I am sure things happened today. Most of them have not made the news.
The ESM was signed by the president of Germany.
The funds are all committed.
The situation is unchanged.
Krugman:
Not The Election They Were Expecting
A
brief, mostly subjective note: This really isn’t looking like the
election anyone expected. Obviously it’s not the election Romney and the
Republicans expected and wanted; but it’s also looking very different
from what Democrats expected.
What Romney & Co. expected was a simple rejection of Obama because of the weak economy. As Greg Sargent often reminds us, this isn’t how it has played at all. On one side, voters tend to react to recent trends, not the absolute level — and the economy has gotten better in some ways over the past year, though obviously not by a lot. On the other, people do remember the crisis of 2008, which they still blame on Bush, and remain willing to cut Obama substantial slack.
But as the polls move strongly in Obama’s direction (yes, I know, it’s all a liberal conspiracy that somehow even includes Fox News), it’s clear at least to me that there’s more going on.
The conventional wisdom — which I too bought into — was that Democrats were going to support Obama, but grudgingly and without much enthusiasm. There had been too many disappointments; the golden aura of 2008 was long gone. Meanwhile, Republicans would show their usual unity and discipline, and at best it would be Obama by a nose.
Instead, the Republicans appear to be in a shambles — while the Democrats seem incredibly united, and increasingly, dare I say it, enthusiastic. (Mark Blumenthal sees this in the polls, but it’s also just the impression you get.)
How did that happen? Partly it’s because this has become such an ideological election — much more so than 2008. The GOP has made it clear that it has a very different vision of what America should be than that of Democrats, and Democrats have rallied around their cause. Among other things, while we weren’t looking, social issues became a source of Democratic strength, not weakness — partly because the country has changed, partly because the Democrats have finally worked up the nerve to stand squarely for things like reproductive rights.
And let me add a speculation: I suspect that in the end Obamacare is turning out to be a big plus, even though it has always had ambivalent polling. The fact is that Obama can point to a big achievement that will survive if he is reelected, perish if he isn’t; health insurance for 50 million or so Americans (30 million from the ACA, another 20 who would lose coverage if Romney/Ryan Medicaid cuts happen) is enough to cure people of the notion that it doesn’t matter who wins.
All of this in turn has an implication that Republicans won’t like — assuming that Rasmussen doesn’t have a special insight into the truth denied to all other pollsters, and that Obama does in fact win with a solid margin. The right is already set up to blame poor Mitt, claiming that he lost because he wasn’t conservative enough. But that’s not what we’re seeing; it looks as if voters are rejecting the right’s whole package, not just the messenger.
As I said, not the election anyone was expecting — but a happy surprise for some, and a nasty shock for others."
What Romney & Co. expected was a simple rejection of Obama because of the weak economy. As Greg Sargent often reminds us, this isn’t how it has played at all. On one side, voters tend to react to recent trends, not the absolute level — and the economy has gotten better in some ways over the past year, though obviously not by a lot. On the other, people do remember the crisis of 2008, which they still blame on Bush, and remain willing to cut Obama substantial slack.
But as the polls move strongly in Obama’s direction (yes, I know, it’s all a liberal conspiracy that somehow even includes Fox News), it’s clear at least to me that there’s more going on.
The conventional wisdom — which I too bought into — was that Democrats were going to support Obama, but grudgingly and without much enthusiasm. There had been too many disappointments; the golden aura of 2008 was long gone. Meanwhile, Republicans would show their usual unity and discipline, and at best it would be Obama by a nose.
Instead, the Republicans appear to be in a shambles — while the Democrats seem incredibly united, and increasingly, dare I say it, enthusiastic. (Mark Blumenthal sees this in the polls, but it’s also just the impression you get.)
How did that happen? Partly it’s because this has become such an ideological election — much more so than 2008. The GOP has made it clear that it has a very different vision of what America should be than that of Democrats, and Democrats have rallied around their cause. Among other things, while we weren’t looking, social issues became a source of Democratic strength, not weakness — partly because the country has changed, partly because the Democrats have finally worked up the nerve to stand squarely for things like reproductive rights.
And let me add a speculation: I suspect that in the end Obamacare is turning out to be a big plus, even though it has always had ambivalent polling. The fact is that Obama can point to a big achievement that will survive if he is reelected, perish if he isn’t; health insurance for 50 million or so Americans (30 million from the ACA, another 20 who would lose coverage if Romney/Ryan Medicaid cuts happen) is enough to cure people of the notion that it doesn’t matter who wins.
All of this in turn has an implication that Republicans won’t like — assuming that Rasmussen doesn’t have a special insight into the truth denied to all other pollsters, and that Obama does in fact win with a solid margin. The right is already set up to blame poor Mitt, claiming that he lost because he wasn’t conservative enough. But that’s not what we’re seeing; it looks as if voters are rejecting the right’s whole package, not just the messenger.
As I said, not the election anyone was expecting — but a happy surprise for some, and a nasty shock for others."
And now for a congress that can do what is necessary.
Krugman's op-ed:
http://www.nytimes.com/2012/09/28/opinion/krugman-europes-austerity-madness.html?partner=rssnyt&emc=rss
"So much for complacency. Just a few days ago, the conventional wisdom
was that Europe finally had things under control. The European Central
Bank, by promising to buy the bonds of troubled governments if
necessary, had soothed markets. All that debtor nations had to do, the
story went, was agree to more and deeper austerity — the condition for
central bank loans — and all would be well. But the purveyors of conventional wisdom forgot that people were
involved. Suddenly, Spain and Greece are being racked by strikes and
huge demonstrations. The public in these countries is, in effect, saying
that it has reached its limit: With unemployment at Great Depression
levels and with erstwhile middle-class workers reduced to picking through garbage in search of food, austerity has already gone too far. And this means that there may not be a deal after all.
Much commentary suggests that the citizens of Spain and Greece are just
delaying the inevitable, protesting against sacrifices that must, in
fact, be made. But the truth is that the protesters are right. More
austerity serves no useful purpose; the truly irrational players here
are the allegedly serious politicians and officials demanding ever more
pain.
Consider Spain’s woes. What is the real economic problem? Basically,
Spain is suffering the hangover from a huge housing bubble, which caused
both an economic boom and a period of inflation that left Spanish
industry uncompetitive with the rest of Europe. When the bubble burst,
Spain was left with the difficult problem of regaining competitiveness, a
painful process that will take years. Unless Spain leaves the euro — a
step nobody wants to take — it is condemned to years of high
unemployment.
But this arguably inevitable suffering is being greatly magnified by
harsh spending cuts; and these spending cuts are a case of inflicting
pain for the sake of inflicting pain.
First of all, Spain didn’t get into trouble because its government was profligate. On the contrary, on the eve of the crisis, Spain actually had a budget surplus and low debt.
Large deficits emerged when the economy tanked, taking revenues with
it, but, even so, Spain doesn’t appear to have all that high a debt
burden.
It’s true that Spain is now having trouble borrowing to finance its
deficits. That trouble is, however, mainly because of fears about the
nation’s broader difficulties — not least the fear of political turmoil
in the face of very high unemployment. And shaving a few points off the
budget deficit won’t resolve those fears. In fact, research by the International Monetary Fund suggests
that spending cuts in deeply depressed economies may actually reduce
investor confidence because they accelerate the pace of economic
decline.
In other words, the straight economics of the situation suggests that
Spain doesn’t need more austerity. It shouldn’t throw a party, and, in
fact, it probably has no alternative (short of euro exit) to a
protracted period of hard times. But savage cuts to essential public
services, to aid to the needy, and so on actually hurt the country’s
prospects for successful adjustment.
Why, then, are there demands for ever more pain?
Part of the explanation is that in Europe, as in America, far too many
Very Serious People have been taken in by the cult of austerity, by the
belief that budget deficits, not mass unemployment, are the clear and
present danger, and that deficit reduction will somehow solve a problem
brought on by private sector excess.
Beyond that, a significant part of public opinion in Europe’s core —
above all, in Germany — is deeply committed to a false view of the
situation. Talk to German officials and they will portray the euro
crisis as a morality play, a tale of countries that lived high and now
face the inevitable reckoning. Never mind the fact that this isn’t at
all what happened — and the equally inconvenient fact that German banks
played a large role in inflating Spain’s housing bubble. Sin and its
consequences is their story, and they’re sticking to it.
Worse yet, this is also what many German voters believe, largely because
it’s what politicians have told them. And fear of a backlash from
voters who believe, wrongly, that they’re being put on the hook for the
consequences of southern European irresponsibility leaves German
politicians unwilling to approve essential emergency lending to Spain
and other troubled nations unless the borrowers are punished first.
Of course, that’s not the way these demands are portrayed. But that’s
what it really comes down to. And it’s long past time to put an end to
this cruel nonsense.
If Germany really wants to save the euro, it should let the European
Central Bank do what’s necessary to rescue the debtor nations — and it
should do so without demanding more pointless pain."
Krugman did offer the rational for European policy:
Notes On Internal Devaluation (Wonkish)
Still
in jet-lag city. Talking to people, and also reading what comes across
the threshold, it occurs to me that there’s widespread misunderstanding
of what a more or less Keynesian view of Europe’s problems actually
implies. People seem to think that it means that (a) internal
devaluation can never work (b) any sign of recovery, even a partial
rebound, proves Keynes/Krugman wrong (this is a critical part of Baltic
boosterism, where the partial recovery of Latvia and Estonia is supposed
to be some kind of incredible triumph).
But none of this is right.
Let’s look at a sample of more or less orthodox sticky-price open-economy macro — in this case, Menzie Chinn’s lecture notes (pdf). Menzie actually analyzes the process of internal devaluation, though not by that name, and offers us the following figure and caption:
So
over time gradual deflation (or deflation relative to trading partners)
increases competitiveness, leading to recovery toward full employment;
this implies a period of above-normal growth and, implicitly, above
normal growth in exports as well. So if you see these things it isn’t a
refutation of the approach, it’s actually what the model predicts.
The point, however, is that it may take a long time — and there’s massive pain along the way.
And to enlarge on a point I made yesterday, what, exactly, is the purpose of imposing harsh fiscal austerity as this process unfolds? I guess it could slightly accelerate the adjustment by driving unemployment even higher; but if the biggest problem is actually one of maintaining social and political cohesion, which seems to be the case, it’s actually counterproductive even for the creditors."
But none of this is right.
Let’s look at a sample of more or less orthodox sticky-price open-economy macro — in this case, Menzie Chinn’s lecture notes (pdf). Menzie actually analyzes the process of internal devaluation, though not by that name, and offers us the following figure and caption:
The point, however, is that it may take a long time — and there’s massive pain along the way.
And to enlarge on a point I made yesterday, what, exactly, is the purpose of imposing harsh fiscal austerity as this process unfolds? I guess it could slightly accelerate the adjustment by driving unemployment even higher; but if the biggest problem is actually one of maintaining social and political cohesion, which seems to be the case, it’s actually counterproductive even for the creditors."
No joy there.
Spain's rising debt costs eat up austerity gains
27 Sep 2012
| 15 Comments
Germany on firm footing as rest of eurozone sinks
27 Sep 2012
| 10 Comments
Spain must leave the euro
27 Sep 2012
| 143 Comments
Spanish budget: what the economists say
Spain has said its 2013 budget will focus on spending cuts rather than tax rises, as its economy minister insisted that the plan exceeds EU expectations. Here's how economists reacted.
27 Sep 2012
| 4 Comments
France to unveil toughest Budget for 30 years
Hollande expected to unleash €30bn of austerity cuts and tax hikes.
27 Sep 2012
| 21 Comments
Spain braces for austerity budget to avoid full bailout
Spain is expected to announce more austerity measures when the Government unveils its 2013 budget on Thursday as it strives to avoid a full sovereign bail-out.
27 Sep 2012
| 44 Comments
Austerity in the eurozone: key dates
Unrest is rising in several European countries, notably Greece, Portugal and Spain, against austerity policies demanded by the European Union and the International Monetary Fund to resolve the debt crisis.
27 Sep 2012
| 2 Comments
Spain is turning into the new Greece, and Mariano Rajoy has himself to blame
Spain has taken another confident stride to becoming the next Greece, a status long predicted for the country in some quarters.
26 Sep 2012
| 47 Comments
http://www.telegraph.co.uk/finance/comment/jeremy-warner/9572359/Spain-must-leave-the-euro.html
8:40PM BST 27 Sep 2012
140 Comments
Yet the eurozone crisis has sparked back into life more swiftly than even I
would have anticipated, with the epicentre returning to a fast-shrinking
Spanish economy. Political and economic developments are once more
threatening to combine into an uncontrollable firestorm.
To understand why, it is first necessary to explode some myths about the
nature of the eurozone debt crisis. This is not at root either an isolated
banking crisis or indeed a fiscal one, though that’s how public policy in
Europe attempts to define it.
As many of us have long argued, both these phenomena are but symptoms of what
in essence is just a good old fashioned balance-of-payments crisis. This has
been greatly exaggerated by monetary union, which is also preventing the
application of time-honoured solutions. Utopian pursuit of the single
currency is damning Europe to economic oblivion. Political hubris has
eclipsed economic common sense.
After monetary union, capital flowed in ever-increasing quantities from
Europe’s surplus to its deficit nations; Germany and others were in essence
lending the periphery the money to buy German goods and services. Monetary
union precluded the sort of interest and exchange rate discipline that would
normally serve to keep things in check.
Cheap money fuelled unsustainable construction and credit booms in the
periphery and encouraged governments to spend more than they should.
Relative to the core, wages and prices rose, rendering these countries
progressively less competitive and deepening the problem of trade
imbalances. The deficit countries borrowed to spend, rather than earning it.
Since the onset of the financial crisis, the process has gone violently into
reverse. Money has fled the periphery, starving it of credit and
exacerbating the economic downturn. Tax revenues have collapsed, causing
budget deficits to soar and fiscal crisis to take root.
With a shrinking economy has come a mounting bad debt problem, which Spain and others have yet fully to recognise. Confidence in the banking system is at rock bottom, leaving Spanish banks progressively more dependent on the European Central Bank printing presses to fund their lending.
Spain is looking for some €60bn to recapitalise its banks but this is widely thought a gross underestimate of the true size of the problem. City analysis puts the amount needed to restore credibility at nearer €150bn, or 15pc of GDP. Touchingly, the Spanish government still seems to think that much of this new capital can be raised in markets. In truth, the only two banks thought remotely capable of tapping the capital markets, Santander and BBVA, are also the only two likely to be judged in forthcoming stress tests not to need it. If even British banks are thought “uninvestable”, what hope Spanish banks?
Worries about whether Spain can last the course has caused further capital flight, depriving Spain of the very low borrowing costs normally associated with countries facing rapidly weakening inflation and depression. Much of this money has flowed into Germany, further depressing its own already low cost of borrowing.
A politically explosive polarisation has established itself, whereby some countries face ruinously high borrowing costs, depressing the economy and increasing the challenge of fiscal consolidation, while others have very low costs and therefore a significant competitive advantage.
There are three elements to renewed crisis in Spain. First, Spain as a nation state is manifestly coming apart at the seams under the pressure of rising unemployment and crippling austerity, with Catalonia now openly threatening to secede. Spain’s age-old battle between the forces of regionalism and centralism is back with a vengeance.
Second, an unholy alliance of Northern states – Germany, Holland and Finland – has reneged on promises of direct support from European bail-out funds for the beleaguered Spanish banking industry.
This makes the political and fiscal situation in Madrid even more precarious. Spain had hoped that if banks could be recapitalised directly from the bail-out funds, it might avoid the humiliation of a full-scale sovereign bail-out and acceptance of a reform programme imposed by the EU and the IMF. The original summit agreement also seemed to recognise that the banking crisis was separate from the sovereign fiscal crises, and in some sense the responsibility of Europe as a whole.
In this way Spain might have avoided piling on further sovereign debt to rescue its banks. Spanish banks would be a collective, rather than a sovereign, responsibility.
But it now appears that any money for bailing out Spanish banks must be part of a wider sovereign package with corresponding guarantees and conditions.
This reversal in position by the surplus nations of the North is being taken as an act of extreme bad faith, not just in Spain but in the troubled eurozone periphery as a whole. Trust in European solidarity is being shattered.
Finally, Mariano Rajoy, the Spanish prime minister, has been digging his heels in over requesting any form of bail-out, despite the evident need for one as the Spanish economy slips ever deeper into recession and the budget deficit widens back into double digits. There is now no chance whatsoever of Spain meeting its fiscal targets.
Less than a year after sweeping to power in a landslide victory, Mr Rajoy is already fatally wounded. He promised never to apply taxpayers’ money to bailing out the banks. He already has. He promised not to follow Greece, Ireland and Portugal into a sovereign bail-out. Now, other than leaving the euro, he’s got no choice. Even on gay marriage, Mr Rajoy has failed to deliver as promised.
A further €40bn package of austerity measures has been announced in a desperate bid to get ahead of what Brussels wants of Spain and, we must suppose, thereby obtain a somehow unconditional bail-out, allowing national pride to be salvaged. These measures are almost bound to be self-defeating, for they threaten further to shrink the economy, thereby making deficit reduction tougher still. Spain is chasing its tail into austerity-induced fiscal and economic meltdown. Mr Rajoy is a dead man walking.
Other than leaving monetary union and defaulting on its euro debts, which for the moment even the rebellious Catalans don’t seem to want, is there any way out for Spain? The answer looks ever more likely to be no.
Membership of monetary union is preventing the application of appropriate monetary policy to the periphery sovereigns. The single currency has also denied Europe the natural market mechanism of free floating exchange rates to correct deficiencies in competitiveness and reduce external indebtedness.
There is only one conclusion to be drawn from all this; though the short-term costs would be profound, Spain must leave the single currency.
Spain is damned if it leaves, but damned for eternity if it stays. Eurozone policy as it stands offers no plausible way back to prosperity."
-
27 Sep 2012: Bank of England's financial policy committee says banks must 'seek to raise capital externally' to bolster their defences -
27 Sep 2012: Alan Posener: The former Italian leader has called Germany a hegemonial state, yet the new, 'soft' euro is not what Merkel wanted
-
26 Sep 2012: Editorial: This is a pan-southern-European pushback against austerity happening while the package is still being negotiated
-
26 Sep 2012: Letters: Ainger ends with a reminder that 600,000 Portuguese swarming the gates of parliament and city centres forced their government into a U-turn
-
26 Sep 2012: Nils Pratley: The European Stability Mechanism row damages the already-fragile notion that the eurozone countries are capable of acting quickly
1. COALITION AGREEMENT The three coalition party
leaders have reached "basic agreement" on the new austerity package,
which will be presented to the troika for approval on Monday, the
finance minister has said. Yannis Stournaras was speaking to reporters
at 1.20pm as he left the Maximos Mansion, the prime minister's official
office, after a meeting with coalition leaders. The measures must be
finalised by September 28, when the head of the government's team of
financial experts, Panos Tsakloglou, will present the package to a euro
working group, finance ministry sources told the semi-official AMNA news
agency earlier in the week.
2. KOUVELIS’ RESERVETAIONS Democratic Left leader
Fotis Kouvelis convened a meeting of his close associates and senior
party officials after the meeting of the three coalition government
party leaders to brief them on the basic axes agreed by the leaders and
to discuss the party's further moves. Sources told AMNA news agency that
Kouvelis said he had told the other two leaders that the measures
should not be put to vote in parliament before Greece secures
commitments from the EU/IMF for the disbursement of the pending tranche
of 31.5 billion euro of the bailout loan. The same sources said Kouvelis
voiced reservations over an increase of the retirement age from 65 to
67 as to the way and time the measure will be implemented, while on the
cuts to holiday bonuses he insisted that they not be abolished but
instead that scaled cuts be made.
3. FREELANCERS’ TAX The austerity package, which
will be implemented from 2013 to 2014, includes drastic changes to the
system for taxing freelance professionals, with the introduction of a
flatrate of 35 percent on income. This percentage will apply to the
total of their net income as it also foresees abolition of the current
5,000 euro tax-free ceiling. The government is considering applying the
new rules to 2012 incomes (which taxpayers will declare 2013), so as to
bring in an extra 1bn euros in revenue on top of the anticipated 2bn
euros.
4. DISABILITY PROTEST There were angry scenes at a protest called by disability groups
against spending cuts when MAT riot police prevented demonstrators from
entering parliament to submit their demands. The demonstration was
called in protest at cuts in social benefits and pensions for people
with disabilities. Protesters say that they also want the government to
protect the tax exemptions they enjoy and for the reopening of schools
for people with disability. Over 700 people, including dozens on
wheelchairs, attended the protest, which began in Omonoia Square shortly
after 11pm and made its way to Syntagma Square, where they intended to
enter parliament. Police eventually allowed representatives from the
protest to enter the parliament building.
5. ANCIENT SERIFOS The 'chora' or main town on the
Aegean island of Serifos is to be declared an archaeological site,
according to a decision of Greece's Central Archaeological Council (KAS)
that was announced on Thursday. The island has a rich history,
featuring in ancient myth and legend as the home of the hero Perseus,
and has been settled since prehistoric times. Its chora, situated high
on a hill overlooking the island's main harbour, is notable for its
dramatic views and is classic example of traditional Cycladic
architecture. Included in the archaeological site are the town's
Medieval settlement, the 'Kastro' or fort, its post-Byzantine churches, a
large segment of open land where mosaic floors have been discovered and
the Church of the Birth of the Virgin."
There will soon be another election in Greece.
We will decide how much insurance I should carry and with whom.
I expect to have insurable risk.
You may buy any car that pleases you. Another Beetle if you wish.
Cars.com is a place I would look.
Liability I will insist upon. I am insured that way and plan to stay insured.
Sooner is better. As soon as you can is best. <14 br="br" days="days" good.="good." is="is">
I gave up sugar when the times published on it. I need more activity to harden up. Building is good. Bicycle is good. Walking is better. I may get to running with the dog(s).
Slowing glucose metabolism is not going to be effective.
There is no safe "royal road" to skinny. Austerity works for skinny.
.
