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GUARDIAN Mon, 07 May 2012 14:44:11 GMT
It has said no to austerity and Merkozy – but with the rise of Golden Dawn and Syriza, it's not clear what it's said yes to yet
The message of Sunday's election in Greece is clear: the Greeks have said no to more of the cuts and austerity measures that have devastated the country, pushing unemployment above 20%, shattering the healthcare system, tearing families apart and leading some to suicide. It was above all a vote of rage against the two major parties, Pasok and New Democracy, which between them ran the economy into the ground, signed up to a disastrous austerity programme in exchange for dead-end bailouts from the EU and IMF, and then allowed the blows to fall on the most vulnerable.
The medium, though, is more confused and troubling. As elsewhere in Europe, the draining away of the centre has revealed a jagged landscape: the shorthand of "extremes of left and right" doesn't begin to map it. The most obvious rift in Greece in the last months – a rift that's been described to me more than once as a "civil war"– has been between those who are for and against the "memorandum", the EU/IMF schedule of demands. The pro-memorandum forces want to keep Greece in the eurozone at any cost; most of their opponents also want to stay in Europe – but not of "Merkozy", austerity and the banks.
Across that rift runs an older, deeper one, whose roots go back at least as far as to the actual civil war that followed the Axis occupation, leading to 30 years in which the left was outlawed, and culminating in the neo-fascist junta of 1967 to 1974. The social and political collapse brought by the crisis has revived those memories, too, as well as old family loyalties. In the summer of 2011, when the aganaktismenoi ("outraged") of Syntagma Square briefly became the darlings of the foreign media, conservative truck drivers could rub shoulders with eco warriors and direct democracy mavens; the Greek flag could stand for self-determination as well as nationalism. But not any more.
The biggest shock of yesterday's election was the arrival of the neo-Nazi Golden Dawn in parliament, with 21 out of 300 seats and 7% of the popular vote – the first neo-Nazi party to enter a European assembly since the second world war.
Its leader, Nikolaos Michaloliakos, threw Greek journalists who wouldn't rise for him out of his press conference and dedicated his victory to "the brave boys in the black shirts". "Those who slander us," he barked, and "those who betray this country should be afraid: we're coming." Near Kalavryta in the Peloponnese, the site of one of the most terrible Nazi massacres in the 1940s, Golden Dawn graffiti calls for "a new Holocaust to clear the filth from the country".
It's not yet clear, demographically, where this horrifying surge has come from. But Golden Dawn won votes across much of the country – and not just in the inner cities, where it is encouraging the persecution of immigrants and woos old ladies with offers to escort them to the cash machine. It also got the votes of one in 10 young people. Adding Golden Dawn's vote to those of the other two far-right parties, Laos and Panos Kammenos' Independent Greeks, one in five Greeks voted for rabid nationalism and anti-immigrant rhetoric.
Three things have nurtured the rise of Golden Dawn and its less flagrant cousins. First, the humiliation and rage provoked by the austerity measures and by the crude scapegoating of Greeks abroad; second, the presence of thousands of destitute migrants desperate to go north but trapped in Greece by the EU's cynical migration policies; third, the fact that mainstream politicians – especially but not only conservative New Democracy leader and likely new prime minister Antonis Samaras – have shamelessly pandered to their blood-and-belonging nationalism. Samaras has promised to support the church and religious education and to repeal a law giving citizenship to children of legal immigrants; one of his campaign ads featured Hagia Sophia in........
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ECONOMIST Thu, 03 May 2012 15:00:46 GMT
WITH their overnight-lending rates at zero for most of the past decade, the Japanese public long ago stopped caring about interest rates. Instead the yen is their focus. Shoppers may revel in its current strength against the dollar but in the news media, the financial markets and corporate Japan, it is a relentless source of woe. Carlos Ghosn, the boss of Nissan and Renault, publicly lambasts it as a “1,000-pound gorilla” that hurts his ability to sell Japanese cars abroad. Its strength is increasingly becoming a political issue, too.Both the Bank of Japan (BoJ) and the finance ministry have taken steps recently that analysts believe are surreptitiously aimed at the currency markets. On April 27th the BoJ increased the size of its asset-purchase programme by ¥5 trillion ($62 billion), and extended the maturity limit of government bonds it would buy from two to three years. That enhanced easing measures introduced in February which sharply weakened the yen.Days before, the finance ministry promised the biggest single contribution—a $60 billion slug—to a $430 billion increase in IMF funding which is largely aimed at alleviating concerns about the euro crisis. As a senior official admitted, Japan’s decision was not altruistic. When the euro crisis gets worse, it weakens Japan’s exports to Europe and strengthens the yen, which compounds the first problem. So Japan has a direct...
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GUARDIAN Wed, 25 Apr 2012 20:04:12 GMT
This event will surely become part of the shorthand used when summing up this government's wrong-headedness
Here is the startling thing about yesterday's news that Britain has gone back into recession: it is not the biggest failure of George Osborne's economic policy.
This is not to deny the political potency of Britain's double dip, our first since the 1970s. It is a huge deal, a landmark event – and it will surely become part of the shorthand people use when summing up this government's wrong-headedness. In the short term, a second recession will form part of a bleak backdrop to next month's local elections – along with the cosiness with the Murdochs and what we must inevitably call the budget omnishambles. For the past two years, David Cameron and his chancellor have been given the benefit of the doubt by the majority of voters, who took it on trust that they would be at least competent. That appearance looks decidedly threadbare and, judging by our poll this week, the patience of voters is also wearing thin.
Ed Miliband now has a fallback any time prime minister's questions isn't going his way. As for the shadow chancellor, he can claim vindication: Ed Balls saw this all coming in his speech at Bloomberg in August 2010. And, of course, it is a blow for David Cameron, who has previously foolishly boasted to parliament about the economy being "out of the danger zone". However Mr Osborne tried to brazen it out yesterday, make no mistake: this was not in the plan. He has sanctioned hundreds of billions in quantitative easing, tens of billions in so-called credit easing, and unveiled a dizzying array of growth strategies and wheezes. Yet none of this was enough to prevent the UK falling into recession – or to stop the chancellor being put on the critical coconut shy for his critics to fling accusations of bungling.
Because that is the biggest criticism that can be made of Mr Osborne and his colleagues: they took an economy that was enjoying an (admittedly tepid) recovery under Alistair Darling, and knocked it flat on its back. Let us assume that the GDP figures are revised up in coming weeks and that the recession is declared not to be so deep. But the economy has still shrunk over the seven quarters of this government.
As the Office for National Statistics pointed out yesterday, "The economy has … recovered less than half the output lost during the recession in 2008 and 2009" – even while the US has made back all its lost income during the subprime recession, and then some. Nor do the superlatives stop there: this is now the weakest recovery Britain has had in over a century – worse even than the Depression. While it has made things worse, the eurozone crisis cannot account for all of this. The primary cause must be the way Mr Cameron's government has gone about its austerity programme: stupidly comparing the UK to Greece, smash-and-grab raids on public spending (such as David Laws's cuts in 2010), and choking whatever little confidence the private sector might have mustered. Even when the IMF urged a change of course, ministers ploughed stubbornly on.
The recession declared yesterday is one of Mr Osborne's creation. But it is simply the most eye-catching of his failures. He predicted a record burst of business investment – it hasn't happened. He promised an export-led recovery – which is still to turn up. As for the rebalancing, the only economic cylinder still firing is the old one of government spending. The past two years have been a massive economic gamble which many (including this paper) warned would fail. It has, and it is not ministers who are paying the price. It is the new school-leavers and graduates slung on the dole, the welfare recipients seeing their incomes cut, and the vulnerable.
George Osborne
Economic policy
Liberal-Conservative coalition
Conservatives
Recession
Economics
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ECONOMIST Fri, 20 Apr 2012 08:32:47 GMT
HOW many people in the world have bank accounts and what do they use them for? You would think there would be answers to those questions, given that banking is the quintessentially global business, and is important not only in the West but in developing countries, where banks can help poor people save, borrow and invest. Yet, until now, data on the global reach of financial institutions have been limited. The IMF publishes a financial access survey of depositors and borrowers. But there is little about how much people save or why they borrow. Especially little is known about the banking practices of the poor, women and young people. So a big data hole got plugged last year when the Gates Foundation, the World Bank and Gallup World Poll carried out the biggest survey yet of how people save, borrow, make payments and manage risk. The results have just appeared.Roughly half of all adults in the world have an individual or joint bank account, according to the new Global Findex database. As one would expect, there is a big difference between banking in the West (where is 89% of adults have accounts) and the developing world (41%). The difference is wider still when it comes to credit cards; half of adults have them in the West, just 7% in developing countries.Within countries, levels of banking climb sharply with income and education. In Africa, for instance, ...
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ECONOMIST Mon, 23 Apr 2012 06:13:31 GMT
GIVEN the dismal weather reports from much of the world economy, and most notably the euro zone, the International Monetary Fund's stock of provisions has been looking a little thin. Yet it has not been easy to imagine a straightforward way to increase the funds available to the IMF. The rich countries that are typically the source of most of the Fund's resources are either racked by crisis, nervous about becoming racked by crisis at some not-too-distant future date, or in the midst of election season at a time when bail-out cash for profligate foreigners is not a very popular campaign pledge. Those that are a bit more fiscally hale, mostly emerging markets, are both much poorer than the euro countries at the heart of current crises (and therefore rightly miffed at the expectation that they should be the ones to come to the rescue) and unwilling to pour money into an important international organisation at which their voices remain relatively small.Despite these challenges, IMF Managing Director Christine Lagarde managed to scrape together pledges for $430 billion in new funding for the organisation, which she announced at the spring meetings of the World Bank and IMF over the weekend in Washington. The new money includes secured commitments of more than $350 billion from mostly rich countries, alongside unspecified pledges from large emerging markets like Brazil, China, ...
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ECONOMIST Mon, 23 Apr 2012 16:33:09 GMT
AS WE write this week, the IMF's latest World Economic Outlook suggests that the world economy has had a bumpy ride of late but looks stronger than it did when the year began. There are plenty of things that could go wrong, of course, but the main threat continues to be Europe. The good news there is that a euro zone which continues to merely bungle along on its present course shouldn't be too dangerous for the world outside of the euro area's immediate backyard. A fairly deep euro-zone recession would be less pleasant to handle—it would take most of the steam out of America's recovery, for instance—but it wouldn't represent a disaster. A euro-zone disaster would, however.That still looks unlikely, if only because euro-zone leaders, including the European Central Bank, seem crazy enough to allow this mess to drag on but not quite crazy enough to permit another Lehman-like episode. It is nonetheless disconcerting that over the past few weeks the euro area has appeared to track closer to the IMF's "weak" scenario. The latest bad news came in this morning's release of a handful of purchasing managers' indexes. Private-sector activity in France slowed at a faster pace in March and hit a six-month low. In Germany, private-sector activity continued to grow but at a slower pace. And manufacturing activity contracted sharply, touching a 33-month low. Unsurprisingly, activity across ...
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GUARDIAN Mon, 16 Apr 2012 17:29:00 GMT
Seoul-born Kim beats Nigerian finance minister Ngozi Okonjo-Iweala, who said the decision was not made on merit
The World Bank named Korean-born doctor Jim Yong Kim as its new president today amid criticism that the role had once more gone to a US-nominated candidate.
The 52-year-old president of Ivy League college Dartmouth beat Nigerian finance minister Ngozi Okonjo-Iweala to the post, the first time in the World Bank's history that the US candidate has faced a serious challenge.
US president Barack Obama nominated Kim to replace current World Bank chief Robert Zoellick in March. Kim, who was born in Seoul, the South Korean capital, is a public health expert – a change from the bank's usual nomination of candidate from the financial world.
The World Bank presidency has gone to a US candidate since the organisation was founded at the Bretton Woods conference at the close of the second world war. The International Monetary Fund (IMF), its sister organisation, has always been run by a European.
The US backed France's Christine Lagarde's nomination to the top role at the IMF last year after the shock resignation of Dominique Strauss-Kahn. In return, Kim received Europe's backing for the World Bank job.
But in recent years the organisations have faced growing criticism over their US/European duopoly. Ahead of the announcement, Okonjo-Iweala said: "You know this thing is not really being decided on merit."
"It is voting with political weight and shares, and therefore the United States will get it," she told reporters at a briefing on the country's 2012 budget.
A third candidate, Colombia's former finance minister Jose Antonio Ocampo, pulled out of the race Friday, calling the selection process a "political-oriented exercise".
Okonjo-Iweala said that although she expected her challenge to the US's nomination to fail, the process "will never ever be the same again".
"So we have won a big victory. Who gets to run the World Bank – we have shown we can contest this thing and Africa can produce people capable of running the entire architecture," she said.
Kim was a surprise nomination for the role. The 52-year-old is a leading figure in global health and a former director of the HIV/Aids department at the World Health Organization. He moved with his family to the US at the age of five.
Brazillian and South African government officials reiterated their support for Okonjo-Iweala on Monday. Before the announcement, South African finance minister Pravin Gordhan said there was a need to "look beyond the verbiage of democracy and the claims to democratic process, and ask whether in substantive terms the institution has met the democratic test."
In a statement, the World Bank said: "We, the executive directors, wish to express our deep appreciation to all the nominees, Jim Yong Kim, José Antonio Ocampo and Ngozi Okonjo-Iweala. Their candidacies enriched the discussion of the role of the president and of the World Bank group's future direction. The final nominees received support from different member countries, which reflected the high calibre of the candidates. We all look forward to working with Dr Kim when he assumes his responsibilities."
Professor Simon Evenett, a former World Bank official who works at the University of St Gallen in Switzerland, said Kim's appointment was inevitable. "The Obama administration would almost certainly have withheld support for Lagarde's appointment to the IMF if European nations had not agreed in advance to support whomever was Washington's candidate for the World Bank," he said.
"There was never really a contest. Some developing countries probably figured this out and put up a strong candidate to embarrass the west, hoping that this will lead to a more open process in the future. Don't bet on that. The west won't give up its hold over these institutions until they need something from the emerging markets."
World Bank
IMF
United States
Barack Obama
Nigeria
South Korea
Dominic........
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ECONOMIST Tue, 20 Mar 2012 16:12:59 GMT
MY COLLEAGUE makes many excellent points in this morning's post on potential output. We are, for the most part, singing from the same hymnal. For the most part, but not entirely. I must take issue with this:My colleague [that is, me] says sluggish growth is no surprise, but the obvious result of too-tight monetary policy. But if monetary policy were systematically too tight, inflation should have fallen much further than it has; instead, both actual and (survey-based) expected inflation have been surprisingly stable, and higher than forecast by outfits like the IMF and the Fed who assign a relatively large weight to the output gap in the determination of inflation. The stability of inflation may be down to well-anchored inflation expectations, but this is ex-post reasoning; it’s not an unambiguously superior explanation than reduced potential.I disagree. First, the literature suggests that we should not expect accelerating disinflation in the presence of large output gaps. This is not based on an ex-post assessment that expectations are well anchored but on the ex-ante observation that wages and prices display substantial downward nominal rigidity. Inflation could also not have been much lower without becoming deflation, and the Fed has been aggressive in acting to prevent falling prices. That is not to say that monetary policy is appropriate; Fed policy has been easy ...
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GUARDIAN Sun, 11 Mar 2012 14:25:56 GMT
Jon Henley goes to meet Greeks who have responded to austerity with innovation and resourcefulness as well as anger
Last week's news that Greece had won enough support from its private-sector creditors to finally secure the latest crucial €130bn (£109bn) bailout package was greeted with relief in Europe's capitals and undisguised joy in Greek government circles, where the deal was hailed as a "triumph".
It certainly gives Athens a breather. But for ordinary Greeks the price will be at least five more years of swingeing austerity measures that will change the country beyond recognition. EU officials have admitted that after seeing their wages cut by a third since 2009, Greeks will suffer a further 15% reduction in the next three years, and probably more after that.
The economy is forecast to shrink by up to 5% this year, after a 7% contraction last year. Stuck in recession for five straight years, Greece has seen its GDP shrink by a crushing 17%. That, is the level to which unemployment is expected to fall in two years' from 21%, at present.
Far from rescuing Greece, the austerity measures dictated by the IMF, European Union and European Central Bank, many here believe, will turn the eurozone member into a marginalised, third-world economy for decades to come. Not, of course, that Greece – in particular its swollen, corrupt and often hopelessly inept and wasteful public sector – didn't need reform. But at what cost?
Behind the numbers lies the reality that an estimated one-third of the Greek population has now fallen below the poverty line. Even for conservative analysts, the heavy and repeated cuts in salaries and pensions, spiralling tax hikes and never-ending public spending cutbacks are pushing Greece to the brink of economic, if not social, collapse.
Even the minimum wage is being slashed by 22%. The queues for the soup kitchens are lengthening; each day, the Greek Orthodox church is handing out emergency food rations to a quarter of a million people. An estimated 20,000 Greeks find themselves suddenly homeless, more than half of them in Athens.
Anger, particularly against the country's political class, is mounting, perhaps to dangerous levels. Commentators predict not just an explosion but an eruption, extraordinary scenes, even the breakdown of civil society. Elections scheduled for next month could prove a momentous test of strained resolve.
That said, alongside the fury there is solidarity. Self-help groups are emerging, citizen activists joining forces and several grassroots initiatives taking shape. Academics are offering free tuition; community web radio stations provide a forum for advice and support; volunteer soup kitchens deliver food to places the town hall can't reach. In municipalities around the country, farmers have started selling potatoes and other staple foods – including Easter lamb – to consumers directly, at ultra-low cost.
Last October I travelled to Portugal, Spain, southern Italy and northern Greece in search of real people's stories behind the headlines for a series called Europe on the breadline. This week I'm returning to Greece – to Athens and then up to Thessaloniki – on a similar quest, looking not only at how people's lives are being affected by the ongoing crisis, but also at the innovative and resourceful ways in which they have started to help each other.
As before, I'll be tweeting pictures and interviews along the way using the hashtag #EuroDebtTales, as well as blogging. As before too, I'm counting on your help: last time, readers came up with some truly remarkable tales. So please suggest places I should go to and people I should meet. Or if you send me your personal story (not too long, please …) I will post as much of it as I can on the blog. You can reach me at @jonhenley or jon.henley@guardian.co.uk. Thanks!
Greece
Eurozone crisis
Europe
European Union
Jon Henley
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GUARDIAN Sun, 26 Feb 2012 19:46:01 GMT
$2tn global rescue package hinges on action in Europe, before other countries would consider additional IMF contributions
Leading economies said on Sunday that the eurozone must bolster its firewall around the embattled single currency before they will agree to provide more funds for a planned $2tn (£1.3tn) global rescue package for the bloc.
At a meeting of finance leaders of the G20 group of major national economies plus the European Union in Mexico City, the eurozone countries promised that they would over the next month reassess the strength of their bailout fund, a step which could re-assure other countries so they agree to pay more into the International Monetary Fund.
"This [eurozone move] will provide an essential input in our ongoing consideration to mobilise resources to the IMF," the G20 said in the final communique of the two-day meeting.
Germany, as Europe's largest economy, came under intense pressure to support enlarging the firewall. But facing political hurdles at home, it has sent conflicting signals over whether it was ready to move.
Britain's chancellor, George Osborne, joined US Treasury secretary Timothy Geithner and other leading ministers in calling on euro members to put more funds into the European stability mechanism (ESM), the fund set up to bail out eurozone nations struggling with their sovereign debt, in order to stop the debt crisis spreading. Osborne said: "Until we see the colour of their money, I don't think you are going to see any [IMF] money from the rest of the world."
Geithner said Europe had come a long way in laying the foundations for a "credible" crisis response but could not rest there, while Russia and Brazil also came out for more eurozone action. Brazilian finance minister Guido Mantega said: "Emerging countries will only help under two conditions: first that they strengthen their firewall, and second for the IMF [voting rights] reform to be implemented. I see most countries sharing a similar opinion that the Europeans have to strengthen their firewall."
An agreement by Europe to merge its temporary bailout vehicle, the European financial stability facility, with the permanent one, the ESM, would create a $1tn war chest and open the door for other G20 countries to meet the IMF's request for $500bn-$600bn in new resources, on top of its current $358bn in funds. This would create around $1.95tn in firepower.
Germany, the euro bloc's paymaster, has so far resisted calls for a bigger ESM. However, its finance minister, Wolfgang Schäuble, whose government has taken a tough public line on aid for Greece, did hint that its position could be reviewed when European leaders discuss the issue next month. It will also be debated at a European Union summit on Thursday.
"The month of March goes from March 1 to March 31. It will be reviewed again, also in the light of the developments that have since occurred, whether the stated dimension of the [European bailout] mechanism is enough or not," Schäuble told reporters.
Some G20 negotiators were optimistic that Germany would soften its line in order to make the deal. "Everyone in the eurozone and even in the European Union is reasonably happy with combining the ESM and the EFSF, even Germany, but it is too early to say if this will be decided at the EU summit at the beginning of March," said Margrethe Vestager, economy minister of Denmark, currently the EU rotating president.
The EU economic and monetary commissioner, Olli Rehn, was asked in Mexico on Sunday if he expected a deal to combine the funds at the summit. He said: "In the course of March I expect a result."
Another important stage in finding a solution for the euro crisis will come on Wednesday when Mario Draghi, the president of the European Central Bank, makes another tranche of cheap money available to the eurozone's struggling banks. The first so-called longer-term refinancing operation in December saw the ECB providing €498bn and has been credited with restoring......
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