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| (European Politicians, Robin Hood Tax/Flickr) |
First, quoting an interview by Roger Strassburg of the German blog NachDenkSeiten with U.S. (neo-Keynesian) economist James Galbraith while on his visit to Europe, who was asked about his views on the situation in Europe:
"Roger Strassburg: You weren’t against stimulus, though, were you?
James Galbraith: I am against the use of that word as a description of any viable economic strategy. Absolutely, I’m against the use of the word “stimulus”. I think it should be purged from the vocabulary of anybody advocating an effective alternative to austerity, because it is not an effective alternative to austerity.
RS: And the alternative would be?
JG: The first necessity is to stabilize the patient, who is on the verge of collapse. This is not about stimulus, it’s not about returning to growth, or returning to full employment, this is about preventing a disaster which will lead to the breakup of the Euro Zone and the European Union, and will lead in that direction in my view quite soon if nothing is done. So that’s what I’ve been talking about over the last month...........
JG: The test of it (i.e. European deposit insurance) is that you want to avoid a situation in which there is a panic, a capricious run on the banking system, and I don’t think the Europeans are there. And, of course, the problem that they have is that if it’s the national authority that’s paying out, then the bankruptcy of the state basically means that the deposit insurance fund isn’t credible, this is why it has to be done on a collective basis.
RS: There’s a lot of resistance to that here.
JG: Well, that may be, but, you know, nobody is safe in this situation.
RS: Well, Germans do worry about their deposits. They hear that deposits aren’t necessarily safe, it makes them worry, too. But they’re absolutely dead set against paying for anybody else’s.
JG: I think that ultimately the decision on the future of Europe will be made in Germany, and Germany has to decide, does it want it or not? If it wants it, it has to take minimal steps to stabilize it on the same principles on which they stabilized the East, and on which they built the Federal Republic in the first place. And if they don’t want it, well, it will go away.
RS: I think even if they want it, they’re not going to stabilize it.
JG: In which case they’ll lose it, and then we can see what is left. But when it’s lost, Germany’s going to have the problem it had before of an appreciating currency, and an industry that quickly loses competitiveness, and there’ll be higher unemployment. And its markets will have collapsed and its debts won’t get paid................
RS: Do you think Greece is going to collapse?
JG: Well, the current direction is certainly moving that way, and moving that way, I think, quite quickly. And I think the precipitating event will probably be political. We’ll see what happens when there’s a change of government. If I were in a position to counsel European authorities, which I do from the margins, I would say, you need to rethink your ideas quickly. Time is not on your side on this issue." .................
Read the complete interview here.
Then Naked Capitalism refers to a post by retired Austrian banker Klaus Kastner, who just changed his mind about the viability of the Euro. He no longer believes the Euro can work. On the contrary, he now believes that the Euro doesn't unite Europe but splits it (for completeness sake, Naked Capitalism has reposted the above interview with Galbraith and the post by Kastner from a blog by Greek Professor of Economics Yanis Varoufakis)
The next critic of the Euro crisis is British investment expert and financial veteran, Alasdair Macleod , who is interviewed in the below podcast by Chris Martenson for his blog Peak Prosperity. This is a 40 minutes interview, but worth your while. In a nutshell, Macleod is pessimistic about the Euro, because the austerity measures have not so much cut government spending, but resulted in higher taxes. This won't help economic reforms, let alone growth. Macleod finds Greece to be in a tragic situation; Italy is politically a mess, not in the least thanks to Berlusconi; Spain too has political challenges, due to political corruption. Also, it will have to recover from a housing bubble and the weakness of its banks; then, Portugal, where the young professionals are leaving for other Portuguese speaking countries, such as Brazil and Angola. The Portuguese banks and government financing are also in deep trouble; In France, there are too few people working in the private sector, and the taxes are too high on the high earners; Even the Netherlands, he says, has its troubles, namely it has the highest percentage of private sector debt in the EU ("Consumer debt amounts to about 250 percent of available income. By comparison, in 2011 even the Spaniards only reached a debt ratio of 125 percent.") ; Belgium has unsustainable high government debt; Germany is still strong, but is in a holding pattern waiting for its parliamentary elections on September 22, and everyone is hoping that nothing dramatic will happen in Europe before those elections. Anyway, it's hard to see any positive developments in this European landscape.
And then we have the views of Dutch economist and investment analyst, Harry Geels, who last week wrote a column in the Dutch newspaper De Telegraaf about the Dutch lower ranking on the World Bank GDP per capita- list. The Netherlands is now ranked 18th, while in 2009 it was ranked 11th (above countries such as Sweden, Austria, the U.S., and Japan.) Geels also observes that GDP in the Euro countries, including the Netherlands, has not or hardly been growing since the beginning of the credit crisis in 2008. Last but not least, just like in several other countries including the U.S., Dutch households have been earning less since 1997, while the corporate sector has been generating record revenues. Geels blames two items for these negative developments: one, again, the Euro is counterproductive for the various individual member states and, two, globalization is putting downward pressure on households' income in the West, to the benefit of its corporations, which are outsourcing their labor costs. In the end he suggests that if one wants to profit from this trend towards increased corporate profits and increasing wealth in the emerging markets, there are three things to consider doing: become a shareholder, protest against outsourcing, or emigrate from Holland. It would be a sign of the times, if the Dutch start emigrating due to lack of prosperity at home, even though they have a long history of traveling abroad.
While many of us are still enjoying their summer vacations, clearly a growing number of experts expect the hot waters not to cool down for Europe and the Euro once the summer is over.
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