Thursday 24 November 2011

Monday 21 November 2011

I Told You so

Man I was so busy with other things, that I missed this:

"Get Real. Wage Growth is More of a Wage Crawl
"Wage growth has slowed to a crawl, confounding doomsayers who have warned of a wages breakout emanating from mining and giving the Reserve Bank more room to cut interest rates."
(See here)
I know. I should not gloat. Gentlemen don't gloat, they are gracious.

It's not cool to gloat when you are right and about every-fucking-body else (especially pro-business "experts", bosses, journos and sundry eggheads) is wrong and obviously so.

But, dammit, I ain't no gracious gentleman. I am poor and I work for a living, so I'm rude and crude, and, quite frankly, I don't give a shit:

Toldya so

(See here and here and here).

Sunday 20 November 2011

Chronicle of a Death Foretold

Mariano Rajoy [1]
The Spanish general elections took place today and the results were largely expected: the "socialist" PSOE lost, the right-wing PP won. Mariano Rajoy (a former bureaucrat under the Francoist regime) will assume as PM next December.

What may have surprised is how badly the PSOE lost: its poorest result ever (29.32% of valid votes for the lower house, compared to 43.87% in 2008, for a -15.14% fall).

Participation: actual valid votes from voting age population.
Party votes: percentage of valid votes.
Source: El País.
And although the PP captured some of the former PSOE votes (44.61% now, against 39.94% in 2008), the majority of former PSOE voters voted for minor parties.

IU increased its lower house representation from 2 to 11.

How does this election leave parliament?

The PP increased its absolute majority in the upper house (Senado), and achieved absolute majority in the lower house (Congreso de Diputados): 186 out of 350. Thus, the road is open for the PP to apply its programme, according to this AFP dispatch, published in the SMH today:

"Though considered uncharismatic, Rajoy won support from voters lured by his promise to fix the economy and create jobs, even if it means more austerity.
"He vowed to make cuts 'everywhere', except for pensions, so as to meet Spain's target of cutting the public deficit to 4.4% of gross domestic product in 2012 from 9.3% last year." (See here)
Other measures:
  1. tax reductions for financial investments and corporate taxes;
  2. reduction of tax incentives for home buyers;
  3. industrial relations reform (collective bargaining at firm level, against industry level);
  4. a bankruptcy-like procedure to apply to mortgagors in arrears;
  5. employers subsidy for new hires. (See here. Spanish.)

Why did the Spaniards vote for such a party?

The chart above does show that the percentage of PP votes was already increasing. Apart from its promise to "fix the economy and create jobs, even if it means more austerity", the AFP/SMH dispatch mentioned above hints to a further reason:

"Prime Minister Jose Luis Rodriguez Zapatero's government was blamed for reacting late to the 2008 property market implosion, which combined with a global financial crisis to throw millions out of work."

But the most revealing passage in that dispatch, to me, is this:

"Octavio Arginano, a retired 67-year-old factory worker, said he voted for the right for the first time in his life.
" 'My son has been unemployed for over a year, my daughter earns just 600 euros ($A810) a month looking after young children,' he said as he left a polling station in Madrid.
" 'There has to be a change, although I am not sure anyone knows what to do to get us out of this situation.' "

Lo siento Octavio, pero creo que te vas a llevar una sorpresa desagradable. No todos los cambios son para mejor. Vamos a ver qué opinas dentro de un año.

I'm sorry, Octavio, but I believe you are in for an unpleasant surprise. Not all changes are for the better. Let's see what's your opinion in a year's time.

Including Spain, so far five European governments did not survive the crisis. Would this phenomenon be over, or is this just the beginning?

I can't say for sure, but the Rajoy Government could have a very short-lived honeymoon...


23-11-2011. Just 48 hours since the PP won the Spanish general elections, and yesterday "the annualised interest rate Spain had to pay more than doubled to 5.11%, from 2.29% at the last auction in October." (See here)

Where are the confidence fairies?

Photo Credit:
[1] Mariano Rajoy. Wikipedia

Good News... Bad News...

So, is a change of Government a good or a bad thing for countries like Spain, Italy or Greece?

Let me answer as a Latin American politician once did: "Ni lo uno, ni lo otro, sino todo lo contrario" (my translation: neither the former nor the latter, just the opposite).

More precisely and cautiously, if not so colourfully: it would not improve things for the majority. Let me reason this considering Mario Monti and Italy. The cases of Spain and Greece largely follow from analogy.

Mario Monti [1]
Mario Monti, current Italian Prime Minister replacing Silvio Berlusconi, had a distinguished education and successful career, in academe, the bureaucracy and the private sector. That is undeniable.

His career in the private sector included a senior advisory role for Goldman Sachs. In this, his experience is shared by a remarkable number of prominent economists currently (or at least until quite recently) in position of authority throughout Europe:

  1. Karel van Miert (Belgium): former EU Competition Commissioner and ex international advisor to Goldman Sachs.
  2. Otmar Issing (Germany): former board member of the Bundesbank and ECB, advisor to Goldman Sachs.
  3. Mario Draghi (Italy): ECB head, former managing director of Goldman Sachs International.
  4. Peter Sutherland (Ireland): former Attorney General of Ireland, non-executive director of Goldman Sachs International.
  5. Antonio Borges (Portugal): former head of European Department (IMF), former vice chairman of Goldman Sachs International.
  6. Lucas Papademos (Greece): Greek current PM, former head of Greece's central bank at the time of derivative deals with Goldman Sachs, enabling Greece to "cook" its books on public debt.
  7. Petros Christodoufou (Greece): head of the Greek debt management office and former Goldman Sachs. (See here)

One of Monti's positive characteristics, it has been argued, is that he is a technocrat, without links to partisan policy.

I will not argue here why this is not necessarily a good thing: it could make this post too long. Instead I will simply remark that Monti, to be appointed Prime Minister, had also to be previously appointed Senator for Life, by president Giorgio Napolitano. (See here. In Italian)

This may be a perfectly constitutional process, I will not argue otherwise. However, in my mind, to be "elected" Senator when one single vote was "cast" (Napolitano's) cannot be reconciled with the notion of democracy.

If I had to speculate, I'd say it means Monti does not owe his position to popular decision, but to whatever group supported him. And I might be unduly suspicious, but this is where Goldman Sachs comes into play.

It would also mean that Monti has little in the way of legitimacy and eventually the Italian electorate is bound to find that, particularly if the new government attempts to impose severe austerity measures.

Further, it could mean Monti has little political support from the parties, if his tenure as Prime Minister becomes too unpopular.

Is the Spanish case different? It remains to be seen.

Photo Credits:
[1] Mario Monti. Wikipedia.

Thursday 17 November 2011

Where is My Mind?

"Where is my mind?
"Way out in the water, see it swimmin' "(The Pixies, "Where is My Mind?")

I'll admit it: I'm confused.

In my mind, Silvio Berlusconi was a conservative media/finance/real estate tycoon cum politician. He introduced labour market deregulation policies (so-called "Legge 30" or "Legge Biagi"); during his second period as PM, he increased the retirement age from 58 to 60 years (the "riforma Maroni", turned back after he lost the following elections) and abolished the inheritance tax (reinstated after he lost the following elections). Politically, he was a supporter of the War on Terror.

In fact, in my confusion, I'd have thought he was a more politically extrovert, personally more colourful and flamboyant version of our very own Rupert Murdoch, with a dash or two of Donald Trump.

That's why I can't understand that the local right wing commentariat seem to put Berlusconi next to those nefarious social democrats and bureaucrats guilty of pushing Europe to the brink. Take, for instance, Paul Sheehan quoting with approval a Pierre Ryckmans (presumably a very well-known name among right wing types):

"He summed it up with this: the European social democrats, and their allies in the bureaucratic class, have been living in a fantasy world that is now unravelling." (See here)

I mean, it's not cool to abandon a fellow right winger (and a very rich one, at that) in distress, on top accusing him of being a pinko (horreur!), just because he fucked things up big time, and other right wingers, like Frau Merkel and Monsieur Sarkosy, deposed him... Or (gasp!) does Sheehan mean they are also lefties?!

But my confusion does not end there.

I know most Italians were pissed off at Berlusconi. I can understand that. But I can't understand these images:

As I see it, the question is not so much that Silvio Berlusconi was quicked out of power: the question is who is replacing him, who put him there and why?

The same thing is happening in other European countries: people desperate are putting their hopes in what they would like to be an alternative, without realizing that this so-called alternative is no better than what they currently have.

I'm looking at you, Spain. The next elections are due to take place this weekend.

More on this in a following piece.

Wednesday 16 November 2011

Obama in Oz

While Barack Obama visits Australia, this is what the NYPD does to peaceful demonstrators carrying court orders affirming their right to go to Liberty Square.

There is a cop filming the incident. My question is: will the footage be used to investigate what looks like an assault against civilians, or to persecute the demonstrators?

Democracy? My ass.

Wednesday 9 November 2011

Unilateral Trade, Tax and Circus

"Fortescue, Labor Trade Blows on Mining Tax" is how the ABC's The World Today entitled its report on the hearing into the mining tax in Canberra, today. (See here)

As far as trades go, I'd say the "terms of trade" were quite "favourable" to the Labor MP: he gave little and received a lot. Something like a "unilateral trade": it reminded me of an inverse "shitty deal" US Senate hearing. (See here)

A little background information for overseas readers: after deposing former Labor PM Kevin Rudd last year due to the big mining corporations' opposition to the Resources Super Profit Tax (RSPT, for short), the Federal Government (headed by Labor PM Julia Gillard) is now trying to resurrect the RSPT (rebranded Mining Resource Rent Tax), with the same opposition from the miners and their conservative political minders in the Australian Liberal Party. (Don't ask: this is the antipodes and things here are upside down).

Anyway, beyond the niceties (or lack thereof) in the exchange, the most interesting part of the "dialogue" between Julian Tapp (believe it or not, head of Government Relations, Fortescue Metal Group Ltd) and Labor MP Andrew Leigh is this:
"JULIAN TAPP: We're also paying circa $450 to $500 million a year on current production levels in WA state royalties. So I do not agree that Fortescue does not contribute its fair share.
"ANDREW LEIGH: But in terms of corporate tax paid it wouldn't be correct to describe Mr Forrest as a tax payer, would it?
"JULIAN TAPP: Mr Forrest isn't a company. Fortescue Metals Group is the company.
"ANDREW LEIGH: But as things currently stand, it wouldn't be correct to describe it...
"JULIAN TAPP: We have not cut a corporate tax cheque today, no."
(Emphasis added)
In case the readers missed the detail, Stephen Dziedzic, ABC reporter, made it clear:
"Dr Leigh also pushed Fortescue to say how much tax it's paying at the moment. The company admits it has not yet paid company tax but says it will pay up to $800 million this financial year". (Emphasis added).
Or, according to Senator Chris Evans (Government Senate leader):
" 'They [Fortescue Metal Group, that is] have never paid a dollar in company tax to date and they want to resist having to pay the Mining Resource Rent Tax,' Senator Evans said." (Emphasis added. See here)
But if the situation were not absurd enough, the timing of its release is insuperable. Just today, former Liberal Federal Treasurer, Peter Costello, published an op-ed in the SMH, stating:
"Australia has a decisive advantage in mining. It is carrying the Australian economy, but the old taxes such as company tax and royalties are not enough. The government thinks we need new taxes as well." (See here)

So, there you have it: Peter Costello warning about taxes strangling mining corporations... that don't pay corporate taxes.

To close in an appropriate note:

Note: this march is named "Entrance of the Gladiators" and was composed by Julius Fucík (between the C and the K there is an I!!!).

Monday 7 November 2011

The Eurozone Crisis in 22 Words

Paul Mason summarises the facts about the current state of the Eurozone crisis in 22 words and a chart:

The Eurozone Crisis: Who Can do What

A few days ago a picture of German chancellor, Frau Merkel, seemed to summarise the global economic outlook in one image:

Merkel Calls for European Unity at End of Tumultuous Week

I have only one thing to add: capitalism sucks.

Thursday 3 November 2011

Berlin, March 15, 1939.

Hácha (second from the left), Hitler, Goering and other officials [1]

Less than 6 months after the Munich Agreement was signed (30-09-1938), what remained of the former Czechoslovakia was in crisis, again.

Abandoned by their French and British allies, the Czech government was forced to give the Sudetenland to Nazi Germany, plus other territories ceded to Poland and Hungary; while Slovak nationalists, instigated by the Nazis, were pressing for the independence of Slovakia.

Emil Hácha [2]
Edvard Beneš, who presided over the Czech government during this earlier crisis, self exiled to London out of fears for his life, leaving the 66-year-old conservative Emil Hácha as president of Czechoslovakia (appointed in November 30, 1938).

In reply to his own request for a face-to-face meeting, president Hácha was summoned to Berlin by the German chancellor, Adolf Hitler.

Hácha and his Foreign Affairs Minister (one M. Chvalkovsky, according to reports by the French Embassy), arrived in Berlin on March 14, 1939.

Summoned to the Chancellery in that evening, the two Czech ministers were kept waiting until 01:15/01:30 am, when they were taken to the Fuehrer's study.

After hearing Hácha's pleads on his shrinking country's behalf, it is said Hitler went into a rage, finally giving Hácha a document prepared earlier, by means of which the Czech government requested Nazi protection.

If Hácha signed the document, the "entry of German troops would take place in a tolerable manner" and it would "permit Czechoslovakia a generous life of her own, autonomy and a degree of national freedom...", otherwise "...resistance would be broken by force of arms, using all means", starting with a massive aerial bombardment of Prague next morning. (See here)

As Hácha and Chvalkovsky were still reluctant to sign, Hitler left his visitors in the company of Hermann Goering (head of the Luftwaffe) and Joachim von Ribbentrop (Foreign Affairs minister).

Under relentless pressure, Hácha, who had a weak heart, collapsed to the floor, apparently due to a heart attack. Hitler's personal physician, Dr. Theodor Morell, who was standing by for any eventuality, rushed in and assisted Hácha.

At 3:55 am, Wednesday the 15th, a badly shaken Hácha signed the document.

Czechoslovakia ceased to exist as an independent nation until the end of WW2.


Any similarity between this historical incident and the sudden change of mind of Greek prime minister George Papandreou on the matter of the referendum, after meeting last Tuesday 2nd with French president Nicolas Sarkosy and German chancellor Angela Merkel in Cannes, is surely mere coincidence (right?):

"Merkel, Sarkozy Read Riot Act to Greece". ABC. November 3, 2011.
"Greek PM Papandreou 'Ready to Drop' Bailout Referendum". BBC. November 3, 2011.

Photo Credits:
[1] Hitler and Hácha at the Chancellery. Bundesarchiv, B 145 Bild-F051623-0206 / CC-BY-SA. Wikipedia
[2] Emil Hácha. Wikipedia.

Further Information:
Nazis Take Czechoslovakia. The History Place.
The French Yellow Book. No. 77. The Avalon Project. Yale Law School.


05-11-2011: Paul Mason asks Nicolas Sarkozy: "It's evident that you and Mme Merkel (...) are trying to change the governments of Italy and Greece. How is that just? And once it's started, where does it stop?"