Future of the European Union

A Financial Times Special Report

on the impact of the economic crisis on the future of the EU

link to the page

http://media.ft.com/cms/62041770-98b4-11e1-ad3e-00144feabdc0.pdf

Europe's elites feel the backlash

Ian Traynor, The Guardian, Uk

That's the major problem of the European system. It's too inflexible.

In elections in France on Sunday, in the Royal Palace in The Hague on Monday, and on Wenceslas Square in Prague on Saturday, a democratic backlash appeared to be gathering critical mass as the economic prescriptions of the governing class collided with the street and the ballot box. The collision looks likely to bring down three European governments.

Read the article on the Guardian's website

http://gu.com/p/374am

Irish Debt

Dublin has pressed ahead with a plan to defer a €3.06bn cash payment due on its banking debt in a move it hopes will ease its return to international bond markets in late 2013.

Michael Noonan, Ireland’s finance minister, said on Thursday the government would settle the payment, due on March 31, using a long-term government bond rather than with its cash reserves. “This [financing] approach reinforces the commitment of our European partners in assisting the state in its path to recovery,” he said.

“I, and the Irish government, would like to thank all parties to these discussions for their constructive approach and positive engagement.”

For months, Dublin has been trying to persuade the EU to allow it to restructure debts related to its rescue of Anglo Irish Bank, the lender at the centre of Ireland’s financial crisis, and a second failed lender, the Irish Nationwide Building Society. On Thursday, Dublin said it had secured the agreement of the European Central Bank for its latest arrangement.

However, the ECB gave the announcement a lukewarm greeting. “The ECB takes note of today’s announcement of the minister of finance of Ireland regarding the government’s intentions on the payment of the promissory notes due on Friday the 30th of March 2012,” it said in a statement, stopping far short of endorsing the move.

The issue has moved centre stage as Ireland prepares to hold a referendum on the EU’s fiscal treaty on May 31. Some ministers have warned of an angry public reaction if the onerous repayment terms on its banking debt are not improved.

Under the arrangement, Dublin will give a long-term government bond to the IBRC to cover the €3.06bn payment it is due to make under the terms of promissory notes worth €31bn it issued at the height of its banking crisis.

The IBRC can then use the bond to reduce the €40.6bn in emergency liquidity assistance it has received from Ireland’s central bank.

But although Dublin said it had secured the ECB’s agreement, Thursday’s move will be seen with scepticism in Frankfurt because of the increased longer term costs to Ireland and fears that its government was acting for reasons of short-term expediency.

The ECB will also worry that by sidestepping the payment due, Ireland has risked its credibility with investors, possibly delaying its return to capital markets. The “nuclear option” for the ECB would be to block Ireland’s use of emergency liquidity assistance, but it seems unlikely to go that far.

European Economic Help to Ireland 2012

http://ec.europa.eu/economy_finance/eu_borrower/ireland/index_en.htm

Keynes vs. Hayek Rap

Fight of the Century Lyrics

Written by John Papola and Russ Roberts

KEYNES

Here we are… peace out! great recession

thanks to me, as you see, we’re not in a depression

Recovery, destiny if you follow my lesson

Lord Keynes, here I come, line up for the procession

HAYEK

We brought out the shovels and we’re still in a ditch…

And still digging. don’t you think that it’s time for a switch…

From that hair of the dog. Friend, the party is over.

The long run is here. It’s time to get sober!

KEYNES

Are you kidding? my cure works perfectly fine…

have a look, the great recession ended back in ’09.

I deserve credit. Things would have been worse

All the estimates prove it—I’ll quote chapter and verse

HAYEK

Econometricians, they’re ever so pious

Are they doing real science or confirming their bias?

Their “Keynesian” models are tidy and neat

But that top down approach is a fatal conceit

REFRAIN

Which way should we choose?

more bottom up or more top down

…the fight continues…

Keynes and Hayek’s second round

it’s time to weigh in…

more from the top or from the ground

…lets listen to the greats

Keynes and Hayek throwing down

KEYNES

We could have done better, had we only spent more

Too bad that only happens when there’s a World War

You can carp all you want about stats and regression

Do you deny World War II cut short the Depression?

HAYEK

Wow. One data point and you’re jumping for joy

the Last time I checked, wars only destroy

There was no multiplier, consumption just shrank

As we used scarce resources for every new tank

Pretty perverse to call that prosperity

Rationed meat, Rationed butter… a life of austerity

When that war spending ended your friends cried disaster

yet the economy thrived and grew faster

KEYNES

You too only see what you want to see

The spending on war clearly goosed GDP

Unemployment was over, almost down to zero

That’s why I’m the master, that’s why I’m the hero

HAYEK

Creating employment’s a straightforward craft

When the nation’s at war, and there’s a draft

If every worker was staffed in the army and fleet

We’d have full employment and nothing to eat

REFRAIN REPEATS

HAYEK

jobs are a means, not the ends in themselves

people work to live better, to put food on the shelves

real growth means production of what people demand

That’s entrepreneurship not your central plan

KEYNES

My solution is simple and easy to handle..

its spending that matters, why’s that such a scandal?

The money sloshes through the pipes and the sluices

revitalizing the economy’s juices

it’s just like an engine that’s stalled and gone dark

To bring it to life, we need a quick spark

Spending’s the life blood that gets the flow going

Where it goes doesn’t matter, just get spending flowing

HAYEK

You see slack in some sectors as a “general glut”

But some sectors are healthy, only some in a rut

So spending’s not free – that’s the heart of the matter

too much is wasted as cronies get fatter.

The economy’s not a car, there’s no engine to stall

no expert can fix it, there’s no “it” at all.

The economy’s us, we don’t need a mechanic

Put away the wrenches, the economy’s organic

REFRAIN REPEATS

KEYNES

so what would you do to help those unemployed?

this is the question you seem to avoid

when we’re in a mess, would you just have us wait?

Doing nothing until markets equilibrate?

HAYEK

I don’t want to do nothing, there’s plenty to do

The question I ponder is who plans for whom?

Do I plan for myself or leave it to you?

I want plans by the many, not by the few.

Let’s not repeat what created our troubles

I want real growth not a series of bubbles

Stop bailing out loser, let prices work

If we don’t try to steer them they won’t go berserk

KEYNES

Come on, Are you kidding? Don’t Wall Street’s gyrations

Challenge your world view of self-regulation?

Even you must admit that the lesson we’ve learned

Is more oversight’s needed or else we’ll get burned

HAYEK

Oversight? The government’s long been in bed

With those Wall Street execs and the firms that they’ve bled

Capitalism’s about profit and loss

you bail out the losers there’s no end to the cost

the lesson I’ve learned? It’s how little we know,

the world is complex, not some circular flow

the economy’s not a class you can master in college

to think otherwise is the pretense of knowledge

REFRAIN REPEATS

KEYNES

You get on your high horse and you’re off to the races

I look at the world on a case by case basis

When people are suffering I roll up my sleeves

And do what I can to cure our disease

The future’s uncertain, our outlooks are frail

Thats why free markets are so prone to fail

In a volatile world we need more discretion

So state intervention can counter depression

HAYEK

People aren’t chessmen you move on a board

at your whim–their dreams and desires ignored

With political incentives, discretion’s a joke

Those dials you’re twisting… just mirrors and smoke

We need stable rules and real market prices

so prosperity emerges and cuts short the crisis

give us a chance so we can discover

the most valuable ways to serve one another

Greek Economic Crisis

ECB noncommittal on helping Greece | euronews, economy

ECB noncommittal on helping Greece | euronews, economy

Interview with Mario Monti

http://www.time.com/time/video/player/0,32068,1441566061001_2106444,00.html

Declaration of the Occupation of New York

As one people, united, we acknowledge the reality: that the future of the human race requires the cooperation of its members

http://www.nycga.net/resources/declaration/

Occupy Wall Street (OWS)

Today an Occupy Wall Street initiative called ‘Occupy the Highway’ arrives in Washington DC, having marched from New York City. Two weeks ago, Occupy Wall Street participants in Manhattan embarked on the epic journey. Their goals were to make the new movement visible in more communities, to connect with other occupations along the way, and to further a national dialogue about how to reclaim our democracy.

http://occupywallst.org/