Greek bonds and shares: What does their decline mean for Europe? – Interview with Jorge Nascimento Rodrigues for EXPRESSO

euro crisisThe spectre of Greek contagion seems to be returning to the Eurozone. At least this is the fear that I sense by talking to financial journalists across Europe. In this interview with Jorge Nascimento Rodrigues (for EXPRESSO) I argue that: “The Euro Crisis never went away. What happened was that Mr Draghi’s skillful interventions in the summer of 2012 suppressed the crisis in the bond markets but, at the same time, pushed it deeper into the foundations of the real economy. It was inevitable that, as the crisis was wrecking these foundations (with deflationary forces, desperately low levels of private and public investment and increasing debt to GDP ratios in the Periphery), it would resurface in the bond and equity markets. It does not matter whether the trigger was Greece, Portugal or Italy. What matters is its inevitability.”

You can read the interview as published in Portuguese here, or in its original (and longer) version below. Continue reading

Centralisation-Without-Representation: A reply to Frances Coppola, Simon Wren-Lewis and Niall Ferguson

euro crisis[This post was later published by Open Democracy]

Behind the European Union’s official ‘line’ that the worst of the Euro Crisis is behind us, a flurry of proposals for institutional changes reveal a deep-seated anxiety about the Eurozone. Indeed, in recent weeks, even the German finance minister, Mr Wolfgang Schäuble, went public with an op-ed in the Financial Times (1st September 2014, co-authored with Karl Lamers), presenting a proposal for a Eurozone Parliamentary chamber that would legitimise, and stand behind, a new office of Euro ‘Czar’ with the capacity to veto member-states’ budgets.[1]Screen Shot 2014-10-03 at 4.57.39 AM

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Frances Coppola and Simon Wren-Lewis on the ‘Modest Proposal vs Austerian Federalists’

Screen Shot 2014-06-11 at 4.02.33 PMIn Whither Europe? The Modest Camp vs the Federalist Austerians James Galbraith and I attempted to chart the evolution of various plans to save the Eurozone. In that survey, we juxtaposed a Modest Camp (that includes our own Modest Proposal), whose philosophy is to promote a minimalist agenda for stabilising the Eurozone and ending its socio-economic crisis before Europe’s future can be discussed cooly and properly, against federalist plans (like those of the Piketty and Glienecker Groups) for political union. Our argument (also augmented here) was that the prescribed federalist moves are, by definition, austerian in logic and, thus, ultimately detrimental to Europe’s integrity and even its… soul.  Most recently, Frances Coppola and Simon Wren-Lewis, at the behest of Open Democracy (who published our original paper), responded to our musings. Here are their responses:

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Mr Juncker should look to an EIB-ECB alliance, not to the ESM

JunckerJean Claude Juncker had a good idea but looked in the wrong place for funding it. His good idea was to promote a sizeable investment program (€300 billion) that would help Europe end years of crisis, stem deflation and return the continent to growth. Unfortunately, Mr Juncker thought it a good idea to tap the European Stability Mechanism’s unused borrowing capacity in order to fund his investment program. Soon after putting forward this idea, Germany smacked it down. Why was Mr Juncker badly mistaken to suggest the ESM as a funding source? And what should Mr Juncker have proposed instead? Read on…
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Revisiting the Modest Proposal: Q&A with a sceptic – Fall 2014 version (*)

MP4.0 in FrenchAs Europe seems resigned to the perpetuation of the Euro Crisis, with its authorities in a state of permanent paralysis (with only the ECB trying, and failing, to stem the debt-deflationary vortex), it seems more pertinent than ever to keep the debate on the Modest Proposal going. If only as a reminder to the powers-that-be that there are immediately implementable policies whose implementation would stem the crisis without breaking any of the existing rules, without having the core countries pay one euro for the debts and losses of the periphery, and without any further diminution of national sovereignty. Can all this be possible? Is the Modest Proposal genuinely capable of delivering such much-needed relief at no cost and without bypassing any of the existing rules? We, the authors of the Modest Proposal, think so. Of course, sceptics have every right to pose questions and challenge our hypotheses. In this post, one such sceptic asks pertinent, probing questions about each of the Modest Proposal’s four policies. Which we do our best to answer. [(*)For earlier Q&As on the Modest Proposal, raising many of the same issues, click here and  here.) Read on… Continue reading

The Global and European Crisis revisited: An audio from the launch of the Global Minotaur in Finland

Screen Shot 2014-08-22 at 12.03.50 PMOn 25th August, I had the honour of presenting the Finnish edition of The Global Minotaur to a splendid, and welcoming, audience at the University of Tampere. In this post you can listen to an interesting exchange on the state of the global and European economy, why Finns (along with citizens of other European ‘surplus’ member-states – but even more so than most others) ought to be very, very angry with their politicians (over the bailouts and overall handling of the Euro Crisis), on China’s future role etc.  Continue reading

Is Mr Draghi’s ‘turn’ significant? Is Germany ‘turning’? Can Europe escape its ‘iron cage’? Plus, on the Scottish currency plans – on Boom-Bust RT-tv

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[Jump to 3'20''] Erin Ade, RT’s Boom-Bust presenter, interviewed me yesterday on the state of Europe. We talked about the significance of Mr Draghi’s recent ‘intervention’, on whether Germany is about to change course, touched upon my article “Can Europe be saved without turning into an iron cage?” and briefly delved into Scotland’s proposal for a currency union with England if the Scots opt for independence on 18th September.

CAN EUROPE ESCAPE ITS CRISIS WITHOUT TURNING INTO AN IRON CAGE?

ON THE MODEST PROPOSAL’S POLITICAL, CONSTITUTIONAL AND ETHICAL DIMENSIONS

Rembrandt Europa[Image: Rembrandt's 'The Abduction of Europa']

This article is a sequel to an earlier piece entitled ‘Why is Europe not coming together in response to the Euro Crisis?’ and is best read in conjunction with this article (co-authored with James K. Galbraith) that compares our Modest Proposal for Resolving the Euro Crisis with alternative proposals for defeating the Euro Crisis. In what follows below , I argue that, as things stand, ‘political union’, ‘more Europe’, calls for a ‘Eurozone economic government’, or for a ‘Euro Chamber’ within the European Parliament, are not preludes to a democratic federal Europe. Instead, they are steps towards a postmodern European feudalism that is, in fact, the very antithesis of a democratic federation. The article concludes with an analysis of why our Modest Proposal offers Europe a rare chance to prevent the creation of a European iron cage in which what is left of our democracies must suffocate. Unlike all moves that are currently heralded as ‘baby-steps’ towards federalism, the Modest Proposal’s emphasis on ‘Europeanised Decentralisation’ is perhaps Europe’s best shot at a future consistent with the basic principles of a constitutional democracy.

 

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WHY IS EUROPE NOT ‘COMING TOGETHER’ IN RESPONSE TO THE EURO CRISIS?

EU disunityIn this article I ask a question on everyone’s lips: Almost everyone agrees that the Eurozone was a one-legged giant; a monetary union lacking a political ‘leg’ to stabilise it. If so, why has the Euro Crisis (which surely strengthened that view on the back of its ferocity and durability) not strengthen the hand of the federalists? Of those who were, supposedly, waiting to pounce upon any opportunity to create a United States of Europe? (This article was compiled from extracts of a keynote speech I have on 25th August 2014 at the University of Tampere, Finland, in the context of a conference entitled Power, Knowledge and Society.)   Continue reading

Austerity comes to Australia – OpEd, WHITE PAPER, ABC Radio National

Screen Shot 2014-08-22 at 11.18.49 AMFollowing the passing of an Austerity Budget by the Australian Federal Government, the editors of White Paper (ABC Radio National’s online magazine) commissioned me to write an OpEd on what lessons Australia should learn from the implementation of similar austerian fiscal policies in Britain and the Eurozone.

You can read my article by clicking here, or simply by reading on…

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A European New Deal financed by the EIB, with ECB QE-backing, is the optimal policy: Now recommended also by W. Münchau

Faced with deflationary forces in its core, and a lasting depression in the periphery, the Eurozone requires a major investment drive. One of the Modest Proposal’s policy recommendations is that the European Investment Bank (along with the European Investment Fund) embarks upon a massive investment drive (up to 8% of Gross Eurozone Product) without any national co-funding. These investments could be funded through 100% issues of EIB-EIF bonds, with the European Central Bank purchasing, in secondary markets, sufficient quantities of these bonds to ensure that their yields stay well below 1.5%, thus making a European New Deal not only possible but also self-financing – and off the books of national budgets. Continue reading

James K. Galbraith on The Modest Proposal, Europe and Greece

JamieIn this Q&A with a Greek journalist, on the occasion of the launch of the Greek translation of the Modest Proposal, James K. Galbraith argues that Italy and Greece can play an important role in changing the terms of the European ‘conversation’, so that rational, minimalist solutions like the Modest Proposal can have a chance of saving the Eurozone. He also explains that the Greek implosion was always a political choice by Berlin and Frankfurt; and that if the troika squeeze is lessened, it is due to SYRIZA’s success – not to the success of the austerity program. Finally, he answers an important question on the Chinese government’s investment strategies in Greece and in the rest of the Eurozone. 

“The Modest Proposal requires a change of thinking, not a change of European Treaties.”

“If Greece has been declared a success, it is largely due to the success of SYRIZA – not of the austerity program”

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The Modest Proposal (in Greek) – presented tonight, in Athens, by Alexis Tsipras, Yanis Varoufakis & George Krimpas

Πρόσκληση στην βιβλιπαρουσίασηIf you happen to be in Athens tonight (Tuesday 17th June), come to the Byzantine Museum (2 V. Sofias Avenue) at 8pm for the launch of the Greek translation of our Modest Proposal for Resolving the Euro Crisis 4.0. It will be presented by Yanis Varoufakis (who will speak to the proposal itself), George Krimpas (who will place it in a broader context) and Alexis Tsipras (who will speak to it as Leader of the Official Opposition and, primarily, the European Left party’s candidate for the Presidency of the European Commission). (Unfortunately no translation will be available.)

 

A proposal for Federal Unemployment Benefits in the €-Zone: By EU Commissioner László Andor

LaszloLászló Andor, European Commissioner for Employment, Social Affairs and Inclusion, has recently given a speech (at the Hertie School of Governance, Berlin, 13 June 2014) entitled Social dimension of the Economic and Monetary Union: What lessons to draw from the European elections? It is a good speech, well worth reading carefully, that outlines a proposal for a federal-like Eurozone-wide unemployment insurance scheme. While I have my concerns regarding its feasibility, and in particular the notion of fiscal transfers without democratically elected Eurozone federal insitutions, Mr Andor’s speech marks a third category in our classification of proposals to save the Eurozone: Federalist Anti-Austerians. For Commissioner Andor’s speech… Continue reading

Whither Europe? The Modest Camp vs the Federalist Austerians – in Open Democracy

Screen Shot 2014-06-11 at 4.02.33 PMby JAMES GALBRAITH and YANIS VAROUFAKIS

Proposals for resolving the Eurozone crisis, and re-designing its architecture, are multiplying – especially as evidence mounts that the crisis is continuing, despite all the official announcements of its end. Our Modest Proposal  was the first to have been tabled, along with Breugel’s Blue Bond Proposal, back in 2010. In this review article, J.K. Galbraith and I argue that, while there is now a plethora of proposals for ‘fixing’ the Eurozone, there are only two competing camps. One is our ‘Modest Camp’, whose policy recommendations would re-configure the Eurozone immediately, using existing institutions, and without cumbersome federal moves that would legitimate a permanent Austerity Union. The other being, what we described as, the Federalist Austerians’ Camp.  Click here for the OPEN DEMOCRACY site

Europe’s Crisis and the Rise of the Ultra-Right is the Left’s Fault

Nazis riseEurope’s appalling  handling of a euro crisis that was always going to happen, given its faulty architectural design,[1] has triggered an electoral result in the recent European Parliament elections that is a clarion warning that Europe is decomposing. And it is decomposing precisely because of the Left’s spectacular failure to intervene both during the construction phase of Europe’s economic and monetary union and, more poignantly, after the latter’s crisis had begun. Continue reading

Italy, Greece and Europe after the European Parliament elections: An interview with Alessandro Bianchi

ITALY_GREECEHow the current policies of the Brussels-Berlin-Frankfurt triangle are based on a propaganda campaign reflecting continuing Crisis Denial and why they constitute an attempt to create a new financial bubble  – Why SYRIZA is a pro-European progressive party, in contrast to UKIP and Ms Le Pen’s FN – What should we expect of the new Italian government and why there is important room for an alliance between Italy and a SYRIZA-led Greek government. In conversation with Alessandro Bianchi of L’Antidiplomatico (click here for the Italian version) Continue reading