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Canada's Place in the Global Economy

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The Eurocrats really don't understand the "markets".  They think the "Market" is an institution like all the institutions with which they are familiar - institutions that serve the whim of one individivual.  They are convinced that there is an evil oligarchy of Anglo-Saxons actively engaged in undermining their attempts to perfect society.

Everywhere we find the Eurocrats and their fellow travellers parroting the line that capitalism is killing democracy as they resort to ever more authoritarian measures to impose their own version of l'Orangerie.

They seek to control the markets and the movement of gold just as they seek to control people and their movements.  Of course, for people that believe the control of CO2 is possible, I suppose it is unrealistic to be able to convince them of their limitations.
 
Further to the last and reflective of T6s (admittedly) curt commentary -

Amid all the discussion of the Frankfurt Group (France, Germany, IMF and the ECB) aiming to secure Europe in their image, I offer this - from Frankfurt - 1951.

This is still the opposition - a vast "left wing conspiracy" - that operates in the open.  They are constantly looking for crises, real or imagined, to stampede the herd towards Utopia.

I Congress of the Socialist International, Frankfurt

30 June-03 July 1951

AIMS AND TASKS OF DEMOCRATIC SOCIALISM

Declaration of the Socialist International

adopted at its First Congress held in

Frankfort-on-Main on 30 June-3 July 1951


1. From the nineteenth century onwards, capitalism has developed immense productive forces. It has done so at the cost of excluding the great majority of citizens from influence over production. It put the rights of ownership before the rights of man. It created a new class of wage-earners without property or social rights. It sharpened the struggle between the classes.

Although the world contains resources which could be made to provide a decent life for everyone, capitalism has been incapable of satisfying the elementary needs of the world’s population. It proved unable to function without devastating crises and mass unemployment. It produced social insecurity and glaring contrasts between rich and poor. It resorted to imperialist expansion and colonial exploitation, thus making conflicts between nations and races more bitter. In some countries powerful capitalist groups helped the barbarism of the past to raise its head again in the form of Fascism and Nazism.


2. Socialism was born in Europe as a movement of protest against the diseases inherent in capitalist society. Because the wage-earners suffered most from capitalism, Socialism first developed as a movement of the wage-earners. Since then more and more citizens — professional and clerical workers, farmers and fishermen, craftsmen and retailers, artists and scientists — are coming to understand that Socialism appeals to all men who believe that the exploitation of man by man must be abolished.



3. Socialism aims to liberate the peoples from dependence on a minority which owns or controls the means of production. It aims to put economic power in the hands of the people as a whole, and to create a community in which free men work together as equals.



4. Socialism has become a major force in world affairs. It has passed from propaganda into practice. In some countries the foundations of a Socialist society have already been laid. Here the evils of capitalism are disappearing and the community has developed new vigour. The principles of Socialism are proving their worth in action.



5. In many countries uncontrolled capitalism is giving place to an economy in which state intervention and collective ownership limit the scope of private capitalists. More people are coming to recognise the need for planning. Social security, free trade unionism and industrial democracy are winning ground. This development is largely a result of long years of struggle by Socialists and trade unionists. Wherever Socialism is strong, important steps have been taken towards the creation of a new social order.

6. In recent years the peoples in the underdeveloped areas of the world have been finding Socialism a valuable aid in the struggle for national freedom and higher standards of life. Here different forms of democratic Socialism are evolving under the pressure of different circumstances. The main enemies of Socialism in these areas are parasitical exploitation by indigenous financial oligarchies and colonial exploitation by foreign capitalists. The Socialists fight for political and economic democracy, they seek to raise the standard of living for the masses through land reform and industrialisation, the extension of public ownership and the development of producers’ and consumers’ cooperatives.



7. Meanwhile, as Socialism advances throughout the world, new forces have arisen to threaten the movement towards freedom and social justice. Since the Bolshevik Revolution in Russia, Communism has split the International Labour Movement and has set back the realisation of Socialism in many countries for decades.



8. Communism falsely claims a share in the Socialist tradition. In fact it has distorted that tradition beyond recognition. It has built up a rigid theology which is incompatible with the critical spirit of Marxism.



9. Where Socialists aim to achieve freedom and justice by removing the exploitation which divides men under capitalism, Communists seek to sharpen those class divisions only in order to establish the dictatorship of a single party.



10. International Communism is the instrument of a new imperialism. Wherever it has achieved power it has destroyed freedom or the chance of gaining freedom. It is based on a militarist bureaucracy and a terrorist police. By producing glaring contrasts of wealth and privilege it has created a new class society. Forced labour plays an important part in its economic organisation.



11. Socialism is an international movement which does not demand a rigid uniformity of approach. Whether Socialists build their faith on Marxist or other methods of analysing society, whether they are inspired by religious or humanitarian principles, they all strive for the same goal — a system of social justice, better living, freedom and world peace.



12. The progress of science and technical skill has given man increased power either to improve his lot or to destroy himself. For this reason production cannot be left to the play of economic liberalism but must be planned systematically for human needs. Such planning must respect the rights of the individual personality. Socialism stands for freedom and planning in both national and international affairs.



13. The achievement of Socialism is not inevitable. It demands a personal contribution from all its followers. Unlike the totalitarian way it does not impose on the people a passive role. On the contrary, it cannot succeed without thorough-going and active participation by the people. It is democracy in its highest form.



POLITICAL DEMOCRACY



1. Socialists strive to build a new society in freedom and by democratic means.





2. Without freedom there can be no Socialism. Socialism can be achieved only through democracy. Democracy can be fully realised only through Socialism.



3. Democracy is government of the people, by the people, for the people. It must secure:



a. The right of every human being to a private life, protected from arbitrary invasion by the state.

b. Political liberties like freedom of thought, expression, education, organisation and religion.

c. The representation of the people through free elections, under universal, equal and secret franchise.

d. Government by the majority and respect for the rights of the minority.

e. The equality before the law of all citizens, whatever their birth, sex, language, creed and colour.

f. Right to cultural autonomy for groups with their own language.

g. An independent judiciary system; every man must have the right to a public trial before an impartial tribunal by due process of law.



4. Socialists have always fought for the rights of man. The Universal Declaration of the Rights of Man which has been adopted by the General Assembly of the United Nations must be made effective in every country.



5. Democracy requires the right of more than one party to exist and the right of opposition. But democracy has the right and duty to protect itself against those who exploit its opportunities only in order to destroy it. The defence of political democracy is a vital interest of the people. Its preservation is a condition of realising economic and social democracy.



6. Policies based on the protection of capitalist interests cannot develop the strength and unity needed to defend democracy from totalitarian attack. Democracy can only be defended with the active help of the workers, whose fate depends on its survival.



7. Socialists express their solidarity with all peoples suffering under dictatorship, whether Fascist or Communist, in their efforts to win freedom.



8. Every dictatorship, wherever it may be, is a danger to the freedom of all nations and thereby to the peace of the world. Wherever there is unrestrained exploitation of forced labour, whether under private profit or under political dictatorship, there is a danger to the living and moral standards of all the peoples.



ECONOMIC DEMOCRACY



1. Socialism seeks to replace capitalism by a system in which the public interest takes precedence over the interest of private profit. The immediate economic aims of Socialist policy are full employment, higher production, a rising standard of life, social security and a fair distribution of incomes and property.



2. In order to achieve these ends production must be planned in the interest of the people as a whole.



Such planning is incompatible with the concentration of economic power in the hands of a few. It requires effective democratic control of the economy.



Democratic Socialism therefore stands in sharp contradiction both to capitalist planning and to every form of totalitarian planning; these exclude public control of production and a fair distribution of its results.



3. Socialist planning can be achieved by various means. The structure of the country concerned must decide the extent of public ownership and the forms of planning to apply.


4. Public ownership can take the form of the nationalisation of existing private concerns, municipal or regional enterprise, consumers’ or producers’ cooperatives.



These various forms of public ownership should be regarded not as ends in themselves but as means of controlling basic industries and services on which the economic life and welfare of the community depend, of rationalising inefficient industries or of preventing private monopolies and cartels from exploiting the public.



5. Socialist planning does not presuppose public ownership of all the means of production. It is compatible with the existence of private ownership in important fields, for instance in agriculture, handicraft, retail trade and small and middle-sized industries. The state must prevent private owners from abusing their powers. It can and should assist them to contribute towards increased production and well-being within the framework of a planned economy.



6. Trade unions and organisations of producers and consumers are necessary elements in a democratic society; they should never be allowed to degenerate into the tools of a central bureaucracy or into a rigid corporative system. Such economic organisations should participate in shaping general economic policy without usurping the constitutional prerogatives of parliament.



7. Socialist planning does not mean that all economic decisions are placed in the hands of the Government or central authorities. Economic power should be decentralised wherever this is compatible with the aims of planning.



8. All citizens should prevent the development of bureaucracy in public and private industry by taking part in the process of production through their organisations or by individual initiative. The workers must be associated democratically with the direction of their industry.



9. Democratic Socialism aims at extending individual freedom on the basis of economic and social security and an increasing prosperity.



SOCIAL DEMOCRACY AND CULTURAL PROGRESS



1. While the guiding principle of capitalism is private profit the guiding principle of Socialism is the satisfaction of human needs.



2. Basic human needs must make the first claim on the distribution of the fruits of production; this need not deprive the individual of the incentive to work according to his capacity. Socialists accept as self-evident the individual’s right to be rewarded according to his efforts. But they believe that there are other incentives, like pride in work well done, solidarity and team spirit which can be strengthened when men work for the common interest.



3. Socialism stands not only for basic political rights but also for economic and social rights. Among these rights are:



the right to work;



the right to medical and maternity benefits;



the right to leisure;



the right to economic security for citizens unable to work because of old age, incapacity or unemployment;



the right of children to welfare and of the youth to education in accordance with their abilities;



the right to adequate housing.



4. Socialists strive to abolish all legal, economic and political discrimination between the sexes, between social groups, between town and countryside, between regional and between racial groups.



5. Socialism means far more than a new economic and social system. Economic and social progress have moral value to the extent that they serve to liberate and develop the human personality.



6. Socialists oppose capitalism not only because it is economically wasteful and because it keeps the masses from their material rights, but above all because it revolts their sense of justice. They oppose totalitarianism in every form because it outrages human dignity.



7. Socialism fights to liberate men from the fears and anxieties from which all forms of political and economic insecurity are inseparable. This liberation will open the way to the spiritual development of men conscious of their responsibilities and to the cultural evolution of complete personalities. Socialism is a powerful factor in promoting this cultural development.



8. Socialism seeks to give men all the means to raise their cultural standard and foster the creative aspirations of the human spirit. The treasures of art and science must be made available to all men.



INTERNATIONAL DEMOCRACY



1. The Socialist movement has been an international movement from the beginning.



2. Democratic Socialism is international because it aims at liberating all men from every form of economic, spiritual and political bondage.



3. Democratic Socialism is international because it recognises that no nation can solve all its economic and social problems in isolation.



4. Absolute national sovereignty must be transcended.



5. The new world society for which Socialists strive can develop fruitfully in peace only if it is based on voluntary cooperation between nations. Democracy must, therefore, be established on an international scale under an international rule of law which guarantees national freedom and the rights of man.



6. Democratic Socialism regards the establishment of the United Nations as an important step towards an international community; it demands the strict implementation of the principles of its Charter.



7. Democratic Socialism rejects every form of imperialism. It fights the oppression or exploitation of any people.



8. A negative anti-imperialism is not enough. Vast areas of the world suffer from extreme poverty, illiteracy and disease. Poverty in one part of the world is a threat to prosperity in other parts. Poverty is an obstacle to the development of democracy. Democracy, prosperity and peace require a redistribution of the world’s wealth and an increase in the productivity of the underdeveloped areas. All people have an interest in raising the material and cultural standards in those areas. Democratic Socialism must inspire the economic, social and cultural development of these areas unless they are to fall victim to new forms of oppression.



9. Democratic Socialists recognise the maintenance of world peace as the supreme task in our time. Peace can be secured only by a system of collective security. This will create the conditions for international disarmament.



10. The struggle for the preservation of peace is inseparably bound up with the struggle for freedom. It is the threat to the independence of free peoples which is directly responsible for the danger of war in our time.



Socialists work for a world of peace and freedom, for a world in which the exploitation and enslavement of men by men and peoples by peoples is unknown, for a world in which the development of the individual personality is the basis for the fruitful development of mankind. They appeal to the solidarity of all working men in the struggle for this great aim.
 
it is the small things which we don't notice which will change the world:

http://www.foreignpolicy.com/articles/2011/10/28/black_market_global_economy

The Shadow Superpower
Forget China: the $10 trillion global black market is the world's fastest growing economy -- and its future.

BY ROBERT NEUWIRTH | OCTOBER 28, 2011

With only a mobile phone and a promise of money from his uncle, David Obi did something the Nigerian government has been trying to do for decades: He figured out how to bring electricity to the masses in Africa's most populous country.

FOR MORE

Welcome to Bazaaristan
Photos from the trillion shadow economy
It wasn't a matter of technology. David is not an inventor or an engineer, and his insights into his country's electrical problems had nothing to do with fancy photovoltaics or turbines to harness the harmattan or any other alternative sources of energy. Instead, 7,000 miles from home, using a language he could hardly speak, he did what traders have always done: made a deal. He contracted with a Chinese firm near Guangzhou to produce small diesel-powered generators under his uncle's brand name, Aakoo, and shipped them home to Nigeria, where power is often scarce. David's deal, struck four years ago, was not massive -- but it made a solid profit and put him on a strong footing for success as a transnational merchant. Like almost all the transactions between Nigerian traders and Chinese manufacturers, it was also sub rosa: under the radar, outside of the view or control of government, part of the unheralded alternative economic universe of System D.


You probably have never heard of System D. Neither had I until I started visiting street markets and unlicensed bazaars around the globe.

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System D is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of "l'economie de la débrouillardise." Or, sweetened for street use, "Systeme D." This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy. A number of well-known chefs have also appropriated the term to describe the skill and sheer joy necessary to improvise a gourmet meal using only the mismatched ingredients that happen to be at hand in a kitchen.

I like the phrase. It has a carefree lilt and some friendly resonances. At the same time, it asserts an important truth: What happens in all the unregistered markets and roadside kiosks of the world is not simply haphazard. It is a product of intelligence, resilience, self-organization, and group solidarity, and it follows a number of well-worn though unwritten rules. It is, in that sense, a system.

It used to be that System D was small -- a handful of market women selling a handful of shriveled carrots to earn a handful of pennies. It was the economy of desperation. But as trade has expanded and globalized, System D has scaled up too. Today, System D is the economy of aspiration. It is where the jobs are. In 2009, the Organisation for Economic Co-operation and Development (OECD), a think tank sponsored by the governments of 30 of the most powerful capitalist countries and dedicated to promoting free-market institutions, concluded that half the workers of the world -- close to 1.8 billion people -- were working in System D: off the books, in jobs that were neither registered nor regulated, getting paid in cash, and, most often, avoiding income taxes.

Kids selling lemonade from the sidewalk in front of their houses are part of System D. So are many of the vendors at stoop sales, flea markets, and swap meets. So are the workers who look for employment in the parking lots of Home Depot and Lowe's throughout the United States. And it's not only cash-in-hand labor. As with David Obi's deal to bring generators from China to Nigeria, System D is multinational, moving all sorts of products -- machinery, mobile phones, computers, and more -- around the globe and creating international industries that help billions of people find jobs and services.

In many countries -- particularly in the developing world -- System D is growing faster than any other part of the economy, and it is an increasing force in world trade. But even in developed countries, after the financial crisis of 2008-09, System D was revealed to be an important financial coping mechanism. A 2009 study by Deutsche Bank, the huge German commercial lender, suggested that people in the European countries with the largest portions of their economies that were unlicensed and unregulated -- in other words, citizens of the countries with the most robust System D -- fared better in the economic meltdown of 2008 than folks living in centrally planned and tightly regulated nations. Studies of countries throughout Latin America have shown that desperate people turned to System D to survive during the most recent financial crisis.

This spontaneous system, ruled by the spirit of organized improvisation, will be crucial for the development of cities in the 21st century. The 20th-century norm -- the factory worker who nests at the same firm for his or her entire productive life -- has become an endangered species. In China, the world's current industrial behemoth, workers in the massive factories have low salaries and little job security. Even in Japan, where major corporations have long guaranteed lifetime employment to full-time workers, a consensus is emerging that this system is no longer sustainable in an increasingly mobile and entrepreneurial world.


So what kind of jobs will predominate? Part-time work, a variety of self-employment schemes, consulting, moonlighting, income patching. By 2020, the OECD projects, two-thirds of the workers of the world will be employed in System D. There's no multinational, no Daddy Warbucks or Bill Gates, no government that can rival that level of job creation. Given its size, it makes no sense to talk of development, growth, sustainability, or globalization without reckoning with System D.
The growth of System D presents a series of challenges to the norms of economics, business, and governance -- for it has traditionally existed outside the framework of trade agreements, labor laws, copyright protections, product safety regulations, antipollution legislation, and a host of other political, social, and environmental policies. Yet there's plenty that's positive, too. In Africa, many cities -- Lagos, Nigeria, is a good example -- have been propelled into the modern era through System D, because legal businesses don't find enough profit in bringing cutting- edge products to the third world. China has, in part, become the world's manufacturing and trading center because it has been willing to engage System D trade. Paraguay, small, landlocked, and long dominated by larger and more prosperous neighbors, has engineered a decent balance of trade through judicious smuggling. The digital divide may be a concern, but System D is spreading technology around the world at prices even poor people can afford. Squatter communities may be growing, but the informal economy is bringing commerce and opportunity to these neighborhoods that are off the governmental grid. It distributes products more equitably and cheaply than any big company can. And, even as governments around the world are looking to privatize agencies and get out of the business of providing for people, System D is running public services -- trash pickup, recycling, transportation, and even utilities.

Just how big is System D? Friedrich Schneider, chair of the economics department at Johannes Kepler University in Linz, Austria, has spent decades calculating the dollar value of what he calls the shadow economies of the world. He admits his projections are imprecise, in part because, like privately held businesses everywhere, businesspeople who engage in trade off the books don't want to open their books (most successful System D merchants are obsessive about profit and loss and keep detailed accounts of their revenues and expenses in old-fashioned ledger books) to anyone who will write anything in a book. And there's a definitional problem as well, because the border between the shadow and the legal economies is blurry. Does buying some of your supplies from an unlicensed dealer put you in the shadows, even if you report your profit and pay your taxes? How about hiding just $1 in income from the government, though the rest of your business is on the up-and-up? And how about selling through System D even if your business is in every other way in compliance with the law? Finding a firm dividing line is not easy, as Keith Hart, who was among the first academics to acknowledge the importance of street markets to the economies of the developing world, warned me in a recent conversation: "It's very difficult to separate the nice African ladies selling oranges on the street and jiggling their babies on their backs from the Indian gangsters who control the fruit trade and who they have to pay rent to."

Schneider suggests, however, that, in making his estimates, he has this covered. He screens out all money made through "illegal actions that fit the characteristics of classical crimes like burglary, robbery, drug dealing, etc." This means that the big-time criminals are likely out of his statistics, though those gangsters who control the fruit market are likely in, as long as they're not involved in anything more nefarious than running a price-fixing cartel. Also, he says, his statistics do not count "the informal household economy." This means that if you're putting buckles on belts in your home for a bit of extra cash from a company owned by your cousin, you're in, but if you're babysitting your cousin's kids while she's off putting buckles on belts at her factory, you're out.

Schneider presents his numbers as a percentage of the total market value of goods and services made in each country that same year -- each nation's gross domestic product. His data show that System D is on the rise. In the developing world, it's been increasing every year since the 1990s, and in many countries it's growing faster than the officially recognized gross domestic product (GDP). If you apply his percentages (Schneider's most recent report, published in 2006, uses economic data from 2003) to the World Bank's GDP estimates, it's possible to make a back-of-the-envelope calculation of the approximate value of the billions of underground transactions around the world. And it comes to this: The total value of System D as a global phenomenon is close to $10 trillion. Which makes for another astonishing revelation. If System D were an independent nation, united in a single political structure -- call it the United Street Sellers Republic (USSR) or, perhaps, Bazaaristan -- it would be an economic superpower, the second-largest economy in the world (the United States, with a GDP of $14 trillion, is numero uno). The gap is narrowing, though, and if the United States doesn't snap out of its current funk, the USSR/Bazaaristan could conceivably catch it sometime this century.

In other words, System D looks a lot like the future of the global economy. All over the world -- from San Francisco to São Paulo, from New York City to Lagos -- people engaged in street selling and other forms of unlicensed trade told me that they could never have established their businesses in the legal economy. "I'm totally off the grid," one unlicensed jewelry designer told me. "It was never an option to do it any other way. It never even crossed my mind. It was financially absolutely impossible." The growth of System D opens the market to those who have traditionally been shut out.

This alternative economic system also offers the opportunity for large numbers of people to find work. No job-cutting or outsourcing is going on here. Rather, a street market boasts dozens of entrepreneurs selling similar products and scores of laborers doing essentially the same work. An economist would likely deride all this duplicated work as inefficient. But the level of competition on the street keeps huge numbers of people employed. It liberates their entrepreneurial energy. And it offers them the opportunity to move up in the world.

In São Paulo, Édison Ramos Dattora, a migrant from the rural midlands, has succeeded in the nation's commercial capital by working as a camelô -- an unlicensed street vendor. He started out selling candies and chocolates on the trains, and is now in a more lucrative branch of the street trade -- retailing pirate DVDs of first-run movies to commuters around downtown. His underground trade -- he has to watch out for the cops wherever he goes -- has given his family a standard of living he never dreamed possible: a bank account, a credit card, an apartment in the center of town, and enough money to take a trip to Europe.

Even in the most difficult and degraded situations, System D merchants are seeking to better their lives. For instance, the garbage dump would be the last place you would expect to be a locus of hope and entrepreneurship. But Lagos scavenger Andrew Saboru has pulled himself out of the trash heap and established himself as a dealer in recycled materials. On his own, with no help from the government or any NGOs or any bank (Andrew has a bank account, but his bank will never loan him money -- because his enterprise is unlicensed and unregistered and depends on the unpredictable labor of culling recyclable material from the megacity's massive garbage pile), he has climbed the career ladder. "Lagos is a city for hustling," he told me. "If you have an idea and you are serious and willing to work, you can make money here. I believe the future is bright." It took Andrew 16 years to make his move, but he succeeded, and he's proud of the business he has created.

We should be too. As Joanne Saltzberg, who heads Women Entrepreneurs of Baltimore -- a business development group -- told me, we need to change our attitude and to salute the achievements of those who are engaged in this alternate economy. "We only revere success," she said. "I don't think we honor the struggle. People who have no access to business development resources. People who have to work two and three jobs just to survive. When you are struggling in this economy and still you commit yourself to having a better life, that's really something to honor."
 
Long essay by Naill Ferguson on the possible future of the Euro:

http://online.wsj.com/article/SB10001424052970203699404577044172754446162.html

2021: The New Europe
Niall Ferguson peers into Europe's future and sees Greek gardeners, German sunbathers—and a new fiscal union. Welcome to the other United States.
 
By NIALL FERGUSON
[europe1] Map illustration by Peter Arkle

'Life is still far from easy in the peripheral states of the United States of Europe (as the euro zone is now known).'

Welcome to Europe, 2021. Ten years have elapsed since the great crisis of 2010-11, which claimed the scalps of no fewer than 10 governments, including Spain and France. Some things have stayed the same, but a lot has changed.

The euro is still circulating, though banknotes are now seldom seen. (Indeed, the ease of electronic payments now makes some people wonder why creating a single European currency ever seemed worth the effort.) But Brussels has been abandoned as Europe's political headquarters. Vienna has been a great success.

"There is something about the Habsburg legacy," explains the dynamic new Austrian Chancellor Marsha Radetzky. "It just seems to make multinational politics so much more fun."

The U.S. has lost its position as the best place to do business, and China and the rest of the East have so mastered the ways of the West that they're charting a whole new economic paradigm, Harvard historian Niall Ferguson says in an interview with WSJ's John Bussey. Photo courtesy of Jeff Bush.

The Germans also like the new arrangements. "For some reason, we never felt very welcome in Belgium," recalls German Chancellor Reinhold Siegfried von Gotha-Dämmerung.

Life is still far from easy in the peripheral states of the United States of Europe (as the euro zone is now known). Unemployment in Greece, Italy, Portugal and Spain has soared to 20%. But the creation of a new system of fiscal federalism in 2012 has ensured a steady stream of funds from the north European core.

Like East Germans before them, South Europeans have grown accustomed to this trade-off. With a fifth of their region's population over 65 and a fifth unemployed, people have time to enjoy the good things in life. And there are plenty of euros to be made in this gray economy, working as maids or gardeners for the Germans, all of whom now have their second homes in the sunny south.

The U.S.E. has actually gained some members. Lithuania and Latvia stuck to their plan of joining the euro, following the example of their neighbor Estonia. Poland, under the dynamic leadership of former Foreign Minister Radek Sikorski, did the same. These new countries are the poster children of the new Europe, attracting German investment with their flat taxes and relatively low wages.

But other countries have left.

David Cameron—now beginning his fourth term as British prime minister—thanks his lucky stars that, reluctantly yielding to pressure from the Euroskeptics in his own party, he decided to risk a referendum on EU membership. His Liberal Democrat coalition partners committed political suicide by joining Labour's disastrous "Yeah to Europe" campaign.

Egged on by the pugnacious London tabloids, the public voted to leave by a margin of 59% to 41%, and then handed the Tories an absolute majority in the House of Commons. Freed from the red tape of Brussels, England is now the favored destination of Chinese foreign direct investment in Europe. And rich Chinese love their Chelsea apartments, not to mention their splendid Scottish shooting estates.

In some ways this federal Europe would gladden the hearts of the founding fathers of European integration. At its heart is the Franco-German partnership launched by Jean Monnet and Robert Schuman in the 1950s. But the U.S.E. of 2021 is a very different thing from the European Union that fell apart in 2011.
* * *

It was fitting that the disintegration of the EU should be centered on the two great cradles of Western civilization, Athens and Rome. But George Papandreou and Silvio Berlusconi were by no means the first European leaders to fall victim to what might be called the curse of the euro.

Since financial fear had started to spread through the euro zone in June 2010, no fewer than seven other governments had fallen: in the Netherlands, Slovakia, Belgium, Ireland, Finland, Portugal and Slovenia. The fact that nine governments fell in less than 18 months—with another soon to follow—was in itself remarkable.

But not only had the euro become a government-killing machine. It was also fostering a new generation of populist movements, like the Dutch Party for Freedom and the True Finns. Belgium was on the verge of splitting in two. The very structures of European politics were breaking down.

Who would be next? The answer was obvious. After the election of Nov. 20, 2011, the Spanish prime minister, José Luis Rodríguez Zapatero, stepped down. His defeat was such a foregone conclusion that he had decided the previous April not to bother seeking re-election.

And after him? The next leader in the crosshairs was the French president, Nicolas Sarkozy, who was up for re-election the following April.

The question on everyone's minds back in November 2011 was whether Europe's monetary union—so painstakingly created in the 1990s—was about to collapse. Many pundits thought so. Indeed, New York University's influential Nouriel Roubini argued that not only Greece but also Italy would have to leave—or be kicked out of—the euro zone.

But if that had happened, it is hard to see how the single currency could have survived. The speculators would immediately have turned their attention to the banks in the next weakest link (probably Spain). Meanwhile, the departing countries would have found themselves even worse off than before. Overnight all of their banks and half of their nonfinancial corporations would have been rendered insolvent, with euro-denominated liabilities but drachma or lira assets.

Restoring the old currencies also would have been ruinously expensive at a time of already chronic deficits. New borrowing would have been impossible to finance other than by printing money. These countries would quickly have found themselves in an inflationary tailspin that would have negated any benefits of devaluation.

Some bumpy moments in recent EU history.

For all these reasons, I never seriously expected the euro zone to break up. To my mind, it seemed much more likely that the currency would survive—but that the European Union would disintegrate. After all, there was no legal mechanism for a country like Greece to leave the monetary union. But under the Lisbon Treaty's special article 50, a member state could leave the EU. And that is precisely what the British did.
* * *

Britain got lucky. Accidentally, because of a personal feud between Tony Blair and Gordon Brown, the United Kingdom didn't join the euro zone after Labour came to power in 1997. As a result, the U.K. was spared what would have been an economic calamity when the financial crisis struck.

With a fiscal position little better than most of the Mediterranean countries' and a far larger banking system than in any other European economy, Britain with the euro would have been Ireland to the power of eight. Instead, the Bank of England was able to pursue an aggressively expansionary policy. Zero rates, quantitative easing and devaluation greatly mitigated the pain and allowed the "Iron Chancellor" George Osborne to get ahead of the bond markets with pre-emptive austerity. A better advertisement for the benefits of national autonomy would have been hard to devise.

At the beginning of David Cameron's premiership in 2010, there had been fears that the United Kingdom might break up. But the financial crisis put the Scots off independence; small countries had fared abysmally. And in 2013, in a historical twist only a few die-hard Ulster Unionists had dreamt possible, the Republic of Ireland's voters opted to exchange the austerity of the U.S.E. for the prosperity of the U.K. Postsectarian Irishmen celebrated their citizenship in a Reunited Kingdom of Great Britain and Ireland with the slogan: "Better Brits Than Brussels."

Another thing no one had anticipated in 2011 was developments in Scandinavia. Inspired by the True Finns in Helsinki, the Swedes and Danes—who had never joined the euro—refused to accept the German proposal for a "transfer union" to bail out Southern Europe. When the energy-rich Norwegians suggested a five-country Norse League, bringing in Iceland, too, the proposal struck a chord.

The new arrangements are not especially popular in Germany, admittedly. But unlike in other countries, from the Netherlands to Hungary, any kind of populist politics continues to be verboten in Germany. The attempt to launch a "True Germans" party (Die wahren Deutschen) fizzled out amid the usual charges of neo-Nazism.

The defeat of Angela Merkel's coalition in 2013 came as no surprise following the German banking crisis of the previous year. Taxpayers were up in arms about Ms. Merkel's decision to bail out Deutsche Bank, despite the fact that Deutsche's loans to the ill-fated European Financial Stability Fund had been made at her government's behest. The German public was simply fed up with bailing out bankers. "Occupy Frankfurt" won.

Yet the opposition Social Democrats essentially pursued the same policies as before, only with more pro-European conviction. It was the SPD that pushed through the treaty revision that created the European Finance Funding Office (fondly referred to in the British press as "EffOff"), effectively a European Treasury Department to be based in Vienna.

It was the SPD that positively welcomed the departure of the awkward Brits and Scandinavians, persuading the remaining 21 countries to join Germany in a new federal United States of Europe under the Treaty of Potsdam in 2014. With the accession of the six remaining former Yugoslav states—Bosnia, Croatia, Kosovo, Macedonia, Montenegro and Serbia—total membership in the U.S.E. rose to 28, one more than in the precrisis EU. With the separation of Flanders and Wallonia, the total rose to 29.

Crucially, too, it was the SPD that whitewashed the actions of Mario Draghi, the Italian banker who had become president of the European Central Bank in early November 2011. Mr. Draghi went far beyond his mandate in the massive indirect buying of Italian and Spanish bonds that so dramatically ended the bond-market crisis just weeks after he took office. In effect, he turned the ECB into a lender of last resort for governments.

But Mr. Draghi's brand of quantitative easing had the great merit of working. Expanding the ECB balance sheet put a floor under asset prices and restored confidence in the entire European financial system, much as had happened in the U.S. in 2009. As Mr. Draghi said in an interview in December 2011, "The euro could only be saved by printing it."

So the European monetary union did not fall apart, despite the dire predictions of the pundits in late 2011. On the contrary, in 2021 the euro is being used by more countries than before the crisis.

As accession talks begin with Ukraine, German officials talk excitedly about a future Treaty of Yalta, dividing Eastern Europe anew into Russian and European spheres of influence. One source close to Chancellor Gotha-Dämmerung joked last week: "We don't mind the Russians having the pipelines, so long as we get to keep the Black Sea beaches."
***

On reflection, it was perhaps just as well that the euro was saved. A complete disintegration of the euro zone, with all the monetary chaos that it would have entailed, might have had some nasty unintended consequences. It was easy to forget, amid the febrile machinations that ousted Messrs. Papandreou and Berlusconi, that even more dramatic events were unfolding on the other side of the Mediterranean.

Back then, in 2011, there were still those who believed that North Africa and the Middle East were entering a bright new era of democracy. But from the vantage point of 2021, such optimism seems almost incomprehensible.

The events of 2012 shook not just Europe but the whole world. The Israeli attack on Iran's nuclear facilities threw a lit match into the powder keg of the "Arab Spring." Iran counterattacked through its allies in Gaza and Lebanon.

Having failed to veto the Israeli action, the U.S. once again sat in the back seat, offering minimal assistance and trying vainly to keep the Straits of Hormuz open without firing a shot in anger. (When the entire crew of an American battleship was captured and held hostage by Iran's Revolutionary Guards, President Obama's slim chance of re-election evaporated.)

Turkey seized the moment to take the Iranian side, while at the same time repudiating Atatürk's separation of the Turkish state from Islam. Emboldened by election victory, the Muslim Brotherhood seized the reins of power in Egypt, repudiating its country's peace treaty with Israel. The king of Jordan had little option but to follow suit. The Saudis seethed but could hardly be seen to back Israel, devoutly though they wished to avoid a nuclear Iran.

Israel was entirely isolated. The U.S. was otherwise engaged as President Mitt Romney focused on his Bain Capital-style "restructuring" of the federal government's balance sheet.

It was in the nick of time that the United States of Europe intervened to prevent the scenario that Germans in particular dreaded: a desperate Israeli resort to nuclear arms. Speaking from the U.S.E. Foreign Ministry's handsome new headquarters in the Ringstrasse, the European President Karl von Habsburg explained on Al Jazeera: "First, we were worried about the effect of another oil price hike on our beloved euro. But above all we were afraid of having radioactive fallout on our favorite resorts."

Looking back on the previous 10 years, Mr. von Habsburg—still known to close associates by his royal title of Archduke Karl of Austria—could justly feel proud. Not only had the euro survived. Somehow, just a century after his grandfather's deposition, the Habsburg Empire had reconstituted itself as the United States of Europe.

Small wonder the British and the Scandinavians preferred to call it the Wholly German Empire.
—Mr. Ferguson is a professor of history at Harvard University and the author of "Civilization: The West and the Rest," published this month by Penguin Press.
 
I hope Ferguson is right but I fear that I am. My prediction remains that Greece, Italy, Spain, Portugal and France all end up, within the next five years, being governed by populist movements and that all those populist movements become fascist/national socialist dictatorships within a decade.

I agree with Ferguson re:

1. The fate of North Africa, the Middle East and Iran - including an Israeli attack on Iran, the American response thereto, and Turkey leaving Europe (withdrawing from NATO) and challenging Egypt and Iran for leadership of the new caliphate;

2. Britain and Ireland leaving the EU;

3. The creation of some sort of Scandinavian league;

4. The disintegration of Belgium; and, being only slightly disagreeable

5. The fascist "Latin tier" of Europe being, de facto a colony of the frugal, hard working, quasi-democratic Northerners.
 
Who knew that Niall Ferguson was a Buddhist? He must be, given his belief in reincarnation.  :)

I don't know if his future is any more or less probable than any other but there are elements there that I like.

Given that it all seems to hinge on Mario Draghi defying Angela Merkel and (loosely paraphrasing the advice of the Duke of Wellington) deciding to print and be damned I suppose we will find out in the very near future if his prediction has any chance of success.

I can see the Scandinavians deciding to depart the EU.  I hope my fellow Scots see sense, decide to stick with the UK and that the UK departs the EU.  It would be Christmas in July if the Irish decided to Rejoin the UK (although perhaps not impossible if Scotland, England, Ireland, Ulster and Wales (not to mention Man and the Channel Islands) became federated members of a new UK).

It might even be possible that the UK join the Scandinavians (And Canada?????) in a recreation of Canute's hegemony, or possibly the Hanseatic League.

It is still curious to me that Europe divides itself between the "Latin" South and the North (I prefer to think of the Roman South and the Hanseatic or Viking North).  We have become so used to the Russian Discussion that we think only in terms of East West, especially as it applies to Germany.  But historically the lands of the Germans have been divided North South between the Catholic Bavarians of the Southern Mountains, culturally allied with France, Portugal, Italy, Greece and Spain and the Protestant Hansans of the Baltic Coast.  Niall's German dichotomy (the unhappy Germans) I think must reflect that.

Also curious to me is the role of the third group of Germans, those of the Valley of the Main, in the Middle, that have been historically torn North South and East West. In the East it is bounded by Bohemia (Czech Republic).  In the West it is bounded by Mainz, Koeln, Trier, Koblenz, Aachen, Luxembourg, The Ardennes, The Saarland, Alsass, Lorraine, The Palatinate of the Rhine, Westphalia and the Fulda Gap...... Its Capital is Francfurt.  It used to be known as Francia......

Culture matters.
 
E.R. Campbell said:
I hope Ferguson is right but I fear that I am. My prediction remains that Greece, Italy, Spain, Portugal and France all end up, within the next five years, being governed by populist movements and that all those populist movements become fascist/national socialist dictatorships within a decade.

In Ireland's presidential election mere weeks ago, Sinn Fein won 14% of the popular vote. With a candidate (Martin McGuiness) who had been convicted and imprisoned for possession of a car full of 250kg of explosives and 5000 rds, and is known to have been one of 5 members of the IRA council.

Imagine what will happen next time around, when they run with a candidate who is not a known murderer. 
 
The Global bomd market gives it s verdict on Europe. I predict interest rates will start rising everywhere despite the efforts of central bankers (even ours) to keep the interest rates low. F.A. Hayek will not be denied:

http://pointsandfigures.com/2011/11/25/death-spiral-in-euroland/

Death Spiral in Euroland

    Posted by Jeff Carter
    on November 25th, 2011

If you indulge in Black Friday shopping, have fun. I hate shopping with crowds. I always trade the day after Thanksgiving. It’s a light trading day, but sometimes you can get some good opportunities.

Today might be one of those days, but be very careful. Europe has hit the point of no return I am afraid. Debt ratings in some countries went to junk yesterday. Italy paid record highs in their latest auction. Tell me, how is Italy not junk?

The only countries in Europe that aren’t junk are probably France and Germany. However, without knowing the true exposure of their government finances to the rest of the EU, it’s hard to know if they can maintain their status or not. As rates continue to steepen in weekly European Union debt auctions, the entire continent speeds it’s collision course with stagflation.

The only way out of their financial mess is print money or grow. They aren’t going to grow given their current economic policies. Watch the near term months in the Eurodollar ($GE_F) contract. If they start to break hard, EU banks and governments are having funding problems.

As we mark time to the eventual day of reckoning, December 1 seems like the next big data point to me. It’s the date of the next French OAT auction. Spreads between French and German debt are at all time highs. As the PIIGS careen upwards to 8%, I don’t see how the French can keep their debt costs from spiraling higher as well.

It’s just too risky to hold these securities. Investors have to demand a huge premium. No doubt the resolution will be haircuts if you hold the security, and devaluation of the currency they are denominated in.

I don’t see any white knight coming in and changing things. The Europeans have made their bed, now they have to lie in it.
 
I think what the market is doing just now is starting to discount the Euro and the Eurozone as future players and instead focusing on the national economies to determine what the risk is going forward. 

With Angela holding fast to getting re-elected by not perturbing the 70-80% of her voters that werden keinen Eurobonden haben there is an increasing risk that Euro paper will blow away in the breeze.  Conversely Italy, as an example, has a track record of paying its debts even when it was carrying  money over 7% previously.

Eurozone Italy is weak.  Italy is not weak.

You just need to look at the UK.  Its finances are not better than those of Spain, and is about on par with the Eurozone average.... but investors are preferring the risk there to the risk in the Eurozone.

Edit:

From Kamal Ahmed, Sunday Telegraph Business Editor:

@kamalahmed1So, that's why Angela Merkel has set her face against eurobonds - ZDF poll: 79% of Germans against eurobonds via @OpenEurope
 
This article suggests there may be an optimistic outcome in the end, but the greater danger is during the chaos created by the collapse of the Welfare State and the rest of the Progressive project, citizens will call for stability and look to "The Man on the White Horse" to provide it. (Edward Campbell puts it a bit differently; States will be captured by populist movements, which work in effectively the same manner and result in the same outcome; the establishment of illiberal, authoritarian States). Perhaps with some judicious stick handling we may reach this desired outcome, but I think the fortunate few who achieve this end state will have to fight like hell to get there.

http://metanoodle.blogspot.com/2011/11/normal-0-false-false-false.html

The Second Great Depression is coming to town.

Remember “The Great War” was renamed “World War One” after 1939?  Next up, the "Great Depression” will be renamed the "First Great Depression”.

The near future holds something equal to or greater than the Thirties depression.  And as in that depression, governments will make it worse, thinking to make it better.

    Things fall apart; the centre cannot hold;
      Mere anarchy is loosed upon the world,
      The blood-dimmed tide is loosed, and everywhere
        The ceremony of innocence is drowned;
        The best lack all conviction, while the worst
          Are full of passionate intensity.  (Yeats)

Not everyone will suffer.  Perhaps Canada will be spared apart from a slow economic period and a 25% rollback in housing prices.  Despite the collapse of a couple sovereign nations, states, counties, cities and bank empires and despite a concomitant rise in unrest, most citizens won’t be hurt. A lot of the notional money on loan is matched to notional risk insurance money issued by other financial institutions.  When claims and counter party claims collapse, how many individuals actually take a loss?    Crony elites have morals much like the typical citizen but from their favoured positions in governments, unions and businesses,  they have been busy covering decades of enlightened looting by issuing IOU's charged to future taxpayers. Thus they fund unsustainable pensions and hare-brained Solyndra schemes.. The bailouts worldwide are transfers of risk from the ones who did the gambling to the voters who maybe should have known better.

There is a countervailing push from know-how and networking that is creating opportunities for wealth as big as or bigger than the looming losses.  No individual is in charge of it, as if the possibilities themselves were alive and exploiting us.  This push may yet bring enough wealth to bail out the failures of self-serving busybodies.

Like a low key Kurzweilian singularity, this push includes cheap power from cold fusion,  credentials that can be verified without a college or university degree,  voter networks in real time doing what MP’s ponderously do, the resurgence of drilling jobs in the US despite opposition by government at every stop, more healthy and wealthy old people who have a longer life expectancy at the end of each year than they do at the beginning of each year, fewer dictators thanks to ubiquitously leaked documents and video, greater honesty in government thanks to Google searches of past promises, and so on.

There's turmoil up ahead followed by a stagnant decade paying off the bills, but there's a reasonable possibility the unpredictable will perk up everything.

The highlighted paragraph hints at the outlines of a post progressive state; while the details may not be as described (I am skeptical of "cold fusion", for example), the undermining of centralized, bureaucratic institutions and "gatekeepers" continues apace, and effective distributed energy, manufacturing and information is coming in the near term, maybe near enough to make the changes suggested and needed.
 
This describes the situation not only i the US, but most of the West in general (and other parts of the world have similar issues). The breakdown and collapse of these structures could lead to chaos and "popular" movements (The man on the white horse scenario); or the evolution of a post progressive society:

http://www.zerohedge.com/news/guest-post-future-jobs

Guest Post: The Future Of Jobs
Tyler Durden's picture
Submitted by Tyler Durden on 11/28/2011 17:54 -0500
 
Submitted by Charles Hugh Smith via ChrisMartenson.com

The Future of Jobs

That the American and global economies are being transformed by the forces of globalization, demographics, and over-indebtedness is self-evident. What is less self-evident is the impact this transformation will have on the future of work, earned income, and financial security.

The key question an increasingly vulnerable workforce is asking is: What skills will be in demand once this transition occurs?

In order to answer this question, it's necessary to understand the macro trends that will shape the nature of employment in this new era. In our previous look at The Future of Work, we focused on the US economy’s dependence on debt as a driver of growth and found that debt saturation was correlated with declining employment. But there are many other long-term dynamics influencing the economy, and no survey of the future job market would be complete without considering these other factors.
The Trends That Will Determine the Future of Jobs

Most cultural and economic trend changes begin on the margin and then spread slowly to the core, triggering waves of wider recognition along the way. Thus some of these long-wave trends may not yet be visible to the mainstream, and may remain on the margins for many years. Others are so mature that they may be primed for reversal.

The key here is to be aware of each of these, think on which are most likely to impact your current profession and how, and estimate when that impact is likely to be expressed so that you can position yourself wisely in advance:

    Automation enabled by the Web continues to eliminate or reduce the role of human labor in production and services. The low-hanging fruit may be gone, but labor-intensive industries such as health care, government, and education are ripe for software/Web automation and streamlining.
    The cost structure of the US economy—the system-wide cost of housing, food, energy, transport, education, health care, finance, debt, government, and defense/national security--is high and rising, even as productivity is lagging. This reflects the growth of "friction" in the economy—unproductive expenses that add neither value nor productivity.

    This high-cost structure drives the cost of labor ever higher, even as employees’ share of compensation stagnates. For example, if health-care costs rise 10% a year, the employer must reap 10% more surplus from labor to pay the higher compensation costs, while the employees see no increase in their take-home pay.

    Rising systemic costs make employers wary of hiring more workers unless they create enough surplus value to keep ahead of the rising systemic costs and generate a return on investment. In low-productivity, high-cost basis economies like the U.S., the incentives shift from expansion to reducing labor costs by via automation and replacement of stable workforces with flexible freelance contract labor.
    The stress of operating a small business in a stagnant, over-indebted, high-cost basis economy is high, and owners find relief only by opting out and closing their doors. I call this exhaustion and loss of faith “when belief in the system fades.” Pundits may speak of our fraying “social contract,” but small-business owners increasingly feel betrayed by a system that constantly increases the burdens on enterprise at every level.

    Much of Main Street America is stuck in two unenviable roles: tax-donkeys saddled with ever-higher taxes and fees, and/or debt-serfs working just to service crushing debt. Many are planning for the day they escape the burdens of enterprise by shutting down their business.
    The Central State has been co-opted or captured by concentrations of private wealth and power to limit competition and divert the nation’s surplus to Elites within the key industries of finance, health care, education, government, and national security. The rising friction within these vast systems is distributed over the entire economy via cartels and taxes, raising costs in every sector and lowering the nation’s productivity.

    As a result of central State intervention and politically expedient controls, the prices charged for these services are “sticky,” meaning there is little to no market pressure to lower prices, as competition has been largely eliminated by collusion, cartels, and/or government control.

    At some point, these top-heavy, protected industries will experience a “stick/slip” event in which their fixed pricing and funding will collapse once the dwindling productive economy can no longer support this enormous dead weight of unproductive friction.
    Financialization of the economy has incentivized unproductive speculation and malinvestment at the expense of productive investment. Financialization has been driven by low interest rates and abundant credit for speculation while credit for capital investment is restricted.  In the boom years, money was effectively diverted into consumption such as luxury McMansions while the productive segments of the economy stagnated.

    The direct costs and lost opportunity costs of zero-interest rates and malinvestment have been spread over the entire economy, as income that once flowed to savers was diverted to “too big to fail” banks and speculators. Speculation creates vast profits for financial Elites and a modest number of service jobs catering to the Elite: clerks in luxury retail shops, personal trainers, dog-walkers, etc.
    The U.S. economy has bifurcated into a two-tiered regulatory structure. Politically powerful industries such as finance, education, health care, oil/natural gas, and defense benefit from either loophole-riddled regulation or regulation that effectively erects walls that limit smaller competitors from challenging the dominant players.

    Enterprises outside this politically protected circle are treated as adversaries by state and local government regulatory agencies.
    Selective globalization and political protection has created a two-tiered labor market in the US. Industries exposed to direct competition from low cost-basis economies with low labor costs must either close, automate or rely on minimum-wage immigrant labor. At the top end, global corporations are increasingly hiring talent in their offshore markets. Jobs, which remain in the US at the top tier of global companies are well-paid, but increasingly insecure.

    The domestic industries that cannot be outsourced (education, health care, government, national security) have gained political power as their share of the national income has increased, and their domestic position astride the economy has been enhanced by political protection. As a result, the pay scales in these sectors are much higher than those in globally exposed private sectors.

    These industries have thrived as Federal government spending has continued via borrowing 11% of the nation’s GDP every year. In this sense, these domestically protected industries are prospering at the expense of future taxpayers, who will be burdened with servicing this stupendous debt that has been taken on to fund these politically protected sectors.
    Financialization and the two-tiered labor market have led to a two-tiered wealth structure in which the top 10%'s share of the nation’s wealth has outstripped not just the stagnant income and wealth of the lower 90%, but of productivity, the ultimate driver of national wealth. This trend towards concentrated wealth also plays out in the top 10%, as the share of national income flowing to the top 1% has outstripped the wealth growth of the other 9%.

    These trends are all visible and well established. Looking farther out, there are emerging trends I call “the five Ds:” definancialization, delegitimization, deglobalization, decentralization and deceleration. Though these may not be visible to the mainstream just yet, they will slowly influence the job market and our definition of work.

    Definancialization. Resistance to the political dominance of banks and Wall Street is rising, and the financial industry that thrived for the past three decades may contract to a much smaller footprint in the economy.
    Delegitimization. The politically protected industries of government, education, health care, and national security are increasingly viewed as needlessly costly, top-heavy, inefficient, or failing. Supporting them with ever-increasing debt is widely viewed as irresponsible. Cultural faith in large-scale institutions as “solutions” is eroding, as is the confidence that a four-year college education is a key to financial security.
    Deglobalization. Though it appears that globalization reigns supreme, we can anticipate protectionism will increasingly be viewed as a just and practical bulwark against high unemployment and withering domestic industries. We can also anticipate global supply chains being disrupted by political turmoil or dislocations in the global energy supply chain; domestic suppliers will be increasingly valued as more trustworthy and secure than distant suppliers.
    Decentralization. As faith in Federal and State policy erodes, local community institutions and enterprise will increasingly be viewed as more effective, responsive, adaptable, and less dysfunctional and parasitic than Federal and State institutions.
    Deceleration. As debt and financialization cease being drivers of the economy and begin contracting, the entire economy will decelerate as over-indebtedness, systemic friction, institutional resistance to contraction (“the ratchet effect”), and political disunity are “sticky” and contentious.

While these trends will cause harsh disruption to the Status Quo economy resulting in job loss and/or lost relevance for many of today's workers, there is good news here for those who remain flexible, open-minded, and adaptable. For those individuals, making the best use of the gift of having time to re-focus and re-skill professionally -- while the shock waves have yet to hit the Status Quo in earnest -- should be a top priority.

In Part II: The Skills Most Likely To Be In Demand, we explore the opportunities that this long-term transformation opens for those willing to adapt to the new realities of "work", including the business models that are likely to thrive, and what type of skills will offer the greatest job security.

Click here to access Part II of this report (free executive summary, enrollment required for full access)

The TEA Party movement is in response to this (and the Libertarianism as a social movement as well), correctly identifying the growth of State power as the issue; break the power of the State and roll it back to its natural areas (protecting liberty, property rights and the rule of law) and the "elites" will have little to capture.
 
Thucydides said:
This describes the situation not only i the US, but most of the West in general (and other parts of the world have similar issues). The breakdown and collapse of these structures could lead to chaos and "popular" movements (The man on the white horse scenario); or the evolution of a post progressive society:

http://www.zerohedge.com/news/guest-post-future-jobs

The TEA Party movement is in response to this (and the Libertarianism as a social movement as well), correctly identifying the growth of State power as the issue; break the power of the State and roll it back to its natural areas (protecting liberty, property rights and the rule of law) and the "elites" will have little to capture.

The OWS movement is ALSO in response to this......although they seek the "Right" institution when the existing institutions are failing them.  Libertarians (and I count myself among them) seem more inclined towards NO institutions and a greater reliance on the person.........which starts to sound an awful lot like Anarchy.

Maybe the only difference between me on the right and them on the left is that I keep running the circle clockwise and they run it counter-clockwise. :)
 
The OWS movement seeks to capture the State and control the redistribution of wealth to whatever ends they deem fit; "They're bastards, but they're our bastards". Exchanging one group of crony's or oligarchs for a different groups realy does not change the game or the outcomes, just the deck chairs on the Titanic (how's that for a mixed metaphor?  ;))

Most Libertarians (and even Randian Objectivists) believe in a very limited set of roles for the State (most disagreements come from where the limits lie) which excludes places where crony capitalists and oligarchs can capture and direct the flow of tax dollars and shut out competition. It is still possible to rig the Police, the Military and the Courts of Law in order to capture the wealth, but it is harder to do and more obvious, and the competition will be much fiercer since there are fewer targets for the cronys and would be oligarchs to capture. There would be a "churn" of new people and ideas as a minimum, and political and economic dynasties would be minimized.
 
The UK makes preparations:

http://www.guardian.co.uk/politics/wintour-and-watt/2011/nov/29/georgeosborne-autumn-statement-20111

George Osborne prepares for run on banks in troubled eurozone countries

Tories warn of collapse of eurozone and danger of a depression as Germany is criticised for slow response
     
George Osborne fears a run on the banks in Italy and other troubled eurozone members. Photograph: Fiona Hanson/PA

George Osborne said in his autumn statement on Tuesday that the Treasury is "undertaking extensive contingency planning" in response to the eurozone crisis.

The chancellor gave little detail of this planning. This was in line with the decision of the Office for Budget Responsibility (OBR) not to assess the impact on Britain's economic growth of a "disorderly outcome" to the eurozone crisis.

Behind the scenes Treasury officials are hard at work. They are losing sleep over fears of a run on the banks in Italy and some of the other troubled eurozone members. This is what one Treasury source told me:

    The five to midnight scenario will be a run on the banks in Greece, Italy and Portugal. Spain is fine. There is already a drawdown from banks. But we haven't got to a run on the banks yet.

Sir Mervyn King, the governor of the Bank of England, highlighted concerns about banks in the eurozone in his evidence to the Commons Treasury select committee on Monday. But there are growing fears among members of Osborne's circle that the eurozone could break up. An article in Monday's FT by Wolfgang Münchau has concentrated minds. Münchau argued that eurozone leaders must agree a package of measures to shore up the euro by the time of the next European Council:

    If the European summit could reach a deal on December 9, its next scheduled meeting, the eurozone will survive. If not, it risks a violent collapse. Even then, there is still a risk of a long recession, possibly a depression.

Münchau's suggestion of a depression set alarm bells ringing. One senior Tory, who is familiar with the chancellor's thinking, says:

    A depression will mean we won't be able to take money out of holes in the wall.

The Tory believes people have not grasped the gravity of the eurozone crisis and its potential impact on Britain. The MP said:

    The disaster will hit a lot quicker than people have realised. There is a good chance the eurozone will split up.

There is growing anger about Wolfgang Schäuble, the German finance minister, who is seen to be leading the charge in Berlin against allowing the European Central Bank to act as the lender of last resort for the eurozone. I blogged last month that Schäuble told Osborne not to use the eurozone crisis to try and repatriate EU social and employment laws. The MP said:

    Wolfgang Schäuble is the most dangerous man in Europe. Born in 1942, he was brought up in the embers of post war Germany. He is going to have to end up writing a cheque for well over €1tn euros. It would have been a few hundred billion if Germany had acted sooner.

There is at least some cause for comfort. Gideon Rachman argued in the FT on Tuesday that a "grave economic crisis in Europe" would not lead to a repeat of the instability of the 1930s:

    For all the parallels, I still cannot bring myself to believe that we are heading back to the 1930s.
 
                                              Shared with provisions of The Copyright Act

Why Canadians should care about a euro collapse
Mark Gollom, CBC News  01Dec
http://www.cbc.ca/news/canada/story/2011/11/30/euro-impact-canada.html

The demise of the euro would deliver a significant blow to the Canadian economy, leading to less trade, higher unemployment and a possible recession, financial experts say.

"The situation in Europe would create a tsunami that would reach our shores very very quickly," Louis Gagnon, finance professor at Queen’s University School of Business in Kingston, Ont., told CBC News.

"We would be collateral damage and this collateral damage would be very, very significant."

With some European countries seemingly unable to control their spiralling debt crises, and with uncertainty over the type of financial relief the European Central Bank may contribute, there are fears the end of the euro is near.

Gagnon explained that if the euro dissolved as a currency, a number of countries with their debt denominated in euros would immediately have to default since they would adapt their own domestic currencies and those would be devalued from anywhere between 50 to 70 per cent.

As the marketplace establishes the exchange rates, Gagnon said, you would see a "fire sale" on the exchange rates because investors would have very little confidence in these new currencies.

"These countries would be forced to pay back debt holders in euros which they don't have. As well, financial institutions, all the banks have euro obligations," he said.

Banks' failure may affect the world

As some European governments would default, banks holding those bonds would not have money to lend, drying up liquidity, sparking a severe global economic contraction and causing a major economic crisis.

"It's one banking system, when we look at it. If it fails in Europe, the rest of the world would be affected," Gagnon said.
But what does that mean for the average Canadian?

"This would cause panic, fear, remove all the confidence in the financial system," Gagnon said. "The global financial system would become paralyzed … in this way Canadians would be affected."

Canadians would stop spending, which could lead to a possible recession in Canada.

Walid Hejazi, associate professor of international business at the University of Toronto's Rotman School of Management, said that being part of an integrated global economy means what happens elsewhere could affect us.

"Much of our prosperity is driven by our linkages into the global economy and much of the risks are driven by our linkages to the global economy, so you have to deal with both."

Hejazi said employment numbers, income growth, value of our assets, our homes and the assets of financial markets would all be put at risk.

"So it can actually impact the average Canadian quite significantly. So we do have to worry. It's not something the average Canadian can say, 'It's over there in Europe, who cares?'"

'When they do well, we do well'

Hejazi said he worked with the Department of Foreign Affairs on the first study on deepening the economic relationship between Canada and EU in 2008.

"There was tremendous goodwill about the benefits that come between Canada and the EU," he said. "I found that people really wanted to deepen the relationship because of the economic opportunity, but also because of the history.

"On the business side, we want the Europeans to get out of this. We want them to do well. One thing that's really clear is when they do well, we do well. When they're worse off, we're worse off."

Matthias Kipping, professor of policy and chair in business history at Schulich School of Business, said the euro collapse would mean countries would become more protectionist, which would have a major effect on a country like Canada that relies on exports.

While Canada’s direct share of global trade with Europe is relatively small, it would be indirectly affected by those countries, in particular the United States, which are heavily exposed to the European market and which Canada trades with.

But Kipping said the crisis would take a little while for it to work its way through Canada.

"People won't get fired immediately tomorrow, but it will work its way through."

The "doomsday scenario," he said, is the credit flows stop, meaning economic activity and trade stop or get severely curtailed.

"The next thing is if trade stops, who are you going to sell to? People who make things, they eventually have nothing to do, and they'll be out of a job. It may not happen next week, but could happen next year."

While Canadian banks don't have much direct exposure to Europe, they would be affected by the "calamity raging in the credit marketplace," Gagnon said, meaning they would have to stop lending to other banks.

But Gagnon said Canada, with its relatively healthier banks and deficit containment, is in a better position than other countries to deal with the crisis.

"Things aren’t looking all that great, but I think we would weather the storm to a better degree than our trading partners and especially Europe."

 
Looks like  the EURO collapsing is nothing compared to what is happening behind the scenes. If I understand this correctly here is what happens;

CIBC buys 500$ worth of a stock or security in London from Broker A.  250$ cash and 250$ on margin for which they have “collateral” which may in itself be of dubious value. CIBC then has 500$ worth of assets on paper. But the 250$ they borrowed is ALSO considered an asset by Broker A and they can use that as collateral to buy securities on margin from Broker B. Who can then buy on margin from Broker C, etc.  So 250$ of notional assets which may have little real world value to begin with turns into thousands of dollars on the market. This is what is keeping the system afloat and Canadian banks are highly exposed.  And the kicker,.... They invested the fake money in sovereign AA Bonds. So if one country defaults the entire world banking system could be dead.

More at the link if you wish to read. Merrry Christmas. >:D
http://www.zerohedge.com/news/why-uk-trail-mf-global-collapse-may-have-apocalyptic-consequences-eurozone-canadian-banks-jeffe

Most annoying is that these brokerage houses are on welfare. They buy bonds with fictitious money that suck taxpayers money in the form of bond yields to pay themselves multimillion dollar bonuses. Why can't we all use pretend money to invest millions in Canada Savings Bonds and live off the interest? Douche bags. Armani f%@#ing welfare bums.


P.S. CIBC has 72 billion and the Royal Bank 54 billion in assets invested in this pyramid scheme. Canadian banks are DIRECTLY exposed.
 
The Tragedy of the Commons as applied to the Euro:

http://www.hoover.org/publications/defining-ideas/article/102281

The Euro & The Tragedy of the Commons
by Gary D. Libecap (Sherm and Marge Telleen Research Fellow and Cochair, Property Rights, Freedom, and Prosperity Task Force)
Is it any wonder that the currency zone encouraged profligate debt?

In 1968, the American ecologist Garrett Hardin wrote “The Tragedy of the Commons” which must be the most cited article ever to appear in Science Magazine. In this article, Hardin described the “tragedy” associated with common pool resources—those that are claimed or used by many with little effective restriction. With a common resource, each party is motivated by private self-interest in deciding how much of and when to use the resource. But the costs of these private decisions are spread across to everyone. This mismatch between private and social benefits and costs in decision-making results in the outcomes we are all familiar with—waste, plundering, and extensive and rapid use of the resource with little consideration of the future.

Hardin made his point by describing a pasture that was “open to all” and, hence, subject to overgrazing. Although each herder privately benefits from grazing his or her own animals, the costs of overstocking are shared by all herders. Under these circumstances, each herder is motivated to add more animals than would be optimal for the range resource. Hardin concluded: “Therein is the tragedy. Each man is locked into a system that compels him to increase his heard without limit—in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons.”

Although Hardin was eloquent in describing the problem, he was much less persuasive in describing the solution. The remedy he offered was “mutual coercion, mutually agreed upon…coercive devices to escape the horror of the commons.” According to Hardin, the outcome would be unjust because some parties would accept more costs and fewer benefits than others. Why? “The alternative of the commons is too horrifying to contemplate. Injustice is preferable to total ruin.” Of course, Hardin was wrong—not in identifying the underlying source of the Tragedy of the Commons, but in predicting its solution.

All around us we see examples of cases where common pool resource problems persist, at least until there is a major crisis. Parties disagree, occasionally on the magnitude or nature of the overall problem, but most often, on the sharing of the costs and benefits of addressing it. These distributional issues block agreement and the problem of open access continues. Fairness does matter, and few are willing to shoulder more of the costs than others to address the losses of the commons. And if compliance cannot be monitored and assured, then even if some parties agree to bear more of the burden, little will come of this action because others will continue to use or exploit the resource. Self-restraint under a commons does not pay—for the individual or for the resource. Accordingly, the problem continues and the tragedy described by Hardin emerges.

At some point, a crisis occurs—the pasture is so overgrazed that it no longer supports any livestock and all herders lose. With a crisis, the status quo is no longer viable and distributional issues become less critical in agreeing to a solution to the problem of open access. But by that time, the resource may be so depleted and the crisis so severe that the resource cannot rebound. Hence, the Tragedy of the Commons.

All men rush toward one destination: ruin.

Fortunately, in many cases, conditions are not so dire, and recovery is feasible if effective solutions can be found. The lesson, however, is that remedies do not come early, but rather, late. They may come too late in some important cases to avoid the losses of the Tragedy of the Commons.

So, what does the Tragedy of the Commons have to do with the floundering efforts to save the Euro and the failed U.S. government debt negotiations? The answer is that they are both examples of commons problems. Consider the U.S. Federal Debt. The Federal Government budget is a common pool resource—that is, the president and each member of Congress seek a portion of it to advance particular preferred policy objectives and to reward valuable constituents. There is not enough in the budget to satisfy all of these 536 claimants (the president, the members of the Senate, and the members of the House). Expanding the budget requires raising taxes or borrowing, or both. Higher taxes are unpopular, so in recent years borrowing has increased.

From 1980 onwards, U.S. debt has generally risen toward levels not seen since World War II. Indeed, the debt load has become high enough that credit agencies have begun to doubt the ability of the United States to credibly pay it off. On August 6, 2011, Standard and Poor’s lowered the United States’s AAA credit rating.

Despite growing concern about the debt, members of Congress and the president have not been able to reach agreement about how to lower it. On November 21, 2011, the Joint Select Committee on Deficit Reduction (the so-called Super Committee) failed to come up with a resolution. Politicians from both parties were unwilling to raise taxes or to cut expenditures sufficiently to reduce federal borrowing. As Hardin would explain, each politician seeks to protect his or her private political interests and agendas, even though the overall U.S. economy will likely be harmed, as will its ability to rebound from the recession. Politicians could not agree on a sharing of the costs (higher taxes and expenditure cuts affecting their constituents) for the benefit of reducing the federal debt. This is indeed a Tragedy of the Commons.

What about the Euro? In January 1958, six European countries joined to form the European Common Market with reduced tariffs and more integrated economies. In 1993, the European Union (EU) was formed. By 2007, the EU had 27 members and five other European countries as candidates. A common currency, the Euro, was introduced in 1999 with 17 of the EU member-countries adopting it.

While linked monetarily, the Euro countries were not bound by a common fiscal policy.

The Euro seemed to be a logical progression in the gradual uniting of European economies. It lowered transaction costs in trade and reduced borrowing costs in at least some member countries because debt was denominated in Euros, rather than in local currencies, such as the drachma. This not only facilitated the writing of debt instruments but appeared to lower default risk. The Euro was Europe’s currency and it began to compete with the Dollar as the international currency for exchange. After a slow start, the value of the Euro rose beyond par with the Dollar. Everyone seemed to benefit. German and Dutch exporters sold more to Greece, Spain, Portugal, and Italy, and Europeans could more easily travel throughout the continent, with northern Europeans purchasing vacation homes on the Mediterranean.

While linked monetarily, the Euro Zone countries were not bound by a common fiscal policy. Expenditures, taxes, and borrowing patterns diverged. Indeed, the Euro promoted higher debt levels. The Euro became a common pool resource. So long as its value was assured, Euro Zone countries and their populations could borrow at low rates and expand both private and government expenditures. The problem, of course, was that the fiscal policies of the countries within the Euro zone varied dramatically. It was rational for politicians in some countries to borrow more and increase debt, relying upon the common currency. As long as their economies continued to grow, there was no emergency.

But debt levels grew, especially after the financial shocks of the late 2000s. By 2011, debt levels in Greece, Italy, Ireland, Portugal, Spain, and possibly France have become so high that sovereign default is possible. But just as with other Tragedies of the Commons, members of the Euro Zone have not been able to devise a credible solution. Politicians from northern Europe are reluctant to saddle their thrifty taxpayers with the debts of their spendthrift southern neighbors. This is despite the fact that should countries default and the Euro fail, there are likely to be severe economic repercussions, affecting everyone including those in northern Europe who profited from exporting to southern Europe during the Euro boom. The parties cannot agree on the sharing of the costs and benefits of guaranteeing the debt of all Euro Zone countries. Here, too, is a potential Tragedy of the Commons.

As stated by Garrett Hardin, the alternative to the losses of the commons may be “too horrifying” so that some agreement among the Euro Zone countries is ultimately reached. This would be propelled by an imminent crisis. In the case of the Euro, the current crisis may lead to greater efforts to protect the currency. The costs of doing so, however, are very high because it requires actual coordination and control of sovereign fiscal policies, something national politicians and their constituents are loath to relinquish.

In the case of U.S. debt, the solution could be easier, because other sovereign countries are not involved. Rather, individual politicians represent jurisdictions within one country. Taxes could be raised and expenditures could be reduced. But a crisis at home has yet to materialize to push politicians to such agreement. The Tragedy of the Commons may yet unfold.

Gary D. Libecap is the Sherm and Marge Telleen Research Fellow at the Hoover Institution as well as the Bren Professor of Corporate Environmental Policy, Donald R. Bren School of Environmental Science and Management and an economics professor at the University of California, Santa Barbara. An expert on natural resource and environmental economics, he specializes in property rights and markets. His current research examines the legal and regulatory transaction costs of water marketing in the western United States. He is the cochair of Hoover's Property Rights, Freedom, and Prosperity Task Force.
 
China's experiment with bubble economics looks to be feeling the strain. Their stimulus package is ending and the strain is visible everywhere. Der Speigel has a good story on it.
http://www.spiegel.de/international/europe/0,1518,802308,00.html
 
Some businesses might have started drawing up contingency plans to deal with a collapse of the euro, but David Newlands, chairman of Kesa Electricals, was remarkably unruffled about the crisis. He said that Kesa had modelled for no such collapse, adding:

If you turn a Frenchman upside down, he has plenty of money, and if you look down the back of an Italian's sofa, there's plenty of money there. Europeans are going to carry on spending on white goods, whether it is in euros, or francs or lira. All we would have to do is change the tills, which would be a bit of a bugger

http://www.telegraph.co.uk/finance/debt-crisis-live/8939634/Debt-crisis-as-it-happened-December-7-2011.html

The real impact of the financial crisis:

Politicians and Bureaucrats being exposed as totally ineffectual and deprived of alms to distribute.

Bankers not much further behind.

With the internet, in the absence of cash, how long would it take for David Newlands to decide that he would accept a new Mercedes in exchange for 10 stoves?  Means of exchange?  Store loyalty points?  Clubs?  Visa/Master Charge Credits (undenominated).  People are already swapping goods and services effectively internationally without money.....

Roll on default..... Death's too late.  :)
 
A pretty fair assessment, I think of what has just transpired in Brussels, reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/report-on-business/international-news/eus-vicious-circle-economics-dooms-it-to-failure/article2265562/
EU’s vicious-circle economics dooms it to failure

ERIC REGULY

ROME— From Saturday's Globe and Mail
Published Friday, Dec. 09, 2011

The fawning mission to meet Germany’s demands for fiscal discipline, and lots of it, everywhere, all day and all night, has succeeded. But before you cheer the end of the debt crisis, consider that the Brussels summit chose the wrong bloody mission.

The agenda should have focused instead on short- and medium-term growth plans and didn’t. That’s why the crisis will endure, perhaps not to the point of destruction for the common currency – though that should not be ruled out – but certainly to the point that Europe faces years of zombie economic performance.

The two-day summit, which ended Friday after an all-night negotiating session, wasn’t a total disaster. At least 23 of the 27 countries in the European Union – soon to be 28 with Croatia’s apparently suicidal desire to climb aboard the listing ship – agreed to a new, long-term fiscal pact designed to ensure that the euro never again gets hit with an existential crisis. (Britain isolated itself by refusing to join the deal, for fear that it would have to sacrifice the safeguards on its banking industry.)

On top of that agreement, the EU is strengthening its roster of financial stabilization tools. The EU will lend about €200-billion ($272-billion) to the International Monetary Fund, co-sponsor of the bailouts of Greece, Portugal and Ireland, to boost its firefighting capabilities. The European Stability Mechanism, the permanent bailout fund, is to launch next summer, a year earlier than originally planned, and its lending capacity is to be increased.

Separately, the European Central Bank did its bit on Thursday by dropping interest rates by 0.25 percentage points and opened the credit spigots to keep the banks in the lending game. The ECB will not, however, become the lender of last resort. Nor will Germany back the idea of euro bonds.

In the end, the theme was Teutonic – and legally binding – fiscal discipline, as demanded by German Chancellor Angela Merkel and her debt-fearing minions. Structural deficits are to be limited to 0.5 per cent of GDP. Countries with high debt will have to reduce that debt by one-twentieth a year. Sovereignty-robbing oversights of national budgets are coming, and so on.

Translation: More austerity. Make that more austerity or you get hit with painful sanctions.

The German interpretation of the crisis is that all debt is evil and therefore eliminating debt is the cure. Never mind that countries with groaning debt loads, such as Japan and Italy, have always muddled through, and at times thrived; or that the relatively low debts of Spain and Ireland did not prevent them from becoming victims of this crisis.

And never mind that austerity programs seem to be making a bad situation worse. Look at Greece. Two years of austerity demanded by the EU and the ECB – read: Germany – with the IMF at their side have pushed the country to the verge of failed state status as economic activity vaporizes. The rest of the EU is slipping into recession.

With no growth, budget deficits everywhere refuse to disappear. Debt is going up. Perversely, the German-inspired response to the persistent deficits is demand for even deeper austerity. This is self-defeating, vicious-circle economics. At its worst, the lack of growth will erode the ability of the weakest countries to service their debts. Once investors figure that out, their sovereign bond yields will soar again, to the point their funding costs become unsustainable. Italy is getting close to that point.

The summit failed because scant attention was paid to the far bigger problem of how to restore growth, how to reform economies to make them more competitive and – crucially – whether some of the austerity programs should be diluted, if not eliminated. Or whether Germany should do the unthinkable and stimulate its own economy in an effort to boost imports, all the better to stimulate the weak economies.

As Martin Wolf of the Financial Times pointed out the other day, the “debt crisis” isn’t really about debt. It’s really about epic imbalances within the EU. Germany’s current account surplus is way too big. Greece, Spain, Portugal and Italy are running negative current account balances. The extremes have to be eliminated.

How will this end? Here’s a guess. In the absence of credible growth strategies, and the presence of ever-deeper austerity efforts, the euro zone, at best, will muddle through, though only with the help of the ECB. The bank has ruled out becoming the lender of last resort. Don’t count on it holding to that position. Its bond-buying program will have to accelerate at some point. Euro bonds, ruled out by Germany, will have to be launched. If Germany insists on fiscal austerity, it will have to allow weaker countries to exploit its excellent credit rating.

There is one more scenario that the EU summiteers appear to be forgetting, or ignoring: Social breakdown, Greek style, in other countries as jobs disappear, lost generations take to the streets and banks refuse to lend. Mass protest and strikes, some violent, from London to Athens were regular features of the 2011 disaster calendar. The ultimate outcome of the Great Brussels Fiscal Discipline Summit could be blood in the streets.


I thinks Reguly is right: slow to no growth in Euirope and the USA (and parts of Asia, too) is making this the Great Recession. One result of the German's disciplinary theme will be slower growth - just what Europe doesn't need.

I also think Cameron got it right, albeit probably for the wrong reasons. The best way to avoid the train wreck is to not get on the train.
 
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