Opinion – Divisions Grow as a Downturn Rocks Europe – NYTimes.com – John Gelmini


English: NOVO-OGARYOVO. Answering journalists'...

English: NOVO-OGARYOVO. Answering journalists’ questions following talks with Federal Chancellor of Germany Angela Merkel. Русский: НОВО-ОГАРЁВО. Ответы на вопросы журналистов по окончании переговоров с Федеральным канцлером Германии Ангелой Меркель. (Photo credit: Wikipedia)

The prognosis within the article as Dr Alf says, is spot on, and a stagnating Europe is in nobody’s interests as there will be knock on effects around the world which is so inter-connected that one could liken it to a river. A blockage at a bend in a river caused by silt or the activities of beavers causes the river downstream to slow to trickle so that shipping cannot move along it and the economic life of the river dies off.

To create full employment, you need growth at 3% or better, yet Europe even before the crisis in the Ukraine and the Banking collapse has not created a single nett new job in 30 years.

Two generations of young people in Southern Europe and one generation in the UK remain on the dole, effectively written off as economically useless.

Apart from Germany, whose economy is slowing, the rest of the continent fails to make enough of the products and services people want and is still £4.5 trillion gbp in debt.

Cutting expenditure only works if it is delivered as a powerful short sharp shock for a maximum of two years in parallel with an expansion of exports through faster writing down allowances and a crash program of increasing the size of the export sales-force.

Bigger high ticket items do not sell themselves through websites and need “shoe leather on the ground” by people who can sell, know how to engender trust and who speak the language/understand cultural differences.

European politicians and civil servants are immune to this necessity, do not understand exporting or sales and do not understand that we in the West are engaged in economic warfare.

As Donald Trump put it when he said that the Chinese are “eating our lunch” he could have included South Korea, Singapore, Japan, India and some of the MINT countries.

This creates a situation in which misguided tax policies drive companies and the wealthy offshore where both hide some $32 trillion USD, the off-shoring of jobs and huge losses in tax revenues.

The Europeans still imagine that bluff, bluster, lies and mental holograms are enough to get them out of trouble.

It will not and neither Derren Brown nor David Copperfield two superb stage magicians known globally are going to step in to create that money out of a hat or thin air.

It is now “High Noon ” on Friday afternoon and like a salesperson whose house will be repossessed if he cannot make a sale that afternoon because his bank manager has threatened to pull the overdraft, the Europeans think that a soft option or divine intervention will save them.

It will not and if there is an attempt to steal money from people in the form of a Cyprus style “bail in” they are mistaken.

People will revolt and turn on the politicians who have failed them.

A conventional war, with no nuclear weapons, might have worked once but now the world, especially Russia, has plenty of them, so Vladimir Putin knows that European threats about red lines in the Ukraine are just so much hot air.

All that is left is quantitative easing and a massive focus on exports but even now at the 11th hour, I see no co-ordinated and focused action, only complacency, incredible stupidity on the part of our so-called rulers and another generation of young people being sold down the river.

John Gelmini

Argentina’s Use and Abuse of Keynes by Andrés Velasco – Project Syndicate

Project Syndicate

Project Syndicate (Photo credit: Wikipedia)

This is an excellent read from Project Syndicate. Check it out!

Argentina’s Use and Abuse of Keynes by Andrés Velasco – Project Syndicate.

Surprsingly, perhaps policy-makers in Berlin and Brussels can learn from Argentina?

Certainly, Keynesian tools are necessary to restore the economies of Southern Europe, especially Greece,  Cyprus & Portugal.