Christianity, Culture, Vocation
Remember when the United States used to be “the world’s policeman”? We don’t do that anymore, for some arguably good reasons. But the USA used to be the go-to world power, the defender of freedom, a force to counter tyranny and social disorder. But we’ve declined from that role. The world’s policeman is now France. And the European Union in general. And not just in Mali. Europe is doing what the United States used to do. [Read more...]
Europeans are torn about the best approach to fix their messed-up economies: austerity (cutting government budgets and deficits) or stimulus (the government spending even more money and running up even bigger deficits in an effort to jump-start economic growth). Austerity, as recommended by Germany, had been the plan, but recent elections in France and Greece have favored the pro-stimulus side. Who is the role model for this position? President Barack Obama and his stewardship of the American economy. See Germany, U.S. head to G-8 summit with starkly different economic policies – The Washington Post.
The countries of the European Union are voting out the leaders who had been pushing austerity measures to reduce debt, cut back the welfare states, and get their economies on a more solid footing. French President Sarkozy was ousted in favor of socialist Francois Hollande. Greece, the nation in the worst shape of all, has voted out the coalition of center-left and center-right parties that accepted the tough conditions of Germany’s bailout. In fact, German Prime Minister Angela Merkel is herself facing political setbacks. And so is Great Britain’s David Cameron.
Now is all of this just the political dynamic of voters turning against the incumbents when the economy is a mess? In that case, the trend might seem positive for American conservatives. Or is it, as most commentators are saying, a reaction against the austerity measures, with voters not wanting their benefits cut, to the point of embracing politicians who promise to spend even more in order to help the economy grow. In that case, it would herald well for American progressives.
Not that America has experienced much austerity from the current administration. But do you think the general public would support a serious attempt to cut the budget any more than the Europeans would?
via After voters reject austerity, Europe ponders future of grand project – The Washington Post.
The European economy is in a state of crisis, to the point that some people are thinking that the Euro, the pan-European currency (except for the British pound a few others), may be finished. Some businesses are planning what to do if the Euro ceases to exist:
International companies are preparing contingency plans for a possible break-up of the eurozone, according to interviews with dozens of multinational executives.
Concerned that Europe’s political leaders are failing to control the spreading sovereign debt crisis, business executives say they feel compelled to protect their companies against a crash that can no longer be wished away. When German chancellor Angela Merkel and French president Nicolas Sarkozy raised the prospect of a Greek exit from the eurozone earlier this month, it marked the first time that senior European officials had dared to question the permanence of their 13-year-old experiment with monetary union.
“We’ve started thinking what [a break-up] might look like,” Andrew Morgan, president of Diageo Europe, said on Tuesday. “If you get some much bigger kind of … change around the euro, then we are into a different situation altogether. With countries coming out of the euro, you’ve got massive devaluation that makes imported brands very, very expensive.”
via Businesses plan for possible end of euro – FT.com.
That wouldn’t help American exports. But it would mean the dollar would suddenly become very, very strong. That sounds like a good thing, but it would probably mean more dollars flowing out of this country into foreign imports and investments.
What might the breakup of the Euro mean for the American economy?
The Greeks founded Europe, and now they may end it. And the vehicle for both is the same: Democracy.
The European powers carefully crafted a deal to bail out Greece, forgiving half of their debt at the cost of significant reforms and austerity measures. With this agreement, the world’s stock markets soared. But then the Greek government, despite its earlier agreement, suddenly decided to put the accord to the vote of the people. Since the population seems opposed to austerity, the prospect of a referendum has cast the agreement into doubt, sending the world’s stock markets into another dive and shaking the economic foundations of the Eurozone.
World leaders convening at this resort [Cannes] for a long-planned summit find themselves confronting a suddenly acute crisis over Greece and signs of an economic slowdown throughout Europe that may narrow their room for action.
Greek Prime Minister George Papandreou left a cabinet meeting in Athens early Wednesday with his government intact — for now — and backing his plan to hold a national referendum on the country’s latest international rescue program.
World leaders will gather in Cannes, France, on Nov. 3 and Nov. 4 to discuss Europe’s debt crisis and other economic issues. Thousands of protesters are gathering in France to urge the G-20 leaders to focus on the poor.
But his call for a popular vote on Tuesday has jeopardized the rescue plan and upended the agenda for Group of 20 leaders. Papandreou has been called to a meeting here Wednesday night to explain himself.
This was to have been a summit where the G-20 — the forum where industrialized nations and the leading developing economies compare notes on the world economy — puts its stamp on a plan that convincingly appeared to settle Europe’s lingering financial crisis.
Instead, with Cannes under a security lockdown that has made its streets into a virtual ghost town, the group will be looking for ways to avoid even greater problems. The 17-nation euro region is trying desperately to navigate between the budget-cutting and reform needed to bring down high levels of government debt, and the tepid economic growth that is sapping incomes, causing chronically high unemployment and straining political systems.
via World leaders to confer with Greece over referendum call – The Washington Post.
Do you think the Greek government was right to put the question of accepting the economic package to a popular referendum? Does the world’s economic problems bring us to the limits of Democracy, the possibility that people will not vote to suffer, even when the alternative may be suffering on a far greater scale? Can you see something like that happening here, with voters rejecting efforts to cut back federal spending AND repudiating new taxes AND demanding ever more entitlements, to the point of national bankruptcy?
UPDATE: The Greek government has now scrapped the referendum.
Ezra Klein argues that neither presidents nor congress, no matter which party, will be able to do much to influence the economy. What will either pull us down further or bring improvement is what happens in Europe. And so, if the state of the economy is what determines who gets elected president, our elections are in the hands of Angela Merkel:
Sometimes, the things driving the country’s economy are not passed by Congress. Sometimes, Congress has almost no influence over them. And this is one of those times.
Europe has reached a tipping point. Without a systemic solution — and fast — Greece will default. If Greece falls, chances are that Ireland and Portugal will follow. Desmond Lachman, a fellow at the American Enterprise Institute, compares it to Bear Stearns collapsing and dragging Lehman down with it.
If that happens, we’re going down, too. The European Union is a big economy. Bigger than ours, in fact. In 2010, the United States exported $240 billion worth of products to the European Union, and imported $320 billion. And our other major trading partners — Canada, Mexico, China, etc. — are similarly interlinked with the European economy. So just as a financial crisis that began in the United States was capable of creating an economic crisis around the world, a debt crisis that begins in the European Union has plenty of channels through which it can shatter a fragile global economy. . . .
Even the not-so-bad outcomes are still, well, pretty bad. Goldman Sachs estimates that if the European Union simply limps along the way it is now, the financial stress “is likely to slow the U.S. economy to the edge of recession by early 2012.” . . .
That’s the reality of the economy over the next year. If Europe gets its house in order, we might see a recovery. If it continues staying one step ahead of catastrophe, we’re likely to continue stagnating. And if it makes a mistake, we’re likely to follow it into recession.
In determining the likely future of our economy, Europe will probably also determine the outcome of our election. And that means that Congress, the president, and even the Republican presidential candidates, for all that they will pretend otherwise, will not. In 1992, James Carville, an adviser to Bill Clinton’s presidential campaign, used to constantly remind his candidate, “It’s the economy, stupid.” In 2012, it may well be the European economy, dummkopf.
via How Angela Merkel could defeat Barack Obama – The Washington Post.
Economics columnist Robert J. Samuelson gives a good explanation of what’s going on in the European economy:
Europe’s banking crisis — and “crisis” is used advisedly — tells us how much and how little has changed since the onset of global financial turmoil in September 2008. Then, people worried about the viability of major American banks, loaded with “toxic” mortgage-backed securities whose value was difficult to determine. Now, people worry about major European banks, loaded with government (a.k.a. “sovereign”) bonds whose value is difficult to determine. We are flirting with another financial crisis not unlike the post-Lehman Brothers panic.
So American financial institutions were pulled down because of bad loans on houses. European institutions are on the verge of being pulled down because of bad loans on whole countries.
Read the column for the details: Is another financial crisis looming in Europe? – The Washington Post.
The European Court of Human Rights has overturned a lower court’s decision to outlaw crucifixes in Italy’s public schools. Not only that, the court ruled that Christianity is, in fact, the religious foundation of European civilization, a fact that need not be hidden.
The Grand Chamber ruling. . .recognizes that “human rights must not be placed in opposition to the religious foundations of European civilisation”. rules
The decision is an affirmation of the respect owed to each country of the European Union for “the religious symbols of its cultural history and national identity” and for national decisions on how the symbols can and should be displayed, Fr Lombardi said.
A lack of respect, he said, would lead to a situation in which, “in the name of religious liberty, paradoxically one would limit or even deny this freedom, ending up excluding every expression of it from the public sphere”.
via Vatican welcomes European court decision on crucifixes | CatholicHerald.co.uk.
Would that same reasoning apply in the United States of America?
Ireland may have saved civilization at one time, but now Ireland may be pulling down the European economic system. Robert Samuelson explains what is going on with the Irish economic collapse and the European bailout of yet another country in the Euro-zone:
That Ireland, after Greece, has come to grief is ironic. Until recently, it was admiringly dubbed the Celtic Tiger for emulating Asian countries in attracting foreign investment – Intel and others – and achieving rapid export-led growth. From 1987 to 2000, annual economic growth averaged 6.8 percent; unemployment fell from 16.9 percent to 4.3 percent. But then solid growth gave way to a housing boom and bubble whose collapse left Irish banks awash in bad loans.
One cause was easy credit occasioned by the euro. With its own currency, Ireland could regulate credit. If it seemed too loose, the Central Bank of Ireland could raise interest rates. Adopting the euro meant Ireland surrendered this power to the European Central Bank (ECB), which set one policy for all euro countries. The ECB’s rates, though perhaps correct for France and Germany, were too low for Ireland and some others. Moreover, financial markets pushed rates on government bonds of euro countries down to lower German levels. In 1995, Ireland’s rates were more than a percentage point higher than Germany’s; by 2000, they were almost identical. . . .
So now the reckoning. In Ireland, the burst housing bubble left a massive budget deficit and lifted unemployment to 14 percent. Most European economies suffer from the ill effects of some combination of easy money, unsustainable social spending and big budget deficits. Countries are interconnected, so there are spillover effects. European banks – led by British, German, French and Belgian banks – have $500 billion in loans and investments in Ireland, reports the Financial Times. Large losses could snowball into a broader banking crisis.
Europe’s challenge is no longer just economic. It’s also social and political. Cherished values and ideals are under assault. The euro, intended to nurture unity, has bred discord, as countries assign blame and argue over sharing costs. The social contract is being rewritten, with government benefits and protections being cut.
via Robert J. Samuelson – In Ireland’s debt crisis, an ominous reckoning for Europe.
A single currency set by a central authority, indifferent to individual country’s economy sounds like an experiment that didn’t work. This is another kind of argument for federalist-style de-centralization.
Now that America is going the way of Europe in our economy, politics, and institutions, get ready for this one:
An overseas holiday used to be thought of as a reward for a year’s hard work. Now Brussels [the capital of the European Union] has declared that tourism is a human right and pensioners, youths and those too poor to afford it should have their travel subsidised by the taxpayer.
Under the scheme, British pensioners could be given cut-price trips to Spain, while Greek teenagers could be taken around disused mills in Manchester to experience the cultural diversity of Europe.
The idea for the subsidised tours is the brainchild of Antonio Tajani, the European Union commissioner for enterprise and industry, who was appointed by Silvio Berlusconi, the Italian prime minister.
The scheme, which could cost hundreds of millions of pounds a year, is intended to promote a sense of pride in European culture, bridge the north-south divide in the continent and prop up resorts in their off-season.
Tajani, who unveiled his plan last week at a ministerial conference in Madrid, believes the days when holidays were a luxury have gone. “Travelling for tourism today is a right. The way we spend our holidays is a formidable indicator of our quality of life,” he said.
Tajani, who used to be transport commissioner, said he had been able to “affirm the rights of passengers” in his previous office and the next step was to ensure people’s “right to be tourists”.
via Get packing: Brussels decrees holidays are a human right – Times Online.
HT: Joe Carter
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