Monday, 5 December 2016

In Europe, the center is not holding

As Italian PM Renzi quits, from Italy, to France, through Austria and across Europe the center is finding it difficult to hold. While mere anarchy may not yet be being loosed upon the world, only those in denial can doubt that the tectonic plates are shifting

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And what rough beast, its hour come round at last...
Michael_curtis
Michael Curtis
On 5 December 2016 00:36
It is a hyperbolic overstatement to say that the center cannot hold and mere anarchy is loosed upon the world, but it is fair to recognize that the tectonic plates of European politics are shifting.
In one week in November- December 2016 this actuality was illustrated by electoral results in France and Italy, and to a lesser extent in Austria.
In France after the victory on November 28, 2016 of Francois Fillon to be the candidate of the right wing Republic party in the 2017 presidential election, and the growing popularity of Marine Le Pen the leader and candidate of the far right Front National, the incumbent socialist President Francois Holland declared he would not compete in the presidential election.
The public opinion polls indicate that since Fillon and Le Pen are leading, a socialist candidate, whether Prime Minister Manuel Valls, or someone else, is unlikely to get to the second round, let alone win.
In Italy, Prime Minister Matteo Renzi quit on Sunday following a referendum that was defeated by 60-40 percent. The 41 year old center-left Renzi wanted, by a complex referendum, to change the constitutional system by which both chambers of parliament had virtually equal powers, and often blocked legislation.
Renzi proposed limiting the power of the Senate, thus facilitating the legislative process, and reducing the power of Italy's regional governments, and thus providing stronger central government.
The complex referendum, not easily understood by voters, in essence became one on Renzi and his leadership, and on Italian nationalism. For some voters implicitly expressing unhappiness with the EU, the vote was in favor of Exit Italia, the Italian version of Brexit.
More important, it showed, as has been the case in other European countries, opposition to immigration. So far in 2016 Italy has taken in 171,000 migrants.
The referendum was primarily opposed by the left leaning Five Star Movement (MSS), by the far right Northern League, and to some extent by the center right Forza Italia.
The MSS, founded in 2009 and led by former comedian turned politician Beppe Grillo, who wants Italy to abandon the euro, is a populist, anti-establishment, environmental group.
Grillo sees Italy as a “country stuck in the mud.” In the 2013 parliamentary election it gained the second highest number of votes, and won 109 of the 630 parliamentary deputies. The MSS has done well in mayoral elections throughout Italy, as well as in parliamentary elections.
The right wing Northern League, founded in 1991, wants Italy to become a federal state, and sometimes called for the north to secede and form its own system. It got about 4 percent of the poll in the 2013 general election, but does far better in its stronghold regions and has strengthened its position in recent months and years.
The advances of the far right in European politics however were halted on the same day as the Italian referendum with the defeat of Norbert Hofer, the candidate of the Freedom party, in the race to become president of Austria.
A victory would have been symbolically important, making him the first far right politician to become head of state in a European country since the end of World War II. Nevertheless, his relatively strong performance will be an encouragement to his own party and also to similar nationalist ones seeking power in other countries.
Hofer had almost won the presidency in May 2016 obtaining 49.7 percent of the vote when his Green party opponent, Alexander Van der Bellen, obtained 50.3 percent, an advantage of 30,800 votes. However, because of irregularities in postal ballots in 94 of 117 districts the election result was declared invalid and a rerun was held on December 4 which Hofer lost, while still garnering well over 45 percent of the vote. This is hardly encouraging.
The Austrian Freedom party was founded in 1955 by a former general in the Nazi SS and has a history of antisemitism. Today, some members of the party wear blue-cornflower on their clothes, a symbol of German nationalism that was used by Nazi Germans as a secret symbol.
The chair of the party since 2005, Heinz-Christian Strache, is a populist, far right politician, more extreme than Hofer. In April 2012, he posted on Facebook a caricature of a Jewish banker with hooked nose.
He called Nazi death camps “punishment facilities.” He has attacked German Chancellor Angela Merkel for allowing an unlimited number of migrants into Europe. His platform states, “the uncontrolled influx of migrants alien to our culture who seep into our social welfare system…makes civil war in the medium-term not unlikely.”
Hofer is a 45 year old former aeronautical engineer who carries both a walking stick as a result of a paragliding accident in 2003, and a pistol. Like Marine Le Pen and unlike Strache, Hofer distanced himself from antisemitism, past and present.
Hofer’s policy platform is similar to other European far right groups:  anti-immigration, fear of Islamic terrorism, anti-elite, opposition to globalization, and emphasis on national identity.
One of his main slogans in his electoral campaign resembles similar rhetoric in the 2016 US presidential campaign: “Your homeland needs you now.” Vienna, he declares, must not become Istanbul. As a strong nationalist, Hofer expresses concern about Turkey and Turks entering Austria.
If elected he would have called for a referendum on membership of the EU, and for South Tyrol (Alto Adige), which came under Italian control in 1919, and has been an autonomous province since 1948, to be incorporated into Austria. Even more strongly, he argued that Islam is not part of Austrian values, and that criminal penalties should be imposed on immigrants committing crimes like rape.
This attempt to limit immigration of Muslims into Europe comes at a moment when the belief that Muslims may not be part of the national community is understandable. A poll in UK in December 2016 shows that Muslims in the country live in enclaves on their own housing estates, having their own schools, and TV channels. Paradoxically, the report criticizes the British police for “pandering” to ethnic minorities. 
Some 43 percent of Muslims in the country want at least some aspects of Sharia law to be in force and to replace British law. It is disconcerting that a considerable number of Muslims in the UK believe conspiracy theories. Some 31 percent believe that the US government, and 7 percent believe that Jews, were responsible for the 9/11 attacks in the US. Only 4 percent blamed al Qaeda.
Many other European countries have seen electoral gains by far right and nationalist parties. They include Switzerland (Swiss People’s Party with 29 percent), Hungary (Jobbik with 21 percent), Denmark (Danish People’s Party 21 percent),  Netherlands Freedom Party 10 percent), Greece  (Golden Dawn 7 percent).
Even in Germany the far right Alternative for Germany party (AfD) in September 2016 got 14 percent of the vote in the Berlin state election, entering that state parliament for the first time. Indeed, the AfD is now represented in 10 out of Germany’s 16 state parliaments.
In all these countries there is revolt and popular anger against what is seen as the elite, and centrist politics. The populist backlash that took Trump to the White House and Britain out of the European Union is continuing.
President Trump and his administration must formulate policy in the light of the growing populist strength in Europe and the growth of anti-system, extremist nationalist parties.
Michael Curtis is Distinguished Professor Emeritus in political science at Rutgers University. Curtis is the author of 30 books, and in 2014 was awarded the French Legion d'Honneur
Read more on: European Union, european union budget, and break up of the European Union
http://www.thecommentator.com/article/6458/in_europe_the_center_is_not_holding

Sunday, 4 December 2016

WAR ON DENMARK'S STREETS: Migrant chaos sparks clashes between police and protestors

VIOLENT clashes over immigration have erupted between police and opposing protest groups in Copenhagen, leading to the arrests of 11 people.

Police scrambled to contain confrontations between the “Patriotic Europeans Against the Islamisation of the West” group, PEGIDA, and pro-immigration counter-protestors.
A video of the dramatic encounter caputures the moment where riot police form ranks to stop pro-immigration protestors reaching the nationalist group, founded in 2014.
The open-borders hooligans – who held banners saying “make racists afraid again” – set bins and pieces of wood ablaze and lit a bonfire in the middle of the road before physically barging the police.
Bizarrely, one protestor dressed as Santa Claus held a sign saying “Santa says no to racists”.
Police had to extinguish a fire and unblock the roads.
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Pro-immigration protestors clashed with law enforcement at the demonstration.
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The protestors also set fire to litter and containers.
Officials confirmed 11 people were arrested but police refused to say what group they were from.
Riot squads prevented the two protest groups – held at different parts of the city – from meeting.
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They also placed barricades in the road, which had to be removed by police.
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Banners saying
Police spokesman Rasmus Skovsgaard said arrests were made for vandalism and violations of public order, as well as one case of violence against a public official.
As many as 100 people attended the pro-immigration rally, the spokesman added, with no information an the number of people at the PEGIDA protest.
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A protestor dressed as Santa Claus warns PEGIDA members:
PEGIDA was founded in 2014 by German national Lutz Bachmann.
The movement aims to resist and oppose Islamic extremism and calls for stronger enforcement of laws to curb immigration.
http://www.express.co.uk/news/world/739582/WATCH-Anti-immigration-Islam-protestors-clash-police-antifa-Denmark-Copenhagen?

Thursday, 1 December 2016

Brexit: Prosperity, not austerity

Our deficits are not entirely the product of our membership of the EU. But leaving will help dramatically, and, as with so many things, Brexit gives us the opportunity for a fresh start and a new road to sustained prosperity

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We can make Brexit work for all
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John Redwood MP
On 1 December 2016 12:58

Yesterday I published proposals for a new UK economic policy through Politeia. I set out why I think Brexit is a great opportunity to promote more UK growth.
The freedoms we gain will enable the UK government to follow policies friendlier to jobs and domestic output.
One of the big themes I suggest is to correct the worst of the balance of payments deficit. Some 25 percent of the deficit in 2015 came from UK government payments abroad in the form of net contributions to the EU and overseas aid.
The sooner we are out of the EU the sooner we will benefit from that saving on the external accounts.
The government should make sure more of the money spent on overseas aid is spent on buying goods and services from UK producers, where the money cannot be spent directly in the country we are seeking to help. That will boost UK business and cut the strain on the balance of payments.
36 percent of the 2015 deficit came from the excess of interest and dividends we pay away to foreign lenders and owners of UK assets over the money we receive from our investments and loans abroad.
There is no quick fix to this, as the longer we remain in deficit, the more the claims of foreigners on UK assets will build up.
However, the government could work to ensure that in future when adding to our power stations and other privately financed infrastructure the investment is offered on decent terms to UK savers and institutions rather than to foreign interests. The Chinese financing of Hinckley will b e a long term drain on our balance of payments.
The remaining 38 percent of the deficit comes from the deficit on trading in goods with the rest of the EU. The UK is in surplus with the rest of the world on trade account, and in surplus on services with the rest of the EU, but has a huge deficit in goods.
Some of this will reduce as a result of the devaluation of the pound. People will look  to buy domestic substitutes or cheaper goods from non EU destinations. Some will reduce as a result of new UK policies.
Why need we continue with a deficit on fish, once we take back control of our own fishing grounds? Won’t a UK farming policy be more helpful to UK flower and vegetable growers? Won’t more market gardens flourish?
Mr. Redwood's writing is re-posted here by his kind permission. This and other articles are available at  johnredwoodsdiary.com
Read more on: brexit, European Union, and european union budget
http://www.thecommentator.com/article/6456/brexit_prosperity_not_austerity

It’s time to face facts: Pandora’s Box is open and Europe is finished

For much as I love the lifestyle and all that comes with it, the continent’s complete, pathetic inability to solve any of its many existential problems – the endless euro crisis, non-existent rates of overall growth, Depression-era levels of youth unemployment ....

Thursday 1 December 2016 4:59am

Euro coins
The economic poison has seeped into the EU's body politic (Source: Getty)
Let me begin with a truism. My analytical career has not suffered from betting against Europe.
For much as I love the lifestyle and all that comes with it, the continent’s complete, pathetic inability to solve any of its many existential problems – the endless euro crisis, non-existent rates of overall growth, Depression-era levels of youth unemployment in the south, and no common policy on refugees – unsurprisingly has toxic political ramifications.
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It almost does not matter which political crisis next knobbles Europe. There are plenty to choose from. But instead the key analytical reality is that one of them will soon further grievously wound the dying power in the coming year.
Lurking beneath the sturm und drang of Trumpism, the most recent growth figures for the continent were released. They make for the usual dismal reading.
In the third quarter of 2016, Eurozone growth overall was an anaemic 0.3 per cent; in France 0.2 per cent, Italy 0.3 per cent, and Germany 0.2 per cent. Given that in a modern industrialised country 0.5 per cent is the bottom end of what is acceptable, this damning economic reality – try as apologists may – can no longer be ignored. The economic poison has now seeped into the European body politic.
In Spain, after two elections and almost a year of deadlock, centre-right Prime Minister Mariano Rajoy was returned to form a weak minority government.
While the Spanish economy is picking up again from a catastrophically low base (it grew at 0.7 per cent in the third quarter), Madrid must find €5bn in tax increases or further spending cuts if it is to meet its deficit target mandated by the European Commission. It is hard to see either the far left Podemos Party or the electorally chastened Socialists going along with this. Rajoy is in for a very bumpy ride.
Given that French President Francois Hollande’s approval rating is just 4 per cent (that’s not a typo) and that far right Front National (FN) leader Marine Le Pen remains (at least for now) unelectable, the establishment candidate of the centre-right Les Republicains, Francois Fillon, will be the next leader of the country.
If France keeps to its current lengthy trajectory of almost no growth, this, coupled with the fears of further terrorist attacks, could propel Le Pen to the presidency the next time out. It is possible that in the final round of this year’s elections she will double her father’s earlier vote tally of more than 18 per cent. Le Pen’s political wager against the French establishment looks more than plausible.
In Italy, reformist Prime Minister Matteo Renzi is running about five points behind in his pivotal 4 December referendum on electoral reform. Renzi has reiterated that, if he loses the vote, he will resign. This would lead to new elections early in the new year, where the populist, anti-euro Five Star movement of Beppe Grillo is running neck-and-neck with Renzi’s centre-left Democratic Party. A Five Star victory would lead to Italy having a referendum on euro membership, with the outcome up for grabs.
Even in Germany, while Angela Merkel is on course to win a dispiriting re-election (proving the adage that the tallest pygmy in the village is considered a giant), the far right, xenophobic AfD is on course to rocket up from nothing to anywhere from 15 to 18 per cent of the vote in the autumn 2017 parliamentary elections. This means a further joyless grand coalition between Merkel’s CDU and the leftist SPD is on the cards.
As is true with France, while the establishment parties will hang on this time, another term of Merkel’s do-nothingism will only help the populists, putting even this most stable of European polities at risk of major political disruption.
It is true that not all these apocalypses will come to pass. In fact, it is quite possible that most will not. But given the already weakened state of Europe, if one ghoul here from Pandora’s box does escape, surely the writing is on the wall for the prospects of the continent as a whole. It is time to face facts; Europe is over.
City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.
http://www.cityam.com/254727/its-time-face-facts-pandoras-box-open-and-europe-finished

Italy’s exit from the Eurozone is almost inevitable – whichever way it votes this weekend

Two long-term trends make me worry about the Italian economy, regardless of the outcome of the referendum this weekend. First, the so-called Italian Death Cross, and second the prospect of three decades of lost growth (yes three, this isn’t a typo).

Thursday 1 December 2016 4:15am
Graeme Leach

Italy protest
Italy leaving the euro may be the only way to avert a catastrophic deindustrialisation of the country (Source: Getty)


In my view, these two trends make Italy’s exit from the euro almost inevitable at some stage. This is not if, but when. Italian 10-year treasury bonds are yielding 2 per cent, up from 1 per cent in the autumn, and other vital signs, such as the scale of current account and fiscal imbalances, are also very different from the onset of the Greek crisis. But while this provides some comfort, look elsewhere and there is much to fear.
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Nominal GDP in Italy is around 25 per cent below trend. This has given rise to the so-called Italian Death Cross chart, with nominal GDP relative to trend falling, and bad debt rising. When nominal GDP is this far below trend, banking sector difficulties are almost a given.
The stop problem (of international capital flows which came to an abrupt end), which triggered the original Greek crisis, has been replaced by a slow problem (of rising non-performing loans) in Italy. Unsurprisingly, research shows that an economy predisposed to grow slowly will experience a more virulent interaction between financial sector shocks and public debt.
Non-performing loans (NPLs) in Greece rose from 14 per cent of total loans in 2011 to 35 per cent in 2015. NPLs in Cyprus increased from 18 per cent in 2012 to 46 per cent in 2015. If the NPL ratio in Italy is 18 per cent before any crisis, where might it be in the event of a crisis? Because of the size of the Italian economy, banking sector difficulties would have major systemic implications for the entire Eurozone.
My second concern relates to lost growth. The Italian economy is already in its second decade of lost growth. Throw in demographic decline in the 2020s and it is reasonable to argue that Italy could face three decades of lost GDP growth.
Economic failure on such a scale will raise fundamental challenges to political and economic institutions. The continued deindustrialisation and hollowing out of the Italian economy will, rightly or wrongly, be blamed on the euro. Arguments over price versus non-price competitiveness are likely to receive a tin ear, as politicians yearn for the “good old days” of lira devaluations. Italy leaving the euro may be the only way to avert a catastrophic deindustrialisation of the country.
But just when you thought that was bad enough, one economic commentator foresees even darker days ahead. Wolfgang Munchau, writing in The Financial Times, says: “An Italian exit from the single currency would trigger the total collapse of the Eurozone within a very short period. It would probably lead to the most violent economic shock in history, dwarfing the Lehman Brothers bankruptcy in 2008 and the 1929 Wall Street crash.”
It’s not difficult to see how worst case scenarios could play out. Market uncertainty would be fuelled by contagion fears, the solvency of Italian banks and the so-called sovereign-bank doom-loop. Throw in a potential change of government (and higher probability of exiting the euro) and there would need to be massive intervention by the ECB.
Financial markets aren’t signaling anything like this scale of problem. Let’s hope they’re right.
City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.
http://www.cityam.com/254718/italys-exit-eurozone-almost-inevitable-whichever-way-votes