Why Europe Keeps Failing........ merged with "EU Seizes Cypriot Bank Accounts"

[Edward Campbell]

The Economist has, in recent weeks, raised its editorial eyebrows over what it calls the Tea Party analogs in Europe, especially Marine Le Pen's Front national and the UKIP in Britain. Now, in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Financial Times, it is reported that the upstart UKIP is ahead in one opinion polls ~ and polls need to be treated with caution ~ and its leader, Nigel Farage, is running just behind Prime Minister Cameron and well ahead of Labour leader Ed Miliband and Nick Clegg, the Liberal Democrat leader and deputy prime minister:

http://www.ft.com/intl/cms/s/0/30bc428e-80f0-11e3-95aa-00144feab7de.html?siteedition=intl#axzz2qqeyOfOf

Ukip more popular than the Tories, shows poll

By Elizabeth Rigby, Deputy Political Editor

January 19, 2014

Nigel Farage has been voted the second most popular party leader behind David Cameron in a poll, underlining the threat of the UK Independence party to the political establishment in the run-up to May’s local and European elections.

Ukip emerged as the most popular of all parties, with 27 per cent of voters saying they “liked” Ukip the best. Mr Farage won 22 per cent of support in the poll as most favoured leader, behind Mr Cameron with 27 per cent. Ed Miliband, the Labour leader polled 18 per cent with Ni

The poll will stoke the growing anxiety among the Conservative party in the run-up to European elections in May.

Downing Street is bracing itself for a Ukip surge in the elections, with swaths of their supporters indicating they will vote Ukip. More than a third of voters who supported David Cameron in the 2010 election said they were considering voting for Ukip.

The research by Lord Ashcroft, former Conservative party treasurer and pollster, found that 37 per cent of 2010 Tory voters – the “defectors” – would not support the Tories in an election tomorrow. Half of those said they would shift their support to Ukip.

The ComRes poll reinforces the growing fears within the Conservative party that Mr Cameron is not doing enough to neuter the Ukip threat, with a number of backbenchers pushing the prime minister to shift to a more eurosceptic position.

Nearly half of Mr Cameron’s backbench MPs wrote to Number 10 last week demanding that the government change the law and give parliament a veto over new EU legislation, as they look to steer the Conservatives to a more eurosceptic position in the run-up to the 2015 general election.

Lord Ashcroft has urged the party not to be distracted from the task of winning new voters, however.

“Pundits will be preoccupied by how well Ukip do, and at what cost to the Conservatives. But the Tories must keep their eye on the prize.

“Whatever tactical moves they make to minimise losses in an election that many people regard as inconsequential – and therefore an opportunity to cast a cost-free protest vote – must not be at the expense of building a coalition of voters that could give them a majority at Westminster.”

Mr Cameron has in recent months sought to counter the Ukip threat by appealing to more traditional Conservative voters with promises of an EU referendum in 2017, a tax break for married couples and tougher rhetoric on immigration.

But modernisers such as Andrew Cooper, Number 10’s former director of strategy, are adamant that the prime minister must not retrench to core Tory territory and instead try to attract younger, urban and ethnic voters to build support for the future.

I agree that Prime Minister Cameron is on the horns of a dilemma: does he continue to try to broaden the Tory base by being more moderate and more European? Or does he retrench and try to win back the Euroskeptics? I don't think he can do both.

Meanwhile:

 

Are these, Nigel Farage and Marine LePen,  the faces of the New Europe?

 

[a_majoor]

Having read that edition of the Economist, I think they have the right basic idea. These political parties and movements are in response to voter frustration over the very real "costs" of the EU, including loss of local autonomy, the severe dislocations caused by the 2008 economic disaste and strains caused by immigration and so on.

The key difference between the European movement(s) and the TEA Party movement in the United States is they come from far different political and cultural backgrounds. The TEA Party movement is about returning to the small/limited government model of the Founders. The various movements in Europe are actually all over the map (except for the small limited government movement, which really has no historical roots or precedent in Europe). The most extreme ones like "Golden Dawn" are National Socialist in nature, and many of the others which are not as focused on the immigration issue range from Social Democrat to advocating the Fascist Corporate State.

The big takeaway for me isn't that these parties will sweep into power (unless there is a further economic collapse in the EUZone), but that the more established parites will have to move in their direction in order to  appeal to voters, and start talkig about issues that many would rather leave unspoken.

 

[Edward Campbell]

While I think President François Hollande and his socialists are a major part of France's and Europe's problems, I doubt that Marine Le Pen, president of the Front National, the third-largest party in France is any improvement but, The Telegraph reports that she and her Front National have secured their best results ever in today's municipal elections.

:dunno:

 

[Kirkhill]

From a French observer in the Telegraph

....Marine Le Pen was the elephant in the room; the unmentionable partner. To consider voting for her was to exclude yourself from polite discourse. Bertolt Brecht, the Marxist playwright, summed it up best 60-odd years ago: “The people have lost the government’s confidence. Wouldn’t it be simpler for the government to dissolve the people and elect another?”

The writing was on the wall, but nobody cared to read it. Seen from the disfranchised wastelands of semi-rural France, from the Lorraine industrial basins (where the last Indian tycoon has abandoned the steelworks), or from Provence, where the Parisian haute bourgeoisie summer in elegant cypress-shaded stone villas while the local youth can’t find jobs, most of France’s politicians all look and sound the same. Drawn from a narrow social class, educated in the same elite government or scientific schools, civil servants by profession, they believe in technocratic, top-down solutions, because, every inflection seems to imply, They Know Best. They were not very popular even before the economic crisis. They are now loathed.

France is, of course, not alone in seeing a grassroots revolt from ordinary people who feel that the powers that be, in their respective capitals or in Brussels, at best nanny them, and at worst despise them. From Geert Wilders’s Partij voor de Vrijheid to Nigel Farage’s Ukip, they have made similar inroads in the political discourse.

But the French elites were particularly ill-equipped to understand this new reality. Allying intellectual pretensions with a hard-wired conformism – there’s a reason why there’s no French expression for “tall-poppy syndrome” or “accountability”, for that matter — they found it incomprehensible that the working class would cease to vote for the Left.

Marine Le Pen, meanwhile, was busy shopping for new young faces to the Left of the Socialist party. And with them she drew up a statist, protectionist platform that believes in nationalising key industries, withholding benefits from immigrants while making them more generous for laid-off workers, and supports Bashar al-Assad “against the Jihadists”. It all sounded Left-wing enough to attract an entire swathe of different voters.

There's that nasty word again.... TECHNOCRAT.

The Aristo's solution to the French Revolution - Meritocracy.

Meanwhile Marine Le Pen has found an innovative solution to the international socialism of Hollande, the EU, Milliband, Clegg, Blair, Kohl and Schroeder.  She has invented something new under the sun - she has subsumed the left and created a nationalist party to deliver socialism for the working class.  But I think she needs a new name - Le Front National doesn't do the concept justice - peut-etre la Partie Nationale des Oeuvriers Socialistes?

I mean, just think how many wars could have been avoided had Ultramontagnisme been spurned for Royalist churches in France, England and the Scandinavian countries.

I am truly glad that here in Canada we don't live in a sham democracy where all our bureaucrats come out of Ottawa, Carleton and Laval and all our lawyers don't come out of Osgoode Hall.  For then we would be living in a technocracy.

 

[SeaKingTacco]

I see what you did there....

 

[Edward Campbell]

This may seem an odd place to put an article - which is reproduced under the fair Dealing provisions of the Copyright Act from the Globe and Mail - about Putin's Russia, but I want to use it to suggest that Europe, as we generally think of it, doesn't really exist as anything other than a geographic expression, despite the EU and the €:

http://www.theglobeandmail.com/news/world/world-insider/is-europe-headed-for-war/article17765630/#dashboard/follows/

Is Putin about to wage war?

SUBSCRIBERS ONLY

Mark MacKinnon
The Globe and Mail

Published Wednesday, Apr. 02 2014

Everywhere I’ve travelled in recent weeks – London, Ukraine, Crimea, Moscow – the question is the same: Will there be a war in Ukraine?

The answer probably depends on your definition of “war.” If I’m asked whether I expect a full-blown Russian invasion of Ukraine, the answer I give is no. Not yet, anyway.

But we’re already deeply into a classic “phony war,” the kind that Europe has seen before.

NATO officials say the Russian army has massed tens of thousands of troops at the Ukrainian border, and is behaving in such a way (communicating through hand-to-hand couriers, deploying logistical units and erecting field hospitals) that looks more like preparations for an invasion than a standard military exercise. The Ukrainian government is hastily raising a new National Guard in hopes of demonstrating that (unlike in Crimea) it intends to put up at least some kind of fight.

But analysts in Moscow – including those with Kremlin connections – say President Vladimir Putin has not yet decided to invade. So far, he has only asked his government and military to give him all the tools he needs to mess with Russia’s disobedient neighbour.

Mr. Putin may be apoplectic over the revolution in Kiev, but few believe he has lost his mind. He’s not interested in sending his army to capture and hold (the latter task is the real challenge) eastern and southern Ukraine. Not if he can get what he wants by other means. The military force at the border is meant, for now, only to intimidate.

But Russia is already waging war by other means. The Kremlin’s media outlets – widely watched in Ukraine until a recent ban – have whipped up fear among Russian-speakers that the new government in Kiev is controlled by “fascists” bent on forcing their children to speak Ukrainian. Russian citizens are believed to have joined demonstrations in Donetsk, Kharkiv, Lugansk and Odessa, decrying the “coup” in Kiev and calling for Crimea-style referenda in those Russian-speaking cities.

The goals of the military buildup, the propaganda and the provocateurs are the same: making it clear that Ukraine ungovernable without Russia’s help and making it plain to Kiev and the West just how far Mr. Putin is willing to go to keep the former Soviet republic from joining the European Union and NATO. Each step Ukraine takes towards the West will be matched by violence in cities like Donetsk, bringing separatist referenda and Russian military “protection” closer.

The delicate dance – clashing protesters in Ukraine, rumoured Russian troop movements at the border, limited economic sanctions from the West – recalls the 1850s, as Russia’s Tsar Nicholas I tried to wring concessions out of crumbling Ottoman Empire before the English and French navies arrived in, yes, Crimea. Others will draw comparisons to the 1930s in Europe.

What Russia wants in exchange for peace now is what it believes it had before overthrow of Viktor Yanukovych in February: veto power over the decisions made by the Ukrainian government. It will not tolerate a Ukraine that sits on its border as a member of NATO and the EU.

Lviv, in the far west of Ukraine, can fly the flag of Brussels if it wants. But the Kremlin considers almost everything east of there to be part of its historic “sphere of influence.” And, after watching that sphere contract for the past 20 years (the 2004 accession of the former Soviet republics of Estonia, Latvia and Lithuania to NATO was particularly painful for Moscow), Mr. Putin has drawn a line through Ukraine, roughly following the curve of the Dnepr River. He’ll make it a new Iron Curtain if he has to.

This crisis won’t end soon, even if Kiev and its allies in the West agree tomorrow to recognize Russia’s annexation of Crimea as legal. If Mr. Putin gains the Crimean Peninsula while losing influence over the rest of Ukraine, he’s lost very badly indeed. And – remember – he’s thinking about how he’ll be judged in Russian history textbooks, not the ones that will some day be printed in North America and Western Europe.

Moscow sees only one route to resolve this conflict. Russia and the West (the Kremlin doesn’t consider the current Ukrainian government worthy of inclusion in discussions about Ukraine’s future) can make a deal that redesigns Ukraine along the decentralized lines of Bosnia-Herzegovina. That means expanded autonomy for the Russian-speaking east and south of the country, making those regions into de facto Russian protectorates. The whole of Ukraine would be made politically and militarily neutral, never to join NATO or the EU.

It’s a deal some policy makers in the West might be tempted to sign, if only to avoid a prolonged showdown with Moscow that would be costly for all sides. But any Ukrainian leader who agreed to such a pact drafted without the participation of Ukrainians would almost certainly see the “Maidan” – the street movement that ousted Mr. Yanukovych – turn on them next. There’s the May 25 election to think about.

The Kremlin believes it can win this war without fighting it, and is counting on the West to force Kiev to accept its terms in order to keep Mr. Putin from sending his troops across the border. As tiny Georgia discovered in 2008 during its own brief war with Russia, NATO isn’t coming to the rescue of a non-member state.

But the Ukrainians that Mr. Putin is wishing out of the equation just spent three months staring down Mr. Yanukovych’s riot police. They won’t simply back down now. Neither will Mr. Putin.

The worrying thing about phoney wars is they often prove only a prelude to the real thing.

I think mark MacKinnon is right that this is a situation that Europe has faced many, many times before and it does so for the simple reason that Europe doesn't, really, exist, except as a geographic expression.

There are several Europes, not one:

    + North West Europe ~ the British Isles, Scandanavia, the Netherlands and parts of Belgium and Germany;
    + Roman Europe ~ Italy, France, Spain and parts of Belgium and Germany;
    + Orthodox Europe ~ Greece and (some of) the Balkans;
    + Slavic Europe ~ led by Russia;
    + The Muslim periphery, including parts of the Balkans; and and, of course
    + Mittel Europa centred on Berlin and stretching from the Rhine to Russia.

It's not clear to me that economic advantage and political unions can overcome centuries millennia of cultural divisions.

 

[Kirkhill]

Agreed.  Nor is it clear to me that there exists any political authority anywhere that has the ability to command its subjects to accept anything.

And that is/was the essence of RealPolitik at which Kissinger and Adenauer excelled.  If your leadership is bloody-minded enough and has enough bullets and labour camps they can generate the appearance of control.  But given risings and rebellions in the world's most repressive regimes, making a farce of claims of stability, nobody can ever do more than - and with equal certainty - Neville Chamberlain and proclaim "peace in our time".

For good or ill, the populi has a vox today.

"Uneasy lies the head that wears a crown".

 

[Edward Campbell]

So, France restructures its government, again, and the first thing the new finance minister does is ask the EU for yet another extension to the deadline for meeting its deficit rduction targets.

Source: http://www.theglobeandmail.com/report-on-business/video/video-so-will-eu-give-france-more-time/article17789666/#dashboard/follows/

France has, essentially, been lying to its EU partners ever since the exchange rate snake was introduced in 1979. But France is, must be, allowed to lie because the Franco-German accord is the reason the EU exists at all. The bargain that underlies the EU is that Germany will be defanged and France will be elevated to and maintained in a position of power in Europe thanks to German generosity. But the expansion of the EU into Eastern Europe will, in my opinion establish something akin to the old German dream of Mitteleuropa stretching from the Rhine to Russia. Britain and (some of) the Scandinavians may, in my view will, demand a "second tier" EU status, allowing them to opt out of much of the EU's financial adventures. France will be less and less relevant but it, like Spain, Portugal Greece and Italy (and unlike Britain, Ireland and the Scandinavians) will have nowhere to go.

 

[Kirkhill]

I can see NATO's Partners for Peace of the Eastern Fringe setting a pace that Spain (neutral under Franco), France (reluctant under deGaulle) and Germany (unwilling at present) will not match. 

Conversely I can see Romania, Austria, Czechs and Slovaks, Poles, Latvians, Lithuanians and Estonians all finding common cause.  The Balts will engage the Finns and Swedes for historical and strategic reasons and I can foresee Denmark, Norway and Britain standing in with the rest of the Baltic states.  Britain's contribution is likely to be RN/RAF lead with 3 RM Cdo and 16 Air Asslt taking the lead for land forces.  The Netherlands - it depends on the government of the day as to whether they are continentalists along with Belgium, Luxembourg and France or "Thalassians" along with the Danes, Brits and Norwegians.

Ukraine I intentionally set aside - crystal ball is too murky.

The interesting link, I think, is what happens in region between China and Russia.  Reading the local news out of that part of the world it seems that they are in no rush to be subsumed by either Moscow or Beijing.  They really like the idea of being able to play the middle man - as they always have.

What type of relationship can Poland and Kazakhstan establish?  Russia can dominate a province of a country like Georgia, and apparently can secure friendly territory like Crimea.  It even seems to be balking at swallowing Ukraine whole.  How would it manage against Poland and Kazakhstan?

 

[Edward Campbell]

So, France restructures its government, again, and the first thing the new finance minister does is ask the EU for yet another extension to the deadline for meeting its deficit rduction targets.

Source: http://www.theglobeandmail.com/report-on-business/video/video-so-will-eu-give-france-more-time/article17789666/#dashboard/follows/

France has, essentially, been lying to its EU partners ever since the exchange rate snake was introduced in 1979. But France is, must be, allowed to lie because the Franco-German accord is the reason the EU exists at all. The bargain that underlies the EU is that Germany will be defanged and France will be elevated to and maintained in a position of power in Europe thanks to German generosity. But the expansion of the EU into Eastern Europe will, in my opinion establish something akin to the old German dream of Mitteleuropa stretching from the Rhine to Russia. Britain and (some of) the Scandinavians may, in my view will, demand a "second tier" EU status, allowing them to opt out of much of the EU's financial adventures. France will be less and less relevant but it, like Spain, Portugal Greece and Italy (and unlike Britain, Ireland and the Scandinavians) will have nowhere to go.

But it is being reported that Brussels says "No!" What will the French do?

 

[Edward Campbell]

I think that Viviane Reding (Luxembourg), the vice president of the European Commission, is on the right track for some, maybe even most of continental Europe and the unnamed "senior official" is also on the right track in saying that "We assume Britain's leaving the EU so we don't even bother thinking about British sensitivities at the moment," in this article (which I missed when it was first published) which is reproduced under the Fair Dealing provisions of the Copyright Act from The Telegraph:

http://www.telegraph.co.uk/news/worldnews/europe/eu/10559458/We-want-a-United-States-of-Europe-says-top-EU-official.html

We want a United States of Europe says top EU official
Voters must decide for or against a United States of Europe during EU elections this spring, says vice president of the European Commission

By Bruno Waterfield, Athens

08 Jan 2014

A campaign for the European Union to become a "United States of Europe" will be the "best weapon against the Eurosceptics", one of Brussels' most senior officials has said.

Viviane Reding, vice president of the European Commission and the longest serving Brussels commissioner, has called for "a true political union" to be put on the agenda for EU elections this spring.

"We need to build a United States of Europe with the Commission as government and two chambers – the European Parliament and a "Senate" of Member States," she said.

Mrs Reding's vision, which is shared by many in the European institutions, would transform the EU into superstate relegating national governments and parliaments to a minor political role equivalent to that played by local councils in Britain.

Under her plan, the commission would have supremacy over governments and MEPs in the European Parliament would supersede the sovereignty of MPs in the House of Commons.

National leaders, meeting as the European Council, would be reduced to consultative, second chamber role similar to the House of Lords.

Nigel Farage, the leader of Ukip, said that Mrs Reding had revealed the true choice for British voters to make at polling stations.

"For people in power in Brussels that is the only choice on offer, no reform just a United States of Europe. On 22 May the British people must ask themselves if they want this and vote accordingly," he said.

"I am sure people will say no to this centralist fanaticism."

Mrs Reding's comments illustrate the growing gulf between a Europe committed to "ever closer union" and Britain, which is pushing to reduce the EU's powers.

"We assume Britain's leaving the EU so we don't even bother thinking about British sensitivities at the moment," said an official.

While Britain may have been written off, concern is mounting because hostility has reached unprecedented levels across continental Europe and anti-EU parties are leading the polls in France, the Netherlands and Greece.

Senior EU figures, such as Mrs Reding, want the European elections in May to move beyond debates over eurozone austerity by embracing a grand vision of Europe.

"This debate is moving into the decisive phase now. In a little more than four months' time, citizens across Europe will be able to choose the Europe they want to live in," she said.

"There is a lot at stake. The outcome of these elections will shape Europe for the years to come. That is why voting at these elections is crucial.

This will be our best weapon against the Eurosceptics: to explain to our citizens that their vote really matters."

In the run up to the springtime pan-European vote, the EU is gearing up to mount an unprecedented campaign for the hearts and minds of voters.

Speaking in Athens, José Manuel Barroso, the commission president, signalled that the EU would use the centenary of World War One to warn that Euroscepticism, far-Right and populist anti-European parties could bring war back to Europe.

"No other political construction to date has proven to be a better way of organising life to lessen the barbarity in this world," he said.

"It is especially important to recall this as we will commemorate this year the start of the First World War. We must never take peace, democracy or freedom for granted. It is also especially important to remind this as in
May the peoples of Europe will be called to participate in European elections."

The attempt by Mr Barroso and Mrs Reding to raise the stakes in the EU elections have not been well received by all governments.

"Federalist hyperbole about a United States is the opposite of helpful to the majority of countries who want a reformed EU to work better," said a European diplomat.

Why does a USE (United States of Europe) make sense? Put bluntly, France, Italy, Portugal and Spain. All can be, should be economic success stories ~ none are. They are, to be even more blunt, unfit to govern themselves within the framework of a currency union. A USE, wherein those four have less and less say over their fiscal policy and no say at all over monetary policy is the best way to bring them into "peace and prosperity."

In my view Britain is, indeed, being "written off" and that, too, is as it should be. Britain, Norway, Switzerland and possibly Denmark, (Eurozone member Ireland) and Sweden might all be excluded but might, also, remain within a European Free Trade Agreement that includes the (gigantic) USE. Some countries - Greece, certainly, may (likely will) be admitted because they cannot survive without the USE.

 

[Kirkhill]

I think that one has been tried before as well....

Overview of contractual states (red) and associated states (other colours) between 1866 and 1914.

  - Wikipedia

And I believe that the Latin Monetary Union pretty nicely matches with the earlier Bourbon attempt to secure France, Spain (including Portugal and the Two Sicilies) and Luxembourg after their Navarre  base had been the loser in a squeeze play by the Valois, Aragons and Castillians.

It also is not a lot different than this map

Except for the prevarication of France - a nation of farmers ruled by the mutually antagonistic Germanic Capetian faction and the Latinate Bourbon faction.  Entrepreneurs left France centuries ago.

Europe is doomed.... doomed I tell ya.  ;D

 

[Brad Sallows]

>Why does a USE (United States of Europe) make sense?

Generally you should excise a cancer, not invite it to make itself comfortable and share resources.

 

[CougarKing]

Related: isn't the same thing true for Holland because of the importance of Shell to their economy?

Reuters

End of oil boom threatens Norway's welfare model

Reuters
By Balazs Koranyi

OSLO (Reuters) - Norway's energy boom is tailing off years ahead of expectations, exposing an economy unprepared for life after oil and threatening the long-term viability of the world's most generous welfare model.

High spending within the sector has pushed up wages and other costs to unsustainable levels, not just for the oil and gas industry but for all sectors, and that is now acting as a drag on further energy investment. Norwegian firms outside oil have struggled to pick up the slack in what has been, for at least a decade, almost a single-track economy.

How Norway handles this "curse of oil" - huge wealth that bring unhealthy dependency in its train - may hold lessons across the North Sea in Scotland, which votes on independence from the United Kingdom later this year, relying at least in part on what it sees as its oil revenues.

(...EDITED)

 

[Edward Campbell]

The highlighted bit also applies to Canada and all Canadian provinces.

 

[Edward Campbell]

It is too long to post, but I think members who are interested will be able to read this fascinating series in the Financial Times without a subscription.

 

[Colin Parkinson]

>Why does a USE (United States of Europe) make sense?

Generally you should excise a cancer, not invite it to make itself comfortable and share resources.

Clearly a closest Eric Flint fan http://www.ericflint.net/

 

[Edward Campbell]

Despite an apparent recovery in the Eurozone, the Globe and Mail's Eric Reguly suggests that Italy is still dragging them down in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from that newspaper:

http://www.theglobeandmail.com/report-on-business/international-business/italy-the-euro-zones-pouting-mistress-threatening-financial-havoc/article18728345/#dashboard/follows/

Italy, the euro zone’s pouting mistress, threatens financial havoc

ERIC REGULY
ROME — The Globe and Mail

Last updated Saturday, May. 17 2014

Bear with me on this little story because it says a lot about the direction of Italy and the other banged-up Mediterranean countries on the eve of the European Union election.

My daughter Emma is 14 and attends a well-regarded Italian school in a buzzy but grubby part of Rome. Last year, the school was hit with at least two arson attacks. Someone – no one knows who – would pour an alcoholic fluid on one of the upper floors and light it. Each time, the school was empty, suggesting the arsonist had no desire to incinerate all the kids and teachers, and the damage was minimal.

Since September, there have been eight more arson attacks. The last one, two weeks ago, again set when the school was empty, did a lot of damage before it was doused. The school is now closed and the teachers have been scrambling to create makeshift classrooms in other schools and in offices nearby. The effort has been chaotic, frustrating, disruptive to parents and students and – this is the point – entirely avoidable.

In any civilized country, the second arson attack would have triggered something akin to a ruthless counterterrorist campaign. Priority police investigations and round-the-clock patrols would have been launched, surveillance cameras installed and evacuation practices ordered. Nothing of the sort happened, in spite of attack after attack after attack.

Typical Italy, some of us thought. This is a country that happily ignores danger signals and puts its crew on alert only at the last minute, when bulkheads are bursting and the ship is about to sink beneath the waves. Ditto Greece, Spain and, to a great extent, France, though Italy, the euro zone’s third-largest economy, embraces inertia and denial like a pouting mistress. Italy could still wreck the euro zone.

But isn’t the crisis over? It is, in the sense that the sovereign bond yields of the crisis countries have fallen relentlessly in the past two years, taking them down to their precrisis levels. Italy’s 10-year borrowing costs are now 2.9 per cent, not much higher than Canada’s 2.3 per cent. For Italy, that’s a drop of four full points from their level in 2011 and 2012, when the country was on the verge of the bailout whose crushing expense could easily have torn the euro zone apart. Remember, Italy is a Group of Seven country whose economy is about a quarter bigger than Canada’s.

Greece, the distraught victim of a six-year depression, and the recipient of two bailouts and a debt restructuring, is again raising its own debt and recently sold five-year paper at just below 5 per cent. Portugal has vaulted back into the debt markets too; its two-year bonds trade at just 1.2 per cent, roughly the same level as equivalent Canadian debt.

How can this be? A big thank you must go to European Central Bank president Mario Draghi, who, in the summer of 2012, promised to do “whatever it takes” to keep the euro zone intact. The promise was backstopped by a pledge to buy, in unlimited quantities, the debt of any country having trouble financing itself. The gradual end of the euro zone recession did the rest.

But like my daughter’s school, there are warning signs everywhere that all is not well. The bond yields in what were known as the “crisis” countries are not telling the truth; they seem to be entirely disconnected from the real economy. Take Italy, which is easing up on austerity and reform measures as its bond yields converge with those of the healthiest European economies. Italy’s economy is not growing. This week, fresh data showed that the economy slipped back into contraction territory in the first quarter. Another negative quarter – entirely possible – and the country will officially be back in recession.

Essentially nothing has been done to improve its competitiveness. Unlike Spain and Greece, its unit labour costs have not fallen since the start of the 2008 recession. Italy’s debt is now well beyond 130 per cent of gross national product, making it the world’s second most indebted industrial country on the planet, after Japan. With negligible growth rates, the debt will keep rising to the point it cannot be paid back.

If all this were not bad enough, Mr. Draghi, the saviour of the euro zone, seems to have lost his altruistic side. Inflation rates have plummeted in the region, to the point that deflation – falling prices – have gone from remote possibility to clear and present danger. Yet Mr. Draghi has not dropped interest rates or launched quantitative easing. Very low inflation or deflation can wreck countries’ debt-reduction plans because it prevents them from inflating their debts away.

To top it all off, the Chinese economy is cooling off, which is bound to cost Germany, France and Italy some export sales. If China devalues its currency, a move that would raise the cost of its imports, all bets are for Europe’s export-led recovery.

The warning signals abound, yet euro zone governments, especially those in the Mediterranean countries, take comfort in the low bond yields and ignore them. In the EU elections on May 25, the new band of anti-austerity parties stand to make great inroads. If they do, the reform efforts will again get diluted. The underperforming economies of Italy, Spain and a few others do not deserve their low bond yields. Sadly, it appears only a crisis will convince these countries to ramp up economic reforms.

I think he has hit the nail on the head when he explains that the ECB nudged Italy's debt back into respectability despite, not because of, Italy's own economic performance which remains below acceptable standards. Mario Draghi did 'whatever it took" but none of the big players, not Italy and not France, helped out. The Eurozone is still in deep, deep trouble because two of its members, Italy and France, are 'too big to fail' and, also, apparently, too 'big' learn to fiscal self-discipline.

 

[Edward Campbell]

"The local council elections in Britain point to a surge in popularity of the UK Independence Party, whose fierce anti-Europe stance has rattled the mainstream British parties and will encourage the populist Eurosceptic parties who are campaigning across the continent," according to an article in the Globe and Mail.

My sense is that Europe has moved a bit too far a bit too fast.

The intrusions into everyday traditions by an insensitive Brussels based bureaucracy has made too many ordinary people cranky. Immigration/racism is also a factor. The problems of the Euro, created by making membership too easy, are eroding confidence.

But it is not clear that all the Eurosceptic parties are doing as well as UKIP. The Financial Times reports that "Geert Wilders, the far-right populist who promised to help lead a continent-wide anti-EU insurgency, has expressed disappointment about his Freedom party’s prospects in the European Parliament poll, raising doubts over an expected surge for eurosceptic parties in the pan-European elections that conclude on Sunday ... [and] ... Anti-EU parties such as France’s National Front and the Freedom party were expected to record big gains in this weekend’s European elections, in which the Netherlands and the UK were the first to vote."

 

[Edward Campbell]

The EU election results are not, according to an aricle in The Guardian, what moderates of any stripe, wanted.