I haven’t had the time to read any analysis yet, though I heard a little bit on NPR this morning. Basically the Socialists regained power in France on an anti-austerity/pro-stimulus spending platform (as well as a “unity” platform against the anti-immigrant tide). Apparently newly elected President Hollande is going to pick up the phone to argue with Chancelor Merkel immediately. Anybody know when Germany is up for elections? Does their system have a no-confidence vote?
Then in Greece even the Socialists who signed off on the Conservative Party’s austerity measures took a hit, and together the two main parties took under 35 percent of the vote with a slew of what NPR described as “extreme left and right parties” taking the rest. One of the left parties actually slipped into second place with 17 percent of the vote. Scary is the fact that the country’s neo-Nazi party went from one percent to seven percent, again over the austerity measures, but France’s more enlightened “unity” vote doesn’t seem to have rubbed off on Greece, which is suffering from 21 percent unemployement and a huge poverty rate. There is no governing coalition at the moment.
Basically, the voters in both countries aren’t in the mood to tighten their belts to bail out the financial system. I haven’t looked, but I imagine that stock prices have tumbled this morning as they get jittery whenever any news comes out of Europe about potential debt defaults.
If Europe had joined the US and China in an international stimulus program two years ago, we might not be here. But for some reason conservatives in every country refuse to acknowledge that sudden and large cuts to spending when markets are in contraction actually exacerbate the debt problem, meaning that austerity measures are actually counterproducitve even if your concern is obsessed with debt to the exclusion of all the other economic concerns.
I would appreciate links to good articles you find on the subject. Thank you.
Sohum Parlance II 
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May 7, 2012 at 11:54 am
Charley
German national elections weren’t due for a year or two, but Merkel’s party has been decimated in state elections in recent months, and their Free Democrat partners (laissez-faire liberals) are verging on losing representation in Parliament because they’re not drawing the minimum 5 percent vote. So some speculate Merkel may call elections early, presumably since things will only get worse.
It’s hard to find good information because the ‘Anglo-Saxon’ ideologies define economic coverage as well as policy. Amy Goodman just had a good Greek prof interviewed who said the idiocy of our policies is now beyond dispute, having caused the South American debt crisis in the early 90s, the Asian financial crisis in the late 90s, and now this. He hopes the IMF will develop a sense of shame, but I think that’s asking a lot.
May 7, 2012 at 11:58 am
Charley
But there’s this from Krugman:
May 7, 2012 at 2:18 pm
Erasmus
I’m astonished that anyone would write that “It’s hard to find good information” about the recent elections —–when the internet provides access undreamed of during almost the entirety of human history. I question the racialist language of “Anglo-Saxon ideologies”—would “Charley” call Marxism a “Jewish” ideology? (Let’s hope not.) Would he inject any other racial categories into a discussion of economics? If not —- why? As for the “idiocy” of “our”policies—- who are “we”? The socialist former head of the IMF (Strauss-Kahn)? Do the South American countries bear no responsibility for the state of their economies? Do no other entities deserve “shaming”?
May 7, 2012 at 4:15 pm
Charley
Erasmus, I see you haven’t spent much time out from under your rock.The French–who were the subject of Eric’s post–have been denouncing the Anglo-American economic combine for a century, using what you’ve declared is racist language. Tell them, don’t tell me. It’s old news.
And don’t tell me, let me guess–you think Strauss-Kahn is some kind of progressive, right? This is what I mean by how hard it is to find good information hereabouts. I’m giving you an alibi, for you are mightily uninformed. As for South America, use that mighty google power to investigate their ’90s foreign debt collapse. See what Argentina does to evil international bankers. And figure out why Strauss-Kahn banned his EU fellow-members from solving their problems so elegantly (by declaring bankruptcy).
Finally, ‘we’ are the Anglo-Americans, aka the Washington Consensus, which is the ideology of free corporate trading and raiding that has disgraced itself across Europe and around the world–except here, where information is hard to come by. You have to look for it.
May 7, 2012 at 4:47 pm
Dave Kirby
I read today that the head of the world bank is calling for a gradual reduction of national debt. She seems to be saying that austerity needs to be administered in more palatable portions. As for Greece where tax evasion is rampant and the government has treated it as a cultural anomaly they probably are destined to have their membership in Club Euro cancelled.
May 7, 2012 at 7:28 pm
Simon Frech
You could check http://www.english.rfi.fr/
The article up front right now is
Goodbye Merkozy – Will new French president François Hollande get along with Angela Merkel?
Of course there’s http://france24.com
and http://dw.de
And don’t forget EuroBureau on KMUD on Wednesday at 2:30, I plan to have some material on that. Haven’t had time to read much news yet… but one can try.
May 7, 2012 at 8:02 pm
Thorstein Veblen
Krugman has part of it right in that what the tea partiers and republicans are favoring is just dumb. If you wonder why, you aren’t paying attention to who got bailed out, both by the US treasury and by the fed, and who paid for it.
What Krugman still doesn’t get is the difference between public and private debt, and the role of the banks in creating money. He is correct, though, in recognizing that public debt didn’t cause the bubble, and public austerity won’t fix it.
Here’s a good econ blog for those of you who are awake enough to read thru it;
http://www.debtdeflation.com/blogs/
May 7, 2012 at 8:53 pm
Anonymous
Oh Eric, you’re sooooo excited the socialists won ! And France will go further in the toilet, Greece too. I’ll bet you’re hoping for a communist to win next?
May 8, 2012 at 6:57 am
Erasmus
Charley switches from ‘Anglo-Saxon’ (a racial term) to ‘Anglo-American’ in his evasive reply, hoping that readers will not notice the sleight of hand. He still maintains that information is hard to find —“You have to look for it.” (!) — No, Charley:you have to remove your blinders.—– Monsieur Strauss-Kahn belongs to the same party as Monsieur Hollande. DSK is not,according to Charley,a true “progressive”(whatever that term means these days), but the election that took place in France on Sunday augurs well for the anti-Washington consensus because a soul-mate of DSK was chosen.—-I’ll try to parse the logic of that, but it may take some time. ( My rock looks more inviting all the time.)
May 8, 2012 at 8:17 am
Charley
I didn’t realize I have nothing better to do than evade charges of racism from. . . whatever you may be, Erasmus (you do no justice to your monicker, by the way).
DSK was part of the Washington Consensus (forged by the Anglo-Saxon alliance, aka Anglo-Americans, for beginners). That’s why he was head of the IMF. Could it be that French Socialists are like, oh, I don’t know, American Democrats? and don’t live up to their labels when there’s money to be made? Nah.They’re just racist, like me.
Thorstein, I agree. The funny thing is that private and public debt bubbles are both creations of fiat money, which we’ve now learned may be created and endowed to crony banks (or anyone else?) without any record. Trillions of dollars of magic money. This back-door inflation will inevitably end badly, but it’s pumped up what’s left of our economy for an impressively long time.
I suspect the Brits and Dutch also did much more of this completely secret lucre creation throughout their financial reigns. It’s what the Americans had to learn from our Brit cousins to take over global finances after WW II. And it’s funny to review the financial history of less subtle monetary schemers, most notably the French, who never learned to keep the instant money totally secret–because in France, the whole point of money was to display it, whether you had it or not. So the French failed spectacularly to prime their magic well of wealth. How long can we? I’m realizing it could go on much longer than theory would say is possible. Money is still money, to the very instant it isn’t.
May 8, 2012 at 9:16 am
Anonymous
“Charley switches from…”
It has been noted before that Charley switches whenever it’s convenient.
“It sounds like Charley is one of those people who either doesn’t care about the facts or will twist them around to support his candidate, no matter what the facts are.”
May 8, 2012 at 12:19 pm
Jane
Is there a difference between public and private debt in an error where private debt is being delayed through loop-holes and then passed on to the taxpayer eventually? I don’t think Krugman’s perception is wrong at all. He just has the bigger visionary picture.
May 8, 2012 at 12:19 pm
Jane
Hah.. I like error.. but what a Freudian slip–should be era, of course.
May 8, 2012 at 1:01 pm
Eric Kirk
Oh Eric, you’re sooooo excited the socialists won ! And France will go further in the toilet, Greece too. I’ll bet you’re hoping for a communist to win next?
Yes, I’m glad they won. In case you didn’t notice, France went into “the toilet” under Sarkozy’s watch.
May 8, 2012 at 1:42 pm
Ernie's Place
“France went into “the toilet” under Sarkozy’s watch.”
Are you sure it wasn’t George Bush’s fault?
May 8, 2012 at 2:10 pm
Thorstein Veblen
Models of the economy which don’t recognize how banks can (and do) just make up money from thin air and lend it out, don’t simulate reality very well. Similarly if the influence of private debt on aggregate demand is ignored, i.e., treated as a net zero transfer from lenders to debtors, you can’t model reality. Thats why most economists, including Krugman, didn’t see the bubble bursting.
And, btw, thats how banks make money to pay salaries and bonuses, by lending it out, whether its real money or made-up money. Is it a surprise, then, that private lending and debt are at all time highs?
May 8, 2012 at 2:33 pm
Eric Kirk
Ernie – Partly, since it was in fact America’s financial crisis which set off the chain of events which the international economy into a tailspin. But Rush was calling it “the Obama recession” three days after the election, and before he even took office. So I suppose we can blame it on Hollande.
I also fault Reagan, Bush, Sr. and Clinton as well as the Congresses which signed off on financial deregulation which allowed institutions to fraudulently represent liabilities as assets. So plenty to go around. Perhaps Obama would have continued the course had the crash been delayed further, I don’t know.
May 14, 2012 at 11:27 am
Eric Kirk
Change in Germany?
http://www.spiegel.de/international/germany/spd-and-greens-strengthened-in-german-state-vote-a-833007.html