My recently published e-book and Pope Francis' speech at the European Parliament in Strasbourg

Dear readers,

I am happy to inform you of the recent publication of my e-book "From Washington Consensus to Economic Shock Therapy in Europe," available for purchase at Amazon.com. If you wish, you can take a look inside, read the contents page, the introduction, and the first part of chapter I here.

As if to underline the key messages of my book, Pope Francis gave a wonderful, eloquent, heartrending, and inspiring speech on Europe, adressed to the members of the European Parliament. Allow me to cite a few key sentences of this speech, sentences I found particularly poignant:   

"At the heart of this ambitious [European] project was confidence in man. Not so much man as citizen or as economic agent, but in man, in men and women, as persons endowed with transcendent dignity".....

...."To our dismay, we see technical and economic questions dominating political debate, to the detriment of any genuine concern for human beings. The human being risks being reduced to a mere cog in a machine that treats them as items of consumption to be exploited with the result that, as is so tragically apparent, whenever a human life no longer proves useful to the machine, it is discarded with few qualms as in the case of the terminally ill, the old or abandoned and uncared for, and the children who are killed before they are born".....

....."A Europe which is no longer open to the transcendent dimension of life is a Europe which risks slowly losing its own soul and that humanistic spirit which it yet loves and defends"......

....."The motto of the European Union is "united in diversity". But unity doesn't mean uniformity of political, economic, and cultural life, or of ways of thinking. In point of fact, all real unity draws from the rich diversities that make it up"....."It's no secret that a conception of unity seen as uniformity strikes at the vitality of the democratic system, weakening the rich, fruitful, and constructive interplay of organizations and political parties. This leads to the risk of living in a world of ideas, of mere words, of images, of sophistry, and to end up confusing the reality of democracy with a new political nominalism"....

...."Keeping democracy alive in Europe requires that we avoid the many globalizing trends that dilute reality"...."The true strength of our democracies, understood as expressions of the political will of the people, must not be allowed to collapse under the pressure of multinational interests which are not universal, which weaken them and turn them into uniform systems of economic power at the service of unseen empires".... 

...."I encourage you to work so that Europe rediscovers the best of itself"...."Europe urgently needs to recover its true features in order to grow, as its founders intended, in peace and harmony".....

....."Dear members of the European Parliament, the time has come to work together to build a Europe, a Europe which revolves not around the economy but around the sacred nature of the human person and around inalienable values"......"A Europe which looks to the heavens and pursues ideals; a Europe which cares for, which defends and which protects every man and woman; a Europe which moves on safe ground, a precious point of reference for all humanity."     

Closure of this blog and announcement of forthcoming publication

Dear readers,

in contrast to lucky Yanis Varoufakis who stopped posting because he spent his summer vacation on the Greek isles, I stopped posting for more mundane reasons: First, a long-planned trans-atlantic move has kept me away from the pulse of life and economic policymaking in Europe. And second, the economic crisis in the euro zone has calmed down and the focus now seems to be on provoking a war against Russia.  It seems Europeans never learn from history.....  

It's been two years since I started this blog in July 2012 when the euro zone was on the verge of collapse and the days of the common currency seemed numbered. Well, the euro has survived, but the economic and human costs are horrendously high due to the economically non-sensical and inhumane austerity policies I so often criticize in this blog. As a consequence, the euro zone now risks a lost decade (or more) of weak or non-existent economic growth, high unemployment and poverty, rising public debt levels, and a dangerous deflationary spiral.

protest posters in front of the ECB 

And yet, instead of implementing an immediate, Euro-zone wide investment program to create jobs for a lost generation of Europeans, European policy makers seem set on waisting valuable money and energy on an unnecessary conflict with Russia. As so often in the past two years, I feel like hitting my head against the wall...

That, however, is of no use to anybody.  Instead, I'd like to announce a forthcoming publication. It will be a sort of blog diary of the euro crisis from 2012 to 2014, with a selection of the most important posts put in a logical, coherent order. Look out for this publication between September and December 2014. The working title: "From Washington Consensus to Economic Shock Therapy in Europe: A Blog Diary of the Euro Crisis, 2012-2014."  

In the meantime, I may still - from time to time - give my opinion on actual economic policy issues and European economic policy making.  

So long, dear readers, and thanks for your loyal readership.   

European Elections 2014: Voting Recommendations for the Largest Voter Group in Germany

The largest voter group in Germany are women over 50, accounting for 17.4 million voters or 28.2% of all persons entitled to vote. This compares to 24.3% of men in that age group and 23.5% of women in the age group 18-50 (see the estimates in the press release of Germany's Federal Returning Officer - Bundeswahlleiter - of February 21, 2013). For the European elections I expect the figures to differ a bit, but not substantially.

The growing influence of mature voters on election results in Germany is compounded by the fact that electoral participation among women 50+ is above average, due in part to a higher political consciousness as the women of this cohort either witnessed or participated in the women's movement of the late 1960s and 1970s.

Voting recommendations for the European elections 2014:

1.) Based on the unquestionable statistical evidence, women over 50 need to realize that we have the power to significantly influence political decisions in Germany and - since Germany has one of the largest populations in the EU - in the European parliament. That is: if we work together, not against each other as is so often the case in Germany.

2.) Once we realize our power and decide to work together, we can change the EU and particularly the eurozone for the better, i.e. institute policies that benefit women and children instead of hurting us (like the austerity policies and structural 'reforms' designed to cut the very social services that we need); constrain the financial sector that benefits mostly (male) speculators; other measures to (re-)transform the European Union into the social, humane, and environmentally sustainable peace project it was meant to be.

3.) To work together, we ought to avoid parties that follow the old and tried tradition of replacing mature women with 20 and 30-somethings. The idea behind this (male) strategy is clear: combining experienced old men with inexperienced but mallable young women ensures that men preserve their power (and makes life more colorful as Joseph Ackerman used to say). This strategy also supports the interests of the financial sector as younger women can be used to attack the state-financed pension system older women depend upon, and thus help divert retirement savings to private financial firms.

4.) Avoid Germany's green party as they have become experts at the above-mentioned 'throw the old bitches out'-strategy and are increasingly dominated by austerity-promoting, business-friendly 'realos' from the rich Länder in South-Western Germany (the Swabian housewives and -men I so often complain about in this blog). 

5.) If you want more humane, socially fair and progressive economic policies in Europe, it's obvious you should NOT vote for Merkel's 'christian' democrats (CDU) nor for Bavaria's 'christian' social union (CSU). These two parties are anything but christian and mainly serve Big Business, not the average European citizen.

6.) If you want a significant change for the better in economic policy making, you need to assess whether the SPD and her sympatico leader Martin Schulz will have the 'cojones' to work against Big Business, if necessary, to stand up for the social, economic and democratic rights of the average European citizens or not.  You should also examine whether the SPD follows the strategy explained under point 3.).

7.) Please read this article before you vote, especially the last sentence: "Der Trick mit der Troika".

Other than that, I have no specific recommendations and wish you an enlightened voting decision at the ballot box next week. I know which party I will vote for, to send a loud and clear message to the nincompoops currently in power.

For my mother on Mother's Day 2014

“The supreme happiness of life is the conviction that we are loved.” 

(Victor Hugo)

It was the death of her mother that inspired Anna Jarvis to organize the first Mother's Day observances in 1908, in Jarvis' hometown of Grafton/West-Virginia and in Philadelphia where she lived. (see National Geographic news, "Mother's Day turns 100"): "For Jarvis it was a day where you'd go home to spend time with your mother and thank her for all that she did," ....."It wasn't to celebrate all mothers. It was to celebrate the best mother you've ever known—your mother—as a son or a daughter."

That's exactly how I would love to celebrate this Mother's Day: spend time with my mom - if I could. Unfortunately, no such chance. My mother has left the physical realm many years ago, yet I think of her nearly every day. I guess it's human nature to realize only after she's gone a mother's extraordinary love. I know I took my mother's love for granted too many times and would give anything if I had a chance to show her my appreciation and how much I miss her.

Since I am a firm believer in dimensions that humans do not yet understand (---> see Michio Kaku's "The Future of the Mind"), I hope she can somehow receive my thoughts, feelings, and other communications. This is for you, mom:

Source: Europa convention of the German green party, February 2014.

For readers who do not understand spoken german, here is the english translation of my speech:

"It was in July 2012 - the euro once again close to collapse - that my outrage about the dogmatic, incompetent and unjust economic policies in the euro zone drove me to found my economic blog WOMEN ECONOMISTS FOR A FAIR EUROPE. Since then, my blog has acquired a small but fast growing international readership.

Today, it is my concern for the disastrous economic, political and humanitarian consequences of these economic policies - especially the concern about a drift of the southern European periphery into a deflationary depression - which prompts me to seek a seat in the European Parliament.

Following the near destruction of our global financial system by the 'Masters of the Universe' 5 years ago, I hope that today you will give women economists a chance. I think it is imperative that competent, experienced and confident women keep a watchful eye on all the over-confident, unteachable 'Men in Black' in Europe, to prevent backroom decisions which adversely affect millions of women and children. A woman physicist holding regular court with senior representatives of the banking lobby is not enough. [editor's note: this is a swipe at chancellor Merkel]

Now, I am aware that some of you appreciate our chancellor; you might have even voted for her or her party in the last national election. In view of the alternative candidate available, I can almost understand this. In contrast to him [Peer Steinbrueck, chancellor candidate of the SPD - editor's note] chancellor Merkel is modest, unpretentious and has worked tirelessly for the interests of Germany (or at least for what she considers to be Germany's interests). For this, she deserves our respect. In addition, she and her team seem to have understood that no election can be won without the support of the largest voter group in Germany, namely women over 50 .

But I also have the impression that chancellor Merkel - and her finance minister with a typical German CV - lacks an appreciation of Europeans outside of Germany. Especially an appreciation and understanding of the way of life of South-Western Europeans is sorely missing. However, Europe does not only consist of Teutons. There may even be Teutons - and one is standing here in front of you - who highly appreciate the Mediterranean way of life as well as the continental European welfare state, and who do not want to see it destroyed by a brainless Anglo-American rat race. Yet, this is exactly what seems to be on chancellor Merkel's agenda.

Fact is that our Christian Democratic chancellor is responsible for the most unchristian, unjust and inhumane economic policies in Europe since the founding of the European Economic Community in 1957. The pro-cyclical austerity measures demanded by her government and imposed with the help of the troika are chiefly responsible for the collapse of the Greek, Portuguese, and Spanish economies, the soaring of unemployment rates to record highs and the existence of poverty, misery, hunger and despair in the Southern periphery of 'civilized' Europe.

What would have been [and still is - editor's note] necessary are structural adjustment programs for the over-indebted European banking sector, with strict rules for the orderly winding down of insolvent banks, as well as for the rapid repayment of bank bail-out costs to the states and the taxpayers that financed them. Instead, government spending is being slashed to ensure that sufficient funds are available to service the banks/ters' debt. The focus of the expenditure slashing is on state-funded social benefits, wages and pensions of people who have worked hard their entire lives and are not to blame for the European bank debt crisis.

This is not just a disgrace and a brazen raid by the financial elites, but also gross economic non-sense. Because the slashing of pensions, wages, and social security benefits by up to 40 % has stifled internal markets and set in motion a dangerous deflationary spiral which could lead the entire euro zone into the abyss. 

Even if real banking reform and the closure of zombie banks were to be carried out in the future, the damage to the real economy is already enormous. Due to the economic downturn, government debt has continued to rise. Each of the countries that carried out an austerity and reform program imposed by the troika or recommended by the EU today has a higher public debt ratio than before the austerity measures! Because the economy is down, investors stay away and new financial gaps open up which need to be filled by the European taxpayers. These failed, interest-led economic policies also cost German taxpayers dearly, and will become even more costly if we do not stop them.

Just as bad or even worse are the re-awakened anti-democratic and nationalist tendencies caused by the economic hardship of many Europeans. Not only in Greece and France, but also in Germany politicians are again fishing for votes from extreme right-wing, nationalist groups. If we do not re-direct economic policies NOW, this could end in political disaster and even war again . In order to avert another catastrophy in Europe, we must act now!"

Back in the market-conform Euro zone

Dear readers,

I am finally back in Europe after a long trip to prepare a trans-atlantic move. No, I'm not giving up on Europe, just seizing better opportunities elsewhere for lady economists.

Back in the euro zone, the atmosphere is definitely scary:

Three weeks before the European election on May 25, there is a deafening silence in Germany - much like the somniferous national election campaign of last year. The economic and humanitarian crisis affecting European citizens in Southern Europe and the very real threat of a deflationary spiral in the euro zone is either not discussed or smoothed over by the mainstream press, indoctrinating German voters with news about alleged economic recoveries, primary surpluses, improving growth rates, and broadly orchestrated PR on crisis countries' return to financial markets.  

A perfect example of such orchestrated PR was Greece's successful return to international bond markets, widely viewed as necessary to prevent an electoral victory sweep by the European left: First, the terrain was prepared with news of Greece's primary surplus, forecasted economic growth, and improved competitiveness (i.e. drastically lower labor costs). Second, Greek bankers went on international road shows in the US and UK for Greek bond placements. Well aware that Greece's failure to return to financial markets could mean a victory of the left as well as the immediate stop of market-friendly structural reforms in the euro zone, the markets played along: Greek bond issues were greeted with unprecedented investor interest and heavy oversubscriptions. And so it was for the first Greek sovereign bond issue since early 2010: notwithstanding macroeconomic fundamentals such as 27% unemployment (over 50% for the young), a 25% shrinkage in Greece's GDP vs. 2009 and a 175.7% debt-to-GDP-ratio (compared with 129.7% in 2009), the 5-yr, €3 billion bond issue by the Hellenic Republic was 8 (eight !) times oversubscribed. 

Third, Germany's chancellor Merkel made the final PR point so that everyone would understand. Days after Greece's successful return to international bond markets Merkel visited Greek prime minister Samaras to pat him on the back for his successful austerity and reform strategy. By then, the message was loud and clear to everyone: "Our strategy is working. If you, dear European voter, want Europe's recovery and success on financial markets to continue you need to vote for us, not the left."

And yet, this perfectly orchestrated PR-campaign didn't quite 'catch', at least not in the more critical blogger scene far away from Frankfurt am Mainstream. This financial blogger's comment, including a telling Goldman Sachs press notice, says it all:  "Greek bond final term sheet..." See also MacroPolis "...The perils of ignoring macro-economic fundamentals".

If Europe's VSPs think European voters are idiots who happily continue to suffer and then turn the other cheek, they should not be offended if Europe's extreme right has a landslide victory on May 25, then dissolves the European parliament and starts the Third World War in Ukraine.

Yes, I think the situation is that serious. And no, I will not stay and watch.

Lady economist traveling

Dear loyal readers around the world,

I am currently on a long business trip, so posting will be sporadic.

Hope, I will be forgiven. Will be back soon.

Euro zone recovery ? If at all, highly imbalanced and with a lot of room for improvement

Europeans queuing for work.

Source:  Frankfurter Rundschau, March 2, 2014.

It is understandable that interested parties[1] aim to convince European voters that the euro zone is recovering from the crisis and that the structural reforms imposed on the periphery are showing results, namely lower risk spreads on euro zone government bonds, lower budget and trade account deficits, and blossoming economic growth.

While the lowering of budget and trade account deficits is mainly due to the severe economic austerity measures in the euro zone periphery, and +0.5% growth in the euro zone as a whole can hardly be called a success, it is true that risk spreads and yields on euro zone government bonds have normalized --> see this Bloomberg article of February 28, 2014, including yield chart for Greece: "Greek yields fall below 7% as crisis source regains confidence". There is no doubt, euro zone financial markets have calmed after ECB president Mario Draghi's historic proclamation "within our mandate, the ECB is ready to do whatever it takes to preserve the euro" of July 2012. Recent euro zone bond sales have shown that there seems to be no stopping the appetite of yield-hungry investors as long as ECB accommodation remains favorable. 

The other side of the euro story, however, conveniently remains unmentioned. Fortunately, there are still critical economists who look under the superficial veneer of the euro zone. See, for example, Yanis Varoufakis' recent economic update on Greece: "What you should know about Greece's present state of affairs." Or the Frankfurter Rundschau's thorough review of economic and social developments in Italy, Greece, Portugal and Spain: "Union der Armen." Or my own assessment of the economic impact of hundreds of €billions of taxpayer funds spent on bail-out and 'rescue' measures in the euro zone:

- Sovereign defaults have been avoided and zombie banks full of worthless assets have been saved.

- The economies of the euro zone periphery contracted severely, in Greece by 25% vs. 2009.

- Unemployment reached record levels in the periphery, among the under-25s over 50%.

- Public debt ratios are higher than 2009 as a consequence of the economic collapse in the periphery.

- Wages, pensions, and social security payments have been significantly cut, in Greece by 40%.  

- Poverty, misery, and hunger in the middle of wealthy Europe !

Conclusion: the euro and zombie banks have been saved, but the patient (the real economy and its people) is nearly dead. The pro-cyclical austerity policies combined with the wage-depressing structural competitiveness reforms have caused tremendous damage to the real economy and the social fabric of the euro zone periphery, and the damage is spreading to the core. Europe risks a lost decade with weak economic activity, high unemployment and rising poverty with dangerous deflationary tendencies, increasing the real value of public debt.  

Bravo, Merkel & Co. Great job !
No, in my monopoly game, you will NOT be able to get out of jail, collect €4000, and continue on.
I hope, European voters agree with me and show you so at the ballot box in May.
______________________

[1] namely those economic policy makers responsible for the euro zone 'rescue' measures and who are trying to win MEP seats in the European elections in May 2014.