Dawn

Dawn

Thursday, February 01, 2018

Thoughts from Galicia, Spain: 1.2.18

Spanish life is not always likeable but it is compellingly loveable.
- Christopher Howse: A Pilgrim in Spain. 

If you've arrived here because of an interest in Galicia or Pontevedra, see my web page here.

Cataluña
Spain
  • I've always known there was too much hugging in Spain.
  • Here, in Spanish, is an insight into how companies rip you off. From Moscow's RT, of all people.
  • Spain's democracy is in danger of being downgraded, it says here. But surely this happened when the current PP party came to power. Or when it enacted the Gag Law.
The EU
  • Like Don Quijones (and me), Ambrose Evans Pritchard is no admirer of the EU. Nor is he any more optimistic about its future. There's a full article from him below but here are some extracts:-
- Will Britain’s metropolitan elites cling to the EU Project for so long? 
- Whitehall’s UK pauperisation forecasts ignore the cultural deformities of the EU’s dystopian experiment. They make narrow, static, econometric assumptions about what is in essence an unworkable political system.  
How's this for sticking your neck out?
- Since the Treasury toys with raw speculation on Britain in the early 2030s, let me counter with raw speculation that the EU will either have torn itself to pieces by then, or will have evolved so obviously into an authoritarian Caesaropapist construction that it will no longer command emotional loyalty from Western liberals.
- The euro remains an orphan currency with no fiscal union or genuine banking union to back it up. The North-South chasm in competitiveness has not been closed. 
- If they were not so tone deaf, the French and German elites might have heeded the cautionary tale from Brexit and from their own internal rebellions. They might have paused and toned down the Monet mantra. Instead they have seized on Brexit to forge ahead almost triumphantly with "more Europe". 
- You could say that the EU is caught in an unstable equilibrium, so perhaps it must obey the awful logic of monetary union and press on  with ever deeper integration. But this defines its future failure. There is no popular consent anywhere for subsuming the ancient nation states of Europe into a supra-state construct. Attempts to do so guarantee an explosive backlash.

Mark my words, it really will end in tears.

The USA
  • Fart's State of the Union Address:-
- Republicans conceded afterwards that he had offered nothing to ease a deadlocked political system.
- The Guardian naturally thought little of it. See its editorial below.

The UK
  • Possibly a useful site for Brits.
  • Gibraltar post-Brexit: Round one to Spain, says Madrid
  • Hope on the horizon? Later this month, a freethinking, anti-PC comedy night is being launched. The Comedy Unleashed website promises to promote “comedians who make us think, rather than nod along to a joke-laden sermon”. And the motto is simple: “If it’s funny, it’s funny.”
Social Media
  • Facebook's profits in the last quarter were 47% up on 2016. The site is now said to have 2 billion daily users. It can't last. Or, rather, shouldn't.
  • In economics, Gresham's Law has it that Bad money drives out good. In real life, a similar phrase is More is worse. You only have to look at TV schedules to see incontrovertible evidence of this. Or just the 4 BBC channels. So it is that: - The extraordinary proliferation of new media has not brought about an improvement in the quality of information; indeed quite the opposite. This comment - courtesy of Lenox Napier's Business Over Tapas - was made in reference to the Spanish media but it applies elswhere, of course.
Nutters Corner
  • Another HT to Lenox Napier: You don't have to rush off to Lourdes or Fatima for your instant cure (but, alas, no new limbs) - You can access living miracle workers here in Spain. Many people in rural Spain still accept the mystical healing-powers of the 'curanderos'. But, more than this are the 'santeros', the wizards who can cure the crippled and talk to the dead. Their capital is Jaén in northern Andalucía. I really must get to visit them.
Galicia/Pontevedra
  • Good to see Lenox citing our Voz de Galicia, on the issue of cheaper retirement for foreigners in nearby Portugal.
Finally
  • Here's a video showing the most complained-about UK TV ads last year. I think KFC got the crown, for a preposterous ad implying their featherless chicken fodder isn't imprisoned in cages. At least, I guess that was why folk took offence at it.
Today's Cartoon



THE ARTICLES

1. Europe's civil wars will blow away the Treasury Brexit forecast

Poland is in open revolt against the EU's Franco-German axis, and so are many others

Let us hope that Labour succeeds in invoking the ancient procedure of the "humble address", forcing release of Project Fear Mark II.

We will then find out how Whitehall attempts to model Brexit-linked losses fifteen years hence, down to fine points of GDP. My supposition is that this “preliminary estimate” will disintegrate on forensic scrutiny,  even on its own limited economic and financial terms.

Viscount Ridley’s address in the magnificent Lords’ debate this week reminds us what the Treasury said last time. “A vote to leave would represent an immediate and profound shock to our economy. That shock would push our economy into recession and lead to an increase in unemployment of around 500,000. GDP would be 3.6pc smaller.”

It was a “clean sweep of failed predictions” and as far as we know the Treasury has persisted with the same models. Do they read Nobel trade economist Paul Krugman, who described the Treasury claims at the time as intellectual slumming? Do they shrug off a similar verdict from Mervyn King, ex-Governor of the Bank of England?

It is true that global recovery is now flattering the picture, but the fact is that UK unemployment has fallen steadily since the referendum to a 43-year low of 4.3pc. The numbers in work have reached a record 32.21 million, 415,000 more than a year ago.

There was no recession. The economy has slowed a little – as its was bound to do once the output gap had closed – but the National Institute for Economic and Social Research estimates that growth rebounded to 0.6pc in the fourth quarter, roughly the same as in France or the eurozone.

Lord Ridley evoked the 1690s, warning his colleagues in their “gilded, crimson, echo chamber of Remain” against neo-Jacobite temptations. It is an apt historical parallel. Reading John Churchill’s letters, you are reminded of the constant plotting to reverse the Glorious Revolution and restore the Catholic absolutism of James II, even to the point of conspiracy with Louis XIV’s France. The rebellion simmered for decades. It was still alive in Scotland until Culloden in 1745.

Will Britain’s metropolitan elites cling to the EU Project for so long? My anthropological critique of Whitehall’s pauperisation forecasts – 2pc lower GDP under the Norway model, 5pc lower under a Canada model, and 8pc under a WTO "no deal" – is that they ignore the cultural deformities of the EU’s dystopian experiment. They make narrow, static, econometric assumptions about what is in essence an unworkable political system.

Since the Treasury toys with raw speculation on Britain in the early 2030s, let me counter with raw speculation that the EU will either have torn itself to pieces by then, or will have evolved so obviously into an authoritarian Caesaropapist construction that it will no longer command emotional loyalty from Western liberals. Either way, it cannot prosper, so it is perfectly plausible that Britain will – by breaking free early – enjoy an 8pc gain in output relative to the status quo trend line of being shackled to this EU enterprise.

The eurozone is currently enjoying a cyclical recovery driven by negative interest rates, QE a l’outrance, the end of fiscal austerity, and a catch-up effect from the Long Slump – deeper for Southern Europe, Ireland, and Finland, lest we forget, than during the Great Depression.

Germany has permitted the European Central Bank to operate as a lender-of-last resort since the summer or 2012, when contagion to Italy and Spain almost blew up monetary union. This matters enormously but the euro nevertheless remains an orphan currency with no fiscal union or genuine banking union to back it up. The North-South chasm in competitiveness has not been closed.

The next global economic downturn – probably in 2019 – will be traumatic for everybody, given that we have already used up our monetary and fiscal powder, and exhausted popular consent for globalisation. My guess is that those countries with strong bonds of patriotic cohesion and tested institutions will best survive this ordeal by fire. Almost by definition, these are nation states, all for one and one for all.

The eurozone fails spectacularly on this score and it is skating on very thin fiscal ice without a system for pooling sovereign liabilities. Public debt ratios are much higher as a share of GDP than in 2008 before the Lehman crisis; plus 31 percentage points in Italy (133pc), plus 60 in Spain (99pc), plus 54 in Portugal (126pc); and plus 29 in France (97pc).

Countries are running out of time in this finite global expansion to rebuild their economic and social buffers. It is hard to believe that Latin Europe will tolerate a second round of hairshirt austerity imposed by Germany through its near absolute control of the policy machinery. Italians will collectively declare "va fanculo". So might the French people, more or less.

By September the ECB’s balance sheet will have ballooned to 44pc of GDP without having lifted the eurozone out of a "low-flation" trap. The bloc risks crashing back into deflation in the next recession. Further QE at that point would court political danger since the anti-euro Alternative fur Deutschland party is about to become the official opposition in the Bundestag. AfD now chairs the budget committee.

On a separate political line of cleavage, much of central Europe is in revolt. Hungary and Poland have both repudiated Western judicial ideology and have effectively left the EU from within, whilst retaining club privileges. The Czechs have elected a eurosceptic billionaire, Andrej Babis, who is up in arms against Franco-German diktats. “We cannot be in a position where we have nothing to say, that there are only two big nations and the Commission decides everything,” he said this week.

Mr Babis is not alone. When asked in Davos about the resurgent Franco-German axis, Ireland’s Leo Varadkar warned against the return of a Europe of Great Powers, sitting round a Versailles table, dictating terms to small countries. Britain’s exit brings these tensions into sharper focus by altering the EU’s political chemistry. A string of states relied on the UK – acknowledged or not – to push a free market agenda and counter the integration overdrive.

If they were not so tone deaf, the French and German elites might have heeded the cautionary tale from Brexit and from their own internal rebellions. They might have paused and toned down the Monet mantra. Instead they have seized on Brexit to forge ahead almost triumphantly with "more Europe".

You could say that the EU is caught in an unstable equilibrium, so perhaps it must obey the awful logic of monetary union and press on  with ever deeper integration. But this defines its future failure. There is no popular consent anywhere for subsuming the ancient nation states of Europe into a supra-state construct. Attempts to do so guarantee an explosive backlash.

So what is Britain to do? My preference after Brexit was the Norway model (EEA), as a way-station for ten years that would let the UK extricate itself from roughly half the EU machinery (farms, fish, justice, Pillar II and III, and the Charter) and allow it to strike trade deals with the rest of the world, preparing a safer trampoline for a great escape later. The Government has unwisely ruled this out, instead pursuing a "Canada plus" deal that may or may not exist.

What Britain must avoid at all costs is drifting into a "plus" variant of the Canada model that leaves British soldiers defending the EU’s eastern border, while at the same time locking the UK into a horrible asymmetric trade structure: one that gives the EU unfettered access to the UK goods market so that Germany can continue to run its €50bn surplus, while denying Britain reciprocal access on services where it has a compensating surplus, and adding insult to injury by making us pay a fee for our own exploitation.

France, Germany, and Brussels have stated categorically that there can be no service access for the UK unless its accepts vassal status and the whole ideological apparatus of the EU. Britain should take them at their word. The condign riposte is to announce immediately that Britain will seek a WTO settlement, while making exit payments contingent on cordial handling of cliff-edge issues such as landing rights and Euratom. The door should be left open for closer ties if the EU requests this – but only as equals – in order to protect its export industries and trade surplus.

Donald Trump told Piers Morgan in Davos that he would have taken a much “tougher” line and called the EU’s bluff if he were in charge of Brexit, dismissing the European Union as less than it is “cracked up” to be. He is right.


2. Trump’s State of the Union: platitudes, few plans and plenty of division

Trump happily applauded his own address to Congress. The rest of us should not

Rituals are designed not merely to embody but preserve and perpetuate a community’s beliefs. One danger is that they are hollowed out, form superseding substance as people forget their meaning. This was the risk Thomas Jefferson identified when he abandoned the State of the Union address as disturbingly monarchical, and judged that the constitutional requirement to inform and make recommendations to Congress could be satisfied in writing. It was not until over a century later that Woodrow Wilson – pursuing a stronger, more forceful presidency, in part via publicity and press controls – would reinstate it. An event that theoretically focused on accountability became a moment of showmanship: ideal for Donald Trump, who through his years as developer, reality star and now president has projected an image, pocketed proceeds and indulging his whims, while those around him get on with their unsavoury business.

On Tuesday he basked in the limelight. He was applauded (including by himself) merely for being Teleprompter Trump, not Twitter Trump, as the shorthand has it: sticking to a speech that repeated all the platitudes expected of an American president. These occasions rarely prove memorable, let alone groundbreaking; but previous administrations have at least tried to set a course and send a clear message of priorities. Despite its length and grandiosity, the address was mostly self-congratulation, laying out little in the way of plans. The pro-forma calls for bipartisanship and unity, designed to make him more palatable to the wider public, were garnished with winks to his base. It was designed to provide only enough (very minimal) respectability to allow Republicans to continue pursuing their goals without having to oust him. It was a presidential speech in the sense of being “in the style of a president”, rather than in rising to the office. It was a speech that talked of “all of us, together” while furthering the cause of division with the comment that “Americans are dreamers too”; the attack on “disastrous Obamacare”; the announcement that “we have ended the war on clean coal”; the dig that “we proudly stand for the national anthem”.

Alarm bells should ring loud at his call for cabinet secretaries to have the authority “to remove Federal employees who undermine the public trust or fail the American people”. This, from a president who has put departments and agencies under the control of people openly hostile to their record and their staff; who fired the FBI director as questions grew about links between his campaign and Russia in the run-up to the 2016 election; reportedly (he denies it) ordered the firing of the man investigating Russian interference, Robert Mueller, only to be thwarted when the White House counsel threatened to resign; and who has attacked the media relentlessly for their attempts to hold him to account and fostered paranoia about the deep state.

Sometimes authoritarianism is imposed by the gun, note the authors of the new book How Democracies Die, but in other cases it develops more subtly, as “democracy’s enemies use the very institutions of democracy – gradually, subtly and even legally – to kill it”. The State of the Union is supposed to be a ritual expression of the president’s duties to the American people. But trappings do not matter if you have no sense of duty; if you regard the people as eminently divisible; if you attack the institutions on which democracy rests; and if your presidency defiles the nation’s supposed ideals instead of upholding them.

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