Eideard

Greece is at the heart of the ongoing eurozone crisis, but is past sleight of hand by Greek statisticians to blame for the country’s current financial meltdown?

“We used to call him the magician, because he could make everything disappear. “He made inflation disappear. And then he made the deficit disappear,” recalls Greek economist Miranda Xafa…

The new fiscal treaty that 25 of the 27 EU member states agreed to…is meant to ensure that in future no country has a budget deficit of greater than 3% of GDP.

That same 3% rule was first enshrined in 1992, in the Maastricht Treaty, which led to the creation of the euro in the first place. But some countries did not respect it. In the case of Greece, not even from the beginning. Greece cooked the books to join the euro in the first place.

“Take the Greek state railway. It was losing a billion euros a year,” Ms Xafa remembers. “The Greek railway had more employees than passengers. A former minister, Stefanos Manos, had said publicly at the time that it would be cheaper to send everyone by taxi…”

“The [railway] company would issue shares that the government would buy. So it was counted not as expenditure, but as a financial transaction.” And it did not appear on the budget balance sheet.

So Greece fulfilled the Maastricht criteria and was admitted to the eurozone on January 1, 2001 – but by 2004 the deception was becoming transparent.”

That year a new, centre-right government was elected. Peter Doukas was appointed budget minister. “I invited the senior staff of the ministry and asked them to give me details of the budget that had been passed the previous December, two-and-a-half months before we took office…

The difference between the published deficit and the real one was huge…The budget said the deficit was 1.5%. The real shortfall was 8.3%.”

So what did Mr Doukas do about it, given the eurozone’s Maastricht treaty rule to keep budget deficits below 3% of GDP…?

“But the answer I got at the time was ‘listen, we are having the Olympic Games in a few months and we cannot upset the whole population and start having strikes and everything just before the Olympic Games’.”

Instead of reforming public finances, Greece borrowed and borrowed to meet the deficit. Banks queued up to lend. The markets did not believe there was a risk of default because Greece’s currency, the euro, was locked into that of Germany…

Suddenly, in this one very narrow respect, every country was Germany…The markets failed to see the debt mountains that were accumulating. And they underestimated the risk…

In fact the Stability and Growth Pact was as good as dead by the time Mr Doukas took office in 2004.

The big nations of the EU, the predominant economic forces of France and Germany were as willing as the little guys to bend the laws, stifle the accounting, because it made the overall books look bigger. The whole of Europe was becoming one big happy family and just one bank, the European Central Bank, was needed to keep track of everything. Even if the rules weren’t lived up to in the first place.

And all the work that’s been put into turning around the train wreck that was the Great Recession started by our local crooks in the United States still can be undone by another recession spinning out of control from Greece and Europe — courtesy of a magician who made the cost of running the Greek train wreck disappear into economic limbo.

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A new law promising internet users the “right to be forgotten” will be proposed by the European Commission on Wednesday. It says people will be able to ask for data about them to be deleted and firms will have to comply unless there are “legitimate” grounds to retain it…

Details of the revised law were unveiled by the Justice Commissioner, Viviane Reding, at the Digital Life Design conference in Munich…

“These rules are particularly aimed at young people as they are not always as aware as they could be about the consequence of putting photos and other information on social network websites, or about the various privacy settings available,” said Matthew Newman.

He noted that this could cause problems later if the users had no way of deleting embarrassing material when applying for jobs. However, he stressed that it would not give them the right to ask for material such as their police or medical records to be deleted.

Although the existing directive already contains the principle of “data minimisation”, Mr Newman said that the new law would reinforce the idea by declaring it “a right”…

The commissioner said that firms would have to explicitly seek people’s permission to use data about them and could not proceed on the basis of “assumed” consent in situations where approval was required.

Her proposed law says that internet users must also be notified when their data is collected, and be told for what purpose it is being processed and for how long it will be stored.

The bill also suggests people must be given easier access to the data held on them, and should have the right to move it to another provider in addition to the right to have it deleted.

However, the commissioner said that she recognised there were some circumstances under which this right would not apply. “The archives of a newspaper are a good example. It is clear that the right to be forgotten cannot amount to a right of the total erasure of history,” Ms Reding told delegates.

RTFA. There’s a certain amount of regulatory crap I’ve left out. The core of the concept is worth discussing throughout the Web.

And, yes, there was a time when conservatives were as concerned with these topics as liberals or progressives. Not anymore, man.

Haven’t we been here before?

Under the pressure of financial crisis and with the euro currency at stake, the two key leaders of the euro zone said Monday that they would together push to remake the European Union into a more integrated political and economic federation, with tight legal restraints on how much debt national parliaments can issue.

German Chancellor Angela Merkel and French President Nicolas Sarkozy, meeting here at the start of a crucial week that will end with a European Union summit meeting on Thursday and Friday, called for amendments to European treaties that would include centralized oversight over budgets and automatic sanctions against countries that violate firmer rules on deficits…

The automatic sanctions – or threat of – are the most Neverland part of the proposals, of course. Who expects a country unable to pay sufficient bills to pay a fine for not paying those bills?

“We want to make sure that the imbalances that led to the situation in the euro zone today cannot happen again,” Mr. Sarkozy told a joint news conference. “Therefore we want a new treaty, to make clear to the peoples of Europe that things cannot continue as they are.”

Mrs. Merkel, warmly embracing the French president despite their often testy relationship, insisted that the euro zone must be effectively reestablished under a different set of rules. “We want structural changes that go beyond agreements. We need binding debt brakes,” she said…

The two leaders are aiming to develop a clear consensus among the other members of the euro zone that they will push ahead with a new treaty. They appear to be calculating that such a signal of solidarity will be enough to persuade the European Central Bank, the only institution in Europe with enough financial firepower to defend the ability of member states to raise money on bond markets, that it has enough political cover to move more aggressively to protect vulnerable countries like Italy and Spain.

RTFA for the details, anecdotal hogwash, hopeful analysis – all of which ignores the fact that standards meant nothing for the several nations brought into the EU in the first place though they didn’t really meet standards. Creative analysis, voodoo economics were used to justify including countries like Greece into the club although they were miles and years away from realistic qualification.

Leave it up to Fibber McGee and Molly
Daylife/AP Photo used by permission

President Hu Jintao of China will arrive in Cannes, France, this week pondering a plea from Europe for tens of billions of dollars to help the continent get out of its debt crisis. And President Obama will arrive with a smile, some hearty handshakes, and his own plea: that Greece get its act together and that Europe fix its economic ills, which he has called one of the biggest drags on the United States’ own ailing economy…

The last few months may well end up being an inflection point, in which the United States, though easily still the world’s leading power, no longer has quite the responsibility or the burden it once did. The pattern has been evident in the Arab Spring, with the American military playing mostly a supporting role in Libya, and now in the European financial crisis, with Asian money coming to aid the Europeans…A significant difference in policy between Obama and traditional Cold Warriors in both of the TweedleDeeDum parties.

In many ways, the situation is a natural evolution of the campaign promises made by Mr. Obama in 2008, when he vowed to turn away from the Bush administration’s more unilateral approach.

As president, Mr. Obama is now overseeing the withdrawal of all troops from Iraq and has emphasized multilateral diplomacy in all its messy forms. He refused to consider American intervention in Libya until the United Nations approved a resolution supporting it, and then he stepped back and allowed France and Britain to take the lead though American military help remained essential…We only have about 174 countries to go to withdraw from the rest of our foreign military bases.

Mr. Obama’s backers say that he is simply acknowledging reality and developing a clear-eyed strategy for what the United States can and cannot do and that he ultimately may prove right in diagnosing Europe’s economic problems and its need to take difficult steps to fix them…

Arriving in Cannes on Thursday, Mr. Obama will be trying to balance providing that leadership while not taking on any of the additional burden — particularly financial — that such leadership often requires…

But for all the acceptance that the United States will no longer be the world’s policeman and financier, the emerging strategy carries risks…

The American military remains the world’s most formidable, and the most likely to be called on to back American allies like Israel, Japan and South Korea.

Of course, no one expects South Korea or Japan to invade one of their neighbors – and start a war.

Does Europe have too many people paid as political and financial journalists?

Journalists in the main media hall at the European Union summit in Brussels, October 27, 2011.

There are plenty of times everyone feels the European Parliament is roughly akin to a Roman circus. They’re not feeding xhristians to lions or staging phony sea battles in their shiny coliseum – but, the attention paid to the smoke and mirrors that passes for planning, that imitates serious well-thought-out legislation, is as much of a joke as the content of that legislation itself.

Peering in at row after row of people paid to report on these events as a serious record of history somehow reminds me of the scribes covering Roman holidays before the obligatory crucifixions.

France and Germany may effectively run the European Union, but Finland has been demonstrating how even a small country can disrupt their grand designs.

By insisting that it receive collateral from Greece in return for aid, Finland is threatening to upend an agreement that euro zone countries, led by France and Germany, made in July to expand the E.U. bailout fund.

Finland would contribute less than 2 percent of the guarantees provided to the fund, known as the European Financial Stability Facility. But the country’s demands, the subject of intense negotiations in recent days, threaten to derail the fragile consensus that is preventing Greece from defaulting on its debt.

Finland is the most vivid example of the way domestic politics can become Continental problems, threatening the unity of the 17 euro zone members as they face their deepest crisis ever. But Germany, the Netherlands and Austria — all wealthy countries with strong economies — also harbor deep opposition to bailing out Greece, Portugal, Ireland or any other country that may become overwhelmed by debt…

In Finland, Prime Minister Jyrki Katainen faces discontent within his governing coalition as well as pressure from a nationalist opposition group, the True Finns, which rode euro-skepticism to big gains in April parliamentary elections…

Finnish officials say they want to resolve the collateral issue and contribute to the bailout fund. But they are also adamant that the country must receive guarantees.

“We have to listen to the people of Finland,” said a government official, who requested anonymity because of the sensitivity of the issue. “Collateral is an absolute condition for Finland to be involved.”

It is unclear what the collateral might consist of — jokes making the rounds suggest that Greece could pawn the Acropolis or the island of Corfu. And any concessions made to Finland would probably then be demanded by other countries like Austria, where citizens are also grumpy about having to provide tax dollars to support Greece…

They may be jokes to NYTimes writers; but, that was exactly the same response from my favorite banker when we got into a discussion of exactly these fiscal issues — the European Union not being a fiscal union.

Confederacies still haven’t anymore viable economic solutions than they have political solutions. A simple agreement for commerce and currency doesn’t guarantee sound monetary policy for seventeen different economies.

European Union leaders gave the go-ahead on Friday for Croatia to join the EU, after six years of preparations marred by slow democratic reforms in Zagreb and the EU’s reluctance to expand.

The former Yugoslav state of 4.4 million people should be able to wrap up accession negotiations next week, they said at a summit in Brussels, but warned the Zagreb government that it has to continue to fight widespread corruption with “vigor.”

The recommendation marks a turnaround for Croatia, which struggled for years to convince the EU’s 27 governments that its judiciary reforms would produce genuine results and prove it has recognized its role in the Balkan wars in the 1990s…

Several EU governments, led by Britain and the Netherlands, pushed for strict monitoring of Croatia during the ratification process and had insisted that the completion of talks remains open-ended.

But others wanted a more clear message. Many EU politicians are hopeful that rewarding Croatia for a last-minute reform push will persuade other governments in the western Balkans that the EU is willing to accept new members if they are ready…

EU enlargement is likely to remain on the backburner in the coming years, however, with voters around the continent wary of its cost at a time of economic austerity…

Croatia, the richest of EU hopefuls in the Balkans and which relies heavily on tourism, is hoping that accession will bolster its appeal to foreign funds at a time when Europe’s financial woes have slashed direct investment in the region.

Not until they change out the tablecloth-looking football kit.

Daylife/Reuters Pictures used by permission

She makes fun, in private, of the way he walks and talks, of his rapid, jerky gestures and facial grimaces. He mocks her deliberation, her reluctance, her matronly caution. She has compared him to Mr. Bean and to the French comic Louis de Funès, with his curly hair and large nose. He sometimes calls her La Boche, the offensive French version of “Kraut,” and goes out of his way to give her an embrace and a double-cheeked kiss in the French fashion, the kind of contact that he knows very well, aides say, she cannot stand.

While the agonies of the European Union — sovereign defaults, deficits and bubbles — unfold like a great wonk drama, at their core is something more intimate: the fractured tale of Angela Merkel and Nicolas Sarkozy. They have been photographed across Europe giving the appearance of happy partnership. They are the best hope Europe has for continued unity. But they do not like each other at all.

As with any couple in trouble, economic difficulty has added to the strain. Two years ago, at the beginning of the crisis, Sarkozy burst out in public, saying, “France is acting, while Germany is only thinking about it!” Later, before a European Union meeting in Brussels on the Greek bailout, the French president was in a rage at his inability to persuade Merkel to do more for that country. After yelling at the E.U.’s president, Herman Van Rompuy, he threatened to boycott the meeting, muttering, according to French officials, “The Germans haven’t changed.” Later, when Sarkozy took camera crews in with him to a meeting, Merkel insisted they leave and, aides said, told Sarkozy, “I won’t let you do this to me.”

So it is not an easy relationship. But they know that they need to keep going for the sake of the kids — that is, for the sake of Europe. They have instructed their top foreign-policy advisers, Jean-David Levitte and Christoph Heusgen, both consummate diplomats, to make the relationship function. Some of the symbolism is a stretch — joint cabinet meetings, ceremonies at the Arc de Triomphe and the Berlin Wall. But there is an extraordinarily close coordination between the two staffs, and before every major European Union summit meeting, Sarkozy and Merkel hash out a joint position to take to the other 25 member states. This isn’t very democratic; it probably isn’t very pleasant either. Yet if the European Union is to function, Sarkozy and Merkel have to get along.

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The EU has been accused of “vanity” after it emerged that the new diplomatic corps headed by Baroness Ashton will spend £32.8m on bullet-proof limousines for some of its 7,000 officials who will enjoy postings in Barbados and even the tiny Pacific island of Vanuatu.

The cost covers the purchase and maintenance of the 150 vehicles for four years with 30 cars being sent to missions in each of five regions around the world, including capitals where there is little or no terrorist threat.

A breakdown of the new European External Action Service (EEAS), which will have a budget of £8bn, shows that the diplomatic postings will include sending 46 officials to Barbados, 57 to Vietnam and 95 to Ukraine.

Even the tiny Pacific island nation of Vanuatu, which has a population of just 230,000, will have six diplomats…

Stephen Booth, of the Open Europe think tank, said, “We were told that the EU’s new foreign service would be ‘budget neutral’ but this promise has been broken in its first year. At a time of widespread austerity, taxpayers shouldn’t be asked to pay for the EU’s pretensions to global power status.”

“Why else would the EU send ambassadors to Barbados to parade around in armoured cars other than sheer vanity..?”

As the EU’s High Representative for Foreign Affairs and Security, Lady Ashton is the best paid female politician in the Western World and earns a salary of £230,702 a year…

If the EU is to succeed on their mission to keep up with the American State Department at self-aggrandizement they will also have to add a private army of mercenaries. Are the Hessians still available?

Nordic customs officials have arrested a truck driver after he tried to illegally import 28 tons of Chinese garlic into the European Union.

The driver was intercepted last month as he drove the pungent truckload from Norway, which is outside the EU and where garlic is exempt from customs’ duties, into Sweden, where garlic is subject to a 9.6 percent EU-wide duty.

Smuggling of cheaply produced Chinese garlic into the EU is on the rise, with around 1,200 tons brought into the 27-nation bloc via Norway since 2009, according to the European Anti-Fraud Office, known as OLAF.

“The interception of the lorry was the result of a carefully prepared initiative coordinated by OLAF,” the EU said in a statement. “This action came about due to the excellent cooperation provided by Norwegian and Swedish customs.”

Whoop-de-fracking-doo.

Imposing a duty of almost 10% is just crap protectionism. Not that that is outside the framework of most EU political decisions, anyway.