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

[a_majoor]

It looks like Greece actually has an exceptionally strong hand to play, with the threat of hundreds of billions of Euros being lost through various clearing accounts built into the EU's structure:

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/11421500/ECB-risks-crippling-political-damage-if-Greece-forced-to-default.html

ECB risks crippling political damage if Greece forced to default
If Greece defaulted, the German people would discover instantly that a large sum of money committed without their knowledge and without a vote in the Bundestag had vanished
By Ambrose Evans-Pritchard
8:54PM GMT 18 Feb 2015

The political detonating pin for Greek contagion in Europe is an obscure mechanism used by the eurozone's nexus of central banks to settle accounts.

If Greece is forced out of the euro in acrimonious circumstances - a 50/50 risk given the continued refusal of the creditor core to acknowledge their own guilt and strategic errors - the country will not only default on its EMU rescue packages, but also on its "Target2" liabilities to the European Central Bank.

In normal times, Target2 adjustments are routine and self-correcting. They occur automatically as money is shifted around the currency bloc. The US Federal Reserve has a similar internal system to square books across regions. They turn nuclear if monetary union breaks up.

The Target2 "debts" owed by Greece's central bank to the ECB jumped to €49bn in December as capital flight accelerated on fears of a Syriza victory. They may have reached €65bn or €70bn by now.

A Greek default - unavoidable in a Grexit scenario - would crystallize these losses. The German people would discover instantly that a large sum of money committed without their knowledge and without a vote in the Bundestag had vanished.

Events would confirm what citizens already suspect, that they have been lied to by their political class about the true implications of ECB support for southern Europe, and they would strongly suspect that Greece is not the end of it. This would happen at a time when the anti-euro party, Alternative fur Deutschland (AfD), is bursting on to the political scene, breaking into four regional assemblies, a sort of German UKIP nipping at the heels of Angela Merkel.

Hans-Werner Sinn, from Munich's IFO Institute, has become a cult figure in the German press with Gothic warnings that Target2 is a "secret bailout" for the debtor countries, leaving the Bundesbank and German taxpayers on the hook for staggering sums. Great efforts have made to discredit him. His vindication would be doubly powerful.

An identical debate is raging in Holland and Finland. Yet the figures for Germany dwarf the rest. The Target2 claims of the Bundesbank on the ECB system have jumped from €443bn in July to €515bn as of January 31. Most of this is due to capital outflows from Greek banks into German banks, either through direct transfers or indirectly through Switzerland, Cyprus and Britain.

Grexit would detonate the system. "The risks would suddenly become a reality and create a political storm in Germany," said Eric Dor, from the IESEG business school in Lille. "That is the moment when the Bundestag would start to question the whole project of the euro. The risks are huge," he said.

Mr Dor says a Greek default would reach €287bn if all forms of debt are included: Target2, ECB's holdings of Greek bonds, bilateral loans and loans from the bail-out fund (EFSF).

Markets remain relaxed. Yields on Portuguese, Italian and Spanish debt have been eerily calm. Investors are betting that the ECB could and would contain any fallout as its launches €60bn a month of quantitative easing, simply blanketing the bond markets of EMU crisis states.

This ignores the great unknown. Would the Bundestag or Holland's Tweede Kamer, or any creditor parliament, continue to let their national central banks supply unlimited Target2 credits to Latin bloc states via the ECB nexus once the system had blown up in Greece.

As a practical matter, the ECB itself would be in trouble. Any Target2 losses must be shared, according to the ECB's "capital key". The Bundesbank would take 27pc, the French 20pc, the Italians 18pc and so on, but these are uncharted waters.

"I do not believe that the Germans would allow the Bundesbank or the ECB to carry on with negative capital. They would demand recapitalisation and consider it a direct loss to the German state," said Mr Dor.

If so, Chancellor Merkel would face an ugly moment - avoided until now - of having to go to the Bundestag to request actual money to cover the damage. Other forms of spending would have to be cut to meet budget targets.

Syriza's leader, Alexis Tsipras, holds a stronger hand than supposed, and he is not shy in playing it. His speech to the Greek parliament on Tuesday night was flaming defiance. "We are not taking even one step back from our promises to the Greek people. We will not compromise, and we won't accept an ultimatum,” he said.

"There is a custom that newly-elected governments abandon their election promises. We intend to implement ours, for a change," he said, basking in approval from 82pc of Greek voters.

The new Greek plan to be submitted to Brussels is scarcely different from the proposals already rejected by the EMU finance ministers on Monday. The elemental demand is that there must be no further austerity. This has not changed.

The Eurogroup insists that the primary budget surplus be raised from 1.5pc of GDP in 2014, to 3pc this year and 4.5pc next year. As Nobel economist Paul Krugman says, they want to force a country that is already reeling from six years of depression - with the jobless rate still near 50pc - to triple its surplus for no other purpose than paying off foreign creditors for decades to come. They are doing to Greece what the Western allies did to a defeated Germany at Versailles in 1919: imposing unpayable and mutually-destructive reparations on a prostrate nation.

The fear of the Northern bloc is that austerity discipline will collapse across southern Europe if Greece wins concessions, but collapse is exactly what is needed for Europe to escape from a debt-deflation trap and prevent a second Lost Decade.

"It has become an ideological battle over austerity. Conservative governments want to ram though their retrenchment policies whatever the cost," says Sven Giegold, a German Green MEP.

Many of the attacks on Syriza are caricature. Athens is not taking on more public workers. It is rehiring 3,500 people "unjustly fired", offset by reductions elsewhere. "On privatisation, the government is utterly undogmatic," said finance minister Yanis Varoufakis.

"We are ready and willing to evaluate each project on its merits alone. Media reports that the Piraeus port privatisation was reversed could not be further from the truth," he told his Eurogroup peers. What Syriza will not do is carry out a "firesale" of assets at giveaway prices in a crushed market.

Talk of a debt write-off is a red herring. The Greeks are not asking for it. Mr Varoufakis wants a bond switch to "GDP-linkers" tied to future economic growth rates. He would probably settle for lower interest payments by stretching maturities.

The issue that matters is the primary surplus. Do the creditors wish to risk an EMU break-up and all that could follow in order to extract their last pound of flesh regardless of history's verdict?

Anybody who thinks the loan package forced on Greece in 2010 (with the collusion of the Greek elites) was fair treatment should read the protests by every member of the IMF Board from the emerging market nations. With slight variations, all said Greece needed debt relief from the outset, not fresh loans that stored greater problems. All said the bail-out was intended to save foreign banks and the euro itself at a time when there were no EMU defences against contagion, not to save Greece.

"The scale of the fiscal reduction without any monetary policy offset is unprecedented," said Arvind Virmani, India's former representative to the International Monetary Fund, according to leaked minutes. "It is a mammoth burden that the economy could hardly bear. Even if, arguably, the programme is successfully implemented, it could trigger a deflationary spiral of falling prices, falling employment and falling fiscal revenues that could eventually undermine the programme itself." This is exactly what happened.

Jean-Claude Juncker, the European Commission chief, implicitly recognises that Greece has a legitimate moral claim on Europe. He is quietly helping Syriza, just as France is quietly helping to shift the balance in the Eurogroup. The united front against Greece is a negotiating posture. It will fray under pressure.

Whether the EMU powers can resolve their own deep differences before Greece runs out cash - within a week, reports Ekathimerini - is an open question. Francesco Garzarelli, from Goldman Sachs, said he is "more worried" now than at any time since the start of the EMU crisis.

"The risk of a miscalculation in the negotiations remains high and will peak between now and month-end. Should Greece drop out of the single currency, the risk would become systemic. We doubt that even the major markets would be unaffected," he said.

On balance, and with little conviction, my view is that Chancellor Merkel will ultimately overrule the debt collectors and will yield in order to save Germany's 60-year investment in the diplomatic order of post-war Europe. It is a view shared by German eurosceptics such as Gunnar Beck, a legal theorist at London University.

"Germany's leaders can't let Greece leave the euro, and the Greeks know it. They will die in a ditch to defend the euro. This is our Eastern Front, our Battle of Kursk, and I'm afraid to say that it will end in unconditional surrender by Germany," he said.

 

[Brad Sallows]

Quite a while back I mused half-jokingly that the machinations to prop up Greece during the last active throes of its fiscal crises were only meant to hold things together until Germany had figured out how to transfer losses from German banks to German taxpayers, and until France had figured out how to transfer losses from French banks to German taxpayers.  Apparently the plan continues to unfold.

 

[Edward Campbell]

Eric Reguly, the Globe and Mail's European Bureau Chief opines on the costs of Brexit in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from that newspaper:

My emphasis added
http://www.theglobeandmail.com/report-on-business/international-business/as-grexit-fades-brexit-becomes-the-new-eu-nemesis/article23341085/

As Grexit fades, Brexit becomes the new EU nemesis

ERIC REGULY - EUROPEAN BUREAU CHIEF
LONDON — The Globe and Mail

Published Friday, Mar. 06 2015

The chances of Grexit – Greece’s exit from the euro zone – are fading. The chances of Brexit – Britain’s exit from the European Union – are not.

As Britain’s May 7 general election approaches, investors are getting nervous about Brexit. Various economists and strategists are warning that the markets, especially the currency market, face tremendous volatility after the election. The only scenario that would take Brexit off the table is a win by Ed Miliband’s Labour Party. But if David Cameron’s Conservatives form the next government, Brexit will emerge as the defining geopolitical debate. That’s because Mr. Cameron has promised an in-out referendum on Britain’s EU membership in 2017.

Grexit was about the integrity of the 19-country euro zone, which does not include Britain. Brexit is about the integrity of the EU, still the world’s biggest trading bloc. While it might be impossible to imagine the EU without Britain, which is close to displacing France as the region’s second-largest economy, that scenario cannot be eliminated. Most of Corporate Britain is worried about it, as are millions of pro-EU Britons. They fear Britain would emerge as a cold-water Cayman Islands if were to go it alone.

Grexit is still a possibility, although a waning one. Greece’s radical left Syriza government, elected in January, has backed down on demands for a debt “haircut” and the end of austerity. Its three main creditors – the EU, the European Central Bank and the International Monetary Fund – are drafting a new bailout program that, at best for Greece, would allow austerity-lite. Greece could still reject the program, default and leave the euro zone. But the rest of Europe is now healthy enough to absorb any Grexit shock waves.

Brexit would be more damaging to the EU than Grexit to the euro zone. Greece is tiny; Britain, by European standards, is a giant. Pro-Brexit sentiment has been rising, a result in good part to the surging popularity of Nigel Farage’s UK Independence Party, which won last year’s EU parliamentary elections and is polling at about 15 per cent in the British election.

UKIP thinks the EU and its regulation-mad gnomes in Brussels are a threat to British sovereignty and competitiveness. Mr. Farage wants Britain to clamp down on immigration, which would be easier if Britain were out of the EU and free to control its own borders. The trouble for Mr. Cameron, who doesn’t want Britain to leave the EU, is that a large and unruly portion of his own party agrees with Mr. Farage. This lot thinks Britain is dragged down by rotting old Europe, not buoyed by it. “It’s a European Union of economic failure, of mass unemployment and of low growth,” Mr. Farage has said.

Britain has always had a lukewarm affection for the EU. The country was not part of the founding group of countries – Italy, France, West Germany, Belgium, Luxembourg and the Netherlands – that launched the EU’s predecessor in 1957 under the Treaty of Rome. Britain finally gained admission in 1973, under a Conservative government (its previous attempt to sign up was blocked by French president Charles de Gaulle). In 1975, the new Labour government held a referendum on membership, with two-thirds of voters opting to stay put. In the early 1990s, Britain joined the exchange-rate mechanism, the first step toward adopting the euro, only to see the pound’s trading band shredded by speculators in 1992’s Black Wednesday.

Since then, Britain has ruled out euro membership and has pulled back from some EU treaties. Now, lawmakers and voters are wondering whether EU membership is worth all the fuss. Britain may have reached peak EU.

Britain would not fade away like an old rose if it were to leave. Switzerland and Norway are not EU members and their economic performance is just fine. Britain would negotiate free-trade arrangements with the EU, although strictly under the EU’s conditions because it would not have a seat at the table. London probably would remain Europe’s banking, trading and clearing centre, although the French and the Germans would no doubt use devious methods to try to shift the trading of euro-denominated instruments to Paris and Frankfurt (the ECB has tried to do so already, only to get slapped down by the European Court of Justice).

The EU would suffer more than Britain if London were to leave, for sure. The EU would lose its greatest proponent of liberal economics and its greatest military power, and its clout on the world stage would diminish. Shorn of Britain, the EU would be utterly dominated by Germany, which would not sit well with the austerity-ravaged Southern European countries.

The EU will play tough with Britain if London tries to renegotiate its EU membership. But Britain will not roll over like Greece did. The EU needs Britain more than Britain needs the EU. The best solution would be for the EU (read: Germany) to cut the Brits a deal that would encourage them to say Yes to EU membership in any referendum.

I will repeat what I have said before:

    The essential EU, a large free trade area, is a good great idea; the bureaucratic and federal government EU is less good ~ it was not well thought out; some of the outputs of the federal union, the Schengen
    Agreement, for example, are poor ideas; the Euro is a really bad idea.

    Some EU members can, if they really want, form a federal state in which some degrees of national autonomy are retained ~ they can look to Canada as an example of powerful states within a federation.

    The European Union needs to look like a layered cake:

         

    The small, top, layer will be those (few) members who want to be in a full, federal union, they will have "surrendered" considerable power to a new, super-national order of government.

          The big bottom layer will be those states which subscribe to (only in some cases) the free trade agreement.

              The middle layers will be for those state that accept free trade + but not all the aspects of a federation.

 

[a_majoor]

Is the entire EUzone riddles with these financial traps? Now Austria could trigger a domino like bank collapse:

http://www.telegraph.co.uk/finance/comment/jeremy-warner/11455671/Austria-is-fast-becoming-Europes-latest-debt-nightmare.html

Austria is fast becoming Europe's latest debt nightmare
A mini-Greece is about to go off in Europe's heartlands, and markets don't even know it
By Jeremy Warner
8:43PM GMT 07 Mar 2015

Ah Austria, land of schnitzel, lederhosen, Mozart, alpine meadows and beer drinking. Less widely appreciated is its special place in the history of catastrophic banking crises.

It was the failure of Creditanstalt, a Viennese bank founded in 1855 by Anselm von Rothschild, that arguably sparked the Great Depression, setting off an unstoppable chain reaction of bankruptcies throughout Europe and America.

No-one would think that what happened last week at Austria’s failed Hypo Alpe-Adria Bank International falls into quite the same category; we are meant to be in the recovery phase of the latest global banking crisis, so this is more about re-setting the system than again bringing it to its knees, right?

Well, make up your own mind. I suspect neither financial markets nor policymakers have yet caught onto the full significance of the latest turn of events.

In a nutshell, the Austrian government has had enough of funding the bank’s losses, and announced plans to “bail-in” external creditors to the tune of €7.6bn instead.

As such, this marks a test case of new European rules to make creditors pay for failing banks. About time too, you might say. What took them so long?

Only in this case, the bonds are notionally guaranteed by the Austrian state of Carinthia, which now theoretically becomes liable for the bail-in. It’s an echo of the mess Ireland got itself into at the height of the banking crisis, when it foolishly attempted to stem the panic by underwriting all Irish banking liabilities; the move very nearly ended up bankrupting the entire country. Hypo will bankrupt Carinthia.

Essentially, what the Austrian government is doing is cutting loose an entire region, rather in the way the federal authorities in the US allowed Detroit to go bust a number of years ago.

It’s a mini-Greece going off in the heartlands of Europe.

In Hypo’s case, the bail-in also threatens knock-on consequences for public bodies elsewhere, including Bayern Landesbank, a big holder of Hypo bonds which is owned by the German state of Bavaria, and the Munich based FMSW, which is again publicly underwritten.

All this is just the tip of the iceberg; Europe is awash with interlinked banking and public liabilities, many of which will never be repaid and basically need to be written off.

Massive creditor losses are in prospect. The European authorities had us all half convinced that Europe’s debt crisis was over. In truth, it may have barely begun.

 

[Edward Campbell]

Is the entire EUzone riddles with these financial traps? Yes! The Eurozone has no firm foundation, it sits on legislative/regulatory quicksand. That's why I keep saying that the "top tier" of a united Europe must be a single, federal state. A European Central Bank is not enough; those who want to suck from the German teat must accept German control of monetary and most important fiscal matters. Now Austria could trigger a domino like bank collapse:

http://www.telegraph.co.uk/finance/comment/jeremy-warner/11455671/Austria-is-fast-becoming-Europes-latest-debt-nightmare.html

 

[daftandbarmy]

"(I)t is highly questionable whether when 'Europe speaks with one voice', as we are so often told it is doing, anyone is really listening. Europe's reputation as a serious player in international affairs is unenviable. It is a feeble giant who desperate attempts to be taken seriously are largely risible. It has a weak currency and a sluggish inflexible economy, still much reliant on hidden protectionism. It has a shrinking, ageing, population and, with the exception of Britain, rather unimpressive armed forces and, not excepting Britain, muddled diplomacy." -- Margaret Thatcher http://margaretthatcher.tv/The_Best_Quotes.html

 

[a_majoor]

Greece makes a pretty chilling threat. Personally, I would seal the borders, since what is being promised is an invasion, not the free movement of labour and capital. The only way this could end is either a default or the "Grexit" from the EUzone. Everything esle is just trying to kick the can a bit farther down the road (so, as Brad so cynically but truthfully suggests, the German taxpayers can be forced to assume the debt):

http://www.ibtimes.com/senior-greek-official-threatens-flood-europe-migrants-jihadists-if-bailout-ends-1841528

Senior Greek Official Threatens To 'Flood' Europe With Migrants, Jihadists If Bailout Ends
by  Avaneesh Pandey
@avaneeshp88a.pandey@ibtimes.com
on March 10 2015 1:29 AM EDT

Greece will flood Europe with a “wave of millions of economic migrants” including militants linked to the Islamic State group if the eurozone did not back down on austerity demands, Greek Defense Minister Panos Kammenos reportedly said on Monday. His comments came even as the Greek government and its “troika” of creditors -- the European Commission, European Central Bank and International Monetary Fund -- agreed to hold a further round of talks over a 240 billion-euro ($260 billion) bailout program.

“If they deal a blow to Greece, then they should know the migrants will get papers to go to Berlin,” Kammenos, who founded the right-wing anti-austerity party Independent Greeks, reportedly said. “If Europe leaves us in the crisis, we will flood it with migrants, and it will be even worse for Berlin if in that wave of millions of economic migrants there will be some jihadists of the Islamic State too.”

Kammenos added that the European Union’s rules allowing passport-free travel in the Schengen Area, which consists of a bloc of 26 nations, left these countries vulnerable to the influx of migrants.

“If they strike us, we will strike them. We will give to migrants from everywhere the documents they need to travel in the Schengen area, so that the human wave could go straight to Berlin,” he said, according to media reports.

Last week, Nikos Kotzias, Greece’s foreign minister, also said during a meeting of his EU colleagues that if Greece was forced out of the eurozone “there will be tens of millions of immigrants and thousands of jihadists,” adding that the EU was trying to “crush the Syriza government in its early days.”

In February, Greece, which is reportedly seeking the disbursement of an outstanding aid of nearly 7 billion euros ($7.5 billion), had secured a four-month bailout extension, providing it time until the end of June. However, European officials have indicated that no money will be released before a full assessment of the Greek economy.

Negotiations between the Greek government, led by the left-wing Syriza party, and its European creditors have turned sour in recent days with creditors accusing the country of falling short of its earlier promises.

 

[Edward Campbell]

Grexit, if it comes, will not be just from the Eurozone, I think; my guess is that Greece will be "invited" (forced) to leaved the Schengen Agreement, which means that Europe's borders will be closed to Greeks or, at best, as 'open' to Greeks as they are to, say, Canadians. A Grexit from the Eurozone might well mean leaving the EU, itself ... maybe joining Albania, Bosnia and Herzegovina, Macedonia, Montenegro and Romania as outsiders looking in to the EU.

 

[Edward Campbell]

Another outsider that has decided to stay out is Iceland.

See: http://www.slate.com/blogs/moneybox/2015/03/13/iceland_abandons_eu_bid_it_s_all_about_the_mackerel.html?wpsrc=fol_tw and http://qz.com/362227/its-us-or-the-fish-eu-tells-iceland-iceland-chooses-the-fish/

Here is a link to Iceland's letter to the EU: http://www.mfa.is/media/gunnar-bragi/Bref-ESB-ENS-pdf.pdf

 

[tomahawk6]

Greece is an economic basketcase and a drag on the rest of the EU states.Greece is still a member of NATO so we would defend Greece if need be.Greece needs to shed its socialist policies if it wants to recover.

 

[a_majoor]

Something which might also be appropriate for the Russia thread. As economic activity rises in the Eastern European nations and the East becomes the economic center of gravity, there will be two second order effects:

1. The Eastern European economic heartland will become far more valuable to the EU and NATO, and will become much more important in terms of defense thinking and spending

2. A wealthy Eastern Europe is going to be even more attractive to the peoples and nations who are not interested in becoming partners with Russia or part of the Russian sphere of influence

http://www.the-american-interest.com/2015/03/17/the-rise-of-central-europe/

The Rise of Central Europe

Europe’s economic center of gravity has shifted, new statistics confirm, from heavily-regulated, high-wage markets like France and towards the cheaper, more freewheeling east. This has both in part been caused by and accelerated a German shift in investment. Reuters reports:


A quarter of a century later, the continent’s industrial geography has morphed. A more fitting image might be a golden soccer ball centered on southern Germany and reaching into Poland, Hungary, the Czech Republic, Slovakia, Austria and Romania.

“We have seen a huge relocation and concentration into a central European manufacturing core,” says Michael Landesmann, scientific director of the Vienna Institute for International Economic Studies.

Former-communist countries that joined the European Union in 2004 and 2007 have become the extended production line of German industry, no longer just supplying raw materials and components but assembling cars and some industrial machinery.

The report also raised some interesting points on other important European regions. The UK is losing manufacturing jobs but picking up other service jobs to grow employment; France, on the other hand, is losing manufacturing jobs and not replacing them.

Similarly, the southern periphery of the eurozone is nowhere: no sign (yet) that despite massive unemployment, industrial investment is moving south. The perceived north-south split (with France caught in the middle) is real.

No pattern lasts forever and this one could also shift, but as long as it holds, the focus of German foreign policy is likely to keep shifting east—as countries like Poland and the Czech republic matter more to German manufacturing, they will matter more to German politicians.

This underlines the need for countries like France, Italy and others to ask themselves what reforms will attract more investment—from Germany as well as from outside the Union. As the French and Italian governments move to deregulate their labor markets (often in the face of fierce opposition from their own people), Greece digs in its heels, and Spain wavers in the middle, these questions are especially pointed.

 

[a_majoor]

This culture of censorship and repression certainly isn't going to help Europe stay competative or "cutting edge" in any field, and historically repressive cultures are much less successful economically, politically or culturally than more open ones. Compare Athens vs Sparta and the Persian Empire; Elizabethan England vs Hapsburg Spain, the Serenìsima Repùblica Vèneta vs the Ottoman Empire or even the "Tiger" economies of Asia vs China. Despite a massive disparity in manpower and resources, across history the more open societies were richer and more influential, and even more effective militarily (yes, Athens lost in the end, but it took ten years after the loss of the bulk of her army and fleet in Syracuse).

http://brendanoneill.co.uk/post/114576326774/the-vast-empire-of-censorship-in-europe-and-how

The vast Empire of Censorship in Europe - and how to fight it

On 25 March, I gave a speech on freedom of speech at the Brussels headquarters of the Alliance Defending Freedom. My speech is published below.

I hate to be the bearer of bad news, but I have to tell you that freedom of speech no longer exists in Europe.

In almost every European country in 2015, there are individuals who are in prison or doing some kind of community service or paying off a fine simply for something that they said, simply for expressing themselves.

In Scotland, birthplace of so much of the Enlightenment, a man is currently in jail for the crime of singing an offensive song.

The man is a 24-year-old fan of the largely Protestant football team Rangers. And he was recently found guilty of singing a song called “The Billy Boys”, which is an anti-Catholic song that Rangers fans have been singing for years.

Under Scotland’s Orwellian Offensive Behaviour at Football Act, he was sentenced to four months in jail for songcrimes. We’ve had thoughtcrime and speechcrime — now we have songcrime.

In Sweden, which many view as the Mecca of liberalism, the happiest, fairest nation in Europe, a man was recently released from a six-month prison sentence for producing offensive art.

His name is Dan Parks. He’s a painter. He does paintings which he says are designed to challenge political correctness and to rattle the authorities. And they can certainly be described as offensive and racist works. For this, he was sent to jail for six months at the end of last year and his artworks were destroyed by the Swedish state.

In the past, Europe burnt allegedly corrupting books; now it incinerates or pulps offensive art.

In Spain, a rapper called Pablo Hasel was recently released from a two-year prison sentence for the crime of singing songs that contained violent lyrics.

Hasel is a communist who raps about how much he hates the People’s Party of Spain and how angry he is about the imposition of austerity in Spain. In one of his raps he went so far as to praise al-Qaeda and ETA. For this, for praising those groups, he was sent to jail.

In France, which still presents itself as the guardian of man’s rights, three people are currently paying off fines imposed on them for making homophobic comments on Twitter.

In January, these three individuals became the first in French history to be found guilty of anti-gay hate crimes, not for attacking anyone or damaging anyone’s property, but simply for expressing themselves on the internet.

In Turkey, the Dutch journalist Frederike Geerdink is currently under investigation for crimes of “terrorist propaganda”. What she actually did is post comments on Facebook and Twitter expressing support for the Kurdistan Workers’ Party, which is banned in Turkey.

She faces up to five years in jail for this, for the crime of expressing a political view.

Some people say Turkey isn’t fit to become a full member of Europe because it’s too authoritarian. On the contrary, Turkey’s willingness to punish and fine and imprison people for speechcrimes shows that it has all the necessary credentials to be European in the 21st century.

In Germany, a 74-year-old woman is currently struggling to pay off a fine imposed on her by the courts for the crime of carrying an offensive placard.

She was on a march against immigration when she held up a sign that said “The arrogant Turks and Muslims are threatening Europe”. For this, for expressing her quite hardcore, not-very-nice political views, she was convicted of incitement to hatred and fined 1,000 Euros.

In Hungary, a historian was recently found guilty of breaching the public order when he described the far-right party Jobbik as “neo-fascist”. He was fined. Fined for expressing a political opinion, fined for criticising the far right, fined for saying something.

And on it goes. Across Europe, from Britain to Scandinavia, from the former Stalinist bloc to the Mediterranean countries, people are being arrested and convicted and fined and jailed for expressing themselves. Not for violence or theft or criminal damage, but for expression; not for action, but for speech; not for behaviour, but for thought.

And those cases are just some of the better known ones. There are hundreds more incidents from the past few years where people in Europe have been arrested under public-order or hate-speech legislation for the crime of saying shocking or offensive or simply non-mainstream things.

Christian preachers who have argued that gay sex is evil; historians who have called into question the Armenian genocide; young Muslims who have expressed support for certain Islamist groups in the Middle East —such people, and many others, are being arrested in their hundreds in 21st-century Europe.

Some are let off, some are punished. But the clear message sent by all this heavy-handed state intervention into the arena of thought and speech is that there are certain things you cannot say; certain views you cannot hold; certain opinions you must not express.

So if you want to see regimes which still, in the 21st century, punish people for singing songs or which destroy decadent art, you don’t have to look to the Islamic State.

It is happening here, all around us, on this apparently Enlightened continent. Freedom of speech no longer exists in Europe.

Some will say, “Ah, but *I* still have freedom of speech. If you don’t say offensive or hateful things, then you still enjoy freedom of speech in modern Europe.”

For example, we, in this room, are free to talk about censorship in Europe, to criticise it, to ridicule the authorities, and it is very unlikely any of us will be arrested for doing so. So what’s the problem?

The problem is that speech is either free, or it isn’t. There’s no halfway house. You cannot have free speech for one section of society but not for another — that is a profound contradiction in terms.

If the offensive and the allegedly hateful are not free to express themselves, then freedom of expression does not exist. Instead, we in effect have a licence to speak, graciously granted to us by officialdom. We have a licence to speak and it can be removed from us the minute we say something that the authorities consider offensive or hurtful or horrible.

Across Europe, people are not speaking freely, not even you and I. We are speaking under licence, aware that our licence can be revoked if we cross certain lines.

And those lines are blurred. Very blurred. They encapsulate not simply things that all of us can agree are hateful and of little social value, like Holocaust denial; they also encapsulate non-mainstream moral convictions and religious beliefs.

And this is where we get to the nub of the problem with the vast empire of censorship in 21st century Europe.

There are two major problems with modern Europe’s insatiable policing of thought and speech in search of anything that might be deemed offensive or hateful.

The first, and most serious, is that people are being punished for their moral, religious and political views.

Supporters of hate-speech legislation often say, “Look, we just want to outlaw the n-word or vile anti-Semitism, so what’s your problem?” But in truth, moral thought and political and religious ideology are also being swept up in this moral crusade against so-called hate speech.

So Christians have been arrested and fined for saying homosexuality is a sin. That is, they have been convicted for their beliefs, for a profoundly held moral viewpoint. They have been punished for their religious views, just as surely as people were punished for their religious views during The Inquisition.

Liberal critics of Islam have been arrested, and many have been fined, for saying that the production of halal meat is barbaric or that Islamic values are not suited to modern Europe. That is, they have been convicted for their beliefs, for their profoundly held political viewpoint. They have been punished for their political views, just as surely as people were punished for their political views under Stalinism.

We must always remember that one man’s “hate speech” is another man’s deep moral belief. What the state and mainstream observers consider to be “hateful” might be a religious or political ideal to someone else.

When we invite the state to police hatred, to police emotion, to police speech, to police thought itself, we open the door to the policing of political and moral and religious ideas.

As we have seen in Europe in recent years. In the name of fighting hatred, states have arrested, fined and imprisoned people for the crime of holding the supposedly wrong views on moral matters.

And the second problem with the empire of censorship, with the state’s crusade against hatred, is that it actually makes it more difficult for us to challenge actual hatred, real and genuine backward views.

Hate-speech legislation doesn’t only punish the hateful, or the allegedly hateful; it also disarms us, the rest of society, ordinary, non-hateful citizens. It prevents us from being able to see and know and challenge backward ideas.

Censorship is the worst tool imaginable for tackling genuine bigotry. Because it simply pushes such bigotry underground, allowing it to fester and grow out of sight.

France demonstrates this problem very well. Twenty-five years ago it outlawed Holocaust denial. And now, it has a very serious problem with Holocaust denial and anti-Semitism.

These things are not unrelated. In banning Holocaust denial, the French state removed this ideology from the democratic public realm where it could be challenged, where it could be fought with facts and defeated with argument.

It also unwittingly turned Holocaust denial into something exotic and exciting, into an attractive outlook for those who already felt isolated from mainstream French society.

And so some sections of French society embraced Holocaust denial as an edgy and dangerous ideology, and they were never publicly held to account or confronted or argued down because Holocaust denial was forbidden from the public realm, from public discussion. Here, we can see how censoring even genuine hate speech only makes hate speech worse.

So hate-speech legislation is not only an attack on the speaker — it is also an attack on the audience. It undermines our right, and our responsibility as citizens, to name and expose and stand up to actual bigotry; to use the tools of freedom and reason to challenge those who say genuinely racist or anti-Semitic things.

This is why free speech is so important. First, because it allows individuals to express themselves; secondly, because it allows the rest of us to listen and to think and to speak back.

Freedom of speech is the most important of all freedoms because it keeps all of us on our toes, it keeps citizens alert, it makes society a more vibrant, thoughtful place. It trusts us to hear and see and read all ideas, and then to use our reason and our rationality to consider and confront these ideas. It invites us to be engaged and responsible citizens.

Censorship, by contrast, makes us morally lazy. It turns us into children who don’t have to worry about what is right and wrong because the state has already decided that for us. It weakens our moral muscles and decommissions our moral judgment. It encourages passivity, dishonesty, obedience, slavishness — all bad things in a democratic society.

So what can be done to take down this new empire of censorship in 21st century Europe?

I think it’s a fairly straightforward task - but a very difficult one to achieve. We have got to argue for the repeal of all hate-speech legislation in Europe. All of it. Every last act, every last rule, every last word of it.

And we have got to challenge every act of censorship that occurs. And I think we need to put a special emphasis on defending free speech for people we disagree with, even for people who we loathe.

We can’t only defend free speech for ourselves and ignore the censorship of others. For that leaves the problem of censorship unchallenged and leaves us open to attack later on.

So Christians must defend those who are punished for blaspheming against Christianity. Muslims must defend those arrested for ridiculing Islam. Liberals must defend those imprisoned for expressing neo-fascist ideas. Why must we do this? In the words of Thomas Paine, one of my heroes, who was himself sentenced to death for something be wrote:

“He that would make his own liberty secure must guard even his enemy from oppression; for if he violates this duty, he establishes a precedent that will reach to himself.”

 

[cupper]

In Scotland, birthplace of so much of the Enlightenment, a man is currently in jail for the crime of singing an offensive song.

The man is a 24-year-old fan of the largely Protestant football team Rangers. And he was recently found guilty of singing a song called “The Billy Boys”, which is an anti-Catholic song that Rangers fans have been singing for years.

Under Scotland’s Orwellian Offensive Behaviour at Football Act, he was sentenced to four months in jail for songcrimes. We’ve had thoughtcrime and speechcrime — now we have songcrime.

Ah, my far distant cousins, making me proud.  :facepalm:

 

[Kirkhill]

There are no offensive songs in the 'Gers song book - I understand the John B sails for Ireland soon.

 

[Old Sweat]

In the Great War the Brits used to explain the rather lacklustre performance of their troops to that of the self-governing colonies by stating that once wholesale emigration started, they had been "breeding from scrubs."

Several generations of scrubs producing scrubs seem to be validating the theory.

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail is a useful look at why Brexit might not be a very good idea after all:

http://www.theglobeandmail.com/report-on-business/international-business/european-business/britain-needs-eu-more-than-eu-needs-britain/article23792389/

Britain needs EU more than EU needs Britain

ERIC REGULY - EUROPEAN BUREAU CHIEF
ROME — The Globe and Mail

Published Friday, Apr. 03 2015

There was a time when British elections didn’t matter much outside of Britain, beyond their amusement factor. This one is different. The outcome of the May 7 election, which kicked off this week with the usual mud slinging and scare mongering, could reshape the entire European Union. That’s because David Cameron’s Conservatives have promised a referendum on EU membership in 2017 if they win. The EU shorn of its second-biggest economy – Britain recently surpassed France for the No. 2 spot – is a distinct possibility.

Just as the popularity polls are pretty much evenly divided on who will win – the Conservatives or Ed Miliband’s Labour Party – so too are the opinions on whether Britain is better off within or without the EU. For the most part, the big companies and the financial services industry want Britain to stay put, even if most of their CEOs would sooner donate their private jets to orphanages than vote for Labour.

But many others, including the disciples of the UK Independence Party (UKIP) and the thriving Euroskeptic arm of Mr. Cameron’s Tories, think the raw expense of EU membership and the regulations thrust upon Britain by the mad gnomes in Brussels are crimes against Britain’s purse and sovereignty. They think Britain could negotiate trade deals that would allow it to remain inside the single market without having to kowtow to a bureaucracy obsessed with the curvature of bananas and other regulatory absurdities. Negotiating a NAFTA-style deal with the continent is held out as a viable option.

Were it only so simple. Leaving the EU would in no way make Britain immune from EU regulations. That’s because the EU has emerged as a regulatory superpower. If you want to do business with the EU, you have to meet its standards and regulations even if your company is on the other side of the planet. Even the mighty United States has been incapable of bypassing the EU’s formidable regulatory power.

That much became apparent way back in 2001 when the blockbuster merger of General Electric and Honeywell International was killed by the EU’s competition commissioner Mario Monti (who would later become Italy’s prime minister). To him, it didn’t matter that GE and Honeywell were American companies or that the deal had passed U.S. antitrust muster; what mattered was the deal was so big that it would damage competition in the EU. It became legally impossible to allow the merger to go ahead without approval from the EU, which was, and remains, the world’s biggest market.

Anu Bradford, director of the European Legal Studies Center at Columbia University and author of a 2012 study about the EU’s regulatory clout called “The Brussels Effect,” thinks a British exit (“Brexit”) from the EU would be counterproductive. “The U.K. is simply too small a market,” she said in an interview. “The U.K. companies cannot carve out the EU from their business. That means they will have to meet the EU standards and the EU standards are coming to dictate the global standards.”

She compares the EU to the “California effect.” California is the biggest market in the United States and comes with the strictest consumer and environmental regulations (California has, for instance, the most demanding fuel economy standards for cars and labelling requirements for consumer products). If any company anywhere wants to sell in California, that company has to meet its standards. Since it makes little sense for a company to create one product for California, and a slightly inferior version of the same product for the rest of the country, the California standard tends to win. Instead of a race to the bottom, it’s a race to the top.

The EU is similar, much to the distress of some big non-EU companies that argue that unelected civil servants in Brussels should have no right to block deals (like the GE-Honeywell merger) or use a regulatory hurdle to ensure that a non-EU product cannot find its way onto the shelves within the EU. It is thinly disguised protectionism, they charge. The counterargument is that the EU is not intent on regulatory overreach or regulatory imperialism. Instead it is trying to protect is citizens from excessive corporate power and products that could harm its users.

The EU probably has the toughest standards on the planet for everything from food safety and air quality to privacy protection and energy efficiency. As Ms. Bradford notes, the air conditioners bought in the United States were designed to meet EU standards, not American ones. Russia may have to overhaul its entire natural gas export policy because the EU wants an open gas market. It might not tolerate companies, like Russian energy giant Gazprom, that both produce the gas and distribute it through wholly owned pipelines.

Which brings us back to Britain and a potential Brexit. UKIP leader Nigel Farage will bang on relentlessly about the meddling and sovereignty-robbing army of bureaucrats in Brussels. The Euroskeptics within the Conservative Party will do the same. They think the cost of EU membership borne by Britain, about €14-billion ($19-billion) a year, would buy a lot of hospitals, nuclear submarines and negotiators who could hammer out free-trade deals.

What they don’t say is that Britain would still have to meet the EU’s regulatory standards even if it chose to bolt from the EU. If it stays, it would, as the region’s second-biggest power and most economically liberal force, play a huge role in shaping those rules. For Britain, floating alone off the coast of the world’s biggest market would make it a dinghy, not a battleship.

I continue to believe that the EU, as currently structured, must evolve.

It already has three parts or tiers:

    The first tier is the Eurogroup 18 of whose 19 members (Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain)
    are also all member of the Schengen Agreement) (Cyprus is the exception, but it has applied for membership);

    The second tier is those EU members who are part of the Schengen Agreement but not in the Eurogroup (Czech Republic, Denmark, Hungary, Poland, and Sweden); and

    The third tier are those (few) countries who are EU members but not part of either the Eurogroup or the Schengen Area (Bulgaria, Ireland, Romania and the UK).

So, it's my layer cake, again. A big EU at the bottom ~ a simple free trade area ~ and increasingly united layers above.

In my opinion the very top tier has to look a bit (maybe a lot) more like Canada: a federation with fairly powerful member states who have surrendered fiscal and monetary authority to the centre (or the candle on the top, if you like). The middle tier looks a lot like the current EU/Schengen mix. The big, bottom tier is, simply, a free trade area, which, in many ways, is what Britain has, already. Some (many?) Brits want an even looser association.

That being said, I agree with Mr Reguly that Britain, like America, will have to dance to Europe's (Brussels') tune on standards ... in or out.

 

[Edward Campbell]

More on the fundamental problem in the Eurozone in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/report-on-business/international-business/european-business/how-much-will-it-take-for-the-euro-zone-to-cut-greece-loose/article23799873/

What will it take for the euro zone to cut Greece loose?

GWYN MORGAN
Special to The Globe and Mail

Last updated Monday, Apr. 06 2015

The latest Greek bailout request being debated at the European Union's headquarters in Brussels is yet another chapter in what must surely be the longest-playing national debt drama in modern history.

Ironically, the country should never have been allowed to join the euro zone in the first place. Greece was granted membership in 2001 after presenting false data understating the true extent of its budget deficit. Three years later, the government finally admitted it had fudged its books to gain entry.

But when Greece assumed the mantle of a euro zone member, financial markets overlooked the country’s overextended balance sheet. Greeks went on a new borrowing and spending spree, while again hiding the true size of their deficits from Brussels through a devious derivative scheme managed by Goldman Sachs. By the time an inquiry into that second fraudulent act was announced in early 2010, Greece’s national debt had more than doubled to a whopping €330-billion ($453-billion). The country’s debt ratings plummeted to junk bond status, putting it just weeks away from sovereign debt default.

Euro zone members faced a crucial decision: Cut Greece loose or bail it out. They had every right to expel Greece from the euro zone on the basis of such fraud, yet chose not to.

Implementing a bailout meant the euro zone had to overlook these transgressions and also trust that the country’s long-entrenched dysfunctional governance, out-of-control spending, bloated and unaccountable public service, business-crippling bureaucracy and institutionalized corruption could be miraculously changed. This reality was summed up in 2010 by German politician Michael Fuchs, now deputy chairman of Germany’s ruling coalition, when he said: “If we start now, where do we stop?”

In an April, 2010, column written during that debate, I wrote, “An EU bailout of Greece would surely lead to the rampant spread of a moral hazard disease deadly to the future of the world’s largest economic zone.” Cutting Greece loose then would not only have meant a much stronger euro zone today, but would also have forced Greeks to face their entrenched problems and begin dealing with them.

Now, five years later, a much weakened euro zone again looks down the Greek debt black hole as debate rages about releasing a further €7.2-billion in bailout funds. Despite receiving €214-billion in bailouts since 2010, the country’s debt has actually risen, now standing at some €340-billion. Hardly evidence of the alleged drastic spending cuts that have seen anti-austerity Greeks demonstrating and burning in effigy German Chancellor Angela Merkel, leader of their main benefactor. And a new socialist government under Greek Prime Minister Alexis Tsipras that is vowing to ratchet up spending and reverse hard-won structural reforms has just been elected. Just how much is enough to cut Greece loose?

Many commentators contend that the shrinkage of the Greek economy since the bailout spending-reform conditions were implemented demonstrates that austerity has failed. Reaching that conclusion requires denial of the fundamental principle of actions and consequences that apply to countries as well as families and individuals.

Consider the case of a household whose members chronically live beyond their means. They have no savings and their bank account is constantly in overdraft. Rather than cutting back, they obtain multiple credit cards by hiding their true financial situation, but those credit cards are soon maxed out. In desperation, they turn to financially responsible cousins to help them through, again hiding the true scale of their spendthrift ways. Finally, the family defaults on its loans, triggering loss of home, car and other possessions. But instead of recognizing that they were the architects of their own misfortune, they consider themselves victims of the mortgage, car loan and credit card companies. And they even vilify their generous relatives for refusing to lend more money.

Greece’s problems have not been caused by austerity, but by decades of irresponsible spending and corrupt behaviour. Expecting that a debt problem will be solved by more debt simply defies common sense and reality. Believing this myth will only make the debt hole that Greeks have dug themselves even deeper, and the challenges of climbing back out ever more unlikely.

But the problem Mr Morgan describes wasn't, and still isn't, unique to Greece ~ several Eurozone members lied to gain access. The European Monetary System (established in 1979 as a first step towards the Euro), called the snake was plagued by French and Italian lies: neither ever kept their deficits within the (relatively generous) limits of the system. Several of the Eurozone members, including Belgium, Cyprus, France, Greece (obviously) Italy, Ireland, Malta, Portugal and Spain, have had real trouble obeying the Eurozone rules and all of them have, I think, fudged the books at least once - that's nearly half of the Eurozone's members!

 

[Kirkhill]

And don't forget the Jerries themselves......

http://www.spiegel.de/international/europe/the-ticking-euro-bomb-how-the-euro-zone-ignored-its-own-rules-a-790333.html

 

[a_majoor]

The EU is becoming annoyed at Greece, but a possible way out of the problem is to realign the political structure within Greece itself, replacing the looney left with a coalition of more centerist parties (with more realistic views of how to fix things).

http://www.the-american-interest.com/2015/04/06/what-brussels-doesnt-get/

Brussels Seethes as Greece Spits

The Greeks are at it again.  This week Greece first made, then walked back, a threat to miss a €460 million payment owed to the IMF come Thursday. Meanwhile, PM Alexis Tsipras flew off to Moscow, courting an also cash-strapped Vladimir Putin, and making noises about how Greece did not support the EU’s sanctions against Russia.

Brussels insiders say that EU patience with the Greek circus is running out; there are reports that the EU will start to pressure Prime Minister Tsipras to dump the left wing of his party and build a new coalition that will embrace a more conventional approach to Greek’s debt issues. As The Financial Times reports, EU officials—and some representatives from creditor nations—are ready to give the current Greek cabinet the hook:


The idea would be for Mr Tsipras to forge a new coalition with Greece’s traditional centre-left party, the beleaguered Pasok, and To Potami (The River), a new centre-left party that fought its first general election in January.

“Tsipras has to decide whether he wants to be prime minister or the leader of Syriza,” said one European official.

A senior official in a eurozone finance ministry added: “This government cannot survive.”

EU impatience with the Greek clown show is understandable. Condescending, arrogant, clueless, incompetent, the Greek government has made itself a global laughingstock as it stumbles from mishap to mishap, spewing bile and seeking handouts. Meanwhile, Greece’s debt clock is ticking, and the longer the clown show continues the more likely it is that a crisis will erupt, and turn the farce into a tragedy.

Some argue that EU interference with Greece’s parliamentary politics constitutes an insufferable intrusion on Greek sovereignty, and given the realities of Greek public opinion, many Greeks will see it exactly that way. They are wrong, but their feelings need to be taken into account. While heavy hints from Brussels to Tsipras that he might get a better deal for Greece if he shifted his government’s parliamentary base away from the looney left are not the same thing as an attack on Greek democracy or promoting some kind of coup, reports like this are likely to be counterproductive.

Impatient foreigners need to understand that the clown show is only partly the result of amateur arrogance and hotheaded inexperience. It also flows from one of the iron laws of politics: if you can’t give the people enough bread, you have to give them extra-tasty circus tricks. Syriza can’t make Greek austerity go away and it cannot force the rest of Europe to indulge Greek fantasies about ‘alternative models’ of capitalism that would somehow make Greece affluent without labor law and pension reforms. Syriza may be riding high in the polls, but that reflects (so far) its ability to entertain the Greeks. Syriza cannot free Greece from the trap it is in, but it can reflect and represent Greek unhappiness and anger as it flounces across the European stage.

Greeks feel themselves powerless in an unfair and unsympathetic world. The kind of government that Brussels wants to see in Athens — silent, obedient functionaries — would enrage Greek opinion, at least at this stage of the crisis. After years of austerity, the Greeks needed to vent, and they have: spectacularly, if counterproductively.

One doesn’t know where or how this will end. European monetary union has turned into something Greeks have no trouble recognizing: a bed of Procrustes. Brussels is becoming a machine for forcing round pegs into square holes. This cannot go on forever; something will have to give. In the short term, the odds of a Grexit, a Greek exit (either formal or informal) from the eurozone are going up as Brussels and Athens grow weary of one another. In the longer term, the costs to the European project, one of the most hopeful and important undertakings in the history of the human race, continue to grow.

Nothing about this is good.

 

[Kirkhill]

Some argue that EU interference with Greece’s parliamentary politics constitutes an insufferable intrusion on Greek sovereignty, and given the realities of Greek public opinion, many Greeks will see it exactly that way. They are wrong, but their feelings need to be taken into account.

And some people are just thick.

There is a French expression taught me by my French Canadian mother in law that translates into the English phrase "thick-headed": 

"Tete de Belge" - head like a Belgian.  Her father was Belgian.

But maybe I'm too hard on the Belgians.  It was said of the Bourbon clan from Navarre by Talleyrand that they "learned nothing and forgot nothing."

Belgium got itself into this mess by replacing the elected governments of Greece and Italy.  And it thinks if it does it again the situation will somehow marvellously improve.