fight and win, or perish. Except that this time, various parts of the army are nipping back to the various rivers that they just might be wanting soon to be retreating across, and are quietly building bridges. Just as burning bridges changes the game, so does building them. Even thinking about building them changes things.
There is something about this story about bank debt buybacks that I don’t quite understand, although I have only had two cups of coffee as of the time of writing:
“European banks are turning to buying back their own debt in order to raise some of the billions in extra capital required by regulators. At least six major banks have launched debt buybacks in the last two weeks and investment bankers say more are likely.”
Okay, so if a bank has debt – ie, others are lending it money – and the bank buys back, or in other words, pays off some of that debt, like paying off a credit card, say, how is this raising capital? The bank is presumably paying the debt off with, er, what? Fairy dust?
“In Lloyds’ case, it will exchange bonds previously issued for new instruments that are compatible with new regulations. The move allows lenders to book profits and reduce the stock of non Basel III capital on their books without issuing new equity or offloading assets.”
This is not very clear. What is the defining characteristic of “Basel III capital” in this case?
Finally we get a glimmer of how this actually works:
“The capital raised in this way is likely to be in the hundreds of millions. It boosts earnings by realising “own credit” gains that are otherwise purely theoretical. The market price of banks’ debt has fallen dramatically in recent weeks, which enables banks to buy back their debt for an amount above the market price but below the cash they raised by selling the instruments, booking a profit.”
Now I understand – I think.
As usual, the CityAM publication has a blisteringly good item on the Eurozone’s latest absurdities today. It is become my daily morning read. The fact that several of its writers are friends and acquaintances is, of course, purely coincidental.
Paul Krugman:
“Although Europe’s leaders continue to insist that the problem is too much spending in debtor nations, the real problem is too little spending in Europe as a whole.”
Let us fisk this:
“The story so far: In the years leading up to the 2008 crisis, Europe, like America, had a runaway banking system and a rapid buildup of debt. In Europe’s case, however, much of the lending was across borders, as funds from Germany flowed into southern Europe. This lending was perceived as low risk. Hey, the recipients were all on the euro, so what could go wrong?”
Nice piece of snark, which I do not demur from.
“For the most part, by the way, this lending went to the private sector, not to governments. Only Greece ran large budget deficits during the good years; Spain actually had a surplus on the eve of the crisis.”
That may be true. I have not checked. However, the fact that Spain’s public finances went down the toilet so fast does not quite suggest that the Spanish public sector was a model of mean-minded prudence.
“Then the bubble burst. Private spending in the debtor nations fell sharply. And the question European leaders should have been asking was how to keep those spending cuts from causing a Europe-wide downturn.”
No, they should have been facing up to the fact that a vast number of mal-investments were caused by a decade of under-priced credit, and that there was no way that such a build-up of bad investments can be unwound painlessly. Seeking to hold off the pain by increasing public spending (and hence scaring the hell out of the global bond market) is hardly likely to achieve the desired effect.
“During the years of easy money, wages and prices in southern Europe rose substantially faster than in northern Europe. This divergence now needs to be reversed, either through falling prices in the south or through rising prices in the north. And it matters which: If southern Europe is forced to deflate its way to competitiveness, it will both pay a heavy price in employment and worsen its debt problems. The chances of success would be much greater if the gap were closed via rising prices in the north.”
That may be true in crudely political terms; after having enjoyed the fat years, those who have done so are not likely to enjoy a lean period. However…
“But to close the gap through rising prices in the north, policy makers would have to accept temporarily higher inflation for the euro area as a whole. And they’ve made it clear that they won’t. Last April, in fact, the European Central Bank began raising interest rates, even though it was obvious to most observers that underlying inflation was, if anything, too low.”
Well, it seems a bit glib to assume, as Keynesians like Professor Krugman do, that the inflation will prove to be temporary… Riiiight… One key problem for the eurozone, as he ought to know, is that labour markets in much of the region are so heavily regulated that getting a meaningful adjustment in wages and prices is hard, and yet this has to happen if countries such as Greece and Germany are to co-exist under the same currency area without strife. The same issue, of course, would apply if the whole region were to adopt, say, an inelastic system of real money instead of fiat money issued by a central bank or banks.
Another point for Professor Krugman to remember is that in some member nations, such as France, there has been double-digit percent unemployment for the young long before anyone had heard about sub-prime or credit crunches. And Europe’s record for wealth and job creation, compared to that of the US prior to the crunch, has been and remains lamentable.
There seem to be lots of people out there who think the euro is about to collapse. They talk about Greece or Italy leaving or of Germany leaving or the creation of ‘hard’ and ‘soft’ euro zones. I beg to differ.
Let me explain. There is one thing that people in the Anglosphere often fail to understand: euro-federalists are euro-fanatics. They (the euro-fanatics) seriously believe that should the European Union fail or take a step backwards or even stutter, then Europe would more or less instantly be plunged into war.
Now, us sceptics might ask why it was that there was no war between 1945 and the founding of the European Community (1958, if I recall correctly) or why, if a European Community was all that was needed to preserve the peace up to 1992, it was necessary to create the European Union, but we would be wasting our breath. This is not something that has anything to do with logic or reason. Euro-fanaticism pretty much took over where religion left off.
When push comes to shove nothing else matters. So, when Germany’s politicians are given a choice between the breakup of the euro and a Weimar-style hyperinflation fueled by the European Central Bank printing press, they’ll choose the hyperinflation. Inflation at 20%, 200% or 2000%? It won’t matter: they’ll do it.
And that is the choice they will be given. The PIIGS: Greece, Portugal, Ireland, Spain and Italy are bust. They cannot pay their bills. In itself this would not be a problem. As far as the European project is concerned these countries are expendable. France, however, is not. France is absolutely central to the project. After all, without France there would be no one to go to war with. French banks have lent enormous sums to the PIIGS. If the PIIGS go bust (possibly only even one of them) France’s banks go bust. Now you and I might think “serves ’em right” or “well, that’s how capitalism creates wealth: by weeding out loss-making enterprises” but that’s not how the euro-fanatics think. They are no less wedded to the theory of ‘too big to fail’ than Hank Paulson – the US Treasury Secretary who bailed out US banks in 2008. So, France’s banks will be bailed out. But France can’t afford to do this. So, it will have to print money. But France can’t print money. So, it will have to get the eurozone to do it instead. Enter the ECB. Enter hyperinflation.
The good news is that hyperinflations can’t go on forever. At some point Europe’s hyperinflation will end but it will end in different countries at different times. The different times will dictate that there will, in the end, be a euro breakup, but the hyperinflation will happen first. We just have to hope that the breakup of the euro and possibly even the EU doesn’t trigger the very war it was designed to prevent.
“For what it’s worth, I have yet to meet a British eurosceptic who is enjoying the economic turmoil on our doorstep. It is plainly in our interest that the eurozone-which takes 40 per cent of our exports, and comprises our allies and friends-should flourish. That’s precisely why we are alarmed at the readiness of eurocrats to sacrifice their peoples’ prosperity so as to keep their monetary union together. Not that Norman Davies is much interested in what eurosceptics actually think. One of the oddities of the whole debate is that euroenthusiastic commentators who are quick to spot prejudice in others when it comes to racism, sexism or xenophobia are quite unable to detect it in themselves when it comes to people who don’t share their Weltanschauung. (By the way, Professor Davies, one uses nouvel before a masculine noun beginning with a vowel – le nouvel an, but le nouveau franc. When loftily dismissing people as anti-Europeans, it’s a good idea to get your own French right.)”
– Daniel Hannan, MEP, having a go, among others, at the historian Norman Davies.
|
Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
|
