Peaches, the twenty-first century torchbearer of feminist punk, just released a video and track in support of Pussy Riot, the Russian female anarchist art group that has become the symbol of political oppression in Russia under Putin.
Unlike in the case of something like Kony 2012, this video is not a gratuite kind of protest. The whole point of Pussy Riot, and the wider protests in Russia of which it is a part, is the embeddedness in social media, and performing symbolic acts against the regime. That’s reflected in this ‘Free Pussy Riot’ video, which consists of footage sent in by Peaches fans.
Pussy Riot – whatever else it is – is also really an example for those Western hipster, a-political, “ironic” bands and the people who wallow in it (not excluding myself here). Punk, youth culture here once was a form of actual protest against the powers that be. That aspect of youth culture, thanks to the consumerist hipster, is long gone; grunge probably was the last vestige of it.
The three girls of this group, however, are literally risking everything. By staging an act of protest against spy-dictator Putin in an Orthodox cathedral, they have incurred the wrath of the most powerful institutions in the country. Pussy Riot is facing years in a Siberian prison camp – the worst imaginable place you can be in. This must have known this was going to happen, even though it’s an outrageous and thoroughly undemocratic and unjudicial sentence.
Throughout their trial, in their statements Pussy Riot have courageously pointed at the creeping dictatorship, the obliteration of the separation between church and state, and the squashing of free speech and right to demonstrate in Russia. They’ve even done this in an artful way, declaring themselves heirs to 1920s and 1930s absurdist collectives, and standing in a tradition of ‘last statements’ in show trials like dissidents of the Stalin and Soviet era.
As a political essay, the closing statement by Yekaterina Samutsevich, member of the group, is superb:
Why did Putin feel the need to exploit the Orthodox religion and its aesthetic? After all, he could have employed his own, far more secular tools of power—for example, the state-controlled corporations, or his menacing police system, or his obedient judiciary system. It may be that the harsh, failed policies of Putin’s government, the incident with the submarine Kursk, bombings of civilians in broad daylight, and other unpleasant moments in his political career forced him to ponder the fact that it was high time to resign; that otherwise, the citizens of Russia would help him do this. Apparently, it was then that he felt the need for more persuasive, transcendental guarantees of his long tenure at the pinnacle of power. It was then that it became necessary to make use of the aesthetic of the Orthodox religion, which is historically associated with the heyday of Imperial Russia, where power came not from earthly manifestations such as democratic elections and civil society, but from God Himself.
So, what these women have achieved is exposing the coming-into-being of dictatorship in Russia. They’ve shown that to the world. For that – even though Putin is probably feeling the heat and is already saying that the group shouldn’t be treated “too harsly” – they’ll probably end up in jail.
Here’s a great example of the stupidity of public officials in many countries – the United States, the United Kingdom, the Netherlands – when it comes to drugs, and more specifically, marijuana policy.
In the US, marijuana is “classified” as being as risky as heroin and meth for a person. So, the Congressman above keeps asking the top administrator of the Drugs Enforcement Agency (DEA) a simple question: are heroin and meth more dangerous and addictive than marijuana? Watch the reaction of the administrator as she keeps selling the “official” answer.
One wonders how long these fact-free policies can go on. In the Netherlands, kids are now on the streets selling marijuana, because of a government-enforced registration of marijuana smokers. We have, among others, the Christian Democrat party to thank for that. The smaller Christian Union is even proposing, out of pure religious zeal, to abolish the distinction between ‘soft’ and ‘hard’ drugs, which will result in the same idiotic charade as witnessed in the video above.
I keep coming back to the same question: what goes on in the brains of these people? If anybody has an answer, I’ll be glad to hear it.
Rightwing political activist, televangelist and former presidential candidate Pat Robertson (81) – a guy who is more conservative than the Dutch political parties of VVD, CDA, PVV and SGP combined times two, squared – has yesterday spoken out in favor of marihuana legalization.
That makes mr. Robertson – a Southern Baptist founder of, among others, the Christian Coalition and the Christian Broadcasting Network (CBN), and 1988 Republican Party candidate – more progressive than the current cabinet in the Netherlands and the parties supporting them.
Well, join the club, Pat. You’re in good company, as former liberal conservative statesman Frits Bolkestein (VVD), is also an ardent support of marihuana legalization.
His argument is as clear as it is simple: treat marihuana the way we treat alcohol. Since marihuana is less harmful than alcohol, it couldn’t be more straightforward than that, could it?
Of the many roles Pat Robertson has assumed over his five-decade-long career as an evangelical leader — including presidential candidate and provocative voice of the right wing — his newest guise may perhaps surprise his followers the most: marijuana legalization advocate.
“I really believe we should treat marijuana the way we treat beverage alcohol,” Mr. Robertson said in an interview on Wednesday. “I’ve never used marijuana and I don’t intend to, but it’s just one of those things that I think: this war on drugs just hasn’t succeeded.”
Mr. Robertson’s remarks echoed statements he made last week on “The 700 Club,” the signature program of his Christian Broadcasting Network, and other comments he made in 2010. While those earlier remarks were largely dismissed by his followers, Mr. Robertson has now apparently fully embraced the idea of legalizing marijuana, arguing that it is a way to bring down soaring rates of incarceration and reduce the social and financial costs.
“I believe in working with the hearts of people, and not locking them up,” he said.
For his part, Mr. Robertson said he was “not encouraging people to use narcotics in any way, shape or form.” But he said he saw little difference between smoking marijuana and drinking alcohol, a longstanding argument from far more liberal — and libertarian-minded — leaders.
“If people can go into a liquor store and buy a bottle of alcohol and drink it at home legally, then why do we say that the use of this other substance is somehow criminal?” he said.
Mr. Franklin, who is a Christian, said Mr. Robertson’s position was actually in line with the Gospel. “If you follow the teaching of Christ, you know that Christ is a compassionate man,” he said. “And he would not condone the imprisoning of people for nonviolent offenses.”
”I want to denounce in the strongest possible manner the entire process that led to the signature of this agreement: no inclusion of civil society organisations, a lack of transparency from the start of the negotiations, repeated postponing of the signature of the text without an explanation being ever given, exclusion of the EU Parliament’s demands that were expressed on several occasions in our assembly.”
“As rapporteur of this text, I have faced never-before-seen manoeuvres from the right wing of this Parliament to impose a rushed calendar before public opinion could be alerted, thus depriving the Parliament of its right to expression and of the tools at its disposal to convey citizens’ legitimate demands.”
“Everyone knows the ACTA agreement is problematic, whether it is its impact on civil liberties, the way it makes Internet access providers liable, its consequences on generic drugs manufacturing, or how little protection it gives to our geographical indications.”
“This agreement might have major consequences on citizens’ lives, and still, everything is being done to prevent the European Parliament from having its say in this matter. That is why today, as I release this report for which I was in charge, I want to send a strong signal and alert the public opinion about this unacceptable situation. I will not take part in this masquerade.”
Vanwege grote workload en even grote onderbezetting hebben uw doorgaans zo kritische bloggertjes van LSD ernstig gefaald waar het gaat over ACTA -- het in geheime achterkamertjes zonder invloed van parlementen bekokstoofde internationaal-juridische verdrag via welke de copyright-industrie het vrije Internet aan banden meent te gaan leggen. En, bovenal, een elektronische surveillancestaat met permanente monitoring van Internetters (iedereen) aan te gaan leggen waar je U tegen zegt.
Het Europees Parlement -- om precies te zijn, 16 van de 736 Europarlementariërs -- is het laatste wat nog tussen ondertekening en implementatie van ACTA staat.
Daarom deze onbeschaamde re-post van een dringende oproep tot actie van GeenStijl, in samenwerking met D66-Europarlementariër Marietje Schaake. Ook overgenomen door Retecool, Sargasso en Bits of Freedom. Dit is collectieve burgeractie in het Internettijdperk, en wat de Amerikanen konden met SOPA en PIPA kunnen wij met ACTA:
Prima initiatief van Marietje Schaake, europarlementariër voor D66. Via reddit -- dat al eerder zeer succesvol actie voerde tegen copyrightbeschermende maatregelen die het internet aan banden proberen te leggen -- probeert ze internetters te mobiliseren om parlementsleden online te stalken om op die manier ACTA van tafel te krijgen. Waarom? Omdat door ACTA straks individuele F5′ers snoeihard aangepakt gaan worden. Lees maar in het verdrag (PDF) onder Sectie 5, digital enforcement. KIJK MAAR! En omdat een petitie ook maar een middeleeuws middel is dat eigenlijk geen zier helpt. Een ontploffende mailbox maakt natuurlijk veel meer indruk. Eens kijken hoe ze in Brussel en Den Haag reageren wanneer de machtige netwerkgeneratie uit woede massaal haar harige vuist online op tafel slaat. Het internet kan wel een beetje burgerlijke ongehoorzaamheid gebruiken. HIER ziet u wie er in het EP eigenlijk voor en tegen ACTA hebben gestemd. Dat is vooral handig wanneer de PVV voor de zoveelste keer probeert te spinnen dat ze heus wel tegen ACTA zijn, terwijl ze zich destijds gewoon ijskoud van stemmen hebben onthouden. Welnu, een lijst met mailadressen van EP-leden waar u uw grieven omtrent ACTA kunt droppen staat HIER. Eenzelfde lijst met leden van de Tweede Kamer vindt u DAAR. Probeer voor een keer de goatses en tubgirls thuis te laten. Een inhoudelijk verhaal waarom u ACTA niet ziet zitten werkt veel beter. Voor vragen kunt u Marietje natuurlijk ook zelf mailen op firstname.lastname@example.org. Met een beetje goede wil scharen meerdere partijen (we denken aan Bits of Freedom, De Piratenpartij en nog meer goedwillende blogs) zich achter deze actie en kunnen we dat verwerpelijke ACTA slopen. Power to the internets! ¡No pasarán! UPDATE: Mensen opletten: de politici die VOOR die motie stemden zijn TEGEN het ACTA-verdrag. Degene die TEGEN hebben gestemd zijn dus de villains die u moet mailbomben. Duidelijk zo? UPDATE: Website van EP heeft het zwaar wegens vermeende ddos-aanvallen van scriptkiddies. Hier en hier lijst met mailadressen. UPDATE: Solidariteit in de blogosfeer: Retecool & Sargasso doen mee. UPDATE: Ook Bits of Freedom sluit zich aan.
As a Member of the European Parliament (EP), I am concerned about the ACTA treaty in the international trade committee (INTA). Please find some information about the procedure of the ACTA treaty in the EU, especially the EP, below. You can reach me on Twitter via @marietjed66, where I will also post a message about this post.
The internet blackouts by thousands of websites last week in protest of the Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA) have raised lively discussions. Not only in the US but also in the EU the question is how to balance or reform copyright laws whilst preserving an open internet.
The success of the protests against SOPA and PIPA has also given the internet community quite a confidence boost. How will this development influence future legislative proposals? The Anti-Counterfeiting and Trade Agreement (ACTA) is the next controversial treaty which may be about to become law. This is an international trade agreement which aims to halt counterfeited products, but also affects the internet. Already massive protests have taken place on the streets of Poland against ACTA.
A wide range of NGO’s, scholars, civil society organisations, engineers, industry and activists have expressed concern about the impact ACTA will have on online freedom and freedom of speech. But there are also serious questions about access to medicine and the fact that ACTA may violate international law. Certainly, the lack of transparency of the negotiations has made it very difficult for both civil society and the European Parliament to monitor the drafting process.
The European Commission and Member States will sign ACTA on Thursday January 26th in Japan. However, the European Parliament has a decisive voice on ACTA. It can determine whether the EU ratifies the treaty or not. Ratification means the treaty will actually be enacted; the signature itself is not legally binding but expresses intent and agreement on the text.
The European Parliament has the decisive voice on ACTA and the INTA committee has the lead. Other committees will be developing their opinions on ACTA in the coming months. You can find some more information about the procedures and relevant committees on this official EP website
The 1st exchange of views on ACTA in the INTA committee is scheduled for either the 29th of February or the 1st of March. The committee will then most likely vote on the ratification of the treaty in April or May.
After that, the most important vote will be during the Strasbourg plenary session on June 11th to 14th, where all MEPs will be able to vote on ACTA. (Please note that these dates may change). If the majority of MEPs vote in favour of ratification ACTA will be ratified by the EU.
So what can we do to stop ACTA?
If you are concerned about ACTA, you can convince the EP to vote against ACTA. In November 2010 we proposed an alternative resolution on ACTA, which intended to take away the main concerns. It was voted down by a very slight majority,please see here (the red section represents MEPs voting against our resolution). As you can see, the difference is only 16 votes, out of 736 (or 754 as it stands now). Another text was then voted in favour, which said the Commission should carry on its negotiations.
If you are concerned about ACTA, contact MEPs (from your country of political party), especially targeting the ones who are in the committees who will vote on ACTA in the coming months. You can find their email addresses on the EP website. Perhaps it won’t have to come to a blackout!
I will organise a hearing in April, where parties that will be affected by ACTA can give their opinion. This meeting will be live streamed. If you wish to be informed about this, please send me an email: email@example.com.
I believe internet offers tremendous opportunities to bring makers of music, film and other cultural content closer to audiences at lower prices. However, while Europe offers the most attractive and diverse content in the world, much of it is locked behind fragmented copyright laws. Instead of focusing on enforcement, we must focus on reform, while keeping in mind that it is not the government’s job to preserve certain business models against the forces of the free market.
TL;DR: Important dates for ACTA in the European Parliament:
- 29 February/1 March: Discussion in international trade committee,
- April or May: Vote in international trade committee,
- 12, 13 or 14 June: Final vote in plenary (most important vote).
(Please note, all dates may be changed)
The ECB may not be issuing eurobonds or print money, but out of the public eye, they’ve definitely taken up a central role. They do this by providing banks with almost interest-free emergency capital. And those banks have come to the rescue of the governments that couldn’t sell bonds for very high interest rates a few months ago. So, as was argued for by a lot of people back then, the ECB, albeit not straightforwardly, has started to act like all other central banks around the world. Only they will not tell us this. And it seems that the eurozone now, unlike a month ago, is not teetering on the brink of collapse.
Throughout the month, countries caught in the eye of the European financial storm, including Italy, Spain and France, have repeatedly defied expectations, selling big batches of bonds to the public at interest rates significantly lower than investors demanded at the height of the euro crisis late last year.
The surprisingly successful auctions owe little to improving economic data around the region. On the contrary, many of the countries that use the euro as their currency appear to be confronting a renewed recession, and pessimism about their growth prospects remains abundant. Just last week, Standard & Poor’s stripped France of its coveted AAA rating for the first time in recent history and downgraded eight others.
Instead, most of the credit seems to go to the European Central Bank, which in late December under its new president, Mario Draghi, quietly began providing emergency loans to European banks — hundreds of billions of dollars of almost interest-free capital that the banks have used to come to the rescue of their national governments.
The central bank, based in Frankfurt, used typically understated and technical language to describe its actions, but it appears to have done what its leadership said throughout 2011 that it would not do: namely, flood the financial markets with euros in a Hail Mary attempt to make sure that the region’s sovereign debt crisis does not lead to a major financial shock.
Though on a smaller scale and in a subtler manner, it has in many ways taken a page from the United States Federal Reserve’s playbook for the 2008 financial crisis, which has been roundly criticized in Europe as a reckless bailout that risks setting off uncontrolled inflation. And, at least for now, the effort has worked. Spain’s 10-year bonds carry interest rates that hover around 5.5 percent, compared with 7 percent and higher in November, and Italy’s five-year bonds are approaching 5 percent, down from nearly 8 percent at their peak.
There have been moments before when European leaders declared the crisis contained, only to see it return with renewed fury. But the central bank’s incentives, combined with a push from the private banks’ home governments, seem to have convinced investors that this time may be different, and financial markets in Asia, Europe and the United States have responded with strong gains this year.
Yet another sign that the northern European conservative and liberal dogmatic creeds against using the ECB as a true central bank are not so widely spread outside their own little hub. Leaving ECB executive board member Lorenzo Smaghi said today that he doesn’t understand the “quasi-religious” discussions about letting the ECB use the money printing press, if necessary, just like every other central bank in the world does.
Note that Smaghi says that the ECB should do this only to combat deflation (and not to reduce unnecessary exposure to the financial markets). Yet it was already predicted a while ago that policymakers would increasingly try to give the ECB a more prominent role in solving the short-term crisis by framing it as an inflationary matter - which is in tune with the central task of the ECB. Also note that the ECB is increasingly pumping money into the tightening European credit system, to battle the credit squeeze.
European Central Bank Executive Board member Lorenzo Bini Smaghi said that policy makers shouldn’t shirk from using quantitative easing if deflation becomes a danger to the euro region.
“I do not understand the quasi-religious discussions about quantitative easing,” Bini Smaghi, who will leave his post at the end of the month, said in an interview published yesterday by the Financial Times. The ECB confirmed the comments. “It is appropriate if economic conditions justify it, in particular in countries facing a liquidity trap that may lead to deflation.”
Unlike the U.S. Federal Reserve and the Bank of England, the ECB has offset liquidity created by purchases of government bonds so that such operations don’t amount to quantitative easing that stokes inflation. ECB Executive Board member Juergen Stark told Germany’s Die Welt newspaper in an interview published today that the central bank doesn’t “have a mandate” for unlimited purchases of government bonds.
Growth prospects in Europe “have deteriorated” since September, U.K. central bank Governor Mervyn King said yesterday after a risk assessment by European officials. Stark, who resigned in September to protest bond purchases, said while the euro-region economy could shrink at the end of 2011, deflation threats are “significantly lower” than after the collapse of Lehman Brothers Holdings Inc. in 2008.
“Central banks are given a clear mandate, to achieve price stability, and the independence to achieve it through the instruments they consider most appropriate,” Bini Smaghi said. “If conditions changed and the need to further increase liquidity emerged, I would see no reason why such an instrument, tailor made for the specific characteristics of the euro area, should not be used.”
Quantitative easing “is implemented in the U.K. and U.S., where the central banks consider that there are risks of deflation and where the policy rate is constrained by the zero lower bound,” Bini Smaghi said. “This is currently not the case in the euro area because the ECB currently sees no risk of deflation.”
Instead of more bond purchases, the ECB has so far opted to grease the banking system with unlimited liquidity of up to three years, hoping financial institutions will lend the money on to companies and households. The institution loaned banks a record 489 billion euros ($636 billion) for three years on Dec. 21 to avert a credit crunch from the sovereign debt crisis.
With Kim Jong-Il gone (or Kim Jong the second, as Rick Perry calls him), everything related to the DPRK is all of a sudden hot again. But most stories are simply a repetition of what we already know. Not this one. You might remember Shane Smith, the reporter of the online video magazine Vice, who sneaked into North Korea a few years ago and secretly caught the whole trip on camera. In the documentary he showed he had balls of steel, but mostly it was a very black-humored film, in which the whole People’s Republic sharade was made fun of.
For their next North Korea-related project, Smith and his team have paid a visit to Siberia, where, on the border with China, thousands of North Korean laborers are working in huge logging camps. They are housed in camps which are copies of the work camps in their home country, fitted with North Korean-style living quarters, all the propaganda banners, indoctrination rooms, etc. They also wear their standard North Korean workers outfits. Basically, they are slaves, who are used by the Russian government to cut trees at the most remote and harshest locations in Siberia. They are forced to work there for years or even decades under the most arduous conditions. The Vice team travelled to a number of these camps and simply started filming and interviewing the North Koreans working there, being the first journalists to do so.
In the resulting documentary you can see how they are at first met with surprise, are then ousted by the North Korean camp leaders and Russian operators, and at the end are forced to sneak out of the country because they are wanted by the FSB (the modern version of the KGB). And it also involves a traincar filled with agressive antisemitic Russians on the Transsiberian Express, old remote abandoned Soviet cities, and local Siberian shotgun-waving mafia. Smith lives through all these dangers in quite a lighthearted manner, mostly because he and his cameracrew and translators are on a steady diet of wodka and beer. All in all, a must see film. Start with part 1 here:
Can’t say anything but agreeing completely. From the people at Tahrir square, Egypt and in Tunisia to those in Libya, Syria, Yemen and Qatar, from the 15-M movement in Madrid and Barcelona, Spain, to the Occupy protesters on Wall Street, New York, in London, Frankfurt and Amsterdam, to those now marching against Putin in Russia: whatever the cynics, ‘realists’ and conservatives say, 2011 has been the year of the democratic protester.
Let’s hope it continues - in the Middle East, in Russia, and the West - in 2012. It’s still more than necessary.
As I’ve blogged before, I’m kinda tired of writing about the eurozone debt crisis. The results of the once again ”crucial” European summit that starts today are fairly predictable: announcements of more, even radical, fiscal discipline and sanction mechanisms across the European Union (or the eurozone), a further integration of tax and labour market policies, and no hopes whatsoever for an expanded role of the ECB in the form of it acting as lender of last resort or as issuer of eurobonds. Everything that Germany wants, happens.
In other words: in order to please the financial markets, only one of the structural deficiencies of the eurozone is being addressed: the disparity in budgetary policies across member states. The other ones - the existence of separate bonds markets and the absence of a true central bank, which leads to Europe’s heightened exposure to the judgment of financial markets and credit rating agencies - are not addressed at all. All this because of Germany’s fear of inflation.
The European debt crisis is now starting to become a democratic crisis as well. This is happening on two levels. First, in order to please the financial markets, “reforms” and budget cuts are being imposed on southern European countries at huge social and economic costs without the population having any say in it. Elected politicians are removed not by elections or the people on the street, but replaced by so-called “technocrats” under pressure of the financial markets. Moreover, across the entire eurozone radically tightened fiscal discipline, which will have a huge bearing on social and economic policies, is being imposed without the population having any say in it; once again, to please the markets. The German, i.e. the conservative/(neo-) liberal policy solution for everything – fiscal discipline, budget cuts and market reforms - is imposed throughout the eurozone by Diktat.
Whether you like this particular economic policy package or not (I’m personally not against it), there’s no escaping the fact that the past months we’ve witnessed a huge shift in sovereignty from democracy to the market. Financial markets dictate what must be done; and it is reinforced by those policy-makers in charge who happen to walk in tune with those markets.
The second level at which democracy is under attack is in the transfer of powers from the national level to the European one. It is by now accepted that the only solution for the eurozone is a further federalization of fiscal, social and economic policies. The European Commission (EC) is likely the institution that will benefit the most from this. Yet, whether you are in favour of the European project or not, the EC is ultimately a technocratic institution; it is a super-regulator that issues “directives” and “regulations” to be imposed uniformly across member states without interference of national parliaments. The European Parliament (EP), the only European institution that is truly democratically legitimized (but only by a minority of voters), does not have the right of initiative; it is the barely legitimized EC that is the one policy ”motor” of the European Union. This situation will only be exacerbated by the current eurozone crisis.
In short, there’s a double crisis of democracy going on: one in the shift of decision-making power from the political sphere to the market, and a second in the transfer of powers from the national level to a barely legitimized European one. In between, the voice of the people is crushed. Particularly worrying is the talk, to be heard here and there, that “democracy” really is just one way to govern a country, that it was a nice experiment, but that it doesn’t really work in an age of globalized financial markets and much-needed technocratic European governance. Have we now really entered a 1930s-style “crisis of democracy”? Is the democratic principle itself being questioned?
To me, the need for a more unified Europe if the single currency is to be saved is clear. But the democratic deficit is getting painful. German solutions mean a half-hearted attempt to create a fully functioning economic zone, but an almost complete transfer of fiscal discretionary powers to an incompletely legitimized supra-European entity. Is that what we want? Do we have any say in that? In my view, the democratic level of the European Union is to be deepened if any of this is the result of current talks. This would mean a broadening of the powers of the EP to become a fully-fledged representative body with legislative powers, as well as finally some concerted effort on the part of European and national policy-makers to promote European democratic institutions amongst the populace. The ECB should also really be allowed to function as a central bank.
Otherwise, the result will be something we have now, but even more overbearing. A soft kind of technocratic regime, composed of an intricate byzantine web of committees, networks, councils and summits and a super-regulator, governed by one particular budgetary philosophy, all the while constricting national discretion to formulate policies, that is whipped from here to there by the financial markets. Even if this solution is, for now, accepted by those financial markets, I don’t think it will hold in the future. And there is no place for democracy in it either.
Yesterday and today, lots of ‘authoritative’ newspapers and journals once more published gloomy articles about the coming end of the eurozone, largely due to the perceived inaction of leading (German and other northern European, notably Dutch) politicians. Particularly their refusal to set up the ECB as lender of last resort and/or let it buy state bonds on large scale and/or let it issue eurobonds, and their continued insistence on austerity and budget cuts as the only “solution”, now leading such esteemed organizations as the OECD to condemn their inaction. France is threatened with a credit rating downgrade, as a matter of fact the entire eurozone is threatened with a downgrade, the stability fund doesn’t have nearly enough funds, and… oh well.
I’m getting kinda tired writing about this so maybe I’ll quit doing it, but here goes once more (my bet is on the end of the eurozone before New Year’s Day, by the way)…
Bloomberg (‘The Euro Area Is Coming To An End’, written by the former chief economist of the IMF):
Investors sent Europe’s politicians a painful message last week when Germany had a seriously disappointing government bond auction. It was unable to sell more than a third of the benchmark 10-year bonds it had sought to auction off on Nov. 23, and interest rates on 30-year German debt rose from 2.61 percent to 2.83 percent. The message? Germany is no longer a safe haven.
Since the global financial crisis of 2008, investors have focused on credit risk and rewarded Germany with low interest rates for its perceived frugality. But now markets will focus on currency risk. Inflation will accelerate and the euro may break up in a way that calls into question all euro-denominated obligations. This is the beginning of the end for the euro zone.
Germany is the only country in Europe that can act to save the eurozone and the wider European Union from “a crisis of apocalyptic proportions”, the Polish foreign minister warned on Monday in a passionate call for more drastic action to prevent the collapse of the European monetary union.
The OECD’s comments came as the organisation slashed its half-yearly forecasts for growth in the world’s richest countries, warning that economic activity in Europe would grind to a near-halt.
Yet their calls were met by a stubborn insistence in Berlin that only EU treaty change to forge a “stability union” in the eurozone would revive confidence in the markets.
Wolfgang Schäuble, German finance minister, rejected calls for the European Central Bank to act as a “lender of last resort” in the eurozone, and for the introduction of jointly guaranteed eurozone bonds to relieve the pressure on the most debt-strapped members of the common currency such as Greece and Italy.
De eurocrisis is in een eindfase gekomen, in beleggerstermen: het eindspel. De ontwikkelingen gaan nu razendsnel, en de tijd dat de sterke eurolanden de zwakke konden redden, is voorbij. Volgens veel economen is het een kwestie van weken, misschien van dagen, en dan moet er iets op tafel liggen om het uiteenvallen van de euro te voorkomen.
Over negen dagen houden de Europese leiders nog maar eens een ‘top der toppen’. Er was er al een op 21 juli, op 23 oktober en op 26 oktober. Maar nu leeft meer dan ooit het gevoel dat het erop of eronder is. De reeds geplande Brusselse top van vrijdag 9 december is inmiddels uitgebreid met een werkdiner op de avond ervoor. Er is immers veel te bespreken.
Columns in de Financial Times en commentaren in The Economist waarschuwen inmiddels dat de euro snel verleden tijd kan zijn. Jean Pisani-Ferry, directeur van de gerenommeerde Brusselse denktank Bruegel, stelt onderkoeld dat er ‘een nieuwe situatie in Europa’ is ontstaan. Met iets meer gevoel voor dramatiek schrijft de Vlaamse econoom Paul De Grauwe: ‘De euro heeft nog enkele weken om zichzelf te redden, terwijl verschillende instituties zich al voorbereiden op de klap.’
Wat de situatie nu zo wezenlijk anders maakt dan enkele weken geleden? Verreweg het belangrijkste signaal is dat zelfs Duitsland meer moeite heeft om zijn staatsleningen in de markt kwijt te raken. En opvallend, direct na de half mislukte emissie van vorige week verloor de euro in een tel 0,72 eurocent in waarde. Voor centrale bankiers een serieuze aanwijzing dat de munt zelf het volgende doelwit zal zijn.
Het is bijna tragisch dat de ministers van financiën vanavond alweer naar Brussel moeten afreizen om over het noodfonds te praten. Nog altijd zijn de afspraken van 21 juli (uitbreiding van noodinstrumentarium) niet in werking getreden, en nu zwoegen ze op de deal van 26 oktober (vergroting slagkracht). Het fonds heeft nog ongeveer € 250 mrd beschikbaar, maar niemand gelooft meer dat daar € 1000 mrd van te maken is, zoals een maand geleden werd beloofd.
Inmiddels is duidelijk dat het beleggers helemaal niet meer uitmaakt dat de betrouwbare technocraat Mario Monti als premier is aangetreden. Net zomin als zijn bezuinigingsplannen nog indruk maken. Het is de les van twee jaar eurocrisis: paniek en wantrouwen slaan niet met enkele ferme politieke daden om in volledig vertrouwen. Voor België dreigt hetzelfde lot. Verrassend genoeg reageerden beleggers maandag positief op het nieuws dat er na anderhalf jaar eindelijk een regering komt. Maar de aanstaande premier Elio Di Rupo kan de snel opgelopen rentelasten voor België waarschijnlijk niet zomaar ongedaan maken. Ook hij zal ervaren dat eenmaal afgehaakte beleggers niet snel tevreden zijn.
De euro is een misgeboorte en had beter niet ingevoerd kunnen worden. Dat zegt oud-AFM-topman Hans Hoogervorst in een aflevering van het geschiedenisprogramma Andere Tijden, die op 11 december wordt uitgezonden.
Hoogervorst zegt daarin: ‘De enorme problemen die we nu hebben op de kapitaalmarkten en de enorme risico’s die worden gelopen, als we dat tevoren hadden geweten, dan denk ik niet dat iemand bij zijn volle verstand eraan was begonnen.’
Volgens Hoogervorst kan de munt ‘wel als mislukt’ kan worden beschouwd.
One of the most worrying articles I’ve read so far on the ongoing European debt crisis. The Economistis seriously discussing the prospect of imminent bank runs in the eurozone. In fact, in one country, Latvia, this has already happened with a mid-sized bank. That’s the first time I read something about this most scary of economic malfunctions (although Paul Krugman was there first, I’m informed).
With the debt crisis spreading and deepening further to the core of the eurozone – France and Austria are defending their triple-A ratings, Belgium, the Netherlands and now Germany are having bonds issues – and politicians unable (and unwilling) to do something about it, banks are more and more exposed to great financial risks. These stem from the drying up of funds to these financial institutions, which could ultimately lead to one or more of them going down. One of the most worrying signs of this is corporate institutions withdrawing their money from banks. And that’s exactly what’s happening now in Italy, Spain, France and Belgium.
I believe articles like these are called “bearish” in the financial world. Still frightening nonetheless.
- Edit: CNBC is on it as well, referring to the same Economist article. Their message: hoping that customers don’t notice that every other source of bank funding is depleting is not a wise strategy.
ONE can almost hear the gates clanging: one after the other the sources of funding for Europe’s banks are being shut. It is a result of the highly visible run on Europe’s government bond markets, which today reached the heart of the euro zone: an auction of new German bonds failed to generate enough demand for the full amount, causing a drop in bond prices (and prompting the Bundesbank to buy 39% of the bonds offered, according to Reuters).
Now another run—more hidden, but potentially more dangerous—is taking place: on the continents’ banks. People are not yet queuing up in front of bank branches (except in Latvia’s capital Riga where savers today were trying to withdraw money from Krajbanka, a mid-sized bank, pictured). But billions of euros are flooding out of Europe’s banking system through bond and money markets.
At best, the result may be a credit crunch that leaves businesses unable to get loans and invest. At worst, some banks may fail—and trigger real bank runs in countries whose shaky public finances have left them ill equipped to prop up their financial institutions.
To make loans, banks need funding. For this, they mainly tap into three sources: long-term bonds, deposits from consumers, and short-term loans from money markets as well as other banks. Bond issues and short-term funding have been seizing up as the panic over government bonds has spread to banks (which themselves are large holders of government bonds). This blockage has been made worse by tighter capital regulations that are encouraging banks to cut lending (instead of raising capital).
Markets for bank bonds were the first to freeze. In the third quarter bonds issues by European banks only reached 15% of the amount they raised over the same period in the past two years, reckon analysts at Citi Group. It is unlikely that European banks have sold many more bonds since.
Short-term funding markets were next to dry up. Hardest hit were European banks that need dollars to finance world trade (more than one third of which is funded by European banks, according to Barclays). American money market funds, in particular, have pulled back from Europe. Loans to French banks have plunged 69% since the end of May and nearly 20% over the past month alone, according to Fitch, a ratings agency. Over the past six months, it reckons, American money market funds have pulled 42% of their money out of European banks. European money market funds, too, continue to reduce their exposure to France, Italy and Spain, according to the latest numbers from Fitch.
Interbank markets, in which banks lend to one another, are now also showing signs of severe strain. Banks based in London are paying the highest rate on three month loans since 2009 (compared with a risk-free rate). Banks are also depositing cash with the ECB for a paltry, but risk-free rate instead of making loans.
That leaves retail and commercial deposits, and even these may have begun to slip away. “We are starting to witness signs that corporates are withdrawing deposits from banks in Spain, Italy, France and Belgium,” an anlayst at Citi Group wrote in a recent report. “This is a worrying development.”
With funding ever harder to come by, banks are resorting to the financial industry’s equivalent of a pawn broker: parking assets on repo markets or at the central bank to get cash. “We have no alternative to deposits and the ECB,” says a senior executive at one European bank.
So far the liquidity of the European Central Bank (ECB) has kept the system alive. Only one large European bank, Dexia, has collapsed because of a funding shortage. Yet what happens if banks run out of collateral to borrow against? Some already seem to scrape the barrel. The boss of UniCredit, an Italian bank, has reportedly asked the ECB to accept a broader range of collateral. And an increasing number of banks are said to conduct what is known as “liquidity swaps”: banks borrow an asset that the ECB accepts as collateral from an insurer or a hedge fund in return for an ineligible asset—plus, of course, a hefty fee.
The risk of all this is two-fold. For one, banks could stop supplying credit. To some extent, this is already happening. Earlier this week Austria’s central bank instructed the country’s banks to limit cross-border lending. And some European banks are not just selling foreign assets to meet capital requirements, but have withdrawn entirely from some markets, such as trade finance and aircraft leasing.
Secondly and more dangerously, as banks are pushed ever closer to their funding limits, one or more may fail—sparking a wider panic. Most bankers think that the ECB would not allow a large bank to fail. But the collapse of Dexia in October after it ran out of cash suggests that the ECB may not provide unlimited liquidity. The falling domino could also be a “shadow” bank that cannot borrow from the ECB.
The European Commission chief said Monday he wants to introduce eurobonds issued jointly by the 17 euro nations as an effective way to tackle the financial crisis, an idea that puts him on a collision course with German Chancellor Angela Merkel.
Jose Manuel Barroso said a eurobonds plan makes sense if linked to fiscal rigor among the member states sufficiently stringent to make it impossible for profligate nations to live on the back of budget-conscious countries.
- Original post: As blogged about for a while nowhere, everyone except for liberal and conservative policy-makers in northern Europe by now knows what the solution for the eurozone debt crisis is. That is for the ECB to start acting as lender of last resort – like every other central bank in the world, f.e. in the US, Japan, the UK, China, etc. – and start issuing euro bonds or buying sovereign debt in larger amounts.
But the German ruling coalition of conservatives and liberals, supported in this by their peers in the Netherlands, will not do it. Because in their heads, the only solution that can be is austerity and budget cuts.
It hasn’t worked so far, and it doesn’t work now. The debt crisis has spread to the eurozone core, with Austria now defending its triple-A status. We’re currently waiting for the biggest economy yet to get into trouble (France). Meanwhile, the solution is at hand, with American and European economists, policy analysts, journalists and bloggers all calling for it. Let the ECB take up its proper role as central bank.
Does it suck? Of course it sucks. Some inflation may occur. You’re creating moral hazard for profligate economies (the Club Med ones) to go on spending sprees, paid for by their northern neighbours. But it beats breaking up the eurozone and let huge economies go default, doesn’t it?! Moreover, this crisis is not entirely the fault of the south. The entire EMU has failed to create a political and economic system coherent enough to facilitate a single currency. Southern bonds were judged way too safe by central banks and regulators throughout the Union (including the ECB). So, Germany and the rest of the north are as much to fault as the south. And now, they have to face their responsibilities and move towards closer integration.
But no. Austerity and budget cuts that nobody believes in. Watching the eurozone right now is like watching the end-of-the-world scene in Lars on Trier’s Melancholia: you know it’s inevitable, you know it’s going to happen, and it will be massive. Oh well. Better than inflation I guess.
The key part, which he said with some anger rising in his voice, was this:
“Because after the error of the Bundesbank, they consider central banks purchasing sovereign debt outright to be like swearing in church. It’s just not done. This has been in fact to a certain extent embedded in the treaty which forbids the ECB from lending directly to governments or buying stuff in the primary market. But there is no restriction at all on them buying any amount of sovereign debt at any time in the secondary market, so they can do it.”
“This crisis is the result of the failure to provide the minimal institutional underpinning for a monetary union in the euro area and also a result of the ECB unfortunately being the heir of the Bundesbank and therefore not understanding and rejecting the role of central bank as lenders’ last resort to sovereigns. They certainly are a central bank. They just are a central bank that prefers to fight with both hands behind their back. If they just let go of one hand, that would be enough.”
It’s not just that the ECB could immediately push Italian yields down to 4% if it wanted to… it’s that this role that the ECB is being asked to play is not even extraordinary by modern economic standards. Every other major economy in the world: Japan, the UK, the US, China, etc. has a central bank that funds the government. Only Europe doesn’t have that, and that’s why, with debt-to-GDP ratios high around the world (Japan has a 200% debt-to-GDP remember), it’s just Europe that’s in crisis.
But there is this problem with the ECB being the descendant of the Bundesbank, and, well, the Germans are really not into anything that looks like debt monetization.
That’s why the Germans will look for any explanation of the current crisis other than the obvious one. As Bundesbank chief Jens Wiedmann said this weekend, Italy has a political problem, and Greece has a debt problem. That both Italy and Greece (and Portugal and Cyprus and Ireland) could have problems relating to something more fundamental to their monetary structure either completely eludes Wiedmann, or he’s just not allowed to admit it due to German ideology.
Now granted, there is a defense of the ECB, which Edward Harrison makes brilliantly in a post today. Unlike, say, when the Fed or the Bank of England do QE, ECB bond buying is a fiscal operation that would be creating winners and losers and also fostering moral hazard. After all, why not spend like crazy to get ahead of your peers, if the ECB is holding your debt at a certain level. That does make the question tricky.
But the bottom line remains: There’s no chance of anything that’s been planned so far working out, since the only solution (more fiscal austerity) only makes the underlying debt dynamic worse.
So the question is: Will the ECB wait too long and blow it?
The problem for the market is whether to take these comments at face value or to see them as part of a general tactic of trying to force other leaders into line or believing that the comments will be reversed if the alternative to an aggressive ECB is the collapse of the Euro. If you don’t think Merkel’s tone will change then our investment advice is to dig a hole in the ground and hide. It’s difficult to see any other scenario than widescale Sovereign defaults without an aggressive ECB. Indeed it doesn’t seem we’re alone on this anymore. An Irish Times story overnight said that Sarkozy told his deputies yesterday that the euro would not survive unless the ECB decisively entered the fray.
[When] the UK government, for example, is perceived to have borrowed too much, the Bank of England can buy some of its debt and turn it into money. This is, in fact, the Bank of England is doing, to the tune of £275bn, through quantitative easing (though it hasn’t gone the whole hog – which it could do if the UK were ever in a seriously deflationary recession – of cancelling the debt).Of course, this so-called monetisation can debase the currency and spark inflation.
But here’s the thing. Although devaluation of the currency and inflation would generate losses for creditors, those losses are typically a fraction of losses that would arise from a default by government or – as Greece is trying to do – from a request to creditors to voluntarily forgo an element of what they’re owed.
Also, inflation and devaluation are worst for overseas creditors. If you are resident in the UK, and you have substantial liabilities and outgoings in sterling, a bit of inflation will help you service what you owe at the same time as eroding the real value of your assets (or in this case, the real value of your loans to Her Majesty’s Government).
[Surely], you may say, the eurozone has a central bank: the European Central Bank. What is to stop it buying up Italian government debt or Spanish government debt in substantially bigger amounts than it is currently doing?
To be clear, right now the ECB is purchasing modest amounts of Italian and Spanish government debt, for example, in an attempt to keep the respective interest rates they’re charged at a bit less than the penal and prohibitive 7%.
But the ECB is prevented both by its own constitution and by the passionately held views of the Bundesbank – the German central bank and the ECB’s most influential shareholder – from purchasing substantially more than that.
Although many economists believe the Germans are wrong-headed in refusing to countenance substantial purchases of government debt by the ECB, there is some logic to the prohibition.
Brad Plumer did an excellent post earlier this week calling bullshit on ECB claims that it would be illegal for them to step up to the plate and provide relief in the European debt crisis. In a speech delivered early this morning in Frankfurt, ECB Chief Mario Draghi took another stab at explaining himself. His view is that if the ECB stepped in to offer relief, that might undermine its credibility as an inflation-fighter over the long term. “Losing credibility can happen quickly,” he warned, “and history shows that regaining it has huge economic and social costs.”
I’m running out of analogies to explain how frustrating I find this logic. So let’s just be frank. What is it that Draghi thinks is happening now? Is Ireland enjoying a walk in the park? Have the past 12 months been party time for Greece and Spain and Portugal? Another year of this kind of suffering is baked into the cake for those four countries. If Italy tips into a Spain-esque depression, wouldn’t that have huge economic and social costs? Aren’t there costs to prolonging the Spanish depression? Or think about plucky little Ireland and Estonia, winning praise from bureaucrats everywhere for their imposition of internal devaluation, aren’t they going to smacked with a sledgehammer if things go to shit? And what about France?
Now I don’t want to be alarmist, but let’s talk a bit about credibility. Suppose there’s a prolonged, continent-wide depression. Suppose the European Union and its institutions lose all credibility as a force for human welfare. Suppose the mainstream political parties in every European country lose all credibility as vehicles for popular aspiration. How does that story end? Don’t we already know? Didn’t we build these institutions for a reason? I think they were built for a reason. A reason that had something to do with huge economic and social costs. But it wasn’t fear of the Harmonized Index of Consumer Prices increasing at a four percent annual rate.
So the Mayor of New York, Michael Bloomberg – who happens to be a former Wall Street banker and the 12th most wealthy person in the US – has evicted the nucleus of the Occupy movement from Zucotti Park, where they had been camping for two months. In that process, the NYPD has not shunned violating constitutional rights, including the right to free speech and the right to protest, in addition to preventing the democratic press from doing its job. Books were burned.
This process is likely to repeat itself elsewhere. In the Netherlands, local politicians of the conservative liberal (and, arguably, banking-aligned) VVD party are demanding the exit of Occupy protesters from public places throughout the country. Public attention has declined. So what’s next for the Occupy movement?
In all honesty, personally, while I am very sympathetic to a vocal social movement addressing the immense wealth and especially political power of global financial institutions, the injustices in that sector (such as exorbitant bonuses, the sale of intransparent financial products, and the power of credit rating agencies to almost topple entire economies), and rising economic inequality, I had become a bit disappointed with the Occupy movement. During my (admittedly short) visit to Occupy Amsterdam, what I saw was a shanty town with a lot of pot smokers and squatters, talking vaguely about the need to discuss, not have any organization, etc.
Of course any movement that starts out from a feeling of discontent needs time to organize and formulate demands, but the point of Occupy seemed to be to disavow any kind of organization or concretization. Again: I very much admire proto-democratic experiments, and disagreed with the choir of commentators who kept blattering from the very beginning that it was unclear what Occupy was about (that’s very clear), but even a die-hard communal hippie has to admit that a certain point, you need organization and representation.
Occupy has historical predecessors way earlier than the Tahrir Square protesters. The early labour union movement in the nineteenth century everywhere started out grass-roots democratically; but during the way, they learned to organize, formulate demands, and still keep an internal democratic process. You need a distinction between principles and concrete demands, for instance; or a distinction between a general assembly and working groups; and people who specialize in tasks they’re good at (like creating leaflets, organizing, negotiating, doing practical stuff, etc.). In that way, you can develop from an inspired, resounding but vague movement to an organization that actually works.
Once again, I completely understand the distaste of Occupy protesters for “standard” kinds of political organizaton, like political parties and trade unions, and wouldn’t want them to develop in that way. But any movement that doesn’t develop further than a general assembly that discusses every tiny little detail doesn’t get very far (the meeting reports of Occupy Amsterdam attest to that). And now, public attention has declined, the authorities have zoomed in and it will probably not take long before the physical manifestion of Occupy on squares around the world disappears.
So what’s next for Occupy? Opinion polls are showing that they have struck a nerve – in the US, but I imagine also elsewhere, economic inequality and financial malpractices are on the agenda, and opposed by a majority of voters. In that sense, Occupy has already been a success. Some people are arguing that the forced removal of protesters from squares may re-ignite the movement (it would have been wiser for the authorities to wait for winter). Others are saying that the Occupiers need to penetrate existing movements and organizations to address their (and our!) concerns.
Personally, I would like a vocal and identifiable Occupy movement to remain in existence, get its act together, and start thinking about ways to reform the system while continuing to exert pressure on the political-financial axis. This could be done by spreading awareness (the big pro of this movement) and keep protesting, even occupying places. After all, the big invention of the Arab Spring was the protesting technique of permanently occupying a place, rather than having your average one-afternoon demonstration. However, it is essential (I think) to develop an organization, first to make sure that encampments aren’t turned into shantytowns, trouble makers are fended off, and violence doesn’t spread; second to develop ideas, demands and rallying points, appoint representatives, and create a more focused media outreach.
Will this happen? Probably not, but I hope so. The Tea Party has shown that you can move from a vague movement to something approaching a working organization. For Occupy as well, it’s probably time to move from subcultural self-expression to a fight for political change.
[The] truth is, Bloomberg might have just done Occupy Wall Street a favor. Next week, temperatures are projected to dip down to the high 30s. Next month, they’re projected to dip into the mid-20s. The month after that, as anyone who has experienced a New York winter know, they’re going to fall even lower.
The occupation of Zuccotti Park was always going to have a tough time enduring for much longer. As the initial excitement wore off and the cold crept in, only the diehards — and those with no place else to go — were likely to remain. The numbers in Zuccotti Park would thin, and so too would the media coverage. And in the event someone died of hypothermia, or there was some other disaster, that coverage could turn. What once looked like a powerful protest could come to be seen as a dangerous frivolity.
In aggressively clearing them from the park, Bloomberg spared them that fate. Zuccotti Park wasn’t emptied by weather, or the insufficient commitment of protesters. It was cleared by pepper spray and tear gas. It was cleared by police and authority. It was cleared by a billionaire mayor from Wall Street and a request by one of America’s largest commercial real estate developers. It was cleared, in other words, in a way that will temporarily reinvigorate the protesters and give Occupy Wall Street the best possible chance to become whatever it will become next.
The question is what, if anything, comes next for Occupy Wall Street. The movement has already scored some big wins. As this graph by Dylan Byers showed, they have changed the national conversation. Income inequality is now a top-tier issue. Before Occupy Wall Street, it wasn’t.
And perhaps that will be the legacy of Occupy Wall Street. That would certainly be more than most protests achieve. If they are to go further, however, they are going to have to figure out a way to wield power in a more direct and directed form. The movement has always been uncertain on whether it wants to do that, and if it does, how to do it. It requires a willingness to work with the system that is, in certain ways, inimical to the founding of Occupy Wall Street. The good news, if they choose to make that transition, is that they don’t need a park to do it. The bad news is that, in most cases, it requires more hierarchy, clearer leaders, a more obvious agenda.
Back in October, I asked Rich Yeselson, a union researcher and a scholar of social movements, what he thought Occupy Wall Street would need to do to survive and succeed. “Whether they will grow larger and sustain themselves beyond these initial street actions will depend upon four things,” Yeselson said. “The work of skilled organizers; the success of those organizers in getting people, once these events end, to meet over and over and over again; whether or not the movement can promote public policy solutions that are organically linked to the quotidian lives of its supporters; and the ability of liberalism’s infrastructure of intellectuals, writers, artists and professionals to expend an enormous amount of their cultural capital in support of the movement.”
I still think that’s right. So then: Can the post-Zuccotti Park incarnation of Occupy Wall Street furnish skilled organizers who are able to keep the protesters involved, come up with solutions — or at least problems — they’re willing to agree on and fight for, and attract the sort of media attention that they need if they’re going to be able to continue forcing their issues into the national conversation?
The odds are probably against it. The odds are against any social movement, always. But it’s probably likelier under these conditions, where the occupiers were cleared from the park all at once, under sympathetic conditions, and so all of them can agree that this is the moment in which to decide what comes next.
Supporters of the Occupy movement are gearing up for a national day of protest and direct action across America, taking in dozens of events from New York to Chicago to Los Angeles.
Thursday has been declared a day of “solidarity” with the Occupy Wall Street activists in New York after their camp in lower Manhattan’s Zuccotti Park was raided and dismantled by police. But it is also aimed at highlighting several of the movement’s broader aims in terms of income inequality and a desperate need for job creation in America’s floundering economy.
The Occupy movement, which began two months ago with the occupation of Zuccotti Park, has since spread to scores of cities and towns across the country, with varying success. It has often rejuvenated left-leaning political activists but also brought down a heavy police response, frequently at the behest of city mayors.
In recent days, police evictions and crackdowns on protesters in New York, Seattle, Berkeley, Portland and other places have caused widespread condemnation of alleged heavy-handedness by police.
In New York, protesters are planning actions all day in each of the city’s five boroughs. A potential early flashpoint will be a rally planned to begin at 7am that will target Wall Street itself, as the protesters seek to disrupt the operations of the New York Stock Exchange before the ringing of the opening bell that signals the start of trading at 9.30am.
Since the protests began, Wall Street has become a virtual permanent protest zone, ringed by steel fences and heavily policed. Later actions are planned to take place across the city’s subway system, as marchers will enter at 16 different stations and begin protesting.
Finally, the day will end with a rally at Foley Square, near New York’s Town Hall, and then a march to the Brooklyn Bridge, where hundreds of protesters were arrested in a previous headline-grabbing mass action.
Bridges will be the focus of some actions in other cities too. In Boston, Detroit, Washington DC, Portland and Seattle, protesters, some allied with union workers and community groups, will march on high-profile bridges in order to highlight the problem of America’s crumbling and underfunded infrastructure.
The range of activities across America spans a spectrum from the dramatic to the small-scale, including teach-ins, rallies and direct actions aimed at banks and corporations. In Portland, Oregon, protesters plan to target a city bridge and then try to organise flashmobs to go to local banks. In Detroit, protesters are marching from their camp downtown to the city’s municipal centre, where they aim to highlight the brutal impact of government cuts on ordinary citizens.
Spanish bond rates are soaring, and now even The Netherlands (!) are not considered a safe haven anymore. The debt crisis thus is spreading to the eurozone core, which includes France and Austria as well. So as predicted here last week (and downplayed by commenters), the solutions of Merkel, Germany and other northern countries – merely insisting on “reforms”, “budget cuts” and “austerity” in southern Europe as the one way to get out of this crisis – are not working. The financial markets, for one, are not buying it.
The question is: will political leaders continue on this road to nowhere, and ultimately be responsible for the break-up of the eurozone? Or will true reform finally be made, and the ECB be allowed to act as lender of last resort? We’ll find out soon enough.
The turmoil in the eurozone has taken a troubling turn in recent days, with anxiety spreading from Europe’s periphery to its “core” countries. Even as Italy’s Mario Monti readies his economic agenda to be presented today, investors are looking at France, the Netherlands and Austria with increasing unease and wondering whether the ECB might yet ride to the rescue. Over in Greece, today is the anniversary of 1973′s mass student protests – with demonstrators once more planning to take to the streets. And the bond markets are showing ever more strain, with today’s Spanish bond auction souring sentiment still further.
It is make your mind up time for Angela Merkel. Not next year. Not even next month. But this week. The financial markets were ugly on Tuesday, flashing a loud and consistent message: the crisis in the eurozone is no longer confined to the weak Club Med countries but is spreading to the core.
Germany has to decide whether to drop its visceral opposition to the European Central Bank acting like a true lender of last resort, or face being blamed for the break-up of the single currency.
This is a tough call for Merkel, but what happened in the markets on Tuesday was significant. The loss of confidence in Greece, Italy, Spain and Portugal was old news. The new development was that investors were also increasingly wary of lending to those countries that would, along with Germany, form the nucleus of a hard-core euro in the event of a break-up.
Interest rates on Belgian, Austrian and French debt rose sharply. There was even pressure on Dutch bonds, traditionally seen as the second safest in the eurozone after German bunds. Bond dealers reported a full-scale run on French bonds.
By contrast, Switzerland – the safe haven of choice for nervous investors at present – sold six-month bonds at an interest rate of -0.3%. Investors, in other words, were paying the Swiss government for the privilege of being allowed to lend money to a country seen as rock solid. This is simply a posh way of hiding money under the mattress.
The financial markets understand just how critical the situation is, even if the pfennig has yet to drop in Berlin.
Symmetrical reflation is the best option for restoring growth and competitiveness on the eurozone’s periphery while undertaking necessary austerity measures and structural reforms. This implies significant easing of monetary policy by the European Central Bank; provision of unlimited lender-of-last-resort support to illiquid but potentially solvent economies; a sharp depreciation of the euro, which would turn current-account deficits into surpluses; and fiscal stimulus in the core if the periphery is forced into austerity.
Unfortunately, Germany and the ECB oppose this option, owing to the prospect of a temporary dose of modestly higher inflation in the core relative to the periphery.
The bitter medicine that Germany and the ECB want to impose on the periphery – the second option – is recessionary deflation: Fiscal austerity, structural reforms to boost productivity growth and reduce unit labour costs and real depreciation via price adjustment, as opposed to nominal exchange-rate adjustment.
The Guardianschrijft dat er al maanden gesprekken gaande zijn om de eurozone toch maar op te breken. Nu de rente op Italiaanse obligaties torenhoog is, en er zeker geen kans is op een bail out van Italië door het Europees noodfonds, komt een ’herstructurering’ van Italiaanse schulden (d.w.z. een half bankroet) in zicht. Dat treft de Franse financiële mega-conglomeraten hard, betekent een monsterrecessie, en waarschijnlijk het einde van de euro.
Wtf! Opbreken van de eurozone? Say what? Het lijkt erop dat de negatiefste voorspellingen van commentatoren stuk voor stuk uitkomen. De totale ellende is inmiddels niet meer te overzien.
Het lijkt er ook steeds meer op dat er een realisering ontstaat dat het door Merkel, de ECB en het IMF voorgeschreven programma van “bezuinigen” als panacée voor alle problemen niet de weg is. Je kunt bezuinigen wat je wil, maar speculanten op de financiële markten geloven er toch niet in. Sterker nog, ze hebben er belang bij als de boel onderuit gaat. Bovendien wordt landen onder curatele stellen en de hele verzorgingsstaat wegbezuinigen op een gegeven moment ook ondemocratisch; wat dat betreft is het jammer dat dat Griekse referendum er niet gekomen is, dan konden ze tenminste kiezen.
Wilders heeft gelijk gehad: Griekenland had bij het begin van de crisis al uit de eurozone gekickt moeten worden, i.c.m. schuldherstructurering en een terugkeer van dit land naar een eigen monetair systeem. Zoals een LSD-reaguurder schrijft:
Misschien een interessant alternatief voor het hameren van Merkel en de ECB op een uitgebalanceerd huishoudboekje voor Griekenland, met als gevolg elkaar versterkende opeenvolgende bezuinigingen en hemeltergende werkloosheidscijfers enkel om de schuldeisers te plezieren: laat Griekenland de weg van Argentiniė volgen! Dus een gecontroleerd bankroet en herstructurering van schulden (plus een vertrek uit de euro), zodat het land weer kan investeren en ja, ook werk maken van hervormingen en een minder gestoord belastingsysteem opzetten. Hebben ze ook geen vaste wisselkoers meer. Voorheen alleen de positie van de PVV en SP, nu hoor je het vaker.
Een klein landje kan zich terugtrekken uit de financiële markten, zich minder afhankelijk maken van speculanten en geld bijdrukken, zodat er weer geïnvesteerd kan worden i.p.v. alle economische groei op recept van het IMF en Noord-Europese liberalen kapotbezuinigen. Wellicht dat de crisis dan niet was verspreid naar Italië. Maar nu is het te laat voor deze optie (al kan het nog steeds als de hele euro uit elkaar klapt).
Het enige alternatief nu? De ECB staatsobligaties laten opkopen, en instellen als lender of last resort. Dat wil zeggen dat de ECB gaat functioneren zoals de centrale bank doet in normale economieën. De eurozone is een mislukt project gebleken, omdat landen met uiteenlopende economieën én aparte obligaties niet kunnen functioneren onder een regime dat één munt hanteert. Amerikaanse economen roepen het al maanden, en misschien wordt het tijd dat dit ook eens doordringt in Europa. De EMU in haar huidige vorm kan niet bestaan.
Dat betekent dus “meer Europa”. Want als je dat doet, moet je je economische systeem ook verder integreren. Duitsland wil geen ECB als lender of last resort, omdat ze bang zijn voor inflatie. Maar het is dit, of het opbreken van de eurozone. De heilloze weg van het voorschrijven van bezuinigingen, leidend tot nieuwe vertrouwenscrises en weer nieuwe landen die de prooi worden van speculanten (Frankrijk?) moet in ieder geval verlaten worden.