Monday, 18 April 2016

Once upon a time in Europe

Once upon a time, the European Union was poised to become a federal union. Leaders gathered in a Dutch city and tried to agree. The UK,which never wanted a federal union, disagreed.

Delors, Kohl, Schmidt and others wanted an ambitious union. They did not get it.

They got a single currency for some (which began 10 years later) but under pressure from the UK and others they did not get their federal way. Plus the UK and Denmark got official opt outs from the single currency. The UK also got an opt out from the so called Social Protocol.

They thought they would improve things in later Treaties of the EU. That did not happen. In 2005 for example the EU Constitutional Treaty was rejected by France and the Netherlands. The federal idea had been shaken.

The euro started in 2001 but high interest rates by the ECB created unbalances.

The subprime crisis later hit Europe too.

Enlargement of the EU was partly the cause of slower deepening.

In the meantime, public opinions in the member states changed too.

The EU never got a single tax system or a real budget (comparable to the US). In many member states, fiscally conservative governments wanted an EU that cost less, no matter the cost.

As a result, in 2016, the EU has lost its way.

World growth is slow and the EU has growth troubles. Unemployment is still high in many member states.

24 years have elapsed since the Maastricht Treaty of 2001/2002 and one can wonder what is the reason for having an EU with 20+ different languages, no single tax system, no federal budget, only laws decided at EU level, an EU el cheapo that is.

If the British voters decide to leave the EU in June 23, this may cause similar appetites in other member states.

One solution is for a new EU. A leap forward towards a United States of Europe with those countries that want and can. An EEA type of EU for the rest. Can the EU make such a bold move? Unlikely.

Europe's problem, which led to two world wars, is that it comprises of too many nation states. Europe has too much history. Can it have a (united) future?

The Greece problem serves as a stark reminder that the EU cannot make decisions. For example its insistence of having the IMF in the Greece troika.

The economic logic of the EU is still a hard case to make. EU economies are still too different, too national, too complicated for a central economic policy. Again, without a single tax system, single laws, a single social security system and of course a real federal budget, the EU does not make economic sense. Especially given the liberalisation and growth of TWO trade in recent decades.

Let's see what the Britons decide in June.

I still think the EU needs an IGC very badly.

Thursday, 7 April 2016

More troubles for an unbalanced EU

The rejection of the EU-Ukraine partnership agreement by the Dutch populous, albeit non binding for the Dutch government, serves as a stark reminder of the troubles the EU is in.

The recent decision of the ECB to cut the Eurozone's central interest rate to 0% marks the worry of the EU policy makers regarding lack of growth inside the Eurozone.

In 1959 the EU started as a mere Common Market because the French Parliament rejected a fuller union.

The UK is to make a decision on EU continued EU membership in a few weeks.

Ireland has rejected a new EU Treaty twice.

In 2005, the French and Dutch voters rejected the Treaty of Lisbon.

Swiss voters have rejected EU and EEA membership years ago.

Swedish voters rejected EMU/Euro membership.

Danish voters rejected the Maastricht Treaty and EMU/Euro membership.

19 of the 28 current EU members have joined the Euro, 9 have not. That creates an unstable system.

ECB interest rates with the insistence of the inflation phobia driven Bundesbank have traditionally been high, to avoid inflationary pressures. That has kept the Euro high and has hurt Eurozone industry not only in foreign markets but also (from imports) at home.

There are no single taxation system, no strong federal EU budget, no single social security system in sight. No wonder intra EU migration is very low compared to the US one then. Plus there are some 23 national languages among the EU 28.

No wonder an unbalanced union as the current one faces unemployment and growth problems. And when such problems arise, then many voters vote for nationalist parties and policies.

True, the EU has helped Europe avoid feuds such as another world war. But this peace has come at a price. The EU decision making machine is seen as foreign by many citizens of the EU member states. Member states with a strong social model such as the Netherlands and Germany have revised these models downwards in recent years. For example Dutch unemployment benefits used to be high, now they are significantly lower. Who are the voters expected to blame?

Countries with strong social models such as Sweden, Norway, the Netherlands have attracted intra and non EU migration in recent years and that has promoted xenophobia among the population.

To this day, the EU has 28 distinct countries as members, there is no real union to speak of. Plus the existing EU has produced too many laws, in addition to the national ones. As a result, too many small companies do not like the Single Market, they see it as a threat, not an opportunity.

Problems have brought fiscally conservative parties into government in many EU member states. Their policy agenda has been conservative, austerity driven and as a result anti-EU and de facto xenophobic. The Eurozone's austere economic policies by its members and the ECB have hurt the Eurozone. The 0% rate by the ECB is maybe too late. The Eurozone is damaged goods. The EU is damaged goods.

A No by the UK voters in the coming weeks may be a blessing for the EU. It may force it to take a good look at itself. On the other hand, it may not. Some EU policy makers have a tradition of dismissing reactions in the member states. They will be mistaken to dismiss the Dutch No to the EU-Ukraine agreement.

Ukraine has a right to feel betrayed at a result. But it should realise that the EU is in trouble, not the Ukraine. I spoke to many youths in Georgia a year and a half ago and they are not gang ho about joining the EU. Maybe they realize it is not paradise for countries in trouble. The ex USSR and ex Eastern bloc states that joined the EU went through very dire straits because of the need to follow the EU standards.

What is the solution? It is hard to say. A United States of Europe would be a solution but so far the EU is stuck with a Eurozone of 19 without a common tax or social models. At the same time, not only Greece but other EU and Eurozone member states as well are facing significant growth and employment troubles.

The EU could ask for things at an international level to help deal with its own problems. For example use its size and its internal market as leverage for even more free trade. Free migration should exist to counter balance freedom for capital and goods. People migrate because there is war (refugees) and to seek a better life (economic migrants). Two and a half decades after the fall of communism in the USSR, the world has structural problems. The West has become de-industrialised to a large extent. Migrants want to flow into the de-industrialised US and EU whereas new jobs are being created elsewhere.

These things need to be discussed and debated in the WTO and the UN. Probably they won't. In absence of a global summit on growth and jobs, countries will continue to pursue their own remedies. And the EU will make even less sense.

The EU needs an IGC to decide on its future, with or without the UK. It needs, above all, to start making sense to the European common man.  It probably won't, though.


Thursday, 31 March 2016

Should the UK leave or stay in the EU? Some crucial questions.

Well, it is up to British voters/citizens to decide.

My analysis.

Many Britons feel that Britain has lost sovereignty to Brussels. Policies and laws in many areas are decided by the EU institutions and this takes power away from Westminster. This includes standardisation issues for products and services produced and sold inside the EU.

Many argue that Britain needs to be part of the EU Single Market so that it can sell more easily to its most significant trade partner, the rest of the EU. That is true, but more and more minor as the cause of WTO world trade advances. Plus a non-EU UK can be a member of the European Economic Area as Norway and others do.

Has non EU and non EEA membership hurt Swiss exports? That is a crucial question proponents of the Yes and No to the EU must answer.

My 2 cents is that a globally strong and competitive UK does not need to be a member of the EU and its single market.

How will an exit from the EU affect the revenues of The City? That is a question for the City to answer. Will there be another financial hub in the EU that will compete with a non EU City if the UK leaves? To what extent?

The EU, via its policy on EU enlargement, has managed to hinder the process to a United States of Europe by the EU. Why does then the UK have to leave? Are EU laws enough reason for the UK to leave the EU?

Now, let's be reminded that the UK is neither a member of the Euro area nor the Schenger area. Will thus EU exit allow the UK to better determine its immigration policy?

The EU does not have an industrial policy. Will a non EU UK be able to have an industrial policy and help develop more manufacturing? Maybe yes. But is any political party arguing this factor? Cameron should have been arguing for an EU industrial policy for years now. He has not. Why? Has Labour?

A non EU UK will be able to depart from the EU working time legislation and have the type of social, industrial affairs and employment policy it wants to. Be reminded that Blair incorporated the EU social protocol other UK governments had vetoed (most notably, the Maastricht Treaty opt-out).

A non EU UK will be able to also develop its own environment, transport, VAT and other policies and laws. Will they be much different than the existing EU ones though? That is a question UK policy makers must answer.

There is no question that some non EU companies with manufacturing activities in the UK may be tempted to leave the UK and settle inside the EU if the UK leaves the EU. It will depend on what they perceive the problems of selling in the EU if the UK leaves to be. Who has asked them, in the debate so far?

A non EU UK will not have to contribute to the EU budget. But is the UK contribution to the EU budget (much inferior to the US one) so important (see UK Rebate) after all?

Now, what will happen to UK citizens living and working "freely" in other member states and citizens of other EU member states living and working in the UK? That is a matter that may be settled via UK-EU negotiations as part of an exit agreement, should the UK decide to leave the EU.

Of course, it is most likely these questions will remain unanswered and the decision in the referendum will depend on more top of the mind issues.

In any case, there will be no Doomsday though. Why? Because the UK has the policy makers and think tanks to address policy issues, whether the decision is Yes or No.

Enlargement vs Deepening. What future for the EU? The EU needs an IGC. Badly. To decide on its future.

Enlargement vs Deepening. That was the big strategic dilemma in the EU years ago. The main proponents of enlargement were the UK and Germany. The UK hoped enlargement would hinder the deepening of the EU. It has worked. 19 members may be in the Eurozone but Eurozone and the EU as a whole are facing considerable problems.

How can a single market work properly without a single language, a single tax system, a single bureaucracy? With a single currency for merely 19 out of it 28 members?

The current migration crisis shows the lack on union within the European Union.

The decision of the ECB to lower interest rates to 0% shows its despair in trying to make the Eurozone more competitive. Triche interest rate policies some ten years ago hurt the cohesion of the Eurozone significantly and it has not recovered.

A de-industrialising EU cannot create enough jobs to curb the joblessness issues.

If the UK decides to leave the EU in a few weeks, an earthquake will shake the EU. It better. The EU needs a wake up call.

Is the EU a failure, so far? Yes. It has taken 60 years and failed to become a United States of Europe.

Can the EU change its course and succeed?
Yes, it can.

How likely is that? Not very likely.

Will the EU dissolve? Not likely.

What should member states do?
Well, they are focusing on national affairs increasingly, taking care of their national needs.

What is the future for European business? Well, 2.5 decades after 1992, there is no European business, merely, companies doing business across the EU. 28 tax regimes, 23 languages, what kind of a single market is that?

The existence of world trade and the EU puts pressure on the cohesion of the EU. Why should members stay members when world trade is now more free than ever and one (eg the UK) can sell to Europe without needing to be part of the EU.

The EU needs an IGC. Badly. To decide on its future. I argued that 2 years ago. The need is more urgent today. Even after the UK referendum.

An IGC should decide whether to move the EU into a United States of Europe (as some want and it makes economic sense) or take back the EU to the Common Market it was decades ago (that would please the UK). More or less union make sense, both, as strategic option. The current status of the  union does not.

Friday, 7 August 2015

The optimal solution

Europe must stop blaming Greece and go United States of Europe right now and ask for WTO be empowered to include migration in its agreements on trade, services and capital.

Wednesday, 6 May 2015

Policy solutions and other proposals for a new Greece

1) Second Chance
Second chance is a program that will allow all migrants and Greeks to start their lives afresh in Greece. Details to be announced at a press interview soon.
1.1 Migrants
They will all receive green cards permitting them to live and work without any restriction in Greece permanently.
They will be granted absolutely free of charge by the Greek Immigration Service and a new INS type of agency that will soon be established in Greece.
Their countries of origin will be charged USD 1 million for each but this sum will of course not be collected but count against the existing Greece debt to IMF and the EU/Eurozone thus wiping it out.
1.2 Greeks
All Greece citizens will be allowed to declare personal default and wipe out all existing debts to banks, credit cards and social security funds.

2) Consolidation
All social funds (IKA/EOPPY, ETAA, OAEE (TEBE), etc) will be merged into one.
Their financing will come mainly from tax revenues.
To promote entrepreneurship (and thus jobs creation) by new and existing entrepreneurs, independents (self employed, shops) will pay a contribution of 50 (instead of the current 253 to 450) euros per month, irrespective of age and experience (unlike what troika imposed)
To promote employment/job creation, employers will only deduct from gross monthly salaries 50 euros per employee and pay employer contribution of only 10% on the gross monthly salary.

3) Minimum Wage
Minimum wage will be set by the national, sectoral, professional, local and enterprise level social partners based on the 1990 Koukiadis law. There will be a major crackdown on non declared and uninsured employment which has grown (for foreigners and Greeks) since the beginning of the crisis (2009).

4) Exports
A new Exports Promotions Agency will be established.

5) Liquidity
To assist in immediate liquidity needs of the government, taxpayers can deposit money and receive interest by the Greek IRS.

6) Guaranteed Income
It is set at 700 Euros at first for all Greeks and migrants in Greece.

7) Taxation,
All VAT is set at 0% with a view to being abolished ASAP. Incs will be established for a minimum 1 Euro capital. There will be no proxy income tax. But the IRS (US style) will be able to audit any person in Greece, Greek or foreign.
No land tax.
The state has an obligation to provide housing for all, migrants or Greek (or via guaranteed income).
The tax declaration will be minimal.

8) Quality of Life:
State hospitals and mass transport will be for free and available 24/7. Local landline telephony will be for free.

9) Enterprise policy
Laws and red tape will be cut 70%-90%.
Industry (heavy, manufacturing and agriculture) will be subsidized via state funds.

Wednesday, 29 April 2015

Latest policy proposals for Greece, EU, WTO/UN/G7

My latest policy proposals: 
1) An EU with 23+ languages, 28 tax systems, midget federal budget, etc cannot work. 
2) Greece has become Schengen's Ellis Island
3) The Ukraine situation must be solved, it creates uncertainty in the whole region
4) Interest rates are too low and too much FIAT money
5) Around the world people need to sleep well at night

Policy proposals (indicative, alternative proposals available)
1) The EU must formulate and approve via referenda a United States of Europe Treaty immediately. Members that reject it should leave. One budget (like USA), 1 IRS, 1-3 common languages for the EU job market for work, EU wide min wage, welfare state, industrial policy for more blue collar jobs (more details available) 

2) Greece gives all foreigners in Greece (Asian, African, exUSSR et al) green cards, charges their EU/IMF countries USD 1mi for each thus automatically GR has surplus no debt vs Eurogroup and IMF. Then the Greek employment agency (OAED) gives each jobless person in Greece (25%+) 600 euros/mo until it finds him/her a job. 

3) WTO/UN or G7 must meet ASAP to establish global free migration, 100% free trade, free capital movements or blocks of it and solve Ukraine issue in win-win manners. 

At your disposal: 0030.6934380453 (cell)

Tuesday, 10 March 2015

Migration: The Schengen system in Europe has many faults

My foreign wife has a son who's allowed to only live and work in Greece and not the rest of Schengen or the EU. How fair is that for a European Union that claims to be more humanitarian than other blocs and world powers?

In effect Greece has been forced by its EU and Schengen co-members to absorb the bulkk of the employment and economic effects on large migration from Asia, Africa and the ex USSR to the European West.

Instead of being recognized for their efforts to keep and find jobs in their own country and abroad, Greeks who have been dealing with huge problems in their own country (bureaucracy, overregulation, lacking infrastructures, etc) have been post 2009 branded as thieves, tax evaders, lazzies, even fascists.

While 17-75 year old Greeks are far from perfect, since their country faced a Stalin USSR promoted civil war post WWII and a US aided junta in 1967-1974 and given its geographical and morphological characteristics, Greece and Greeks deserved the aid they were given. Thus it does not constitute loans but a just payment for having incurred the cumulative effect of faulty public policies not only by Brussels but also the USSR, the post USSR Russia and other states, the UK, Germany et al.

Greece does not owe any country money. It thus has not only the capitalist but also the moral right to not pay back the little money given by Eurozone member states and the IMF members to help it deal with the above mentioned cumulative effect plus the effect of world migartion to the EU via Greece.

Further analysis on this topic available. Contact the analyst at 0030.2108646683.

Wednesday, 4 March 2015

Marketing over finance

It is now some time since the hawks beat Obamacare in the US and then launched a full throttle attack on Europe's social model(s). And society has started its comeback, mostly in Europe and somewhat in the US. The growth of hawkish parties in Germany, the NL and elsewhere has been causing a variety of side effects such as Greece's golden dawn party. Some are in the progressive direction (PODEMOS, SYRIZA, etc).

What will come out of 2015's other elections in the UK, Spain, etc? The upcoming US elections? In any case, fasten your seat belts and hold your passports tight in your hands.

Sunday, 22 February 2015

Greece and the US the main victims of faulty globalization

Unlike most views I read and hear, Greece needs no memoranda or new programs but a solid government instead. The No1 reason ppl go to Greece is climate. The No1 reasons they don't is the oligopolistic structure of the airline industry in Europe and beyond and the morphology of Greece that creates sub markets but do not impeded global players anymore, thus leading to dealth of the Greek enterprise and job market (jobless a whopping 25% officially 6 years after 2009).

Next time in Athens take a stroll on Aharnon St. in Patissia to see how Schengen and globalization aren't working. There is no crime and people in a friendly environment but what most want to forget is that in addition to its 2009+ crisis due mostly to faulty 1981-2015 PASOK and Stournaras policies, Greece pays a huge cost due to Schengen's policy to keep most Asian, African and ex USSR immigrants in Greece instead of other EU/Schengen member states.

Thus Greece faces a crisis larger than the US Depression since pays a huge cost due to so many faulty EU & globalization in addition to faulty 1981-2015 PASOK one and thus must default.

It is my view that Greece should pay only individuals who are creditors as well as selected debtor countries.

Why, one may ask.

Because default is part of the capitalist game.

Some more considerations on the issue:

1) The PASOK party in Greece is now dead and with good reason, it co-governed Greece for most of 1981-2015 but provided only few solid policies

2) As pick and choose members of the #EU, the UK, Ireland and Denmark have no business telling Greece what to do and how to do it

3) Greece owes no apologies to the other EU members, Germany, Ireland and The Netherlands do.

4) Too many foreign journos who go to Greece stay gated in luxury hotels and don't see the real Greece crisis

Thursday, 13 March 2014

Athens vs Sparta, 2014

Management/politics/Life: The main choice has always been: Athens or Sparta. In Ancient Greece, in USSR vs USA, in US vs British Empire, Germany vs USA, Panathinaikos vs Olympiakos, Barcelona vs Real, Celtics vs Lakers, Celtic vs Glasgow Rangers (duopoly). But sometimes there is a third party, eg Ancient Thebes, AEK, the EU, etc that comes in and sometimes wins the day.

Monday, 24 February 2014

We are still living the effects of the criminal subprime crisis.

The economy is an ongoing system. Current problems in Greece, EU, US and world stem from old habits and scleroses. But some of the remedies are alas faulty. And a major shift was caused in the 1990s and 2000s by the further shift of much of western economic activity into an "unreal" real economy away from industry into not high end but basic services that have cut the real income of western citizens and shifted much activity into rather "useless" activities (an "unreal" economy). A major case of that is my native Greece (which, yet, has just managed to move into positive territory in trade balance for the first time since 1948 when records started being kept).

The dotcom bubble was followed by major mistakes of the US Fed in central interest rate policy (a rapid rise in early 2000s) that led to the subprime crisis that spread from the US to much of the rest of the western economies that, due to their own de-indurialisation and other structural problems, some due to inefficiencies in their welfare states AS WELL AS their product and services markets (leading to lack of sufficient competition and unreal "market" prices and costs). As a result, many banks and other organisations even in Germany had heavily invested in the dotcom bubble. The Hartz concept, Hartz IV being a prime product of it, was an ernest but faulty response (by the German SPD government of Third Way devotee R. Schroder). The Greek and PIGS austerity regimes, driven by the CDU-SPD (2005-2009) and later CDU/CSU/FDP coalition (2009-2013) and now a new CDU-SPD coalition are a) too German-centric and b) ill-conceived and harsh.

Photo: A dumpster in the red lights district of Athens, Greece (Fylis Street, near Agios Panteleimon and Victorias Square), one of the epicenters of the Greece, EU and western economies' crisis, January 2014, photo by Nick Panayotopoulos (InsideEUCrisis: Greece series). Properties in such areas have reached a low of below 300 euros per square meter (for late 1950s and early 1960s flats, as on location research by Nick Panayotopoulos has found).  

Greece, now at -20 pc GDP since the crisis started and on 28% unemployment, had its own perennial systemic problems (econ, social, policy, political/state) that compiled with the aftershocks of the subprime crisis and the Bubba driven by ECB interest rate policies in much of the 2000s (tolerated by the PIGS and other Euro nations and their reps in the ECB) have led to this crisis.

In the meantime, China's December 2002 entry into the WTO (a strategic mistake by the US and the EU), and the rise of other economies (eg ASEAN and others), fueled by investment from western bankers and companies (outsourcing of production to these countries) has created a dynamic that has further exacerbated the problems for the western economies. Greece is a key test case.

On top of that, speculative (casino like) investment in derivatives, especially on food related goods (commodities) has further blown up a more fundamental bubble that has not yet burst (the rise of bitcoins being one side-effect). When it does....

Thursday, 20 February 2014

What is global?

In this day and age of globalisation, there are certain things that are more global than others. As I wrote in an analysis back in 2004, global are things that six different people of different nationalities and walks of life on a long distance flight can talk about.

Most things global, in 2004 and still today, are of course, Anglo-American. Courtesy of the language.
Movies such as When Harry Met Sally and You Got Mail, both with Meg Ryan, are part of global pop culture.

Paris is global too. The French language, not. Sorry M. Shirac!

To become part of global markets, pop culture and other dimensions of it, is not easy, of course. One either inherits it or works hard and smartly to achieve it.

Ancient Greece did.

Also read:

Wednesday, 19 February 2014

The tuition issue will probably always haunt Nick Clegg

Paddy Ashdown's 2012 decision  to lead on the LibDems' General Election campaign is great but I am afraid that the damage done to the credibility of the LibDems due to the tuition issue will, alas, probably always haunt Nick Clegg.

What did/do the liberals and the Leninists had/have in common?

First realised and posted this analysis, in Greek, in 2004, at the online forum of the Bulls (, a then liberal party in Greece.

Their sensitivity against oligopolies and cartels.

For their differences, see my full analysis, as written in 2004 and posted here later: