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The Germans don't like it.
Saturday, September 8, 2012
Links 9/8/12
Scientists Cast Doubt On Heisenberg’s Uncertainty Principle Science Daily
Science wins over creationism in South Korea Nature
Ohio teen travels quarter of a mile through sewer AP
Central bankers won’t fix Libor this weekend – Carney Reuters
What’s up with the new Draghi plan? Marginal Revolution
The Absurd Quest for Euro Crisis Images Der Speigel
U.S. Jobless Rate Drops for the Worst of All Reasons Businessweek
Jobs Data Show U.S. Factories Bearing Brunt of Slowdown Bloomberg
Will August job report propel the Fed into action? Mark Thoma
Another Jobs Disappointment Tim Duy
What Krugman & Stiglitz Can Tell Us NYRB. “We’re not using the knowledge we have.” You don’t bat zero for the season without a plan.
Gross Says Jobs Growth to Spur Fed on Quantitative Easing Bloomberg
Obama Gives Up on Demand Matt Yglesias, Slate
Not The Time To Be Demanding Krugman. Jam tomorrow.
A young Ben Bernanke? Financial Armageddon. So where’s mine?
Giving your right arm for 600,000 euros El Pais
Why Spending/GDP is a Terrible, Horrible, No Good, Very Bad Metric For Judging Obama’s Performance Angry Bear
Universal Health Care Shouldn’t Be Reduced, Lancet Says Bloomberg (original) (U.S. rankings (LC)). Why not? Because moochers will die?
BMW Never-Too-Old Assembly Insures Against Lost Engineers Bloomberg
Canada proves the decline of unions is not inevitable Dean Baker, Al Jazeeera
A Detailed Explanation For Why People Become Investment Bankers Business Insider. With handy diagram.
Martha’s Vineyard Nabs the Thief Who’s Been Robbing Its Cute Sweater Boutiques: A Wealthy Socialite Gawker
Lucky Us: Toilet Paper Priced Like Airline Tickets? Big Picture
Slow coffee spreads fast San Jose Mercury News
Lunch with the FT: Tim Berners-Lee FT
Data Analysts Seek to Make Social Media More Useful Businessweek. Graph databases going mainstream (technology tracker)
Exclusive: Insiders suspected in Saudi cyber attack Reuters
Plan in place for struggling Infosys, but no quick returns Reuters. Playing the world’s smallest violin.
Geography of tourism Le Monde Diplomatique
How could you go ahead of me? Letters of Note
‘Bye, Buffalo Bill Stop Me Before I Vote Again. “Government should be run like a business.”
* * *
Science wins over creationism in South Korea Nature
Ohio teen travels quarter of a mile through sewer AP
Central bankers won’t fix Libor this weekend – Carney Reuters
What’s up with the new Draghi plan? Marginal Revolution
The Absurd Quest for Euro Crisis Images Der Speigel
U.S. Jobless Rate Drops for the Worst of All Reasons Businessweek
Jobs Data Show U.S. Factories Bearing Brunt of Slowdown Bloomberg
Will August job report propel the Fed into action? Mark Thoma
Another Jobs Disappointment Tim Duy
What Krugman & Stiglitz Can Tell Us NYRB. “We’re not using the knowledge we have.” You don’t bat zero for the season without a plan.
Gross Says Jobs Growth to Spur Fed on Quantitative Easing Bloomberg
Obama Gives Up on Demand Matt Yglesias, Slate
Not The Time To Be Demanding Krugman. Jam tomorrow.
A young Ben Bernanke? Financial Armageddon. So where’s mine?
Giving your right arm for 600,000 euros El Pais
Why Spending/GDP is a Terrible, Horrible, No Good, Very Bad Metric For Judging Obama’s Performance Angry Bear
Universal Health Care Shouldn’t Be Reduced, Lancet Says Bloomberg (original) (U.S. rankings (LC)). Why not? Because moochers will die?
BMW Never-Too-Old Assembly Insures Against Lost Engineers Bloomberg
Canada proves the decline of unions is not inevitable Dean Baker, Al Jazeeera
A Detailed Explanation For Why People Become Investment Bankers Business Insider. With handy diagram.
Martha’s Vineyard Nabs the Thief Who’s Been Robbing Its Cute Sweater Boutiques: A Wealthy Socialite Gawker
Lucky Us: Toilet Paper Priced Like Airline Tickets? Big Picture
Slow coffee spreads fast San Jose Mercury News
Lunch with the FT: Tim Berners-Lee FT
Data Analysts Seek to Make Social Media More Useful Businessweek. Graph databases going mainstream (technology tracker)
Exclusive: Insiders suspected in Saudi cyber attack Reuters
Plan in place for struggling Infosys, but no quick returns Reuters. Playing the world’s smallest violin.
Geography of tourism Le Monde Diplomatique
How could you go ahead of me? Letters of Note
‘Bye, Buffalo Bill Stop Me Before I Vote Again. “Government should be run like a business.”
* * *
Germany is in a monkey trap.
They cannot back growth in southern Europe because they cannot give up the income from interest on the debts.
Regulators must shine a light on 'shadow banking'
08 Sep 2012
| 2 Comments Trouble at world's oldest bank leaves Siena paying the price
08 Sep 2012
| 2 Comments 
Samaras: Greece 'came close to exiting euro'
Antonis Samaras, the prime minister of Greece, says the European Central Bank's decision to start buying eurozone bonds has proved the beleaguered country must stay in the euro.08 Sep 2012
| 104 Comments Schaeuble: Eurozone 'must still reform' despite ECB plan
The German finance minister Wolfgang Schaeuble has warned eurozone countries must press ahead with cutting their deficits and reforming economies despite the European Central Bank revealing ground-breaking plans to buy bonds.08 Sep 2012
| 5 Comments Brussels' plans to make ECB bank super-regulator leaked
Bank regulators in eurozone countries will be asked to agree to relinquish their powers to the European Central Bank (ECB) in three months' time, according to documents leaked from Brussels.07 Sep 2012
| 24 Commentshttp://www.guardian.co.uk/world/2012/sep/09/german-judges-to-rule-on-euro-fate
Judges of the German constituional court, which will rule this week on whether to give the green light for the euro rescue fund. Photograph: Winfried Rothermel/AP
They have the potential to throw the stock exchange into turmoil, trigger frenzy on bond markets and bring down the German government. So the eyes and ears of the eurozone will be on the eight red-robed judges of Germany's highest court this week when they deliver a long-awaited verdict over whether a financial rescue fund considered crucial to the future of the euro gets the green light.
The constitutional court is under international pressure to rule in favour of the European stability mechanism and fiscal pact. A dissenting ruling from the court, based in Karlsruhe, southwestern Germany, would probably cause havoc on money markets and cast doubt on the future of Europe's single currency.
"The German constitutional court cannot afford to be seen as not being independent, but it also cannot afford to be seen as the court that brought down the government," said Constanze Stelzenmüller, a senior transatlantic fellow at the German Marshall Fund in Berlin. "They're going to have to try to square the circle; in other words, not bring down the government at the same time as asserting their independence."
The ruling, due on Wednesday, is expected to give the go-ahead to the ESM, a permanent bailout mechanism, and the fiscal pact, but with caveats such as constraints on future decision-making or a ruling that Germany's basic law has to be rewritten if there is to be further EU integration.
A government insider told the Observer, on condition of anonymity, that the court "is very independent and always good for a surprise. Nobody knows what will happen on 12 September." A poll published on Friday on Spiegel Online showed that 54% of Germans were in favour of the court blocking the legislation, reflecting the degree to which public opposition to bailouts is increasing.
The poll was released a day after the European Central Bank president, Mario Draghi, divulged plans for making unlimited bond purchases to lower borrowing costs for crisis countries in the eurozone. The announcement unleashed a wave of condemnation across much of Germany's media and among a growing band of eurosceptics, who said the scheme would stoke inflation. German fears of a repeat of its 20th-century experiences of hyperinflation and the catastrophic consequences run deep.
"A black day for the euro, and for all of us!" a headline in the tabloid Bild said last week. It said the ECB had effectively written a blank cheque to indebted states by offering to buy their bonds. Jens Weidmann, head of the Bundesbank, issued a statement calling the Draghi decision "tantamount to financing governments by printing bank notes" and accusing the Italian banker of breaking ECB rules.
Analysts noted that the once mighty Bundesbank had been sidelined. "Germans feel utterly deserted and mocked by the fact that their Bundesbank has been so completely isolated, as has Germany," said Gunnar Beck, a specialist in EU law at London's School of Oriental and African Studies."While this looks like an attractive solution in the short term, in the long term it's disastrous, as it takes away any incentive for reform from the countries in crisis."
Beck said the Draghi ruling had set off alarm bells for many Germans. "Like many Germans over 40, I grew up being told of my grandparents' experience as very young people in the 1920s who experienced hyperinflation and were ruined by it," he said. "It's a collective phobia. Then, as now, it's the people who are least guilty, who invested conservatively, who are the ones who are asked to pay for the losses of the risk-takers."
Beck said it was likely Draghi had been informed of what the court's decision will be on Wednesday, ahead of making his announcement. "Draghi, or let's call him Draghiavelli, is a shrewd operator who waited for the moment when his solution would seem the most opportune," he said. "He must have been given the OK by Merkel and she wouldn't have done that if she hadn't known how the court would decide on Wednesday." He said the Draghi announcement would add pressure on the court, whose decision was vital to the future of the euro.
The case was brought by a group of more than 12,000 plaintiffs, including a growing band of eurosceptics from academia, Angela Merkel's coalition and the hardline Left party. Karlsruhe shocked the political establishment in July by saying it needed two months to examine complaints that the rescue fund violated the constitution. Political observers believe the anti-euro group has the makings of a new party, unprecedented for Germany, where there are no anti-European parties.
"There's a certain angst now among politicians that people are distancing themselves from Europe for the first time, as the Germans wake up to the fact that Europe can no longer be united by Germany's war guilt, but needs to be united by the idea of a common, successful currency and by making it work," said Wolfgang Nowak, a former adviser to chancellor Gerhard Schröder. "Germans would probably do themselves a service by leaving the euro, but this is something that is unsayable in German politics.""
The constitutional court is under international pressure to rule in favour of the European stability mechanism and fiscal pact. A dissenting ruling from the court, based in Karlsruhe, southwestern Germany, would probably cause havoc on money markets and cast doubt on the future of Europe's single currency.
"The German constitutional court cannot afford to be seen as not being independent, but it also cannot afford to be seen as the court that brought down the government," said Constanze Stelzenmüller, a senior transatlantic fellow at the German Marshall Fund in Berlin. "They're going to have to try to square the circle; in other words, not bring down the government at the same time as asserting their independence."
The ruling, due on Wednesday, is expected to give the go-ahead to the ESM, a permanent bailout mechanism, and the fiscal pact, but with caveats such as constraints on future decision-making or a ruling that Germany's basic law has to be rewritten if there is to be further EU integration.
A government insider told the Observer, on condition of anonymity, that the court "is very independent and always good for a surprise. Nobody knows what will happen on 12 September." A poll published on Friday on Spiegel Online showed that 54% of Germans were in favour of the court blocking the legislation, reflecting the degree to which public opposition to bailouts is increasing.
The poll was released a day after the European Central Bank president, Mario Draghi, divulged plans for making unlimited bond purchases to lower borrowing costs for crisis countries in the eurozone. The announcement unleashed a wave of condemnation across much of Germany's media and among a growing band of eurosceptics, who said the scheme would stoke inflation. German fears of a repeat of its 20th-century experiences of hyperinflation and the catastrophic consequences run deep.
"A black day for the euro, and for all of us!" a headline in the tabloid Bild said last week. It said the ECB had effectively written a blank cheque to indebted states by offering to buy their bonds. Jens Weidmann, head of the Bundesbank, issued a statement calling the Draghi decision "tantamount to financing governments by printing bank notes" and accusing the Italian banker of breaking ECB rules.
Analysts noted that the once mighty Bundesbank had been sidelined. "Germans feel utterly deserted and mocked by the fact that their Bundesbank has been so completely isolated, as has Germany," said Gunnar Beck, a specialist in EU law at London's School of Oriental and African Studies."While this looks like an attractive solution in the short term, in the long term it's disastrous, as it takes away any incentive for reform from the countries in crisis."
Beck said the Draghi ruling had set off alarm bells for many Germans. "Like many Germans over 40, I grew up being told of my grandparents' experience as very young people in the 1920s who experienced hyperinflation and were ruined by it," he said. "It's a collective phobia. Then, as now, it's the people who are least guilty, who invested conservatively, who are the ones who are asked to pay for the losses of the risk-takers."
Beck said it was likely Draghi had been informed of what the court's decision will be on Wednesday, ahead of making his announcement. "Draghi, or let's call him Draghiavelli, is a shrewd operator who waited for the moment when his solution would seem the most opportune," he said. "He must have been given the OK by Merkel and she wouldn't have done that if she hadn't known how the court would decide on Wednesday." He said the Draghi announcement would add pressure on the court, whose decision was vital to the future of the euro.
The case was brought by a group of more than 12,000 plaintiffs, including a growing band of eurosceptics from academia, Angela Merkel's coalition and the hardline Left party. Karlsruhe shocked the political establishment in July by saying it needed two months to examine complaints that the rescue fund violated the constitution. Political observers believe the anti-euro group has the makings of a new party, unprecedented for Germany, where there are no anti-European parties.
"There's a certain angst now among politicians that people are distancing themselves from Europe for the first time, as the Germans wake up to the fact that Europe can no longer be united by Germany's war guilt, but needs to be united by the idea of a common, successful currency and by making it work," said Wolfgang Nowak, a former adviser to chancellor Gerhard Schröder. "Germans would probably do themselves a service by leaving the euro, but this is something that is unsayable in German politics.""
- 9 Sep 2012: Decision is likely to give financial rescue fund the go-ahead against a background of German disillusion with single currency
- 7 Sep 2012: Global stock markets and euro rise after ECB president Mario Draghi's ambitious plan to keep the eurozone together
-
6 Sep 2012: Costas Lapavitsas: The strain on a country whose rulers are desperate to avoid a euro exit will lead it to poverty and disfunctionality
- 6 Sep 2012: Editorial: Imaginative and astute ECB leader has lived up to his side of the bargain, but his plan is wrong-headed and insufficient
A statement of hopes not of facts.
Watch the weaseling this week.
Stephanie Flanders Economics editor
"The ECB puts a sting in the tail
The ECB will is now in a position to defend the euro Former US Secretary of State Henry Kissinger famously asked: "If I want to talk to Europe, which number do I call?" For the past three years, global financial markets have been asking a similar question: "If I want to destroy the euro, who's going to stop me?"
Surveying the carnage in European financial markets, investors wanted to know who, or what, ultimately stood behind this currency. When push came to shove, who was ultimately going to be there, with deep pockets, to hold the whole thing together.Governments have tried, and failed to take on this role, while the European Central Bank (ECB) has tried very hard to avoid it. But yesterday, to an important extent, it gave up trying.
Yes, the support the ECB president described will come with conditions. Yes, it has come pretty late in the day. And yes, the president of the German central bank has a point when he suggests that the central bank is putting its independence at risk with this "unlimited" pledge, and potentially building up trouble for the future propping up governments.
But whatever you think of the ECB's plan, and however sorry you are that they did not come up with a better name ("outright monetary transactions" really is awful), it does provide an answer to that crucial question I raised at the start. In effect, the ECB has said, if governments are doing the right things, the central bank will do its bit to save the euro.
The economic blogger for the Economist says the ECB has acted in time to save the euro. "Whether it has acted in time to save the euro economy remains to be seen."
Partly because it has come so late, the ECB action will not prevent countries like Spain from having a pretty terrible few years. As I said on the Today programme this morning, if the bank, with all its internal misgivings about the scheme, messes up in the implementation it might not save the euro either.
But, for the first time since the start of the crisis, the eurozone - on paper at least - has what Americans would call a catastrophic insurance policy.
The ECB will not protect Spain, or Portugal, or Italy from being discriminated against by the markets - from paying higher interest rates to borrow than, say, Germany. But if Spain and the rest are able to keep their populations on the side of doing what it takes to stay in the euro, the ECB is saying it will not allow them to be forced out.
That is what Mr Draghi meant when he talked of the OMT programme as backstop against the "tail risks" hanging over the euro system - the extreme scenarios, like the whole thing blowing apart.
The new ECB scheme has a chance of playing this role, because, unlike the European rescue facilities like the European Stability Mechanism, the purchases are not limited in advance. And because, unlike the previous ECB bond buying programme, the bonds that the central bank buys will not get special treatment in the event of any debt write-downs, as happened in Greece.
To repeat what I said in an earlier blog, if the ECB had said this a year ago, we probably wouldn't be where we are today. The delay has made it harder for any rescue plan to succeed. And it has certainly raised the costs of the crisis for the real economy.
Sovereign governments could still mess things up. Heaven knows, they've done it before. But if you want to destroy the euro - the second most important central bank in the world now says it will be there to stop you."
I have no police record. 1968 was a long time ago.
I think there was finally no arrest.
I have occasional traffic tickets.
If I were to start a program with grant support I would be committed to a location for at least two years.
Communication sooner is better. As soon as you can is best.
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