Archive for the ‘Ireland’ Category

Ireland’s choice, sovereignty vs money

05/09/2016

An article notes the tax affairs of Apple in Ireland, “American tech giant Apple had $234 billion in annual revenues in 2015. Now, it’s going to have to pony up $14.5 billion to Irish authorities for skirting taxes. That’s according to the European Commission, which announced Tuesday that Apple had paid a tax rate of just 1 percent or even less — .0005 percent, in some years — on its European profits while some of the company’s operations were based in Ireland. The commission determined such a low tax rate was illegal because it creates an illegal trade incentive. “Member States cannot give tax benefits to selected companies — this is illegal under EU state aid rules. The Commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years, commissioner Margrethe Vestager, in charge of competition policy, said in a statementTuesday”.

The report adds “The massive penalty is likely to send shockwaves through boardrooms of companies like Amazon and McDonald’s that have extensive operations in Europe. European authorities are investigating both companies to see if they paid their fair share of taxes. The ruling also puts the Obama administration in a tight spot. President Barack Obama wants to keep American companies in the country to contribute to U.S. revenue. At the same time, he doesn’t want European authorities to target American companies simply because they’re American and doing business in Europe. In a statement Tuesday, the Treasury Department said it was disappointed in the ruling”.

The piece goes on to mention “Republicans share the president’s frustration. In a statement, House Speaker Paul Ryan of Wisconsin said, “This decision is awful. Slamming a company with a giant tax bill — years after the fact — sends exactly the wrong message to job creators on both sides of the Atlantic. It’s also in direct violation of many European countries’ treaty obligations.” Both Apple, which has been operating in Ireland since 1980, and the Irish government have said they would appeal the ruling”.

It notes “Andrea Montanino, director of global business and economics at the Atlantic Council who previously worked at the European Commission, put the blame for the mess on Dublin. “There are rules in Europe as there are rules in the United States,” Montanino told Foreign Policy Tuesday. “You have to comply with the rules. I would not say it’s the fault of Apple. Apple followed the rules. It is Ireland that broke the rules.”

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Farrell’s new job

26/08/2016

Rocco Palmo notes the new appointment of Bishop Kevin Farrell a the new prefect of the Dicastary for Laity, Family and Life. He opens, “Now the ranking US prelate in the Roman Curia – where his brother, Brian, has long served as bishop-secretary of the Pontifical Council for Christian Unity – even as the move short-circuits the long-held wish for the nation’s sixth-largest city to be elevated as seat of a third metropolitan province in Texas, the Vatican statement announcing the move conspicuously did not include Farrell’s elevation to the rank of archbishop, which has always been customary practice for appointments of this kind. While the pick of the Dublin-born ex-Legionary of Christ might come as a surprise in some quarters, the threads explaining it can be gleaned on several fronts”.

Rocco points out that “First, and most crucially, while no one would see the low-key yet driven (and, quietly, quite funny) Irishman as some kind of wild-haired progressive, he has been notably unstinting in his affection for and loyalty to the reigning Pope; among other examples, Farrell used his homily at February’s ordination of his latest auxiliary, Greg Kelly, to lay out Francis’ vision of being a bishop in depth. Secondly, by every account Farrell has succeeded at the high-wire challenge that marked the first stage of his tenure in the Metroplex – unifying a roiled Dallas church after the divisive tenure of his predecessor, Bishop Charles Grahmann, when the diocese’s staggering growth (a more than sixfold increase of Catholics since 1990) was coupled with an eruption of abuse scandals. In addition, with Hispanic fluency steeped in Mexico from his days in the Legion, the bishop has has successfully navigated the Latin and Anglo realities of the mammoth diocese, whose 67 parishes are effectively teeming at the seams, and the replacement of parish churches with significantly larger new buildings has been a common occurrence. (He would open new parishes, he’s often said, if only he had the priests – or, as one pastor memorably put the crunch, “We’re forbidden to die.”)”

Perhaps most importantly Rocco makes the point that Farrell “enjoys close ties and clear goodwill among four prominent figures in Francis’ orbit: having served as vicar-general and auxiliary of Washington under Cardinals Theodore McCarrick and Donald Wuerl until his southern transfer, the sister of the ever-influential head of Francis’ “Gang of 9,” Cardinal Oscar Rodriguez Maradiaga, lives in Dallas, while the work that brought him to DC to begin with saw him succeed then-Bishop Sean O’Malley as director of the capital’s Centro Catolico Hispano, which the Capuchin founded a decade earlier as Latinos began to arrive in the city en masse, only leaving the role on his appointment to the Virgin Islands. Lastly, having been a key figure in the USCCB boiler room over his 14 years on the bench – leading various elements of the conference’s temporalities and serving as its executive-level treasurer – while Farrell is an administrative whiz and knows the church’s tendency to be obsessed with process, he doesn’t exactly revel in it and understands its place as an element of the greater good. Beyond the sheer challenge of setting up a new ministry that will combine two pontifical councils – and likely bring its share of tough decisions – the organizational element is critical as the combined dicastery will oversee the preparations for the global church’s two largest regular events: World Youth Day and the World Meeting of Families, the latter’s next edition to be held in 2018 in the new prefect’s native Dublin”.

Rocco goes on to mention “On top of all this, having become adept at social media with his own blog and Twitter feed, even if the Pope’s pick isn’t the type who’d be knocking over people to get to a camera, Farrell’s always played well in the spotlight. That public role will likewise be of high import given his new post’s natural role of serving as the church’s lead spokesman on family issues, and in particular at the helm of the dicastery most pointedly tasked with the ongoing implementation of Amoris Laetitia, as a palpable amount of head-banging over the Pope’s Post-Synodal Exhortation continues four months since its release. In tandem with today’s appointment, Francis published a motu proprio formally establishing the new Dicastery and suppressing the respective Pontifical Councils for Laity and the Family, merging the duo alongside the Pontifical Academy for Life into Farrell’s office. In the text, the Pope writes of his desire that the church “offer sustenance and help” to laity and families, “that they might be active witnesses of the Gospel in our time” and might “make manifest the love of the merciful Lord toward all humanity.” On a related note, given the vivid debate among canonists over which rank the consolidated office should hold as it exercises some jurisdiction – which, in the strict sense, is the mark of a Curial congregation – only today has the generic, unusual designation of “Dicastery” emerged for the new organ, which presages a further breakdown of the traditional ranking of the offices as Francis’ overhaul of the Holy See’s governing structures continues apace”.

Rocco ends, “for now, as some fireworks are bound to ensue in the top rank with the appointment for a now-vacant Dallas church – where Farrell was already laying the groundwork to receive another auxiliary – it bears recalling that, with the new Prefect to be aided by three Secretaries for each of the new office’s areas of competence, the legislation establishing the Dicastery provides that (in a first for a top Curial organ) the lead deputies need not be clergy, but may likewise be named from among religious or the laity”.

John Allen discusses the appointment also, “By naming Bishop Kevin Farrell of Dallas on Wednesday as the first head of the Vatican’s newly created mega-department for Laity, Family, and Life, Pope Francis has accomplished two things at once: He’s handed another major victory to pastoral moderates, and he’s also further disabused notions that he’s cool to Americans. (Farrell, 68, isn’t American by birth since he was born in Dublin and came of age in Ireland, but by now he’s spent almost half his life in the States, including the last 14 years as an American bishop.) Farrell joined the Legion of Christ but left fairly early on, before sexual abuse controversies broke out around the order’s controversial founder, Father Marcial Maciel Degollado. He moved into the Archdiocese of Washington in 1984, where he served as a pastor and also took over a center for Hispanic ministry from then-Capuchin Father Sean P. O’Malley, who’s now the Cardinal of Boston”.

Allen goes on to mention, “Bishops who come to the Vatican from the outside often face a steep learning curve, but that’s not likely to be the case with Farrell, since his brother, Brian, is also a bishop and has been serving for the past 14 years in Rome as the number two official in the Vatican’s Pontifical Council for Promoting Christian Unity. I’ve known both Farrells for a good stretch, Kevin a bit better than Brian since I generally see him every year when I speak at Dallas’s annual ministry conference, and this past year Farrell presided over awarding me an honorary doctorate when I delivered the commencement address at the University of Dallas in May. By most measures Farrell profiles as a moderate, with a pastoral touch and a social justice orientation very much in keeping with the Pope Francis style”.

He writes that “when Farrell was named to Dallas in 2007, he took over an uneasy relationship with more conservative elements at the University of Dallas, which was on its way to earning a reputation as one of the bastions of a fairly agressive “new orthodoxy,” and did his best to steer it back to the center. In 2009, Farrell delivered a memorable commencement address in which he warned against “dogmatism, closed mindedness, judgmentalism, [and] suspicion of another’s motives.” He returned to the subject in 2011, when critics objected to a new ministry degree program they saw as insufficiently orthodox. On that occasion, Farrell took the unusual step of releasing a video in response. “Let me remind the Catholic people of the diocese that this is my responsibility,” he said. “And I’m the one who has to stand before God and say whether or not this is truly Catholic. That is my responsibility, and I do not take it lightly.” In not-so-subtle fashion, part of what he was saying boiled down to, “I’m the bishop and you’re not, so relax.” At various other points, Farrell has come under similar fire. When he recently supported Father Thomas Rosica, who operates the Salt and Light media platform and also assists the Vatican with English-language press relations, when Rosica denounced a “cesspool of hatred” in the Catholic blogosphere, some of the same blogs angry at Rosica went after Farrell”.

The piece adds “Others howled when Farrell publicly objected to a new Texas carry law on guns, and praised President Barack Obama for pursuing stronger gun control. Yet liberals too have also lodged complaints. In 2008, for instance, Farrell and Bishop Kevin Vann, then of Fort Worth, issued a joint pastoral letter on Catholics and politics, calling abortion “the defining moral issue not just of today but of the last 35 years.” It was widely seen as a warning to Catholics about supporting Barack Obama (or, at least, doing so uncritically), and led to protests outside the Dallas chancery. Farrell’s reputation for balance, therefore, isn’t about any hesitance to speak his mind, or timidity about drawing lines in the sand. It’s more about an instinctive aversion to ideological extremes, a sense that busting people’s chops generally isn’t the right immediate response to any new problem. On the issues that will loom largest in his new gig – abortion, contraception, gay marriage, and so on – the bottom line is that Farrell is robustly pro-life, but nobody’s idea of a cultural warrior”.

In his new position, Farrell will also be responsible for overseeing implementation of Francis’ recent treatise on the family, Amoris Laetitiae, which among other things seemed to open a cautious door for divorced and civilly remarried Catholics to return to Communion after a process of discernment.

Although Farrell hasn’t directly addressed the Communion issue, when the document appeared he was broadly supportive.

“Some feel Pope Francis does not go far enough in addressing the hopes of those in irregular marriages, others who feel it compromises traditional teaching,” he said. “In my opinion, it reflects the call of Jesus to his church to continue his healing and saving mission.”

Farrell also warmly praised comments on Amoris made by Cardinal Christoph Schönborn of Vienna, Austria, who was among the proponents of opening Communion to the divorced and remarried at the pope’s two Synods of Bishops on the family.

On the pastoral level, Farrell won high marks in July for his response to the sniper attacks on police that left five law enforcement officers dead, in retaliation for police shootings of African-Americans.

Farrell gets good reviews as an administrator and manager (he has an MBA from Notre Dame), and is seen as a strong leader. That’s a quality that will come in handy in the Vatican, where outsiders, especially those who aren’t part of the Italian clerical world, can easily get steamrolled if they aren’t careful.

Personally, Farrell is relaxed and accessible, with a sharp wit and a keen sense of humor, without any of the pretense one sometimes associates with senior Vatican mandarins.

As for the American angle, Francis had already gone a long way to assuaging doubts about a perceived coolness to Americans by naming Greg Burke, a veteran Time and Fox News correspondent, as his new chief spokesman effective Aug. 1.

Yet there was still no American prelate heading a major Vatican department, something of an anomaly in recent decades when the informal rule was there should be at least one.

By tapping Farrell, therefore, Francis has again shown his respect for the Church in the United States in arguably the most consequential way any pope can, since, in the small world of the Vatican, personnel is always policy.

Here’s the bottom line on the Farrell appointment: Moderates can claim another big win, and Americans (as well as the Irish, of course) can feel like they’ve got a powerful new friend in Rome.

Francis ducks and dodges

09/07/2016

A piece notes how Francis reaches out to margalised gays but without altering Church teaching, “Pope Francis on Sunday essentially backed a cardinal’s suggestion that Christians owe LGBT persons an apology for past mistreatment or neglect, but suggested apologies are probably in order to other constituencies as well, including the poor, exploited women and divorced families. Francis was speaking in response to a question that linked the call for an LGBT apology to the recent massacre at Orlando’s Pulse nightclub”.

The article adds “The pontiff said gay persons must not be discriminated against, conceding that there are “some traditions and cultures that have a different mentality,” and said apologies are in order whenever there are “people we could have defended and we didn’t.” The suggestion for a mea culpa came from German Cardinal Reinhard Marx, who in a recent speech in Ireland said that both Church and society have treated gay persons poorly and that the Church should say it’s sorry”.

It goes onto mention “On other matters, Pope Francis said on Sunday:

  • Despite a senior Vatican official’s recent suggestion that retired Pope Benedict XVI might be part of an “expanded papacy,” in fact “there’s only one pope,” while praising his predecessor’s “courage” and “intelligence.”
  • On the recent Brexit result, while not directly criticizing the U.K.’s decision to withdraw from the EU, Francis did insist that “brotherhood is better than being enemies or distant” and that “bridges are better than walls.”
  • The pope denied that his recent agreement to create a study commission on women deacons means the Church has “opened the door” to the idea, and said that more important than the “functions” women hold is the Church’s determination to hear their voice.
  • He said that he felt that he used the term “genocide” to describe massacres of Armenians by Turks in 1915 because it’s the term widely used in Argentina, and since he’s used it before, it would be “very strange” not to have done so in Armenia.

Francis made the remarks during a roughly hour-long news conference on the plane flying back to Rome Sunday after a June 24-26 trip to Armenia. During the trip, Francis earned strong applause from Armenians and swift blowback from Turkish officials for using the word “genocide” to describe the deaths of an estimated 1.5 million Armenians, in what they claim was a deliberate campaign and Turkey sees as the fallout of a broader war”.

The report notes “The pontiff insisted, however, that he doesn’t use it with “offensive intent” but rather “objectively.” The idea of an expanded papacy came from German Archbishop Georg Gänswein, the personal aide of Benedict XVI, who recently suggested that the papal ministry now includes both an “active” and a “contemplative” dimension in Francis and Benedict. Insisting “there is only one pope,” Francis said that Benedict had promised to be obedient to his successor and “he’s done it.” Laughing, Francis then said he’s heard, without being absolutely sure if it’s true, that some people have gone to Benedict to try to complain about his own leadership, “and in great Bavarian style, he kicked them out!” Noting that he plans to take part in a small event on June 28 marking the 65thanniversary of Benedict’s ordination as a priest, Francis called him a “man of prayer,” “courageous” and “intelligent.” On Brexit, Francis had spoken briefly about the results at the outset of his Armenia trip on Friday, saying only that they reflected the “will of the people” and represented a call to “great responsibility” to work for both the good of the U.K. and the coexistence of European peoples”.

The article mentions that “On Sunday Francis went further, making a distinction between the sort of decolonization that occurred in Latin America and Africa earlier in the century and secessionist movements in Europe today, such as those in Catalonia and Scotland, suggesting that the latter risks becoming a kind of “Balkanization.” While saying he doesn’t know “what the reasons are for which the U.K. wanted to make this choice,” he said that in general he believes “bridges are better than walls.” Francis also said the outcome represents a challenge to the EU to become “more creative and flexible,” including by allowing greater independence to its individual members, and also overcoming problems such as widespread youth unemployment”.

 

“European leaders are likely to favour as amicable a settlement as possible”

29/06/2016

A piece notes that after Brexit, the talks, despite minor tensions will be resolved cordially in the interests of all, “There has been no single official response by the European Union to the U.K.’s decision last week to vote in favour of leaving the bloc. Instead, we’ve seen a flurry of mixed and competing messages – a sort of good cop-bad cop routine, with European Commission President Jean-Claude Juncker pounding on the table and German Chancellor Angela Merkel asking Britain to take a few deep breaths and think. Toughest of all have been leaders of the EU’s institutions. Negotiations for exit must start immediately, argued Juncker, alongside European Parliament President Martin Schulz – Europe can’t be held hostage to an equivocating Britain. Seeing a chance to make a power grab, high-profile European parliamentarians – such as former Belgian Prime Minister Guy Verhofstadt – have, too, demanded a speedy departure and pressed for a seat at the Brexit negotiating table alongside representatives from the 27 EU member states”.

The author mentions that “By contrast, the member states themselves, and their leaders in particular, have been much more guarded. Belgian and Italian officials argued for speeding up divorce proceedings at a meeting of national diplomats last weekend, but they were in a minority. Most agreed to proceed with caution. Merkel, in particular, has warned against any anti-British backlash. Europe’s pragmatic national leaders are likely to prevail over the EU true believers in Brussels. All may have been irritated over the years at the U.K.’s prickly relationship with the EU, and its departure from the union will force all remaining member states to think long and hard about how they can renew their cooperation. But none of that’s a reason to expect an ugly divorce. A popular view in Brussels, and in some national capitals, is that ever since the U.K. joined the Common Market in 1973 it has vetoed ambitious projects of continental integration, leaving the EU weaker and more divided. The U.K.’s exit is, for these Machiavellian federalists, a golden opportunity to take the EU in a different direction, to advance their project of “ever closer union,” involving deeper fiscal union and the launching of new pan-European institutions like a European army. But to take advantage of this chance, they believe, they must move quickly – hence the hostility to Britain’s dallying”.

The writer makes the point, “There is also the fear that the referendum result may not stick, and so negotiations on Brexit must start before the U.K. has a chance to change its mind. Options for backing out are already being floated by some from the “Remain” camp. And a cold-feet reversal wouldn’t be as radical as it appears. After all, the EU has ignored referendums in the past: The Irish were asked to vote again after rejecting the Lisbon Treaty in 2008 and the French and Dutch voted against the constitutional treaty in 2005, only to see it reappear virtually unchanged in the form of the Lisbon Treaty a few years later. Most recently, Greeks overwhelmingly rejected a bailout deal in 2015, but their prime minister signed off on a worse one shortly afterward. But this attitude falls on deaf ears in many national capitals, and member states will have the final say on how to deal with the U.K. Among national leaders, the prevailing belief is that the block must proceed with caution when formulating its response to the U.K. referendum. This stems from the realization that the U.K.’s vote is not an isolated event, but connected with wider European politics”.

Crucially he makes the point that “Experienced politicians, such as Merkel, view the political meltdown taking place in the U.K. with great concern. The fallout from the Brexit vote has revealed the fragility of the British government’s authority and how weak mainstream political parties in the U.K. have become. For Merkel, who has made the center-ground in German politics her own, or for embattled leaders like Matteo Renzi in Italy and François Hollande in France, events in Britain are a sobering reminder of their own domestic political struggles. Renzi recently lost mayoral elections in Rome and Turin to the anti-establishment Five Star Movement, and his political future looks more uncertain than ever. Hollande leads a Socialist Party that has lost much of its support among working-class French voters, just like the British Labour Party has. The French political establishment will take the success of the U.K. Independence Party in the EU referendum as a warning about the chances of Marine Le Pen’s National Front in next year’s presidential elections”.

He concludes “In some ways, other EU member states are in more of a bind than the U.K. Since the U.K. does not use the single currency, its vote to leave the EU is complicated but achievable. For eurozone countries, exit is almost unimaginable. Faced as they are with deep domestic discontent, governments in the eurozone share many of the U.K.’s problems but have fewer options available to deal with them. And the already fragile and stagnant eurozone is hardly in a fit state to withstand the economic shock of Brexit. Shares of Southern European banks, for instance, took a dramatic hit after the Brexit result was announced and many eyes are on Portugal and Italy”.

Correctly he ends “For these reasons, the good cops are likely to win out: When negotiations around Brexit do begin, they are likely to be orderly and reasonable. There will be no excessive generosity, given that the remaining EU member states want to discourage their populations from arguing for a similar in/out referendum. But a hostile set of negotiations driven by a desire to punish the U.K. are also very unlikely. After all, voters in France, Germany, Italy, and elsewhere across Europe are angry with their own politicians, whom they consider remote and self-serving. They are far less preoccupied with punishing the U.K., a sentiment that belongs to disappointed Eurocrats more than it does to European citizens. What these citizens are concerned about is the dire economic performance of their economies, one which acrimonious negotiations with the U.K. would not help. Concerned about the impact of Brexit on the eurozone, European leaders are likely to favour as amicable a settlement as possible, where the economic interests of all concerned are accommodated”.

He finishes “As befits a bloc made up of national governments whose politicians are acutely aware of the fragility of their own authority, the response to the U.K.’s decision to leave the EU has so far been muted. The nastier and more jubilant responses have come from those parts of the EU that are more isolated from the realities of national politics – from the European Commission and the European Parliament. The sense of opportunity felt by Euro-federalists does not extend much beyond the Brussels bubble, and it is certainly not shared by governments in national capitals. There, the feeling is more one of a generalised political crisis that needs to be managed carefully if it is not to engulf the EU as a whole. The EU’s future rests upon its national governments being able to contain growing voter dissatisfaction with mainstream political establishments. This is the greatest challenge for the EU, and one that means European leaders will continue to tread very carefully over the next few weeks”.

Brexit and the rise of English nationalism

06/03/2016

A piece discusses the Brexit debate in the UK, “If a sizeable majority of English voters support Brexit in the forthcoming referendum on membership in the EU, the tottering European project of “ever closer union” will have lost its momentum. The EU would stagger on, attempting to weather a refugee crisis, a dysfunctional financial system, a sluggish economy, and threats on its borders, but who would bet on its permanence, let alone on its effectiveness? Many would look back to the prescience of French President Charles de Gaulle when he vetoed Britain’s first application to enter the European Economic Community in 1963: “England is an island,” he said, “sea-going, bound up, by its trade, its markets, its food supplies, with the most varied and often the most distant countries” — marked, in other words, by its difference from the rest of the Continent”.

The piece goes on to make the point that “It is the gut feelings of the people of England that will be decisive. I stress England because feelings here are very different from those in Scotland, Wales, and perhaps Northern Ireland. England is at the core of British euroscepticism: The largest overtly eurosceptic political movement in Britain, the U.K. Independence Party, despite its name, is a largely English party. The largest semi-eurosceptic party, the Conservatives, are also predominantly English. In a recent front-page pro-Brexit editorial, Britain’s Daily Mail roared, bold and in all caps: ‘Who Will Speak for England?’ Without specifically English support, Brexit would be a nonstarter”.

He goes on to make the point that euroscepticism has historically been prominent in Scotland but a change has occurred, “One straightforward answer is the politics of the EU itself. In the 1970s, left-wing politicians and poorer voters in less prosperous areas were suspicious of “Europe” as a capitalist conspiracy set up to serve the interests of big business, international banks, and the political elite. And as prime minister in the 1980s, Thatcher indeed promoted free trade and deregulation with her plan for a single European market. But French Socialist Jacques Delors, president of the European Commission, responded with a raft of social and environmental protection measures designed to restrain Thatcherite neo-liberalism, flipping the politics of the EU on their head. The British left was converted to Europeanism — Delors was given a standing ovation by the 1988 English Trade Union Congress — while British Tories took umbrage. Part of the division over EU membership in Britain today, then, is between neo-liberals — strongest in England — who see EU regulations as a dangerous handicap to trading success in a globalized world, and their opponents — strongest in Scotland — who see EU regulations as a defense against predatory global capitalism. But economics don’t fully explain the depth of the resistance to more Europe that many English voters see as a fundamental part of their national identity. For that, we must turn to history”.

Correctly he makes the argument that “It is only in recent years that a distinctly English national identity has resurfaced. As the core of a United Kingdom of four nations, and previously the center of a multinational empire, the English had been happy to be “British.” They had no national anthem other than “God Save the Queen”; the old red St. George’s Cross flag rarely made an appearance. As long as the United Kingdom seemed both united and effective, “England” was a matter of poetry, not politics. But Englishness as a political identity has accelerated as a response to two novelties. First, the rise, since the 1980s, of Scottish and Welsh nationalism, which came up in opposition to the free-market policies imposed on the outer regions, from England, by the governments of Thatcher and Tony Blair. In the hope of calming nationalist demands, Scotland, Wales, and Northern Ireland — but not England — were given semi-federal governments, creating a new sense of distinction and difference. People in England began to complain of unfair treatment — about English taxes subsidizing Scottish welfare policies and the like. The second stimulus has been the ambition of European idealists to make “Europe,” and not the nation-state, the ultimate source of sovereignty and focus of citizens’ loyalty. At first this seemed just a matter of rhetoric. But the rhetoric, combined with the legal right it has given to large numbers of EU citizens to live, work, and draw welfare benefits in Britain — but mostly, in fact, in England — has fueled a growing sense that England’s parliament, government, and voters no longer have control over their own borders, laws, or population. It was these growing English grievances that helped propel David Cameron’s Tory Party to an unexpected majority in last May’s general elections; the major themes of his campaign were the Labour Party’s supposed dependence on Scottish nationalist support, and Cameron’s promise to renegotiate the terms of Britain’s EU membership”.

Pointedly he goes on “Impatience with the workings of the EU is fueling left- and right-wing populism across Europe — often in forms far more angry and extreme than in England. Yet only in England is there a real possibility of a majority actually voting to leave. Why is England contemplating this bold step, when other large and assertive nations such as the French are not? In part, it’s because the idea of a united Europe fits much better with the broad narrative of history in countries such as France, Germany, or Italy, who naturally feel themselves to be inherently continental. The French often present the whole project of European integration as their own design, traced back not only to Jean Monnet and Robert Schuman in the 1950s, but to Victor Hugo in the 1860s, Napoleon in the 1800s, and the 18th-century Enlightenment. England fits far less easily into this idea of a European destiny — most obviously, as Gen. de Gaulle was aware, because its history is far more global. It’s worth noting, too, that several key EU nations, including France, Germany, Italy, Poland, and Ireland, have histories in which great national decisions have been taken by an enlightened vanguard, with the mass of the people eventually acquiescing — sometimes willingly, often not”.

Perhaps the most important point he makes is that “the greatest difference of all is psychological. European integration is a project based on fear. Fear of war, of foreign domination, of civil conflict, of authoritarian government, of Communism. France and the other pioneers in the 1950s feared Germany. Germany feared being hated. Of the newer members who joined in the 1980s and ‘90s, Spain, Portugal, and Greece feared a return to right-wing dictatorship. The Eastern European countries feared Russia. “Europe” offered a new beginning, an escape from the fears of the past. Some of these fears have lessened, but not all. Most moderate people in most Continental countries are genuinely scared of a breakdown of the EU. England is very different: At least half the population is willing to contemplate Brexit. The basic reason is obvious. England suffered far less from Europe’s great 20th-century disasters. It hasn’t lost a major war since 1783, and hasn’t been conquered since 1066. The country’s take-it-or-leave-it attitude to the EU is found in other lucky parts of Europe — Scandinavia and Switzerland. If large nations like France still fear the ghosts of their history too much to go it alone, many small nations such as Catalonia, Flanders, and also Scotland and Wales, continue to see the EU, whatever its failings, as indispensable to their independence and self-esteem, their protection against big neighbours — including England. In England, on the contrary, many see the EU as such an impediment to political autonomy that they would be willing to face a possible breakup of the United Kingdom by supporting Brexit even as Scottish voters oppose it”.

It concludes “When the campaign begins, the “Out” faction will appeal to history, to ancient rights of self-government, to a brighter future as an autonomous global nation. The “In” faction will revive fears of decline and isolation, arguing that Britain will be more vulnerable, poorer, and less influential should it leave. Much of the discussion will be about bread-and-butter issues — jobs, investment, profits, prices, immigration. But behind this will be the deeper question: Are English voters confident about the ability of Britain — or, if necessary, England, if Scotland goes its own way — to function and prosper outside the EU? Or will they be persuaded that they are too small and too weak? In an uncertain world, the advantage lies with the status quo: Doing nothing seems safer. It may be that a majority of the people of England are inclined to leave the EU, but their politicians and bureaucrats mostly shrink from the task. That English nationalism is on the rise is clear; the results of the coming referendum will reveal whether it has yet to find an effective mouthpiece. If effective leaders emerge during the coming days or weeks, then Brexit is a real possibility”.

Francis dismantles Social Communications

20/12/2015

Yesterday Pope Francis appointed Msgr Paul Tighe as adjunct secretary of the Pontifical Council for Culture. He had previously been serving as secretary of the Pontifical Council for Social Communications since 2007.

Rocco reports While this week before Christmas has seen two Stateside nods slip under the door, the Pope’s saved the best present for last: at Roman Noon this Saturday, word came that Francis had appointed Msgr Paul Tighe, 57  – the Dublin-bred #2 at the Pontifical Council for Social Communications since 2007 – to the new post of adjunct secretary of the Pontifical Council for Culture, elevating him to the episcopacy in the process as titular bishop of Drivasto”.

He goes on to add “For starters, the move comes as a surprise, arriving in the face of widely-held expectations (his own included) that – with the Vatican’s communications entities now being consolidated into a single Secretariat led by three Italians and, for “balance,” an Argentine – Tighe would be heading back to Ireland. Most of all, however, given the bishop-elect’s longstanding role as the relentless architect behind the Holy See’s sometimes turbulent embrace of and adaptation to a “new media” world, that he’s sticking around instead (and with a hat, to boot) has the feeling of a watershed moment”.

He makes the interesting point that “if you’re trying to reform a culture – or advance a new one – the quietly warm, wiry and energetic nominee is the kind of guy you’d want to have around: after all, as Francis’ designated coordinator of the blue-ribbon Patten Commission tasked with charting the reform of the Vatican’s media operation, Tighe did the very un-Curial work of presiding over his own obsolescence”.

Importantly Rocco gives background “To briefly recap a long, eventful decade, it bears recalling how the first throes of digital media were mostly greeted in Vatican circles with ignorance at best, paranoia at worst – and even today, in at least few quarters, some things never change. In the main of the Curia, however, the premium on a fortress mentality carried the day until the chaotic fallout of the 2009 Williamson case, when the lessons learned from the debacle of B16’s de-excommunication of a Holocaust-denying traditionalist prelate (whose residency in Argentina is instructive to more recent developments) included a fresh approach to the cyber-world. As a result, after years of being sidelined in its pleas for a more digital-friendly Vatican, the PCCS suddenly found a new openness to a shift of strategy – to no shortage of displeasure from the Old Guard – with Tighe landing in the driver’s seat. By 2011, the council scored a torrent of global attention with its move to hold the Vatican’s first ever conference on social media during the beatification of Pope John Paul II – a Tighe idea whose widespread response stunned the organizers’ very modest expectations – and by late 2012, five years after the attempt at a first platform (called Pope2You) was epically botched due to a lack of top-level interest and support, the Communications council was the conduit behind the smooth, very successful launches of the share-based News.va portal and the Pope’s own @Pontifex Twitter presence, both of them tapped into being by Benedict himself in moments that went viral and then some”.

He mentions that “Alongside Cardinal Gianfranco Ravasi and two other bishops already on-hand at Culture, “adjunct secretary” is a freshly created post for the council, which isn’t being collapsed into the new, sprawling Secretariat for Communications. Ergo, while the shape of the nominee’s new duties remains to emerge, it stands to be expected or at least hoped that, as a bishop – and one with less of an administrative workload, to boot – Tighe’s role as voice and presence for the church’s digital reality will only increase”.

Becciu to Saints?

27/11/2015

Robert Mickens writes about upcoming curial appointments.

He opens “Francis will not be coming back to anything remotely considered “peace and quiet” in Rome. Among other things, in the coming days and weeks he is set to announce some major personnel and structural changes in the Roman Curia and other Vatican-related departments”.

He notes that “The extensive overhaul of the media sector, which the Pope signaled last June when he established the Secretariat for Communications, is expected to finally get underway. First of all, it appears that Fr. Federico Lombardi, who has headed the Holy See Press Office since 2006, is going to retire by the end of December. The 73-year-old Jesuit has also been running Vatican Radio since 1991 as its program director and since 2005 as its general director”.

Mickens writes that “It’s still not clear if Francis has decided to replace him at the press office with another member of their order, 49-year-old Jesuit Fr. Antonio Spadaro, or if he’s opted to name Basilian Fr. Thomas Rosica, 56, to the post. Spadaro is the editor of Civiltà Cattolica and is the man who conducted the blockbuster interview with Pope Francis that was published simultaneously in September 2013 by Jesuit publications around the world. The pope has given Spadaro freedom to help shape his message and clearly values his younger confrere’s advice. “Spadaro has the pope’s ear,” it is often said in Vatican circles. On the other hand, Rosica has used his fluency in several languages, an impressive theological education (he has a doctorate in Scripture) and extensive experience in developing and running a top-flight communications network (Salt + Light in Toronto) to be a highly effective Church representative in the media. A native of Rochester, N.Y., with dual U.S.-Canadian citizenship, he is already an at-large English attaché for the Vatican press office. And the pope has known him for several years”.

Importantly he adds that “it is structural changes in the Vatican’s media operations that will be turned up a few more notches next month when the newly created Secretariat for Communications leaves its temporary home at the Vatican Radio building and takes over the offices of the Pontifical Council for Social Communication. It’s not clear if Mgr. Dario Viganò, the secretariat’s prefect, will be named a bishop. The 53-year-old Milan priest, who is not related to the apostolic nuncio to the United States with the same name, is a specialist in film and television”.

However it would seem odd to have the prefect of the new secretariat not even a bishop. Of course this may be part of the Francis mindset of anti-careerism but not having Dario Vigano as a bishop may signal a weakness in Francis not willing to put the necessary papal support behind the nascent organisation.

The writer goes on to report that “It seems this change of offices is confirmation that the pontifical council will be suppressed and its president, Archbishop Claudio Maria Celli, given a new post — likely with the promise of a red hat. The career papal diplomat (he served in the Vatican nunciature in Argentina, among other places) will not be 75 until next July, but it’s possible that he could be named Archpriest of St. Mary Major. The current titleholder is Cardinal Santo Abril y Costelló, a former nuncio who turned 80 last September”.

Giving Celli the job of archpriest leaves several others out in the cold, especially the current nuncio to Italy and nuncio to the United States. Archbishop Vigano has served in the United States since October 2011 and is in many ways a Francis man, especially on the subject of money and transparency. It remains to be seen where, or if Vigano will get his reward. He may replace Cardinal O’Brien but this is by no means certain.

Mickens then notes that “Then there’s the question surrounding the future of Mgsr. Paul Tighe, the secretary at the soon-to-be-defunct Pontifical Council for Social Communications. The 57-year-old Dublin priest could end up being named head of one the larger dioceses in Ireland — such as Meath or Cork and Ross — where the current bishops are already retirement age”.

Indeed Tighe, 57, could be sent to Meath. This would place him in good position, if not pole position, to take the place of his archbishop, Diarmuid Martin who has served in Dublin since 2004 to clear up the mess after decades of hidden child abuse. Tighe could have four or so years in Meath and then be named coadjutor to Archbishop Martin or may just take over after Martin turns 75 in 2020.

Mickens goes on to mention “In the coming days Archbishop Giovanni Angelo Becciu, who has been the Sostituto or Deputy Secretary of State for internal affairs since 2011, will be appointed prefect for the Congregation for the Causes of Saints. The red-hat post is a done deal for the 67-year-old Sardinian and former nuncio to Cuba. He will replace Cardinal Angelo Amato, 77, an Italian Salesian who was the No. 2 at the Congregation for the Doctrine of the Faith from 2002-2008″.

Yet again this leaves more questions unanswered, what is to become of Archbishop Luis Ladaria Ferrer SJ a confrere of the pope and secretary of the CDF. Is he to remain in his post until retirement or will be be given a red hat as custom dictates? With Catholic Education, and now it seems Saints, all sown up what is to become of the Spanish archbishop. Perhaps Francis does not what the row it would cause if he moved Ladaria Ferrer to Saints and instead seeks to bide his time. However if Ladaria Ferrer was moved it would give Francis a chance name someone more to his liking at CDF.

Mickens goes on to mention “And who will get Becciù’s job? There is strong speculation that Archbishop Gabriele Caccia, who turns 57 in March and is currently papal nuncio to Lebanon, is the leading candidate to become the next Sostituto. He was the Assessore (or deputy to the Sostituto) from 2002 up until 2009 when he and his counterpart in the foreign section (does the name Pietro Parolin ring a bell?) were both sent away from Rome and into exile. Pope Francis wisely brought Parolin back to be his Secretary of State. By appointing Caccia he would be reuniting a duo that — for at least their time — successfully prevented the numerous disasters that would later plague the previous pontificate”.

Mckens ends “the current Assessore, Msgr. Peter Wells of Oklahoma, is frequently mentioned as the next papal nuncio to the United Nations organizations based in Geneva, Switzerland. The witty and highly competent diplomat is 52 years old and due to be promoted to the episcopacy. He would replace Archbishop Silvano Tomasi, 75, who has held the extremely important U.N. post since 2003″.

He concludes “Pope Francis finally announced last month what everyone had known for more than a year — that three existing structures would be combined to make one big office to deal with issues concerning the laity, family and human life. But up to now he has not said what exactly the new body will be (such as a congregation or a secretariat) or who will head it. Polish Cardinal Stanislaw Rylko, currently president of the Pontifical Council for the Laity, would seem to be the leading candidate to oversee the new office, even if lay people have been mentioned as possible heads of various sections. But the pope may think it is time for the cardinal, who was ordained both priest and bishop by Karol Wojtyla-Pope John Paul II, to return to his native Archdiocese of Krakow after spending the last three decades in Rome. He would be a natural replacement for the current archbishop there, Cardinal Stanislaw Dziwisz. The longtime secretary of the late Polish pope turns 77 next April”.

He goes on to speculate “Pope Francis could turn to Rylko’s deputy (and former personal secretary to Cardinal Joseph Ratzinger), German Bishop Josef Clemens, 68. Or he could look to the current president of the Pontifical Council for the Family, Italian Archbishop Vincenzo Paglia, 70. On the other hand, both men are still young enough to head up a diocese in their native countries. But the pope will have to discern whether that would really be such a good idea — and for whom. There’s yet another possibility. Francis could name the trusted coordinator of his C9 body of cardinal-advisors, Cardinal Oscar Rodriguez Maradiaga, to be the first head of the new office for laity, family and life. The affable Salesian will be 73 next month and shortly afterwards will mark 23 years as head of the Archdiocese of Tegucigalpa, Honduras. Now might be the right time for him to take up a new post. Rodriguez is, without a doubt, one of Francis’ most important allies. But he looks suspiciously like the epitome of the so-called “airport bishop” that the pope so strongly criticizes — one who is constantly travelling abroad for speaking engagements and meetings and is rarely at home”.

He concludes “Bringing Cardinal Oscar to Rome would make perfect sense. After all, the man who’s come as close as anyone to being the “vice-pope” is also the one who initially suggested the idea for new super-office for the laity. He actually said it should be a top shelf department at the level of a Vatican congregation, like those for bishops, clergy and religious. These are just some of the personnel changes Pope Francis will be making. There will be more, included with the official announcement that several current departments will be dissolved and folded into one big office for charity, justice and peace”.

Irish support for Athens?

01/09/2015

A piece from Foreign Affairs argues that Ireland should support Greek debt relief. This is at a time when the country has formally exited the troika “bailout” and is among the fastest growing economies in the EU.

The piece opens “After three long weeks of closure, Greece’s banks are beginning to open their doors to an expectant public. Following tense bailout negotiations, Greece received a seven billion euro ($7.6 billion) bridging loan to pay down 6.8 billion euros ($7.4 million) of the debt it owed last week to its official creditors. Essentially, it’s a new loan to pay off the old one. Or more accurately, it’s paying off the old loan plus interest. But the end of the deadlock has at least returned some normalcy to Greece. Checks can now be cashed. Limited transfers are again possible. Withdrawals are no longer limited to 60 euros ($66) per person per day, although capital controls remain in place, and will for some time. For now, the maximum withdrawal is 420 euros ($460) per day, and money cannot yet leave the country without approval from the finance ministry. This comes at the cost of more fiscal discipline for the Greeks, even though on the whole the country has already endured a level of austerity seen only during times of war or depression”.

He writes correctly that “In all this, Ireland, a small and open economy that completed its own bailout program only two years ago, has stood shoulder to shoulder with the creditor nations of Europe in denying Greece any debt forgiveness. That is shameful. Ireland is now recording some of the fastest growth rates in the eurozone. But during its own crisis, it, like Greece, eventually lobbied heavily for debt relief. In late 2010, Ireland received an 85 billion euro ($94 billion) loan package in exchange for austerity, recapitalising and restructuring the banking system, and passing structural reforms. At that time, it did not ask for debt relief, and none was offered. But two years later, in June 2012, Irish Prime Minister Enda Kenny began to push for it. He announced that he had made a promise together with European leaders to “break the toxic link between bank debt and sovereign debt” through a debt restructuring that would involve a combination of decreasing the interest rates charged and lengthening the loan repayment periods on some of the debt, perhaps indefinitely, as well as compensating the Irish state for the cost of recapitalizing Ireland’s banks”.

He writes, somewhat controversially that “in early 2013, Ireland got debt relief in the form of extremely long-term bonds, which replaces the punishing high interest rate “promissory notes” that the Irish government issued in 2010 to prevent the insolvency of its two largest banks. To this day, Ireland maintains a commitment, at least on paper, to a debt restructure that will return to taxpayers the money they pumped into the banks, even though privately, many fear such an arrangement will never take place, at least not this year”.

To call this “debt relief” shows the kind of alternate reality that the EU “leaders” are living in. For their to be any real notion of solidarity there must be debt relief not just for Ireland but Greece, Spain and Italy. Therefore to say that simply extending the length of the bonds (which will mean the Irish taxpayer paying even more money to the EU) qualifies as debt relief is laughable.

He then argues that “If Ireland’s economic openness is one factor that allowed Ireland to recover more quickly than Greece, there is another, more important reason: Greece has suffered more than double the amount of austerity imposed on Ireland. Although Ireland will be intensively monitored by the troika of international lenders (the European Commission, the International Monetary Fund, and the European Central Bank) until at least 2018, it has at least escaped the troika’s direct control. And Ireland has done well since. Unemployment is falling below double digits, asset prices are recovering, and investment is rising again as international investors, hungry for yields in a low inflation, low interest rate environment, gobble up assets. It’s all very 2006: It is impossible to get a restaurant reservation these days and traffic jams are back in style. Even though more than 20 percent of all banks’ loans are nonperforming, they no longer have a question mark over their survival”.

Shamefully this overlooks the sickening social cost of the austerity that has been demanded by the EU of Ireland. Poverty rates, homelessness, drug and alchocol abuse, suicides have all risen since and to then glibly say that all is well because traffic jams are back smacks of a disregard for people over the economic machine, irrespective of the social and moral costs.

He goes on to make the point that Greek banks do have a question over their survival, “Greece’s debt is around 180 percent of its GDP. (For comparison, Ireland’s was 123 percent of its GDP in 2014.) For a sense of scale, Greece owes more than 90 billion euros ($99 billion) to Germany alone. It owes around 70 billion euros ($77 billion) to France, and slightly over 61 billion euros ($67 billion) to Italy. The key reason Greece owes so much to its official creditors is that nine of every ten euros loaned to Greece in 2010 went to pay back private debt that should have been restructured at that time”.

He does note that “Greece faces a medium-term financing problem. As the state reduces in size, more and more austerity is required to balance the books. The result is the kind of downward spiral central banks were created to help stop. But Greece doesn’t have the U.S. Federal Reserve of the 1940s and 1950s, which stabilized the economy by taking an activist approach to monetary policy. It has the European Central Bank, a currency board with aspirations, but little substance. The difference in outcomes in Ireland and Greece is also thanks to structural differences in their economies. The proportion of the economy made up of internationally tradable versus non-tradable goods and services in Ireland is much higher than Greece’s. That means that Irish people can earn euros from the rest of the world, not just from each other. To a much greater extent, Greek people only earn euros from each other. So, when a large shock comes along, Ireland is better equipped to weather it than Greece. If Ireland’s economic openness is one factor that allowed Ireland to recover more quickly than Greece, there is another, more important reason: Greece has suffered more than double the amount of austerity imposed on Ireland”.

He concludes “Right now, the Greek experience has shown the world that the institutions of the European project are not yet up to the task of crisis management. In extremis, it seems, leaders would rather openly discuss kicking a country out of the currency union than provide some sort of relief for its debts. In that case, the EU is not a currency union but a series of bilateral currency pegs. And, as such, a Greek exit in the next five years could still come to pass”.

Searching for the next Greece

14/08/2015

Daniel Altman tries to discuss who might leave the eurozone, apart from Greece, “With Greece enjoying a temporary lull in its apparently permanent crisis, we can take a moment to look around its neighbourhood at other candidates for trouble. There are several — and the euro’s future looks far from bright. Greece ran into trouble mainly because it should never have been in the eurozone in the first place. Its governments couldn’t balance their budgets, and its economic cycle was far out of sync with those of the eurozone’s leading lights. When Germany grew, Greece shrank, and vice versa. Using the same monetary policy in both countries made no sense at all”.

Altman notes that “the first in line are Portugal, whose government bonds are rated as junk by Standard & Poor’s, and Italy, which receives the lowest investment-grade rating of BBB-. Each country’s government is carrying a debt bigger than its GDP, something the IMF doesn’t expect to change any time in the next five years. Spain, whose debt-to-GDP ratio is below 70 percent but may rise in the coming years, is rated BBB”.

However, Italian debt is odd as most of it is held within the country rather than from outside creditors. Therefore, from this point of view there is less wrong with Italy than Greece. Italy’s main problem is that it has an almost medieval economic system with little ability to change quickly in addition to a corruption problem. Matteo Renzi is attempting to solve some of these problems with legislation that would give Italy more stable governments which would in then then be able to press for the most badly needed reforms. So while Italy has problems there is the possibility of progress, under certain circumstances.

Altman goes on to note that “Not far behind are Ireland, whose debt burden of 86 percent of GDP is supposed to decline rapidly now that economic growth has resumed, and France, at 89 percent, where growth rates may struggle to crack 2 percent in the coming years. Both of them receive reasonable grades from Standard & Poor’s — AA for France and A+ for Ireland, with AAA being the safest of all”.

Yet Altman’s anaylsis should be taken with a warning. Reports from Ireland show that “Ireland’s economy grew by more than 6 per cent in the first three months of the year compared with the same period in 2014, new figures reveal. Data released this morning in Dublin by the Central Statistics Office shows that gross domestic product (GDP) in the first quarter of 2015 accelerated by 6.5 per cent year-on-year while gross national product (GNP) advanced by 7.3 per cent”.

He goes on to argue “it’s important to take these ratings with a grain of salt. After all, Standard & Poor’s gave Greece’s debt a grade of A- until December 2009, when the fiscal writing was already on the wall. Partly because of the rating, Greece had no trouble borrowing at reasonable interest rates as late as November of that year, just as Portugal can today. Yet at the end of 2009, all of the countries above except France were once again being called by their pejorative acronym: the PIIGS. Going forward, the primary risks for these countries are dips in government revenue (mostly likely stemming from disappointing economic growth) and the buildup of other fiscal obligations. Either one could force a decision like the one that faced Greece: to pay or not to pay”.

Importantly he notes “Of course, collecting revenue is one thing; what a government chooses to do with it is another. During those heady high-revenue years from 2005 through 2007, Ireland paid down almost 30 percent of its debt, but Spain shrank its liabilities by only about 13 percent. Yet Portugal took the brass ring for most profligate fiscal policy, with its debt load rising sharply every year — despite a growing economy and rising tax revenue — for a total increase of 36 percent. If any of these events reflects long-term tendencies, then Portugal is one to watch. Another risk for these countries is the possibility that their economic cycles will fall out of sync with the rest of the eurozone or, more pertinently, with Germany. The PIIGS and France rely much more on tourism, for instance, than Germany; as a result, trends in their exports may depend on demand from wealthy households in China, Japan, South Korea, and the United States more than on industrial activity in the eurozone”.

Crucially he writes “the rates of economic growth in these five countries were most similar to Germany’s during the worst years of the global financial crisis. Then, in the past few years, all five fell behind Germany. As Germany recovered more quickly, driving the ECB toward a more hawkish stance on inflation, the other countries were left without the monetary support they needed to escape recession. And most recently, Irish growth has exceeded German growth by more than 2 percentage points; Ireland may eventually need higher interest rates to avoid overheating, but the ECB is unlikely to provide them anytime soon”.

He goes onto make the point that “When the next recession hits the eurozone, the laggards will again come under threat. And there’s no reason to believe that some of them will be any more capable of snapping back. Italy, Portugal, and Spain have enormous baby-boom generations a decade or two from retirement, whereas France has a more stable population profile and Ireland has young reinforcements on the way. For the first three countries, the costs of pensions and medical care will loom large for at least the next two economic cycles”.

He ends “These costs will imply hard choices like the one that caused Greece to falter. Its government ended up in the worst of both worlds, making deep cuts to the very jobs, benefits, and services that it chose to fund in lieu of repaying its debts. Given the staggering cost Greece has already paid to stay in the euro, the next country engulfed by crisis might choose a third option: leave the eurozone sooner rather than later”.

“Beijing is scrambling to control the chaos”

29/07/2015

A report notes the ongoing collapse of the Chinese stock market and how whatever safety net is too late to save it, “China’s stock-market bubble has burst, and Beijing is scrambling to control the chaos. It’s better to stop bubbles from forming in the first place, but Beijing failed to act — perhaps because the rising markets were a rare bright spot in a period of relative economic malaise. Now, with millions of fortunes already destroyed, continuing to do nothing might be the best approach. But that hasn’t stopped the government from diving in. The crash in Chinese share prices is a symptom of a market that is serving new strata of society as it develops, just like the American bourses during the dotcom boom”.

He makes the point that it was supply and demand rather than the fundamentals of the companies that were driving up prices, “even though the last bubble and crash occurred less than a decade ago. In 2008, the Shanghai market plunged spectacularly after increasing its value five times over in the previous two years. Once the global financial crisis subsided, however, it didn’t take long for investors to pour their money back in. And in recent months, they bet that prices in the Shanghai marketand others — would continue to climb indefinitely, borrowing billions to trade on the margin. One problem is that these are not the same investors as in 2008. For the past several years, China has been the world’s primary growth market for online trading accounts. Tens of millions of people have bought stocks for the first time and discovered the wonders of margin trading. Many are members of China’s burgeoning middle class, but that doesn’t mean they’re sophisticated investors; the majority may not even have finished high school. Now, with the markets down roughly 30 percent, their heavily leveraged positions have started to crumble”.

Pointedly he writes that “The government is understandably concerned, as more than three trillion dollars in wealth on paper, which didn’t even exist last spring, has already disappeared. But it’s not taking the right steps to salvage the situation — nor does it necessarily have to take any steps at all. So far, Beijing has placed a moratorium on initial public offerings, apparently in the belief that doing so will discourage churn (and thus more selling) in the markets. In reality, the move just protects existing investors — and the bloated companies they own — at the expense of businesses raising money to expand their operations. The Chinese government is also putting together a stabilization fund, including contributions from 21 brokerage firms, to prop up blue-chip shares”.

Interestingly he argues that “it’s not even obvious that the markets are still substantially overvalued, so none of these measures may even be necessary. On the Shanghai market, price-to-earning ratios have come down from a peak in the forties (for the median share) to the upper teens, which is somewhat elevated but not crazy for an emerging economy in East Asia. In Shenzhen, the ratio was around 45 at the time of this writing. But given the higher concentration of manufacturers on the southerly exchange, this higher figure could signify lower earnings for exporters — possibly a temporary phenomenon — as well as inflated prices. If shares are nearing prices that reflect the underlying values of the companies, rather than frothy demand for stocks, then doing something may be more dangerous than doing nothing. Beijing is setting a risky precedent by acting as a backstop not just for financial stability but also for the market capitalization of publicly traded companies. In the future, with no incentive for caution, investors may adopt even riskier behavior than the kind that has landed them in their current multi-trillion-dollar hole“.

This was seen spectularly in the Eurozone, Ireland and the UK had huge liabilities and yet where brought into the public balance sheet. The real lesson was Iceland who refused to prop up the banks and let them go bust only protecting the money of people over investors. The result was enormous pain for Icelanders in the short term but long term benefits.

Ireland’s referendum: right result, wrong method?

13/07/2015

Omar Encarnación argues that the recent gay marriage referendum was bad for gay rights.

He begins, “In yet another example of the apparent paradox of Catholic nations leading the world on gay rights, Ireland, a quintessential Catholic society, has legalised same-sex marriage. Before Ireland, there was Uruguay, France, and Brazil (the world’s largest Catholic nation as well as the largest same-sex marriage state) in 2013; Argentina and Portugal three years before that; and Spain, the country that inaugurated the trend of overwhelmingly Catholic nations legalizing same-sex marriage, five years before that”.

The writer should take more care in labelling nations “quintessential Catholic”. Gay marriage began in 2004 in the United States, it was in the UK in 2013 and in South Africa before that. To equate Catholicism with leadership on gay rights should not be seen as “set in stone”. Moreover, Ireland voted on gay marriage long after France and Spain introduced it.

He goes on to argue interestingly that “When Spain’s same-sex marriage law was enacted in 2005, only two other nations, the Netherlands and Belgium, had extended to same-sex couples the right to marry, with the Netherlands having done so only in 2001. As of now, and including Ireland, 19 countries protect that right. Of the almost 600 million people who today live in nations that allow same-sex marriage, more than 60 percent are in Catholic-majority nations—and that tally does not even include the “mini” state of Mexico City, a metropolis of some 20 million people, which legalized same-sex marriage in 2009, or Bolivia, Chile, Colombia, and Ecuador, which allow for same-sex civil unions with benefits that are very similar to marriage”.

He makes the valid point that Catholic countries favour gay marriage not just because of “the decline of the Catholic Church’s moral and political authority across the Catholic world. In Ireland, it came as a result of sex and child abuse scandals; in Spain and Latin America, because of the church’s support of military regimes with reputations for wanton human rights abuses, including the disappearance of left-wing dissidents. But this is only part of the story. Polling data also suggest that Catholics, as a religious group, are more accepting of homosexuality than Protestants and Muslims.According to Pew: “On average, Catholics are less morally opposed to abortion, homosexuality, artificial means of birth control, sex outside of marriage, divorce and drinking alcohol than are Protestants.” It is further noted that: “The differences between Catholics and Protestants on most of these issues hold true even when accounting for levels of religious observance. For example, Protestants who participate in religious services at least once a week are somewhat more likely to oppose abortion and divorce—and considerably more likely to oppose homosexuality, sex outside of marriage and drinking alcohol—than are Catholics who attend Mass at least weekly.” Certainly, it isn’t unusual that an overwhelmingly Catholic country such as Ireland decided to back same-sex marriage”.

He argues that “What is unusual about Ireland, however, is the process through which the country settled the matter—not through the courts and the legislature, but via a national poll. In doing so, Ireland has claimed the title of the world’s first country to gain same-sex marriage by popular demand. This is, arguably, a dubious honour. As I wrote in the pages of the Irish Times,Although inspiring, Ireland’s referendum is not a step forward for gay rights.” There is, in fact, something unseemly about a nation putting the civil rights of a historically oppressed minority (it is worth remembering that homosexuality was regarded a crime in Ireland as recently as 1993) to a popular vote. Most civilized nations would never conceive of putting the rights of racial and ethnic minorities to a vote”.

Firstly, the implication that only civilised nations enact rights through legislation or the courts and therefore excludes Ireland is outrageous and should not be tolerated to any degree. Secondly, the author seems to lack the ability to see that having a referendum strengthens the rights of people by making them truly democratic.

For some reason he then describes the recent history of gay rights in the United States, even though the article is meant to be about Ireland. He appears to get around this by noting that several anti-gay ballot measures were passed in the 1970s and 1980s in the United States.

He mentions that “The infamy that surrounds gay rights referendums begs the question of why the Irish would choose a popular poll to settle the issue of same-sex marriage. By 2004, Republican operative Karl Rove cynically managed to put a same-sex marriage referendum on the ballot in ten states, including the all-important swing state of Ohio. He hoped to gin up support for George W. Bush’s reelection campaign by motivating so-called value voters. The gay community was more than a little incensed at the idea that the public should have any say in whether or not a gay person could marry the person of his or her choosing”.

He continues with the example of the United States and Proposition 8 in California to overturn gay marriage in that state. Yet in a somewhat self defeating reference the vote was later overturned, as he admits “the victors in the Prop 8 fight have fared worst. After public opinion turned in favour of same-sex marriage, those who supported the referendum have found themselves fending off characterisations as retrogrades and bigots. Having lost the same-sex marriage war”.

He finally gets to the point and argues that “The infamy that surrounds gay rights referendums begs the question of why the Irish would choose a popular poll to settle the issue of same-sex marriage. According to conventional wisdom, consulting the public on same-sex marriage was the only way to prevent same-sex marriage from being declared unconstitutional, since the constitution did not provide for same-sex marriage, a point that was stressed to me repeatedly by readers to my article in the Irish Times. I am not an expert on Irish constitutional law, but this reasoning strikes me as unconvincing. After all, Irish politicians had previously rejected a referendum on the issue because they feared it would prove too divisive, and instead decided to pass a same-sex civil unions law, enacted in 2011″.

He bizarrely rejects the notion of a democratic referendum “because they recognize that despite the appearance of being a democratic way to decide a contentious issue, gay rights referendums are actually demeaning to a democratic society”.

To say this does little to affirm the value of democracy when it is, in so many ways, under pressure. He seems to reject the way that gay marriage became not just law but part of the Irish constitution, and yet at the same time presumably welcome the result. A strange dichotomy.

He ends on the self defeating point “Let us hope that Ireland’s referendum is one example of settling gay rights that we will not see repeated anytime in the near future. The best-known case is Spain, where the 2005 same-sex marriage law survived a 2012 test by the Constitutional Tribunal. A conservative government had come into office pledging to overturn the law and arguing that it had “denaturalized” marriage as defined in the Spanish constitution as the union of a man and a woman. In the end, the tribunal refused to hear the appeal, leaving the same-sex law intact”.

He concludes “In fairness to the Irish, one big difference between Ireland and Argentina, Mexico, and Spain is the liberalism of the courts. Largely because of the latter countries’ recent experience with military dictatorship and the horrendous legacy of human rights abuses, the courts in Latin America and Spain have been extraordinarily receptive to arguments made by gay activists that “gay rights are human rights.” Additionally, and also in contrast to Ireland, anticlericalism runs deep in the political culture of Latin America and Spain”.

Again he seems to want it both ways, Ireland is a Catholic country fighting against the traditional morality of the Church but then say that Ireland is a clerical country. It cannot be both.

He finishes, “It seems that Irish politicians did not have the stomach for a political brawl and a protracted legal fight over same-sex marriage of the likes seen in Latin America and Spain and that they instead chose the least confrontational but most morally suspect path, which is understandable given Ireland’s history of civil and political conflicts. Moreover, Ireland is a peculiar place, a point underscored by the fact that virtually the entire Irish political class was fully united behind the “Yes” campaign, making the outcome of the referendum certain, if not preordained. To their credit, those manning the “No” campaign resisted the temptation to demonize the gay community, which has not been the case in the United States. Actually, the losing side has been very gracious in accepting defeat. Signaling a willingness to reflect and move on, Dublin Archbishop and Primate of Ireland Diarmuid Martin noted that “we [the church] have to stop and have a reality check, not move into denial of realities.” All of this said, it is difficult to escape the conclusion that although things could have gone tragically wrong, things have instead played out very well in Ireland for the government, the LGBTQ community, and the nation as a whole. The triumph of the “Yes” campaign appears to be one not just for the gay community but for Ireland as a whole. Marriage equality is rightly held as a milestone in Irish history, a monumental achievement in the country’s social and political development, and a repudiation of the Catholic Church’s outmoded views on homosexuality. So we can rejoice in the outcome while decrying the process by which this outcome was attained. But just because the gay marriage referendum worked well for Ireland does not mean that it should be emulated by the rest of the world”.

“Long-term causes that will only have long-term solutions”

20/06/2015

A piece from Foreign Policy argues that the “bailouts” Greece has received from the troika are unhelpful.

It opens “The Greek bailouts have been incredibly stupid. There, I’ve said it. Let’s put aside the debate over whether rescuing Greece was a bad idea in the first place; a complete collapse of its economy might well have led to social unrest and even conflict. But how the Europeans and their cohorts at the International Monetary Fund (IMF) bailed out Greece was amazingly, insufferably stupid”.

He goes on to explain “The world has seen plenty of bailouts in the past, some that worked and others that didn’t. Argentina’s by the IMF in 2000 and 2001 didn’t work, because the peso was so overvalued that there was no way to make the country’s debts sustainable. Ireland’s bailout by the European Union in 2010 succeeded, in the sense that the country paid its way out of the program on schedule three years later, though its economy was still on a fragile footing. But Greece is neither Argentina nor Ireland. As a percentage of the economy, its public debt is much higher than Argentina’s was. Its business environment is nowhere near as dynamic as Ireland’s in the views of the World Bank and the World Economic Forum. And Greece’s shadow economy — the portion that doesn’t pay taxes — may be the biggest of the three”.

Yet even this misses serious errors. Ireland may be technically out of the IMF programme but the debt is still vast, indeed so vast that if things worsen in the Eurozone as the are expected to, another “bailout” is probably necessary.

He goes on “None of these problems has a short-term solution, and yet that is exactly the template that both of Greece’s bailouts have taken. Greece is still in crisis talks with its creditors because the payments it has been expected to make and the reforms it has been expected to implement have corresponded to unreasonable short-term expectations. Put simply, the problems in Greece have long-term causes that will only have long-term solutions. A public debt as big as Greece’s — currently more than 170 percent of its GDP — does not go away overnight, even with the harshest austerity measures. It will only erode during an extended period of robust economic growth as well as restrained spending. Austerity might make it possible for Greece to meet its payment obligations in the short term, but what’s the point if the economy is crippled in the long term? Greece’s climate for business won’t turn into a world-beater in just a few years, either”.

He makes the point that “Improving protections for investors, curtailing corruption, strengthening property rights, and — crucially — enhancing the enforceability of contracts are all on Athens’s to-do list, but the cultural and legislative changes they require will take time. Indeed, it would be a mistake to rush hastily written laws on such fundamental matters through the Greek parliament, especially without building widespread public understanding and support”.

He argues that “it’s foolish to believe that Greece will turn into a nation of chastened and loyal taxpayers in just a few short years. Tax avoidance and evasion have a variety of deep social roots; they can be affected by factors as diverse as religiosity, class divisions, individual psychology, and perceptions of fairness. Though some incentives can increase compliance with the tax system in the short term, the commitment to pay taxes has more to do with a feeling of stakeholdership and justice — something Greece, with its fractured politics and current disillusion, will need time to manifest”.

He concludes “the bailout backers set their criteria based on what they thought Greece should do, rather than what Greece was capable of doing. They were also preoccupied with ensuring Athens would work hard for each tranche of bailout funds, rather than ensuring Greece’s process of reform would be as smooth as possible. Given these disjoints, it’s no surprise that Greece may need a third bailout to avoid defaulting on its debts. A series of short-term cures will never solve a long-term problem. But officials in Frankfurt, Brussels, and Berlin never showed enough interest in the overarching challenges in Greece’s economy. Their goal all along has been to maintain the integrity of the eurozone, despite its flaws, as well as their own infallibility. Ironically, they might have been closer to their goal had they thought less about themselves and more about the Greeks”.

“The reality might not be all gloom and doom”

14/06/2015

Michael Sean Winters writes that Ireland, after the historic gay marriage referendum has given the world and the Church a reality check. He opens “The vote in favour of same sex marriage in Ireland was overwhelming. The Irish people, especially Ireland’s young people, turned out in large numbers to support a measure that was unthinkable ten years ago and unheard of twenty years ago. There is a palpable sense that the Catholic roots of Ireland are no more, that traditional marriage was not the only thing on the ballot this past weekend, but Ireland’s Catholic heritage. There will be plenty of hand wringing in the days ahead. People will seek out a scapegoat. True, the clergy sex abuse crisis took an enormous toll on the moral credibility of the Irish Church. True, catechesis there, like catechesis here, has been weak the past few decades – although, in Ireland, most of those young people voting for same sex marriage went to Catholic schools. But, everyone, especially the leaders of the Church, should try to avoid making anyone or anything a scapegoat: The results point to a deeper reality”.

Winters notes the comments from Archbishop Diarmuid Martin on the need for the Church to face a reality check, “It is impossible to disagree with +Martin’s call for a reality check. Is it possible that those Irish young people did not vote for same sex marriage despite their Catholic education but, in part, because of it? At a time when the face of religion on the nightly news is the face of inhumane intolerance, perhaps we should not bemoan a victory for tolerance, even if that tolerance extends to something the Church does not endorse. It is not an easy question. The Church teaches that sexual relations find their full and proper place within the marriage covenant, and that the procreation of children is, like the unity of the spouses, an integral aspect of those sexual relations, a participation in God’s on-going creation. It is a beautiful teaching and, as I have written before, I think society can and should privilege traditional marriage. But, how often, instead of simply proclaiming our faith, have we wrapped it in judgment of others”.

The danger of as Winters’s argues that there should be a “privilege traditional marriage” results in a new level of bias against gays. The tiny number of people that identify as gay should not, and do not, discriminate against straight marriages. To then say that this number, which is so small, means that straight marriage needs to be elevated seems odd.

Winters adds “What does a reality check look like? The first thing the hierarchy – in Ireland and in the United States – should do is have some long listening sessions with young people. Ask them why they support same sex marriage. They are not trying to destroy Western civilization. Most of them are not gay or lesbian themselves. To them, society must be first and foremost about mutual respect and religion should learn to be more tolerant. They are not wrong to think that. It is good Catholic theology. Bishops and pastors and lay leaders should ask them how they seek to follow the Lord Jesus in their romantic and sexual lives. Do they keep religion and sex separate? Do they think God has something to say about the subject? Before preaching to the next generation of Catholics, Church leaders are well advised to listen to them first, and not just to the choir a la Mrs. Clinton, but a real listening session with people who are not hand-picked for their docility”.

He then makes the correct point that “The second thing the leaders of the Church must do is stop using phrases like “intrinsically disordered” which have been a disaster pastorally and misunderstood theologically. They should have the courage to admit in public what many will admit in private, that the Church’s theology on homosexuality is woefully inadequate. They must stop acting as if knowing this one discrete fact about a person, the fact that he or she is gay, is enough to form a judgment about the whole person. We don’t think our society is justified in sentencing Dzohkar Tsarnaev to death on account of his one, truly terrible act; We should not justify societal exclusion based on one characteristic. The Church at Her best never ceases proclaiming the integrity and dignity of the human person, the whole human person, no matter their choices and their preferences, still less something over which they have no choice whatsoever”.

He adds rightly that “The third thing the hierarchy must do actually sit down with same gay and lesbian Catholics and listen to their stories, find out how they reconcile what the hierarchy currently sees as irreconcilable. Look for areas of commonality, instead of starting with how different each others’ views on human sexuality are. What do they mean when they say “marriage” and “equality”? And, the bishops are well advised to do this before both the Synod on the Family and, here in the United States, before the Supreme Court issues its ruling on same sex marriage at the end of next month. Their statements after that decision should be scrubbed of negativity and hand wringing”.

He ends “I confess I would be more supportive of the fight for same sex marriage if it did not seem so trendy. I worry that the support for gay rights may be inch deep, a passing fad, and could, in the wrong set of circumstances, fail to grow deep roots and be unable to protect gays and lesbians from new hatreds. (The anti-immigrant fervor in Europe will not long be content with only one scapegoat.) If a nation as schooled in the faith as Ireland reaches the conclusion it did, then it truly is time for a reality check, but the reality might not be all gloom and doom. I do not know where such a reality check would lead. I know that our Catholic understanding of human sexuality will always be different from that achieved by merely human reason. But, I suspect the result in Ireland contains more good news for the Christian faith than many realize at first blush. It is not a catastrophe. Wake up calls are always unwelcome, but they help us avoid catastrophes”.

 

Parolin’s historic mistake

02/06/2015

After the historic referendum on gay marriage Secretary of State, Pietro Cardinal Parolin, has “attacked the legalisation of gay marriage in Ireland. The referendum that overwhelmingly backed marriage equality last weekend was a “defeat for humanity”, he claimed. “I was deeply saddened by the result,” Cardinal Pietro Parolin, the Vatican’s secretary of state, said at a conference in Rome on Tuesday night. “The church must take account of this reality, but in the sense that it must strengthen its commitment to evangelisation. I think that you cannot just talk of a defeat for Christian principles, but of a defeat for humanity.” The remarks by the Vatican’s top diplomat, who is seen as second only to the pope in the church’s hierarchy, represent the most damning assessment of the Irish vote by a senior church official to date”.

The report notes that “It was a far more critical response than the circumspect reaction offered by archbishop Diarmuid Martin of Dublin, who said: “It is very clear that if this referendum is an affirmation of the views of young people … [then the church needs] a reality check.” Ireland became the first country to legalise gay marriage by popular vote after a referendum found that 62% of voters were in favour of changing the constitution to allow gay and lesbian couples to marry. While the results were celebrated by advocates of gay rights in Ireland and around the world, it was also seen as a stark symbol of how wide the chasm has grown between young people in what has traditionally been a staunchly Catholic country and the church itself, which says that homosexual acts are a sin and vehemently opposes gay marriage”.

The piece goes on to state incorrectly, “Parolin’s comments are sure to revive the debate about the church’s attitude to gay rights and equality under the papacy of Pope Francis, who once famously said “who am I to judge?” when asked about the existence of a “gay lobby” within the Vatican. That remark spurred hope among progressive Catholics that the church was entering a new era of tolerance and acceptance of homosexuality. For some, that hope has been dashed by an ongoing controversy involving a French diplomat and practising Catholic named Laurent Stefanini, who is gay. The Vatican has refused to accept Stefanini’s nomination as France’s ambassador to the Holy See because of his sexual orientation, according to media reports in France and Italy”.

The report continues “The Vatican has declined to comment on the matter, but there has been speculation in recent weeks that the pope could make an abrupt change and accept the nomination, after all. The Vatican recently told the Guardian that any news on the appointment would be made available on the Vatican’s bulletin, where such appointments are usually publicised. On Tuesday night, Parolin said the dialogue between the Vatican and France was continuing in regard to the controversial nomination, and that he hoped it would come to a conclusion in a “positive manner”. Parolin’s remarks on the Irish vote are significant given the broader role Parolin plays in crafting the church’s message on major diplomatic and social issues”.

It ends “Among other issues, the Italian cardinal has been an outspoken advocate for action to combat global warming. In recent remarks, he denounced the “globalisation of indifference and the economy of exclusion” that has put the planet in peril. He has also been the public face of Francis’s diplomatic efforts, including the church’s role in helping Cuba and the US restore diplomatic ties. But on Tuesday, with his choice of words, Parolin differed from the pope in one respect: the Argentinian pontiff has also used the phrase “defeat for humanity”, but he was talking about war, not the legalisation of gay marriage”.

 

“The church needs to take a reality check”

29/05/2015

After the passing of the historic gay marriage referendum in Ireland a piece from the New York Times examines where the Church goes after the referendum, “The morning after Ireland learned it had become the first nation to approve same-sex marriage by popular vote, Diarmuid Martin, the archbishop of Dublin, looked out at the future of the Roman Catholic Church. It could be found at St. Mary’s Pro-Cathedral here, in downtown Dublin, as two rows of children awaited confirmation before him in the lofty, column-lined church. “Boys and girls, I made my confirmation 60 years ago,” he told them, adding, “Your world is different from mine.”

It adds “The size of the victory energized supporters, with the referendum affirmed by 62 percent of the electorate and passed in all but one of Ireland’s 43 districts. After the votes were counted, the carefully planned and executed campaign by activist groups seemed as much about putting behind a past entrenched in theocracy and tradition as it was about marriage for gays and lesbians. And it underscored how different Ireland is today for the young, who turned out in droves to vote. In a little more than a generation, Ireland has both distanced itself from the church and sharpened its secular identity”.

The report goes on to note “At St. Mary’s, the results of the referendum, as one might expect, did not come up — the archbishop instead quipped about his first experience with a cellphone. But afterward, speaking at a house next to the church, he conceded that much had changed. “The church needs to take a reality check,” Archbishop Martin said after the Mass, repeating a comment he had made Saturday. “It’s very clear there’s a growing gap between Irish young people and the church, and there’s a growing gap between the culture of Ireland that’s developing and the church.” The country’s cultural evolution reflects a blend of disaffection with the church, and Ireland’s willingness to embrace a wider vision of itself in the world. As the church lost many people in its scandals and its unwillingness to yield to sexual freedoms, the European Union found itself with a willing and eager member”.

Yet the reason Ireland was a “theocracy”, which of course it wasn’t, was because 95% of the people were Catholic. The Church gave people hope and provided services that the State were either unable or unwilling to provide.

When Same-Sex Marriages Became Legal

About 20 countries have already legalised same-sex marriages. Here is a list of when each did.

The Church still has much to give Irish society, through its teachings on poverty, the common good, care for all people irrespective of their status (economic or otherwise) but the obsession with sexual morality is unhelpful to both the Church and Irish society.

It continues “Or, as Mr. Flannery put it, “The day when the church had the power to influence social debate in Ireland, or to swing it, is gone.” The legal system began to chip away at the laws restricting homosexuals. In 1988, a lawyer named Mary Robinson successfully argued a case in the European court system challenging Ireland’s law that made homosexuality a crime. Five years later, after Ms. Robinson became Ireland’s first female president in 1990, she signed a law decriminalizing homosexuality. At the same time that the church’s moral authority was flagging, the Irish were finding a new identity within the European Union. They share the euro, and are more willing to take advantage of low-cost airfares for weekend jaunts to the Continent and beyond, broadening an outlook that for their parents and grandparents had been molded by the church and Britain”.

It mentions that “An influx of young people from Eastern Europe and elsewhere has made Ireland more diverse. The Irish political scene has largely avoided the toxic anti-immigrant rhetoric that has surfaced in much of Europe. In large part, that is because Sinn Fein, the opposition party that was once the political wing of the Irish Republican Army, has gained ground by attacking austerity instead of immigrants. The same-sex marriage referendum had broad support across the political parties”.

It ends “Even as it widely celebrates the change that the same-sex marriage vote indicated, Ireland is not entirely beyond the kind of cultural battles that have led to far more contentious political campaigns in the past. Many believe there will be a much more fierce cultural debate over legalizing abortion. With the vote for the same-sex referendum going nearly two to one in favor, Archbishop Martin said Sunday that the church needed what he called “a new language that will be understood and heard by people.” Many young people, he added, “go in today and find a church that is for the like-minded,” as opposed to being inclusive”.

It concludes “he did not offer a solution for attracting young people back to the church, and reiterated his opposition to same-sex marriage. “For many, and I’ve said this before, inside the church becomes almost alien territory to them in today’s society,” he said. “If the leadership of the Irish Catholic church don’t recognize that, then they’re in severe denial. Have I got a magic formula? Certainly not.”

Gay marriage in Ireland

23/05/2015

In a historic referendum, with no precedent in the world, Ireland has voted to allow gay marriage in a constitutional referendum held yesterday.

The Irish Times reports Ireland has officially passed the same-sex marraige referendum with 1.2 million people voting in its favour. The result was confirmed just before 7pm on Saturday although the result was clear from very early in the count. The Yes vote prevailed by 62 to 38 per cent with a large 60.5 per cent turnout. In total, 1,201,607 people voted in favour with 734,300 against, giving a majority of 467,307. The total valid poll was 1,935,907″.

It goes on to report “Roscommon-South Leitrim was the only county to reject same-sex marriage. The No vote there finished with 51.4 per cent. Donegal, against some expectations, approved the amendment to the Constitution by a small margin. Donegal South West was on a razor edge with 50.1 per cent voting Yes, representing a margin of just 33 votes. A referendum presented simultaneously on reducing the permissible age for presidential candidates was roundly defeated. The Yes vote in Dublin in the same-sex marriage referendum was particularly pronounced”.

It adds that “Dublin Midwest recorded a Yes vote of 70.9 per cent, Dublin South West returned 71.3 per cent, Dún Laoghaire 71.6 per cent, Dublin North West 70.6 per cent and Dublin South Central 72.3 per cent, all in keeping with the 70 per cent-plus positive vote that had been anticipated in the capital. As the result emerged on Saturday afternoon thousands of people gathered in the courtyard of Dublin Castle amid scenes of widespread jubilation. Senior politicians welcomed the result, with Minister for Health Leo Varadkar saying the overwhelming Yes vote makes Ireland a “beacon of light” for the rest of the world in terms of liberty and equality. “It’s a historical day for Ireland,” he told RTÉ, a “social revolution”, adding that had any constituencies voted No, it would only have been a handful. In the end there was just one. Mr Varadkar revealed publically during the referendum campaign that he was gay”.

Gracious in defeat, “Archbishop of Dublin Diarmuid Martin said it was now time to focus on other myriad inequalities in Irish society. “I have the strong belief – there is a strong belief in the church – about the nature of marriage and the family,” he said, after the result was beyond dispute. “I would like to have seen that the rights of gay and lesbian men and women could have been respected without changing the definition of marriage. That hasn’t happened, but that is the world we live in today.” The eyes of the world have been trained on Ireland with the story featuring prominently in international media throughout the weekend”.

The piece adds “Paul Moran of Millward Brown told RTÉ voter turnout had proved vital and that youth had driven the result, if not entirely deciding it. Social media has played a central role, he said. No campaigners congratulated the Yes side. Prominent No campaigner and director of the Iona Institute David Quinn seemed to concede the vote shortly after counting began when he tweeted: “Congratulations to the Yes site. Well done.” The Iona Institute issued a statement congratulating the Yes side “on their win” which they described as “a handsome victory”. “We hope the Government will address the concerns voters on the No side have about the implications for freedom of religion and freedom of conscience,” it concluded”.

The report continues “Yes campaigner and Fianna Fáil Senator Averil Power said gay campaigners who told their stories on the doorsteps of voters had “helped to change Ireland for all of us”, not just the gay community. She said she had seen many of them reduced to tears by the experience they had during the campaign. For them, it was often “an incredibly difficult thing to do”. Senator David Norris, who fought from the 1970s to 1993 to have homosexuality decriminalised, welcomed the result. “I believe that by the end of today gay people will be equal in this country. I think it’s wonderful,” he said. Minister for Children James Reilly said while the same-sex marriage referendum yes vote is strong in Dublin, it is also strong around the country. He says a lot of voters have been thinking about their grandchildren and giving them the same opportunities in life, should they be gay”.

It goes on to mention that “US vice president Joe Biden tweeted: “We welcome Ireland’s support for equality #LoveWins.” As with the last referendum, media facilities were made available at Dublin Castle, and a large international contingent was in attendance. Following calls from politicians and members of the public on Friday Minister of State with responsibility for the OPW Simon Harris announced that Dublin Castle would also be open to 2,000 members of the public”.

An opnion piece notes why young people were so invoved in the debate, it begins “On a bleak November afternoon, hundreds of students lined up to fill in voter registration forms at a stand in University College Cork (UCC). They smiled as they posed for selfies in the queue, proud to be doing their civic duty. By the end of the 15-day student-run registration drive, 3,677 first-time voters — nearly 20 per cent of the UCC student population — had been signed up. James Upton, the outgoing auditor of the UCC LGBT society, had manned the stand with other volunteers from 10am until 4pm every weekday for the duration of the three-week campaign. The efforts of UCC activists are just one strand in the story of how young people mobilised in historic numbers ahead of yesterday’s marriage referendum. Speaking on Newstalk about yesterday’s high voter turnout, Minister for Communications Alex White, the Labour Party director of elections, said there had been a “remarkable” galvanisation of young voters in recent weeks. “We couldn’t have won it without them,” Colm O’Gorman, director of Amnesty International Ireland, told Morning Ireland earlier today. At least 27,633 young people were directly registered to vote this academic year by the Union of Students in Ireland (USI), which secured a unanimous mandate from its members to support marriage equality in 2012. Laura Harmon, the USI president, attributes the success of campus registration drives to the momentum created by student campaigners. “We have had a very engaged LGBT student community for many years now,” she says. “You only need to look at the way people have campaigned for LGBT flags to be flown on different campuses and tried to get exam dates changed so students could vote in the referendum.” Young people engaged in the campaign for marriage equality because they understood the direct impact it would have on gay friends and family members, adds Ms Harmon. Ian Power, the executive director of youth information website SpunOut.ie, agrees. “Personal testimonies have been very important,” he says. “Previous referenda — on the Seanad, the Court of Appeal, judges’ pay and Oireachtas inquiries — were all about the system, which young people can find hard to connect with on a personal level. But with this referendum, people understand the consequences”.

Fintan O Toole writes “The overwhelming victory for the Yes side in the marriage equality referendum is not as good as it looks. It’s much better. It looks extraordinary – little Ireland becoming the first country in the world to support same sex marriage by direct popular vote. But actually it’s about the ordinary. Ireland has redefined what it means go be an ordinary human being”.

O’Toole goes on to argue that “We’ve made it clear to the world that there is a new normal — that “ordinary” is a big, capacious word that embraces and rejoices in the natural diversity of humanity. LGBT people are now a fully acknowledged part of the wonderful ordinariness of Irish life. It looks like a victory for tolerance. But it’s actually an end to mere toleration. Tolerance is what “we” extend, in our gracious goodness, to “them”. It’s about saying “You do your own thing over there and we won’t bother you so long as you don’t bother us”. The resounding Yes is a statement that Ireland has left tolerance far behind. It’s saying that there’s no “them” anymore. LGBT people are us — our sons and daughters, mothers and fathers, brothers and sisters, neighbours and friends. We were given the chance to say that. We were asked to replace tolerance with the equality of citizenship. And we took it in both arms and hugged it close”.

Poientently he adds “It looks like a victory for articulacy. This was indeed a superb civic campaign. And it was marked by the riveting eloquence of so many people, of Una Mullally and Colm O’Gorman, of Mary McAleese and Noel Whelan, of Ursula Halligan and Colm Toibin, of Averil Power and Aodhan O Riordan and of so many others who spoke their hearts and their minds on the airwaves and the doorsteps. The Yes side did not rise to provocations and insults, it rose above them. Many people sacrificed their privacy and exposed their most intimate selves to the possibility of public rejection. Their courage and dignity made the difference. Even so, this is not a victory for articulate statement. Deep down, it’s a victory for halting, fretful speech. How? Because what actually changed Ireland over the last two decades is hundreds of thousands of painful, stammered conversations that began with the dreaded words “I have something to tell you…” It’s all those moments of coming out around kitchen tables, tentative words punctuated by sobs and sighs, by cold silences and fearful hesitations. Those awkward, unhappy, often unfinished conversations are where the truths articulated so eloquently in the campaign were first uttered. And it was through them that gay men and lesbians became Us, our children, our families”.

He goes on to aruge that “It looks like a victory for Liberal Ireland over Conservative Ireland. But it’s much more significant than that. It’s the end of that whole, sterile, useless, unproductive division. There is no longer a Liberal Ireland and a Conservative Ireland. The cleavage between rural and urban, tradition and modernity that has shaped so many of the debates of the last four decades has been repaired. This is a truly national moment — as joyful in Bundoran as it is Ballymun, in Castlerea as it is in Cobh. Instead of Liberal Ireland and Conservative Ireland we have a decent, democratic Ireland. It looks like LGBT people finally coming out of the closet. But actually it’s more than that: it’s Ireland coming out to itself. We had a furtive, anxious hidden self of optimism and decency, a self long clouded by hypocrisy and abstraction and held in check by fear. On Friday, this Ireland stopped being afraid of itself. The No campaign was all about fear — the fear that change could have only one vehicle (the handcart) and one destination (hell). And this time, it didn’t work. Paranoia and pessimism lost out big time to the confident, hopeful, self-belief that Irish people have hidden from themselves for too long”.

He ends “It looks like a victory for global cosmopolitanism. But actually it’s a victory for intimacy. It was intimacy that made Ireland such a horrible place for gay and lesbian people, for all those whose difference would be marked and spied on and gossiped about. But intimacy is a tide that is just as powerful when it turns the other way. Once LGBT people did begin to come out, they became known. Irish people like what they know. They like the idea of “home”. On Friday, the wonderful spectacle of people coming back to vote, embodied for all of us that sense of home as place where the heart is — the strong, beating heart of human connection. Finally, it looks like a defeat for religious conservatives. But nobody has been defeated. Nobody has been diminished. Irish people comprehensively rejected the notion that our republic is a zero sum game, that what is given to one must be taken from another. Everybody gains from equality — even those who didn’t think they wanted it. Over time, those who are in a minority on this issue will come to appreciate the value of living in a pluralist democracy in which minorities are respected. By pushing forward on what only recently seemed a marginal issue, the LGBT community has given all of Irish democracy one of its greatest days. It has given our battered republic a new sense of engagement, a new confidence, an expanded sense of possibility. It has shown all of us that the unthinkable is perfectly attainable”.

After the defeat it has been reported that Archbishop Martin said that “The Catholic Church needs “a reality check” in the wake of the same-sex marriage referendum and needs to ask if it has drifted away from young people, Archbishop of Dublin Diarmuid Martin has said. “I think really that the church needs to do a reality check, a reality check right across the board, to look at the things it’s doing well, to look at the areas where we really have to start and say, ‘Look, have we drifted away completely from young people?’ ” he told RTÉ News. He said the referendum result was “an overwhelming vote in one direction” and he appreciated how gay men and lesbian women felt after the endorsement of same-sex marriage – “that they feel this is something which is enriching the way they live”, he said”.

The report adds that ““I think it’s a social revolution… It’s a social revolution that didn’t begin today,” he said. “It’s a social revolution that’s been going on, and perhaps in the church people have not been as clear in understanding what that involved. “It’s very clear that if this referendum is an affirmation of the views of young people, then the church has a huge task in front of it to find the language to be able to talk to and to get its message across to young people, not just on this issue, but in general.” Dr Martin said it was important that the church must not move into denial of the realities. “We won’t begin again with a sense of renewal by simply denying,” he said”.

When he met Pope Benedict after he became archbishop, the pope asked him where were the points of contact between the Catholic Church and the places where the future of Irish culture was being formed, he said. “And that’s a question the church has to ask itself here in Ireland,” Dr Martin said”.

The report ends “Dr Martin added that “we tend to think in black and white but most of us live in the area of grey, and if the church has a harsh teaching, it seems to be condemning those who are not in line with it. “But all of us live in the grey area. All of us fail. All of us are intolerant. All of us make mistakes. All of us sin and all of us pick ourselves up again with the help of that institution which should be there to do that. “The church’s teaching, if it isn’t expressed in terms of love – then it’s got it wrong,” he said”.

Economist 2015:Future of the UK

03/05/2015

In the final report for the 2015 election the Economist considers the future of the UK, “POLITICAL rivals had to admit it: he was perhaps the canniest statesman of his age. He led a powerful, disciplined group of MPs, who, by offering and then withdrawing support from the big political parties, caused havoc in Westminster. He loathed England, seeing it as snobby and imperialistic, and was determined to loosen its grip over his homeland. And in the end his country broke free of the United Kingdom. He was Charles Stewart Parnell, the grandfather of Irish independence. But is it any wonder that Alex Salmond reportedly sees parallels between Parnell’s career and his own? The charismatic former leader of the Scottish National Party (SNP) will almost certainly return to Parliament as an MP in May, at the head of a band of separatists. There, like Parnell, he will try to win more powers for his country while steering it towards self-government. Unlike in Parnell’s case, separation might well occur in his lifetime. Indeed, it could happen in the next parliament”.

The piece rightly notes that “When a Labour government began to devolve power to Scotland—and, to a lesser extent, Wales—in 1998, many believed that nationalism would fade away. And for a few years that seemed to happen. But the Scots have come to feel more and more separate from the rest of Britain. Elections to the Scottish Parliament have gradually turned into referendums on the government in Westminster, chiefly benefiting Mr Salmond’s SNP. The party formed a minority government in Scotland in 2007 and swept to outright victory in 2011. The unionist parties in Westminster tried to stop the nationalist engine, promising Scotland more powers over tax and home affairs—and then actually delivering them in the Scotland Act of 2012. But it was too late. Conservative politicians have long been toxic in Scotland, where they are blamed for the decline of heavy industry in the 1980s. But Labour is a spent force, too. The party has neglected Scottish politics, regarding the country as a kind of Westminster farm team. Brilliant left-wing Scots such as Gordon Brown, the last Labour prime minister, and Alistair Darling, the last chancellor, are spirited out to play big roles in London”.

The author makes the excellent point that “In October 2012 David Cameron agreed to hold a referendum on Scottish independence. For many months unionists were complacent: in January 2014 one senior figure in Better Together, the pro-union campaign, told The Economist that the only question was how large the margin of victory would be. But the nationalists ran a shrewd campaign. Scots were assured they could keep everything they liked about Britain, such as the pound, while getting rid of everything they loathed, such as Tory governments and austerity. When a YouGov poll put the nationalists narrowly ahead just two weeks before the vote, unionist leaders panicked. They published a “vow” assuring Scots that they would receive extensive new powers over taxation and welfare if they voted No. Championed in a barnstorming eve-of-poll speech by Mr Brown, this pledge seemed to work. On September 18th Scots voted by 55% to 45% to stay, though the working-class Labour strongholds of Glasgow and Dundee both voted Yes. Mr Salmond resigned”.

The author notes that “Even if support for his party falls back somewhat before the election in May, Mr Salmond will probably lead the third-largest Westminster party and play a pivotal role in the next parliament. He could disrupt the unionist consensus as flamboyantly and effectively as did Parnell”.

Worryingly he argues that “It is hard to imagine a scenario in which the election result does not help the SNP and the broader cause of Scottish nationalism. Another Tory-led government would reinforce the party’s central myth (and it is a myth): that Scotland is starkly more left-wing than England and thus should break free from its right-wing neighbours. A Tory-led government would also hold a referendum on Britain’s EU membership. That would give Ms Sturgeon and Mr Salmond a fine excuse to go into the 2016 Scottish elections asking for a mandate for a second independence referendum. Why, they will ask, should Scotland be yanked out of the EU by English voters? A Labour government might be even more dangerous for the union. If the party does not obtain a majority, it might try to govern with the support of Scottish nationalist MPs. Although the two parties probably would not form a coalition, the SNP has declared itself open to an arrangement where it would support a Labour government in budgets and votes of confidence in return for concessions such as further devolution to Scotland. The prospect of a government dependent on a party that is determined to break the union—and under Mr Salmond’s canny leadership determined to use that leverage to secure more spending for Scotland—would almost certainly fuel anti-Scottish feeling in England”.

He goes on to posit that “if the Tories win power, Labour and the SNP will complain that Scots are being sidelined. If Labour wins, the Tories will tell the English that they are being held to ransom by Scots. Both scenarios threaten to plunge the country into a vicious cycle as each attempt to placate one side alienates the other, eroding the assumption of shared interests underpinning Britain’s unitary state. To satisfy resentful voters on both sides, London might have to make the country’s constituent parts self-governing in domestic matters. But even federalism might not hold the union together: support for independence has exceeded 50% in some recent Scottish polls”.

The effects of Scottish nationalism is seen in the wider UK context when he writes “Scotland is not the only place where nationalism has rumbled. The Welsh may not fancy independence (support for it there hit a record low of 3% after Scotland’s referendum) but they do want to loosen London’s grip. Like the Scots, they got a devolved legislature and government in 1998, but theirs are comparatively weedy. In February Mr Cameron and Mr Clegg offered to devolve income tax-raising powers to Wales to move it to the “reserved” model of devolution that Scotland uses (whereby powers are assumed to sit at the devolved level unless specifically withheld for Westminster). Carwyn Jones, the Labour first minister, called this proposal insufficient, huffing that Wales was not being treated with as much respect as Scotland. The prime minister was more cautious about offering the Northern Irish more autonomy. That spoke of doubts over the province’s ability to handle new powers. Profound disagreements over cultural matters like flags, marches and history have paralysed the Northern Ireland Assembly, blocking progress even on humdrum matters like welfare reform. It has fallen to the London and Dublin governments to lead efforts to break it. Even so, most think that Belfast should at least get control over corporation tax by 2017. In January the government published a bill to that effect”.

He concludes “It seems unlikely that the next parliament will see the end of the United Kingdom. Yet before the 2010 election it looked improbable that Britain would be as far down the road to fragmentation as it is now. The past five years have shown that momentum can overcome tradition. If the next five are even half as dramatic, the kingdom will be in serious trouble”.

Germany needs to leave the euro

22/02/2015

A piece  by Patrick Chovanec argues that Germany needs to leave the Eurozone.

It opens “Last year, Germany racked up a record trade surplus of 217 billion euros ($246 billion), second only to China in global export dominance. To some, this made Germany a bright spot in an otherwise anemic eurozone economy — a “growth driver,” as the German finance minister, Wolfgang Schäuble, puts it. In fact, Germany’s chronic trade surpluses lie at the heart of Europe’s problems; far from boosting the global economy, they are dragging it down. The best way to end this perverse situation is for Germany to leave the eurozone. Germans usually respond to such charges with a kind of hurt confusion. We run trade surpluses, they patiently explain, because we are simply much more competitive than most of our trading partners. Can you blame us, they ask, if the world prefers to buy superior German goods (and has nothing we want in return)? So goes the argument: The rest of the world just needs to up its game, get its house in order, and become a bit more like Germany”.

He goes on to make the valid argument that “Contrary to popular mythology, however, there’s absolutely no reason why being “competitive” should mean running a trade surplus. As far back as 1817, the economist David Ricardo pointed out that the optimal basis for trade is comparative, not absolute, advantage. In other words, even if a country is better at everything, it should export what it is best at, and import what it is less better at. Having an across-the-board advantage does not imply that it makes good economic sense to produce everything yourself, much less to sell more than you want in return”.

Here is yet another example of the supposedly rational market doing what is “best”. Germany, instead of doing what is rational (economically at least) and buying the products of others, seeks its own interest like a classical realist and embarks on a kind of self-sufficiency gone to extremes. Germany is happy to trade with the world, as long as it has no need to buy the products of other countries.

The writer adds, “Trade surpluses take place when a country chooses to spend less than it produces — when it has excess savings, beyond its domestic need for credit. It lends that excess savings abroad, financing another country’s ability to spend more than it produces and, by running a trade deficit, purchase the lender’s excess production. It’s true that a highly productive country might have the wherewithal to conjure up excess savings, while a less productive country might be inclined to borrow rather than scape up the savings it needs. But fundamentally, trade imbalances arise not from competitive advantage but from choices about how much to save, and where that savings should be deployed — at home or abroad”.

He goes on to argue that imbalances do make sense, “In the 19th century, Britain’s Industrial Revolution enabled it to reap vast earnings from expanded output, some of which it invested in the United States. The money lent to a rapidly growing American economy generated higher returns than it would have back home, while creating a market for British-made goods. The potential productivity gains made it a win-win: it made sense for the Americans to borrow, and for the British to lend. But the case also highlights something that’s easy to forget: running a trade surplus means financing someone else’s trade deficit.The eurozone crisis is often called a debt crisis. But, in fact, Europe as a whole did not have an external debt problem, but an internal one: German surpluses and mounting debt in Europe’s periphery were two sides of the same coin. Germans saved (a lot) and the single currency induced them — rather than save less or invest it at home — to lend it to their eurozone trading partners, who used the money to buy German goods”.

He mentions that “each country would pursue its own monetary policy, relying on exchange rate adjustments to shift the locus of demand from those who could not afford it to those who could. Under a single currency, though, this could not happen. Instead, Europe’s debtors were forced to slash demand, through a combination of fiscal austerity and debt deleveraging. Their trade deficits with Germany fell dramatically — but by buying less, not selling more. All of the so-called PIIGS (Portugal, Ireland, Italy, Greece, and Spain) saw their total trade with Germany shrink — in the case of Greece and Ireland, by more than one-third. So, to the extent Europe rebalanced, it did so at the cost of growth”.

He makes the simple point that “The eurozone was caught in a trap. Its countries needed to move in two separate directions, but under a single currency, they could only move in lockstep. A Europe that lived within its means meant a Germany that continued to save more than it spent, rather than driving much-needed demand. Thus came monetary easing — and a weaker euro — which merely redirected Europe’s internal imbalances outward”.

Now it is clearer than ever that the euro was a political project masked in economics and convenience. The people of the European continent were told they could move from Madrid to Brussels to Rome to Lisbon all in a single currency. Yet, the construction was so obviously flawed the EU elites were either incompentent, or wilfully malevolent. It is possible they were the former but probable they were the latter. They expected growth to keep going and an eventual currency union (and thus political union) to take place slowly, right under the eyes of the people of Europe.

He goes on to argue that “The best solution — and perhaps thus the least likely to be adopted — is for Germany to leave the euro, and let a reintroduced deutschmark appreciate. Here, the experience of the 1986 Plaza Accord offers some encouragement. While a stronger yen made barely a dent in Japan’s structural trade surplus, German behaviour proved far more responsive to the incentives embodied in a stronger mark. In the past year, German politicians have proven far more willing to try boosting demand by raising the minimum wage, cutting the retirement age, and increasing pensions — moves that may work, but risk harming productivity, which is ultimately the source of Germany’s capacity to consume. Perversely, those same politicians refuse to cut taxes or boost public spending, which in 2014 resulted in Germany posting its first balanced federal budget since 1969, a year earlier than planned”.

He ends “To most Germans, any suggestion that they should relax this fiscal discipline smacks of Greek-style profligacy, but there’s another way to think about it. The excess savings are already there; the only question is where to lend it. Borrowing it domestically to drive a genuine European recovery might be preferable to (once again) throwing it at foreigners to buy things they really can’t afford”.

 

“Germany’s selfish and destructive agenda”

10/02/2015

An article describes the backlash that has been seen with the election of Syrzia in Greece.

The author begins “‘Yes We Can’ may be a stale slogan in Obama’s America, but in crisis-hit Spain it is the rallying cry of a year-old radical-left party that is taking the country by storm. In a show of strength, more than 100,000 supporters of Podemos (the party’s name means “We Can” in Spanish) filled the streets of Madrid on Jan. 31 to protest against austerity, crushing debts, and the country’s corrupt political system — and demand change. The demonstrators don’t represent a fringe group, either. Podemos is leading in the polls, ahead of both the mainstream center-left and center-right parties in elections that will be held by the end of the year”.

He adds “The election of a radical-left Syriza-led government in Greece on Jan. 25 has electrified European politics. After years of being told that there is no alternative to bowing to German demands for crushing austerity and wage cuts, the plucky Greeks have dared to stand up to Angela Merkel’s government in Berlin — and other Europeans have stood up and noticed. While the immediate focus is on the showdown between the new Greek government and eurozone authorities over demands for debt relief — and the (unlikely) possibility that Greece could end up ejected from the currency union — Athenian defiance is already having wider political repercussions”.

He goes on to note that “Long accustomed to treating Greece as an unruly but ultimately submissive colony, horrified German policymakers and their eurozone minions can scarcely believe that it is in outright insurrection. (Just look at the body language of Jeroen Dijsselbloem, the bespectacled Dutch finance minister and head of the Eurogroup of his eurozone counterparts, at a press conference with his new Greek counterpart, Yanis Varoufakis, in this video clip.) Debtor-country governments that have obediently complied with the German diktat — notably Spain, Portugal, and Ireland — suddenly feel very exposed politically. Governments that have mounted a mild challenge to Merkel (think France and Italy) are in a delicate position: They spy an opportunity to advance their own agenda, while fearing that they may be outflanked by those with a more radical one. And not without reason; anti-establishment parties of various stripes have the wind in their sails”.

He makes the valid point “Whenever voters throw out a government, as they have done in nearly every election since the crisis began in 2008, officials from Berlin, Brussels, and Frankfurt — whom they did not elect and cannot hold to account — loudly insist that the incoming administration must stick to the failed policies of the outgoing one”.

Rightly he notes that “Since voting for establishment parties of the center-left or center-right makes little difference, it’s hardly surprising that voters are seeking a genuine alternative. And for the moment this exists only on the extremes. Sometimes, as in Greece and Spain, the insurgents are on the radical left. In Ireland, which is not due to vote until next year, Sinn Féin, a left-wing party that was formerly the political wing of the Irish Republican Army, has a narrow lead in the polls. In other cases, the upstarts are on the far right. In France, Marine Le Pen’s racist National Front is out in front, winning by-elections and pulling ahead in polls for the 2017 presidential election. In Italy, where reformist Prime Minister Matteo Renzi remains popular, all three main opposition parties — the far-right Northern League, the anti-establishment Five Star Movement, and former Prime Minister Silvio Berlusconi’s center-right Forza Italia — are now anti-euro”.

He goes on to make the point that “More broadly, it is neither feasible nor fair for debtors to bear the full costs of the financial crisis. For every reckless borrower there is a reckless lender. In the eurozone’s case, those were primarily German and French banks, which lent vast sums to southern Europe, both directly and via local banks. While the bailouts of Greece, Ireland, Portugal, and Spain are portrayed as gestures of EU solidarity, they were in fact covert bailouts of those foreign banks that would otherwise have suffered huge losses on their reckless lending. Southern Europe’s huge debt burden — primarily private in Spain, mostly public in Greece — is stifling the economy and is unpayable in full”.

He concludes arguing “Nor is it politically sustainable for the eurozone to be run, in effect, by a German hegemon that acts in its narrow interests as a creditor rather than in the broader interests of the monetary union as a whole. If countries are to share a currency, they must do so as equals, with EU institutions representing the common interest, rather than acting as instruments for creditors to impose their will on debtors. Denying people basic democratic choices over how much governments can tax and spend is bound to lead to a backlash — especially when EU fiscal rules are economically harmful. “No taxation without representation” is the stuff of revolutions”.

He ends the article “None of this is radical or extreme, let alone anti-European. Outside the eurozone, many sensible people of all stripes would agree with it. The tragedy of the eurozone is that the policy establishment in Brussels and national elites are destroying political support for the European project by advancing Germany’s selfish and destructive agenda as a creditor. With luck, they will change course before it is too late. After all, while Syriza and Podemos want to make the eurozone fairer, the far right wants to destroy the EU altogether. Europe urgently needs mainstream alternatives to Merkelism — or it risks a President Le Pen”.

 

A deal with Tsipras?

02/02/2015

A report from Foreign Policy seems to posit the theory that the deal could be reached between Greece and its creditors after the election of the new government.

It opens “Left-wing European politicians have in the last five years faced an uncomfortable question: Why, in the midst of an economic crisis that has seen the rich get rich and the poor get poorer, have leftists failed to gain elected executive office? But with Alexis Tsipras’s electoral win in Greece this past weekend, all that has changed, and the continent’s left now has tangible power in hand and a seat at the bargaining table with Europe’s most feared creditors. Tsipras — whose Syriza party won 149 seats in parliament, falling just two short of an outright majority — has now partnered with a right-wing populist group, the Independent Greeks, to form a government”.

He continues, “Nonetheless, the two parties agree where it matters most: the need to oppose the imposition of austerity-minded budget policies on Greece, whose social safety net has been devastated as its creditors force it to slash its spending as a way of balancing its budget. The International Monetary Fund has admitted to underestimating the damage measures like cuts in health and education spending would impose on the Greek economy, and Tsipras’s electoral triumph, the first such victory by a staunchly leftist politician in the post-crisis years, represents the culmination of a backlash against dismal unemployment figures and what can only be described as a social crisis in public health, drug use, and homelessness”.

The fact that the IMF underestimated the scale of the damage the cuts to Greece should be cause enough to relent on what has been done to Greece. Anyone who seeks to keep the Greek people on this track is either heartless or is so wedded to what has patently not worked, should be ignored.

The writer fairly notes that “To be sure, the Greek economy collapsed in the first place as a result of astounding budgetary profligacy and corruption, and it is that era of excess — underwritten by frequently predatory Western banks — that Greece is now paying off”.

Yet, this overlooks the fact that the Greeks fed the German export boom and created jobs by using the credit from the artificially low interest rates set by the ECB, to help Germany, to buy German products. To then say that the Greeks are to blame is laughable.

The writer goes on to note “Tsipras campaigned on a vague platform of debt reduction and a renegotiation of the terms of Greece’s bailout, but on Monday European politicians rushed to say that they will staunchly oppose any serious write-down in Greece’s outstanding debt, which stands at about 175 percent of its GDP”.

Naturally the Germans are wedded, unbendingly to the old view, “‘In our view, it is important that the new government take measures so that the economic recovery continues,’ German Chancellor Angela Merkel’s spokesman, Steffen Seibert, said Monday. ‘A part of that is Greece holding to its prior commitments and that the new government be tied in to the reform’s achievements.’ Jeroen Dijsselbloem, the head of the eurozone’s group of finance ministers, was even more blunt. ‘There is very little support for a write-off in Europe,’ he told reporters”.

Interestingly he notes “even as Tsipras’s future negotiating partners stake out hard-line positions, there is little evidence that Europe is barreling head-first toward another economic crisis. In fact, the outlines of a deal between the two partners are already readily apparent. The only real question is whether Tsipras can sell it to his coalition. Greece’s creditors have already provided the country with some relief in the form of repayment extensions, interest rate reductions, and a decision to return any profits from the loans to Athens. The average maturity of Greek debt — or when the bill comes due — now stands at 16.5 years. That figure compares favorably to other exposed European economies, including Italy, Portugal, and Ireland. Extending maturity would give Greece more time to pay up”.

He continues “Germany and other creditors could easily extend such concessions further. Tsipras campaigned mostly on a platform of debt reduction, and these proposals would allow him to make a reasonable case of having achieved that goal, though in reality they focus on the cost to Greece of financing its debt. According to calculations carried out by the Bruegel think tank, further reducing interest rates on current loans, a move it says wouldn’t hurt lenders’ bottom lines, would save Greece 6.4 billion euros, or 3.4 percent of its 2015 GDP. Extending when the loans come due by another 10 years would save Greece 4.5 percent of 2015 GDP. Extending the due date for loans provided by the European Financial Stability Facility by 10 years would save 17 percent of 2015 GDP. Implemented together, these options would save Greece 31.7 billion euros, or 17 percent of 2015 GDP”.

There is some questions however if this will be enough. Such is the state of Greece debt that whole tranches of debt will need to be written off. For the Germans this would appear to be a “red line”. Yet, there a few other measures that can bring life and dignity back to the Greek people and its economy.

He ends “Still, one can envision a scenario that’s politically acceptable to European leaders, most notably Merkel, that sees borrowing costs slightly reduced and in which a stimulus package for the Greek economy is cobbled together to help restore the Greek social safety net. Unsaid in all of this is that the Greek economy has quietly rebounded. Its economy is growing, and the government is running a budget surplus. That does little to do away with its mountain of debt, but it does reduce the impetus for a Greek exit from the eurozone. The left-wing political project in Europe, then, faces several key tests in the coming weeks. Tsipras’s allies in Spain, the political party Podemos, will be closely watching to see whether Syriza is able to extract financial concessions from Berlin. And if all Tsipras can deliver is marginal concessions on the neoliberal economics that have defined the last half-decade in Greece, his supporters are bound to come away disappointed, and Tsipras may face a crisis inside his own government”.

The Germans have to decide, how badly they want the euro, and the EU for that matter. Do they want it enough to give Greece enough of a writedown so it can stay in the EU, or are they so inflexible that they are willing to see Greece, then Ireland and then probably Spain or Italy leave the euro and thus the spectacular collapse of the EU as a whole.

The Senate does its job, finally

27/09/2014

After some not-so-subtle prodding from the State Department, the Senate has finally confirmed a handful of ambassadorial nominees from the long list of men and women who have been waiting — and waiting, and waiting — for approval. Between returning from summer recess and adjourning for midterms Thursday, the Senate approved 13 diplomats. Among them are John Hoover, who had waited 428 days for confirmation after being nominated as ambassador to Sierra Leone, and Matthew T. Harrington, approved as ambassador to Lesotho after waiting 411 days. While they were waiting, Ebola broke out in Sierra Leone, and Lesotho plunged into political crisis after an alleged coup. Among the other nominees confirmed this week were John R. Bass as ambassador to Turkey and Jane D. Hartley as ambassador to France — important appointments for U.S. efforts to strengthen the coalition against the Islamic State. Also approved, as ambassador to South Korea, was Mark Lippert, a controversial nominee for Republicans due to his close ties with the Obama White House. Ambassadors to Ireland, Zambia, Guatemala, Namibia, Monaco, and various international bodies won approval, as well, but more than 50 other nominees are still waiting. Noah Mamet and Donald Lu, nominees to Argentina and Albania, respectively, have been in limbo since July 2013″.

“The euro crisis has not gone away”

03/09/2014

An article in the current issue of the Economist discusses the latest phase in the endless euro crisis. The piece argues that unless there is real growth in Germany, France and Italy then the economy of the eurozone and the euro itself will slip, violently, into history.

It opens “Just a few months ago the euro zone’s leaders believed that, having weathered the storm, they were set fair at last. Buoyed by the promise of Mario Draghi, the president of the European Central Bank, to do ‘whatever it takes’ to support the currency, confidence had seeped back into the continent. Growth seemed to be returning, albeit at a slow pace. Troubled peripheral countries were recovering, after bail-outs and painful measures to cut budget deficits and improve competitiveness. Unemployment, especially among the young, was still desperately high, but at least in most countries it was falling. And bond spreads had narrowed sharply, as financial markets stopped betting that the euro would fall apart”.

Of course nothing could be further from the truth and as ever those running the EU where deluding themselves. Countries like Ireland, Greece and Portugal are still mired in debt with non functioning banking systems. All of these countries will need a second “bailout” in order to finally correct some of the problems that still exist in them. However, to do this would be to admit failure and the EU, and ECB and Merkel are too either too proud or too ignorant to see this.

The article correctly argues that “It was an illusion. In recent weeks the countries of the euro zone have begun to take in water once again. Their collective GDP stagnated in the second quarter: Italy fell back into outright recession, French GDP was flat and even mighty Germany saw an unexpectedly large fall in output (see article). The third quarter looks pretty unhealthy, partly because the euro zone will suffer an extra drag from Western sanctions on Russia. Meanwhile, inflation has fallen perilously low, to around 0.4%, far below the near-2% target of the European Central Bank, raising fears that the zone as a whole could fall prey to entrenched deflation. German bond yields are hovering below 1%, another harbinger of falling prices. The euro zone stands (or wobbles) in stark contrast with America and Britain, whose economies are enjoying sustained growth. What started more than four years ago as a banking and sovereign-debt crisis has decayed into a growth crisis that is now enveloping the three biggest economies. Germany is teetering on the edge of recession. France is mired in stagnation. Italy’s GDP is barely above its level when the single currency came in 15 years ago. Since these three countries account for two-thirds of euro-zone GDP, growth in places like Spain and the Netherlands cannot make up for their torpor”.

The piece goes on to make the point that “The underlying causes of Europe’s new ills are three very familiar and interrelated problems. First, there is a shortage of political leaders with the courage and conviction to push through structural reforms to improve competitiveness and, eventually, reignite growth: the big countries have wasted the two years bought by Mr Draghi’s “whatever it takes” commitment. Second, public opinion is not convinced of the urgent need for deep and radical changes. And third, despite Mr Draghi’s efforts, the monetary and fiscal framework is too tight, throttling growth—which makes structural reforms harder”.

The writer focuses on France, “Different manifestations of these problems can be seen across the euro zone. But the country that most dramatically epitomises all three is France. This week its embattled Socialist president, François Hollande, was forced to reshuffle his government to eject Arnaud Montebourg who, despite being economy minister, was his own side’s most persistent critic from the left (see article). Mr Hollande, who came to office in 2012 promising a painless future, is hardly a Thatcherite reformer. But since he appointed Manuel Valls as prime minister in March, he has at least embraced the principle of public-spending cuts, lower taxes and structural reforms. In theory a new and more cohesive reforming government could make progress, but public opinion is not remotely prepared for that. Mr Hollande is not just deeply unpopular; unlike Italy’s Matteo Renzi, who has bravely made the case for (as yet undelivered) tough reforms, the French president has failed to convince voters that painful change, including a reduction in the size of the state, is inevitable. Instead, Mr Montebourg and his chums offer the beguiling notion that, if only the euro zone scraps its rules and allows bigger budget deficits and generous enough public spending, no more painful reforms will be needed, because the economy will miraculously lift itself out of danger by its own bootstraps”.

Ironically the author, and the Economist remain wedded to  a system that has led the world to its current state or moral, political and economic bankruptcy. Instead of the successful Anglo-Saxons teaching the French it should be the other way around, with the French and Germany communitarian model being seen as the model for nations around the world.

Admittedly the article does make the point that “Montebourg’s argument is all the more seductive because he is right about Europe’s third problem: excessive austerity, largely forced on the continent by Germany. Mr Draghi has just implicitly conceded that fiscal and monetary policy in the euro zone is too tight at the annual economics jamboree in Jackson Hole. He hinted that he was in favour of quantitative easing, which both America and Britain have used, and he called for fiscal policy to do more to encourage growth—a message plainly aimed at Germany’s chancellor, Angela Merkel. She is the leader who insists most firmly on sticking to the euro zone’s rules on fiscal discipline, just as it is the German Bundesbank that is most strongly against quantitative easing”.

The writer posits a deal, “Despite the gloom, there should be scope here for a bargain. If Mr Hollande and Mr Renzi can show they are sincere about structural reforms, Mrs Merkel should be willing to tolerate an easier fiscal stance (including higher public investment in Germany) and a looser monetary policy. Close your eyes, and you can imagine the three leaders working with the European Commission to complete the single market and pushing through a trade deal with the United States. Sadly, in the real world, Mrs Merkel has little reason to trust either France or Italy: whenever external pressure on them has eased, they have promptly backtracked on promises of reform. And she has just installed Jean-Claude Juncker, the do-nothing candidate, as president of the European Commission. So it will be hard. But without a new push from the continent’s leaders, growth will not revive and deflation could take hold”.

The author concludes “If the currency union brings nothing but stagnation, joblessness and deflation, then some people will eventually vote to leave the euro. Thanks to Mr Draghi’s promise to put a floor under government debt, the market risk that financial pressures could trigger a break-up has receded. But the political risk that one or more countries decide to storm out of the single currency is rising all the time. The euro crisis has not gone away; it is just waiting over the horizon”.

The other, more dramatic possibility is that the euro implodes from its laughable political foundations and undemocratic origins and takes the entire EU with it.

Never ending austerity

17/07/2014

A piece in Foreign Policy writes that the EU and its institutions have remained wedded to the notion of austerity despite ample evidence to the contrary that it does not work. It begins, “Those of us in the reality-based community who have been calling for an end to Europe’s insistence on fiscal austerity, this month’s meeting of eurozone leaders should have been a cause for celebration: Italian Prime Minister Matteo Renzi finally managed to get Brussels and Berlin to adopt a more ‘flexible interpretation’ of rules regarding budget deficit targets. Finally, it seemed that a change of course had come after six years of disastrous budget cutting. Not so fast. Europe’s budget-enforcer-in-chief wasn’t going to let that happen. Shortly after Renzi wrenched this concession, Bundesbank President Jens Wiedmann slapped him down, saying that Italy’s insistence on a more flexible budget posed a threat to Europe’s economic recovery. But most of this is just posturing, anyway. Two much more important factors determine the future of Europe’s budgets. The first is the fiscal straightjacket countries in the eurozone adopted in 2012 via the Treaty on Stability, Coordination and Governance, that reduces the fiscal maneuvering room from “limited” to “don’t even think about it.” The second is the ongoing banking crisis that really lies behind Europe’s austere economics. A ministerial summit has little power to change either of them”.

The writer states correctly thay “The policy of austerity has twin goals: reducing growth in public debt and boosting investor confidence. On both counts, the eurozone’s attempts have been an unmitigated failure”.

He goes on to point out correctly that “Debt levels, far from collapsing, have ballooned under austerity, with countries that have cut the most seeing shrinking economies and growing debts. Greece, the poster child for austerity, went from 105 percent of debt to GDP in 2008 to 175 percent today, despite massive bondholder haircuts and a loss of nearly 25 percent of GDP. Over the same period, Portugal doubled its debts from 62 percent to 129 percent; Spain nearly tripled its debts, from 36 percent to 93 percent; and Ireland, hailed as the eurozone’s ‘success story’ for taking the pain and getting back to the markets first, almost quintupled its debt, from 25 percent in 2008 to 123 percent today. The confidence-inspiring powers of what was curiously called ‘expansionary fiscal contraction,’ the idea that budget cuts today make people spend more since they will have lower taxes in the future, haven’t been any better. European consumer confidence dropped precipitously during the crisis and has yet to return to positive territory. Investment expectations, as measured by business confidence surveys, similarly fell as austerity took its toll and are now barely positive. Growth rates track these declines but with a North-South twist: Germany is pulling ahead, France is flat-lining,Italy is stagnating, and the periphery remains in negative territory”.

He goes on to suggest that given the evidence, a halt would be called to austerity, “Few policymakers are willing to admit it, but the heart of Europe’s problems is not excessive government spending or the level of government debt. Instead, politicians focus on these factors since they are easy to blame and allow them to avoid the real issue: the banking crisis. The narrative put forward by the troika of the European Commission, the European Central Bank, and (before they jumped ship last year) the International Monetary Fund  that government spending caused the crisis — is flatly wrong. Eurozone debt-to-GDP was going down in the years before the crisis. The real problem was overlending from Europe’s big banks (going into the crisis) and how the downgrading of Europe’s sovereign debt blew up their highly leveraged model of funding (as the crisis deepened)”.

Indeed, as has been noted here before the poster child of the “European economy”, Germany is mired in vast bank debt with an aging population and slowing productivity.

He goes on to mention that “In December 2011 and March 2012, European Central Bank President Mario Draghi dumped nearly 1 trillion euros of public money into the European banking system in the form of Long-Term Refinancing Operations (LTROs). This, plus his promise to engage in outright bond purchases if needed, have kept European banks afloat. Indeed, as Oliver Wyman, leading consultant to the ECB, noted, such policies kept European banks afloat with “total state support approved for the EU financial sector total[ing] more than €5 trillion, equivalent to 40 percent of [eurozone] GDP.” When all this cash hit the banking system, banks in the periphery decided their best bet was to buy local sovereign bonds. It seemed like an obvious choice: Spanish 10-year bonds offered nearly 7 percent returns in 2012, while the ECB lent at 1 percent. The banks loaded up on these local high-yield bonds and used the profits to bury the huge amount of non-performing loans on their balance sheets. For a while, it seemed like a good idea”.

He adds that “Eurozone governors, in particular the ECB, face what might be called a “Goldilocks dilemma.” A strong return to growth could paradoxically undermine periphery LTRO-repaired bank balance sheets while too little could leave the eurozone stuck in the doldrums indefinitely. If policy is loosened and growth accelerates, interest rates will have to rise. If that happens, the periphery banks holding all these now-profitable sovereign bonds will see their asset base shrink as yields go up, bond prices go down, and their balance sheets implode. Given this, the ECB needs super-low rates, more LTROs, and a host of monetary tricks to allow the banks to clean up their balance sheets, one non-performing loan at a time, in an environment of slow growth. And here’s the rub: If growth is too slow, these policies can’t work. Higher growth rates are needed to allow the banks to repair their balance sheets as new, healthy loans replace the non-performing loans. The ECB’s recent move to negative deposit rates for banks and the new round of targeted LTROs can be seen in this light as a way to boost lending while negotiating this dilemma. But it’s not going to be easy to find a way out”.

He ends the piece, “The institutional problem that turbocharges all this is the self-inflected wound called the Treaty on Stability, Coordination and Governance that came into effect in March 2012. This is the eurozone-wide treaty that Renzi wants some slack with — and little wonder. It calls for national budgets to be “balanced or in surplus” in the medium term with enforcement guaranteed by “preferably constitutional” provisions in national legal frameworks. Countries that have “significant observed deviations” from the fiscal limits in the treaty will be fined. This is constraining enough, but what makes it worse is the so-called macroeconomic imbalances procedure (MIP) at the heart of the treaty, which sets the scorecard for how well countries are doing. The MIP mandates that countries can only have a maximum current account deficit (imports over exports) of 4 percent or a surplus of 6 percent. Given that imports and exports sum to zero, that surplus of 2 percent must be offset somehow. Countries that export a lot, like Germany, could reduce their surpluses, but that’s going to be a tough sell in Berlin. The other option is for deficit countries, such Spain and Portugal, to run permanently tight policies to offset Germany’s surplus. That’s bad news for any attempt to ease up on austerity in the periphery”.

He concludes, “Between the petrified banking system and the procrustean treaty, it is hard to see how the eurozone countries can ease up on austerity even if they wanted to: Low growth isn’t just legally mandated, it’s needed for the banks to crawl their way back to solvency. And given that the surplus countries in the North, not just Germany, are doing just fine with the current setup, it’s not clear why they would really want to ease up anyway”.

“Starting to look very like Japan”

27/05/2014

An article in the Telegraph seems to confirm what has long been suspected, the Chinese economy is preparing to burst.  It begins “China’s authorities are becoming increasingly nervous as the country’s property market flirts with full-blown bust, threatening to set off a sharp economic slowdown and a worrying erosion of tax revenues. New housing starts fell by 15pc in April from a year earlier, with effects rippling through the steel and cement industries. The growth of industrial production slipped yet again to 8.7pc and has been almost flat in recent months”.

The piece adds “Land sales fell by 20pc, eating into government income. The Chinese state depends on land sales and property taxes to fund 39pc of total revenues. ‘We really think this year is a tipping point for the industry,’ Wang Yan, from Hong Kong brokers CLSA, told Caixin magazine. ‘From 2013 to 2020, we expect the sales volume of the country’s property market to shrink by 36pc. They can keep on building but no one will buy.’ The Chinese central bank has ordered 15 commercial banks to boost loans to first-time buyers and ‘expedite the approval and disbursement of mortgage loans’, the latest sign that it is backing away from monetary tightening. The authorities are now in an analogous position to Western central banks following years of stimulus: reliant on an asset boom to keep growth going. Each attempt to rein in China’s $25 trillion credit bubble seems to trigger wider tremors, and soon has to be reversed”.

He goes on to mention “Wei Yao, from Société Générale, said the property sector makes up 20pc of China’s economy directly, but the broader nexus is much larger. Financial links includes $2.5 trillion of bank mortgages and direct lending to developers; a further $1 trillion of shadow bank credit to builders; $2.3 trillion of corporate and local government borrowing ‘collateralised’ on real estate or revenues from land use”.

He continues adding that China’s financial system is exposed to the property market by perhaps as much as 80% of GDP, “the risk is that several cities will face a controlled crash along the lines of Wenzhou, where prices have been falling non-stop for two years and have dropped 20pc. President Xi Jinping has made a strategic decision to pop the bubble before it spins further out of control, allowing bond defaults to instil market discipline. But the Communist party is in delicate position and may already be trapped”.

The author goes on to discuss “Reliance on ‘fair weather’ land revenues to fund the budget is like the pattern in Ireland before its housing bubble burst. The IMF says China is running a fiscal deficit of 10pc of GDP once the land sales and taxes are stripped out. Zhiwei Zhang, from Nomura, said the latest loosening measures are not enough to stop the property slide, predicting two cuts in the reserve requirement ratio (RRR) for banks over the next two quarters. He warned that any such move will merely store up further problems. Nomura said the inventory of unsold properties in the smaller third and fourth tier cities – which make up 67pc of residential construction – has reached 27 months’ supply. The bank warned in a recent report that the property slump could lead to a ‘systemic crisis’. The Chinese state controls the banking system and has $3.9 trillion of foreign reserves that can be deployed in a crisis. The RRR is extremely high at 20pc and can be slashed if necessary. A cut to 6pc, the level in 1998, would inject $2 trillion in liquidity”.

He ends “What is certain is that China’s demographic profile is already changing the economic calculus. The workforce contracted by 3.45m in 2012 and another 2.27m in 2013. For better or worse, China is already starting to look very like Japan”.

“An indictment of the European Union”

21/05/2014

The front article in the Economist discusses the upcoming European elections. It begins, “After five gruelling years, many of Europe’s citizens must wish they could dispatch the entire political class to hellfire and torment. As it happens, the ballot for elections to the European Parliament from May 22nd to 25th does not include that option, so a record number will probably not bother to turn out. Many of those who do will back populists and extremists. Broadly anti-European parties may take well over a quarter of the seats. The French National Front, the Dutch Party of Freedom and the UK Independence Party are likely to win their highest vote ever. This will cause domestic political ructions, but it is also an indictment of the European Union, a project that millions of voters have come to associate with hardship and failure”.

As with most EU institutions it feeds off ignorance and suits many of the MEPs who disappear off for five years for the Parliament to be so little understood. This problem is compounded by the fact that the media across the continent do nothing to cover it and attempt to hold the people to account.

The problem for the EU is that the backing of “populists and extremists” is entirely their own fault. The EU has done nothing to assuage the concerns and fears of voters and worse, many feel more disenfranchised and anger at what has been done to them. National governments in Spain, Greece and Ireland are widely seen as the stooges of the EU who increasingly control the strings of what these countries do.

The piece adds, “Europe’s political leaders will be tempted to pay little heed. Economies are improving. After a grinding recession and years of battling the euro crisis, growth is returning and bond yields are sharply down. The danger that financial markets might blow up the euro (and the EU) has disappeared, at least for now. A new Pew Research poll this week even suggests that trust in the EU may be reviving a little. If the politicians can just hang on, won’t a slow but steady recovery win back all those disgruntled citizens? No. The last crisis may be over, but it has exacerbated a deep contradiction at the heart of Europe—between euro-zone economies’ need for integration and the voters’ rejection of it. If populism continues to rise, a euro-zone member could elect a government set on tearing up the rules and quitting the single currency. That would reignite the euro crisis—and political upsets can be harder to put right than economic ones”.

The article is correct to point out the dangers of populism and the dormant euro crisis but to say the crisis is over is wrong. The debt of Ireland, Spain, Greece and a host of other countries in the “eurozone” is still high and without significant debt forgiveness these economies will be hampered by low growth, if any, for decades. This is all as a result of ECB/German demands, going against all economic logic and prudence, that these countries cut spending bringing a spiral of unemployment and reduced spending. The notion that this crisis is over bears little relation to the facts.

As the article rightly point out, “European leaders’ wishful thinking starts with the economy. Growth may be back, but it is anaemic. Unemployment remains horrific: as many as 26m people in Europe are now out of work. Almost everywhere debt is dangerously high. With banks fragile, credit is hard to come by, and parts of Europe are on the verge of deflation. The euro zone may be heading into a lost decade similar to Japan’s in the 1990s. Japan is a socially cohesive nation-state; the diverse EU is far less likely to survive such an experience. The EU could help bolster growth. The European Central Bank could ease monetary policy, including by unconventional means. The European Commission could make a renewed push at completing the single market in services, digital technology and energy, for instance, or could press ahead with a free-trade deal with America”.

The author makes the point “Yet a blast of reformist zeal from Brussels would hardly mollify Europe’s disgruntled voters. For one thing, reforms tend to produce short-term pain before long-term gain—one reason why many European governments have found them so hard. For another, voters do not like being pushed around by Eurocrats”.

He mentions the fundmamental contradiction at the heart of the eurozone deal, “The battle to save the euro has led to the centralisation of powers over banking, taxing and spending; and, while most euro-zone voters want to keep the euro, they have made it quite clear that they oppose the accretion of ever more intrusive powers to the ECB, the European Commission and the European Parliament. The EU’s abandoned constitution and its successor, the Lisbon treaty, were together rejected in three out of six referendums; ten governments broke promises rather than hold votes on the final version. In France, a founding member, the EU today attracts even more resentment than it does in famously Eurosceptic Britain. The populists’ appeal in the European elections is based largely on rising hostility to interference by Brussels”.

The crucial point as he argues is “This is an issue of democracy, not of economics. Voters are not impressed when they toss out an incumbent government only to be told by the EU that its replacement must stick to the same fiscal rules and economic policies. Since the transfer of powers to the centre has come about as a result of economic failure, and not of broader political debate or of resounding success, the chances of its being meekly accepted are slim”.

The piece ends, “Voters’ resentment suggests that giving the European Parliament more power has not been a reliable route to democratic legitimacy. The parliament has failed in its 35-year strategy of persuading voters to take it seriously by winning an ever growing role (see article). Europe’s heads of government should stand against its latest power grab, which is to arrogate to itself the right to choose the next European Commission president by getting the main political groups to nominate candidates and refusing to accept any alternative. If the EU is to gain democratic legitimacy, it will do so not through the European Parliament but through national parliaments. That means giving powers back to them wherever possible, including greater fiscal flexibility and more national control over social policy and employment rules. It also means that national leaders must take responsibility for economic reform, rather than hiding behind the convenient fiction that painful choices are being forced on them by bad people in Brussels or Berlin. Recent experience shows that those who do so can benefit: countries which have made deeper changes at home, such as Spain and Portugal, are now bouncing back more strongly than reform laggards like France and Italy”.

He concludes “At one time Europe seemed to be moving inexorably towards “ever closer union”—and many federalists hoped the euro crisis, like previous crises, would mean another leap forwards. Yet in the wasteland left after the crisis, voters are shaking their pitchforks at the notion of a United States of Europe. Rather than seek to expand the role of the EU’s institutions, it would be better to reinforce the nation-states where legitimacy lies. Europe’s broad strategic direction should be set by heads of government, not by the European Commission, even though that body proposes the detailed laws. The European Parliament should be downgraded, with more democratic control given to national parliaments. If the EU is to survive, it must hand powers back to the people”.

A welcome u-turn

02/02/2014

A recent decision by the Irish Government to reverse its previous decision to close its embassy to the Holy See

An news report in the Irish Times notes, “The announcement that the Government intends to reopen the Irish Embassy to the Holy See in Rome has been greeted with immediate satisfaction by Vatican officials. One senior Vatican figure said the reopening will mark ‘the end of a painful period’ in Ireland’s relations with the Holy See. Closed in November 2011, allegedly as a cost-cutting measure, the reopening of the Embassy was announced today by Tánaiste and Foreign Affairs Minister Eamon Gilmore as part of an expansion of Ireland’s diplomatic network which will see Embassies opening in Thailand, Indonesia, Croatia, Kenya and the Holy See”.

It goes on to mention, “At the time of the 2011 closure, many commentators argued it marked an unprecedentedly low ebb in Ireland-Vatican relations. Just three months earlier in a speech in the Dáil, Taoiseach Enda Kenny had criticised the Vatican’s handling of the Irish church’s sex abuse crisis, saying: ‘Far from listening to evidence of humiliation and betrayal with St Benedict’s ‘ear of the heart’… the Vatican’s reaction was to parse and analyse it with the gimlet eye of a canon lawyer.’ No definite date has been established for the reopening, given that a new Ambassador must first be appointed and that new premises close to the Vatican have yet to be located. A Foreign Affairs spokesman did suggest, however, that it was hoped to have the new Ambassador installed by this summer. Since it was closed in 2011, the role of Ambassador has been covered on a caretaker basis by the secretary general of Foreign Affairs, David Cooney, working out of Iveagh House in Dublin”.

It goes on to add, “Officials also stressed that there would be no possibility of the Embassy being housed at its old site of the State-owned Villa Spada which, in the meantime, has become the Irish Embassy to the Italian state itself. It was stated that this was not because of any Vatican veto on a dual purpose embassy but rather because , it was stated, there is no space available at Villa Spada. Foreign Affairs also claims the new Vatican Embassy will be a “modest”, one-person operation, in keeping with the new wind of sobriety and parsimony blowing through the Vatican under Pope Francis. In diplomatic circles, it has long been suggested that the Holy See is a very efficient ‘listening post’, given the Catholic Church’s unparalleled, worldwide intelligence network of priest and nuns. Senior diplomats today suggested, however, that this is not the reason why Ireland has chosen to reopen its Embassy. Rather they argue that in the context of a pontificate which puts huge emphasis on poverty, on human rights issues and on developing world matters, it makes sense for Ireland to have a permanent, residential presence in Rome”.

The irony with this is that just as Pope Francis has highlighted these themes of poverty and human rights so did Pope Benedict, albeit, with a slightly different emphasis. The piece adds that “Archbishop of Dublin Diarmuid Martin said reopening the Holy See Embassy on a smaller scale was a very constructive exercise and would enhance relations with the Vatican. The senior cleric acknowledged that the Government remained committed to reopening the mission when the economic situation allowed. Archbishop Martin also said that Pope Francis has dedicated himself to being a strong voice for fighting poverty and the Vatican remains an important place of interchange on questions of global development”.

A blog post from the Catholic Herald notes “Now just over two years later, the embassy will be re-instated. It has been reported that a key reason for its new inception is Pope Francis’s papacy. The most fundamental plans for this Vatican Embassy already bear hallmarks of Francis’s pontificate. It is being stressed that the embassy will be a ‘modest’ affair, that an ordinary office will suffice and that one diplomat will be the sole employee. Most interestingly, the guiding aim of the new embassy would seem to be at one with the Pope’s mindset. Pope Francis has stressed overseas aid for our poorest brethren, and the main focus of the newly re-instated embassy will be development aid. It is astounding and wonderful that the tenets of Francis’s papacy are influencing the Irish political class, who were thought to be resolute in jettisoning Ireland’s Catholic heritage. Catholic tax-payers had paid for their country’s embassy to the Holy See, and the cynical and hasty closing of the embassy was impervious to the wishes of the Catholic laity. But shutting down the embassy caused a core section of Irish Catholics to unite. We must give a pat on the back to the members of Ireland Stand-Up. They are a gutsy organisation that pledged they would not rest until the embassy was reopened”.

Barroso blames Ireland

03/01/2014

THE EU’s top official last night blasted Ireland’s economic collapse, claiming the euro currency was a “victim” of the problems caused by Ireland and ruled out a retrospective bank debt deal for Ireland. Europe did not cause of the problems for Ireland; Ireland caused a problem for Europe, the head of the EU government said. Following the bailout exit, the Government’s bid to get backdated funding for the banking sector was dealt a spectacular blow as the head of the European Commission blamed the Irish banks, regulators and government for the difficulties in the country. Categorically rejecting suggestions Ireland should now be helped by Europe, at least in the short to medium term, European Commission President Jose-Manuel Barroso cut loose on Ireland. He added that a deal made by finance ministers earlier this week on a banking union  was ‘for the future’ and was ‘not retroactive'”.

“Failing to plan for the worst”

20/12/2013

Sean Kay, writing in Foreign Policy has an article arguing that the “recovery” in Ireland is

He begins, “The Eurozone is back in the news this week with what at the surface level is a good story — Ireland is leaving the European Union/International Monetary Fund bailout mechanism and regaining its economic sovereignty. Five years after it became the first European country to enter a post-financial crisis recession, Ireland is being heralded as a model for how austerity can put a nation back on its feet. There is no question that the country’s temporary sacrifice of economic freedom halted what was one of the steepest declines in relative wealth in modern history. However, the reality is that Ireland has yet to hit rock bottom, and when it does, it will likely remain there for a very long time. Irish Prime Minister Enda Kenny may have been right when he said that leaving the bailout sends a “powerful signal internationally, that Ireland is fighting back, that the spirit of our people is as strong as ever.” But the government has not prepared the public — or potential outside investors — for dangers that continue to lurk in the Irish economy or the stark choices that lie ahead”.

He goes on to note, “The roots of Ireland’s economic crisis are relatively straight forward: The country’s roughly 4.5 million people needed a $117 billion bailout in 2010 because key banks had no money, the nation had gone on a spending and credit binge, and the government could not finance its borrowing to fund its public sector without an outside infusion of capital”.

He adds importantly that “Unemployment today is down to a still staggering 12.8 percent (although it would be much higher if Ireland didn’t export so much of its talented labor force to help build other nations’ economies.) The country’s borrowing rates on 10-year bonds have also dropped considerably — to 3.47 percent — down from a Eurozone high of 14.2 percent in 2011. There have also been improvements in the housing market, at least around Dublin. Yet through the third quarter of this year, an unsustainably high 18.5 percent of Irish homeowners had missed a payment on their mortgage, and three quarters of those in arrears more than 90 days had yet to be restructured. Against this precarious backdrop, insisting on a return to economic sovereignty could very well put Ireland’s modest gains at risk. Ireland’s government recently rejected the option of sustaining an EU credit line as a backstop, should internal or external surprises make self-financing of borrowing to sustain the economy impossible. In effect, it gambled that a strong statement of confidence will be popular at home and attract investment from abroad. But the opposite is just as likely to happen — that questions about the sustainability of Ireland’s economic stability will deter the same international investment”.

Crucially he argues, “Ireland’s central challenge is a sustained lack of indigenous economic growth, due in large part to the unwillingness of banks to support risk taking and lend money to small and medium-sized businesses. Meanwhile, rents and operating costs are high, making it difficult for many businesses to survive, let alone grow. Ireland’s public sector wages remain among the highest in Europe. A failure to address this problem means that even deeper budget cuts are likely, as are heftier taxes on an already heavily burdened public. Meanwhile, Ireland has the third highest deficit in Europe and its debt to gross domestic product (GDP) ratio is 117.4 percent; both are unsustainably high. Ireland’s 2014 budget cuts about $3.4 billion more from domestic government spending. But if Ireland is to sustain self-financing on the open markets, these cuts may actually be woefully insufficient. Deeper cuts, however, might rattle the existing governing coalition, which includes a sizeable Labour Party minority that draws its political backing from constituencies most harshly impacted by budget cuts”.

Worryingly he writes that the wrong decisions made in Dublin will have toxic consequences for Ireland, and the rest of Europe, “Having thrown away its credit lifeline to Europe, however, Dublin will likely find it much harder to secure a new bailout should it need one in six months or a year. The tragic reality often lost in Ireland is that the bailout it just exited was not designed to help the country’s economy recover; it was designed to contain the Irish crisis so it would not spread further in Europe, while also protecting against foreign exposure from Ireland’s dodgy banks”.

He mentions the sad and ongoing social consequences as a result of the policies enacted, “As it exits the bailout, the government and media in Dublin understandably want to promote a new image of Ireland — one that is back on its feet and has learned hard lessons. However, the harsh realities and serious risks to the Irish economy that remain cannot be swept under the rug. Widespread inability to meet personal debt obligations, high unemployment, heightened food insecurity, and soaring murder and suicide rates are just a few examples of the depth of searing pain that has left a tragic imprint on the Irish landscape”.

He ends the piece, “In 2009, Irish economist Morgan Kelly, one of a handful of economists who was consistently right in warning of Ireland’s economic collapse, wrote: “By 2015 we will have seen what happens when jobs disappear forever…. Ireland is at the start of an enormous, unplanned social experiment on how rising unemployment affects crime, domestic violence, drug abuse, suicide and a litany of other social pathologies.” Little has changed since then to suggest this timeline of assumptions should be changed. The only difference is that now Ireland’s leaders are flying without a net — understandably hoping for the best but so far failing to plan for the worst”.

Still feeling the consequences

10/12/2013
 An article from the current issue of the Economist writes that Ireland, even after its “bailout” costing €60 billion has a feeble banking sector with little sign of recovery.
The piece opens, “Ireland’s banks appear to be on the mend. On December 4th Bank of Ireland announced plans to repay part of its bail-out, €1.8 billion of preference shares, to the Irish government. But Ireland is still suffering from the baleful consequences of its bank rescue in other ways. As well as propelling public debt from 25% of GDP to 123%, it has made Ireland’s banking industry one of the most concentrated in the world. Of Ireland’s six big native banks before the crisis, only three are now still in business—all of which have big public shareholdings. The Irish state owns virtually all of Allied Irish Bank (AIB) and Permanent TSB, as well as a 14% stake in Bank of Ireland. Foreign-owned banks, meanwhile, are leaving. British-based Bank of Scotland returned its local licence in 2010; Denmark’s Danske Bank and ACCBank, a subsidiary of Rabobank of the Netherlands, plan to do the same”.
The result of this the article adds is that “AIB and Bank of Ireland in a near-duopoly. Between them they now provide over 86% of new mortgage lending. Indeed, the duopoly is more of a monopoly, given the government’s big stakes in both. Together they are already displaying pricing power over the market”. However, the article is correct but it underplays the extent to which AIB and Bank of Ireland held the market even during the “boom”. The other banks to the extent that they existed were never more than bit players.
The consequences of this state ownership is “That leaves Ireland’s politicians in an awkward position. Under normal circumstances, governments try to foster competition among banks, in the hope of spurring the economy by making it cheaper to borrow. But as a shareholder, the Irish government would benefit if the two big banks improved their margins. That might help stem their losses—of €1.34 billion in the first half of this year—and thus curb Irish taxpayers’ already enormous bill for the bail-out. Such an improvement, however, would involve raising interest rates for Ireland’s borrowers or lowering them for its savers—to the economy’s detriment”. Naturally, because of the unique way the euro is constructed, Ireland does not have the power to do this.
 The piece ends, “The impact of this trend—scarcer and more expensive credit—has already hit Ireland’s economy. Mortgage arrears have risen rapidly, reaching 17% of the value of loans to owner-occupiers and 29% of those on buy-to-let properties. Legal reforms earlier this year have made it easier to repossess properties from defaulters. That will boost banks’ profits, but squeeze already weak consumer spending even more. Irish firms are also finding it harder to borrow. According to a survey published on December 2nd by ISME, a business association, the refusal rate for new credit applications for smaller firms has risen since June by six percentage points. The European Union’s and the IMF’s three-year stint as backstop creditors for the Irish government formally comes to an end on December 15th. That makes Ireland the first of the five euro-zone countries in receipt of international bail-outs to stand again on its own two feet. But it would be wrong to say Ireland’s problems are over. The IMF predicts that its economy will grow by only about 2% a year until 2018—a feeble pace compared to rates of over 10% during the boom. According to Deutsche Bank, Ireland’s banks will need more public money if they are to comply with new international rules on capital. Returning them to health will weigh heavily on the rest of Ireland’s economy—and on its politics—for years to come”.
Perhaps instead of trying to rescue banks, the Irish government, and their EU masters should be looking for more long term solutions, a state run bank leaving private banks to make bigger profits and higher losses.

“Make a clear break”

15/11/2013

Ireland is to make a clean break from its three-year 85bn euro (£71bn) bailout programme next month, without seeking precautionary funding. The Irish prime minister (taoiseach) Enda Kenny confirmed the move during a speech to the Irish parliament. The Irish economy is emerging from one of the deepest recessions in the eurozone, having sought an international bailout in November 2010. Ireland is due to leave the EU-IMF bailout on 15 December”.

Merkel knows best?

29/09/2013

After the German general election when Dr Merkel won a the most seats but not enough to form a single party government an article has appeared discussing the consequences of her victory on Europe.

The piece opens, “the newspaper Der Tagesspiegel printed the following commentary on its front page: ‘What do we need parties for when we have Merkel? That’s the attraction. Mommy is the best. We know ourselves. She won’t change much and doesn’t have to. Just because Merkel is so unspectacular, so hesitant, so apparently indecisive, she is very near to the way Germans actually are. The Germans elect their own image.’ The paragraph catches the essential mystery of Merkel as a politician. In Gerd Langguth’s 2007 biography of her, he writes that “there is something sphinx-like about her … Nobody is supposed to see behind the self-constructed protective shell.” She turns personal questions away with a self-deprecating joke: When a journalist recently asked her how she managed to look so fresh despite the grueling campaign, she replied, “By spending a fortune with the German cosmetics industry.” She also shuns the slightest hint of charismatic oratory. Her victory speech was characteristically low key”.

The article goes on to mention that “The victory of her Christian Democratic Union/Christian Social Union bloc, with 41.5 percent of the votes, nearly gave her an absolute majority of seats, but the failure of the center-right Free Democrats to collect the minimum five percent of the votes to be represented in the Bundestag means that Merkel will have to form a new coalition. Her most likely option, then, is to once again form a coalition with the Social Democratic Party, which came in second, with 25.7 percent. Merkel would likely find this coalition of left and center perfectly comfortable, as she did between 2005 and 2009. A classic case of her ease in dealing with the Social Democrats was her agreement in 2009 to accept a 2,500-euro environmental premium, paid by the state to anybody who bought a new car and scrapped one that was nine or more years old”.

More importantly they write that “Merkel has a tough series of choices ahead, and having a very large coalition majority would allow her to face the angry right wing of her own party. The hardest will be measures to settle the eurozone crisis and to stimulate growth in the economies of Greece, Spain, Italy, Portugal, and Ireland. Almost as difficult will be the rebalancing of the German economy away from its export bias and toward more imports, especially from the ailing Mediterranean economies. So far, “Mommy” has always seemed to know best. But there is no guarantee that she will in the future, especially as the decisions before her get more complicated”.

Francis the liberal?

02/08/2013

An piece in Foreign Policy argues that Pope Francis is turning away from the theological conservativism of his predecessors.

It begins that “Following the Copacabana Mass, Francis flew home to Rome aboard a chartered jet. After the plane leveled off at a cruising altitude, he wandered to the back of the cabin to mingle with reporters and conduct a press conference in the manner of a presidential candidate. The moment was unexpected, especially since the pope had previously declined all requests for interviews since taking office in March. But Francis was buoyant from the reception he had received in Brazil and, perhaps, emboldened to spend a bit of the capital he had accumulated.    No question was off limits and the reporters rose to the occasion, inquiring about controversies ranging from the Vatican Bank to gay priests in a Church that condemns homosexual activity. On that subject, Francis said, ‘If they accept the Lord and have goodwill, who am I to judge them? They shouldn’t be marginalised. The tendency [to homosexuality] is not the problem … they’re our brothers.’ It was the kind of statement — humble, direct, and friendly”.

He goes on to make the point that “Francis risks alienating Catholics in the industrialised West who have supported conservative theology, doctrine, and leadership. This significant minority is energised by the fight against abortion and resistance to those who would welcome both women priests and an end to mandatory celibacy for clerics. They have loyally supported the church with donations and activism and can be expected to oppose any change in direction of the sort Francis has signaled. With his comments, Francis poses a challenge to those who felt comfortable with the conservative leadership they have known for more than a generation”.

Yet what the author does not realise is that what Pope Francis actually said after his quote about not judging is, “If a person is gay and seeks the Lord and has good will, who am I to judge that person?  The Catechism of the Catholic Church explains this point beautifully but says, wait a moment, how does it say, it says, these persons must never be marginalised and “they must be integrated into society.” The problem is not that one has this tendency; no, we must be brothers”

Therefore to say that Pope Francis is changing the stance of the Church on homosexuality and therefore aleinating those who support the Church in this matter is simply wrong.

He goes on to make the arguement that “Beginning with the election of John Paul II in 1978, the institutional Catholic Church entered a period of conservative theology and politics. Even as he encouraged the flowering of democracy in his native Poland and across Eastern Europe”.

Again this view is not grounded in facts. Pius IX and Pius X are well known for their conservative theological stances. To argue that the theological and social conservativism began with John Paul II is incorrect.

He ends the piece “On the specific issue of homosexuality and Catholicism, the pope has begun a discussion that will continue in parishes worldwide and may lead, over the long term, to a revision of official teaching. More generally, by enthusiastically wading into controversial issues, Francis is clearly rejecting the “remnant church” approach to the modern world. He’s not interested in withdrawing and prefers, instead, to swim in the stream of history. Here, finally, is a pope willing to grapple with the implications of a social trend — the increasing acceptance of homosexuality — that threatens to relegate the church to irrelevance. Unlike his predecessor, Francis is not content to wait out the millennia with his head in the sand until Catholic orthodoxy once more becomes in vogue. Rather, this is a pope eager to explain how this ancient church should fit into a changing world.  For 30 years, conservative church leaders have stood by and watched as the Church failed to end its sex abuse crisis and the scandal afflicting the Vatican bank. They have watched while the people of the industrialized West, including those in that most Catholic of countries, Ireland, have abandoned the Church in droves. Issues like homosexuality, the status of women, and the desire of many priests to be married, were never going to be addressed successfully by men who could not reach out with authentic warmth. Francis, the man they selected, seems up to the task. As he pursues it, the old guard appointed by John Paul and Benedict may feel he is leaving them behind. But he will be catching up to modern Catholics who believe the equality of persons as well as souls”.  

European terrorists

11/07/2013

An article mentions that small number of European Muslims that have come from the continent are are currently fighting in the Syrian conflict.

He writes that “while ministers from these irregulars’ governments say they too are in favor of toppling Assad, these same officials are doing everything they can to stop these fighters — or at least develop new laws to criminalise their activities. The reason: fear that these irregulars will one day return to Europe, equipped with deadly military skills, trained in the tradecraft of international terrorism, and steeped in the extremist anti-Western ideology of al Qaeda and its Syrian brethren, the al-Nusra Front. On a single day in April and in a single country, Belgium, the authorities launched 48 raids on suspected jihadi recruiters believed to be luring Belgians to fight in Syria. ‘It is a ticking time bomb,’ French Interior Minister Manuel Valls told Foreign Policy at a small press breakfast with American reporters in New York. Tallies of these European fighters vary. But by Valls’ count, there are more than 600 of them involved in the Syrian war, including 140 French citizens, 100 Brits, and 75 Spaniards. This new generation of fighters forms a kind of European Union of jihadists, hailing from the traditionally Christian cities and villages of Austria, Belgium, Britain, Denmark, Finland, France, Germany, Ireland, Italy, Norway, Spain, and Sweden. Most are young men from Muslim “.

Such is the scale of concern that “European officials are trying to dissuade these militants from taking up arms — or, failing that, trying to gather as much intelligence in order to monitor them if they return home. European, U.S., and Turkish intelligence agencies have been working together to try to track the individuals seeking to cross the border into Syria from Turkey. In some cases, the Turks have turned them back. Belgium has grown so alarmed about the prospects for blowback that it has already launched raids on suspected fighters in an effort to gather intelligence”.

He goes on to mention the situation in Germany “German Interior Minister Hans-Peter Friedrich told a gathering of regional interior ministers in Nuremberg, Germany, on July , that there are as many as 60 young Germans in Syria. “Our fear is that they are being radicalized in training camps by organizations close to al Qaeda,” he said, according to the DPA (German Press Agency). The camps, he said, provide training in weapons and explosives, making the young Germans a threat upon their return to Germany”.

He adds “‘Syria is a very profound game-changer,’ said Charles Farr, Britain’s director general of the Office for Security and Counter-Terrorism, according to the Daily Telegraph. “The blunt truth is there are more people associated with al Qaeda and al Qaeda-associated organizations now operating in Syria than there have ever been before and [they are] close to Europe and operating with an intensity that is unparalleled since events in Iraq in 2006. They are much closer to us, in much greater numbers, and fighting with an intensity that we have not seen before.” The greater numbers reflect the proximity of Syria, which can be reached easily through Turkey. Many Europeans don’t even need a visa to get to Turkey. Nor does they need to have a pre-existing relationship with a militant group to cross the Turkey-Syria border and enter Syria. The profile of the fighters changes from country to country. In Ireland, Muslim leaders have compared the country’s fighters to the international brigades that fought the Spanish fascists in the 1930s. Valls, the French interior minister, has portrayed his country’s fighters as social misfits, ‘marginalised … juvenile delinquents. It’s often people who were criminals before.’ For the time being, said Valls, there is no legal basis for arresting the European jihadists or barring them from leaving or entering France — but France is weighing draft legislation that would criminalize French citizens’ links to terrorist groups like al Qaeda and the affiliated al-Nusra Front”.

This response, or lack of it, shows just how far behind Europe, and indeed, the EU itself is, in understanding the scale of the threat faced by America and now Europe. The danger is that the officials in Europe will minimise the risk, or worse, they will have been too late in taking counter-measures to prevent an attack.

He goes on to cover Ireland, noting “Selim said that no Irish mosques have urged young Muslims to travel to Syria and that efforts to discourage them from doing so have picked up following the death of four Irish citizens, including Shamseddin Gaidan, a 16-year-old schoolboy from the town of Navan. ‘Nobody encourages these young lads to go over there.’ Selim said. ‘We understand that sending them to be involved in this battle … is basically sending them to die.’ Mary Fitzgerald, the foreign affairs correspondent for the Irish Times, who has documented the role of Irish Arab fighters in Libya and Syria, said that Ireland’s community of more than 40,000 citizens of Muslims has never embraced the more extremist tendencies that have taken root in more militant mosques on the continent. The returning fighters she has interviewed have not been radicalized. ‘The question of blowback,’ Fitzgerald added,'”is less pertinent in Ireland than in other countries, where they have joined more hard-line groups.’ The European fighters participating in the conflict in Syria bear similarities with the international Arab fighters who supported the Afghan mujahideen in the 1980s in Afghanistan, the birthplace of al Qaeda”.

He ends the piece noting that many do not go to Syria to fight jihad on Assad, but the fear is that will will return to their home countries radicalised. If they do, and the authorities are not prepared, everyone will regret the consequences.

“Accept your fate”

03/05/2013

With a new king on the throne Holland sould have other things on its mind according to Ambrose Evans Pritchard. He writes that the situation in the Netherlands is as bad as it is in Ireland and that any notion of the country being in the same contention with Germany is a myth.

He opens “Last month it retreated from pro-cyclical tightening, delaying €4.3bn in budget austerity. By then Mr Rutte’s totemic worship of EU deficit targets had invited the ridicule of the official Bureau for Economic Policy Analysis (CPB), which said Dutch leaders did not seem to understand how private credit busts interact with fiscal cuts to create havoc”.

He goes on to note that the country is in dire straits as it has no policy options open to it as it is a euro member and cannot devalue its currency or raise inflation to eat away at its debt. He explains “The Netherlands offers a salutary lesson of what can happen to a rich sophisticated economy caught in a post-bubble crunch once it has lost control of its currency, central bank and monetary levers. This would have happened to Britain without the Bank of England, and the US without the Fed. The Dutch crisis has crept up quietly, though hedge funds have been nibbling for months. Most people lump the Netherlands together with Germany, Finland and Austria, the hardline AAA fist-thumpers who dictate terms to others. Unemployment was very low until the dam broke. It is now soaring as fast as in Cyprus. The rate has doubled over the past two years, jumping from 7.7pc to 8.1pc in the single month of March. The economy has been in recession since early 2011”.

He then writes that “Regulators let the average loan-to-value ratio of new mortgages soar to 120pc at the peak. Since mortgage interest is tax deductible, around 60pc of the entire stock of mortgages is interest-only. Unlike the Bank of Spain, which tried to “lean against the wind”, Dutch officials saw no need for extra buffers to offset the (then) ultra-loose policies of the European Central Bank, geared to German needs when Germany was in slump. The ratio of household debt to disposable income peaked at 266pc in 2010, the highest in EMU and almost a world record. The denoument is well under way. Dutch house prices have fallen 18pc, leaving a quarter of all mortgages “onder water”, and there is surely worse to come. Standard & Poor’s expects prices to drop 5.5pc this year, and slide again in 2014. This is infecting everything”.

The piece ends with a real suggestion for Holland and other highly indebted countries, “The ever-growing brotherhood of damaged nations could of course seize control of the ECB’s Governing Council and ram through a dose of Japanese ‘Abenomics’ over the protest of the Bundesbank, which is loftily indifferent to the Taylor Rule on output gaps. That rule, by the way, shows that monetary policy is too tight even for Germany. Yet the victims recoil. As one ex-governor told me: ‘We know that if we did that, we would destroy political consent for the euro in Germany, so we can’t do it.’ Well then, accept your fate”.

Future of the Church in Ireland

22/04/2013

As part of a series on the Church in Ireland, the Irish Times has written a number of articles on the subject.

The first article discusses the notions of belief in Ireland. The piece begins “Despite the fallout from clerical sex abuse scandals, a significant proportion of the country – including non-Catholics – believe the church has had a broadly positive influence on Ireland. The national survey was undertaken last month among a representative sample of 1,000 voters aged 18 and over. A total of 89 per cent of respondents were Catholic. The remainder were either not religious (6 per cent), Protestant (3 per cent) or from other faiths. Fianna Fáil supporters were most likely to be Catholic (95 per cent), followed by Sinn Féin (89 per cent), Fine Gael (88 per cent), Labour (85 per cent) and Greens (58 per cent). Overall, just under a third (31 per cent) of Catholics said they attended Mass at least once a week. More than two-thirds attended services far less frequently. Some 39 per cent said they either never or very occasionally went to Mass. A further 20 per cent said they attended every two to three months, while 8 per cent went once a fortnight. Those who attend Mass regularly are twice as likely to live in rural rather than urban areas. They are also more likely to be older and support Fianna Fáil or Fine Gael. When it comes to the church’s teachings, many Catholics do not subscribe to key tenets such as transubstantiation. Almost two-thirds (62 per cent) believe the blessing of bread and wine during Mass only represents the body and blood of Christ. Just over a quarter believe it is transformed (26 per cent)”.

It is heartening to see that many still think of the benefits of the Church in Ireland however, these people are normally too afraid to speak up and defend the Church when it comes under attack from those who preach nihilism and relativism. Either unaware of unconcerned by its consequences.  Thankfully there are some who do defend the Church. To be welcomed is the number of people still attending Mass, which is probably among the highest in Europe. Obviously what the survey does not highlight is the age profile of these people and it can be safely assumed that the vast majority are over 60 with only a small fraction under 30.

In a related article in the series notes “Nearly two-thirds of the over-65s attend Mass once a week or more, compared to 13 per cent of those aged 18-24. Interestingly, while women have always been perceived as the stereotypical daily Mass attenders, the gap between male and female attendance is not as wide as might be expected. Four per cent of women attend daily, while 3 per cent of men do. The gap widens to 8 per cent in the once-a-week or more category: 35 per cent of women versus 27 per cent of men. Overall, the gap between the two is about 10 per cent – substantial but still probably narrower than expected”.

The piece adds “Amid increasingly vocal proponents of rationality and science over belief in gods and supernatural explanations for the meaning of life and death, it is interesting to note that over 80 per cent continue to believe in heaven, a belief shared fairly equally across regions, party and class, and rising to 90 per cent among the over-65s and women” but worryingly for the supposed tolerance of society “Do people think the country would be better off without it? The question was asked of all respondents, not only Catholics, and the remarkable fact is only 9 per cent said yes. Nearly 40 per cent said the country would be a worse place without it, a figure that includes 29 per cent of Protestants. It also includes a third of those under 34, rising to nearly half of the over-65s”.

Again this obvious lack of tolerance is seen when another article notes “On one of his first visits to Poland, Scally almost laughed out loud when a Polish friend mentioned that he was a member of the Club of Catholic Intellectuals. The idea of Catholic intellectuals seemed hilarious. But when Polish people needed a bulwark against the communist authorities, the Catholic Church offered people a place to meet and an alternative space to think. It remains the case today: one of Poland’s leading weekly publications is a Catholic newspaper”. The fact that the Solidarity movement worked with the Church to overthrow Communist tyranny and have free speech, the rule of law and a free press after its downfall and the fact that Scally should be so narrowminded and dismissive of the Church speaks volumes.

Predictably reform is mentioned, “Fr Crombie distances himself from themes closely associated with the Association of Catholic Priests, such as the call for national assemblies and dialogue on the looming dearth of priests, on compulsory celibacy and on the ordination of women. Priesthood and celibacy are indivisible for him”. Indeed the ACP, far from being a canonical organisation is totally opposed to any thoughful (liturgical) reform as envisioned by Pope Benedict dismissing it out of hand. As for the question of celibacy it is not practiced in the Eastern Catholic Churches or the Orthodox Church so it should not be ruled out completely. The article goes on “A question that preoccupies the Association of Catholic Priests – the second Vatican Council’s unfulfilled decision that every parish would have a lay-dominated council, linked to a diocesan council, feeding into a national assembly – seems to puzzle him. He has never heard of it”. There is also the issue of what such a proposed assembly would be for.

Lastly, a piece notes the admittedly depressing figures, “In 1970 Ireland had almost 4,000 diocesan priests. Today that figure is 2,160, with 687 others retired, ill, on study leave or working elsewhere. Their average age is 64. In 1970 164 men entered Irish seminaries. Last year the figure was 22. The Amárach survey also found weekly Mass attendance in Ireland was 35 per cent. Last December [2011] Archbishop Martin disclosed that weekly Mass attendance in Dublin is down to 14 per cent and said that within eight years just 235 priests will be available to serve full time in Dublin’s 199 parishes. Dublin’s Catholic archdiocese was facing its biggest crisis since Catholic Emancipation in 1829, the archbishop said”.

Finally a piece calls for “new thinking”. The article mentions that “By 2020, the number of priests in Dublin will drop by about 36 per cent, from 456 to about 294. Just 235 will be available to serve full-time in Dublin’s 199 parishes, he said, with the remainder serving as chaplains or at central services. Meanwhile priests’ income in Dublin has fallen 15 per cent in the past two years to an average of €24,079 per annum, as weekly Mass attendance hovers at 14 per cent. What has been happening in Dublin is reflected in each of the 26 Catholic dioceses on the island. In each, too, as the priests get older and their income drops, their workload increases. This is due to parish clustering, whereby priests who would normally serve in just one parish must now also take care of the needs of the faithful in nearby parishes as well. This, itself, is due to the growing shortage of priests. No wonder morale is low among Irish Catholic priests”. However he adds that this is not the only story, “Of the 1,965 priests currently in parish ministry in Ireland, 838 are 54 years and under. Even the 54-year-olds will not have reached retirement age by 2032. And between now and 2032 more priests will be ordained on an annual basis, though nobody should get too excited about that”.

He adds ” in 2032 there will also be additional permanent deacons. Eight such men were ordained in Dublin’s pro-cathedral last Monday, with other such ordinations to take place in seven more Catholic dioceses in Ireland. It is highly likely this pattern will be followed in the church’s remaining dioceses on the island also. These permanent deacons will be able to officiate at baptisms, weddings and funerals. In so doing, they will greatly lessen the workload of priests. Another way of freeing up, indeed liberating, priests to exclusively exercise their essential spiritual function is for the laity to take over parish administrative duties. This is happening already and is a source of immense satisfaction to the great majority of priests”. Indeed this does make some sense. There is little reason for a priest to spend his time filling in forms when it could be far better spent elsewhere.

Yet is obvious from these reports is the the Church in Ireland faces organisational, financial, “personnel” and credibility problems. However,  the common thread that runs through these reports is that the Church is treated as some political actor rather than a divine institution run by flawed human beings who are trying to achieve some beyond the transitory existence of this life and at the same time aim for something more than just material possessions and whatever else this world offers.

“Less well grasped”

12/04/2013

An article in Foreign Affairs discusses the legacy of Thatcher. It begins arguing that “The outlines of Thatcherism on the socio-economic front are well known: rolling back the frontiers of the state, emphasizing individual responsibility, and championing entrepreneurial creativity. Today, the legacy of Thatcherism is ambivalent. On the one hand, Thatcher pulled the country out of the economic tailspin of the 1970s; on the other hand, her war on regulation facilitated the banking extravaganzas that eventually resulted in the ongoing financial crisis. What is less well grasped, however, is Thatcher’s legacy in foreign policy”.

He writes that the “sobriquet “Iron Lady” was bestowed on Thatcher not by British miners or Thatcher’s many other domestic opponents, but by the Soviet press in the mid-1980s. It reflected her reputation for toughness on the military and diplomatic fronts, particularly in the joint effort with U.S. President Ronald Reagan to strengthen the West’s nuclear defenses during the Cold War”.

Sims goes on to argue that “Three interlocking — but not always mutually reinforcing — impulses drove Thatcher’s foreign policy. First, the Iron Lady hated dictators and bullies of any kind. She refused to be intimidated by IRA violence, and she despised the culture of fear that the Irish republican movement fostered to keep its community in line. Her toughness on the Falklands reflected a determination not to hand island’s inhabitants over to the military regime in Buenos Aires, whose abysmal human rights record was well known. And her opposition to the Soviet bloc was informed by a deep sympathy for the dissident movements in such places as Czechoslovakia and Poland. Later, Thatcher was one of the few members of the British political establishment to speak out strongly against Serb ethnic cleansing in Bosnia.”

However he refusal to “be intimidated” by the IRA while certainly welcome also belied an ignorance and insensitivity when dealing the the government in Dublin. She gave the impression that Northern Ireland was simply her problem when in fact, if she had worked with the government in Dublin sooner and more willingly than much bloodshed could have possibly been avoided.  On more than one occasion she seemed no to understand the complexities of the situation in Ireland and in a perverse way seemed proud of this fact. Her attempts to sideline Dublin completely did little for peace and only made grievances worse. Similarly, she did nothing to halt the rise in Unionist terrorists and preachers that fomented anger among the Unionist community.

The article then goes on, continuing the uncritical style to note “Underpinning this hatred of dictators was the second impulse that drove Thatcher’s foreign policy: her passionate commitment to democracy. She was outraged that the National Union of Mineworkers refused to allow its members to vote on whether to strike, a decision that was ultimately made for the miners by an authoritarian, Soviet-leaning leadership. Her unyielding line against IRA terror was rooted in the knowledge that the majority of those in Northern Ireland wanted to remain part of the United Kingdom. Thatcher’s close relationship with Reagan was based, above all, on their shared belief in economic liberalization at home and democracy promotion abroad, at least in the Communist world”.

The article mentions her “hatred of dictators” yet this is too simplistic. She believed in democracy but at the same time did little to end apartheid in South Africa and at the same time giving support to Pinochet in Chile despite his utter contempt for human rights. Even after vast quanitites of evidence were found to show Pinochet’s involvement in murder and corruption she steadfastly stood by him . Therefore to oversimplify her record is at best, distasteful.

He adds later on that “Where Thatcher ultimately came unstuck was in her third principle, which was a preoccupation with German power — and a related profound ambivalence about European integration. She was a strong supporter of the European common market, partly because of her belief in free trade and partly because she thought that a reinvigorated and economically robust Europe would help contain the Soviet Union. At the same time, however, Thatcher belonged to a generation that had gone through World War II and naturally feared German power and German unification. By the late 1980s, she began to view the growing influence of the European Commission in Brussels not only as an encroachment on the democratic rights of the British people, but also as a vehicle for the reassertion of German power on the continent. This divided her not only from the French, for whom Europe was a device to contain its historical enemy, but also from German Chancellor Helmut Kohl, whose genuine commitment to a united Europe she mistakenly saw as a fig leaf for the reassertion of German power. In 1989–90, Thatcher’s commitment to democracy and her fear of Germany were in direct contradiction. The fall of the Berlin Wall and the collapse of the Soviet bloc cleared the way for the German people to express their democratic desire for reunification. Thatcher now expressed concern that a united republic would ‘once again, dominate the whole of Europe.’ For a time, it seemed as if she would team up with Gorbachev and French President Francois Mitterand to prevent it. It was only with difficulty that the United States and her own advisers persuaded her to accept the inevitable. Nearly 25 years later, as Europe struggles with its sovereign debt crisis and the ever-widening gulf between Berlin and continent’s periphery, Thatcher’s concerns seem less far-fetched”.

It should be noted however that this is simply ascribing something to Thatcher that she did not know about and came into being long after she left office. Any “foresight” she had was in that sense, purely accidental. Not only that but she did after all sign the Single European Act so any hostility she had to Europe was measured by pragmatism rather than blind rage.  The article does little to balance her obvious good points with those acts that will not be judged kindly by history. It is more a  hagiography than a piece of serious historical scholarship.

A deal for Cyprus

25/03/2013

The troika and Cyprus have agreed a “deal” that would stop the country leaving the eurozone. For the first time the EU has turned the “tradition logical” on its head, by imposing capital controls – in a supposedly free trade zone –  and at the same time imposed losses not only on those deposits over the secured €100,00 mark but on shareholders and bondholders first rather than forcing the taxpayers to take the burden on the losses of the banks involved. This was the exact opposite as to what occurred in Ireland where the government was forced/blackmailed by the EU to add the debts of the banks to the sovereign debt thereby crippling the country.

The contents of the agreement are that “Cyprus’ Popular Bank – Laiki in Greek – will be effectively shut down ‘with full contribution of equity shareholders, bond holders and uninsured depositors.’ It is thought that deposits up to €100,000 are insured, and thus not subject to any tax or ‘haircut.’ Laiki will be broken up into an institution with valid assets and a ‘bad bank’ that takes on the risky ones. The bad bank will be slowly dissolved. The valid part of Laiki will be integrated into the Bank of Cyprus (BoC).That integration will be assisted with €9bn of Emergency Liquidity Assistance provided by the European Central Bank (ECB). ‘Only uninsured deposits in BoC will remain frozen until recapitalisation has been effected, and may subsequently be subject to appropriate conditions.’ The ECB governing council will continue to provide the BoC with liquidity ‘in line with applicable rules.'”

A different article mentions the mixed response from Russia, “In what seemed a climbdown from earlier criticism, Mr Putin expressed support for the €10bn EU-IMF rescue deal, despite the heavy blow it will deal Russian businesses on the Mediterranean island. The Russian president also approved the restructuring of an existing €2.5bn Russian loan to Cyprus to extend its payback deadline beyond 2016. His spokesman, Dmitry Peskov, said: ‘Considering the decisions adopted by the Eurogroup, Putin considers it possible to support the efforts of the president of Cyprus and the European Commission aimed at overcoming the crisis in the banking system of this island state.’ That was a surprisingly muted response as analysts’ predicted the discount on deposits of more than €100,000 demanded by the deal could punish Russians – who have an estimated total of €24bn in corporate and private accounts – hardest of all. Last week Mr Putin referred to an earlier plan to levy a tax on depositors as ‘unjust,unprofessional and dangerous’. Prime Minister Dmitry Medvedev said in a meeting with his deputies near Moscow there was a need to ‘understand what this story turns into in the long run, what the consequences for the international financial and monetary system will be – and thus, for our own interests as well.'”

Daniel Drezner writes, “I’ve been pretty insistent that the most surprising thing about the aftermath to the 2008 financial crisis is how much global policy norms haven’t changed. By and large the major economies are still rhetorically and substantively committed to trade liberalization, foreign direct investment, and a constrained role for the state in the private sector. The one exception? Capital controls. The earth has moved here”. Drezner goes on to quote the Economist but sumarises it noting, “as the Economist explains, the current Cypriot reaction is based on the fact that the new deal is a damn sight better for them than the previous deal”.

Drezner goes on to write “So much for Russia as a counterweight to the European Union. Cyprus tried to realign itself closer to Moscow, but it didn’t take. Furthermore, the new deal really puts the screws on the large deposits of Russian investors that have parked their money in Nicosia”. Furthermore he seems to endorse the view that as things stand Russia has lost against the EU with large deposits in Cyprus taxed heavily.

Cyprus fights back

21/03/2013

The euro crisis has roared back, in truth it never really went away. Cyprus is facing a €16 billion gap and the ECB/IMF/EU have agreed €10 billion but insisted that the rest come from the islanders. The troika insisted that the most “efficient” way of doing this would be to take it directly out of the bank accounts of the Cypriot people. There was much discussion over how it should be spread but the vote was to take place in parliament. It took place and the governing party that negotiated it abstained with the rest refusing to back the terms of the “agreement”. Cyprus has looked Merkel in the eye and Merkel has blinked. Yet again the ECB/EU seem to have become unhinged from all basic morality content to take money directly from citizens bank accounts.

News reports note “Political leaders in Cyprus are to hold emergency talks following parliament’s rejection of a European Union-International Monetary Fund bailout package. Cyprus has just 24 hours to find a solution to its funding gap before its banks are due to reopen. President Nicos Anastasiades, barely a month in the job, gathered party leaders and the governor of the central bank at his office. He was also due to hold a cabinet meeting and talks with officials from the EU, IMF and the European Central Bank. Elsewhere, Finance Minister Michael Sarris, who is in Moscow to seek Russian financial assistance, said no decision had been reached”.

The same article goes on to mention “Russian authorities have denied rumours that the Kremlin might offer more money, possibly in return for a future stake in Cyprus’s large but as yet undeveloped offshore gas reserves. Cyprus has asked Russia for a five-year extension of an existing loan of €2.5b that matures in 2016, as well as a reduction in the 4.5% rate of interest. When asked about the loan extension, Mr Sarris said that talks were ongoing about ‘things beyond that'”.

Reuters has written that “Cyprus’s finance minister pleaded with Russia for help on Wednesday to avert a financial meltdown after the island’s parliament rejected the terms of a European bailout, raising the specter of a looming default and bank crash. Finance Minister Michael Sarris said he had reached no deal on financing with his Russian counterpart, Anton Siluanov, but talks were continuing. Cypriot officials disclosed that the country’s energy minister was also in Moscow, ostensibly for a tourism exhibition. Cyprus has found big gas reserves in its waters adjoining Israel but has yet to develop them. ‘We had a very honest discussion, we’ve underscored how difficult the situation is,’ Sarris told reporters after talks with Siluanov. ‘We’ll now continue our discussion to find the solution by which we hope we will be getting some support. ‘There were no offers, nothing concrete,’ he said”. The piece goes on to say “Not a single lawmaker voted for a proposed levy that would have taken up to 10 percent from larger accounts, many of which are held by Russians and other foreigners, while sparing small savers with less than 20,000 euros in the bank. It was the first time a national legislature had rejected the conditions for EU assistance, after three years in which lawmakers in Greece, Ireland, Portugal, Spain and Italy all accepted biting austerity measures to secure aid. Rejection of the key condition for a 10 billion euro ($12.9 billion) bailout, cast the 17-nation currency bloc into uncharted waters, with a risk of financial contagion to other troubled member states”.

Among the new options to gain the €6 billion are nationalising pension funds or interestingly “Euro zone paymaster Germany, facing an election this year and increasingly frustrated with the mounting cost of bailing out its southern partners, said Cyprus had no one to blame but itself. ‘For an aid program we need a calculable way for Cyprus to be able to return to the financial markets. For that, Cyprus’s debts are too high,’ said Germany’s finance minister, Wolfgang Schaeuble. With Sarris and Energy Minister George Lakkotrypis in Moscow, there was mounting speculation that Russian oil and gas giant Gazprom had mooted its own assistance plan in exchange for exploration rights to Cyprus’s offshore gas deposits. Noble Energy reported a natural gas recovery of 5 to 8 trillion cubic feet of gas south of Cyprus in late 2011, in the island’s first foray to tap offshore resources. Russian authorities have denied the Kremlin plans to offer more money”.

The chancellor of Austria has weighed in with reports saying “Austria hopes Cyprus will find a way to stay in the euro zone but its fate is in the hands of its own government”.

It was mentioned yesterday that after the refusal to authorise the levy on people’s bank accounts other options were being examined, “The country’s finance minister defied explicit warnings from Angela Merkel, the German chancellor, and left Cyprus for urgent talks in Russia. Michael Sarris flew to Moscow to plead for aid, despite Mrs Merkel warning Cyprus not to enter into negotiations with Russia, raising the spectre of eurozone disintegration”. The article goes on to add “Not a single Cypriot MP voted in favour of a eurozone rescue package that had been made conditional by Germany on the Cypriot government finding £5 billion to pay off its debts by raiding bank deposits, including the savings of up to 60,000 Britons. Under the original eurozone deal at the weekend, Cyprus agreed to impose a levy of 6.75 per cent on bank accounts up to €100,000 (£85,000) and 9.9 per cent for larger deposits. Despite a compromise proposal not to tax any bank deposit less than €20,000 (£17,000), the country’s 36 MPs rejected a deposit tax that has rattled financial markets and threatened the island’s future as an offshore banking haven for Russian investors, with 19 MPs abstaining from the vote”.

If Merkel does not bend and come up with something more flexible she risks not only a Cypriot exit from the euro but worse a geopolitical loss to Russia, something that the EU seems to have not thought of in its Kantian bubble.  An author writes “imagine an alternative scenario: waking up and finding that your money is safe but Gazprom owns your nation’s debt. That is one way the botched Cyprus bailout could end. Reports in the local media said the Russian state gas company, the largest extractor of natural gas in the world and the largest Russian company, has offered to prop up struggling Cypriot banks in exchange for the right to gas production. A spokesman for Gazprombank said the offer had been ‘initiated’, according to Itar-Tass, the official Russian news agency. Gazprom itself later said an offer had not been made. Russia is furious about the proposed bank levy, which President Vladimir Putin called ‘unfair, unprofessional and dangerous’. His finance minister issued a veiled threat to withdraw a €2.5 billion loan made to Cyprus in 2011″.

The article ends, “In an election year, Angela Merkel, the German Chancellor, was determined to impose the bank levy to avoid her taxpayers bailing out Russians who used Cyprus as a safe haven for their allegedly ill-gotten gains. It could prove a major miscalculation. The Germans and the European Central Bank could yet be forced to back down and cancel the levy altogether, rather than merely reduce the onus on smaller deposit holders. Some analysts have raised the intriguing and alarming prospect that Russia could threaten Germany’s gas supply if the bailout is not dramatically reshaped. Moscow has form here. Gazprom reduced gas supplies to Europe in 2009 during a dispute with an Ukrainian energy company. Europe relies on Russia for 36 percent of its gas supply, a dependency we may hear more about in the coming days”.

Cyprus is either very brave or very foolish. It will either force Germany to blink and thereafter hopefully change the entire euro crisis for the better both for itself and the rest of the Europe, or alternatively it will force its own exit from the eurozone dragging Greece, Italy, Spain and a host of other countries with it while possibly at the same time give Russia a foothold in Europe just as it is losing one in Syria.

Skeletons?

24/02/2013

An article discusses the reign of Pope Benedict and argues that there are still “skeletons”. It begins “If a report on Thursday, Feb. 21, in the Italian newspaper La Repubblica is to be believed, Pope Benedict XVI’s recent decision to resign just got a whole lot more interesting. The paper claims that around the time that Pope Benedict decided to step down, the pontiff learned of a faction of gay prelates in the Vatican who may have been exposed to blackmail by a group of male prostitutes in Rome. The revelations allegedly appeared in a 300-page report by three cardinals that the pope commissioned to investigate the release of internal documents by his butler, the so-called ‘Vatileaks’ scandal”.

The piece goes on to mention that “A Vatican spokesman has refused to confirm or deny La Repubblica‘s claims, and the internal Vatican report is reportedly stowed away in a papal safe for Pope Benedict’s successor to peruse”.

The author then goes on to argue “Seen in the context of Pope Benedict’s career in the Catholic Church, it is difficult to understand why revelations of yet another sex scandal would push him to resign. For over a decade, he has served as the church’s point person for responding to allegations of abuse. From 1985 until his election to the papacy in 2005, Benedict served as the head of the Congregation for the Doctrine of the Faith”.

The fact that such basic information as Cardinal Ratzinger’s time in office, as prefect of the CDF is inaccurate does not bode well for the credibility of the piece. Equally, the notion that this was the sole justification for Pope Benedict to resign and not his almost 85 years. He continues repeating the Fr Peter Hullermann “scandal”. Despite the fact that no smoking gun was found to directly implicate the then archbishop of Munich. Although it has to be said the young cardinal-archbishop could have been more vigilant in matters of governance, an issue that would deeply effect his papacy.

The writer goes on to repeat old stories that have little relevance in the grand scheme of what Benedict was trying to do. He mentions “In an attempt to help bring closure to victims affected by sexual abuse in the Irish Catholic Church, two auxiliary bishops, Eamonn Walsh and Raymond Field, accused of helping to cover up rampant abuse offered Pope Benedict their resignation in 2010. In a move that stunned critics of the church and victims’ rights groups, the pope rejected their resignation and informed the bishops that they would be allowed to stay on”.

Yet, what he does not say is that Bishops Walsh and Field had no direct role in moving abusers around or other matters that would have directly implicated them. Perhaps their resignations should have been accepted but to focus on these issues speaks to both the lack of knowledge and lack of tolerance that many in the media have for the Church.

He ends the piece “By 2010, the hard-line strategy advocated by Pope Benedict became unsustainable. Explosive and wide-ranging reports of abuse — including allegations against Ratzinger himself during his time in Munich — put the church firmly in the cross-hairs of public opinion. Detailed investigations by the Irish government unearthed widespread abuse, and Ireland became something of a ground zero for the scandal. In response, Pope Benedict issued a public apology to his parishioners in Ireland”.

This supposedly “hard line” approach does not bear up to any informed scrutiny when the facts are said, such as Benedict’s meeting with victims on every foreign trip and well as continued and rightful apologies in addition to issuing new norms that his predecessor never did.

No shame

22/02/2013

As the last week of of the reign of Pope Benedict XVI ticks away and the electors are moving their minds as to who will be the next pope some cardinals should not attend the conclave at all.

An article mentions that several cardinals are totally discredited, it notes “Cardinal Dolan, the archbishop of New York, has become the latest cardinal to be questioned over his handling of sex abuse by priests and victims”. The piece goes on to add “several are embroiled in controversies connected to the Church’s systemic failure to tackle sex abuse against children by paedophile priests. The question marks over the cardinals’ management of sex abuse cases are an embarrassment for the Holy See, just as Benedict prepares to resign the papacy next Thursday. Timothy Dolan, the charismatic archbishop of New York, who is considered to have a chance of being elected Benedict XVI’s successor, was formally questioned about abusive priests in his former archdiocese of Milwaukee, just days before his departure for Rome to take part in the conclave”.

The article goes on to note “Cardinal Dolan is the second American cardinal this week to be scrutinised over his role in the sex abuse scandals, which erupted in the United States in 2002. Cardinal Roger Mahony, the retired archbishop of Los Angeles, is due to be questioned on Saturday in a lawsuit over a visiting Mexican priest who police believe molested 26 children in the 1980s. Catholic groups in the US and Italy have called for Cardinal Mahony to be barred from the conclave, but he insists he will attend despite allegations that he shielded predatory priests”.

The piece goes on to mention Cardinal Brady, the archbishop of Armagh and his role in protecting priests who he knew were abusing children. The article adds later that Cardinal Danneels “had computer files seized at his home in 2010 over suspicions that he helped cover up hundreds of abuse cases. Justin Rigali, another American cardinal, retired as archbishop of Philadelphia in disgrace after a grand jury accused him of failing to do enough to tackle abusive priests”.

Indeed it was Cardinal Rigali who having been through a grand jury investigation in 2005 promised to clean up his diocese but a second grand jury report was equally damning of Rigali and his total failure to act.

It is clear that these men should absent themselves from the conclave so as not to cast a stain on a new papacy by guilt of association.

Success for Ireland?

20/02/2013

In what was seen as a “great success” by the Irish government in lengthening the amount of time to pay back the debt, and in effect, pay back more money over time. The not unreasonable hope from the government is that inflation will eat away at the capital sum, leaving only the interest to be paid back, over a longer period.

Media reports note that “A bank debt deal that will reduce the country’s borrowing needs by €20 billion in the coming decade and ease budget pressures over the next two years was unveiled by Taoiseach Enda Kenny in the Dáil yesterday. There was sustained applause from Fine Gael and Labour TDs for the Taoiseach when he sat down after outlining the agreement with the European Central Bank (ECB) to the chamber. The announcement came after 24 hours of political drama which saw emergency legislation to liquidate the Irish Bank Resolution Corporation (IBRC), formerly Anglo Irish Bank and Irish Nationwide Building Society, being rushed through the Oireachtas early yesterday morning”.

The same piece goes on to add that “Kenny said the first payment of principal under the new deal will not now be made until 2038 and the last payment will be made in 2053. The average maturity of the Government bonds will be over 34 years as opposed to the seven to eight year average maturity on the promissory notes. ‘In effect, we have replaced a short-term, high interest rate overdraft that had to be paid down quickly through more expensive borrowings, with long-term, cheap, interest-only loans,’ said Mr Kenny. He said that as a result of the deal there would be a €20 billion reduction in the National Treasury Management Agency’s market borrowing requirements in the next decade with a very large reduction in the debt servicing costs of the State over the next generation. The Taoiseach said the agreement would bring the country €1 billion closer to attaining our 3 per cent deficit target by 2015. ‘This means that the expenditure reductions and tax increases will be of the order of €1 billion less to meet the 3 per cent deficit target,’ he said”.

Yet, it was Fianna Fail that tied bank debt to sovereign debt, under pressure from the ECB, and so made Ireland drown in debt when it could have been Iceland which let the banks go bankrupt, and started again, albeit with siginificant pain to people.

Another article notes that “deal happened only because the ECB agreed to bend rules Being able to manage one’s debts depends to a very great extent on their repayment terms. A small sum borrowed from a loan shark at a usurious interest rate can quickly balloon into an unpayable debt. An open-ended interest-free loan from a friend or relative can, by contrast, be easily managed and cause little worry. The new Government IOUs, unveiled with great fanfare yesterday to replace the promissory notes – the three-year-old IOUs issued to pay off depositors and creditors in Anglo and Irish Nationwide – appear at first analysis to be much closer to the latter kind of loan. While a deal on restructuring the promissory notes has been inevitable since the EU-IMF troika agreed to discuss the matter more than one year ago, the range of potential outcomes of those tortuous negotiations was wide. If the European Central Bank had really put its foot down, the deal reached might have been little more than symbolic.”

Now however, the Germans are attacking the plan, with typical tact. Reports indicate that “Bundesbank president Jens Weidmann has voiced concern that Ireland’s promissory notes deal came perilously close to illegal monetary financing. Last week the ECB “unanimously took note” of a plan to swap Anglo Irish promissory notes for sovereign bonds, easing Irish borrowing requirements by €20 billion. Mr Weidmann, a prominent member of the ECB governing council, has now hinted the deal set a dangerous precedent by blurring the ECB’s “clear line between monetary and fiscal issues”. “The transaction in Ireland demonstrates how difficult it is for monetary policy to free itself from the embrace of fiscal policy once you’re engaged,” he said to Bloomberg. The Bundesbank is unhappy with what it sees as indiscreet statements by Irish politicians on the role played by various officials in reaching the agreement.”

Ultimately the deal is little more than cosmetic with little significance for Ireland or any of the “bailout” countries in the troika programme and domestic Irish politics with the governing coalition gaining from it, though for how long is the most interesting question.

Dolan’s report

27/01/2013

As part of the Apostolic Visitation to Ireland that concluded last year Timothy Cardinal Dolan, archbishop of New York was the visitor to seminaries both in Ireland itself and abroad, most obviously, the Pontifical Irish College in Rome.

Cardinal Dolan’s report to the Congregation for Catholic Education was leaked to The Irish Times which then reported on it. The report of the paper mentions that the report given to Pope Benedict “which expressed concern about ‘the atmosphere, structure, staffing and guiding philosophy’ of the Irish College in Rome, contained ‘significant errors of fact’, Ireland’s four Catholic archbishops have said”.

The report by the Times goes on to note “It has called for ‘substantial reform’ at the college. The four archbishops, who were the college’s trustees, were criticised in the report as seeming to be ‘disengaged from college governance, with meetings, minutes, agenda and direct supervision irregular . . . The general rule of governance is ‘Let’s keep doing what we have been for the last 35 years’,’ it said. The Irish archbishops say they ‘made a detailed and considered response to the Holy See’.

The article by the newspaper goes on to say “The visitation report said ‘a disturbingly significant number of seminarians gave a negative assessment of the atmosphere of the house’. Staff, it added, were ‘critical about any emphasis on Rome, tradition, the magisterium, piety or assertive orthodoxy, while the students are enthusiastic about these features’. A change in the staff was recommended. Elsewhere the report said: ‘The apostolic visitor noted, and heard from students, an ‘anti-ecclesial bias’ in theological formation.’ The Irish Times established contact with four seminary staff mentioned in the report, but none availed of the opportunity to comment. Cardinal Dolan’s report said ‘the college suffers from the reputation of being ‘gay friendly’, however unjust such a reputation might be’. He said he was ‘eager to underline that he did not find any evidence of rampant immorality or a homosexual subculture, and that the overwhelming majority of the seminarians are committed to a faithful, chaste lifestyle'”.

The concept of Cardinal Dolan accusing the Irish College of an “anti-ecclesial” bias is extremely serious and should not be dismissed lightly. The personnel of the Irish College has been changed with separate reports have noted that a new rector of was Irish College was appointed in September 2011. What Dolan’s report effectively says is that while most of the seminarians at the College, follow Church teachings, Dolan openly lays the blame for the culture and supposed lapses in the teaching of the Church on the governing and teaching staff of the College. Dolan again implicitly blames the board of governors of the College which are the four Irish metropolitan archbishops. However, this is unfair of Cardinal Dolan to blame them for what is supposedly going on at the College while the archbishops are running their dioceses at the same time.

The newsreport goes on to mention “The report concludes that if the college is ‘to prepare men as leaders for the renewal of the church in Ireland, which the Holy Father is confident will come, the staff of the college must inspire trust and its programme of formation must engender a vibrant fidelity to Jesus and the teaching and tradition of His church with the fostering of a durable interior life, and a humble, confident sense of priestly identity and mission. Such is now lacking.’ However, Cardinal Dolan left the college ‘filled with affection and admiration for the students and, notwithstanding his criticisms, appreciation for the sincerity and hard work of the staff'”.

The wrong Martin

19/01/2013

Sean Cardinal Brady, the untrustworthy and sinful archbishop of Armagh and primate of All Ireland has finally had his request for a coadjutor archbishop met. Cardinal Brady, who originally requested assistance in 2010 at the height of the crisis in his “leadership”, finally had his request granted.

Yesterday Pope Benedict announced that Msgr Eamon Martin, 51, the diocesan administrator of the Diocese of Derry would become Coadjutor Archbishop of Armagh. Thus, as soon as Cardinal Brady turns 75, in August 2014, his resignation will be accepted and Archbishop Martin will take over.

Rocco notes that Msgr Martin is “Set to be the native ‘frontman’ for Rome’s intended reconstitution” of the Church in Ireland. However, as has been mentioned here before if Rome really wanted to appoint someone with real credibility the only bishop with real trust is Diarmuid Martin, archbishop of Dublin and primate of Ireland. Archbishop Martin of Dublin, 67, has consistently dragged his fellow Irish bishops into dealing properly with the crisis, that they, themselves created through their desire to protect the institution at all costs even though it meant destroying the lives of hundreds of children who were meant to be in their care.

It would be foolish however to think of Rome as a monoculture. Though it is impossible to know for sure, Archbishop Martin’s name must surely have been mentioned for the role in the meetings of the Congregation for Bishops. Yet, it is well known that some of the older prelates in the Roman Curia dislike Archbishop Martin’s forthrightness and actions during his time in Dublin thus far.

Earlier reports of someone from outside of Ireland getting the role quickly faded. Rocco goes on to mention “As a more modern sign of his clout, the Primate – almost invariably the holder of Ireland’s seat in the College of Cardinals for the last century and a half – serves ex officio as president of the Isle’s joint episcopal conference, whose operations Eamon Martin oversaw as general secretary from 2008 until returning to his home-diocese in 2010 as vicar-general”. Thus, the newly appointed Coadjutor Archbishop-elect Martin will become a cardinal, if present traditions hold, sometime around 2019 by which time he will be 58 or 59. Of course, Pope Benedict could expedite the process and give him the red earlier, though this would mean Ireland having two electors in a potential conclave, which is unlikely.

One of redeeming features is the young archbishop’s interest in sacred music which bodes will for the direction of the liturgy in the diocese. Rocco mentions that “two of the 26 dioceses stand vacant, with another three bishops serving well past the retirement age of 75″. Ireland is still waiting for the report from the Congregation for Bishops on which dioceses to suppress and merge for the small island of 4.5 million Catholics with 26 dioceses, as many as Germany. In the last few months Benedict named William Crean as bishop of Cloyne and more recently still, Brendan Leahy as bishop of Limerick.

It seems utterly bizarre to name bishops to dioceses that could be suppressed in a few months, or years. Admittedly, the bishops of Elphin, Kerry and Ardagh should all be retired and their dioceses dissolved altogether.

Rocco concludes the report, “Brady’s standing has come under heavy fire and loud calls for his departure amid revelations of his role in the Irish church’s long, brutal history of sexual abuse by clergy and religious, and the subsequent neglect of allegations by church officials”.

He ends noting Archbishop Martin of Dublin’s comments in July 2011 calling elements of the Vatican a “cabal” when it comes to child protection measures.

Making progress?

17/01/2013

An article from the Economist discusses the economic situation of Ireland, the “best behaved  of all the euro zone countries that have been given a “bailout”.

The piece notes that “By the end of 2013 Ireland could leave its bail-out programme and stand on its own feet again”. The article goes on to mention “An Irish recovery would provide a boost for Europe and its de facto leader, Angela Merkel, the German chancellor, as much as for Ireland and its prime minister, Enda Kenny. It would show that the controversial treatment of austerity and structural reforms imposed as the price of bail-outs can work”.

The article continues “It would reassure the electorates of core Europe, especially German voters who go to the polls in the autumn, that rescues do not condemn them to a never-ending call upon their taxes, as seems to be the case with Greece. And a sustained return by Ireland to the bond markets would boost confidence more generally, helping other bailed-out economies such as Portugal and Spain”. Yet, to equate Greece, to Ireland, Spain or Portugal is unfair as these nations are not sliding into the abyss as Greece seems to be doing with lots of help from Frau Merkel. What should also not come as a surprise, but is still worth noting, that (German) domestic politics seem to be key. How can EU “leaders” expect EU “citizens” will look to them and not their own national leaders when making decisions all the while hoping to create some kind of legitimacy for a body that is either loathed or treated with total indifference?

The writer goes on to say in an optimistic manner “Last year it dodged the euro zone’s wretched recession. Unit labour costs in the country have come down sharply, making the economy more competitive. That has enhanced Ireland’s allure for foreign companies, which continue to favour the country as a manufacturing and services hub for international markets, not least because of its low corporate-tax rate. These are useful advantages. If things go well in 2013, Ireland might be able to leave its programme without any further assistance”.

Thankfully he injects some realism into the picture ” Ireland’s very reliance on foreign firms creates both economic and fiscal vulnerabilities. If global growth falters this year, for example, Ireland will be hit hard because its exports are bigger than the economy. Any economic setback will make it more difficult to get the deficit down, as planned in yet another austerity budget (the sixth) late last year. Even if things go to plan, public debt, which amounted to only 25% of Ireland’s GDP in 2007, will exceed 120% in 2013; and once the large slice of GDP which goes to low-taxed foreign multinationals is taken into account, it will reach almost 140% (see article)”.

The discussion of recovery that is taking place is laughable, Ireland’s debt is actually rising, not falling and it will continue to rise for many years to come. The piece adds, “About a third of its public debt has been incurred bailing out its banks, an imposition which Irish taxpayers resent bitterly. The Irish government is largely to blame for that, because it issued blanket guarantees to bank creditors at the height of the financial crisis in 2008. But European leaders, scared about the repercussions of a default in the bond markets, later forced the Irish government to protect the banks’ senior bondholders”. Yet for all their resentment the Irish seem to do nothing about it being as passive as ever in the face of their country being, yet again humiliated but corrupt and incompetent politicians.

The article ends saying that Merkel could help Ireland and her own credibility by softening the “terms on the promissory notes—IOUs—which the Irish government used in 2010 to prop up its banks could be eased. A more effective measure would be to allow the European Stability Mechanism (ESM), the euro area’s permanent rescue fund, to take stakes in the Irish banks that remain operational. That would help Ireland both by removing some of its sovereign debt and by insulating the government from any further calls on public funds as a result of more mishaps to Irish banks”.

The EU being as decisive as ever however are unsure about this option saying that “the ESM could be deployed in this way only in new rescues. It will be hard for Mrs Merkel to shift course again, especially in an election year”. It ends arguing that a successful Irish debt deal would not only be good for Ireland but also Germany and therefore the EU.

Not working

11/01/2013

A piece rightly criticises Angela Merkel for her almost total lack of inactivity. The piece notes “The chancellor is bad for Europe and bad for Germany, where voters would be doing us all a favour if they kicked her out”.

The article goes on to mention “A decade ago, Germany was derided as being part of ‘old Europe’ and its economy written off as sclerotic – along with Italy and Portugal, it had been the slowest growing in Europe over the previous 10-year period. But since the euro crisis erupted three years ago a sea change has taken place and derision has again turned to awe. Germany’s strong (if often exaggerated) rebound from the 2008-09 Great Recession, its low unemployment, high export levels and unindebted private sector have given the inhabitants of Europe’s largest economy a sense of prosperity, security and progress that few others in the rich world have enjoyed in recent years. Compared to all the other (smaller) major economies in Europe – Britain, France, Italy and Spain – Germany has fewer weaknesses and faces fewer challenges”. Yet, as has been noted here before the Germany economy is in deep trouble and many of these successes will not last and Germany will suffer even greater than the rest of Europe having had such a prosperous economy during the crash.

The writer, Dan O’Brien, goes on to say that Merkel “role in by far the greatest crisis in European Union history has been almost unrelentingly negative, in her rejection of proposals from others and in reluctantly agreeing to suggestions after much credibility-destroying delay. When Merkel has appeared to lead – as she did when calling for political union to ensure enhanced democratic accountability in the euro zone – little detail and no strategic vision emerge to suggest she is serious about taking bold action. And, in the starkest contrast of all with Bismarck, Merkel has built few if any durable alliances with other European leaders, thus presiding over her country’s dangerous isolation. Among Merkel’s few innovations has been the fiscal treaty, aimed at embedding German budgetary procedures in the domestic policy frameworks of all EU member states. Though not at all a bad thing in its own right, it was never going to contribute much to solving this crisis and was more about providing Merkel with domestic political cover. Despite being accorded that cover by all other euro zone members, she did not use it”.

He goes on to argue “Merkel’s minimalism and backsliding in dealing with the euro crisis cannot be explained by the domestic political environment. Unlike her counterparts in other creditor countries – Austria, Finland and the Netherlands – she faces no threat from opposition parties hostile to Europe generally and/or willing to exploit public disquiet about bailing out the periphery. On the contrary. The main opposition party, the Social Democrats, has advocated going further and faster in addressing the crisis”. This however is incorrect. Domestic German politics explain a great deal, though obviously, not all, of the current crisis. In 2009 the German parliament voted for a debt brake which forced the poor eastern Lander/states to limit their spending. This was passed with huge pressure from the wealthy south and south west who, since re-unification, have supported the eastern Lander to the tune of billions of euros.  The amendment was passed despite dozens of economists urging MPs not to write economic theory into the German Basic Law. They economists were ignored however and even worse, this debt brake is now EU law.

O’Brien then goes on to note, quite correctly, “Quite apart from her handling of the euro crisis, some of the biggest decisions of her administration in crucial policy areas – energy, security and industry – show that Merkel is as willing as the most capricious politicians to make it up as she goes along. Germans have long been divided over nuclear energy. This administration and its predecessor expended much time and effort in formulating a nuclear power strategy. But shortly after the Fukushima disaster in Japan in 2011 the chancellor binned her own plan to wind down the country’s nuclear industry. Some reactors were shut down there and then despite no threat of earthquakes or tsunamis in Germany. This reaction was knee jerk”.

He ends “Angela Merkel is not working for Germany or for Europe”. However, there is no certainty that the SDP will change policy in the notoriously rigid German mindset.

End of the German miracle

10/12/2012

Prime Minister of Italy, Dr Mario Monti, said he will resign after “Silvio Berlusconi’s PDL party withdrew its support for the government. Mr Monti, who heads a non-elected cabinet of technocrats, said he will try to pass a budget and financial stability law before standing down. Hours earlier, former Prime Minister Mr Berlusconi said he will run for office again next year. He said Mr Monti’s austerity policies had harmed Italy”.

For years Germans have looked out smugly on the rest of Europe and profligate spenders who wasted their money and happened to buy German goods, thus fuelling the German economy. Now however the German “miracle” seems to be over and hopefully their smugness will end also. An article discusses this.

It gives context “When East and West Germany reunified in 1990, the whole was much greater than the sum of its parts. The East got the West’s airtight economic institutions, its culture of precision in manufacturing, and its central position in the global economy. The West got a huge inflow of new workers — the equivalent of about a quarter of its existing labour force — and access to an enormous market that had been shut off since World War II. This market wasn’t the wealthiest, but it had plenty of room to grow. And though these new workers weren’t quite as productive as their counterparts in the West, on average they were more than 50 percent cheaper“.

The piece goes on to add that “The sudden addition of millions of lower-wage, lower-productivity workers to the German labor force dramatically raised the return to capital. Once the initial growing pains of reunification subsided, investment started flowing in”. He also writes that the workforce was also competitive  he later adds “Then came the euro. Germany’s exports to the eurozone became easier and more transparent, and buyers outside of the monetary union could pay for German goods and services with a versatile new currency instead of the trusty but limited deutschmark”.

The scale of Germany’s success he writes “So, was it any wonder that Germany became a world-beating exporter? The first couple of years after reunification were rocky, and exports actually dropped. Then came the miracle: Germany’s exports grew faster than its gross domestic product in every year from 1994 to 2008, when the global financial crisis started. In those 15 years, exports tripled while GDP (adjusted for changes in prices) expanded by just 27 percent”.

Interestingly, he writes “Until the onset of the euro crisis, these stunning results had plenty of people saying that Germany had discovered some magic formula for export-led growth in an advanced economy”. This is common to human nature, when things, and not just economically, are going well optimism takes hold and in some ways overpowers common sense. So Germany has not stumbled on some magic formula for export led growth, no more than the Celtic Tiger in Ireland was simply a massive property bubble.

He goes on to write “Wages in the East have almost caught up to those in the West, and eventually the advantage in exports will disappear. The trading relationships in Central and Eastern Europe have been almost entirely exploited, and Vladimir Putin’s Russia is trying hard to pull those regions back into its economic thrall. The deutschmark is now an object of fond nostalgia. Two decades on, the boost from reunification is finally petering out“.

He ends the piece “The size of every country’s economy depends on just two things: the size of its workforce and the productivity of its workers. Productivity, in turn, rests on the amount of capital available to each worker and how exactly he or she uses it”. Both of these are changing for Germany and soon, for the eurozone as well.

Europe’s failed state

04/12/2012

As the EU/IMF/ECB “bailout” package progresses and on the eve on another austerity budget that is about to be announced, some have noted the strange characteristics of Ireland and the Irish.  Indeed it has been commented here before that while riots occur in Greece and mass protests in Spain as the endless euro crisis grinds on the Irish remain passive in spite of all that has happened over the last years.

An article in the Irish Times, mentions that the Irish “lack self-esteem despite a veneer of ‘garrulous sociability and self-deprecating twaddle’, according to the latest edition of the Lonely Planet which has just been published. The best-selling guide book says Irish people’s reputation for having an ‘easygoing, affable nature is justified’, but our reputation for friendliness is mostly a manifestation of our desire to chat – and our lack of self-esteem is our ‘dark secret’. The piece goes on to note “the Irish are ‘fatalistic and pessimistic to the core’, which is why they have accepted their economic fate more readily than the Greeks, who have rioted in the streets”.

A different article writes published earlier this year notes that the institutions of the Irish State have little or no significance or respect for many, though obviously not all, of the country’s citizens. It notes “You forget how tenuous and fragile a thing is the Irish State, how little it means to so many of its citizens. By the State, I don’t mean the nation, the flag, pride in being Irish – all that visceral emotion. I mean, rather, two rational things, one tangible, the other abstract. The State is a set of institutions – the Government, the Oireachtas, the Civil Service, public services, the law, the courts. It is also a broad but crucial sense of mutual dependence – the idea that there’s a collective self that goes beyond the narrow realms of family and locality”. The writer goes on to make the point that “To function at all, we have to make the working assumption that those institutions and that idea are part of what we are, that, however vehemently we disagree with each other about however many things, there is this common ground on which we stand. Even when we rail against the institutions (for loyalty is not the same thing as passive obedience), we do so because we identify with them – they are ours to criticise”. He then argues that “Everyone knows, of course, that there are subgroups – criminals, subversives – who have no loyalty to the State at all, who have contempt for its institutions and who don’t recognise the notion of the common good. But the working assumption is that these groups are small, marginal and outside the mainstream of society”.

Indeed, this notion of the common good seems to have been all but obliterated as a result of Ireland’s bizarre history and culture coupled with the ravages of rabid individualism which is prevalent all over Europe and throughout much of the Western world. He depressingly, continues ” every so often, there’s a moment when those assumptions crumble. The idea that the vast majority of people are loyal to the State is suddenly exposed for what it is: a useful fiction. What happens is that very large numbers of people who would never think of themselves as criminals or subversives reveal the truth that they don’t really have much time for key State institutions such as the law and the courts and that they simply don’t believe that there is an over-arching common good that means anything when you set it against more potent local loyalties”. He gives a concrete example, “This is what we’ve seen over the last fortnight in the Quinn affair. Very significant numbers of decent, respectable Irish people – not a majority but not a tiny minority either – are in literal contempt of the courts. They really don’t give a damn what the courts find – if those findings come into conflict with their own deeper loyalties”. He ends his piece “Nor do these decent, respectable people believe that there is a common good that operates at the level of the State and that could possibly outweigh an almost feudal loyalty to a local hero. The State, for them, is a vague, hazy and distant thing – too nebulous to command any real fidelity. The idea that encouraging the Quinns to siphon off €455 million of public assets might harm their fellow citizens has no meaning for them because, deep down, they don’t actually believe that there are such creatures as fellow citizens”, concluding, “The entire political culture of clientilism encourages people to think about the good of the locality, not of the State as a collective entity. Large parts of the Irish elite have demonstrated, with impunity, their own contempt for the law and the common good by evading and avoiding taxes. And of course the State itself is now a sad and tattered thing, stripped of the sovereignty that gives it life”.

An Irish historian weighs in and says that Ireland is not only economically but morally bankrupt also. He argues cogently “the cumulative affect of the various tribunal reports, most recently Mahon, may require political scientists and historians to question or qualify some of their earlier assumptions about the achievements of independence. Taking the long view, perhaps the very impulses that created stability and consensus in the earlier decades of independence also facilitated a fundamental neglect of civic morality and citizenship. This neglect ultimately allowed the sort of ‘systemic and endemic’ corruption exposed by the Mahon report, and as revealed previously by the Moriarty report, what amounted to a devaluing of ‘the quality of democracy itself'”. He goes on to note “There was not enough debate about policy, ideology or the consequences of a ruthless centralisation and authoritarianism. As Garvin observed, in 1922, whatever about devotion to national politics, ‘these unenthusiastic democrats were qualified in their attachment to democratic ideas and were not prepared to trust people with the power to run local affairs'”. Indeed, the nascent Irish state was too homogeneous, being almost entirely Catholic, white and poor. There were no differences in the political parties, a problem that persists to this day, and when a civil war did occur, it was over an irrelevant matter that divided the country then but has no significance in modern times. The writer goes on to mention “This point about trust is vital: if people are not trusted to run their own affairs, they devise other ways of getting things done and with that the likelihood of corruption increases. While there were valiant attempts from the 1920s to clean up malpractice in local government, in the long run local authorities were stripped of most of their powers and the few that they were left with, including the power to rezone land, were abused. In terms of national politics, Fianna Fáil and Fine Gael were born of Civil War divisions, rather than having competing visions about how to shape society. After the laying of the State’s foundations, the practice of politics became about the spoils of the system rather than engagement with ideas about the nature of citizenship. It was about management rather than vision. It was also about, in a society so homogeneously Catholic, abrogating responsibility to the Catholic church in too many crucial areas, including education, with a resultant narrow focus on what constituted immorality”. He adds importantly “Political culture was male-dominated and a closed system in which those who had ideas about doing things differently were dismissed as maverick, or, worse still, intellectuals”. This anti-intellectualism is rife in Irish culture, he mentions “Bertie Ahern – one of that glorious class of Fianna Fáil politicians first elected in 1977, that included Albert Reynolds and Pádraig Flynn – recorded in his memoirs Bertie Ahern: The Autobiography, he had nothing but contempt for intellectuals challenging the ward boss conception of politics”.

He ends his piece “Another problem was that Fianna Fáil was simply in power for far too long and the longer it held office and dispensed patronage the more perverted the definition of loyalty became, in order to justify cover-ups and lies. Lightweights were rewarded and promoted well beyond their capabilities, which resulted in a considerable devaluation of politics and the status of public office. Those who called for accountability within this culture experienced fear, menace and intimidation. As we edge towards the centenary of the events that comprised the revolution of the early 20th century, we face a stark conclusion: this is a State bereft of meaningful sovereignty due to its bankruptcy and a State whose governing culture has been exposed as rotten”.

Two pieces, published more recently, but on the same topic are also of interest and relevance. One of them reports on a conference that took place in Dublin recently. It mentions “The mistakes made in the Celtic Tiger era might be seen as Ireland’s adolescent stage but there is no guarantee that the country will grow up”. The article goes on to say “Counselling psychologist Elaine Martin said Irish society was trapped in a ‘narcissistic system’ as a result of its colonial past and would need to take active steps to move on to the next phase of development”, adding later that “The Irish tendency to devalue themselves as individuals and as a society and to idealise others were among the traits of a colonised people, she said. This is covert narcissism, which manifests itself in low self-esteem, as opposed to the grandiose narcissism more commonly associated with the term. Both types are characterised by self-obsession. The conference held a symposium on the Irish psyche in the aftermath of the Celtic Tiger in which it was claimed that we saw ourselves as a ‘deeply flawed people’. Ms Martin said Ireland needed to develop a sense of identity and self-confidence set apart from its colonial past. She said Queen Elizabeth II’s visit had helped the process, but there was a long way to go”. The piece goes on to note that “New Zealand had sought to move on from its colonial past by promoting traits such as excellence and integrity as values to develop as specific national traits. Ms Martin maintained the relationship between Ireland and its former colonisers was similar to that of a narcissistic family”. The piece ends “Dr Trisha McDonnell, a clinical psychologist, told the conference that Irish behaviour exhibited three postcolonial traits in particular: our deferential attitude to authority; our tendency to avoid the truth; and our communications strategy, which was manifested in a failure to speak plainly and assertively”.

Lastly, another opinion piece argues that no-one is held accountable in Ireland. It asks “What is it with ambitious public sector projects? It seems almost preordained that they end up with eye-watering cost overruns or getting long-fingered indefinitely after being bogged down in controversy. The National Children’s Hospital is the latest project to suffer from the dead hand of the public sector. It’s six years since reports by consultants McKinsey recommended a single, world-class paediatric centre which would amalgamate three children’s hospitals in the capital. Even though the location in the Mater was chosen shortly afterwards, political sniping and growing uncertainty over the location slowed progress. Two chairmen selected to oversee the process ended up resigning. As in excess of €30 million was poured into planning and design, it soon became clear the enormous scale of the development was a major issue. The plan rolled on regardless. It culminated in An Bord Pleanála refusing planning permission”.

He adds a further layer to this when he writes “After all the expensive consultants’ reports, expert groups and glossy plans, no one was accountable for the failure to deliver a project, while the taxpayer has been left to shoulder the burden of wasted expenditure. But perhaps it’s too simple to blame public servants. Is the Civil Service, for example, taking the flak for the failures of politicians or ministers, who have been all too keen to spend millions on half-baked schemes or ill-conceived vanity projects such as the so-called Bertie Bowl, e-voting or the Ppars computer project? For Bill Kingston, who lectures in business at Trinity College Dublin, the answer is simple: the lack of accountability in the public sector”. He goes on to add later in the article “There is also, Molloy says, a lack of expertise. The Civil Service and much of the public sector is based on “gifted generalists”. But it needs to be technically qualified and robust enough to place the public good ahead of the preferences of the incumbent government”.

While Ireland is not about to turn into Yemen or Pakistan, its utter failure to deal with these issues after more than 90 years of independence has effectively rendered it a failed state. Even worse nothing seems to have changed and so there will be another crisis in two decades or so that will set off the same pointless soul searching.

Deeper in debt

04/12/2012

More bad news has come from China as evidence the country’s economy slows further. An article in Foreign Affairs, Indebted Dragon, discusses this.

She opens noting “For four decades, the Chinese economy has grown by between seven and ten percent each year”. Naturally, the immediate assumption is that this growth cannot continue.  She then unveils the “miracle” of the Chinese economy when she argues, “Underwriting the impressive facade, however, is an incredibly risky strategy. Governments borrow money using land as collateral and repay the interest on their loans using funds they earn from selling or leasing the same land. All this means that the Chinese economy depends on a buoyant real estate market to keep grinding. If housing and land prices fall dramatically, a fiscal or banking crisis would likely soon follow. Meanwhile, local officials’ hunger for land has displaced millions of farmers, leading to 120,000 land-related protests each year”. The number of protests will almost certainly continue to rise and even if there is a slight reduction in protests, it will not be for very long. The model the Chinese have adopted is fundamentally flawed and will eventually collapse.

She goes on to describe how China get itself into this mess, “The recklessness can be traced to two things: First, local Chinese officials are evaluated for promotions and other rewards based on how well the economy they manage performs. Construction and real estate activities are among the most straightforward ways to stimulate growth”. Thus, instead of incentivising steady economic growth built on a good education system and exports mixed with internal demand the CCP have destroyed any (medium term) chance China had for a stable economy, and with it, political system. She goes on to mention as an example, ” Take, for example, the city of Ordos in Inner Mongolia: Its elaborate urban infrastructure and its sea of new flats and office blocks are nearly all unoccupied, making it China’s largest ghost city”.

The second factor she argues was “China’s fiscal recentralization reform of 1994, in which the central government raised its own revenue by taking back power from local governments to levy some major taxes. The move lowered local governments’ revenues but left their financial responsibilities — providing education, health care, subsistence allowances, and pensions — unchanged. So local officials had to find other ways to generate money. In the wake of the tax reform, sales and business taxes on construction, real estate, and other service industries became the main source of tax revenue for municipal governments. Not surprisingly, in the 1990s, local authorities started to engineer real estate and construction booms”. Ironically, this is exactly what Ireland did in the late 1970s to much popular acclaim. As a result of that decision Ireland faced a narrower and narrower tax band based largely on property transactions to fund central government. The result was an enfeebled local government that abused the one power it had left, land rezoning. This in turn led to huge corruption and bribery which led to a building boom and in 2007/8 a massive bust. The result of which destroyed the little nations’ banking system and meant the government had to re-finance the banks at crippling cost to itself and its people. She writes ” According to Chinese law, collectively owned farmland must be converted to state ownership before it is leased to private developers. Local governments were thus able to expropriate farmland from villagers and then rent it to private commercial ventures such as factory owners and real estate companies”.

The scale of all of this is partly, seen when she writes “Until Beijing started conducting audits in mid-2009, neither the central government nor the banking regulator knew how much debt local governments had racked up. Since then, official estimates by the National Audit Office, the People’s Bank of China, and the China Banking Regulatory Commission have put the size of local government debt at 5 trillion to 14.4 trillion yuan (803 billion to over two trillion dollars) 13 to 36 percent of GDP — as of the end of 2010. Private analysts often put the number much higher: between 50 and 100 percent of GDP, depending on whether local governments’ contingent liabilities or indirect debts (debts owed by government-owned and government-related entities) are included”.

She ends the piece noting “The banks’ accounting tricks treat only a symptom of the problem. Eventually, banks will become unable to roll over loans because they will run out of fresh money. And officials’ ability to pay off loan interest depends on the continued rise of real estate prices and a buoyant economy, neither of which can be taken for granted”. Yet, there is an assumption that the central government has enough money to bail out all of these banks. What if it does not? Do some regions get preference over others? If some regions could preference, how would other regional leaders who did not get much needed funds react as they would have to deal with massive local unemployment and the collapse of the local economy? She goes on to say “China’s real estate bubble is causing social harm. An inevitable effect of state-led urbanization is that farmers are forced to vacate their land. Close to 300,000 peasants are removed from their villages every year to make room for the construction of airports, highways, and buildings. Since 1980, more than 60 million peasants, roughly the population of the United Kingdom, have been moved”. This adds another layer of instability.

The sun is setting, on the Chinese moment.

What Irish Catholics believe

01/12/2012

A survey has published recently about the religious beliefs of Catholics in Ireland.

The article opens “More than one in five Irish Catholics do not believe in the resurrection of Jesus or that God created the universe, according to the Ipsos MRBI 50th anniversary poll. It found also that 7 per cent of Irish Catholics do not even believe in God. When it comes to making serious moral decisions, more than three-quarters (78 per cent) of Irish Catholics follow their own conscience rather than church teaching (17 per cent). Almost half of Irish Catholics (45 per cent) do not believe in Hell while almost a fifth (18 per cent) do not believe that God created man”.

However, the writer, or even those who composed the questions obviously know nothing about Catholicism. In order to be a Christian the basic belief is Christ’s resurrection. Therefore to say “Irish Catholics do not believe” is an oxymoron. They are not even Christians if they do not adopt this article of faith. The same could be said for the figure of 7% who do not believe in God. Thirdly, it is a great shame that the lack of belief in Hell exists as this too is fundamental to Christian doctrine. Lastly, the Church has for at the very least 60 years taught that there is nothing wrong with belief in evolution and faith. Pius XII wrote on this topic in 1950.

The article goes on to add “On the other hand, 92 per cent of Irish Catholics believe in God, 82 per cent believe in heaven, 80 per cent believe God created man and 84 per cent believe Jesus was the son of God. Seventy-eight per cent believe in the resurrection of Jesus while 76 per cent believe God created the universe. When it comes to Mass attendance, the poll found 34 per cent of Irish Catholics did so on a weekly basis, with 16 per cent ‘rarely/never’ attending. Overall, the poll found 90 per cent of respondents described themselves as Catholic”. What is most interesting is that in a country as secular and “modern” as Ireland, Mass attendance is so high. While certainly not at American or Asian levels of attendance, Irish Catholics are still among the highest Mass goers in Europe. However, demographically these numbers are not sustainable.

The piece adds “Of those polled, 84 per cent believe priests should be allowed marry, with 7 per cent opposed, while 80 per cent believe there should be women priests, with 9 per cent opposed”, concluding “Only 17 per cent of 18-34-year-olds attend Mass weekly, compared to 31 per cent for 34-54-year-olds, 57 per cent for over-55s. Still, 87 per cent of 18-34-year-olds believe in God, compared to 93 per cent of 34-54-year-olds and 97 per cent of over-55s”.

Negative to stable

19/11/2012

Ratings agency Fitch has raised its ranking of Ireland’s creditworthiness to a level last seen in late 2010, the month after the bailout of the State. The agency removed the risk of a further downgrade, moving Ireland’s rating to a “stable” outlook, saying the Government was making progress towards an economic recovery. The State was moved off “negative” outlook, reflecting Ireland’s continued progress on fixing its public finances and the improved options on its ability to fund itself. This is the first positive move by a ratings agency since the EU-International Monetary Fund bailout. The last time Fitch ranked Ireland at a BBB+ rating on a “stable” outlook was in December 2010″.