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The cult of austerity

Gavin Hewitt | 09:32 UK time, Tuesday, 23 March 2010

French protest over change in status of national postal service, 1 Mar 10How quickly should public spending be cut? Who would have imagined just a short time ago that this would be the central political argument in Britain. No political party disputes that the scythe must be taken out of the shed. The only question is when and what part of the public sector undergrowth should be hacked back. Sooner or later the debt mountain will have to be reduced.

It is an argument that, in different ways, rages across Europe. On the one hand are the austerity preachers. Clean up public finances, they urge. Slash the deficits. It is the only way to long-term economic health. And do it now.

On the other side are those who denounce this as "shock therapy". To cut now would risk tipping Europe back into recession. They regard their opponents as "deficit fetishists" who have failed to imbibe the lessons of history.

While politicians and economists argue this out another storm is taking shape on the radar. When the cuts come - as surely they will - they will present a profound challenge to what some call the "European way of life". In the firing line will be those large public sectors with their generous support programmes. Some politicians have sniffed out the battle lines ahead. This was the French Socialist leader Martine Aubry, after the first round in the French regional elections: "We do not want a policy that is destroying what France holds dearest - the social welfare model, equality and fraternity."

And so many countries in Europe - faced with competing with the nimble emerging economies - are having to ask what kind of public sector can they afford?

But let's return to the austerity club. Germany belongs. It insists debt is the problem. To those like Greece struggling to cover its deficit the Germans promote the hair-shirt; cut the budget, raise taxes, reform pensions, increase the retirement age, etc.

Now Greece has already promised spending cuts equal to 2% of GDP. Pay in the public sector has been frozen. Some allowances have been cut back. Its economy shrank by 2.5% in the final four months of 2009. Greek unemployment is rising. Some argue that austerity will only shrink the Greek economy further and so make it more difficult to pay off its debts. Others insist that the cleansing of Greece's public sector is the only way to make the country competitive again.

Other countries have embraced the age of austerity. Ireland, in the midst of a severe recession, has cut public sector wages by between 10 and 15%. Even some of the benefits targeted at the most needy have been scaled back. And still the European Commission believes more severe cuts may be needed. The Spanish have announced 50bn euros of cuts over the next four years. Portugal has an austerity programme. Yet there is also a sense that the cuts in public spending have yet to begin in earnest.

In Britain it is not clear where the axe will fall. Carl Emmerson of the Institute for Fiscal Studies says "we face two parliaments of pain".

It is uncertain across Europe how unions and others will respond to austerity. There are almost daily strikes in Greece. The French have a general strike today. There have been protests in Spain. Jean-Paul Fitoussi from the Institut d'Etudes Politiques in Paris predicts "the pressure will impose terrible strains on the government and society for years to come."

Some see a perfect storm brewing: low growth, high unemployment, governments cutting spending and growing unrest.

Yet change is inevitable. The President of the European Council, Herman Van Rompuy, said "the vaunted European Social Model is unsustainable without higher growth and less wasteful public spending."

So a fierce debate is under way across Europe. What parts of the public sector can be sacrificed and what must be protected at all costs? What will the people accept as fair? In the wings governments are preparing to raise retirement ages and pare down pension schemes. Ministers know that caring for a rapidly ageing population may be unsustainable. Taxes are sure to rise. Some predict that the average rate of VAT will reach 20% and that governments will increasingly embrace stealth taxes to fill the gap.

In all of this lies the political battleground of the future. David Cameron last April promised to preside over an "age of austerity" if elected. What the politicians do not know - but is being tested in Dublin and Athens and Madrid and Lisbon - is how much medicine the voters will stomach on the road to economic health.


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  • 1. At 10:11am on 23 Mar 2010, mvr512 wrote:

    Taxes in many north/western European countries are already at unsustainably high levels, and I certainly do not plan to put up with more of them in order to prop up policies I do not support.

    If I was in charge, first order of business is to disband the EU and the Eurozone and go back to economic cooperation on a voluntary and case-by-case basis only. Everyone knows economic cooperation is necessary, but undemocratic political integration isn't necessary at all. Besides, there is little public support for 'more integration' (why else would politicians frantically seek to deny referendums and try to bypass democracy every time the EU demands a new treaty).

    Banks and other corporations supposedly 'too big to fail' would be broken up so there will no longer be any companies 'too big to fail'. Also, companies would no longer be allowed to 'hide' debt via derivatives and the like and would be forced to put everything on the balance sheet.

    Then, a complete halt on all non-western immigration. And also, policies that would deny would-be immigrants access to welfare. We have mass unemployment and do not need any 'new workers'. And besides, taking the 'smart kids' out of developing countries equals a brain drain over there and is immoral.

    People on welfare and similar handouts, if fit to work, would be put to work in public works projects such as sweeping the streets. Don't wanna work? Fine. But no welfare for you. Only exceptions can be made for disabled and seriously ill people.

    Public sector pensions would be cut, politicians wages would be cut, unneccesary government departments would be disbanded and no longer would politicians enjoy 'labour rights' that ordinary folks do not have such as special goldplated handouts if they lose their jobs (which in Holland is called 'wachtgeld'). Government workers on strike would be fired, eventually, especially if we find out that their absence on the work place doesn't make a difference (useless bureaucrats, or 'raamambtenaren' aka 'window bureaucrats' as we call them in Holland).

    And finally, a complete, total and utter ban on government financing any initiative by religious groups and a complete separation of church and state banning the financing of clerics and churches by the state.

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  • 2. At 10:22am on 23 Mar 2010, cool_brush_work wrote:

    Hmm, Msr von Rompuy gets it a##e about face again!

    It is NOT the "..vaunted European Social Model.." that is unsustainable.

    It is the 'EUropean Union' "model" that has been shown to be an Economic-Fiscal dead-end.

    All the grandiose claims about the EUropean Union offering 'safety in numbers', 'strength through solidarity', 'unity brings stability' have been exposed as a total fraud upon the Citizens of EUrope.

    No, the EU/Brussels/Commission/Parliament most certainly did not cause this crisis.

    Yes, the EU, Brussels EUrocrats, Commissioners, and MEPs did ALL pronounce how EUrope would be more able to manage in any crisis because of the EXISTENCE of the EUROPEAN UNION.

    From the Americas, to Russia, China, Asia, Africa there is widespread Bankruptcy, Reduction of Productivity, High Unemployment, Governments imposing Wage Freezes/Cuts in Social Benefits etc.

    Given the various levels of Economic-Fiscal actvity every Nation within the EU faces precisely the same sort of predicament!
    The EU has not had any significant impact to make the EUropean Citizens' experience any different from that anywhere else in the World during these difficult times!

    So, to ask yet again: What is the purpose of an EU? Why is there an EU?

    Mr Hewitt, DON'T make me laugh: The "...political battleground of the future.."

    From Dublin to Athens and all points in between the 'battleground' will be for the Brussels & 'pro-EU' to somehow lie their way out of a debacle that yet again has revealed the inadequacy and utter futility of a EUropean Union.

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  • 3. At 10:52am on 23 Mar 2010, EUprisoner209456731 wrote:

    2. At 10:22am on 23 Mar 2010, cool_brush_work wrote:

    " ...
    No, the EU/Brussels/Commission/Parliament most certainly did not cause this crisis...."

    EUpris: A recent statement by the President of the Austrian National Bank indicates that the crisis is worse in the "EU" than in the world in general. So it is reasonable to guess that the "EU" is a factor.

    Given that the crisis is taking place after the imposition of the Lisbon Treaty it is reasonable to hypothesise that that may have something to do with it.

    By imposing this treaty the "EU" has shown that it is a despicable organisation which is he enemy of the people it is supposed to serve and that it is quite rightly hated and despised by millions of its victims - the "citizens of the EU." That alone is an indication of likely trouble.

    The information that has come out about Greece and in connection with Greece indicates that the "EU" is even worse than this long-time opponent thought. It must have been areal education to many throughout the world.

    Surely nobody in his/her right mind would invest in the "EU" or keep any assets he/she has inside the "EU".

    The "EU" must be at least a substatial part of the problem.

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  • 4. At 10:53am on 23 Mar 2010, Chris Camp wrote:

    I think it is a very common mistake to consider a generous social system an obstable in the way of economic growth. I would refer Mr Hewitt and anyone else to the social model of any Scandinavian country.

    But I draw my strongest arguments from countries that do not have any or only a very flimsy social safety net.

    China? China has brought an demographic cataclysm upon itself. Last week's Ecomoist ran a very moving story about gendercide. In a country where only one child has been allowed for several decades now to stem what the Chinese leadership misanthropically referred to as "overpopulation", hundreds of thousands, if not millions of girls were murdered or left to starve, as the the Chinese people, officially communist but deeply conservative in their thinking, preferred boys over girls. Now China has as many single young men as the United States has men in total!

    China is often seen as the future boss of the world, but a country that has brought a demographic disaster of those proportions upon itself will thank its lucky stars if it survives, never mind economic success or hegemonial power.

    India? India is a country with great potential, but it is stuck in a social model that will hold India back if it is not addressed. The caste system will keep India from building social cohesion and carving out a strong internal market.

    The United States? In a country where so much ridicule has been hurled at Europeans who build hospitals and schools rather than tanks and stealth fighters, there is now a realisation that perhaps it would have been possible to save Detroit and New Orleans if there had been social safety nets. Economic meltdowns and ennvironmental disasters can be cushioned and fought with money and social cohesion. Obama's move towards a more socially responsible state shows that America realises there is a need for more social cohesion.

    Making it easier for companies to sack people, or allowing them to pay them lower salaries, or reducing national health insurance or reducing job seekers' allowances does not make any country richer. It does not make any economy more successful. On the surface, it might create a short term advantage to other competing markets but it's like burning paper in a hearth instead of coal. The fire is big and hot and very bright. But it does not burn for very long.

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  • 5. At 10:55am on 23 Mar 2010, EUprisoner209456731 wrote:

    Surely one of the first things to do is to start taxing people who are avoiding tax now?

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  • 6. At 11:11am on 23 Mar 2010, Benefactor wrote:

    Why is continously growing the Economy so important anyway? What goes up must inevitably come down. Would it not make more sense to get the economy on a stable level?

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  • 7. At 11:15am on 23 Mar 2010, Francesca Jones wrote:

    You make some thought provoking points in this blog Gavin. It is true that we are approaching a crossroads but as far as I can see Europe's poiticians are still grandstanding and dithering as notayesmanseconomics web blog predicted. How Europes populations are supposed to get a clear view of the situation with this crew in charge is hard to see.
    At least it is good to see someone with plans to make things better with the attack on the UK "poverty trap" proposed on his blog...

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  • 8. At 11:25am on 23 Mar 2010, Gthecelt wrote:

    Here are a few cuts that will not hurt anybody
    1. Cut the cost of staff - nobody to earn more than the PM in all government agencies including the BBC
    2. Cut the size of pension pots to a maximum level but top up contributions can be added by individuals
    3. Cut the quangos - potato council?
    4. Cut government ads on radio and TV - make the BBC show some as well so this cost is not to the taxpayer. If a rule change is needed do it!

    All of these could be cut and not have a slightest impression on the economy but would save money.

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  • 9. At 11:50am on 23 Mar 2010, Mathiasen wrote:

    Mr. Hewitt,
    Should we begin with the observation that the US congress Sunday took a step forward that brings the country closer to the European model. It is a quite popular model.

    Budget deficits are from the only problem this model will face, but perhaps the first. Let me mention that the German parliament is preparing a bank tax as a part of its bank policy. The financial sector has caused a considerable decline in the growth, as you will know, and the opposite will solve some problems. It would be very helpful if all EU countries, including your GB, would assist in this matter.

    Very soon various countries will face additional problems with the demographic development and the oil supplies. These are serious problems and while the first might be solved through emigration, the second demands a solution that is ecologically sustainable.

    On this background I predict that the need in the future for a coordinated European answer on the challenges will not decline, on the contrary. The framework for this coordination will of course be the EU.

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  • 10. At 11:54am on 23 Mar 2010, DynamicEntrance wrote:

    @ no. 5

    Because "The Eurocrats are destroying our economy" plastered across every newspaper in britain is why.

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  • 11. At 12:22pm on 23 Mar 2010, generalissimo wrote:

    The rise of the taxes /in Bulgaria the finance minister has just proposed a 22% VAT!/, the cuts of the public spending /incl. freezing of wages, privatization of some sectors, cuts of the defence/public health/education expenses etc./, the rise of retirement age, etc., etc. are all those painful but necessary measures any EU member state has to consider carefully and apply. Bulgaria is not saved in its move to join the euro zone and the Schengen space. The government here applies different ways to raise more money for balancing the budget, but, as you can imagine, the unions here, backed up by some left wing parties /the BSP, etc./ actively counteract any government plans /out of habit, just to remain on the stage/, claiming that the recession would be inevitable if the government executes to full extend its austerity plan…
    In a way, it is something resembling a vicious circle: if we cut the public spending, if we increase the taxes, the consumption of goods/services will go down… Inevitably the fragile economic growth will be stopped and the unemployment will reach two figures levels…I personally believe in the continuous and firm application of austerity /German like/ measures. We simply have no choice. It is not the best time for strikes and public protests…

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  • 12. At 12:29pm on 23 Mar 2010, EuroSider wrote:


    What is becoming clear here is that the European model depends on a reasonable level of employment; growth;and an economy that can support large-scale spending on public services. This is the French model, which other member states have tried to emulate.

    In a time of global recession this is simply not possible.

    The EU was developed on a fundamental flaw - that being - a united Europe could be run as a single entity; that individual countries would all behave in the same way; that their economies would be identical; and that the polticial will in Europe overcame the fiscal problems.

    The recession and the problems with the "PIIGS" have shown that this is not sustainable and that flexibility is required within the European model.This is not happening. Germany is struggling to support the EU, but there is no 'political will' in Germany to support any type of bail-out of other countries failing to control their own economies. We hear little or nothing from the other member states, whether PIIGS or not. There is very little leadership from the EU offices in Europe.

    Essentially what will now happen is that Greece will go to the IMF; the other southern countries will follow; confidence will be lost in the Eurozone; and the political leaders will defend their own positions within their own countries, rather than try to find a common solution in Brussels.

    It is now every man/woman for themselves.

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  • 13. At 12:43pm on 23 Mar 2010, Chris wrote:

    "European way of life"? Lets kiss it good bye, our politicians gave it to the bankers last year.

    Now we have some options left
    a) Hope for huge inflation to lower everyones debts and redestribute some wealth so people can affort to go out buying things again.

    b) We go the German government approach and lower our wages to Chinese level wages so that we can compete on an equal level with 3rd world countries

    c) We raise taxes and import duties and don't bother cutting spending.

    it is a crisis if we want to be one. With 25,000,000 million people unemployed throughout the EU, having the politician and economists telling there is a crisis is a joke, that is not a crisis its a huge opportunity to push the EU further ahead.

    But as there us hardly any union in the EU I can see the bankers playing one nation against the other to ensure more cuts and more people joining the 25M already out of work.

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  • 14. At 1:09pm on 23 Mar 2010, oldcynical wrote:

    In the mid seventies as there was a swiss project on the uneven distibution of wealth in the world, for every barrel of oil required to sustain someone in the third world a US citizen used 40 and the G7 average was 20 per year the conclusion then was that if a improvement in the third world standard of living were to rise by 8% then the G7 and the US would have to fall by 4% most people seem to neglect this fact and that the demand on resources by those who can now afford them is bound to drive up prices and lower the standard of living here this is going to be a hard pill to swallow. the latest calculation is that the US consumes 25 barrels against 2 for the chinese a fair way to go

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  • 15. At 1:26pm on 23 Mar 2010, RecentExPat wrote:

    This is not a new suggestion that European countries cut their public spending. It seems like governments have tried to evade for years the inevitable fact that supporting their aging populations will mean someone will lose out. In my view, either the young and working will pay higher and higher taxes to support the old and unemployed, or they will say 'no' and those who rely on that public money will be left on their own. Neither scenario is particularly pretty, and if I know my self-centred, materialistic generation, 20 years down the line we will refuse to pay for our parents by either voting for austerity or leaving the country. I pray that something happens between now and then to alleviate this transition...

    Anyway, perhaps this will be the legacy of the Economic Crisis in Europe. Maybe we will not remember this in the history books as the fall of the banks, or the fall of free markets, or even the fright that pushed America into voting for one of the most left-leaning presidents it has ever had (not that that is saying much though; Obama certainly would be at odds with some centre-left parties in Europe.). No, I think we might very well look back on this recession as the point when European deficits spiraled and finally shocked governments into a long haul of cuts to chip away at the "European Social Model." Hopefully I am wrong.

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  • 16. At 1:45pm on 23 Mar 2010, smroet wrote:

    Ah, the European and American way of life. After a lot of bickering of some Germans that Greeks should change their way of life, I just picked up the following remarks of MA-II on the previous blog topic (#246):

    The economic model of the United States economy is probably the most complex model developed to date. What Greenspan didn't understand that he didn't put into the equation or ignored is that the people who operate the market will sometimes make decisions not based on what the market will do that is best for their employer but what is best for themselves personally. Self regulated means unregulates so they don't get caught until the system breaks down. For example, in originating a loan, normally you'd check the credit worthiness of the borrower. But when you make a commission off of initiating loans, you not only allow the borrower to lie, you help him invent them. Then because the company not only doesn't check its employee's work, it doesn't care because it will sell that loan to someone else whose employees will be too lazy to check if the loan is really any good. They will rely on a credit reporting agency who is also staffed by employees too lazy to investigate and face no consequence if they turn out to be wrong. Then to compound matters drastically, insurance companies sell polices called credit default swaps which guarantee those loans will be paid back and therefore the premiums are low. When the loans inevitably defaulted companies like AIG who wrote those policies were faced with paying out hundreds of billions. That's where the government bail out started. Banks who bought those loans repackaged also got slaughtered if they didn't have them insured. They got bailed out too. This was not in the model naturally.

    Now who is lazy here, besides some of the proverbial public servants in countries with more than average sunshine? Perhaps we should have a closer look at how the crisis was brought about, and consider policies which do not perpetuate this kind of behaviour. It is too easy to play up people against each other, while leaving those whose's practices are responsible for the mess in the first place untouched.

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  • 17. At 2:11pm on 23 Mar 2010, MarcusAureliusII wrote:

    The irrationality and incongruity of socialism whether in its purest form or diluted as the social welfare state inevitably takes its toll in the destruction of society by destroying the capacity to create wealth. Wealth is not created by government but by individuals. If they cannot keep a significant portion of that wealth because it is stolen from them, then they have no incentive to try, to take risks. What's more, the oppressive bureaucracy of the socialist and social welfare state rejects individual initiative for its own sake by making it subject to a heirarchy which imposes its will arbitrarily from the top. It's primary objective is to sustain the power to impose its will no matter how good an idea comes from the bottom by people who actually want to contribute even at no benefit to themselves. Therefore socialism is not progressive, it is anti-progress. Socialism is also not a theory of economics, it is a theory of anti-economics to achieve a social goal which is impossible because it rejects the one true principle of economics that explains and supports the creation of wealth, private capitalism.

    Europe's day is over. To understand why, you have to look at its history since WWII, you have to go back to the time just after the war when it was flat on its back. Europeans did not create the wealth they now enjoy by themselves as they imagine. The United States created it just as it has created the wealth such as it is in China. The Marshall Plan was only a humanitarian effort to prevent starvation. Instead the power of American capitalism was harnassed by the US government with incentives in the way of tax structure and one way market access to make it desirable for American corporations to invest in Europe creating millions of jobs and entire new industries. The US also paid for most of the military defense of Western Europe. The USSR was forced to make similar sacrifices in a cruder and more limited way, the disparity could not be allowed to be so great that the failure of socialism would be beyond question. This came to an end with the end of the cold war and the need to do the same in Southeast Asia, especially China. China also imagines it created its wealth by its own initiative and will eventually suffer the same fate Europe is suffering now but for different reasons, American protectionism and currency devaluation.

    "The only question is when and what part of the public sector undergrowth should be hacked back."

    This will be the source of political war all over Europe. Nobody wants their benefits cut. Cut the other guy's not mine.

    "On the other side are those who denounce this as "shock therapy". To cut now would risk tipping Europe back into recession. They regard their opponents as "deficit fetishists" who have failed to imbibe the lessons of history."

    Europe isn't going into recession, it is going into depression. The lesson of history is that you cannot spend more than you earn forever. Eventually debt piles up to the point where nobody will lend to you anymore because the possibility of being paid back with currency worth as much or more than you loaned is zero. That is where Europe is now, on the verge of all credit being cut off to it.

    "While politicians and economists argue this out another storm is taking shape on the radar. When the cuts come - as surely they will - they will present a profound challenge to what some call the "European way of life". In the firing line will be those large public sectors with their generous support programmes."

    No, this is not a challenge to spending far more than you earn, it is the end of it. Kiss it good-bye Europe, the party was fun while it lasted but it is over now.

    "Some politicians have sniffed out the battle lines ahead. This was the French Socialist leader Martine Aubry, after the first round in the French regional elections: "We do not want a policy that is destroying what France holds dearest - the social welfare model, equality and fraternity.""

    They'd better hold on to their fraternity because they will surely hold on to their equality...when they are all equally broke.

    "Other countries have embraced the age of austerity."

    The real pain hasn't begun yet. What's happened so far is just the tip of the iceberg of what is coming.

    "The President of the European Council, Herman Van Rompuy, said "the vaunted European Social Model is unsustainable without higher growth and less wasteful public spending."

    Where has the European Council been up to now? Are they just discovering this after decades? Where were they when the Growth and Stability Pact which at least would have delayed this for a couple of generations was thrown out like so much trash? Did they imagine that the day wouldn't come when there would be a price to pay? Hey guess what, today's the day!

    "Taxes are sure to rise. Some predict that the average rate of VAT will reach 20% and that governments will increasingly embrace stealth taxes to fill the gap."

    Great, just make things even worse than they already are. That's sure to make the depression even deeper, last longer.

    The US is heading down the same road. The passage of the trillion dollar health insurance fiasco to marginally improve the health care 10% of the population receives (nobody in America dies for lack of health care no matter what they tell you) will surely finish the job of bankrupting America too eventually if it isn't stopped. There are four years yet for Americans to come to their senses and reverse this. I have a hunch when they see what happens to Europe they will rethink the whole thing from scratch. Unlike Europeans, Americans do learn from their own mistakes and from those of others.

    The US has some peculiar advantages over Europe. It used to be almost entirely self reliant. By changing the landscape back to what it was in the 1960s before "globalization" saved the world from Communism it could be again. Long dead industries in the US that were exported from the manufacture of basic materials such as steel to the manufacture of all types of goods from consumer electroics to textiles could also be brought back (at the expense of China.) America also has vast untapped natural resources it has held in reserve. It will soon be time for Americans to understand that they will need to use some of them for themselves and the objections of so called environmentalists will be swept aside. By converting to coal, natural gas, and nuclear power, the US does not have to import one drop of fossil fuel energy includng oil if it doesn't want to. Besides, with vast new finds of oil off the coast of South America, oil prices are likely to drop over he long run.

    I've said for the longest time Europe was doomed. Now that reality is finally seeping in. It is unavoidable. There's more bad news for Europe too. Demographic catastrophe, diversion of fossil fuels and other resources it imports and depends on to China with great difficulty and cost of replacing it, and of course its irrational alienation of the US during the last ten years. Europe will face its future on its own. Let's just see how well it does.

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  • 18. At 2:13pm on 23 Mar 2010, stanilic wrote:

    As a descendant of tillers of marginal land in Britain and elsewhere in Europe I can do austere very easily. I respect the careful husbandry of folk who need to keep something by in case of famine. It would not do Britain and Europe much harm to become more careful as to how resource is both created and expended.

    The years of plenty are over. Our heritage is for now exhausted and our granaries need replenishment. However, this is nothing compared with what we have known in the past. Surely, all we have lost are our illusions. So lets us find a means to move forward in a constructive way.

    First, the fat jobs have to become thinner jobs. For too long the elite have grown sleek, polished and elevated. Some humility needs to be demonstrated as this at least will prove to all that the austerity is shared. This is the only way for the European leadership in both nations and in the Commission to retain its legitimacy.

    Second, at the other end of the social scale the poor must have the means to get by with dignity. This may mean that social welfare becomes more balanced and more equal. Again equality tied directly to respect will ensure that the boulevards do not become littered with dead demonstrators as they have been many times before.

    Thirdly, there needs to be work and plenty of it. We need to look at what we import and ask ourselves whether it can be done better at home. For example, there is no point in having cheap imported clothing when clothing can be made locally thus employing local people who then spend their wages locally. It is just not good enough for local demand to be exploited for financial gain elsewhere. We need to obtain a new economic equilibrium built around local supply chains. Since the Single Market was created this can only be arranged through the European Commission.

    Fourthly, severe reforms needs to be imposed on the financial sector. Taxpayer guaranteed retail banking must be separated from the casinos as a matter of priority.

    These are just some points for further consideration. What has to be expected is that the world changed in the autumn of 2008 and will not return. All we need to do is to accept that change and begin to reconstruct a better society on the back of this new, harsher, more austere reality.

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  • 19. At 2:30pm on 23 Mar 2010, MarcusAureliusII wrote:

    thomas barton

    As is typical of people who are more interested in making a political point rather than understanding the facts around situations, there is a huge ommission in the Swiss analysis you cite unless you deliberately left it out yourself. That fact is that with over thee times the GDP produced by less then one quarter of the population, on average Americans are at least 12 times as productive per capita in producing wealth a Chinese people are. What's more when you compare per capita GNI, the real indicator of wealth produced by a nation, not what is just produced within its borders the Average American is at least 32 times as productive as the average chinese. Arbitrarily trying to equalize this disparity would have enormous unanticipated consequences. For example, should there be a major cutback in the energy intensive agricultural industry in the US, much of the world would starve to death as American agricultural output is what makes the difference between people having enough to eat and not enough to eat. Agricultural products are America's number one export. There would be many other consequences too.

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  • 20. At 2:39pm on 23 Mar 2010, ghostofsichuan wrote:

    Without strong regulations and restructuring of the banking and financial services industries none of this will make any difference because the banks can create another bubble and everyone will be back where they are today. There must be something on the other side of the bargin and that is banking and financial services regulations that protect the depositors and investors from fraud and levels of risks not honestly presented. As more is told we see that not only was there gambling of depositors money on banking created shams but now we see the fraudulant books, insider trading and other illegal activities. And still the governments are unwilling to pass regulations for this industry. All must suffer so the banks can continue to do well is a difficult political sell in this day and time.

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  • 21. At 3:42pm on 23 Mar 2010, Menedemus wrote:


    You possibly spend too much time over in Brussels and mainland Europe to realise that, surreptitiously, there are, already, cuts being made in Public Expenditure within the UK.

    One only has to read the Welsh and Scottish News Sections of the BBC website to read of cuts being made by the National Legislatures for those countries as the stipend from the Central Government has already been slashed and cost-cuts are already being implemented.

    We also read that, as of yesterday, that the British Army is going to make redundant 5000 troops (apparently likely to be soldiers with 12 to 15 years service) which has got to be a great move when the British Army is engaged in two Theatres of conflict and just the sort of political move that might, yet again, give Argentina a glimmer of hope that the Falklands might be somewhere that the British might not want to fight over.

    At the moment, the European economies are just like a nice warm bath with the hot tap running but with the bath plughole not plugged.

    We can all enjoy the glow of the warmth of the bath and luxuriate in the excellent social provisions we all enjoy, low interest rates and low exchange rates but sooner or later we are all going to have to get out of the bath, dry off and the bath will be run off down the drain and go to waste.

    We will all know how much that bath cost us when the gas/electricity Bill arrives because the Energy company can charge what they like for the energy useage and their ain't nothing we can do about it except pay the bill.

    The reality is that the Global Recession has caused western governments, like that of the United Kingdom, to borrow beyond reason and the UK has borrowed in the region of £178 billion which expressed as a percentage of the UK GDP is a mere 67% of the national annual income. However, the amount borrowed pails into insignificance when one starts to calculate the interest that will have to be paid over time to maintain the debt and the UK's Triple A rating as a credit-worthy economy. The repayment sums the UK has to start paying in 2012-2014 are astronomic and have been likened to being an unsurmountable wall of expenditure without any option but to pay - just like the Energy Bill for all that hot water we wasted!

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  • 22. At 4:20pm on 23 Mar 2010, MarcusAureliusII wrote:

    The good news if you can call it that is that there will be no more wars between nations in Europe. They have neither the military means nor the financial means to acquire them to fight anymore wars. All of the fighting will be verbal. All of the weapons will be the sharp words and and blunt points of fingers aimed at the "others" who caused the mess they're all in. Drowning men who hung on to each other for dear life will be wasting their remaining energy in accusations instead of trying to figure out how to swim. Alone or together they are surely drowning.

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  • 23. At 4:30pm on 23 Mar 2010, Doctuer_Eiffel wrote:

    "How quickly should public spending be cut?"

    So the banks go bust and miracle upon miracle the money appears not from nowhere, but actually since the poor collectively pay more tax than the rich, the poor have to pay the most for that. Now the poor are expected to pay again? Stroll on... Do you really think people are not going to see revolution as a much better alternative to bought politicians and the bought parties of no difference?

    You can fool some of the people some of the time but saying an empty plate is nourishing is crackers!

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  • 24. At 4:50pm on 23 Mar 2010, commonsense_expressway wrote:


    "Europe's day is over"

    "Europe isn't going into recession, it is going into depression"

    "I've said for the longest time Europe was doomed"

    "There's more bad news for Europe too. Demographic catastrophe"

    Its the positive posts I like the best.

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  • 25. At 5:00pm on 23 Mar 2010, Chris Camp wrote:

    "Europe's day is over."

    If I had a penny for every time somebody predicted Europe's imminent collapse in the last 33 years, I would be a very rich man indeed.

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  • 26. At 6:19pm on 23 Mar 2010, ghostofsichuan wrote:

    The largest economy is in the US and they struggle because of big business shipping production to cheap labor countries and banks facilitating get rich schemes for themselves and not investments in production and economic growth. The US system ran a race with Russia and the race was for technology. The US now competes with China and is matching the corruption. It is interesting to see the US Chamber of Commerce complaining about Chinese currency and other policies when it was the US Chamber of Commerce that pushed for Most Favored Nation status for China and professed that this would mean more US jobs. Europe is in a difficult situation and must adjust but the realities of what will evolve as the new gobal economy has yet to be defined. The old system failed and a new structure is needed. None of this will change the needs of people. Public education, social services, governmental investment in transportation systems and incentives for new energies will continue. The barbaric apporach professed by some is to devolve. The balance of economic growth and social needs has always produced the best results. Certainly governments have taken on areas that are better served by private business but as we have seen, private business is willing to pay bribes for contracts and there are officials ready with an open hand. Competition works, but it must be fair competition and that is hardly the case anymore. It is hardly ever the particular system that has faults but rather the human beings that run them and corrupt them. The policing of both private sector and public sector entities is the issue. When large economic problems exist it is the time to balance both sides of the equation. Reduce waste in government and attack corruption in private business..often this is hand and hand. The US is confronted with a Taliban right wing and they create certain issues but people have been punished enough by their big business will cure all mantras and how they have blocked legislation that would create a more level playing ground for competition. Big business in the US prevents competition through legislation from congress and that is why the recovery is slow. In a democratic process the people can decide what they want and how taxes are spent and the right wing is anti-democartic and wants to tell people what they will and will not have based on some wrong-headed political philosophy that they profess but do not enact. Both captialism and socialism have failed and something new is needed. A balanced system always seems the best place to be and moving back to a more balanced approach will create more opportunities for everyone.

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  • 27. At 6:20pm on 23 Mar 2010, EUprisoner209456731 wrote:

    12. At 12:29pm on 23 Mar 2010, EuroSider wrote:

    " ...
    The EU was developed on a fundamental flaw - that being - a united Europe could be run as a single entity ..."

    EUpris: I think the real flaw is that people in the UK end elsewhere have bee lied to and dictated to repeatedly for about forty years.

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  • 28. At 6:28pm on 23 Mar 2010, EUprisoner209456731 wrote:

    "US planemaker Boeing has reacted angrily to news that Germany plans to give a 1.1bn euro ($1.49bn, £1bn) loan to help Airbus develop its A350 plane."

    EUpris: Surely that is the wrong thing to be spending money on.

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  • 29. At 6:30pm on 23 Mar 2010, EUprisoner209456731 wrote:

    "Whatever happens in the member states, the European Parliament's budget will rise and rise and rise"

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  • 30. At 6:34pm on 23 Mar 2010, EUprisoner209456731 wrote:

    None other than the great Daniel Hannan, member of the Dodgy Dave Party writes:

    " ... Gawaine Towler’s blog, England Expects ... he’s often the first with EU-related stories."

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  • 31. At 7:39pm on 23 Mar 2010, Doctuer_Eiffel wrote:

    There's plenty of money floating around...
    Cancelling investments in the USA and investing in home industry. Taxing Chinese goods at the border. Problem solved. How it is always done. Euro devalued more work in the home industries and less rich people. Great!
    Europe comes out of it smiling.
    Meanwhile the whole global economy is crashing. It is just a game of who hits bottom first. I'd say Europe is still in a far better position than USA or China.

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  • 32. At 7:40pm on 23 Mar 2010, Chris wrote:

    "How quickly should public spending be cut?"

    As soon as unemployment rate dips bellow 4%

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  • 33. At 8:42pm on 23 Mar 2010, Benefactor wrote:

    I once was blind but now I see, Europe is doomed. DOOMED!

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  • 34. At 11:06pm on 23 Mar 2010, EUprisoner209456731 wrote:

    25. At 5:00pm on 23 Mar 2010, Chris Camp wrote:


    "Europe's day is over."

    If I had a penny for every time somebody predicted Europe's imminent collapse in the last 33 years, I would be a very rich man indeed. '

    EUpris: I take it that you too cannot distinguish between Europe and the "EU".

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  • 35. At 11:09pm on 23 Mar 2010, mvr512 wrote:

    6. At 11:11am on 23 Mar 2010, Benefactor wrote: Why is continously growing the Economy so important anyway? What goes up must inevitably come down. Would it not make more sense to get the economy on a stable level?

    Because the 'vaunted' European welfare states are actually Ponzi schemes. They depend on growing the economy (which in western countries has a strong correlation with population growth).

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  • 36. At 11:17pm on 23 Mar 2010, opinion wrote:

    Maybe Europeans (especially the Western ones) should invade and colonize some parts of the world so that they can maintain their way of life and dominance in the world. They have done it before. Why not again.
    I sure that will solve all their budget deficits.

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  • 37. At 00:22am on 24 Mar 2010, MarcusAureliusII wrote:

    Leaning towere of Eiffel;

    "Meanwhile the whole global economy is crashing. It is just a game of who hits bottom first."

    What makes you so sure there is a bottom? If there is, when you hit it, what assurance do you have that there will be any way to bounce off of it.

    "I'd say Europe is still in a far better position than USA or China."

    Far better to hit the bottom first. The US is on a similar course, it's just not as far down the road yet. It isn't clear what will happen to the US there are many possibilities but the current trend is ominous. China's route to the bottom appears to be taking an entirely different course. It will just as surely get there though. Without an export market open to its goods and able to buy them, China cannot prosper. China has many internal faults that will propagate too.

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  • 38. At 03:20am on 24 Mar 2010, pciii wrote:

    #17 "the party was fun while it lasted but it is over now"
    At least Aurelius is finally admitting he was jealous of Europe all this time.
    Unfortunately it doesn't stop him been wrong for the vast majority of the time.

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  • 39. At 03:45am on 24 Mar 2010, MarcusAureliusII wrote:


    It's always fun to eat fine dining on other people's money. When they don't want to pay anymore, hit the credit cards for all they're worth. When the credit runs out....well then you are left hunting in the trash dumpster's for tomorrow's meals. That's where Europe is, that's where America is heading. Our credit card hasn't quite run out yet but President Obama and the Democrats are doing their best to put it to its limit.

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  • 40. At 06:33am on 24 Mar 2010, Chris Camp wrote:

    MarcusAureliusII - "that is where America is heading"? You mean to say that Europe is further gone than America? Do you realise there are countries in Europe that have lent America vast amounts of money? Europe, by contrast, does not owe America any money. America has been living on borrowed money for the last 10 years. At least Europe still has money. America owes money to virtually every country in the world. It has inflicted an unheard-of de-industrialisation upon itself, which means it does not produce anything anymore and has to buy the goods its citizens need with borrowed money. It has been years since I've last seen a product with "Made in the U.S." written on it. When I was a child some 25 years ago, you could find things made in the U.S. in every shop.

    The U.S. is headed for hyper-inflation and Europe is not going to avoid the economic depression that is resulting from it. But at least Europe is not running on empty the way the U.S. is. Europe has a chance of pulling through.

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  • 41. At 07:05am on 24 Mar 2010, Chris wrote:

    #40 Chris,

    ...and if they don't want to buy European products and try to build their own we can bribe them. It looks as if German companies are good at it, we can all learn from them :))

    So the European way of life is dead, but here is Europe we are good with bribes and corruption at least Greece & Germany are!!

    Greek officials to take money and German companies to give money, then both turn around and accuse eachother and cause to the other 24 of us great headaches.

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  • 42. At 07:48am on 24 Mar 2010, Chris Camp wrote:

    @ ChrisArta Is that supposed to surprise anyone? A corporation known for being run by criminals has been found out about? They happened to be German - the only reason it would not happen to an American industrialist is there are hardly any American industrialists left. America does not produce anymore.

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  • 43. At 09:03am on 24 Mar 2010, pciii wrote:

    #39. Marcus your protestations would be a lot more believable if France, the country that seems to embody all that you dislike the most, wasn't doing relatively well right now.

    Where did years of not wasting money on a social safety net get the USA exactly?

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  • 44. At 09:28am on 24 Mar 2010, Wonthillian wrote:

    People will say they support cuts in public spending, but when it comes to the crunch, they will not tolerate cuts in public services, in particular health spending. In the last week Obama has managed to push through legislation that could drag US healthcare, perhaps not into the 21st century, but at least into the second half of the 20th century. We don't want healthcare in Europe to start moving in the opposite direction.

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  • 45. At 10:09am on 24 Mar 2010, Nik wrote:

    Come on Marcus. You talk about the size of US economy. But then you really do not take into accound the following 2 things:

    1) US dollar is the most ficticious currency worldwide of the last 100 years, and perhaps ever. In reality it is so inflational that it should rate less than Zimbabwe's dollar. The only things that keeps it there high is the fact that the US in the cold war (and having started since the WWI) imposed it as a means of exchange among 3 countries which under normal conditions would barter exchange or exchange in their currencies under bilateral agreements.
    2) US economy - largely thanks to the above - is intrinsically tied with the economies of the world, especially E/SE Asia (China, Japan, Indonesia etc.) and Europe (mostly UK & Germany). Hence in a theoretical case of US "returning to its north american neighbourhood continent" in a pre-WWI dogma, the US economy would rate much much smaller and at least for a considerable time it would not be able to compete until its re-industrialisation.

    As people pinpointed US in the last 20 years saw a huge de-industrialisation and even the military/spatial applications struggled to get any commands. While all is not lost as US is still a large country with a huge base, analysts say jokingly that its main product righ now is the dollar itself and that is what the US is exporting. China did what it did by accepting to sell its products in dollar, ending up in a huge reserve in dollars, while their own currency is kept technically low, and they are trembiling even in the thought of US failing to support the current price of its currency.

    So comparison to EU countries cannot be easily done. EU, if seen as a whole, has the advantage of being still enough industrialised to withstand but of course as the same trend continues in this side of the Atlantique, things will resemble more and more the US. UK was the first of the EU countries to reduce its industry and give emphasis on the service sectors (mostly finance) but France and Germany only half-heartedly followed that approach, with France maintaining a large agricultural industry. However, no matter if that has been seen as keeping of "expensive" and "not so profitable" sectors might prove an advantage in future. The question is not the current or near-future performance, the question is continuity.

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  • 46. At 10:33am on 24 Mar 2010, commonsense_expressway wrote:


    "Where did years of not wasting money on a social safety net get the USA exactly?"

    It got them 40 million people below the poverty line, one of the most racist, divided and unequal societies in the world, 25% of the worlds prison population, 20,000 preventable deaths per year due to lack of health insurance,life expectancy lower than any Western European country.

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  • 47. At 12:12pm on 24 Mar 2010, Chris wrote:


    You could also add one in eight adults & one in four children not having enough to eat on a daily basis.

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  • 48. At 12:52pm on 24 Mar 2010, MarcusAureliusII wrote:

    "Where did years of not wasting money on a social safety net get the USA exactly?"

    When taken over time and adjusted for inflation, it got America trillions of dollars poorer because it instead wasted that money defending Europe from Communism. A bad mistake. One I hope it soon corrects by pulling out of NATO and saving the cost of keeping troops in Europe.

    NIK, money is worth what the market says it is. If European government debt were not a dire problem, this thread wouldn't exist. Economies are more than GDP. GNI is a much better measure of it. China's economy when considering GNI, that is the wealth a nation earns rather than what is produced on its own soil some of which may belong to other countries (83% of China's GDP is expatriated) then China's economy doesn't look so big. Nobody in the financial markets is talking about the US dollar possibly collapsing the way they talk about the Euro and even the Pound. You may be jealous but that's the fact. You like all other Europeans I've encountered know very little about the reality of the United States, all you seem to know are the myths they tell you in Europe.

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  • 49. At 1:26pm on 24 Mar 2010, Doctuer_Eiffel wrote:

    37. At 00:22am on 24 Mar 2010, MarcusAureliusII wrote:

    Leaning towere of Eiffel;(shall I call you something silly too?)

    "Meanwhile the whole global economy is crashing. It is just a game of who hits bottom first." Doctuer_Eiffel

    "What makes you so sure there is a bottom? If there is, when you hit it, what assurance do you have that there will be any way to bounce off of it." MarcusAureliusII

    Actually Marcus that is a very very good point and I welcome the opportunity to answer that question.
    The USAmerican propensity to bomb a country back to the stone age in revenge for a relatively minor past transgression as a matter of "diplomacy" is extant. So there is patently a bottom as it were as my example shows.

    The assurance to rise up from such a bottom is in our species propensity to cooperate as proven scientifically via neurological and behavioural studies. Yes I know what you might be thinking of saying in a reaction to that but really you see the strife in the world is not so much man made but state made as is the current global economic crash. Ours is a sharing social creature if we are allowed to grow naturally without a divisive process dehumanising our real survival advantage.

    The countries which have a tradition of maintaining their crafts base will have a head start. No not factory production base... crafts base. Skills are learned and kept only if they are maintained.
    Currently all the countries that became addicted to production outside their borders will have the slowest economic restart. Yes you are going to mention the superiority of high tech production techniques. They are expensive and when the economic crash really hits the ground ALL institutions crash including complex systems required to maintain complex systems. There is no such thing as a closed system.

    Inside the next five years Marcus maybe three.

    Some countries are in a better standing for that eventuality. I really don't want to get into the usual spat regarding my country is bigger than your country because it always has the ring of some kind of Freudian slip and frankly it is just pathetic. I bore myself when I get sucked into that oppositional nonsense.
    Just take a close look around and decide for yourself.

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  • 50. At 1:33pm on 24 Mar 2010, cool_brush_work wrote:


    Re #43

    "...Fracne... doing relatively well at the moment.."

    Do not make anymore jokes of this nature!

    It is frankly beyond a joke that anyone can still write without any reference to Fiscal reality that France's Economy is doing well in comparison to other 'west' Nations!

    Question: If France is doing so 'well' how come it is unable to 'bail-out' its EUro-zone partner Greece?
    Answer: The EU26 fund France.
    Question: If France is doing so 'well' how come it is unable to act independently of its EU-partner of ill-intentions, Germany in any economic matter within the EU?
    Answer: The EU26, especially Germany fund France.
    Question: How does France have the shortest 'working week' & yet pay the 4th highest wages & 4th equal highest Social Benefits?
    Answer: The EU26 fund France's State sector.

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  • 51. At 2:27pm on 24 Mar 2010, commonsense_expressway wrote:


    Even by your standards Marcus that post is total tripe

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  • 52. At 4:10pm on 24 Mar 2010, Chris Camp wrote:

    @ 48 - America made a boon in Europe after World War 2. All the confiscated German patents were worth over 10 billion Dollars, which is over 100 billion in today's money. The Marshall plan also helped kick-start economic recovery in Europe, without which America would not have been able to win the cold war against Russia. Leaving Europe to the Soviets would have left America isolated and eventually defeated, as it would not have been able to stand alone against a Soviet-dominated Eurasia, Africa and South America.

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  • 53. At 4:19pm on 24 Mar 2010, Isenhorn wrote:

    cool_brush_work @50,

    Right, right. However, how would you explain the difference in the figures below, between France and the UK? Germany and the EU26 sending more productive workers to France perhaps?

    [Unsuitable/Broken URL removed by Moderator]

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  • 54. At 7:08pm on 24 Mar 2010, cool_brush_work wrote:


    Re #153

    Freely admit I cannot.

    But then, I strongly suspect neither can You nor anyone else with a remote attachment to reality!

    France reduces the number of hours its workforce have to do compared to other EU Nations and miracle of miracles immediately France's Productivity figures go up!?
    Which begs the question: So, what are we all waiting for? The answer to EUrope's present crisis... Let's reduce the Hours Worked and Pay the same amount as now whilst maintaining the same level of Social Benefits and HEY PRESTO.... EU27 Economies outstrip China the same day!!!!!

    I'm sure every EU Employment Minister is at this moment pressing for 5 hours to be knocked off the working week - - afterall, with France as the example - - We all know it makes Economic sense!

    Don't we?

    Yeah right, right Isenhorn!

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  • 55. At 7:42pm on 24 Mar 2010, cool_brush_work wrote:

    Chris Camp

    Re #42

    "..hardly any American industrialists.. America does not produce anymore.."

    You are serious! Which makes the whole thing even more ludicrous!

    Look, I'll admit my views on the France Economy are open to very real doubt & based on very little factual-statistical data.

    However, Your view of the World's largest Economy "..not producing.." is so incredibly unbalanced and entirely without factual-statistical foundation You make my France views look a guaranteed reality.

    Look at any Economic-Productivity Data: America still has the widest range of Manufacturing base in the whole World.

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  • 56. At 7:57pm on 24 Mar 2010, Chris Camp wrote:

    It is living on borrowed money and has done so for over 10 years. It does not export anything except weapons, has a negligible internal market and keeps running up the foreign deficit. The facts speak for themselves.

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  • 57. At 9:01pm on 24 Mar 2010, pciii wrote:

    Cool brush work. I was thinking in terms of time spent in recession, quality of life, rate of recovery etc. I think some of your questions answer them-self anyway. France is good at getting the best out of the EU.

    Marcus, if that were true, it must be doubly annoying to learn that providing that safety net could actually have been done more cheaply than your privatised system does anyway. Thus allowing you to spend trillions looking after us Europeans for your own charitable ends, and protecting your own most vulnerable in society.

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  • 58. At 9:31pm on 24 Mar 2010, cool_brush_work wrote:

    Chris Camp

    Re #56

    "...(USA) does not export anything except weapons.."

    Oh dear, as inaccurate and displaying a prejudiced attitude about the States as You have done at times on previous topics!

    Let me guess: USA 'Foreign policy' & 'Military' may not be to your liking?
    However, to allow that perspective to so influence Your views that You dismiss the USA in this manner reduces the value of Your contribution to the debate to almost nil.

    Look, You know yourself the 'except weapons' is just complete nonsense & You do your point of view no favours by stating such obviously wholly wide of the mark assertions.

    E.g. USA Manufactures & exports Cars (Ford, Chrysler), Planes (Boeing), Nuclear Technology, Space Technology, Hi-Tec equipment (IBM, Intel), Computers, Chemicals, Forestry products etc.. as well as being the World's No.1 Agricultural producer & exporter.

    Come on ChrisC ! Be a little bit more sensible! Such blind prejudice as You are exhibiting just makes You look very limited in your perspective.

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  • 59. At 00:14am on 25 Mar 2010, Chris Camp wrote:

    1.) I am a big supporter of U.S. foreign policy and I want Americans to stay here in Europe. Thus, your entire premise about my motives is misdirected

    2.) Chrystler was gutted by Daimler a few years back and is effectively a has-bben corporation. Ford produces most of its cars outside the U.S. TThe same goes for Intel. and IBM.

    3.) I am stating these facts not with any sense of glee or satisfaction, but with a great deal of concern. The type of de-industrialisation that has been happening in the United States is harmful for its interests andf I would like to see a strong United States that can advocate for the interests of the free world effectively. At this point, I just do not see that happening.

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  • 60. At 08:18am on 25 Mar 2010, cool_brush_work wrote:

    Wanting, like me, the USA Armed Forces to stay in Europe & NATO is not the same as agreeing on Iraq, Afghanistan etc. You certainly give the impression you don't.

    Manufacture: Again you are just writing stuff without foundation.

    Ford Motor Company produces the huge majority of Ford cars & trucks for America in America!
    Though IBM, Intel do farm-out a lot of their production it is an error to suggest they do not have research & development plus production facilities in the USA.

    I, like you, worry about the USA general trend toward less self-sufficiency, however, the idea that the USA wityh its enormous industrial capacity, relatively low labour costs & entrepreneurial attitude doesn't 'produce'/'manufacture' anymore is just ludicrous.

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  • 61. At 08:31am on 25 Mar 2010, Isenhorn wrote:

    cool_brush_work @ 54

    You seem to have missed the entire point of my post. It was meant to show that your portrayal of France as some sort of lazy society, which depends on EU funds to survive and is the only member state to benefit from it, is ridiculous. France is one of the net contributors to the EU, in fact the third highest contributor to the EU budget after Germany and the UK. At the same time it has bigger industrial production capacity and productivity than the UK.
    So, is it not time you forget your animosity towards France and start looking at the facts as they are? I understand it is not easy to shed prejudices which have been in the British society for centuries, but after all it is not year 1815 any more, it is 2010.

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  • 62. At 09:11am on 25 Mar 2010, Nik wrote:

    Re.60: Ludicrus as it may be just check the imports/exports deficit. People talk about the oil and all that but this is just a mask. US is addicted to imports. You may take the oil imports, it will survive but if you cut the imports it will collapse. How can it continue to fund all that immensely huge production deficit? We have said it: ficticious money. The US dollar invention. US produces money.

    Marcus says: "Well, it is like this, afterall "the market" puts a price and that is how it goes".

    I say: "Well Marcus, no. It is not the market. The market is you and me around a table talking business, it is not you with a gun on my head. If US sits down on the table to talk business, the way e.g. even Russia sits!, then collapse comes overnight".

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  • 63. At 12:13pm on 25 Mar 2010, cool_brush_work wrote:


    Re #61

    No, didn't miss any of your point.

    Just tried by rational allocation of facts to provoke You or any of the Franco-phile/EU-phile into a proper analysis of France's Economic-Fiscal policies.

    It would appear that appraisal, as per usual, is unforthcoming because exposure of the 'ludicrous' notion la belle France can cut its working week whilst increasing its Pay, Benefits & Productivity structures 'without' the additional Funds taken from the other EU26 is just too brave a step for any of You to take!

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  • 64. At 6:56pm on 25 Mar 2010, Chris Camp wrote:

    "I, like you, worry about the USA general trend toward less self-sufficiency, however, the idea that the USA wityh its enormous industrial capacity, relatively low labour costs & entrepreneurial attitude doesn't 'produce'/'manufacture' anymore is just ludicrous."

    It would seem ludicrous to anyone who does not take anymore than just a cursory look at it. But from the beginning of the last decade all the way to the present, from Enron, to Lehmann brothers, to General Motors more and more of those so-called "companies turn out to be mere facades and that the productivity and entrepreneurial spirit of this new America is more illusion than solid fact.

    This is where we differ. I think the E.U. would still serve a purpose, one that is useful, indeed vital for the continued existence of the United States. A productive, successful E.U. would allow America to retreat back into a temporary phase of relative isolationism that would allow it to re-group and re-organise, turning from a consumption-only nation back to a prodcutive nation again. In the meantime, the E.U. would be able to assist a less outward looking U.S. stave off the most ambitious expansionist and aggressive projects of the new Russia as well as play a constructive role in places like Iraq and Afghanistan. I know what you are going to say - a lot would have to change in Europe for that to be possible, and I totally agree with you. Only then would America be able to return to Europe and the Middle East and continue its good work in the world.

    For the time being, it looks as though it needs a time out back home to recharge its batteries.

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  • 65. At 11:10pm on 25 Mar 2010, Doctuer_Eiffel wrote:

    There is thirteen times the actual value placed on the entire global economy. It really is bust.

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  • 66. At 11:22pm on 25 Mar 2010, Doctuer_Eiffel wrote:

    64. At 6:56pm on 25 Mar 2010, Chris Camp wrote:

    how jolly kind of you to say how usefull Europe could be to USAmerica.

    I think you fail to see the obvious perhaps because it is so unpalatable. The whole show is going down. The dilemma Greece faces is the same dilemma for the entire financial system.
    So it is for USAmerica regarding Europe. If Europe fails so does USAmerica.
    If Europe suddenly decided to pull the plug on China's exports the USA will suffer as well as everyone else. But that is really short term because the whole show is going down anyway.
    The "West" tried to stay ahead of China with complex technology. It wasn't enough and really China is winning the entire game hands down. China will survive the crash better than anyone else because they have a head start with manufacturing at all levels of complexity.

    "...constructive role in places like Iraq and Afghanistan."
    No that is the same game continued. It was because of that huge bias in the market towards the military industrial complex that got us to this global crash in the first place.

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