The EPP and the Conservative Party

Despite its Che Guevara name, this is an alliance of the continent’s largest Christian Democrat and conservative parties, 13 of whom are currently in government, 14 assuming a right-wing win in the second round of the Hungarian elections.I think the Tories lost influence by walking away from a group that includes not just the ruling parties of France, Germany and Italy, but also parties which are probably closest in world view to the leadership group of David Cameron, notably the ruling Moderates in Sweden. […]

The EPP is a very broad church, whose French or Greek members are far to the left of the British Labour party when it comes to economic liberalism and globalisation, and whose Spanish and Italian members include some social conservatives whose views I find pretty repellent. Most of all, it is a power cartel, and it shows. The EPP holds party summits in castles, palaces and the like, and loves all that folderol of limousines crunching up gravel drives to drop off powerful men and women. […]

Lopez-Isturiz said the EPP wanted a Conservative victory in the British general election on 6 May, and that he expected conservative leader, David Cameron to “be pragmatic” and apply to rejoin their group. However, he said that they would have to reapply and there was no chance that they would be able to negotiate, saying, that they would have to join on the EPP terms and sign up to the group’s values and programme. […]

You know I thought the Tory breakaway was a mistake. And I don’t rule out the ECR could fall apart, but if the EPP thinks it is clever politics to criticise the Tories before an election while announcing they might be allowed to rejoin the EPP on terms set by a magnanimous EPP (including the ditching of a grassroots favourite, Hannan, at the request of a German grandee) then the EPP secretary general should find another line of work.

How true.

Source: Charlemagne’s notebook

On homosexuality and romance

[…] with Brokeback [Mountain], ‘homosexuals’ get to recap part of the history of heterosexuals—start with romance, yearn for intimacy.  The issue here is not sex but the nature of the emotion and the terms on which two people associate.

The article is interesting. Perhaps love narratives like Brokeback Mountain are important because stories about same-sex relationships tend to refresh the immemorial story of impossible love between two human beings. As if we were so used to Romeo & Juliet romances and needed homosexuality to underline the tragedy of prohibiting some types of relationships between lovers.

Source: A Society Story

Greek bailout

The Greek package of support from the eurozone this weekend marks a high tide for the principle that complete, unconditional, and fundamentally dangerous protection must be extended to creditors whenever something “big” gets into trouble […]. 

The sharp decline in market confidence last week – marked by the jump in Greek yields – scared the main European banks, and also showed there could be a real run on Greek banks; other Europeans are trying to stop it all from getting out of hand.  But there is no new program that would bring order to Greece’s troubled public finances. It’s money for nothing – with no change in the incentive and belief system that brought Greece to this point […].

This is “moral hazard” – put simply, it is clear a country can get a package of support if needed, and this gives less incentive to be careful.  Fiscal management for countries will not improve […]. 

The Greeks will now:

  1. Lobby for a large multi-year program from the IMF.  They’ll want a path for fiscal policy that is easy in the first year and then gets tougher.
  2. When they reach the tough stage, can’t deliver on the budget, and are about to default, the Greek government will call for another rapid agreement under pressure – with future promises of reform.  The eurozone will again accept because it feels the spillovers otherwise would be too negative.
  3. The Greek hope is that the global economy recovers enough to get out, but more realistically, they will start revealing a set of negative “surprises” that mean they miss targets.  If the surprises add to the feeling of crisis and further potential bad consequences, that just helps to get a bailout.
  4. The Greek authorities will add a ground game against the European Central Bank, saying things like:  “the ECB is too tight, so we need more funds”.  We’ll see how that divides the eurozone.

Source: The Baseline Scenario

For the Federation of German Taxpayers at least, the matter is crystal clear. As its president, Karl Heinz Däke, told the business daily Handelsblatt, Germany’s federal government has “buckled,” and the Germany taxpayer will now “have to provide the majority of the help for Greece.”

In reality, Däke is right. If worst comes to worst, Germany actually will have to contribute the lion’s share of the EU’s rescue package for Greece. KfW, the government-owned development bank, would have to transfer €8.4 billion into Athens’ accounts, and those funds would be backed by the federal government. That, at least, is the maximum amount that Germany would have to pay based upon its share in the European Central Bank. But that figure, of course, is based on the presumption that all euro zone member states, the countries that have adopted Europe’s common currency, will contribute to the aid package — a decision that will be made individually by each country.

In fact, the hefty payment doesn’t seem to match up with the hard line the chancellor has assumed with her EU colleagues. In surprisingly undiplomatic tones, her message to them has been that Germany is no longer content to play the role of Europe’s paymaster. In Berlin, politicians are trying to play down the meaning of the decisions taken over the weekend, claiming that they are merely a provisional and more concrete version of the statement that emerged from the last EU summit, on March 25, when Merkel was still dictating the conditions. […]

Likewise, there was even criticism from within the FDP-CDU coalition. FDP finance expert Frank Schäffler believes that, over the long term, the plan will weaken the euro’s culture of stability, and that the European finance ministers’ agreement goes against what was agreed upon at the EU summit held in late March. “After several days, this agreement is no longer worth the paper it is written on,” he said. […]

All that may now change. Indeed, on Monday, the markets actually reacted positively to the news. The euro exchange rate and the stock market both soared, though they would lose some of that ground later on. And risk premiums on Greek bonds fell.

Uncertainty is still running high, and it appears the German government is no longer be ruling out the possibility that it may soon need to pull the fire extinguisher off the wall. The desired effects have occurred, Schäuble’s spokesman said, and the markets have calmed down. Then, he added tellingly, “At least this morning.”

Source: Spiegel Online


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