European myths and real fears: Time to face the truth

Applying logic consistently can lead to some very hardcore argumentation in European Affairs. Especially when coupled with humanism.

Here we go (based on thoughts originally posted via my Twitter account, today):

Xenophobia and "paymasterism" are evidence of insecurity due to policy failures by mostly national policy-makers.

E.g. Angela Merkel and Co. blamed Greeks and other South Europeans to cover up for her own policy failures in 2005-2012. Except for very recently.

Plus,  the EU has always been used by national politicians as a scapegoat for their failures but not their successes.

So who should be in more fear of losing their jobs and who should lose them? People or policy makers. Desperate policy makers produce even more desperate policies. Not to mention desperate (for ratings hence ad revenue) media.

So, for voters, focusing at national and local level is in a way a natural reaction, whereas the wise reaction is to focus at Euro, EU level and beyond.

Instead of helping the man/woman in streets feel a tad of stability via their policies, policy makers have been doing the opposite.

Note also that 2 months of somewhat positive propaganda by Merkel and friends re Greece seems (see polls in Germany) to have managed to partly counter 2+ years of negative propaganda. Is that scary or good? Or both?

That is the real state of the EU in 2012. It is time we start discussing those things, not only the agenda the mainstream traditional media and social media set.

Example:

People in NW and North Europe are panicking and blaming foreigners because, imho, they know their national exceptionalisms are a hot air result of propaganda - narratives. They are in real fear. Because they feel/know that their economies are way more un-competitive and cruel than anyone would admit. They are scared of losing their accumulated privileges and fear more than South Europeans, because they know their societies are more cruel than in South Europe.

Yes what I am proposing, after roaming around the UK, Belgium and the Netherlands (NL) in the past 5 weeks and lots of talking with people from all walks of life, observing systemics and dynamics and lots of thinking, is that the real reason Dutch, Finns, Germans, Belgians, Brits are reacting the way they are is: they are scared. Even more scared than South Europeans.

Take a good look for example at the "streets" of any UK, NL or Belgian city. People are "bowling alone" (much more than Greeks or Spaniard are "bowling alone") and they know it.

That is I propose the main way to interpret eg the local results in Antwerp.

So whereas Greece, Spain, Portugal, Italy need real policies badly, the NL, Belgium, the UK, Germany, Finland need real policies even more badly. And more humanism (and that is a matter/task for society and thought/opinion leaders, not policy makers per se).

On the other hand, imo what Greeks and Spaniards should really worry about is not labour market reforms but of having lost part of their traditional humanism. Because once that is lost, no laws or rules can after all restore that. And liberalism needs humanism in order to work. Every system does, but liberalism (in the European not US sense of the term) does even more (that is of course why Romney and Ryan should not win the elections in the US, the country where the term "bowling alone" was invented).

The Greek and Spanish labour markets are already a "Kaiadas" (see Ancient Sparta) even without labour market reforms, so what worse can reforms do than admit that reality?

Plus Greeks, Spaniards, Portuguese, Italians should look at their national and local "champions" and elites and ask them: What have you done for me lately? In a way they are. In a way.

Being pro-EU doesn't mean being pro European Commission, pro EU Council, etc. It means being pro the common interests of 500,000,000. Because in the world systemics and dynamics of the epoch, mainly at continental and world level can effective solutions be formulated and implemented. But with a systems analysis approach that looks at the forest and at the trees at the same time. These are indeed testing times for policy makers.

The European media and social media should not focus on the symptoms (they do make for good copy, true) but at the diseases. I know it's hard.

Even more analysis on this complex topic and implications for policy makers, the civil society and economic operators at EU, Euro, national and local levels, is available upon request.

Is more Europe the answer to separatist dynamics in Flanders, Catalonia, Scotland?

I believe so.

European unification imo partly alleviated separatism pressures.

Lack of it fosters them, More Europe is the answer.

My take is that many of these separatism pressures/dynamics (must read: a very thought provoking analysis on current separatist dynamics in the EU, "Separatism is in the air as EU leaders prepare to meet in Brussels" today by Stephanie Gruner Buckley in qz.com) are due to lack of concrete unification progress at Euro/EU level.

Applying a systemics and dynamics approach, one could go as far as to speculate that, in a way, if Europe does not unite better, the next equilibrium in many cases may be not the national but the local almost city state level!

In any case, Europe's systemics are not working, at various levels (EU, Euro, national, etc). They need systems analysis fast!

PS. That inter alia means that national champions and elites that are fighting against European integration may soon find their status threatened by local ones. They have to consider joining the EU-wide competition even if that means more competition than they are used to, or decide how to compete with the local champions and forces. Food for thought.

PS2. The European Commission was imo right to "duck" questions on separatism in EU states today. It is not in its "competences" to have a view on the topic.

More analysis and strategic options (policy, business, etc) in  dealing with this dynamic, are available upon request.

And the winner of last week's EUCO is ....

I have been silent (in terms of blog posts, not in terms of tweets) for the last 2+ weeks, watching developments in the EU and the Eurozone, observing, thinking, pondering, on the road to last Thursday's and Friday's session of the European Council (EUCO).

Those included ECOFIN and Eurogroup meetings, comments from many of the capitals of the member states of the EU and the Eurozone (btw CDU MPs do need to learn how to make much more proper comments re other member states etc), the Rome meeting of Merkel, Rajoy, Hollande and Monti, the football externalities of EU and Eurozone affairs etc.

Some claim Europe won, because Merkel bowed (they think) to pressure from Italy and Spain (Hollande adopted a middle ground approach for which I hear that he was criticised at home (France, see also the drop in his approval ratings). She is said to have been criticised at home for giving up too much at the EUCO. She passed the Fiscal Compact in the first vote but CDU and FDP MPs broke ranks. And the ESM vote.

Some even claim that she "won" at the EUCO.

Some claim that "Europe" won, because Merkel bowed to other leaders' views "for once", and the decisions are a step forward for Europe.

In my opinion, Spain and Italy may have won, but maybe not as convincingly as it appears. Merkel did back a bit, but that is compared to her initial negotiating stance.


So, I insist. The last EUCO may have been a victory for Spain+Italy but not for the whole EU or the anti-Merkel/anti-austerity camp as a whole.

For Europe (EU), the gain was better than nothing but maybe too little compared to the task, late if not too late. A leap forward or sideways maybe be necessary soon. How soon? In EU years, not soon enough.

Eurozone systemics: GIIPSB 44% of pop 39% of GDP!

Recent ECB Pres & some BoD members' comments re rate hike potential raise IMO the issue of what kind of economic governance the EA17 need & by whom!

Eg. see "ECB's Gonzalez-Paramo: April rate hike possible" and note the argumentation:

"... Asked about the impact of a rate hike for Spain, whose economy is recovering at a slower pace than others in the euro zone, Gonzalez-Paramo said the ECB must think about the euro zone as a whole rather than individual countries. ..."

The Eurozone as a whole? This prompted me to table some insightful Eurozone statistics & systemics.

Today, I present the first part, that covers Italy, Spain, Ireland, Greece, Portugal as well as Belgium:

Country ... % pop .... % GDP (1) ...... Q4 growth (2) .. Inflation (3)

Italy ......... 18.21% .... 16.94% .......... +1.3% ............... 1.9%
Spain ...... 14.25% ..... 11.71% ......... +0.6% ............. 3.0%

Greece .... 3.41% ........ 2.64% ......... -6.6% ............... 4.9%

Portugal ..3.22% ....... 1.83% .......... +1.2% ............... 3.6%

Ireland .... 1.37% ........ 1.82% ........... N/A ................. 0.2%

Sum

% of Eurozone population: 40.46%

% of Eurozone GDP: 34.84%

plus:

Belgium .... 3.25% .......... 3,76% ................. +1.8% ............... 3.7%

So BPIIGS

% of Eurozone population: 43.71%

% of Eurozone GDP: 38.60%

So PIIGS + BEL: 43.71% of the Eurozone population, 38.6% of nominal 2009 GDP! Quite larger than most would expect or think off hand!

Thus the strategic policy question: Do economic conditions in Spain + Portugal + Italy + Greece + Ireland + Belgium (6 Euro members, 43.71% of the Eurozone population and 38.6% of Eurozone's nominal 2009 GDP) justify Euro rate hike "thoughts" recently expressed by some central bankers in the EZ?

3 of the PIIGS plus Belgium have a January inflation rate above the 2% ECB target: Greece 4.9%, Belgium 3.7%, Portugal 3.6% and Spain 3%. The Greek rate that comes in spite a 6.6% reduction in nominal GDP in Q4 of 2010, is probably driven by new taxes (raises in VAT, etc) part of its budget consolidation effort.

Tomorrow: The full picture of the Eurozone 17 and more insightful data and syllogisms!

Footnotes

(1) Nominal GDP (2009), Source World Bank

(2) Q4 2010 GDP compared to Q4 GDP 2009. Source: Eurostat. Estonia and NL based on not seasonally adjusted data

(3) Eurostat - Inflation rate annual rate Jan 2011/Jan 2010