Opšti topik o EU (ex kriza Evrozone)

[hazard]

Da prebacimo ovde diskusiju sa grčkog topika, pošto su stvari ipak malo šire. Zašto je trenutna nemačko-evropska politika pogubna, kao i zašto je nemački model, zapravo, loš:

 

http://blogs.lse.ac.uk/europpblog/2015/03/09/five-minutes-with-philippe-legrain-the-eurozone-has-become-a-glorified-debtors-prison/

 

 

 

 

Five minutes with Philippe Legrain: “The Eurozone has become a glorified debtors’ prison”

With no lasting solution yet found for dealing with Greek debt, and economies in the Eurozone continuing to suffer from weak growth, how can Europe finally solve the problems brought on by the financial crisis? In an interview with EUROPP’s editor Stuart Brown,Philippe Legrain discusses the policy failures at the root of the crisis, the need to stimulate demand in Eurozone economies, and why the German focus on cutting wages to improve competitiveness is simply exacerbating existing problems.

 

 

 

 

Have the right lessons been learned from the crisis in the Eurozone?

 

The short answer is No. Catastrophic mistakes by Eurozone policymakers – primarily Angela Merkel’s government in Berlin, the European Central Bank in Frankfurt and the European Commission in Brussels – have transformed a financial crisis into a much deeper economic and political one.

 

More than seven years into the crisis, the Eurozone is doing much worse than the United States, worse than Japan during its lost decade in the 1990s, and worse even than Europe in the 1930s. The economy, which is still 2 per cent smaller than in early 2008, is stagnating. The least-bad performer, Germany, has grown by less than Britain over that period and less than half as much as Sweden, Switzerland and the US.

 

The worst, Greece, has shrunk by more than a quarter and is faring worse than Germany did during the Great Depression. Many people’s living standards have slumped and unemployment is painfully high: 11.4 per cent overall, much higher in Southern Europe, scarily so among young people. A lost generation is in the making. In a nutshell, the Eurozone is sinking into a deflationary debt trap, with tragic social consequences and unpredictable political ones.

 

Unsurprisingly, voters are fed up of years of seemingly unending misery. Social tensions within countries are multiplying, as are political frictions between them. Understandable anger at the injustice of bailouts for rich bankers and budget cuts for poor schoolchildren overlaps with a despicable scapegoating of outsiders, notably immigrants. Old stereotypes have been revived and new grievances created. Northern Europeans slander southerners as lazy good-for-nothings, while Greeks label Germans Nazis. Nasty nationalism is on the march again and support for the European Union has never been lower.

 

Most Europeans now associate the EU with austerity, recession and German domination, with undemocratic constraints on what they can do, rather than how we can all achieve more together. And they’re angry and resentful at incompetent and sometimes corrupt establishment politicians and EU technocrats who seem incapable of resolving the crisis and have imposed misery on ordinary voters (but not on themselves). In the absence of mainstream alternatives, voters are turning to radical and extremist ones: the radical left in Greece and Spain (and separatists in Catalonia), the far-right in France and Italy, Sinn Fein in Ireland.

 

While Italy’s reformist prime minister Matteo Renzi remains popular for now, all three main opposition parties – the far-right Northern League, the anti-establishment Five Star Movement and Silvio Berlusconi’s Forza Italia – are now anti-euro. Resentment of southern Europe is also boosting the anti-euro, far-right in the Netherlands, Finland and Germany. So politics may yet achieve what quiescent markets are no longer doing: with luck, force desirable policy change, but potentially break up the euro. That’s the big picture.

 

Despite the prolonged nature of the crisis, there is still little agreement between politicians and economists on the root cause of the Eurozone’s problems. How would you define the current situation?

 

The Eurozone is stuck in a balance-sheet recession, with broken banks, a huge overhang of private-sector debt and a big shortfall of demand. Households, companies and banks are all trying to repair their balance sheets at once, while governments – instead of accommodating the private sector’s desire to save more by borrowing more themselves, or accelerating the balance-sheet repair by restructuring debts – are compounding the problem by trying to borrow less too.

 

So the economy is stagnating, private-sector debts have barely fallen, and public debts have soared all the same. A simplified way of putting it is this. Households aren’t spending because their wages are stagnant and they are trying to pay down their debts. Since consumers aren’t spending, companies don’t want to invest. And governments are cutting back too. So domestic demand is depressed.

 

And since Eurozone economies mostly export to each other, each country’s depressed domestic demand limits demand for others’ exports. So the Eurozone is relying entirely on demand from the rest of the world in order to grow, but the Eurozone is too big and growth elsewhere too weak for that to generate a recovery strong enough to bring down debts and unemployment.

 

The Eurozone also has severe, longstanding supply-side problems: a lack of innovation and enterprise, cartelised product markets, ossified labour markets, rigged and subsidised land markets, a bloated and often inefficient public sector. Over the past decade, productivity growth averaged only 0.9 per cent a year, half that in the United States. On top of that, the Eurozone has dismal demography: its working-age population has been declining since 2011.

 

But even if we assume the Eurozone’s trend rate of growth is as little as 1 per cent a year, it should still have grown by 6.5 per cent over the past six and a half years. Instead it has shrunk by 2 per cent. Clearly, then, the Eurozone’s biggest problem is deficient demand. So while supply-side reforms to boost productivity are vital for future growth, they are not a substitute for policies to boost demand now – indeed they cannot succeed unless accompanied by measures to fix the banking system and boost investment.

 

 

What were the key policy failures that brought us to this point?

 

The official narrative that has taken hold in Germany and EU circles blames the crisis entirely on others, not least profligate and reckless southern Europeans. It argues that since others, not Germany, are responsible for the crisis, they must pay the price for it. Germany does not need to change, others do. As well as paying back their debts in full, they must emulate what Germany did a decade ago: consolidate public finances and bear down on wages to restore competitiveness. That way they can be as successful as Germany supposedly is.

 

There’s just one problem with this narrative: it is entirely false. The true story is as follows. In the years up to 2007, there was a huge credit boom across the Western financial system, from the United States to Iceland. It involved a massive expansion of cross-border lending by dysfunctional and dangerously undercapitalised banks, abetted by the complacency – and sometimes the complicity – of central bankers, regulators, supervisors and politicians. And Eurozone banks were at the heart of it.

 

As well as gambling on American subprime mortgages, German and French banks lent too much, badly to Spanish and Irish homebuyers and property developers, Portuguese consumers and the Greek government, both directly and together with local banks. When the bubbles burst and banks began to fail, governments decided to bail them out, protecting banks’ creditors. Banks’ initial losses were often related to American subprime mortgages, over which European governments had no control. But when it became clear in early 2010 that Greece could not pay its debts, Merkel – together with a French trio of Jean-Claude Trichet at the ECB, Dominique Strauss-Kahn at the IMF and President Nicolas Sarkozy – took a different approach.

 

To avoid losses for French and German banks, they decided to pretend that Greece was merely going through temporary funding difficulties. And under the pretence that the financial stability of the Eurozone as a whole was at risk, they decided to breach the legal basis on which the Eurozone was formed – the “no-bailout rule” – and lend to the Greek government so that it could repay those foreign banks and investors. Further loans from EU governments to Ireland, Portugal and Spain followed, primarily to bail out local banks that would otherwise have defaulted on their borrowing from German and French banks and other financial investors.

 

As a result of these bailouts, the bad lending of private banks has become obligations between governments. And a crisis that could have united Europe in a collective effort to curb the banks that got us into this mess has instead divided it, pitting creditor countries – principally Germany – against debtor ones, with EU institutions becoming instruments for creditors to impose their will on debtors. The Eurozone has become, in effect, a glorified debtors’ prison.

 

 

It is tragic – but hardly surprising – that as a result Germany and EU institutions are now resented so much in debtor countries. It is also understandable that northern European taxpayers are angry at this. But instead of resenting southern Europeans, they should direct their anger at the banks that their loans, in effect, bailed out and at the policymakers who made it happen. And the upshot is that European taxpayers now have an incentive to resist the debt relief that Greece needs to recover. They would also lose out if the €64 billion bank debt unjustly imposed on Irish taxpayers were written down.

 

By putting the narrow interests of the banks ahead of those of ordinary citizens, Merkel and other Eurozone policymakers have set Europeans against each other. While governments bailed out the banks, first directly and then indirectly through the EU loans to southern European governments, they didn’t force them to clean up their balance sheets. As a result, the Eurozone now has state-sponsored zombie banks that use the cheap liquidity provided by the ECB to roll over their bad loans to zombie borrowers while denying credit to new ones.

 

And the flipside of failing to force banks to clean up their balance sheets is that households and companies still have huge, and often unpayable, debts. Until 2010, governments were at least supporting the private sector’s desire to save more by borrowing more themselves. But after Greece’s public-debt problems came to a head, policymakers wrongly decided that the Eurozone as a whole faced a fiscal crisis and embarked on premature, excessive, collective austerity.

 

Yet Greece was the exception, not the rule. High government borrowing was not the cause of the Eurozone’s problems, but rather a consequence of the collapse of private spending after the bubbles burst, banks went bust and private debts suddenly loomed larger. And since households and companies didn’t want to spend, banks didn’t want to lend, and foreign demand wasn’t big enough to fill the gap, austerity caused such deep recessions that, perversely, public debt soared.

 

Worse, policymakers’ successive mistakes sparked panic, to which they responded by demanding ever greater austerity until finally, the ECB – after long insisting that it was legally unable to act – intervened in the summer of 2012. Now that the panic that policymakers created has abated and austerity has been eased off, economies have stabilised. But they are not recovering, because the underlying causes of their weakness – the broken banks, the private-sector debt overhang and the shortfall of demand – have still not been tackled.

 

You’ve said that there is a false narrative which draws a parallel between Germany’s situation a decade ago and the Eurozone’s current problems. How damaging has this narrative been for the EU’s policy response?

 

Clearly, the Eurozone’s current plight is very different to Germany’s at the turn of the century. Back then, Germany was not suffering a banking crisis. It didn’t have huge private debts that households and companies were trying to reduce. And it was surrounded by booming economies to which it could easily export more. So when Merkel repeats the mantra that Germany’s earlier experience shows that fiscal consolidation can be compatible with growth in the Eurozone now, she is comparing apples and oranges.

 

Yet at Germany’s behest the Eurozone is now locked into a stifling and undemocratic fiscal straightjacket: much more restrictive EU rules as well as the fiscal compact. These are unnecessary, because the EU’s original Stability and Growth Pact did not fail, except in not spotting the Greek government lying about its finances. The crisis was caused by failures in the Eurozone’s financial, not fiscal, governance. 

 

But because Merkel agreed to breach the no-bailout rule, German taxpayers suddenly feared they were liable for everyone else’s debts. So she demanded much greater control over other countries’ budgets – and the European Commission was delighted to grab new powers. This is economically dangerous because countries that share a currency need greater fiscal flexibility, not less.

 

It’s also politically poisonous because when voters in a country throw out their government, as they have done at almost every election since the crisis, EU finance commissioner Olli Rehn and now his successor Jyrki Katainen pop up on television to insist that the new government sticks to the old one’s failed policies. That remote, unelected and scarcely accountable officials in Brussels should deny voters legitimate democratic choices about tax and spending decisions alienates people from the EU. And if voting for mainstream politicians doesn’t lead to change, it’s no surprise they turn to the extremes.

 

To make matters worse, Germany is trying to reshape the Eurozone economy in its dysfunctional image. Its mercantilist strategy of suppressing wages to subsidise exports is beggaring Germans as well as their neighbours. Don’t believe the hype about Germany’s success: its GDP growth ranks 15th among the 19 Eurozone economies since the euro’s launch. Once dismissed as the sick man of Europe, it responded not by becoming more dynamic, but by cutting costs.

 

 

Hobbled by a decade of underinvestment, its arthritic economy struggles to adapt: productivity growth averaged only 0.9 per cent a year over the past decade, less even than Portugal’s. And the brunt of this stagnation has been borne by German workers, who now earn less after inflation than 15 years ago, even though their productivity is 17.8 per cent higher. German policymakers claim that holding down wages is a good thing because it boosts the country’s competitiveness.

 

But countries are not companies. While it may make sense for an individual business owner to try to keep wage costs to a minimum, for society as a whole, wages are not a cost to be minimised. Provided they are justified by productivity, wages ought to be as high as possible. And since compressing wages suppresses domestic demand, Germany can only grow by exporting – and now that the rest of the Eurozone is stagnating and China is slowing, Germany is stagnating too.

 

German policymakers pride themselves on the country’s vast current-account surplus as an emblem of its superior competitiveness. But if Germany is so successful, why don’t businesses want to invest there? Its surpluses are in fact symptomatic of a sick economy – and that harms the rest of the Eurozone too.

 

During the bubble years, Germany spread instability through its banks’ bad lending of its surplus savings. Now, it is exporting deflation through its wage stagnation, depressed domestic demand and opposition to debt restructuring.

 

Foisting the German model on the rest of the Eurozone is disastrous. Slashing incomes depresses domestic spending and makes debts even harder to bear. For struggling southern European economies whose traditional exports have been undercut by Chinese competition, the solution is not to try to produce the same old products at much lower wages, but rather to invest in moving up the value chain and produce new and better products for higher wages.

 

Above all, with global demand weak, the Eurozone as a whole cannot rely on exports to grow out of its debts.

 

 

The Eurozone urgently needs to change course. Yet policymakers’ mistakes have created new obstacles to resolving the crisis. Northern taxpayers now have a vested interest in blocking the debt relief that the south needs to recover. The debt overhang is leading to deflation, whose tackling requires exceptional policies that offend Germans’ monetary taboos. The new fiscal straightjacket prevents governments from boosting demand. The antagonism between north and south, broader resentment of a quasi-hegemonic Germany, institutional fatigue and corrosion of support for the EU precludes desirable further integration.

 

And because today’s chronic misery seems less pressing than the acute financial panic that has abated for now, and Germany isn’t suffering enough to feel that it needs to change course, there is a complacency among policymakers, who are often detached from those who suffer the consequences of their bad decisions and unaccountable to them. Thus Germany repeats like a mantra that all that is needed is fiscal consolidation and structural reforms.

 

France and Italy want to borrow a bit more in exchange for a bit more reform. The new president of the European Commission, Jean-Claude Juncker, has announced a €315 billion EU investment programme, but so far, this involves no new public money. The ECB continues to pump liquidity into Eurozone banks, when their real problem is not a lack of cash but the bad debts on their balance sheets. And markets pin their hopes on the launch of quantitative easing this month, which has helped drive down the euro but is unlikely to prove big and bold enough to offset the huge deflationary pressures in the Eurozone.

 

 

What is required to finally solve the crisis?

 

To solve the crisis decisively and fairly, the Eurozone ought to do what I advised President Barroso when I first met him back in 2010: restructure zombie banks; write down unbearable debts, both private and public; and support spending in ways that push the economy towards healthier patterns of growth, not least by increasing investment and lifting barriers to competition and enterprise, with Germany and other surplus countries playing their part by boosting domestic demand.

 

To work better in future, the Eurozone also needs institutional reform. Instead of a Eurozone caged by Germany’s narrow interests as a creditor, Europe needs a monetary union that works for all of its citizens. A genuine, comprehensive and robustly independent banking union, with a workable mechanism for bailing in the creditors of failed banks. The ECB’s role as a lender of last resort to solvent governments enshrined to avoid future panic. The no-bailout rule restored and with it much greater fiscal flexibility for democratically elected governments, constrained by markets’ willingness to lend and ultimately by the possibility of default.

 

And ideally, once it becomes politically feasible, we should create a Eurozone treasury accountable to both European and national legislators, with limited tax-raising and borrowing powers. Ultimately, the freer, fairer and richer Eurozone that would emerge is in Germany’s enlightened self-interest, too.

 

 

Philippe Legrain
Philippe Legrain is a Senior Visiting Fellow in the LSE’s European Institute. From February 2011 to February 2014, he was economic adviser to the President of the European Commission and head of the team that provides President Barroso with strategic policy advice in the Bureau of European Policy Advisers. He is the author of Open World: The Truth about Globalisation (Abacus, 2002); Immigrants: Your Country Needs Them (Little, Brown, 2007);Aftershock: Reshaping the World Economy After the Crisis (Little, Brown, 2010); and European Spring: Why Our Economies and Politics are in a Mess – and How to Put Them Right (CB Books, 2014).

 

 

 

 

 

 

 

 

 

 

 

[Prospero]

http://www.random-austerity-measure-generator.com/# :D

 

Your austerity measure is....

France has to give every second child to Germany to become a worker.

No problem 

[Tribun_Populi]

http://www.random-austerity-measure-generator.com/# :D

No problem 

 

 

Your austerity measure is....

Italy has to have it's prime minister drink the blood of 64 virgins by 2 o'clock this night.

 

[hazard]

Ovo je stari clanak, od pre 4 godine. Ali objasnjava neke bazicne stvari koje jos uvek stoje (i stajace jos dugo, ako se nesto bitno ne promeni):

 

http://www.economonitor.com/dolanecon/2011/08/28/how-germany-free-rides-on-the-euro/

 

 

How Germany Free-Rides on the Euro

Author: Ed Dolan  ·  

 

August 28th, 2011

  ·  Comments (3)-

 

For years, I have warned my European students of the fiscal free-rider problem built into the structure of the euro area. My examples have always been fiscally undisciplined peripheral governments seeking political gain by running budget deficits at the expense of their euro partners. Now, though, as the debate unfolds over measures to cope with the European sovereign debt crisis, it is becoming increasingly apparent that Germany, the long-time locomotive of the euro, is also, in its own way, free-riding on the common currency.

 

The free-rider problem arises whenever someone is able to capture the full benefits of an action while shifting all or part of the the costs to others. I introduce the concept to my students with the example of ten friends eating dinner in a restaurant. If they know they will get separate checks at the end of the meal, they all order hamburgers and beer. If they know there will be one check, to be split equally among everyone at the table, they order steak and champagne.

In the case of  deficit-prone peripheral members of the euro, individual governments capture the full economic and political benefits of fiscal stimulus while shifting part of the costs to other euro members. This happens in two ways.

 

In the short run, the shift works through monetary policy. Other things being equal, more fiscal stimulus puts upward pressure both on interest rates and inflation. To counteract the pressure, monetary policy must be tightened. In a country with an independent currency and its own central bank, the pain of tighter monetary policy (higher interest rates, a stronger exchange rate that hurts exporters) is fully internalized. In the euro area, though, there is just one central bank, so the pain is spread among all members of the currency area. Furthermore, the European Central Bank is in far-away Frankfurt, making it easy for the government of a peripheral country to shift the political blame for painful tightening measures.

 

The long-run costs of excessive short-run fiscal expansion come in the form of the tax increases or spending cuts that are eventually needed to avoid unsustainable debt and eventual default. Those costs, too, can be shifted to others. Even in a country with an independent currency, the current government is tempted to free-ride on the future governments that will have to pay the bills. With a common currency the problem is much worse because fiscally irresponsible governments can expect fiscal bailouts from their currency partners.

 

Even if the founding documents of the currency union include a “no bailout” clause, as is the case in the euro area, no such provision can be fully credible. That is because fiscally prudent members cannot, simply by refusing a bailout, force a profligate member to bear all the costs of a default. Even without a rescue the costs must be shared because default by any one member of a currency area would undermine the perceived credit risk of other members, thereby increasing their interest costs. That fact gives profligate members the leverage they need to extort a bailout, which is more or less what is happening now. (2011., prim. hazard)

 

Germany understands all this very well. It is doing its best to assure that profligate peripheral states at least share the pain, even if some form of rescue cannot be avoided. Meanwhile however, Germany is open to the charge that it too is free-riding on the euro, although in a very different way.

 

Germany’s free-riding consists in using the euro as a mechanism for maintaining a weak exchange rate while shifting the costs of doing so to its neighbors. To see how that form of free-riding works, compare Germany and China.

 

Although there are vast differences between the two economies, each of them for its own reasons has chosen a growth model based on a high savings rate balanced by large net exports. In part, each country’s export success can be attributed to cultural traits favoring hard work, thrift, and efficiency. Far be it from me to denigrate those virtues, but they are not the whole story of China’s and Germany’s export success. The hyper-competitiveness of both countries is also due in part to policies that guard against unwanted exchange rate appreciation. Although the effects are similar, the mechanisms that China and Germany use to accomplish this are quite different.

 

China maintains its undervalued currency through classic methods of market intervention. As a country with an independent currency, it bears the full costs of doing so. To resist appreciation of the yuan, it has accumulated an ever-increasing mountain of low-yielding U.S. Treasury securities. Each purchase of U.S. securities results in an equivalent increase in the Chinese monetary base, thereby adding to inflationary pressure within China.

 

The inflationary pressure is relieved, in part, through sterilization in the form of selling central bank bills and raising commercial bank reserve requirements. However, the sterilization itself is costly. First, it involves an interest expense, since the central bank bills that are sold bear higher interest rates than the U.S. Treasuries that are bought. Second, high reserve requirements, interest rate restrictions, and other administrative measures distort the Chinese financial system. The whole package of monetary and exchange rate policy almost certainly involves costs to the Chinese economy that exceed the benefits. Many observers think that the policies are kept in place only by the concentrated political power of China’s export industries.

 

 

Germany, in contrast, can have its cake and eat it too. It is impossible to know what Germany’s exchange rate would be if its currency were independent, but as good a guess as any is that of Boris Schlossberg, Director of Currency Research at forex trader GFT, who thinks it would be the equivalent of about two dollars per euro. Germany does not have to engage in overt currency manipulation to maintain the current exchange rate; membership in the euro does the job without the need for intervention. The pressure toward appreciation that would be produced by the hyper-competitiveness of the German economy is offset by the opposite pressures from less competitive euro members like Greece and Portugal. On balance, the effect of the euro is to keep the German exchange rate undervalued at the expense of forcing overvaluation on peripheral members.

 

What is the bottom line? What should we want Germany to do that it is not now doing?

 

If we focus only on issues of fairness, it is tempting to say that Germany ought to be willing to pay for the benefits it gets from the euro by contributing more to the bail-out of peripheral members. One way to do so would be to back the concept of a common euro bond, something it has steadfastly resisted. However, I think that fairness alone is the wrong focus.

 

The real problem is that a currency area in which all members can free-ride on all others is inherently unstable. Restructuring the euro area to make it sustainable in the long run will require some fundamental changes.

 

First, as everyone acknowledges, the euro needs a better set of fiscal policy rules to replace the inadequate and unenforceable rules of the growth and stability pact. Sweden’s fiscal policy regime could be a good model.

 

Second, the euro undoubtedly needs more fiscal centralism. That is one reason the United States, where 60 percent of total government spending and taxes take place at the federal level, works better as a currency area than does the euro, where only 2 percent of fiscal activity is centralized. A common euro bond could be a part of the needed centralization. The concept itself makes sense as part of a general structural reform, despite the objections that can be raised against it as an ad-hoc bailout measure.

 

Stability of the euro as a currency area will also be improved if recent efforts at banking reform are successful. The case of Ireland shows that sovereign debt problems do not always begin with excessive government deficits. They can also arise from unsustainable private sector commitments entered into under implicit government guarantees.

 

Finally, like its Asian counterpart, Germany needs to think about the possibility that reforming the euro area in a way that makes it sustainable could also require a rebalancing its own economy. Edging away from single-minded reliance on exports would not have to mean abandoning national virtues. Instead, it would mean allowing workers and consumers to share more fully in the fruits of their own thrift, hard work, and efficiency. If the euro area is to be saved, it will not be enough to reshape other members in its own image. Germany will have to change, too.

 

Footnote: While writing this, I missed the excellent recent post by Christian Schoder, Christian R. Proano & Willi Semmler, on sustainability of current account balances in the euro. The authors provide empirical data that underscores some of the points made above. In particular, with regard to the need for change in Germany, as well as the deficit members of euro, they note that “the relative competitiveness of deficit countries needs to be increased. This cannot be achieved by limited wage growth in the deficit countries only, but must include an expansionary wage policy in the surplus countries.”

[hazard]

I ovaj interesantan rad iz 2011. na temu imbalansa u EZ, prenecu samo zakljucak:

 

http://www.economonitor.com/blog/2011/08/the-euro-and-the-sustainability-of-current-account-imbalances/

 

 

 

Policy implications

 

Our findings suggest that the recent development of current account imbalances among European countries is unsustainable and, therefore, cast some serious doubt on the view that the diverging current accounts are consistent with optimal behavior of economic agents as proposed by Blanchard (2007). Further, we have argued that the introduction of the EMU has contributed to the growth and persistence of these imbalances. The EMU eliminated the nominal exchange rate mechanism, and the common monetary policy aimed at price stability reduced the flexibility of inflationary adjustment. The Stability and Growth Pact and its rather inflexible requirements for national economic policy appears sub-optimal for monetary unions with economies that develop unevenly. Given the low labor mobility between European countries, we can therefore conclude that ambitious policy measures need to be implemented to reduce current account imbalances.

External re-balancing would facilitate overcoming the sovereign debt crisis in southern Europe. Policy measures aimed at increasing economic growth to grow out of the debt crisis would be more effective if the external account was not in deficit. This is because, in this case, a higher share of the domestic demand generated by expansionary policies would be realized in the home country and not abroad through imports.

 

Our results reinforce the view that ambitious political action is required to overcome the external imbalances. Although the literature and the public discourse diverge regarding the question of whether adjustment should take place in the surplus or deficit countries, a broad consensus seems to prevail on core requirements to reduce current account deficits:

 

First, the relative competitiveness of deficit countries needs to be increased. This cannot be achieved by limited wage growth in the deficit countries only, but must include an expansionary wage policy in the surplus countries. In any case, the benefits of a coordinated wage policy within the Euro Area become evident.

 

Second, instead of letting credit flows be regulated by the interest payments and bond yields, funds and low-cost credit for productivity enhancing infrastructure could be provided for the periphery countries. Thus, an EU-wide management of credit and investment flows may reduce an uneven development of productivity.

 

Third, the divergent development of domestic demand among EMU countries – due to regional boom-bust cycles – needs to be reduced as domestic and external demands drive imports and exports, respectively. Again, coordinated wage, credit and fiscal policy may allow for active management of relative domestic demand developments and help reduce current account imbalances.

 

 

Elem, u jednoj recenici - vise integracije tj. federalizacije je potrebno da evrozona ne bi zavrsila u raspadu.

[Prospero]

Dombrovskise, majstoru! 
 
 

“Having in mind that an independent Catalonia would be automatically out of the EU, and thus the economic consequences, what would be your message for the Catalonian voters?” a EurActiv reporter asked European Commission vice-president, Valdis Dombrovskis, on Friday (18 September)

 

Dombrovskis replied:
“The European Commission is not normally commenting on party politics in member states or their regions and now it’s really a choice of the voters so from that point of view we cannot comment a lot on elections on different implications of one vote or another because certainly our intention is not to influence votes in member states and regions.
“So now it’s really in the hands of voters. As the Commission has always outlined, we are ready to work with democratically elected or appointed authorities of member states.”

Not exactly a ground-breaking story or a particularly succinct response. However, nobody had remembered to tell Dombrovskis the Commission’s recent line on Catalonia ahead of the regional elections on 27 September.

Dombrovskis’ team rushed to add what Commission spokesman Margaritis Schinas said the day before:
“If a part of a member state becomes independent, the Treaties would no longer apply to it and it becomes the third country in respect to the EU. Nevertheless, it can apply for EU membership”.

But it was too late once the Catalonian news agency got hold of it. And this was the result:

 

Dombrovskis: “We are ready to work with democratically elected or appointed authorities of member states.”

 

The news spread like wildfire across Catalonia´s media landscape. Suddenly, Dombrovsksis had changed the EU executive’s position on secessionism, which has remained untouched since 2004!

Edited September 21, 2015 by Prospero

[Prospero]

'Jbg, morali smo, Ameri nas smarali, ali nam se već smučilo'...
 

Juncker: We can’t let EU relations with Russia be dictated by US

EurActiv.com with agencies
 07:06
 
Europe must improve its relationship with Russia, and should not let this be something decided by Washington, European Commission President Jean-Claude Juncker said on Thursday (8 October).
 
The European Union joined the United States in imposing sanctions on Russia last year over its annexation of Crimea from Ukraine, and tightened them after separatists launched a rebellion in the east of the country with the backing of Russia.
 
Relations between Moscow and the West have taken a further turn for the worse since Russian President Vladimir Putin ordered a bombing campaign in Syria, against opponents of President Bashar al-Assad.
 
Juncker said tensions had to be eased, even if this was not necessarily popular. "We must make efforts towards a practical relationship with Russia. It is not sexy but that must be the case, we can't go on like this," he said at an event in the southern German town of Passau.
 
Last week, US President Barack Obama accused Putin of acting out of a position of weakness to defend a crumbling, authoritarian ally in the Syrian leader.
 
But Juncker signalled that Europe should take a different approach. "Russia must be treated decently," he said. "We can't let our relationship with Russia be dictated by Washington."
 
"I know from my conversations with (Russian President Vladimir) Putin that he (does not accept) phrases like when Barack Obama said Russia was a regional power. What does that mean? You can't talk about Russia like that," Juncker said.
 
EU sanctions are up for renewal at the end of this year, and so far the bloc has taken a united line on maintaining them, even though some member states are being hit hard, including by Russian counter-sanctions on Western food imports.

[Eraserhead]

Koji su oni beskicmenjaci. 

[Budja]

Koji su oni beskicmenjaci. 

 

Sto su sledili americku politiku bezrezervno ili...?

[Eraserhead]

Sto su sledili americku politiku bezrezervno ili...?

Ako su pratili politiku bezrezervno onda zbog toga, ako nisu pa su sada videli da im se vise isplati da saradjuju sa Putinom uprkos svemu onda zbog toga. Ne vidim kako mogu da se izvuku.

[Dagmar]

Obicna real politika.

[hazard]

Nemci preko DW vec kukaju o novoj poljskoj vladi:

 

http://www.dw.com/sr/eu-%C4%87e-imati-problema-zbog-poljske/a-18805450?maca=ser-TB_ser_b92_2013-9945-xml-mrss

 

 

 

Pri tome su birači okrenuli leđa stranci koja je Poljsku sigurno izvela iz finansijske krize i postigla solidan privredni rast. Za to ima mnogo razloga.

 

Osim toga, poljska omladina, za razliku od većine zapadnih zemalja, gaji velike simpatije za konzervativce. U starosnoj grupi između 18 i 29 godina, gotovo da nema simpatizera levičara; za nju je PiS ubedljivo na prvom, dok je liberalna PO tek na četvrtom mestu.

 

PiS kao jedina stranka na vlasti, kao i konzervativni predsednik države, mogli bi imati dalekosežne posledice po Evropu. Jaroslav Kačinjski ne krije da se divi mađarskom premijeru Orbanu. Varšava će, kao i Budimpešta, zauzeti tvrd kurs prema izbeglicama. A premijer Velike Britanije Dejvid Kameron bi u evroskeptičaru Kačinjskom mogao da nađe saveznika.

 

Vlada Beate Šidvo za Kačinjskim u pozadini će se na međunarodnom planu žestoko boriti za poljske interese. Malo je verovatno da će praviti kompromise, na primer, na planu energetske politike. Ukoliko PiS zaista održi svoja skupa socijalna obećanja, Poljska bi mogla da krene putem koji dugoročno vodi u grčke prilike.

 

I Brisel i Berlin bi sa novom poljskom vladom mogli da imaju teškoća. Tu će sigurno biti razlika u ophođenju prema Rusiji. Nova vlada u Varšavi će se zalagati za trajno stacioniranje velikih jedinica NATO u Poljlskoj. Antiruska retorika će se pojačati i ionako loši poljsko-ruski odnosi će postati još gori. Evropa potresena krizama bi mogla da se nađe pred novim problemom.

 

 

Jebiga, nisu vam bili dobri evroentuzijasticni levicari koji dovode u pitanje konsenzus stednje, sada kusajte malo evroskepticnih desnicara koji dovode u pitanje konsenzus stednje.

[MancMellow]

 

 

Jebiga, nisu vam bili dobri evroentuzijasticni levicari koji dovode u pitanje konsenzus stednje, sada kusajte malo evroskepticnih desnicara koji dovode u pitanje konsenzus stednje.

 

ali bukvalno

[bigvlada]

Leaked Draft Reveals EU Anti-Piracy Enforcement Plan
By Andy
on November 9, 2015


A leaked document has revealed the EU Commission's plans for copyright in 2016. In addition to tackling the issue of content portability in the spring, the draft suggests the Commission will explore a "follow-the-money" approach to enforcement, clarify rules for identifying infringers, and examine the crosss-border application of injunctions.

The EU Commission is currently working on proposals for the modernization of copyright with the aim of providing a framework more suited to the digital age.

The EU’s plan was set to go public exactly a month from today but just before the weekend IPKat said it had obtained a leaked copy of the draft communication from a ‘Brussels insider’.

“EU copyright rules need to be adapted so that all market players and citizens can seize the opportunities of this new environment. A more European framework is needed to overcome fragmentation and frictions within a functioning single market,” the leaked draft reads.

The document, which could be subject to change before its release next month, advises that the Commission will issue legislative proposals for content portability during the Spring of 2016.

“As a first step, the Commission is presenting together with this Communication a proposal for a regulation on the ‘portability’ of online content services, to ensure that users who have subscribed to or acquired content in their home country can access it when they are temporarily in another Member State,” the report reads.

But in addition to making life easier for citizens, the Commission also wants to make life more difficult for pirates. Noting that creative rights have little value if they cannot be enforced, the Commission calls for a “balanced civil enforcement system” to enable copyright holders to fight infringement more cheaply and across borders.

“A ‘follow-the-money’ approach, which sees the involvement of different types of intermediary service providers, seems to be a particularly promising method that the Commission and Member States have started to apply in certain areas,” the draft reads.

“It can deprive those engaging in commercial infringements of the revenue streams (for example from consumer payments and advertising) emanating from their illegal activities, and therefore act as a deterrent.”

On this front the Commission says it intends to take immediate action to set up a “self-regulatory mechanism” with a view to reaching agreement next spring. While voluntary, the EU says the mechanism can be backed up by force if necessary.

“Codes of conduct at EU level could be backed by legislation, as required to ensure their full effectiveness,” the draft notes.

By the fall of next year the Commission says it will have assessed its options in respect of an amended legal framework covering a number of enforcement issues. No additional details are provided but one of the key items in the draft concerns the rules for the identification of infringers.

The document also highlights a need to address “the (cross-border) application of provisional and precautionary measures and injunctions”. Clarification is needed, but this appears to be a reference to EU-wide site blocking.

Furthermore, the EU indicates it will examine the rules for copyright takedowns and the potential for illicit content to be taken down and remain down.

“The Commission is also carrying out a comprehensive assessment and a public consultation on online platforms, which also covers ‘notice and action’ mechanisms and the issue of action remaining effective over time (the ‘take down and stay down’ principle),” the draft reads.

Finally, Julia Reda MEP is raising alarms over the Commission’s intent to clarify the legal definition of ‘communication to the public’ and of ‘making available’.

“The Commission is considering putting the simple act of linking to content under copyright protection,” Reda writes.

“This idea flies in the face of both existing interpretation and spirit of the law as well as common sense. Each weblink would become a legal landmine and would allow press publishers to hold every single actor on the Internet liable.”

The full document can be downloaded here.

 

https://torrentfreak.com/leaked-draft-reveals-eu-anti-piracy-enforcement-plan-151109/

[hazard]

http://www.economist.com/news/leaders/21678791-problem-one-size-fits-all-monetary-policy-euro-area-back-getting-boomier

 

 

Ireland’s economy Getting boomier The problem of a one-size-fits-all monetary policy in the euro area is back Nov 21st 2015  | From the print edition

• 

THE swings in Ireland’s economic fortunes have been wilder than for most. Just look at the labels it has attracted. In 1988 it was dubbed the “poorest of the rich” by this newspaper. By the 1990s it had transformed itself into the Celtic Tiger, Europe’s answer to the fast-growing economies of emerging Asia. In the 2000s it was turbo-charged by the low interest rates that came with membership of the euro (some called it a “euro-bubble” economy). But by the end of 2010 it was a ward of the IMF, as its twin housing and credit booms turned to bust. Now its speedy recovery from the crash has earned Ireland a new title: the Celtic Phoenix (see article).

 

A hyper-globalised economy is one explanation for this whiplashing. Exports are 114% of GDP, and since the late 1980s Ireland has encouraged foreign direct investment, often from American firms. But another factor is the euro area’s one-size-fits-all monetary policy. Ireland is too small to affect the fortunes of the overall euro-zone economy, and thus the decisions of the European Central Bank (ECB). Low interest rates caused it trouble before; and, on its current trajectory, Ireland will soon once again be an economy ill-suited to the ECB’s monetary tailoring. Other small and open economies, such as the Baltic states, Cyprus and Malta may eventually face a similar problem. To stabilise their economies, all these countries will have to lean more heavily on other tools to regulate excessive credit, as well as on fiscal policy. Unfortunately, the early signs are that Ireland has only learned half that lesson.

 

One size fits none

Start with policies to curb credit growth. A first line of defence is the proper regulation of banks. In the bubble years, Ireland was a poster-child for what not to do. Most of its problems stemmed from one bank, Anglo Irish. Feeble regulators allowed its lending book to grow at a wildly imprudent rate, with loans heavily concentrated in commercial property. Today, Ireland has independent-minded economists at the helm of its central bank—Patrick Honohan, the current head, and Philip Lane, who takes over from him this month.

 

They are already showing mettle. The central bank has used macroprudential tools in response to a burst of house-price inflation, placing caps on the value of loans that banks can extend in relation to the value of homes and to borrowers’ income. The trouble is that these tools are largely untried and their efficacy unknown. In places such as Sweden, measures of this sort have failed to restrain soaring house prices.

 

Other tools are also needed, chief among them fiscal policy that leans against the business cycle by raising taxes or cutting spending in a boom. Charlie McCreevy, Ireland’s finance minister between 1997 and 2004, scorned that idea. “When I have the money, I spend it. When I don’t, I don’t,” he once said. Sadly, there are already signs that the McCreevy doctrine still holds sway in Ireland. The recent budget, the last before elections in the spring, diverts stronger-than-expected corporate-tax receipts into extra spending worth 0.7% of GDP this year, and allows a similarly sized boost from tax cuts and additional expenditure in 2016. That is a mistake. Policymakers should at least let the budget’s “automatic stabilisers”—the waxing and waning with the cycle of tax receipts and spending on unemployment benefits—operate freely.

 

Lax budgetary policy was not a prime cause of Ireland’s bubble economy in 2000-07. But the crash that followed the boom would have been less painful if Ireland had had more fiscal insurance to draw upon. Given the inherent limitations of the euro area’s single monetary policy, such insurance may well be needed again.