Europe’s Transition From Social Democracy to Oligarchy

This appropriation of the economic surplus to pay bankers is turning the traditional values of most Europeans upside down. Imposition of economic austerity, dismantling social spending, sell-offs of public assets, de-unionization of labor, falling wage levels, scaled-back pension plans and health care in countries subject to democratic rules requires convincing voters that there is no alternative. It is claimed that without a profitable banking sector (no matter how predatory) the economy will break down as bank losses on bad loans and gambles pull down the payments system. No regulatory agencies can help, no better tax policy, nothing except to turn over control to lobbyists to save banks from losing the financial claims they have built up.

What banks want is for the economic surplus to be paid out as interest, not used for rising living standards, public social spending or even for new capital investment. Research and development takes too long. Finance lives in the short run. This short-termism is self-defeating, yet it is presented as science. The alternative, voters are told, is the road to serfdom: interfering with the “free market” by financial regulation and even progressive taxation.

There is an alternative, of course

Debt and Democracy: Has the Link been Broken?

Debt and Democracy: Has the Link been Broken

Europe is headed to a blood in the streets outcome

My takeaway from two days in DC is that Europe is headed to a blood in the streets outcome. While ECB funding remains ongoing even as it’s uncertain, in any case, the underlying theme remains austerity. There is no plan

Managing the 99 Percent

The McCourtny Consulting Group: We are witnessing a simmering backlash in the face of the widening class distinction. It is wise to address the fundamental issues behind the backlash and consider approaches to deal with the problem, especially given that these conditions may be persistent and structural. Therefore, we have prepared a brief overview of approaches to the problem

The euro zone is coming apart at the seams now, redux

This is an update of a post I wrote at the beginning of September about European political dysfunction

The political economy of the European sovereign debt crisis

Now obviously, there are the issues of efficiency and fairness to think about. However, I want to look at this from a pure forecasting perspective. and stick to the tack I began in October 2010 with “Less Policy Advocacy and More Policy Forecasting at Credit Writedowns”. The point for policy makers is to socialise enough of the bank losses onto taxpayers in order to survive the crisis and maintain the status quo. Taxpayers will accept this if the economy is robust enough

More Protectionism Likely

I agree with Michael Pettis that removing Larry Summers from the White House should be construed as a sign that the Obama Administration is poised to take a more populist tone with China. In June I wrote (More on China, Trade and Protectionism): I see the China issue as more of a backburner thing given

Summers is out

Via Bloomberg: White House officials expect Lawrence Summers to leave his job as the president’s National Economic Council director after November’s congressional elections, according to three people familiar with the matter. His departure would leave Treasury Secretary Timothy Geithner as the only member of President Barack Obama’s original top-tier economic team. Summers, 55, and the

Beggar thy neighbour: Martin Wolf is singing from my songbook

Obviously, the FT’s Martin Wolf has been listening to the same preacher I have because he is singing my song.  In today’s FT he writes about the recent Beggar-my-neighbour eurozone policy and how the policy response in Europe has caused him, like me, to question his previous position that the Eurozone would never break up

Links: 2010-05-18 P&G flash crash trader revealed and Congress blocks IMF aid to Greece

Subscribe to Our News Feed If you would like to receive our links in real-time please follow me at @edwardnh. Must reads How P&G Plunge Derailed One Investor | TheStreet.com Congress blocks indiscriminate IMF aid for Europe – Telegraph Blogs Links BBC News – UK inflation hits 17-month high The zloty’s loss is Poland’s gain

Deutsche Bank chief casts doubts on Greece’s solvency

Just when you thought the EU had things under control with their $1 trillion shock and awe rescue package, the first signs of doubt appear.  The doubting Thomas is none other than Swiss-born Deutsche Bank head Josef Ackermann who appeared Wednesday before a Dusseldorf court to explain Deutsche’s relationship with the failed IKB.  Today, comments

The Soft Depression in Germany and the Rise of Euro Populism

This is the third in a series of posts on the origins of the Euro crisis. "The roots of the European sovereign debt crisis go back thirty years" and "How Belgian debt, Italian anarchy and Greek profligacy lead to economic chaos in Europe" are the first and second posts. On Wednesday I wrote a post