Union Européenne: La crise de la démocratie européenne

This is an Op-Ed written by Dr. Amartya Sen for the NYTimes.  Dr. Sen is  Thomas W. Lamont University Professor, and Professor of Economics and Philosophy, at Harvard University and was until 2004 the Master of Trinity College, Cambridge. He is also Senior Fellow at the Harvard Society of Fellows. Earlier on, he was Professor of Economics at Jadavpur University Calcutta, the Delhi School of Economics, and the London School of Economics, and Drummond Professor of Political Economy at Oxford University. To top this already impressive resume, Dr. Sen Nobel was awarded the 1998 Nobel Prize in economic sciences for his work on welfare economics and social choice theory. Briefly stated, Dr. Sen is an authority in the field.

The Crisis of European Democracy

By AMARTYA SEN

May 22, 2012Cambridge, Mass.

IF proof were needed of the maxim that the road to hell is paved with good intentions, the economic crisis in Europe provides it. The worthy but narrow intentions of the European Union’s policy makers have been inadequate for a sound European economy and have produced instead a world of misery, chaos and confusion.

There are two reasons for this.

First, intentions can be respectable without being clearheaded, and the foundations of the current austerity policy, combined with the rigidities of Europe’s monetary union (in the absence of fiscal union), have hardly been a model of cogency and sagacity. Second, an intention that is fine on its own can conflict with a more urgent priority — in this case, the preservation of a democratic Europe that is concerned about societal well-being. These are values for which Europe has fought, over many decades.

Certainly, some European countries have long needed better economic accountability and more responsible economic management. However, timing is crucial; reform on a well-thought-out timetable must be distinguished from reform done in extreme haste. Greece, for all of its accountability problems, was not in an economic crisis before the global recession in 2008. (In fact, its economy grew by 4.6 percent in 2006 and 3 percent in 2007 before beginning its continuing shrinkage.)

The cause of reform, no matter how urgent, is not well served by the unilateral imposition of sudden and savage cuts in public services. Such indiscriminate cutting slashes demand — a counterproductive strategy, given huge unemployment and idle productive enterprises that have been decimated by the lack of market demand. In Greece, one of the countries left behind by productivity increases elsewhere, economic stimulation through monetary policy (currency devaluation) has been precluded by the existence of the European monetary union, while the fiscal package demanded by the Continent’s leaders is severely anti-growth. Economic output in the euro zone continued to decline in the fourth quarter of last year, and the outlook has been so grim that a recent report finding zero growth in the first quarter of this year was widely greeted as good news.

There is, in fact, plenty of historical evidence that the most effective way to cut deficits is to combine deficit reduction with rapid economic growth, which generates more revenue. The huge deficits after World War II largely disappeared with fast economic growth, and something similar happened during Bill Clinton’s presidency. The much praised reduction of the Swedish budget deficit from 1994 to 1998 occurred alongside fairly rapid growth. In contrast, European countries today are being asked to cut their deficits while remaining trapped in zero or negative economic growth.

There are surely lessons here from John Maynard Keynes, who understood that the state and the market are interdependent. But Keynes had little to say about social justice, including the political commitments with which Europe emerged after World War II. These led to the birth of the modern welfare state and national health services — not to support a market economy but to protect human well-being.

Though these social issues did not engage Keynes deeply, there is an old tradition in economics of combining efficient markets with the provision of public services that the market may not be able to deliver. As Adam Smith (often seen simplistically as the first guru of free-market economics) wrote in “The Wealth of Nations,” there are “two distinct objects” of an economy: “first, to provide a plentiful revenue or subsistence for the people, or, more properly, to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services.”

Perhaps the most troubling aspect of Europe’s current malaise is the replacement of democratic commitments by financial dictates — from leaders of the European Union and the European Central Bank, and indirectly from credit-rating agencies, whose judgments have been notoriously unsound.

Participatory public discussion — the “government by discussion” expounded by democratic theorists like John Stuart Mill and Walter Bagehot — could have identified appropriate reforms over a reasonable span of time, without threatening the foundations of Europe’s system of social justice. In contrast, drastic cuts in public services with very little general discussion of their necessity, efficacy or balance have been revolting to a large section of the European population and have played into the hands of extremists on both ends of the political spectrum.

Europe cannot revive itself without addressing two areas of political legitimacy. First, Europe cannot hand itself over to the unilateral views — or good intentions — of experts without public reasoning and informed consent of its citizens. Given the transparent disdain for the public, it is no surprise that in election after election the public has shown its dissatisfaction by voting out incumbents.

Second, both democracy and the chance of creating good policy are undermined when ineffective and blatantly unjust policies are dictated by leaders. The obvious failure of the austerity mandates imposed so far has undermined not only public participation — a value in itself — but also the possibility of arriving at a sensible, and sensibly timed, solution.

This is a surely a far cry from the “united democratic Europe” that the pioneers of European unity sought.

Union Européenne: Non, l’euro ne survivra pas la sortie de la Grèce

No Mr. Wolfgang Schäuble, the euro won’t survive Greece’s exit

The German minister of Finance, Wolfgang Schäuble, stated in an interview with the “Rheinische Post” on 11 May 2012 that Europe has the capacities to cope with a Greek euro area exit. He went on to say that Germany and its partners have learned a lot during the last two years and have put in place several protection mechanisms. Basically, this is a strong signal from one of the highest German officials stating that the euro can survive without Greece.  Let me say this upfront: No, the euro—and probably the whole European Union project–cannot survive Greece’s exit from the Eurozone. Schäuble’s statement could have been correct if it was given 2 years ago. But now, his statement is tantamount to a Eurozone suicide. And this is why.

However, before we get to why Greece’s exit from the Eurozone would lead to the total collapse of the euro as a currency and probably to the collapse of the European Union as an ambitious yet salutary political project, we need to briefly remember how we got to this point.

The project of the European Union started or was imagined as a purely political project by its founding fathers.  On the ruins of the disastrous and destructive second World War, Robert Shumann, Jean Monet, Alcide De Gasperi, Paul Henri Spaak and Konrad Adenauer (two Frenchmen, an Italian, a Belgium, and a German respectively) began imagining a political project that would knit together the different European countries and make the prospect of another destructive war between European countries an impossible endeavor. Of course, this started with a closer economic cooperation limited to a certain number of goods and services and just between a small numbers of countries, which would later on represent the core countries of the European Union. This limited economic cooperation created a spillover effect, and over time, more goods and services were included and more countries wished to join. Long story short, this economic cooperation spilled over into a political cooperation and led to the necessity of creating a common currency—i.e., the euro.

After the Maastricht Treaty (also know as the Treaty on the European Union) was adopted and ratified by most of the countries, the euro was introduced.  It was first introduced to the financial markets as an accounting currency in 1999 (it replaced the old ECU) and then introduced in circulation in 17 of the 27 EU member states replacing their national currencies in 2002.  The introduction of the euro caused a certain euphoria in the financial markets. Suddenly, countries that were deemed risky for investment saw a drastic influx of cheap capital—i.e., loans. Basically, cheap money started pouring in southern European countries like Greece, Italy, Spain, and even in Ireland and Austria. Belonging to the Eurozone made these countries safe places, though some of them had deep structural flaws (as we came to discover that later on). This influx of cheap capital financed huge housing boom-like bubbles and increased trade deficits.  And then, the 2007-2008 financial crisis hit. It started in the U.S., but soon migrated to the European continent. The influx of cheap money dried up. This caused severe economic slowdowns and downturns in almost all of the Eurozone.

Since the European Union is an unfinished economic integration project topped by an even more unfinished political integration, countries like Greece, Spain, and Italy were literally up the creek without a paddle.  The economic crisis of 2008 led to a huge fiscal crisis in these countries since they had no control over their monetary policies, and they were obliged to keep their budgetary spending within the 3% allowed by the EU agreements.  However, in a time of severe economic crisis, one needs to engage in fiscal deficit spending in order to get out of the hole. The last thing a country needs is drastic cut in public spending. Why? Because drastic cuts in public spending lowers consumption, which lowers demand, which leads to less investments, which leads to less revenues.  And the more austerity measure a given country adopts, the more it reinforces this infernal downward spiral. But what did the EU leaders do? They did exactly what they should not have done.

Germany and France (Sarkozy’s France) forced most of the EU members to engage in drastic public spending cuts hoping that fiscal discipline would calm financial markets and stop speculations. However, these EU leaders misread completely the message that most financial markets have been sending. They were not looking for strict fiscal discipline, though some discipline doesn’t hurt. They were looking for serious economic growth prospects.  Since spending cuts depress economic growth (just look at the economic growth in the Eurozone countries in the last 2 years and you notice that cuts caused economic stagnation and recession in France, Spain, the UK, Italy, Greece, and so forth), investors and bond markets lost confidence in the Eurozone, and that led to higher interest rates on short term borrowing. Not only are these countries killing their economic growth with all those drastic cuts, but also they can’t even find cheap capital to fund short-term operations. Consequence: 3 European countries—Greece, Spain, and Italy—are on the verge of total economic collapse and serious political turmoil.

So, what if we let Greece out of the Eurozone like Wolfgang Schäuble wants? What would happen to the rest of the Eurozone?

Let us game this scenario for a second.

As we speak, Greece is under a slow-moving financial blitzkrieg.  There is a slow moving bank-run on the Greek banks (or what the bankers call a bank-jog). What does that mean? It means that depositors are pulling out their capital to anticipate a possible Greek default or an exit from the Eurozone.  This bank-jog has been going on at a very low rate for the last 2 or 3 months, but it has accelerated since the last legislative elections.  However, the ECB is backstopping, or for the lack of a better word, financing this bank-jog through lending to Greek banks the necessary capital. More accurately, the Greek banks are using the emergency liquidity assistance until the EFSF (European Financial Stability Facility) agrees to release its bonds, so they can use them as collateral.

However, when the ECB decides to stop financing Greek banks (and that’s what the German minister of Finance, Wolfgang Schäuble, means), Greece would effectively be forced to leave the Eurozone and abandon the euro as a currency, and revert to issuing again its own national currency, the drachma.

The first fallout of such a move is that financial markets would lose total confidence in every Eurozone countries. Greece leaving the Eurozone means that the euro is reversible, and any country could decide to abandon it.  Do you remember that bank-jog we just talked about in the previous paragraph? Well, that bank-job would turn into a bank-run on Spanish, Italian, Irish, and possibly French banks. All investors and all financial markets would pull out all of their money at once. Ladies and gentlemen, no bank in the world and in the history of banking has had enough cash or securities in its vaults to face a cataclysmic event like this one. This means that most banks in Spain and Italy would collapse overnight.  A large numbers of banks in France, Germany, Austria, Netherlands, and Belgium would also collapse. This would trigger a worldwide chain reaction and some U.S, Japanese, and Russian banks exposed to Eurozone debts would also be severally affected.

What we would be looking at is a total blow-up of the European Union and a severe global depression.

This is what it means to let Greece leave the Eurozone now. On top of the financial and economic global calamity, we would also have a political one. The rise of extreme right and left political parties in Europe and elsewhere would surely be the most likely political outcome. Mainstream parties would be blamed for the catastrophe and would be completely discredited in the eyes of most voters, which would directly benefit the extreme right and extreme left political leaders.

What to do then to avoid such a calamity? Not only must Greece stay in the Eurozone, but also a more encompassing political economy must be devised. First, the mutualization of the debt must be organized. Second, the ECB must be restructured to issue euro-bonds so member states can directly borrow from the ECB at low rate instead of borrowing from banks. Third, a serious economic growth agenda must be considered so countries like Spain, Italy and others could trigger decent economic growth rates and emerge from the infernal cycle of austerity and depression.

Finally, the ECB must increase the Eurozone inflation rate to at least 4%. Why?  In a recession, you expect average wages to adjust to a lower level. As the unemployment rate increases, workers are willing to accept lower wages, and as wages decrease, employers become more willing to hire more workers. If this does not occur, the recessionary cycle deepens and becomes persistent.  There are several ways to fix this problem, but let us concentrate on the one most suited for the Eurozone. One of the problems in Spain, Italy, Greece and most of Europe is that their workers have become increasingly uncompetitive over the past decade—higher wages, high unemployment rates, and low investments leading to a highly uncompetitive Eurozone worker. One way to correct this is by devaluing the currency, which would effectively reduce wages in a country compared to the rest of Europe. But this solution is not available to most Eurozone member states because they do not have control over their monetary policies. The Eurozone monetary policy is dictated by the ECB.  So how do you reduce wages in those countries when you can’t manipulate your currency? Well keep wages constant, but allow a higher inflation rate. If the ECB allows the inflation rate to run at a 4% level, you effectively get no wage increase, but an effective drop by 4%. This would increase the competitive edge of the European worker.

This is the only way out. But to reach these set of solutions, the ECB and the Germans need to get over their obsession about spending, inflation, price stability, and moral hazard. If Angela Merkel keeps on doing what she has been doing and keeps on bullying the rest of the Eurozone member states into these suicidal austerity programs, she would literally cause the collapse of the European Union. Lastly, the ECB needs to embrace its function as an independent central bank facing drastic economic crisis with a possible political and economic collapse of the whole area. The ECB needs to get over its rigid ideology of price stability and face  reality. Otherwise, there will not be an ECB in a couple of years.

Merci, Grazie, ありがとうございます, Arigato,شكرا, Gracias, & Thank you!

This is just a quick note to thank all of you who made this blog your first destination yesterday. You were tens of thousands from all over the world (from Japan, Chili, Peru, Italy, South Africa, Saudi Arabia, Qatar, Egypt, Cote d’Ivoire, Australia, Morocco, Algeria, Tunisia, Indonesia, France, Spain, the UK, Sweden, the USA and so many other places–sorry if i forgot your country) hitting the reload button again and again and checking the results that i thought the blog was going to crash.

I really appreciate the fact that many of you made this blog your first stopping place (and for many, the main place) and i hope that i provided you with timely and accurate information last night.

Sorry, i won’t be able to reply to all the thank you notes and/or comments that you guys sent me, but just know that i appreciate every single one of them very much.

Again, thank you!

Map of Top Views by Country for yesterday 2012-05-07 (Summarized)

France: Live–Presidentielles–François HOLLANDE ELU PRESIDENT

FRANÇOIS HOLLANDE

FRANCOIS HOLLANDE EST ELU PRESIDENT

 

Ambiance à Tulle à l’annonce des résultats

Rue Solférino: LA LIESSE

More detailed results: Paris

• François Hollande l’emporte dans le 2e (57,6%), le 3e (61,35%), le 4e (54,96%), le 5e (56,22%), le 9e (54,19%), le 10e (69,39%), le 11e (67,76%), le 13e (65,27%), le 14e (60,26%), le 18e (70,31%), le 19e (67,64%) et le 20e arrondissement (71,83%).
• Nicolas Sarkozy arrive en tête dans le 1er (52,17%), le 6e (57,66%), le 7e (71,76%), le 8e (72,47%), le 15e (54,50%), le 16e (78,01%) et le 17e arrondissement (58,22%).

More detailed results:

• A Sablé (Sarthe), la ville de François Fillon, Nicolas Sarkozy recueille 52,89% des voix, contre 57,16% en 2007.
• A Saint-Quentin (Aisne), ville dont Xavier Bertrand est maire, François Hollande (54,18%) devance largement Nicolas Sarkozy (45,82%).
• A Troyes (Aube), où François Baroin est maire, Nicolas Sarkozy (50,39%) compte seulement 171 voix d’avance sur François Hollande.
• A Nancy (Meurthe-et-Moselle), fief de Nadine Morano, où Nicolas Sarkozy était arrivé en tête il y a cinq ans, François Hollande (55%) compte dix points d’avance sur le président sortant.
•  Au Puy-en-Velay (Haute-Loire), ville dont Laurent Wauquiez est maire, François Hollande (55,89%) arrive très nettement devant Nicolas Sarkozy.
• A Chaumont (Haute-Marne), ville de Luc Chatel, François Hollande arrive également en tête avec 51,85% des voix.

UPDATE 26: (RTS) Comme l’annonçaient tous les sondages, François Hollande deviendra bien le nouveau président de la République française à l’issue du deuxième tour du scrutin présidentiel ce dimanche. Il a remporté, selon les premières estimations (pas encore définitives), entre 52,5% et 53,3% des voix contre 46,7% à 47,5% pour son adversaire, Nicolas Sarkozy, le président sortant qui devrait donc quitter donc l’Elysée le 15 mai prochain.

UPDATE 25: EXPLOSION DE JOIE RUE SOLFERINO

UPDATE 24: 19H09– AGENCE FRANCE PRESS  (AFP): FRANÇOIS HOLLANDE ÉLU PRESIDENT DE LA REPUBLIQUE

UPDATE 23: (LE MATIN) NOUVEAUX CHIFFRES CONFIRMANT, VOIRE AFFINANT LA VICTOIRE DE LA GAUCHE: ENTRE 52,7 ET 53,3% DES VOIX POUR VOIX POUR FRANÇOIS HOLLANDE, SELON LH2 (LOUIS HARRIS), 53,3% POUR INTERACTIVE, 52% SELON CSA.

UPDATE 22: 19:01 (RTBF) LE JOURNALISTE DE LA RTBF DECLARE, “C’EST PLIE, FRANCOIS HOLLANDE LE PROCHAIN PRESIDENT DE LA FRANCE”

UPDATE 21: 18h55 (RTBF) : FRANÇOIS HOLLANDE AURAIT GAGNÉ LES ÉLECTIONS PRÉSIDENTIELLES. La fourchette reste a déterminer quand même

UPDATE 20: 18h51: La foule crie victoire rue de Solférino, le siège de PS, alors que l’ambiance est plus tendue à la Mutualité, où Nicolas Sarkozy doit s’exprimer.

UPDATE 19: 18H49: RTBF CALLED THE ELECTION FOR FRANCOIS HOLLANDE. THE ONLY THING THAT STILL TO BE DETERMINED IS THE EXTENT OF THE VICTORY.

UPDATE 18: 18H47: Pierre Moscovici, directeur de campagne de François Hollande: «On ressent de l’émotion, on attend».

UPDATE 17: 18h37: Selon le journal Suisse, Le Matin, “La victoire de François Hollande se confirme”

UPDATE 16: 18h01: selon l’entourage de François Hollande, le socialiste s’envolera de Brives à destination de Paris à bord d’un avion privé aux alentours de 22h, quel que soit le résultat.

UPDATE 15: 18h00: des proches de Nicolas Sarkozy arrivent à l’Elysée: sa porte-parole Nathalie Kosciusko-Morizet et son conseiller spécial Henri Guaino.

UPDATE 14: 18h00–LES TENDANCES DES 3 INSTITUTS DONNENT TOUJOURS FRANCOIS HOLLANDE EN TETE AVEC 52% ET 53%.

UPDATE 13: 17h00 (selon RTS et RTFB)  SONDAGES DES SORTIES DES BUREAUX DE VOTE SELONG LES 3 GRANDS INSTITUTS DE SONDAGE.

HARRIS: FRANCOIS HOLLANDE 53%, NICOLAS SARKOZY 47%

IFOP: FRANCOIS HOLLANDE 52.5%, NICOLAS SARKOZY 47.5%

SOFRES: FRANCOIS HOLLANDE 53%, NICOLAS SARKOZY 47%

UPDATE 12: Selon le Ministere de l’Interieur, le taux de participation a 17h00 etait de 71.96%

A bit of humor to relax the tension of this electoral night

En directe de la frontiere Franco-Suisse

UPDATE 11: On commence à s’affairer devant le siège du Parti socialiste, rue de Solférino à Paris. 

 

UPDATE 10: 16h52 (Tweets des correspondants de la RTS) Des militants commencent à arriver à la Bastille, où François Hollande avait prévu de faire la fête en cas de victoire. Des écrans géants commencent à être installés

UPDATE 9: (source: Le Monde, RTBF, RTS) François Hollande, s’il est élu président, devrait avoir dans la soirée un échange avec la chancelière allemande Angela Merkel, a indiqué un de ses plus proches ami, Jean-Marc Ayrault, le maire de Nantes (ouest).

UPDATE 8: a 16h30 (source RTS) On commence à s’affairer devant le siège du Parti socialiste, rue de Solférino à Paris, comme le montre ce cliché de France Télévisions:

UPDATE 7: a 16h10 (source RTS) Nicolas Sarkozy se trouve à son bureau de l’Elysée, où il doit attendre les résultats du scrutin en compagnie de ses conseillers.

UPDATE 6: RESULTATS DES AMERIQUES (SOURCES: RTBF, RTSINFO)

Voici un premier apercu des résultats partiels des Amériques. La participation a augmentè en moyenne de 3 a 4% par rapport au 1er tour. En règle générale, François Hollande fait le plein des voix de gauche et gagne environ le tiers des voix de François Bayrou.

FRANCOIS HOLLANDE gagne à Montreal (près de 57,74%), à Toronto (51% – la gauche n’y avait jamais triomphe), au Pérou (55%), en Argentine (51,7%), en Colombie (58,82%) et au Honduras (56%). Il comble l’ecart avec la droite au Mexique (47,3%), au Bresil (47% – ou il gagne à Rio, Brasilia et Recife), au Costa Rica (44,1%) et au Chili (44%).

UPDATE 5: (SOURCES: RTBF, RTSINFO) Selon les premières tendances et les sondages de sortie des urnes de 3 grand instituts de sondages, François Hollande serait en tête

UPDATE 4: (SOURCES: RTBF, RTSINFO) RESULTATS DES DEPARTEMENTS D’OUTRE-MER

Nous avons les premiers résultats pour le second tour de la présidentielle française en provenance des départements d’Outre-mer.

Saint-Pierre et Miquelon: François Hollande 65%,  Nicolas Sarkozy 35% ;

Martinique: Francois Hollande 68,5%, pour Nicolas Sarkozy 35.1%

Guadeloupe: François Hollande 72%

Guyane: Francois Hollande 62%

Saint-Martin:  François Hollande avec 51,5 %, tandis que Nicolas Sarkozy ne serait en tête que dans la petite île de Saint-Barthélémy, avec près de 83% des voix exprimées.

UPDATE 3: INFORMATION RTBF–Trois grands instituts de sondages annoncent donc le candidat socialiste François Hollande en tête avec entre 52,5 et 53% des voix. Cela dit ces résutats ne portent que sur les votes du matin (jusqu’à 11h) et il faut encore tenir de la traditionnelle marge d’erreur. Ces résultats sont donc encore à prendre avec précautions à ce stade.

UPDATE 2: RTSINFO– Selon des sondages effectués à la sortie d’une série de bureaux de vote, deux instituts donnent actuellement François Hollande vainqueur de l’élection présidentielle française avec une majorité de 52,5 à 53% des voix.

UPDATE 1: Le taux de participation était, dimanche à midi, de 30,66% en métropole, selon le ministère de l’Intérieur. Ce taux est en baisse par rapport à celui enregistré à la même heure en 2007 (34,11%, marqué il est vrai par une forte mobilisation). Au premier tour le 22 avril dernier, ce taux avait atteint les 28,29% à midi.

We welcome our readers from all over the world. I see that you are already hit the “refresh button” hard and i think there will be thousands of you from France, Europe, and Africa. I promise you that we will be starting our live coverage of the first estimations and exit polls now. Buckle up, this is going to be a “close” right. Let’s Go!

France: Les résultats du deuxième tour dès 18h30 heure françaises et 12h30 heure EST

Comme nous l’avons fait pour le premier tour, Nous allons aussi publier les résultats du premier du deuxième tour des élections présidentielles françaises le 6 Mai à 18:30 heure françaises et 12:30 heure Americaine.

Dès que les résultats (ou résultats partiels) seront disponibles, nous les publierons et les posterons sur ce blog.

Alors restez à l’écoute et venez sur le blog le 6 Mai autour de 18h30 pour avoir les deuxième résultats du tour avant tout le monde.

We did it for the first round, and we were successful in getting the results and publishing there before almost everyone. Well, we are doing it again for the second around. We will be publishing the results of the second round of the French presidential elections at 18:30 or as soon as we have them.  We are not bound by the French law banning the publication of partial results before 20:00, and therefore there is no justification for us to hold on to the results until 20:00 (or 14:00 EST).

So as soon as we have partial results (and we expect to have them at 18:30 French time and 12:30 EST), we will post them right the way on this blog.

So, stay tuned and check our blog on Mai 6 at 18:30 (if you live in France) and at 12:30 American EST.

France: Le Débat: Jeu, Set, Match Hollande

It is hard to really determine a winner in a presidential debate. Both candidates are usually well-prepared, having digested long lists of facts and numbers, and ready to rumble and get it over with. Even in the American tradition of 3 presidential debates, it is hard to clearly say that one candidate has clearly won, while the other has clearly lost. Well, this was not the case tonight. In tonight’s French presidential debate, there was a clear winner and there was a clear loser. Hollande won, and Sarkozy lost.

Hollande dominated the debate from the beginning till the end. For almost 3 hours, the challenger showed his keen mastery of every fact related to any topic debated. In one word, it was a rare display of superiority. Sarkozy looked lost, angry, belligerent, disrespectful, not in control of his own files and facts. Sarkozy was outclassed and out-punched. Briefly stated, Sarkozy was in over his head.

We have to remember, Sarkozy was the candidate who demanded to have 3 debates. He was the candidate who said that he was “going to explode [Hollande].” Of course, Sarkozy, the bomb-maker, got exploded tonight. It is useless to go over every minute of the 3 hour long debate, but there was a passage, just before the end, where Hollande literally put the cherry on top of the cake. It was the apotheosis of the debate, the climatic moment, a moment that would certainly enter the history of presidential debates. Talking about his vision of the presidency and what he will do differently, Hollande, in a very eloquent way–almost poetic–summed up all of Sarkozy’s failures and emphasized clearly and calmly what he would do differently.  Watch, this was a beautiful moment.

France: Mediapart lance une bombe dans les derniers jours de la campagne présidentielle.

Mediapart, the only independent and courageous investigative online newspaper left in France (along with Le Canard Enchaîné), just published damning accusations against the incumbent president Nicolas Sarkozy. For those who do not read French (and soon i will try to translate the article and publish an English version), Mediaprt reports that Kadhafi illegally financed and funded Sarkozy’s 2007 presidential electoral campaign. A 50 million euros is reported to have changed hands, going from the Libyan officials to Sarkzy’s team. The document obtained by Mediapart and published on its website (see below) clearly shows an agreement between Sarkozy’s himself and top Libyan officials such as the Director of the Libyan Intelligence Services, Abdallah Senoussi, the President of the Libyan Investment Funds in Africa, Bachir Saleh, and Moussa Koussa, the closest adviser to Kadhafi and his family for decades as well as the former head of the Libyan Foreign and Counter-Intelligence Services. These are the highest Libyan officials during Kadhafi’s regime.  Why did Kadhafi agree to donate 50 million euros–the equivalent of 66 million dollars–to bankroll Sarkozy’s 2007 presidential campaign? What did Kadhafi get for it? Were weapon and military equipment sales during Sarkoy’s tenure a part of that agreement? These are questions that Sarkozy must answer.

These serious and damning accusation, if their veracity is upheld, are the equivalent of the Watergate Scandal on crack-cocaine. Sarkozy cannot avoid answering these allegations. His answer has to be clear, concise, and accurate. He cannot dance around the subject and try to deflect the gravity of these allegations by attacking the media as he has been doing recently. The messenger is not the problem here; it is the message that must be answered.

Here is the article, courtesy of Mediapart

Sarkozy-Kadhafi: la preuve du financement

Le régime de Mouammar Kadhafi a bien décidé de financer la campagne présidentielle de Nicolas Sarkozy en 2007. Mediapart a retrouvé un document officiel libyen qui le prouve. Cette note issue des archives des services secrets a été rédigée il y a plus de cinq ans. L’en-tête et le blason vert de la Jamahiriya préimprimés s’effacent d’ailleurs légèrement. Ce document, avec d’autres, a échappé aux destructions de l’offensive militaire occidentale. D’anciens hauts responsables du pays, aujourd’hui dans la clandestinité, ont accepté de le communiquer à Mediapart ces tout derniers jours.

Dès 2006, le régime libyen avait choisi « d’appuyer la campagne électorale» de Nicolas Sarkozy à la présidentielle de 2007, et ce pour un « montant de cinquante millions d’euros » : c’est ce qu’indique en toutes lettres cette note datée du 10 décembre 2006, signée par Moussa Koussa, l’ancien chef des services de renseignements extérieurs de la Libye.

Un accord « sur le montant et les modes de versement » aurait été validé quelques mois plus tôt par Brice Hortefeux, alors ministre délégué aux collectivités locales, en présence de l’homme d’affaires Ziad Takieddine, qui a introduit dès 2005 en Libye les proches du ministre de l’intérieur, notamment Claude Guéant, et Nicolas Sarkozy lui-même. Le directeur de cabinet de Mouammar Kadhafi, Bachir Saleh, alors à la tête du Libyan African Portfolio (LAP, soit l’un des fonds d’investissement financier du régime libyen), aurait de son côté été chargé de superviser les paiements.

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L’élément nouveau que nous publions aujourd’hui vient désormais confirmer les accusations portées par les principaux dirigeants libyens eux-mêmes peu avant le déclenchement de la guerre sous l’impulsion de la France, en mars 2011. Mouammar Kadhafi, son fils Saïf al-Islam et un ancien chef des services secrets, Abdallah Senoussi, avaient en effet tous trois affirmé publiquement détenir des preuves d’un financement occulte du président français. La découverte de la note de M. Koussa exige désormais que s’engagent des investigations officielles – qu’elles soient judiciaires, policières ou parlementaires – sur cet épisode sombre et occulte des relations franco-libyennes.

Abdallah Senoussi

(..) Selon des connaisseurs du régime libyen à qui nous l’avons soumis, ce document, dont le signataire et le destinataire appartenaient au premier cercle de Kadhafi, est conforme, jusque dans son style, aux habitudes bureaucratiques du régime. Outre celle du calendrier grégorien, la deuxième date qui y figure conforte son authenticité: elle n’est pas celle du calendrier musulman habituel, mais de celui imposé par le dictateur, qui part de l’année du décès du prophète Mahomet, l’an 632.

Depuis plusieurs mois, nous avons entrepris des recherches pour retrouver des dépositaires d’archives du régime déchu, en rencontrant à Paris et à l’étranger plusieurs représentants de factions libyennes, dont certaines avaient conservé des documents et d’autres s’en étaient emparé, en marge des affrontements armés. Ainsi, Mediapart a publié ici, dès le 10 avril dernier, des documents des services spéciaux libyens demandant des mesures de surveillance d’opposants toubous domiciliés en France.

Le document décisif que nous publions aujourd’hui, sous la signature de Moussa Koussa, a été adressé, le 10 décembre 2006, à un ancien homme clé du régime libyen, Bachir Saleh, surnommé le « caissier de Kadhafi ». Directeur de cabinet du “guide” déchu, M. Saleh était aussi le responsable du Libyan African Portfolio (LAP), le puissant fonds souverain libyen crédité de plus de 40 milliards de dollars. Sous l’ère Kadhafi, le LAP a servi à d’innombrables opérations d’investissement. Certaines avouables (tourisme, pétrole, agriculture, télécommunications…). Et d’autres moins, comme l’ont confirmé plusieurs sources libyennes concordantes. Contacté sur son numéro de téléphone portable français, M. Saleh n’a pas donné suite à nos sollicitations.

Connu pour avoir été l’un des plus proches collaborateurs de Mouammar Kadhafi et le mentor de deux de ses fils (Motassem et Saïf al-Islam), Moussa Koussa a quant à lui été le patron pendant plus de quinze ans, entre 1994-2011, des services secrets extérieurs libyens (l’équivalent de la DGSE française), avant de devenir le ministre des affaires étrangères de la Libye.

Moussa Koussa
Notons que l’auteur de cette note et son destinataire ont vécu, à l’heure de la chute du régime Kadhafi, des destins similaires. Moussa Koussa vit actuellement au Qatar, sous protection, après avoir fui la Libye en guerre, en mars 2011, ralliant d’abord Londres, puis quelques semaines plus tard Doha. Bachir Saleh, emprisonné brièvement par les rebelles du Conseil national de transition (CNT) avant d’être relâché en août dernier, a été exfiltré et accueilli par les Français. Comme l’a rapporté Le Canard enchaîné, lui et sa famille bénéficient toujours de la protection des autorités françaises qui leur ont accordé un titre de séjour provisoire.

Les deux paragraphes écrits par Moussa Koussa sont sans équivoque sur le sujet explosif abordé. «En référence aux instructions émises par le bureau de liaison du comité populaire général concernant l’approbation d’appuyer la campagne électorale du candidat aux élections présidentielles, Monsieur Nicolas Sarkozy, pour un montant d’une valeur de cinquante millions d’euros », peut-on d’abord y lire. Puis M. Koussa affirme transmettre et confirmer « l’accord de principe sur le sujet cité ci-dessus ». Le montant pharaonique promis par les Libyens est à rapprocher des 20 millions d’euros officiellement dépensés par Nicolas Sarkozy lors de sa campagne présidentielle de 2007.
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« C’est grotesque », avait réagi Nicolas Sarkozy sur le plateau de TF1, le 12 mars dernier. « S’il (Kadhafi, ndlr) l’avait financée (la campagne, ndlr), je n’aurais pas été très reconnaissant », avait ironisé le président-candidat, en référence à l’intervention militaire française en Libye.
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Une chose est en revanche certaine : les forces de l’Otan ont bombardé le 19 août 2011, à 5 heures du matin, la maison d’Abdallah Senoussi, située dans le quartier résidentiel de Gharghour, à Tripoli. Un cuisinier indien avait trouvé la mort dans le raid et une école avait été détruite. « C’est un quartier résidentiel. Pourquoi l’Otan bombarde ce site ? Il n’y a pas de militaires ici », avait alors dénoncé un voisin, Faouzia Ali, cité par l’Agence France Presse.

La réponse se trouve peut-être dans les secrets qui lient M. Senoussi à la France. « C’est le principal témoin de la corruption financière et des accords qui ont impliqué de nombreux dirigeants et pays, dont la France », a affirmé en mars dernier à l’agence Reuters une source « haut placée dans le renseignement arabe ».

Fabrice Arfi et Karl Laske – Médiapart via Au bout de la rou

 

 

Message de Paul Krugman aux “Français” et…les autres

If you read some of my previous posts on the economy and the crisis of the eurozone, you would know already my opinion about the stupidity of fiscal austerity during recessionary cycle. Well, i hate to say it, but i have been right all along. This past week, however, more and more European policymakers have been softly whispering another tune and getting themselves ready to leave the sinking austerity policy ship to board the demand-side one.  It warms my heart that they have finally seen the light.

Of course, i wasn’t the only person highly critical of fiscal austerity. Paul Krugman, one of the most brilliant economists out there, has been arguing the same point since the beginning of the crisis.

Those of you who do not know Dr. Paul Krugman, well he is Professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and winner of the  Nobel Prize in Economics (aka Sveriges Riksbank Prize in Economic Sciences) for his work on New Trade Theory and New Economic Geography. Since the beginning of the crisis, Dr. Krugman has been writing a series of articles in the New Times explaining the origin(s) of the crisis and advocating for the soundest way of getting out of it. Needless to say that Dr. Krugman has been right on almost everything he has said.

Here is his latest article that he could’ve titled it, “I told you So!”

Death of a Fairy Tale

By PAUL KRUGMAN

This was the month the confidence fairy died.

For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets.

Critics warned from the beginning that austerity in the face of depression would only make that depression worse. But the “austerians” insisted that the reverse would happen. Why? Confidence! “Confidence-inspiring policies will foster and not hamper economic recovery,” declared Jean-Claude Trichet, the former president of the European Central Bank — a claim echoed by Republicans in Congress here. Or as I put it way back when, the idea was that the confidence fairy would come in and reward policy makers for their fiscal virtue.

The good news is that many influential people are finally admitting that the confidence fairy was a myth. The bad news is that despite this admission there seems to be little prospect of a near-term course change either in Europe or here in America, where we never fully embraced the doctrine, but have, nonetheless, had de facto austerity in the form of huge spending and employment cuts at the state and local level.

So, about that doctrine: appeals to the wonders of confidence are something Herbert Hoover would have found completely familiar — and faith in the confidence fairy has worked out about as well for modern Europe as it did for Hoover’s America. All around Europe’s periphery, from Spain to Latvia, austerity policies have produced Depression-level slumps and Depression-level unemployment; the confidence fairy is nowhere to be seen, not even in Britain, whose turn to austerity two years ago was greeted with loud hosannas by policy elites on both sides of the Atlantic.

None of this should come as news, since the failure of austerity policies to deliver as promised has long been obvious. Yet European leaders spent years in denial, insisting that their policies would start working any day now, and celebrating supposed triumphs on the flimsiest of evidence. Notably, the long-suffering (literally) Irish have been hailed as a success story not once but twice, in early 2010 and again in the fall of 2011. Each time the supposed success turned out to be a mirage; three years into its austerity program, Ireland has yet to show any sign of real recovery from a slump that has driven the unemployment rate to almost 15 percent.

However, something has changed in the past few weeks. Several events — the collapse of the Dutch government over proposed austerity measures, the strong showing of the vaguely anti-austerity François Hollande in the first round of France’s presidential election, and an economic report showing that Britain is doing worse in the current slump than it did in the 1930s — seem to have finally broken through the wall of denial. Suddenly, everyone is admitting that austerity isn’t working.

The question now is what they’re going to do about it. And the answer, I fear, is: not much.

For one thing, while the austerians seem to have given up on hope, they haven’t given up on fear — that is, on the claim that if we don’t slash spending, even in a depressed economy, we’ll turn into Greece, with sky-high borrowing costs.

Now, claims that only austerity can pacify bond markets have proved every bit as wrong as claims that the confidence fairy will bring prosperity. Almost three years have passed since The Wall Street Journal breathlessly warned that the attack of the bond vigilantes on U.S. debt had begun; not only have borrowing costs remained low, they’ve actually fallen by half. Japan has faced dire warnings about its debt for more than a decade; as of this week, it could borrow long term at an interest rate of less than 1 percent.

And serious analysts now argue that fiscal austerity in a depressed economy is probably self-defeating: by shrinking the economy and hurting long-term revenue, austerity probably makes the debt outlook worse rather than better.

But while the confidence fairy appears to be well and truly buried, deficit scare stories remain popular. Indeed, defenders of British policies dismiss any call for a rethinking of these policies, despite their evident failure to deliver, on the grounds that any relaxation of austerity would cause borrowing costs to soar.

So we’re now living in a world of zombie economic policies — policies that should have been killed by the evidence that all of their premises are wrong, but which keep shambling along nonetheless. And it’s anyone’s guess when this reign of error will end.

Jean Luc Melenchon: Humour de campagne et les affiches de Sarko, Hollande & Melenchon

One thing has be said about Jean Luc Melenchon: without him, the French presidential would be boring to death. Not only does he infuse a super dose of enthusiasm in the campaign with his speeches, demeanor, and charisma, but his supporters are also uber fervent and active on the net. And they have a very wicked sense of humor. Look at what they did with the official posters of almost all other candidates. Just sit back, watch and laugh.

Légendes de l’échec

Today, i choose to post a New York Times Op-ed piece written by Paul Krugman. To those who do not who Dr. Krugman is, well let me just say that he is one of the most brilliant economists of our era. Dr. Krugman is professor of Economics and International Affairs at Princeton University.  He received his B.A. from Yale University in 1974 and his Ph.D. from MIT in 1977. He has taught at Yale, MIT and Stanford. And at MIT, he became the Ford International Professor of Economics.

Dr. Krugman is the author or editor of 20 books and more than 200 academic papers in professional journals and edited volumes. He has built his professional and academic reputation on his serious work in international trade and finance; he is one of the founders of the New Trade Theory, which represents a major rethinking of the theory of international trade. In recognition of that work, in 1991 the American Economic Association awarded him the John Bates Clark medal; the highest prize in economics which is given every two years to the “economist who is adjudged to have made a significant contribution to economic knowledge.” In 2008, Krugman won the Nobel Memorial Prize in Economic Science based on his work on the explanation of the patterns of international trade and the geographic concentration of wealth by examining the impact of economies of scale and of consumer preferences for diverse goods and services.

Briefly stated, when Paul Krugman speaks about economics, we all should shut up and listen closely to what he has to say. This is his take on the eurozone crisis.  And if i might add, his analysis is very close to mine, which is a great honor and validation of what i have been arguing for months now.

Legends of the Fail

By PAUL KRUGMAN

This is the way the euro ends — not with a bang but with bunga bunga. Not long ago, European leaders were insisting that Greece could and should stay on the euro while paying its debts in full. Now, with Italy falling off a cliff, it’s hard to see how the euro can survive at all.

But what’s the meaning of the eurodebacle? As always happens when disaster strikes, there’s a rush by ideologues to claim that the disaster vindicates their views. So it’s time to start debunking.

First things first: The attempt to create a common European currency was one of those ideas that cut across the usual ideological lines. It was cheered on by American right-wingers, who saw it as the next best thing to a revived gold standard, and by Britain’s left, which saw it as a big step toward a social-democratic Europe. But it was opposed by British conservatives, who also saw it as a step toward a social-democratic Europe. And it was questioned by American liberals, who worried — rightly, I’d say (but then I would, wouldn’t I?) — about what would happen if countries couldn’t use monetary and fiscal policy to fight recessions.

So now that the euro project is on the rocks, what lessons should we draw?

I’ve been hearing two claims, both false: that Europe’s woes reflect the failure of welfare states in general, and that Europe’s crisis makes the case for immediate fiscal austerity in the United States.

The assertion that Europe’s crisis proves that the welfare state doesn’t work comes from many Republicans. For example, Mitt Romney has accused President Obama of taking his inspiration from European “socialist democrats” and asserted that “Europe isn’t working in Europe.” The idea, presumably, is that the crisis countries are in trouble because they’re groaning under the burden of high government spending. But the facts say otherwise.

It’s true that all European countries have more generous social benefits — including universal health care — and higher government spending than America does. But the nations now in crisis don’t have bigger welfare states than the nations doing well — if anything, the correlation runs the other way. Sweden, with its famously high benefits, is a star performer, one of the few countries whose G.D.P. is now higher than it was before the crisis. Meanwhile, before the crisis, “social expenditure” — spending on welfare-state programs — was lower, as a percentage of national income, in all of the nations now in trouble than in Germany, let alone Sweden.

Oh, and Canada, which has universal health care and much more generous aid to the poor than the United States, has weathered the crisis better than we have.

The euro crisis, then, says nothing about the sustainability of the welfare state. But does it make the case for belt-tightening in a depressed economy?

You hear that claim all the time. America, we’re told, had better slash spending right away or we’ll end up like Greece or Italy. Again, however, the facts tell a different story.

First, if you look around the world you see that the big determining factor for interest rates isn’t the level of government debt but whether a government borrows in its own currency. Japan is much more deeply in debt than Italy, but the interest rate on long-term Japanese bonds is only about 1 percent to Italy’s 7 percent. Britain’s fiscal prospects look worse than Spain’s, but Britain can borrow at just a bit over 2 percent, while Spain is paying almost 6 percent.

What has happened, it turns out, is that by going on the euro, Spain and Italy in effect reduced themselves to the status of third-world countries that have to borrow in someone else’s currency, with all the loss of flexibility that implies. In particular, since euro-area countries can’t print money even in an emergency, they’re subject to funding disruptions in a way that nations that kept their own currencies aren’t — and the result is what you see right now. America, which borrows in dollars, doesn’t have that problem.

The other thing you need to know is that in the face of the current crisis, austerity has been a failure everywhere it has been tried: no country with significant debts has managed to slash its way back into the good graces of the financial markets. For example, Ireland is the good boy of Europe, having responded to its debt problems with savage austerity that has driven its unemployment rate to 14 percent. Yet the interest rate on Irish bonds is still above 8 percent — worse than Italy.

The moral of the story, then, is to beware of ideologues who are trying to hijack the European crisis on behalf of their agendas. If we listen to those ideologues, all we’ll end up doing is making our own problems — which are different from Europe’s, but arguably just as severe — even worse.