Weak Estimate of EU GDP by Eurostat

So, the statistics for GDP in the EU and Euro area were released not long ago. The EU is down by 0.1% from last year, and the Euro area down by 0.2%. This seems to go against efforts made by many EU governments to shore up their economies, something that contrasts with signs of growth in America. However, the EU does still remain the world’s largest economy, and there is no reason to think that this part of a downward trajectory and not merely a blip.

Euro & US GDP growth rate

Euro & US GDP growth rate

The London stock exchange went up by 2.6% this morning, and posted a 5% rise in income for the year. However, French stocks, for example were lower, following bad news in the first quarter. European shares were up by 0.04 percent, for the FTSEurofirst 300. The eurozone is still in a good position, as ”Inflows remain strong, with so much liquidity from the central banks. Investors are buying every dip” (David Thebault from Global Equities).

The GDP for the EU & euro area last year was €12.89 trillion (US$16.56 trillion). Germany led the way with over 20% of the EU’s GDP, and is sure to resume a leadership this year,  even with the new results.

GDP provides an easy comparison for economic activity, as the measurement has largely been standardised, and its adoption is across the board. It’s  important to think about how much meaning these results really have though, as Frank Shostak, writing for the Ludwig von Mises Institute, claimed that GDP was far too ‘abstract’ with no link to reality:

The GDP framework cannot tell us whether final goods and services that were produced during a particular period of time are a reflection of real wealth expansion, or a reflection of capital consumption.
For instance, if a government embarks on the building of a pyramid, which adds absolutely nothing to the well-being of individuals, the GDP framework will regard this as economic growth. In reality, however, the building of the pyramid will divert real funding from wealth-generating activities, thereby stifling the production of wealth.

Because the GDP framework completely disregards the intermediate stages of production, it can be of little help in the assessment of boom-bust cycles. It is little wonder then that mainstream economists are forced to conclude that recessions are a response to a sudden fall in consumer spending. Consequently, it is quite logical within the GDP framework to advocate loose monetary policies to revive the “economy.”

Source - Flash estimate for the first quarter of 2013

Poland & the Postcolonial

Poland has, for hundreds of years, been surrounded and conquered by its neighbours. Recent history up until the very late 20th century has been no better, with Soviet-imposed massacres and brutal repression. Colonialism has evidently been a great part of Polish history, being a land between great powers, yet there is a reluctance in postcolonial literature to include colonial presence in Eastern Europe.

Yet some have recognised Ireland as a postcolonial country, with Eastern Europe as an unknown:

only one European country has thus far been exempted from the binary ‘First World-Third World’ model now governing post-colonial studies. This is Ireland which is, as Seamus Deane remarks, ‘the only Western European country that has both an early and a late colonial experience’ [...] Deane is careful to distinguish here between East and West; [which] remains terra incognita in recent theory. [Cavanagh 2003, 63-64].

The ‘ terra incognita ‘ of Eastern Europe (and Poland, which Cavanagh references), is often referred to in both Western and Eastern discourse as ‘borderlands’, reducing the culture there and its people as merely a place between the East and West. Whilst at times this discourse has been reclaimed by ideas of the Rus as a ‘two-headed eagle’, strong and facing all sides, in modern times this can be seen as a view that sees Eastern Europe as neither the ‘Other’ or the West. Talk of Russia, the Baltics, Balkans, and Eastern Europe in general is often talked of as peripheral to Europe. Indeed, there have been casual attempts to define Russia as an Asian country.

Colonialism, as well as cultural and geopolitical dominance, have played large roles in Eastern Europe. Numerous states have attempted (and at times succeeded in) exercising full or partial control over other countries, others have even occupied with settlers, and it is certainly not rare for there to be a system of economic exploitation. It is not that this has been confined to the history books either, Soviet presence being the greatest example, but also the aims of different groups during periods of ethnic conflict in the Balkans.

‘Outside’ influences such as that of the Turks in South-Eastern Europe, or that of the Austro-Hungarian empire, are underreported in postcolonial studies. German cultural dominance imposed in Poland, for example, still holds sway over local elections even (see below).

Polish voting patterns, with former German territory overlay.

Polish voting patterns, with former German territory overlay.

Polish railway infrastructure.

Polish railway infrastructure.

However, this is not to say that Poland was always the oppressed. The Polish-Lithuanian commonwealth was a force to be reckoned with, and whilst it didn’t quite have the same level of brute as other European powers it still made efforts to assimilate other cultures and civilisations. This is also not to say, that colonisation of Poland, and colonisation outside of Europe are in any way equal. The point of this post is to highlight how postcolonial studies can overlook colonial discourse and events purely because of current affairs.

To further confuse those who delve deeper, there are also efforts to rehabilitate Eastern Europe away from the “Other”. The Economist states that the term has “connotations of “poverty, marginalisation, and weirdness” which is for most states there, “anything but.”  Membership in Schengen, the EU, NATO, and the reemergence of Russia in world politics as an ally of the West all play to the narrative that Europe is no longer divided. A video that plays with the concept of Eastern Europe, and attempts to think up new terms,

Cavanagh , C., 2003, Postkolonialna Polska. Bia ł a plama na mapie współ czesnej teorii, ”Teksty Drugie”, No. 64; 18-19. Quotations taken from other sites, which in turn quoted Cavanagh’s English version.

‘Right to be forgotten’ is not worth fighting for

Following very real concerns created by governments attempting to violate basic internet privacy, some of which were stopped by the EU itself, when the British government seeks to opt out of EU rights for internet users people understandably become worried. In fact, headlines created quite emotional reactions:

daman345 : The UK ought to f**k off on this one. That sounds like an important right to have in the online world.

oldtymer : What do you expect from this government? They will always put the interests of the huge corporate user before the rights of their citizens.

ryebonfire : Why on earth should the MoJ oppose this? Given that there should be sensible exceptions for State records, everyone has a right to the privacy of their personal data.

Others went as far to call it Orwellian, but is it scaremongering or yet another authoritarian policy on part of the government? For one thing, the idea of a ‘right to be forgotten’ is simply impractical.

The concept will either be overbearing or in actual fact promise very little. Richard Allan, a regional Facebook director for policy, said:

“we have concerns about about the workability and consequences of a mechanism where organisations start sending each other instructions about data that needs to be removed. Our worry is that it will take up resources and won’t be effective.”

Simply put, if an embarrassing picture is put online and spread to multiple sites it becomes both impossible to track and near infinitely time consuming to request takedowns. According to some sources, the law could cost the UK over £400m a year in total according to justice minister Lord McNally .

There are some parallels between this and copyright takedown, sites like Youtube have to cooperate with laws on copyright but lack the resources/incentive to do effectively, hence, they have automated systems that delete/block videos or accounts after a certain amount of requested takedowns. This automated system can be combatted if your personal details are filled in claiming ownership of your own video, but due to this can also be abused to silence those taking controversial stances who fear letting their personal information become public ( see here , for example). It is not unreasonable to suggest that the same kind of ‘doxxing’ could happen with any of these new proposed laws.

Footnote: Poland now dependent on immigrants.

Poland: visa and stamps

Poland: visa and stamps (Photo credit: Sem Paradeiro)

According to a report by the Energy Europe foundation (PL), Poland is now dependent on immigration to maintain its economy and demographics. Over 244,000 workers came to Poland from other areas of Eastern Europe, mainly from Ukraine, to work last year. The report states that 5,200,000 must come to Poland by 2050 and stay there if the country is to avoid depopulation and a demographic disaster.

Following the drain of skilled workers to the UK and other countries, Poland has had to rein in its workforce and attempt to lure more people to the country. Prof. Krystyna Iglicka, an expert demographer, said about immigrants:

We need them but we don’t know how to keep them for good.

Poland’s laws on immigrations are highly influenced by the EU’s freedom of movement for citizens and employees, and is relatively simple and easy for EU citizens. Aside from notable exceptions (such as the right of return), other nationals have to obtain a visa and a work permit before coming to the country.

Comments & Curios II

(Europe’s World)

Five wrong notions have encouraged Asia and America to misdiagnose Europe’s ailments, Indermit Gill writes. And although Europeans need to make big changes, he believes the EU’s economic model can still be made to work

Europe has been getting a bad press. The Greeks and the Italians have been excoriated for endangering the euro, and Iceland, Ireland, Portugal and Spain have been criticised for their reckless financial policies. Endless summitry in Brussels hasn’t helped. Europe is increasingly seen by Americans and Asians as sluggish, even spoilt. Five wrong notions that have led to this misdiagnosis.

Ukraine election ‘reversed democracy’, OSCE says (BBC)

International observers say Ukraine’s election has been a backward step for democracy, marred by “the abuse of power and the excessive role of money”.

Related Opinion: Rude awakening for Ukrainian dream (Presseurop)

We can’t export our way out of the crisis (Frankfurter Rundschau)

To come up with the money to pay for its crisis, the eurozone has decided to export at any cost, slashing wages across the union, and courting customers abroad. The problem: that’s exactly what the countries in the Americas and Asia are trying as well.

(The Russia Watch)

There are major questions still to be asked about the New Russia, and whilst growth has been high for the last decade the economy is losing momentum. … Recently, experts at the Valdai Club forum gave four drastically different outcomes for the economy … Key concerns involved oil, but also government reform. The timeline of these rough scenarios was set to be present day – 2030.

What policies would best promote the zombie apocalypse? (Foreign Policy)

Daniel Drezner investigates.. inspired by the video below.

Left to right: ”50 years of Bond” - ”Your mission, 007, is to bring back the boom!”, ”And this is my gadget (holding Hollande)? We’re not going to win!”

A Dire Review

It has been two years since the €110 billion bailout given to Greece and there is no close end in sight for the crisis. Five days ago, unemployment in

Parties advocating leaving the EU such as the UK Independence Party have seen jumps in the polls as well as extremist groups across the continent in reaction to harsh government austerity measures.

Austerity is rife across Europe, and has largely been considered at the very least to be stagnating the various economies.

Wikileaks Infographic, what have we learnt?

A procession honouring the murdered Aziz (‘We are all Aziz’) contrasted with a picture of Wilders and one of his party slogans (‘Henk and Ingrid are sick of paying for Ali and Fatima’)

The Netherlands goes to the left this election. The most influential far-right politician of Europe, Geert Wilders , has experienced his downfall. After creating an image of an average blue-collar couple that his party stands up for , a couple of the same name were involved in a real murder in a real place in the Netherlands. After an argument, Henk and Ingrid of Almemo killed Aziz Kara – their neighbour. Couple this with the image of racism, prejudice, and fascism that Wilder’s party is trying to avoid and you have a PR disaster.

1989: The Struggle to Create Post-Cold War Europe

Analysis : The book’s author, Sarotte , is a professor (of History and International Relations) at the University of Southern California. She’s also a member of the Council of Foreign Relations and author of a few other books. The body of the book is just over 200 pages long, and is well worth a look for anything from a casual to an academic read.

I took this book out as a loan from a library for an essay, and considered it such a great resource that I ended up buying it on Amazon. It was the Financial Times’ ‘Book of the Year’, and not without reason. The book gave a lot of insights into a very important year without losing sight of what could’ve happened, and the context behind everything.

1989 shows interest in Russia’s part, and why Russia has been left on the sidelines of Europe since the end of the Cold War – something which is often left out of books about the events surrounding the fall of the Berlin Wall.

L8Pbq

After a lot of wasting time on all sides, the last summit seems to have pulled everyone together a bit more.

Merkel seems to be the loser here, as Italy and Spain blocked certain pacts before they were given emergency measures to recapitalise banks. something that some foreign newspapers called blackmail.

Hollande benefited from Italy and Spain’s block, “I said during the presidential campaign that I wanted to renegotiate the fiscal pact to add growth and stability measures and a medium-term vision. This summit has enabled us to achieve that” (quoted after the talks). Forming commitments with Southern member states, meeting German opposition leaders, and openly contradicting the German chancellor seems to have paid off then.

Europe’s motto is “united in diversity”, only it seems that most of the countries just want to sell each other out.

The Independent, Friday 25 May 2012

This is highly relevant.

Merkel

What I understand of the eurozone crisis:

Since joining the Euro, countries like Greece & Portugal became accustomed to borrowing and subsequently spending a very large deal of money. People were willing to lend them the money (despite it in heinsight appearing unsustainable) as the view was that countries couldn’t go bust – something which people are only beginning to question now.

The problems with this kind of government spending was bottled up and burst out during the financial crisis, the shattered economy only exacerbated the problem – tax revenue fell. Bailout aid came to Greece, Portugal and Ireland through the ‘troika’ of the IMF, European Central Bank & the European Commission. The bailout aid was needed as the open markets were no longer providing the money they needed.

The bailout helped Greece (as a good example of the eurozone crisis) stay afloat, but more money was lent later on to ensure it stayed solvent. Since then, the economic situation across Europe has arguably worsened – deficit-reduction plans have largely failed, and the eurozone may even be set for recession . The consequences of a disorderly Greek default are almost unimaginably detrimental to the eurozone and as such core countries such as Germany & France are bearing the brunt of the crisis. Whilst printing more money devalues their assets and putting up more cash for bailouts means they have to pay for other government’s mistakes the possibility of a Greek default/banking system collapse is enough for them to carry on.

Why this is still relevant:

With Slovakia no longer holding the eurozone to ransom (having recently approved the ), EU leaders are currently in meeting to discuss the debt crisis in Brussels. The head of governments released a statement today, which was deemed vague by the Guardian . Gus Faucher, a director of macroeconomics was quoted today:

“I’m not sure that this is enough. They may be heading in the right direction but not fast enough to head off a crisis. In some ways half steps might be worse than no steps at all. This may cause investors to panic and then there is a real risk of contagion.”

The BBC’s Nigel Cassidy outlined three points that are expected (and are essential) to be addressed:

  1. A larger rescue fund for Spain & Italy
  2. A huge debt reduction from Greece
  3. Protection of vulnerable banks

In a matter of hours we will at last know just how competent & prepared Europe has acted towards the crisis. Markets around the world will open and make a final conclusion.