Category debt

€uro exit by Med nations could cost 17 Trillion €.

A new study by a German think tank warns that a euro exit by Greece, Spain, Portugal and Italy would cut global GDP by 17 trillion euros and plunge the world into recession, with France suffering the biggest loss. A Greek exit alone would be manageable, but must be avoided to forestall a domino effect, it says.

A Greek euro exit on its own would have a relatively minor impact on the world economy, but if it causes a chain reaction leading to the departure of other southern European nations from the single currency, the economic impact on the world would be devastating, a German study warned on Wednesday.

Economic research group Prognos, in a study commissioned by the Bertelsmann Stiftung, estimated that euro exits by Greece, Portugal, Spain and Italy would wipe a total of €17.2 trillion ($22.3 trillion) off worldwide growth by 2020.

The researchers arrived at a particularly bleak assessment because they didn’t just calculate the losses of creditors who had lent money to the crisis-hit nations. They also analyzed the possible impact of a euro collapse on economic growth in the 42 most important industrial and emerging economies that make up more than 90 percent of the world economy.

Using an econometric model, Prognos first calculated the effect of a Greek euro exit, and then simulated the step-by-step fallout from Portugal, Spain and Italy abandoning the currency as well.

Chain Reaction Could Be ‘Devastating’

“In their overall assessment, the authors of the study come to the conclusion that an isolated exit of Greece and an insolvency of this euro-zone country might well be something that the EU could cope with from a merely economic point of view,” the Bertelsmann Stiftung said in a statement.

“At the same time, however, it is extremely difficult to assess if and to what extent this might trigger a wave of further euro-zone exits in Europe’s south. If so, the implications for the global economy could be devastating.”

A Greek exit on its own would lead to a loss of gross domestic product (GDP) totalling €164 billion, or €14,300 per capita, by 2020 through devaulation of the new currency, unemployment and a sharp fall in domestic demand, the researchers calculated.

It would cost Germany €64 billion in lost credit and €73 billion in lost economic growth between 2013 and 2020, the study said. But that only amounts to 2.9 percent of German GDP.

The impact of other countries leaving the currency union would be more dramatic:

If Portugal went, Germany would lose €225 billion by 2020 and would have to write off credit amounting to €99 billion. Global losses in growth would add up to €2.4 trillion, with the US having to bear €365 billion and China €275 billion, respectively.
If Spain were to go as well, Germany would lose €850 billion in GDP by 2020 and would have to waive €266 billion of credit. The US would lose €1.2 trillion in GDP, and the 42 countries under review would lose €7.9 trillion.
If Italy, the euro zone’s third largest economy, were to leave, “the situation would run totally out of control,” the study said. It estimated that Germany would lose €1.7 trillion in GDP and would have to write off €455 billion in credit. German unemployment would increase by more than one million by 2015. There would be a “severe international recession and global economic crisis,” the Bertelsmann Stiftung writes. The biggest losers would be France, followed by the US, China and Germany.

“In the current situation we have to make sure that the crisis in Europe does not turn into a wildfire,” warned Aart De Geus, Chairman of the Bertelsmann Stiftung’s executive board.



Has the European Green Party lost its radical edge?

In elections yesterday, the Greens were almost invisible.
In Catalonia, the result will be better, but that’s the only place in Iberia where we register our presence.

In Greece, there has been a political upheaval. Natalie Bennett, the Leader of the English & Welsh Greens called for a new Syriza here.
She couldn’t very well say the Greek Greens.

In Portugal, where are we?
In Italy?
In Ireland, the Irish Greens disastrously joined the government and did what the LibDems are doing in the UK. Lust for power = ditching principles = the people ditch you too!

In all these peripheral countries in Europe, the political situation has changed incredib;y as disillusioned people have searched for alternatives.
They have NOT looked at the Greens.

We need to ask ourselves this question and very quickly come out with an answer.
One clue to our misfortune is the disgraceful actions of the European Green co-leader, Danny Cohn Bendit.
He berated the French Greens for opposing Hollande’s austerity budget and resigned in a huff.
Good riddance.

This may be a turning point in the slow slide to mediocrity and listlessness in the face of unprecedented ecological and economic crises.
The “me-too” politics of concession, surrender and coalition at any cost proves to be electorally disastrous eventually.

But where’s the debate?

Farid Erkizia Bakht

Why did the Man from 1968 decide to go?

I am referring to Danny Cohn Bendit, the leader of the French Greens. Or so he was until he abruptly decided to resign last week.
Because two French Green Ministers in the Hollande administration decided not to back austerity.
Which says one thing about D-C-B…. that 1968 was a long time ago… the days of clenched fists and rebelliousness replaced by a more establishment, Federalist approach to “ever closer union” and backing ‘economic reforms’

D-C-B hasn’t left the picture as he is still the European Green Party’s co-leader, though I can’t see how that’s tenable.
A savvy operator like D-C-B would have decided his destination before jumping and no doubt Mr. Barroso has some ideas.

It will become clearer over the next few days what his game-plan is.
Meanwhile, we ought to thank the French Greens who defied pressure over unjustifiable cuts.
One day pretty soon we may well see last week as a pivotal moment in the direction of the European Green Party.

This is an “American View of French Politics”

Daniel Cohn-Bendit has resigned from EELV because the party voted by over 70% to denounce the TSCG (aka Merkozy fiscal pact), which DCB regards as a refusal to support the European project and a strategic error, whatever reservations he may have about the wisdom of the fiscal pact. He accuses his former party of having taken a “gauchiste” turn:

Pour lui, sa position est “profondément pragmatique” : “rappeler nos convictions et trouver le bon chemin (…) vers mieux d’Europe” et une Europe “plus démocratique”. “Ce traité, on ne l’aime pas mais c’est la base”, a-t-il indiqué peu après avant d’ajouter : “J’entends les non, la colère des peuples, mais demain on fait quoi ?”

The EELV, for its part, has sought to distinguish its “no” to TSCG from Jean-Luc Mélenchon’s.

Un “non” que les ténors d’EELV ont pris soin de dissocier de celui de Jean-Luc Mélenchon. A l’instar d’Eva Joly qui, après avoir appelé à “un refus fondateur”, a redit qu’elle n’irait pas manifester le 30 septembre aux côtés du Front de gauche. “Il faut refuser de laisser instrumentaliser l’Europe dans la constitution d’un front du non”, a lancé l’ancienne candidate à la présidentielle à la tribune.

Farid Erkizia Bakht

UK PLC 2017: worst case scenario

As the London Olympics gathers pace, I might momentarily forget about its utter commercialism and corruption and financial mismanagement (what else would you call a bid for £2.4 billion and an ultimate cost of £11 billion?).

Am tempted to see the Olympic flame go past in North London on the 25th of July. In other words, it’s a sport after all, isn’t it?

And Olympic fever will ultimately take over with wall to wall media coverage. And why not?

It might be the last piece of ‘good news’ before the hangover after the night before.

I will return to this theme regularly as it’s something most of us seem to be ignoring:

a) what happens if the Scots do vote to take the first step to independence? Beyond a few weeks of commentariat unease over the date of the referendum (2013 or Bannockburn year of 2014), it’s not an unspoken issue among political parties and movements in the South, i.e. England.

It will be an utter shock to the elite. Three centuries of domination and then, suddenly, ‘separation’ or ‘national liberation’ (take your pick)… it’s not something to just shrug off.

The entire thorny problem of English identity, nationhood and culture needs to be addressed.

I am worried it will be hijacked by the Right while the Centre-Right (New Labour) will mouth measly platitudes to be tough on immigration (as Miliband kicked off recently) and ‘celebrate’ English history in a wholly artificial (go and do some street parties) setting.

It will be a profound shock as “losing India” in 1947. A collective depression among the elite.

Surely, London will have to give up the seat at the UN Security Council?

And can the English Army continue to follow the Pentagon all over the world?

Purpose, character and direction: these will have to be decided. What is England for?

b) Sterling is sitting pretty as the Euro slowly implodes. One can almost feel the complacency among the elite and even much of the population as they calculate how far sterling will go in the holidays.

Yet, isn’t sterling vulnerable? It collapsed 30% after Lehman.

Where will it go if there is another banking collapse?

Isn’t UK PLC one of the most indebted of the major European nations with £1 Trillion in the red?

Does London think that Paris, Berlin, Rome and more will just sit back and let England (and the rest) bask in new glory and prosperity as capital flees to London?

Isn’t  the lop-sided English economy (over reliant on bankrupt banks) in danger of falling over?

The propaganda about financial services, invisible exports, creative ‘industries’, university education, tourism……. taking us to a post-industrial paradise…. well, you believe if you want to…. …. with the Norwegians saving North Sea Oil to form a gigantic sovereign fund while England has.. zip.. (no fund at all)…. I would say “London, we have a problem”.

Sterling and the entire business model of betting all on the City of London look like they could take a beating.

By 2017, we could be facing ruin with all its side effects of civil strife.

The 1970s will look like a stroll in the park, though that decade (with its hangover after the boom party of the 1960s) can teach us a lot about how delusions turn to dust.

The worst case scenario by 2017 could therefore include:

  • sterling crisis
  • City of London and the banks falling apart
  • UK breaks up as Scotland leaves
  • Civil unrest as youth unemployment reaches Southern European levels

Impossible? No.

Likely? Don’t know.

But that’s the whole point of looking at scenarios. Prepare for the Worst, Hope for the Best

Now, look at the ‘debate’ around and see just how the entire political class and intelligentsia are skirting the edges and refusing to ask the tough questions.

Instead, the Tory-Lib Right use the crisis to roll back the 1945 post war settlement while New Labour posture with the same thing (but over a longer time period expecting to get to power and then announce that the books were in worst shape than they thought and …..)

And did I mention the non-existent debate about climate change? Why bother?

It went out the window along with carbon trading as the investment banks saw that ‘opportunity’ disappear.

Athens had its Olympics in 2004 and had no idea of what was just around the corner.
London has a similar feel.

They used to say: don’t mention the war.

Now, it’s almost: don’t mention the collapse. It’s too painful to contemplate.



Let’s have an inquiry re Labour’s “light touch” let off for the City

The Tories want a quick, easily forgotten inquiry into LIBOR-fixing by twenty banks.

Labour want a long public inquiry about ” the culture of banking”

Why have an inquiry? Do a street poll and the majority of people will tell you that the ‘casino bankers” are vultures, preying on them.

Instead, Ed Balls and co could explain their 13 years of light-touch regulation and how they kow-towed to the City of London, and even gloated about it as how ‘successful economies’ should be run.

Either, take a radical approach and restructure the economy.

Or, have your own internal debate about why Labour = PASOK and Spain’s PSOE and why reform needs to start within the Labour Party now before they become irrelevant later on this decade.

Naturally, this is exactly the opposite of what will happen. The ‘strategists’ will bask in the glory of high opinion poll numbers and tinker with messages, sounding a little bit radical (with absolutely no intention to follow through when they are back in power).

Politics in this island needs a shakeup, to allow genuine debate. And choice.

I will be hopeful when the intellectual self-styled ‘progressives’ start their ‘mea culpas’ and ditch the Miliband/Balls charade, demanding that Labour rip up their out-of-date nineties mantra and look around them… the world has changed.

PASOK & PSOE have belatedly realised they are ‘yesterday’s men’. Labour are doing their best to join them.




The end of Spain?

No, this is not about Euro2012. It is, however, about the Euro.

The Austrian Finance Minister shifted ground yesterday suggesting that the austerity policies would be disastrous and that ‘we need to learn the lessons of the 1930s’, referring to the rise of the Far Right and war.

No one seems to be looking at another option: fragmentation.

While European countries are happy to join with the US in splitting up countries in the Middle East and Africa: Iraq, Libya, Sudan and Somalia, they are more coy when it comes to the ‘Old Continent’.

The austerity madness will cause lasting impacts and it is perhaps too late to change course and expect things to get back to the ‘happy days’ of 2005.

The short run should see an enormous use of monetary firepower by Germany, Northern Europe and France to ‘save Spain’. This will perhaps calm market jitters (actually, they are not scared at all but profiting from speculation, but that’s another story). Saving Spain (i.e. the banks) would still mean rising unemployment for the rest of 2012.

But by November, Syriza should be able to remove the discredited austerity/bailout parties and pull out of the Euro.

That would mean Spain and others such as Portugal leaving the Euro in 2013.

The entire Madrid project post Franco has been about joining the big boys at the high table. Democracy for dollars, as in highways, loans and investment.

The fall of the Berlin Wall took the Germans out of the equation as they looked east.

Madrid carelessly decided to do what all Iberian elites have done since Columbus started the rape and pillage of ‘America’: spend not invest, start a property boom rather than construct decent housing for the majority and completely ignore the need to industrialise with clean technology. The latter was done through subsidies and there are good companies such as the Basque Gamesa but no foundations were laid for a Northern European style economy.

Nationalists were kept at bay by the facade of ‘prosperity’ and the presence of ETA – a godsend to rightwing nationalists in Madrid who could present themselves as defenders of the Realm.

Now that war is over. The economy is in tatters. The concept of Spain is being challenged.

Suddenly, nationalists (especially to the Left) in the Basque country and Catalonia are demanding separation on ‘economic grounds’, not just for historical or linguistic reasons.

If Spain is ejected form the Euro in 2013, then Madrid will find that the centrifugal forces, so long kept bottled up by dictatorship or by the bribery of democracy & dinero, will split apart the state.

There may well be far-right nationalism but that is likely to come from PP, no the independence movement in Euskal Herria and Catalunya.

Instead, expect to see the rise of Left-wing nationalism that attacks the core idea of the Banker’s charter (Americanisation/globalisation) yet wants to join Europe (as Syriza does).

Later on this decade, there will still be something called ‘Spain but it will be without its two industrialised regions which will leave and look North to Berlin and outwards to Latin America and Asia.

Spain without the Basques and the Catalans would be even poorer than today unless,  and this is difficult to see how, there is a seachange in outlook towards the Indignados rather than PP/PSOE.

Already, the Latin Americans are factoring in a downgrade in Spanish power by challenging Madrid over Repsol and other ‘untouchable’ Blue-Chip companies.

Madrid is on the edge of an abyss. The right-wing can forget about the 1930s. In that sense, Iberia is different. There will no longer be any armed conflict. The house of cards is set to collapse.

Bread, not guns, is deciding the future.

Saving the banks is destroying the viability of European states.


Green, Equal and Nationalist?

Gold reaches a ‘nominal’ record price just shy of $1600 an ounce. Some predict it reaIching $2000 by Xmas, and anything up towards $5,000 in the next few years as Western governments print oceans of new ‘money’… launching QE3, QE4 and more.

Utah accepts Gold as legal tender. This week, there was talk of the Swiss planning a gold-backed Swiss Franc.

Linked to all this is the continuing debt crises on both sides of the Atlantic.

The Europeans have performed yet another joke ‘stress-testing’ examination of the banks. 9 failed, 16 nearly.

Let us not forget the Irish banks passed with flying colours last year and then promptly went under, and had to be bailed out.

It looks like a choice between the European Central Bank printing €3 trillion to buy the bonds of the PIIGS or accept that Greece, Portugal and Ireland will default.. and then Spain and Italy will revert back to the Peseta and Lira.

Despite all the political capital invested in the Euro project by the Spanish elite, they will have no choice but to leave the Euro.

It is likely that the ultra right of the Partido Popular will win handsomely in the next general elections (latest by March 2012 but could be earlier) while the nationalists (an

d increasingly to the left of the spectrum in the Basque country) will win in the Iberian periphery.

You can see where this leads. A sullen, right wing elite in Madrid unwilling or unable to accept that the post-1975 road to European milk and honey is at an end and then facing disintegration of the Spanish state by the middle of the decade.

When the Euro collapses, it will inevitably lead to the rolling back of the European project. Forget Lisbon. It will be over.

Remember the Hanseatic League? Vaguely.

Picture a new 21st century variant something like this:

Germany, Walloonia, Holland, Denmark, Austria, Sweden and Norway will become a new Deutch Mark dominated economic zone. The richest region on the planet.

Everyone will want to trade and ally with them.. Russia, the Swiss, the new rich ‘states’ of Northern Italy, Catalonia, Euskalherria, Scotland, Eastern Europe and of course the Chinese and Japanese.

The centre of gravity is set to shift from Western Europe into Central/Northern Europe. Economically, it has already happened.

What is left is monetarily, politically and culturally.

Paris and London: eat your heart out. Enjoy your colonial wars in places like Libya…. while you still can.

The Brazilians will buy up Portugal in a reverse of five centuries of colonialism and turn Lisbon into southern Europe’s Sao Paolo as industrialisation arrives in a big way.

Europe’s Politics stand on a knife-edge.

The old institutions look ripe for dissolution.

To divert people from daylight robbery (i.e. austerity for the majority, honey for the rich minority) and flirting with radical ideas of the Greens and the Indignados, there will be shift to semi-fascist ideologies… watch Le Pen in France, the continuing rise of the Freedom Party in Austria, its equivalent in Holland, Sweden, Denmark and Hungary.

Is any of this possible?

If we look back at European history upto the 30 years war and the Treaty of Westphalia, then why not?

Twenty years after the dissolution of the Soviet Union, a new generation is seeing politics in a new light. The worldview of Central/Northen Europe is no longer bound by the necessary ‘payment’ by Germany for its ghastly crimes of WW2. It no longer has to seek US support against the Russian collosus.

The US and English may still have tanks and missiles in Germany, but they are just relics from the Cold War. Elites find it impossible to move on and accept the world has changed.

London, as a Trojan horse for Washington, can no longer pursue the centuries old scheme of preventing the rise of a dominant ‘continental power’. It has happened.

There are no ideological, political or economic barriers for Central/Northern Europe to forge strong relations with a reviving Russia, even in its present callous form.

If the Chinese cannot save the Euro, then they will accept a new Deutsch Mark 2 (or whatever it is called.. EuroCor or Euro-Mark?).

Follow the Money, as they say.

In this background, the Green and Indignado movements have their work cut out. How to convince the peoples of these new states and region that ecology and equality have a central role in this new World?

Greens have won a notable victory over Big Nuclear in this new heartland: Germany. This paves the way to a ramp up in use of Russian natural gas while a vast new infrastructure for renewable energy is laid out, a more energy & waste-efficient industrial system is put in place.

But the war for equality is the key.

The intellectual and political challenge is how to construct and continental (and ultimately global) movement on the following premise:

Eco-Socialism through National Liberation.

A marriage of Green & Left with the desire for national freedom, with nationalism.

If Greens and the Left remain wedded to a universalist framework, they will be outfought by the Right, riding on sentiment about nations and race.

One can be Nationalist as well as Left (the Basques prove this).

And one can be Green as well as Nationalist. That is a right-wing Green nationalist as well as a Left Wing Green Nationalist.

The monumental challenge is to ensure we get the latter not the former.

The Green movement has to grow up.  It has to get its hands dirty. It has to choose sides. It has to recognise that it is a minority or even non-existent in most of Asia, Russia, Eastern Europe, Iberia, Africa and the Americas. Forget conferences. Forget the Big NGOs. Forget ‘winning’ arguments on barely read journals (such as the Guardian in the UK).

It has to link up with wider forces from below as well as the Left. Most of all, it must seek to influence the nationalist dialogue. To help define ‘national liberation’. To wrest the argument away from Berlusconi, Sarkozy, Le Pen and the ultra-rightists.

That political war will be fought in the Iberian peripheries, parts of France and Italy and most of  all in Germany. I would like to say Scotland  but there are no signs of it. Yes, Scotland is going solo this decade but it’s not too different from CIU of Catalonia or PNV of the Basques. It has to shift much more towards the ideology of equality and ecology within its present nationalist framework.

If the Chinese cannot save the Euro, then they will accept a new Deutsch Mark 2 (or whatever it is called.. EuroCor or Euro-Mark?).

Follow the Money, as they say.

In this background, the Green and Indignado movements have their work cut out.

Whichever side prevails in Europe, the end of this decade will be unimaginable to its start.

Aftter decades of disappointment and anguish, that’s a start.