Tag: EU

Obama fails – America fails

A famous story from IBM told of a man who made a $10M error. He was hauled up before the big boss where he expected to be sacked. Pre-empting this, he apologized and offered his resignation. Refusing the resignation, the boss said ‘Goodness, man, we can’t lose you now! We’ve just spent $10M on your education!’

Have you heard? America and EU – the developed, 1st world, civilized West – is on decline.

Let’s focus on America and its incumbent leader, the 1st ever African-American to become a president of the US. Do you remember his promise and inspiration he induced in the entire world? Internet was abuzz with positivity, hope and visions of a truly positive America. That was back in 2008.

We are in the 3rd quarter of 2011. A quick search of term “Obama failures” brings in an excess of 12 million search results on Google. Isn’t this something?

There is “Obama fail blog” which aims to document all Obama blunders and eventually publish a book with all stories.

There is also “Obama lies” which features an impressive list of lies and failures – videos and articles from WSJ, Huffington Post, CNN, and other non-scam or radical/extremist-type media – in addition to a “Submit Editorial” section, which starts off by saying that the online visitor is likely to be on that page “by searching for ‘Obama Lies’. ObamaLies.net is a stage for people upset with the unkept promises of this administration to share their frustrations.” Its “Obama lies directory” section contains a big number of resources, including blogs, video links, and articles. Not forgetting about its own “commercial” side, the site sells branded t-shirts with “Obama Sucks” and alike for $20-30 apiece. This site has been up – if blog archive is any indicator – since March 2008 but contains entries starting June 2008, in itself a telling sign.

Curious about this “blog,” I had a quick look at Alexa.com, the web ranking engine of the Internet.  According to Alexa.com, the audience (with an estimated 86% being in America) of this website comprises mostly of 35-64, predominantly male visitors with some college education who have no children. Doesn’t this sound like a middle class, average-educated, unemployed/freelance divorced/single American?

Is this all? Few blogs and other peripheral hate-mongering – even Mohandas Gandhi and even till now has his haters gather here, or more social ones here.

There are high flyers. Last year, Arianna Huffington, founder of Huffington Post who ranks 28th on “The world’s 100 most powerful women“, gave an interview to the Time magazine about her book “Third World America,” in which, the first 165 pages look like a catalog of horrors describing the decline of America and an undeniable and obvious role of Obama 2008 campaign and its subsequent “execution.”

There are the Republicans. Mitt Romney, the former governor of Massachusetts who currently leads in early polls for the Republican nomination, issued a video of a shuttered steel plant (that closed down in January 2011 after struggling for years) Allentown Metal Works, which Obama visited in 2009, to attack the president.

There are heavyweights. Nouriel Roubini aka Dr. Doom, the influential Italian economist who predicted the current economic recession, was forthcoming when he said, among others, that Obama’s presidency was heading for “fiscal trainwreck,” that his economic proposals “won’t make a difference” and that Obama’s spending freeze is just a “spare change.”

There are creative Wall-Street types too who churn out both wheat and chaff. A recent WSJ article, features “Snapshots from President Obama’s efforts to improve America’s standing in the world, 923 days into his administration” and an alphabetic list – all English letters are present – of info snippets offering statistical details, historic comparisons (not in Obama’s favor), and broken promises. Conspicuous are some comparisons such as the fiscal deficit of 3% in 2008 as opposed to an estimated 11% of GDP in 2011 and the then (November 2008) president-elect Obama’s promised creation of 2.5 million new jobs by 2011, whereas having shed 3.3 million jobs by October 2010.

Let’s be frank. We all commit mistakes, some big, some small; our employers, families and spouses, being considerate, shoulder those mistakes and think of them – best case scenario – as “investments” in our education like in the opening story about IBM or sunk costs/wasted resources – worst case scenario – which entail lay-off/other forms of downgrading.

Obama is no exception. Admittedly, he made and still makes errors, but with the particularly burdensome fiscal debt, the reeling economy, the ever-increasing unemployment and the real scope of the 2008 economic crisis finally unraveling itself, his (under) reactions might eventually have an even more grave consequences for America and the world. As it succinctly points out here, it is not clear

which tragedy is the more troubling: the failure to see the true scope of the disaster when accurate numbers weren’t available, or the failure to see it now that they are.

If Obama only did?

Curiously though, does Obama Google his name from time to time? What would he think/do if he saw what there is to see?

How and why the EU is declining

Europe is in disarray.

Appearance-wise and disregarding petty differences, the EU-27 are marching on the spot on foreign policy, defence, Schengen and the single market with the exception, notable but again not yet really convincing, of progress on financial regulation and supervision.

A layer deeper though, one encounters seemingly impassable hurdles of sovereign debt, vulnerable and domino-like arrangement of banks, and a poorly-designed Eurozone, the combined effect of which risk to disintegrate the Euro (for which the crisis was originally brought on by investors with genuine worries about the solvency of several euro-zone countries), on whose foundations the united European economic system was built. It is clear that economic integration has exhausted its potential, which is more limited than anyone had imagined at the beginning, for ensuring structural convergence of industry between Member States and ameliorating weak growth performances.

Presently, Europe appears to be heading towards a decade of stagnation with the triple threat of nationalism, populism and protectionism which is being dragged behind unemployment (9.9% and among young workers, more than twice that much). Industrial activity is already shrinking in Greece, Ireland, Italy, Portugal, and Spain. The time is coming when a new path towards integration, political this time, will reveal itself as indispensable. But no consensus exists for a new treaty. Ad-hoc formulas will therefore have to emerge as short term Band-Aids, exploiting the existing potentialities of the Lisbon treaty to be followed by long-term formulas, based on a complete revisit and revamp of European economic, social and political values and vision driven by a need for sustainability and prosperity.

Europe also finds itself faced with the colossal challenge of having to mobilize public opinion. But because of the lack of a real consciousness of European citizenship, public opinion is at best passive and at worst euro-sceptic. To mobilize it will demand the unveiling of a “European plan” and the rallying of a majority buoyed by the perception of a commonality of destiny on the economy and defence, two inseparable pillars.

European politicians, led by Angela Merkel, have gone to absurd lengths to avoid admitting two truths: that Greece is bust; and that north Europeans (Germans in particular) will end up footing a good part of the bill. The current rescue package reduces Greece’s debt, but not by enough to give it a genuine chance of recovery. As a result, Greece, and maybe other European countries, will need another bail-out rather sooner than later. To face this (upcoming) problem in a united manner, Europe might get “tighter together” by spawning a fiscal union, hitherto unprecedented, while trying to run away/re-distribute immediate problems.

There is also a part of blame to be laid on dysfunctional politics. In Europe national politicians, answerable to their own electorates are struggling to confront continent-wide problems – thus a crucial misalignment between expectations (by national electorates) and commitments (towards European policies) yielding, on average, ”value-less” results.

European leaders do however know what they need to do. They have been slow in doing for two reasons:

  • magnitude of the commitment necessary to save the union is uncertain, and they don’t want to pay a penny more than is necessary, and;
  • distribution of commitment costs is uncertain and not guaranteed, and no individual entity wants to pay a penny more than is necessary.

So what are those possible solutions to the ailing EU economy that EU leaders so far fail to carry out? Some might be:

  1. Peripheral debts to be addressed through austerity.
  2. Like in case of Ireland, to drop all unsustainable debts, not to continuously slowly the economic recovery.
  3. The Euro to compete with the national currencies, putting pressure on the ECB, which will ensure that the Euro is a low-inflation currency.
  4. A form of Eurozone bond, which would largely replace the national eurobonds issued by the individual countries.
  5. To bolster European emergency funding, which fight failing European banking contagion.
  6. Financial/fiscal integration to take place, including fiscal transfers to support peripheral economies while they get their budgets in order.
  7. European Central Bank to stop raising interest rates and being illusioned about inflation.

Just as in Japan two decades ago, politicians have failed to make the structural labor- and product-market reforms essential to spurring growth. Lack of strong leaders was the underlying problem of Japanese economy, which has not recovered yet. The turn has now come for European leadership to show what it is capable of, but there seems to be no leadership.