Austria's Choice

Today, there is to be a general election in Austria. Thanks to the actions of Angela Merkel two years ago, the conclusion of the election in this neighbouring country to Germany was clear before voting began. The overwhelming majority of Austrians agree that there are now too many Muslims in the country, that the strain they have put on the social assistance and housing and education and health systems is unacceptable; and that no further significant immigration - however desperate the plight of people claiming to be 'refugees' might be - should be permitted. The government that will emerge from the election will be a coalition with a more right-wing structure than any since the re-unification of Austria [after allied occupation] in 1956. The two stand-out policy positions that it is expected to adopt are to seal the frontiers of the EU against immigrants, and to review and restrict access to the social security and related systems.

Neigbouring Hungary has had a government with policies designed to minimise immigration from outside the EU for several years: access to that country is very heavily controlled, with high wire fences and a strong presence of border guards. To the south-west of the Hungarian frontier is Austria's border with Italy, which has already been 'strengthened' to limit the onward passage of any of the tens of thousands of economic migrants who reach Italy by sea every year. No doubt that border will further be toughened: but there will also be sympathy for the Italians in their situation of receiving the migrants, which is resulting in right-wing politicians rising through 'populist' movements there, too.

There will be resistance in Austria to any attempt by Germany to impose any quota of Muslim [or, indeed, any other category of] immigrants on any EU country. It is widely expected that Austria will adhere to, and may even join, the 'Visigrad' group of countries [Poland, Czech Republic, Slovakia and Hungary] that have 'ganged up' to resist pressure from Germany and France. Thus there is already the making of a very powerful subset of the EU that will simply decline to go along with aspects of the settlement that the USA imposed on 'liberated' Europe after 1945. The Liberal Consensus to which Roosevelt and Truman, Churchill and deGaulle subscribed is fading fast.

The right-wing AfD in Germany has gained seats in the Bundestag, sufficient in number to harass whatever coalition government Mrs Merkel may be able to cobble together. France has a completely unproved president; and there are huge questions as to whether his parliamentary majority and constitutional authority will be enough to overcome the inertia of the trade unions, farmers and other vested interests. It has been noted above that Italy has strong and growing right-wing parties, and the legacy of Fascism is ceasing to be seen as an embarrassment. Those countries in north and west Europe that have a couple of centuries of constitutional government [Belgium, the Netherlands, Sweden, Finland and Luxembourg; plus non-EU-member Norway] have all seen some emergence of minority anti-migrant movements. The three Baltic States [Estonia Latvia and Lithuania] have no significant problem with Muslim immigrants; they have suffered, to varying degrees, net emigration to the more affluent west of the EU.

The Balkan EU members, and aspirants to membership, want to prove their democratic credentials; but they have limited resources to accommodate immigrants [balanced by limited means of keeping them out]. They will sympathise with [and envy] the countries to the north that have the means and the will to seal their borders to a significant extent.

Thus the European Union that is harassed by the Brexit issue is a very different political and emotional structure than it was at the beginning of 2015: the year in which Cowardy Cameron launched the Referendum as an election pledge. It is quickly becoming an entity about which any true democrat would have serious questions. Britain is so beset by a useless government that it has not yet faced up to the point: but there is a growing doubt as to whether we would wish to join, if that was the issue before us.

What is Spain Up To?

Spain has already inflicted huge economic sanctions on its citizens: 25% unemployment [at least], reduced pensions and increased age of retirement, underfunded schools and hospitals, bankrupt local authorities, tens of thousands of incomplete and unsold dwellings, increased taxes ... and the catalogue could go on and on. While the banks have borrowed from EU institutions and from foreign banks even in recent days, the markets are betting against the Spanish state being able to submit formally to the conditions that would be applied to a formal 'bailout' by the European Union, the European Central Bank and the International Monetary Fund. Since it is generally understood that the conditions on any formal baliout would be very harsh, why should the Spanish government not have done what the Greeks did: take the bailout as soon as possible, and blame the Germans [and the rest of the EU]  for the harsh treayment meted out to the population?

Simplistically, Prime Minister Rajoy is asserted to be over-endowed with Spanish pride; which makes him exceedingly reluctant to submit to mere north Europeans. More realistically, he has hoped to be able to avoid a bailout altogether. Meanwhile, his government has demonstrated that the Spanish state is sufficiently robust to be able to enforce very hard economic policies. Most importantly he has emphasised and demonstrated the huge difference between the Spanish situation, and the popular response to it, and that of Greece. Spain has presented strong evidence against the domino theory.

Greece will some day fairly soon be forced to withdraw from the euro; but that need not precipitate a gaderene rush by specluators to force Portugal, Sapin or Italy also to fail to manage their economy withon the eurozone.

Whenever Spain now applies for a bailout, on conditions that it will partially be able to dictate, that will not be a signal for the progressive withdrawal of all the weaker southern states from the euro. Spain has not just bought time for itself to get agreed terms; it has ensured that the gulf between Greece and the rest has become consolidated. Yes, there are demonstrations verging on the riotous in Spain; dismay affects most of the population some of the time, and some of the population all of the time; but there is not yet the degree of hopelessness and despair that now characterises the vast majority of Greeks.

The whole situation is classically tragic, but redemption for Greece is vastly different - and much more painful to achieve - than is the possibility to turn the Spanish economy round within the eurozone.

Dubloons for the Dons

Today's German press is highly critical of the fudge by which the eurozone is to bail out the Spanish banking system with a fund of up to 100 billion euros, by means to be clarified at an indeterminate cost to the currency union in general and to Germany in particular. In some editorials the term 'blackmail' is used frankly; in others the same analysis is more delicately expressed. While Greece and Ireland were implicitly deemed to be 'small enough to fail' Spain [like Goldman or Morgan] has been treated as 'too big to allow it to fail'. The eurozone could survive without Greece and Cyprus; provided there was no domino effect on Spain or Italy: but the impression over the past week became a conviction that if Spain was allowed to collapse financially the eurozone would be under terminal threat and the whole European project would massively be enfeebled.

All the eurozone finance ministers were complicit in the round of conference calls that took place at the end of last week. All their governments have become almost-unconditionally susceptible to being organised by Germany into a superstate. The details of the fusion, and of the way the inner union will articulate with the non-euro EU member states must be settled quickly; and Germany will predominate in all the discussions. The vulnerabilities of Italy and France are so significant that neither will have a veto on the integration process: and the influence of the eurorats in Brussels will be diminished in favour of the smooth suits in Frankfort.

The first few hours of trading in international markets after the announcement of the purported loan-guarantee to the Spanish banks demonstrated that supernational gamblers would only give credibility to the package when they can see the funds actually allocated by the Germans. The package was announced on trust: and it was not trusted. The eurozone expressed an intention to support Spanish banks, in circumstances where no fund had yet been established from which the guarantee could be converted into a series of payouts. 'The markets' on which the prices of Spanish [and Italian] bonds have fallen since the 'rescue' was announced are only in a tiny proportion driven by real-world firms [such as pension funds] that hold such bonds as part of their long-term investment portfolios. The majority of recent purchases and sales of state bonds and of bonds issued by south European banks are speculative gambles: the 'value' of the bonds is utterly irrelevant to the gamblers, who are interested only in making a gain by rightly predicting a rise or a fall in the price of the euro in terms of dollars, sterling, yen or other currencies. The market reaction strengthens the Germans' hand: the Spanish deal - and any subsequent deal for Italy or France - will only have credibility if Germany actually places resources in the appropriate backing funds. Chancellor Merkel faces elections: she and her party will be annihilated if they are perceived to have sold the German taxpayer short. Serious negotiations must now begin, with the collapse of the euro as the imminent threat. The eurorats will posture around the periphery, but the power unconditionally rests between Berlin and Frankfort; the modern and the medieval capitals of the German Reich.

Britain has blundered into the position where most of the electorate want the UK to be separated from this whole mess: so it can't be all bad!

Credibility and Credulity

In recent days an ages-old phenomenon of human relationships has become prominent. It emerges in questions such as:
# Can the Archbishop of Canterbury believe that he is being taken seriously, when it has taken the massive negative publicity about the Church that has followed the establishment of the squatter camp at Saint Paul's for him to speak with any clarity on the crisis that began four years ago?

# Can anyone believe that anarchist toughs and rent-a-crowd hangers-on will quietly leave Saint Paul's - on any date - as agreed by the 'Assembly' of middle and upper-class brats who have successfully attracted global media attention to their naive assertions? Will even the whole of the 'Assembly' pack their tents and go?

#  Can anybody really believe that Merkel and Sarkozi are prepared for their countries to bankroll Greece and Italy indefinitely and without limit which is the obvious corollary to their demand that the Greeks should vote for permanent subjection to the rules and exactions of both the EU and the Eurozone? And can the Greek Prime Minister survive in office until the date of the Referendum? And will the Greek government and parliament agree to allow Germany and France to specify the question to be put to their people?

# Can anyone take seriously the ideas of the medical nannies who are demanding that extra taxes should be imposed on alcohol, salt and fat in order to change popular habits? Do the doctors not understand anything about the realities of consumer behaviour in modern society [as set out in my Personal Political Economy]?

Politicians and leading eurorats live in a world of high security, chauffeured cars and filtered news; as does an Archbishop and the President of a medical Royal College. But the organisations that they lead all have agents on the ground, deep in the miserable lives of the 'deprived': and almost all of these people have contributed to endless focus groups, studies, discussions, outreach exercises, social experiments and educational initiatives whose cumulative effect is considerably less than the local impact of the most impressive exercises in self-help. In seeking to answer each of the above questions one finds that grass-roots wisdom rarely reaches the general national consciousness, and hardly ever forms a basis for public policy. Public policy, in the churches and the royal colleges as much as in the state, follow the precepts of authoritarian academic hierarchies, who present the 'received wisdom' that is rarely concordant with the experience of the mass of citizens, not just of the 'deprived'. The academics think they are well-meaning, though they accept their subjection to the hierarchies of their 'disciplines'. Removing these disparities, between the professions and the people, and between the economic and social  professors' dogma and observable reality, are crucial to resolving the present disconnection between power and people. These are even more important issues even than addressing transitory phenomena like the  future of the Euro or the tax on salt.

Democracy, Debt and Doubt

As the G20 Finance Ministers and Central Bank Governors meet in an autumnal Paris they are all acutely aware of the historical context of the meeting. They have all been briefed on what happened to the global economy in the years from 1929 to 1936, and what were the particular effects of the Great Depression on their own countries.

 The Chinese have studied how the impact of the depression on a country that had notionally been through a democratic revolution, but which had seen only minimal structural change in the economy, was rendered even weaker than before and more susceptible to the imperialist ambitions of Japan. Those ambitions led to one of the most brutal colonialist wars in modern history, and left the unoccupied areas of the vast country prey to warlords. The Japanese withdrawal was followed by a partial Soviet occupation [of Manchuria] and a no-holds-barred civil war in whose aftermath the communists inherited a prostrate economy and a disintegrating civil society; which the new regime began to restructure on doctrinaire lines that represented a 'historial discontinuity'.

Japanese and Russian representatives in Paris knew that the debilitating effect of the depression on the the old industrial countries had left those former 'international policemen' unable to intervene in faraway countries, which were left to pursue whatever policies were selected by their non-representative regimes: Japan decided upon reckless imperial expansion and intensified political oppression at home; while the then-Soviet Union stepped up the incompetent processes of collectivisation of agriculture and overambitious industrial expansion combined with oppression on a gargantuan scale.which left the country in an advanced state of debilitation ahead of the German invasion of 1941.

Germany, France and Italy recall all too clearly that the depression was seen as the context for the consolidation of Mussolini's power in Italy and Hitler's rise to power in Germany. The restoration of national morale in Italy and Germany under the Fascists fostered the hubris that led them into aggressive war; while the absence of such a fillip to French society and the French economy helped to ensure the collapse of France in 1940 and the willing acceptance of their occupiers and of their puppet government by most of the French.

The English-speaking countries all recognise the Great Depression as perhaps the most decisive step in the shift of global economic  pre-eminence from Britain to the USA, which both suffered serious social problems as their economies plunged into the depression. Canada, Australia and New Zealand were forced to increase their autonomy from the 'mother country' during the 'thirties, in the worst of economic circumstances: only to find themselves in 1939 responding to the call to support the British war effort - which they did unstintingly, though  their role in the Second World War proved to be a major step in their maturation as sovereign states. The depression also signalled the coming of the end of the British Raj in India: although the imperial power was able to mobilise the sub-continent for the war, despite the fact that the unsustainability of the regime in the postwar world was evident.

Every other participant in the present Group of 20 'leading nations' has memories of the trauma that affected them in direct consequence of the Great Depression: so they all share a determination to take any sensible steps to prevent any re-run of that cataclysm. But they lack a clear and radical economic perspective from which they could possibly devise any 'magic bullet' solution. The nature of the economic crisis is becoming clearer: its potential political fallout is recognised. But the search for a solution lies in economic policy, and the men and women who have this formidable responsibility are looking for guidance into a soup of discredited economic theory, imperfect statistics and glib back-of-a-fag-packet propositions. They will not find any answer to their dilemma in the resources that are currently available to them..