Up to 120,000 protest in recession-hit Ireland
DUBLIN (AFP)--Up to 120,000 protesters brought Dublin city centre to a standstill on Saturday over government austerity measures aimed at stabilising the once high-flying economy now wracked by recession.
Organised by the Irish Congress of Trade Unions (ICTU) and featuring teachers, police, civil servants and others, the Irish protest was the "first step in a rolling campaign of action," ICTU general secretary David Begg said.
Police put the number of protesters at up to 120,000.
Marchers are particularly opposed to a pension levy on some 350,000 public servants which is designed to save about 1.4 billion euros (1.8 billion dollars) this year.
Some perspective on the numbers in that piece....
Dublin metro is about 1.6M people, a little smaller than Kansas City (~1.9M). Imagine ~150K (police estimate!) in the streets of downtown KC.
I don't have an informed opinion about the particular tax that sparked the protest, but dividing $1.8B by 850,000 gives you a figure of just over $2,100 per person.
I like the guy's sign in the picture: TAX THE GREEDY, NOT THE NEEDY.
France offers funds to Guadeloupe
Strike leaders in Guadeloupe and Martinique have agreed to resume talks after an offer from the French president aimed at ending weeks of protests.
The French Caribbean territories of Martinique and Guadeloupe, promote an image of tropical peace and luxury - but in the past few weeks that image of the French Antilles has been tarnished by strikes and violence that have left one person dead and the economy in tatters.
Guadeloupe may be a tourist destination, but it suffers from the highest unemployment rates and most expensive living costs in France.
Latvia in turmoil as premier resigns
Pressure has mounted on Mr Godmanis to resign after demonstrators rioted against the government in Riga last month. The centre-right coalition was already under fire for corruption and arrogance and lost any remaining credibility last year after the once-booming economy plunged into recession.
Euro Reaches Three-Month Low on Eastern Europe Banking Concern
Feb. 21 (Bloomberg) -- The euro reached the lowest level against the dollar in three months on speculation financial turmoil in eastern Europe may deepen the recession in the 16 nations that use the currency.
The yen fell for a fourth week against the dollar and dropped versus the euro as the biggest contraction in Japan’s economy since the 1974 oil shock eroded demand for the currency as a haven from the global recession. Mexico’s peso tumbled to a record low versus the dollar after the central bank cut the target lending rate less than economists forecast.
"We are now moving very specifically to euro concerns," said Simon Derrick, chief currency strategist in London at Bank of New York Mellon Corp., in an interview on Bloomberg Television. "The idea that we could see another 10 percent drop in the euro makes perfect sense to me."
Iceland's center-left party to lead new government
REYKJAVIK, Iceland (AP)--Iceland's center-left Social Democratic Alliance Party was chosen Tuesday to form a new government with the Left-Green movement following the collapse of the conservative government amid deep economic troubles.
President Olafur Ragnar Grimsson made the decision after Prime Minister Geir Haarde, who had led the island nation since 2006, was toppled [1/26/09] by angry protests over the country's slide into economic ruin.
Europe Getting Hit On All Sides
European stocks tumbled sharply on Friday, as announcements from miner Anglo American, car maker Saab and two French building firms reinforced the sense of gloom pervading the markets. Adding to the pressure were fears about the state of Eastern European economies continued, as the entire government of Latvia resigned and the country tumbled into a sharp recession.
I had a hard time excerpting things from the following article. It just kept getting crazier and there is plenty I did not include here:
Bank bail-out 'could send national debt soaring by £1.5 trillion'
The government's rescue of some of Britain's biggest banks will more than double the national debt at a stroke after government statisticians decided to classify Lloyds and Royal Bank of Scotland as public corporations. Their liabilities--up to £1.5tn--will be added to the taxpayer's balance sheet.
That could push the country's debt levels up to 150% of national income, from a three-decade high of 48% now. The public sector net debt has already been swollen by £90bn of Northern Rock liabilities and, as of yesterday, £50bn of Bradford & Bingley's liabilities. But the two latest additions, which the ONS estimates could total between £1tn and £1.5tn, would dwarf those.
It was already widely expected that RBS's liabilities would come onto the public balance sheet since it is now 70% owned by the taxpayer but it is a surprise that Lloyds, which recently swallowed Halifax Bank of Scotland, has been classified as a public corporation given that it is only 43% owned by the state.
The other piece of bad news was that tumbling income tax, corporation tax and VAT revenues in January caused the public deficit for the first 10 months of the fiscal year 2008/09 to blow out to £67bn from £23bn a year ago.
The IFS said that meant the public deficit for this year to April could run up to £87bn. Just over two months ago, in the pre-budget report, the chancellor, Alistair Darling, estimated a shortfall of £78bn for this year.
Public net debt has already hit a record 47.8% of GDP, today's figures showed. The ONS also reported that the government finances worsened dramatically in January--the biggest tax-raising month of the year.
Germany, France May Face Bailout of Nations, Not Just Banks
Feb. 18 (Bloomberg) -- Germany and France may be forced to contemplate the bailout of entire nations rather than just individual banks as European government budgets buckle under the weight of recession.
German Finance Minister Peer Steinbrueck became the first senior policy maker to broach the topic this week, saying some of the 16 euro nations are "getting into difficulties" and may need help. French officials are also concerned about market tensions as the cost of insuring Irish, Greek and Spanish debt against default rises to records and bond spreads widen.
The nightmare for Angela Merkel and Nicolas Sarkozy is that widening deficits will prompt investors to shun the debt of some countries, sparking a region-wide crisis. While few investors are yet forecasting any defaults, the mere risk of it may prompt the bloc’s two richest economies to ignore the European Central Bank and announce their willingness to come to the rescue.
"When push comes to shove Germany, France, the larger players will bail out those smaller peripheral players," said Alex Allen, chief investment officer of Eddington Capital Management. "You can’t let one part of the system fail because it leads to failure of the whole system.'
Not much to say after that but ZOMG
Roubini Says Europe Bank Risks Becoming ‘More Severe’
Feb. 20 (Bloomberg) -- Europe’s banking system faces growing risks because of losses in the region’s emerging markets, and the crisis may require a region-wide rescue effort, said New York University economist Nouriel Roubini.
"The banking problem in Europe is becoming more severe," Roubini said in a Bloomberg Television interview. "You have a series of countries that are really in trouble," Roubini said, citing Latvia, Estonia, Lithuania, Hungary, Belarus and Ukraine.
German and French officials this week expressed concern about a slide in investor confidence in smaller European economies. The cost of insuring Irish, Greek and Spanish debt against default has climbed to records, and mounting losses in eastern Europe among Austrian banks sent that nation’s bond-yield premiums to an unprecedented level.
Re: Roubini--the guy earned the name "Dr. Doom" because he made negative predictions about the current crisis several years ago that were derided at the time but--whoops!--are now coming true.
B-b-b-but Nobody Could Have Foreseen....
So what's the upshot of all this?
The economic situation in Europe is not looking any prettier than it is in the States at the moment. In some of the smaller nations that were still in the middle of decades-long economic reforms (in particular, former Soviet bloc countries converting to capitalism--some system, eh?), we are seeing political realignment and/or civil unrest.
Some other Western European nations are either at risk of defaulting (Ireland) or already have defaulted (Iceland) after having had booming economies.
If anybody in the US is thinking It Can't Happen Here, think again*. It's looking that nationalization of banks is a foregone conclusion, and we just haven't done it yet. Roubini has pointed out that bank nationalization is probably only feasible if it all happens at once, rather than piecemeal, bank by bank. (Let that sink in for a minute.)
Vanishingly few people from left to right in America (certainly no one at all in a position of power) are actually advocating permanent government control of the banking industry. In fact I think you'd find very few takers indeed who would say that gov't control of banks is a good thing at all. But events seem to be outrunning everybody's ideologies (again from left to right); thus the emerging consensus (once again pointed out very early on by Roubini) seems to be that the only pragmatic thing to do is to follow the precedent the Swedish gov't set in the 90s when faced with a similar, if much smaller-scale, set of crises that the entire global financial system is now staring at.
Essentially, the solution was to nationalize the banks; fire the greedy goddamn geniuses running the places; sell off worthless assets at their current market value (i.e. pennies on the dollar, since they were purchased at the top of a way over-inflated market); restore the balance sheets to something resembling stability; and then (this is obviously the key): sell the banks back to the private sector.
Obviously, what Team Obama is wrestling with is substantially greater in scope than the Swedish crisis. Could it work? Who knows. But it's reasonable to think that it actually could. There's a historical precedent for it, and it recognizes insolvency rather than illiquidity is the problem. In English, that means the banks aren't merely short of cash, they're fucking broke. And, in capitalism, what happens when businesses go broke? They get bought up by other businesses, or their assets go to the bank. But what happens when the banks are broke?
Whatever the correct answer to that question is, government intervention clearly has to be mentioned in it somewhere--delicate right-wing sensibilities about what is and is not capitalism or socialism be damned. Welcome to the 21st Century. Buy the ticket, take the ride.
* Come to think of it, we just had a major political realignment here already. Here's hoping we can skip the riots part.
(P.S. Some of these links courtesy of here.)