Posts Tagged ‘PIIGS’
Sunday, February 6th, 2022
Let’s talk about the European Debt Crisis.
[The sound you hear is the countless multitudes clicking off to another blog.]
Way back last decade, dispatches on the ongoing crisis were a regular staple of the blog. To summarize the crisis for those who weren’t paying attention back then:
A bunch of countries joined the Eurozone without following the requirements outlined for membership, including limiting budget deficits to 3% of less of their GDP, and overall debt-to-GDP ratio of 60% or less. How were they able to join? Simple: They lied and the Eurocrats turned a blind eye, because EU.
Foremost among those running into trouble were the PIIGS (Portugal, Italy, Ireland, Greece and Spain). (Cyprus and Malta also had serious issues, but their tiny size meant they presented no systematic risk for other nations, and Cyprus relieved its problems by becoming the dirty Russian money laundering capital of Europe.)
Ireland was probably the most incongruous of the five, since their debt only spiked when the Irish government nationalized Anglo Irish Bank to prevent it from collapsing.
In all other cases, the cause of of the problem was obvious: Each ran huge budget deficits to underwrite generous welfare state programs for countries with below replacement birth rates, and they were allowed to get away with it for a while because they used Germany’s credit rating in lieu of their own thanks to the Euro.
The problem finally came to a head after the SubPrime Meltdown in 2008 made various banks and regulatory agencies actually scrutinize balance sheets and realize just how broke the PIIGS were.
Greece was the worst, being the most dysfunctional, and absolutely refusing to slow down spending on their own. There followed a reoccurring farce where various Euro regulatory agencies (including the International Monetary Fund, the European Commission, and the European Central Bank, collectively known as “the Troika”) demanded Greece end their ridiculous high levels of deficit spending, Greece refused, the Troika threatened to cut off the tap entirely, Greece promised to be better, the Troika reluctantly extended them another loan, and then Greece continued to spend recklessly, setting up the next round of the farce.
A bunch of Eurozone countries then implemented “austerity,” which involved not cutting spending to balance their budgets, but merely reducing the deficits slightly.
None of these “austerity” measures eliminated deficit spending, and none addressed the issue that’s driving all of Europe (and us) bankrupt, namely unwillingness to carry out structural reforms of the welfare state. The few tiny reforms that have been undertaken have been, as NRO’s Michael Tanner notes, ridiculously timid, and even those have been heavily weighted in future years. “So far, European governments haven’t even been willing to take a penknife to the welfare state, let alone an axe.” Plus a huge round of tax hikes…
Actual austerity would mean (at a minimum) reducing spending to the amount of money actually taken in. As best I can tell, none of the PIIGS, or France, or the UK has undertaken such real austerity. That “severe” Greek austerity that just caused a change in government? It reduced Greece’s official deficit spending from 9.0% of GDP to 7.5% of GDP. They didn’t even want Greece to stop digging a hole, they just wanted them to dig more slowly.
Austerity did not fail, it was declared difficult and left untried.
Eventually growth in the Eurozone picked up just enough, and the Troika managed to install enough of their own functionaries in various PIIGS positions to ensure that their half-assed, anemic austerity programs were actually followed that, along with Brexit and the Rise of Trump, it got Eurozone debt crisis off the front page and back under the rug.
So fast forward to today. Has the European debt crisis been solved?
Hah! Of course not. Does the EU ever really solve anything? European debt grew during the pandemic, but this time they get to blame Flu Manchu rather than slow growth, high taxes, declining births and a bloated welfare state.
Spain, Italy and Greece have all continued their PIIGS-ish ways. The UK, under ostensibly conservative Tory governments for the entire pandemic and constant attack for “austerity,” and they’re still piling up debt like one of the PIIGS, though the double-whammy of Brexit dislocations and idiotic lockdowns are more to blame than increased spending per se.
Ireland, with the lowest deficit for the period, seems to have proved that their membership among the PIIGS was transitory.
What then of Portugal? Have they improved? It turns out only slightly and relatively. Their debt increased by 13.9% for the period, making them better not only than Spain, Italy, Greece and the UK, but also France, Cyprus, Malta, Hungary and Slovenia. They evidently managed a balanced budget in 2019 (at least on paper). Their Flu Manchu deficit spending is still unsustainable, just slightly less unsustainable than many of their fellow Eurozone grave-diggers.
Ireland seems to have escaped PIIGSdom, but the others as are still very much in trouble, with debt-to-GDP rations at or above 100%:
Greece: 174.15%
Italy: 133.43%
Portugal: 119.46%
Spain: 95.96%
Ireland is down at 62.42%.
We don’t have much standing to condemn others, as the United States ratio stands at 106.70%. Donald Trump had numerous virtues as President, but he was no deficit hawk, and Biden would crank up deficits even higher if the Senate let him.
We can see the fruits of this orgy of deficit spending in the worldwide inflation we’re seeing. (Feel free to argue whether government budget deficits or central bank quantitative easing is more at fault.) Inflation may ruin nations, but it’s the deficit-spender’s friend, letting him pay off debt on the cheap with now devalued currency. And it’s the working poor whose lives are most impoverished by it.
Robbing Peter to pay Paul has always been a popular proposition to get Paul’s vote, but we’re now robbing Peter and Paul’s unborn grandchildren to delay financial reckonings until after the next election cycle.
It will not end well.
Tags:austerity, Brexit, Budget, coronavirus, Economics, EU, Europe, European Central Bank, European Debt Crisis, Eurozone, Foreign Policy, Germany, Greece, IMF, Ireland, Italy, PIIGS, Portugal, Spain, UK, Welfare State
Posted in Budget, Economics, Foreign Policy, Welfare State | No Comments »
Tuesday, May 29th, 2018
Remember the Eurozone crisis? It’s back!
Or, to be more accurate, it never went away.
Today’s locus of instability is Italy, where two Euroskeptic parties, one left (Five Star Movement) and one right (the League, AKA the Northern League), were prevented from forming a coalition government by the country’s Europhilic President Sergio Mattarella, who vetoed their pick of Paolo Savona for finance minister because he advocates leaving the Euro. Like Spain, Italy found out that if they went too strongly against the EU’s wishes, they’d simply be required to keep voting until they got it “right.”
The current reckoning has been a long time coming:
Accepting Italy as one of the eurozone’s founding members was a decision only made possible by ignoring common sense, by twisting statistics, and by making a mockery of the rules. But it was a Pyrrhic victory: Italy was allowed to trick its way onto a voyage that damned it. The euro simply did not fit the realities of Italy’s economy or its politics. By dramatically cutting the country’s financing costs (borrowing lire would have carried a significantly higher nominal cost) adopting the single currency allowed Rome to avoid tackling the country’s high debt load, a debt load that was made all the more dangerous now that it was all denominated in a ‘foreign’ currency. Italy could no longer print lire to pay off its creditors.
When the eurozone crisis hit, Italy was one of the victims, and so, in some respects was its democracy. In something that came uncomfortably close to a coup, the eurozone leadership essentially used Italy’s financial fragility as a lever to secure the replacement in 2011 of Prime Minister Berlusconi by a Brussels man, Mario Monti, a pliable, unelected proconsul. Next time you hear Brussels lecturing Eastern Europeans on democracy remember that.
Italy weathered the crisis in a ‘just a flesh wound’ sort of way. Its problems became chronic, rather than acute, if that’s the correct adjective to describe the consequences of staying stuck in the euro’s deflationary trap: High rates of unemployment and anemic economic growth.
The Independent:
Per capita GDP in Italy is still more than 8 per cent lower than it was when Lehman Brothers went bust in 2008. Quite incredibly, it is even lower than it was when the country joined the eurozone back at the turn of the millennium. Unemployment stands at 11 per cent, down from a peak of 13.1 per cent in 2014, but still double the 5.8 per cent low seen in 2007.
As the largest of the PIIGS and the third largest economy in the Eurozone, Italy’s participation in the Euro is a lot more vital than Greece’s, which is why the EU has actively been trying to crush any hint of (pick your neologism) Quitaly or Italeave.
Never mind the fact that, as in Spain, Italian voters want to have their cake and eat it too, advocating polices (in the form of “rolling back pension reforms and government subsidies to the unemployed”) that would only pile on further debt in a country that already has a national debt running at over 130% of GDP, secondly only to Greece in the Eurozone. That doesn’t change the fact that Italy has “ceded its sovereignty to the European Union and international financial markets.”
Naturally, traders have responded to the crisis by selling off Italian stocks and bonds.
Stay tuned…
Tags:Budget, Carlo Cottarelli, Economics, EU, Euro, European Debt Crisis, Eurozone, Five Star Movement, Foreign Policy, Italy, Northern League (Italy), Paolo Savona, PIIGS, Quitaly, Sergio Mattarella
Posted in Budget, Economics, Elections, Foreign Policy | No Comments »
Friday, January 13th, 2017
Time to extract more pure wheat from chaff!
Glenn Greenwald says Democrats will go to any lengths to avoid blaming themselves for their debacle:
I really haven’t experienced anything even remotely like the smear campaign that has been launched by Democrats in this really coordinated way ever since I began just expressing skepticism about the prevailing narrative over Russia and its role that it allegedly played in the election and, in particular, in helping to defeat Hillary Clinton. I mean, not even the reporting I did based on the Edward Snowden archive, which was extremely controversial in multiple countries around the world, not even that compared to the attacks now.
And the reason is very, very obvious, which is that it has become exceptionally important to Democratic partisans to believe that the reason they lost this election is not because they chose a candidate who was corrupt and who was extremely disliked and who symbolized all of the worst failings of the Democratic Party. It’s extremely important to them not to face what is really a systemic collapse on the part of the Democratic Party as a political force in the United States, in the House, in the Senate, in state houses and governorships all over the country. And so, in order not to face any of that and have to confront their own failings, they instead want to focus everything on Vladimir Putin and Russia and insist that the reason they lost was because this big, bad dictator interfered in the election. And anyone who challenges or anyone who questions that instantly becomes not just their enemy, but now, according to their framework, someone who’s actually unpatriotic, that if you question the evidence, the sufficiency of the evidence to support this theory, that somehow your loyalties are suspect, that you’re not just a critic of the Democratic Party, you’re actually a stooge of or an agent of the Kremlin.
In fact, Greenwald is all over this week’s LinkSwarm, saying that the U.S. “deep state” is at war with Trump:
For months, the CIA, with unprecedented clarity, overtly threw its weight behind Hillary Clinton’s candidacy and sought to defeat Donald Trump. In August, former acting CIA Director Michael Morell announced his endorsement of Clinton in the New York Times and claimed that “Mr. Putin had recruited Mr. Trump as an unwitting agent of the Russian Federation.” The CIA and NSA director under George W. Bush, Gen. Michael Hayden, also endorsed Clinton and went to the Washington Post to warn, in the week before the election, that “Donald Trump really does sound a lot like Vladimir Putin,” adding that Trump is “the useful fool, some naif, manipulated by Moscow, secretly held in contempt, but whose blind support is happily accepted and exploited.”
It is not hard to understand why the CIA preferred Clinton over Trump. Clinton was critical of Obama for restraining the CIA’s proxy war in Syria and was eager to expand that war, while Trump denounced it. Clinton clearly wanted a harder line than Obama took against the CIA’s long-standing foes in Moscow, while Trump wanted improved relations and greater cooperation. In general, Clinton defended and intended to extend the decadeslong international military order on which the CIA and Pentagon’s preeminence depends, while Trump — through a still-uncertain mix of instability and extremist conviction — posed a threat to it.
Whatever one’s views are on those debates, it is the democratic framework — the presidential election, the confirmation process, congressional leaders, judicial proceedings, citizen activism and protest, civil disobedience — that should determine how they are resolved. All of those policy disputes were debated out in the open; the public heard them; and Trump won. Nobody should crave the rule of Deep State overlords.
Yet craving Deep State rule is exactly what prominent Democratic operatives and media figures are doing.
One need not buy all of Greenwald’s analysis of geopolitics or Trump to conclude that his analysis of the current alliance between Democrats, the media and the intelligence community is essentially correct. (Hat tip: Ace of Spades HQ.)
Borepatch, who is a real life computer security expert, is not impressed with the Russian hacking claims:
My take is that several state actors certainly hacked Hillary’s email server for years and years, and silently read all her communications. Probably more than one state actor penetrated the DNC email system for several years.
It’s plausible than an insider leaked the DNC emails – some BertieBro IT Admin type who saw how the sausage was being made and who was smart enough to cover his tracks while pointing clues towards Russia.
Bottom line, this is a tale told by an idiot; full of sound and fury and signifying nothing. We know that something happened, but we don’t know who did it, and what they say in the report doesn’t change that.
Borepatch, in turn, points to this detailed analysis of the security on both Hillary’s email server and the DNC:
At this point, we can largely dispose of Hillary’s Hack. It was an open book to all comers and at least one was Romanian (and sharing with friends) and not Russia. However, I’d say it was almost certain that at some time a Russian intrusion happened. The name of the server was obvious. The location insecure. The operating system and protective layers a joke. Frankly, I’d expect them to be “in” the same day they first looked at it. Which means something like 8 years ago. So why didn’t things leak then?
Because the Russians Are Not Stupid. A fundamental of spycraft is you don’t expose sources and methods, you use them to collect intel for your use, not publication. I suspect they enjoyed a near real time email feed from the Secretary Of State for years, in silence. This argues for email dump to be someone other than them. My personal muse would be an NSA guy, aghast at what was in evidence. Like a Snowden, but not willing to give up the $1/4 Million salary… He (or she…) would have all the requisite skilz to pull it off and leave no finger prints, access to PRISM, and lots of neat toys to work with. Though more likely would be the underpaid I.T. guy Hillary had set it up who was making a backup one day and dropped a load… But I digress.
The bottom line on Hillary is we know she kept a full copy (found on Huma’s Laptop with the Wiener…) and that it was around until she had her lawyers erase it. We know it surfaced in full at the time the laptop went to the FBI, and in parts before that. We know at least one of her hackers was found (though he had likely not leaked it) and that he said he had a doomsday copy for safety. He wasn’t a very good hacker, so that shows lots of good ones walked right in and snagged copies. Assigning source of any Hillary leaks is going to be an exercise is “ME ME MEE!!! PICK MEEE!” with a dozen hands up in the room.
More from Guccifer 2.0 himself: “I have totally no relation to the Russian government. I’d like to tell you once again I was acting in accordance with my personal political views and beliefs. The technical evidence contained in the reports doesn’t stand up to scrutiny. This is a crude fake.” (Hat tip: Zero Hedge.)
“The opposition research firm that hired a former British spy to dig up dirt on Donald Trump is the same shady outfit that was hired by Planned Parenthood to put a positive spin on videos showing the sale of baby parts.” (Hat tip: Director Blue.)
Our new Secretary of Defense sounds serious about defeating the Islamic State. “We should try to shut down its recruiting, shut down its finances, and then work to fight battles of annihilation — not attrition, but annihilation — against them; so that the first time they meet the forces that we put against them, there should basically be no survivors.”
Speaking of which: “Islamic State publishes video of toddler executing prisoner on playground.”
House Republicans are already laying the groundwork to repeal ObamaCare.
News media buries story of Jeff Sessions bankrupting the Klu Klux Klan in Alabama because it doesn’t fit their narrative. (Hat tip: Dierctor Blue.)
Mexican illegal aliens are already self-deporting in advance of Trump’s inauguration. (Hat tip: Director Blue.)
The problem with rule by experts:
The problem that we are faced with, and what the American people seem to be rebelling against, are the “experts” who seek to influence government policy in ways voters are either opposed to or at the very least find ineffective and expensive.
To put it bluntly: those experts have screwed a lot of shit up. Obamacare, American foreign policy, the war on drugs, domestic environmental policy, the economy…the list of issues is seemingly endless. The American people were told for at least the last eight years that the smart set was in charge, and things would be just dandy if only we allowed the “experts” free rein. The problem is that there are a lot of things that may seem smart on paper but which just won’t work when forcibly applied to the citizens of 50 separate states, with 50 separate economies, and 50 distinct voting bases, and this assessment assumes that those implementing policy actually have America’s best interests as a free republic at heart.
This leads us to the real heart of the matter: liberty. The Washington political and bureaucratic classes have no Constitutional right to force the “solutions” to any of these problems on their fellow citizens. The health insurance “problem” is not a national problem insofar as there is no Constitutional right to health insurance (or even healthcare), and the answer to what problems there are in healthcare in Texas are very probably not the same as the answer for New Hampshire or Oregon. The federal government institutes regulations constantly affecting the economy that have no Constitutional basis. There is no Constitutional basis whatsoever for banning or regulating any drug at the Federal level, and yet we’re told we have a national “opioid epidemic” that demands a federal solution. Foreign policy experts are undoubtedly necessary, but our foreign policy, when any logic or reason can be discerned in it at all, certainly doesn’t seem to be guided by any experts in the field. There is even a very good possibility that actually fixing any “problem” at the federal level is viewed as bad for business, because without the problem to solve there would be a lot of unemployable experts.
In short, the American people don’t have a problem with experts or intellectuals. What they have a problem with is incompetence, and it is just a fact of life that the larger and more remote the government and bureaucracy become, the more incompetent and unaccountable they will be.
Thanks Obama. “93 percent of police officers are concerned about their safety on the job; 72 percent are less willing to stop suspicious characters; and 75 percent report increased tension between cops and the black community.” (Hat tip: Instapundit.)
U.S. troops sent on permenant deployment to Poland. Given that Poland joined NATO in 1999, it’s a surprise it took this long. (Hat tip: Director Blue.)
About half the EU has been cheating on the 3% deficit ceiling fiscal discipline rule half the time. Only Finland, Estonia, Luxembourg and Sweden have never broken the rule. And Poland, France and the brexiting UK have actually violated the rule more than Italy and Ireland. Once again: Austerity hasn’t been tried and found wanting in the EU, it’s been declared difficult and left untried.
Turkish president Recep Tayyip Erdogan blames “terrorist exchange rates” for attacking his country. Fun how that happens when you ruin your own country… (Hat tip: Stephen Green at Instapundit.)
Social Justice Warriors already deterring people from the “Women’s March on Washington.” See, they were all set to flaunt the peacock feathers of their leftwing virtue, only to be told “they had a lot of learning to do.” Because there’s nothing more fun than being lectured about how you’re a racist when you’re not. Welcome to Red State America, liberal white women! (Hat tip: Instapundit.)
“DNC Chair Candidate Forum to Be Held at Anti-Israel Restaurant” (Hat tip: Director Blue.)
Germany court rules that an attempt to burn down a synagogue is a “justified expression of criticism of Israel’s policies.” You know, I think I’ve seen this movie before…
Heh: “Intolerance at Berkeley as Faculty Demand Gay Immigrant Stay Off Campus.”
More: Berkley Social Justice Warriors dox the hosts of Milo’s speech. (Hat tip: Instapundit.)
1. “CEO Raises Salaries to $70K for EVERY Employee” 2. ???? 3. Wrecked company. (Hat tip: Borepatch.)
Teach women not to lie about rape.
Social Justice Warrior drama at the Free Software Foundation. “‘Developer’ Leah Rowe has been making unhinged, outrageous claims of harassment and bullying on behalf of her anonymous friend who was let go by the FSF. She then stole the Libreroot project from the community, locked it down away from the other devs, and made a unhinged claims of wrongdoing by the FSF and two employees. She has provided no evidence of any of these claims and as she is a post-modernist, we’re supposed to substitute her feelings for any facts as being equivalent.” The amazing thing is that, for once, FSF head honcho Richard Stallman (who is somewhere on the continuum between “true software visionary” and “fanatic lunatic no one wants to deal with”) isn’t the person at fault for the drama…
“An Arizona Department of Public Safety officer has survived an attempt on his life after a passing motorist shot dead a highway sniper who took aim at the trooper after stopping to assist an individual in a rolled vehicle.”
Also from Arizona: Naked woman steals police car, goes joyriding.
Clockboy’s lawsuit dismissed.
William Peter Blatty, RIP.
What the hell? YouTube takes down Legal Insurrection’s channel at the behest of anti-Israeli activists.
Slate won’t even delete their big mistakes:
Tags:2016 Presidential Race, anti-semitism, Arizona, austerity, Border Controls, Budget, Crime, Democrats, Donald Trump, Elections, EmailGate, Estonia, EU, European Debt Crisis, Finland, Foreign Policy, France, Free Software Foundation, Glenn Greenwald, Guccifer 2.0, Guns, Hillary Clinton Scandals, Islamic State of Iraq and Syria, Israel, James "Mad Dog" Mattis, Jeff Sessions, Jihad, Leah Rowe, Legal Insurrection, LinkSwarm, Luxembourg, Media Watch, Milo Yiannopoulos, ObamaCare, PIIGS, Poland, police, rape, Recep Tayyip Erdogan, Republicans, Russia, Slate, Social Justice Warriors, Sweden, Syria, Turkey, UK, YouTube
Posted in Border Control, Budget, Crime, Democrats, Economics, Elections, Foreign Policy, Jihad, Media Watch, Military, ObamaCare, Republicans, Social Justice Warriors | 1 Comment »
Wednesday, July 6th, 2016
Yesterday’s Brexit roundup mentioned that Italian banks account for nearly half the bad loans for the entire Eurozone.
Italy is now the heads-on favorite as the most likely instigator of the next global economic crisis. Some analysts are calling it a perfect storm:
Italy’s bank bailout fund might not be enough to beat back the Brexit. More key Italian financial services firms are under pressure and face the potential need to raise capital, leaving Italian government officials and its banking system trying to steer clear of a crisis.
As Italian bank bonds and share prices are seeing their value slammed in the face of rising uncertainty, banks with substantial bad loans are facing greater pressure, with rates around the world slipping into negative territory.
And, of course, they’re blaming Brexit rather than all the myriad problems with the EU that caused the Brexit.
Italy’s bank bailout fund might not be enough to beat back the Brexit. More key Italian financial services firms are under pressure and face the potential need to raise capital, leaving Italian government officials and its banking system trying to steer clear of a crisis.
As Italian bank bonds and share prices are seeing their value slammed in the face of rising uncertainty, banks with substantial bad loans are facing greater pressure, with rates around the world slipping into negative territory. It’s an anxiety some in Italy and throughout the European Union may have been hoping would be eased by the Brexit vote last month — but then the U.K. referendum delivered the opposite outcome from the one they had sought.
“Market volatility following the U.K.’s EU referendum result hit the Italian bank sector particularly hard because it is one of Europe’s weakest,” Fitch Ratings analysts said in a July 4 report. “Asset quality pressure is a main driver for the negative outlooks on several large and medium-sized Italian banks.”
The Brexit vote, which calls for the United Kingdom to abandon a European Union that has careened for years from one crisis to another, could hasten weak Italian banks’ downfall. It was widely expected that European and U.K. banks will suffer the brunt of the vote in late June, and while British banks have been hard hit by the news — which brings with it tremendous regulatory uncertainty — EU banks have suffered as well.
Many banks in Italy, including its largest, UniCredit SpA, have seen share prices pounded; its stock is down more than 60 percent so far this year. A staffer at UniCredit could not provide comment when contacted.
Already, Italian officials and executives appear to be pulling out all the stops to stave off banking sector contagion. The lingering question for banks is whether they can continue to support lending operations at a time when creditors face potential losses and as some of the country’s leading financial services firms could be subject to shotgun M&A marriages by regulators.
Italian financial services firms earlier this year established a multi-billion dollar fund called Atlante to buy non-performing bank loans. But the fund, which is in the 4-billion euro to 6-billion euro range ($4.43 billion to $6.65 billion), one analyst said, is far too small to cover all the non-performing loans held by major Italian banks. However, the fund could still be leveraged in order to support loan purchases.
“The authorities need to get banks to remove a large portion of soured loans from their books so they can loan more,” said Julien Jarmoszko, senior research manager at S&P Global Market Intelligence. “If investors fear more Italian banks, this will raise their cost of capital and reduce lending as a result.”
Look for some sort of holding action for temporary recapitalization (including a “bail in” or some sort of ECB scheme) to let all the insiders dump their bad debts onto the European taxpayer, which was the real point of prolonging the Greek farce.
More news on that front:
Atlante already took control of Veneto Banca after “a €1bn capital increase demanded by EU bank regulators attracted zero interest.” And Atlante may have to tap pension funs for further recapitalization.
Italy has also banned short-selling of imploding Banca Monte dei Paschi di Siena SpA. That’s never a good sign, and it never works for long.
“It’s bad – non-performing bank loans have risen to 18%. At 10%, most banks are technically bankrupt. That’s the percentage of capital and pledged deposits they have against bad loans. Our pledged deposits, not theirs. At 18%, they’re no longer “technically” bankrupt. They ARE bankrupt! Greece still has bad or non-performing bank loans of 34%, Ireland 19% and Portugal 12%. And we haven’t seen the next serious financial crisis yet.”
And bank bailouts could hit Italian sovereign debt right in the bond ratings. “Italian ratings are already at BBB- for S&P, though we must also add that DBRS still ranks the country at AL. Still, if these ratings start to come under pressure from the agencies, this could lead to speculation that Italy may eventually fall out of the investment grade bucket. This would have a major impact – in the first place in terms of the eligibility of Italian bonds for the PSPP.” That’s the European Central Bank’s public sector purchase program.
Of course, when push comes to shove, we’re likely to see all sorts of banking rules get thrown out the window…
Tags:Atlante, Banca Monte dei Paschi di Siena, Brexit, Economics, European Central Bank, European Debt Crisis, Eurozone, Foreign Policy, Italy, PIIGS, UniCredit, Veneto Banca, Welfare State
Posted in Economics, Foreign Policy | No Comments »
Monday, April 25th, 2016
That’s an actual headline today. I throw in “today” because that same headline could have been run just about any time over the past five years, because Greece is endlessly willing to talk as long as they keep getting bailout money.
The one thing they have proven absolutely unwilling to do is actually implement reforms, at least any reforms that would involve the government spending less money than it takes in. Instead they’ll ask for more debt write-downs, write-offs and haircuts for lenders rather than stop spending other people’s money.
And I could have written the preceding paragraph any time over the last five years or so as well…
Tags:EU, European Debt Crisis, Greece, IMF, PIIGS, Welfare State
Posted in Budget, Welfare State | No Comments »
Monday, November 30th, 2015
So go ahead, bankrupt your nation to keep your failing welfare state afloat a little longer! What’s the worst that could happen?
Well, how about turning your daughters into prostitutes to survive?
Young Greek women are selling sex for the price of a sandwich as six years of painful austerity* have pushed the European country to the financial brink, a new study showed Friday.
The study, which compiled data on more than 17,000 sex workers operating in Greece, found that Greek women now dominate the country’s prostitution industry, replacing Eastern European women, and that the sex on sale in Greece is some of the cheapest on offer in Europe.
“Some women just do it for a cheese pie, or a sandwich they need to eat because they are hungry,” Gregory Laxos, a sociology professor at the Panteion University in Athens, told the London Times newspaper. “Others [do it] to pay taxes, bills, for urgent expenses or a quick [drug] fix.”
Correction: It wasn’t “six years of painful austerity” that brought hem to this pass, it was six years of avoiding painful austerity, and refusing to cut government outlays until they matched receipts, that turned all of Greece into Whore Island.
(Hat tip: Ann Althouse.)
Tags:European Debt Crisis, Greece, PIIGS, prostitution, Welfare State
Posted in Welfare State | No Comments »
Monday, October 26th, 2015
Portugal has decided that EU economic mandates trump that pesky Democracy:
Anibal Cavaco Silva, Portugal’s constitutional president, has refused to appoint a Left-wing coalition government even though it secured an absolute majority in the Portuguese parliament and won a mandate to smash the austerity regime bequeathed by the EU-IMF Troika.
He deemed it too risky to let the Left Bloc or the Communists come close to power, insisting that conservatives should soldier on as a minority in order to satisfy Brussels and appease foreign financial markets.
I’m not entirely unsympathetic to Silva’s plight. As in Greece, the anti-austerity movement is an economically illiterate coalition of looters who insist that the welfare state gravy train can never come to an end, ever, even when the country is dead broke. (Though note that author Ambrose Evans-Pritchard never once mentions “welfare state” in his piece.) Remember that Portugal has never practiced real austerity (cutting budget outlays to match receipts), never once having balanced its budget in the last decade. And if the commies (who are, thankfully, only a minority coalition partner) had actually promised to set up a dictatorship of the proletariat, I’d be cheering Silva’s intransigence.
But Democracy is the theory that the people know what they want, and deserve to get it good and hard. If Portugal thinks they can take cues from Greece’s anti-austerity tantrum and somehow not get slapped down just as hard, let them try. And in fact the leftwing’s coalition’s promises “to abrogate the Lisbon Treaty, the Fiscal Compact, the Growth and Stability Pact, as well as to dismantle monetary union and take Portugal out of the euro” are entirely rational and in Portugal’s self-interest.
The EU has always been an explicitly antidemocratic union, one designed to prevent mere voters from overruling their bureaucratic betters. The fact that this time they’re opposed by idiots who think they can keep voting themselves goodies from other people’s wallets doesn’t change the problem of the EU’s deficit of democracy.
Two of modern Europe’s central foundations (a monetary union and a cradle-to-grave welfare state) are not only unsustainable, they are incompatible with each other, and corrosive to both stability and democracy. And the EU leaders have no idea what to do about it.
Tags:Ambrose Evans-Pritchard, Anibal Cavaco Silva, Communism, Elections, EU, Euro, Fiscal Compact, Foreign Policy, Greece, Growth and Stability Pact, Lisbon Treaty, PIIGS, Portugal, Welfare State
Posted in Communism, Elections, Foreign Policy, Welfare State | 1 Comment »
Friday, August 14th, 2015
Austin had a very, very wet spring, but August is shaping up in normal fashion: Bone dry and hot as hell. Try to keep cool and enjoy a Friday LinkSwarm:
“There is no real distinction between today’s Democrats and socialists.”
Democrats have an America problem.
The email scandal could very well sink Hillary:
Politicized or not, the DOJ will be increasingly boxed in by the FBI and intelligence community investigations. Normally, when the intelligence community finds classified materials in unauthorized locations, it seeks felony prosecutions. Gen. David Petraeus was sunk for keeping his own personal calendars in an unlocked drawer at home. The calendars were deemed classified, even if they lacked an official stamp. President Clinton’s CIA Director, John Deutsch, lost his job and security clearance for using his portable computer at home. It had classified material on it. Those violations are trifling compared to Hillary Clinton’s exposure.
(Hat tip: Instapundit.)
Longtime Hillary Clinton aide Huma Abedin may be joining her in the big house
Bernie Sanders up over Hillary Clinton in New Hampshire? #WhiteVotesMatter
Ohio Democrats continue their youth movement by recruiting 74-year old Ted Strickland for a Senate race.
Someone spilled millions of gallons of toxic waste into a river! Call the EPA! Oh wait, it was the EPA.
Islamic State executes 300 electoral civil servants in Iraq. Good thing we’ve got Nobel Prize winner Barack Obama sowing peace and stability to the Middle East rather than that warmongering bungler Bush… (Hat tip: Jihad Watch.)
So why did the Obama Administration pretend Taliban-head Mullah Omar was still alive when he’s probably been dead 2 years? (Hat tip: Prairie Pundit.)
And why is the Obama Administration siding with the terrorists and against the Americans who have already won legal judgments against them?
A whole bunch of gun myths debunked. (Hat tip: Borepatch.)
Just why did the University of Minnesota think it needed grenade launchers? (Hat tip: Say Uncle.)
China devalues the Yuan. This is Big Freaking News, but hard to conceptualize, since China’s economic statistics are have not even a nodding acquaintance with reality, and haven’t for at least a decade. So is China’s current bubble bad, or super mega world-shatterling bad?
Your guide to global black market pricing.
Islamic State Worse off than Greece?
Brazil: Super-Duper boned.
“Great Cthulhu emerges as surprise front-runner in Labour leadership contest.”
Tianjin, China Blows Up Real Good.
Jihadis kill four, kidnap six from hotel in central Mali. That’s really going to crimp your vacation plans. (Hat tip: Jihad Watch.)
Cop-killing inmate dies in prison riot. Alas, my electron microscope is being recalibrated, so I won’t be able to find the proper sized violin to commemorate this sad occasion… (Hat tip: Dwight.)
Social Justice Warriors continue their war on comedy on campus.
Man arrested for shooting at police in Ferguson was completely unarmed. Except for his guns.
Cool World War II radio intercepts story, via Instapundit.
Florida Man has been busy.
Tags:2016 Election, 2016 Presidential Race, Afghanistan, Bernie Sanders, black market, Brazil, China, Crime, Cthulhu, Democrats, environmentalism, EPA, Florida, Foreign Policy, Hillary Clinton, Hillary Clinton Scandals, Islamic State of Iraq and Syria, Italy, Jihad, Mali, Mullah Omar, Obama Scandals, Palestinians, PIIGS, Social Justice Warriors, Ted Strickland
Posted in Crime, Democrats, Economics, Elections, Foreign Policy, Jihad, Military, Obama Scandals, Social Justice Warriors | No Comments »
Thursday, August 13th, 2015
So I haven’t done a Greek update in a while, since after Greece caved into the inevitable (Newsflash: broke people generally do not have leverage over those lending them money), it was all over but the shouting. Now that Greece and its creditors supposedly have a third bailout deal inked, and Greece settles into its clearly defined misery, let’s take a look at exceptionally bankrupt Greece these days, shall we?
Via Zero Hedge comes former Greek finance minister Yanis Varoufakis’ detailed review of the bailout agreement. It’s a mixture of self-serving lies (trying to distance his own Syriza party from the horrific economic mess they made acutely worse) and brutal truths (about just how screwed Greece is by the agreement).
Speaking of Varoufakis, it looks like he’s going to be up on hacking charges…for preparing emergency plans to float the drachma.
Oh: He also says the latest bailout deal won’t work. He’s not wrong…
Greece’s economy miraculously grew in the second quarter. But that was before the full effects of the crisis were reflected…
Greece’s tax revenues have collapsed.
Greece’s manufacturing sector fell off a cliff in July. Funny how that happens when your banks are closed and you can’t pay for goods.
Greece faces two years of recession. That part’s probably true. But that primary budget surplus? Yeah, not so much.
“Greece’s banks just made the mistake of being banks in Greece.”
After all that? Greece still isn’t fixed.
To add a cherry on top, Greece’s refugee crisis continues to grow. Because it’s still safer to live in bankrupt Greece than the Middle East…
Tags:Budget, Euro, European Debt Crisis, Foreign Policy, Greece, PIIGS, Syriza, Welfare State, Yanis Varoufakis, Zero Hedge
Posted in Budget, Economics, Foreign Policy, Welfare State | No Comments »
Wednesday, June 3rd, 2015
Looks like all of Greece’s creditors have finally decided it’s put up or shut up time for reform. “Greek Prime Minister Alexis Tsipras is expected to face demands for tough reforms of Greece’s pension system, labor laws and other areas, as well as creditors’ insistence on painful budget measures to ensure that Greece runs a fiscal surplus before interest.”
At this point Greece seems completely and utterly broke, unless there’s more upfront money in that still unsigned Russian pipeline deal than reports indicate (doubtful, given Russia’s own financial straits), or Tsipras finds yet another hidden money reserve to tap (“We can can pay pensions from the children’s bone marrow fund!”). So despite Tsipras’ insistence that they be allowed to keep spending other people’s money on their bankrupt welfare state, this time the jig may finally, finally, really, we mean it this time, for sure, be up.
Here’s a piece that explains in terms of game theory why Tsipras overplayed his weak hand:
Now, as long as the EU keeps Greece in the Eurozone then the Tsipras administration will find itself forced to either exit the Eurozone or apply the austerity it promised to end. Not only would such an outcome send a clear signal to other Eurozone nations that exiting was foolhardy, it would also indicate that radical, nationalist, anti-establishment and anti-austerity parties cannot deliver on their promises.
The EU won’t force Greece to exit the Eurozone but it won’t offer anything to keep Syriza in power, either. The EU simply needs to keep negotiating without offering anything but strict compliance with what was already agreed upon, which is continued austerity in return for loans. In effect, to use a sports analogy, the EU just needs to “run out the clock.” In the end, it appears that Tsipras will either be forced out of office or forced to break up his coalition and form a new government with the mainstream parties, the outcome that EU and Germany have been angling for all along.
(Though make no mistake: that “primary surplus” was always illusory.)
A few more Greek debt crisis links:
Now Greece is threatening not to pay this week’s debt payment to the IMF unless a deal is agreed on. Once again, Tsipras is playing chicken with a Yugo, while his opponents are driving a Tiger tank…
Tsipras needs to stop making empty promises and get a clue. “He cannot expect Germans to volunteer the money Greece needs, so he can spend it on the kind of leftist economic fantasy that was discredited all over Europe in the 1970s and 1980s. Just ask Argentina where default followed by populist economics leads.”
Germany has good reason to stop subsidizing Greece, namely their own crashing demographics: “Germany’s birth rate has collapsed to the lowest level in the world and its workforce will start plunging at a faster rate than Japan’s by the early 2020s, seriously threatening the long-term viability of Europe’s leading economy.” (Hat tip: Powerline.)
“A Greek exit is already priced into the euro.”
Tags:Alexis Tsipras, Budget, Euro, European Debt Crisis, Eurozone, Foreign Policy, Germany, Greece, PIIGS, Welfare State
Posted in Budget, Economics, Foreign Policy, Welfare State | No Comments »