Enjoy this last round of austerity – that’s the last one you’ll get

The Greek government secured, with a fraction of a majority each time, the next part of the EU/IMF financial help with two votes implementing more austerity. The Euro went up as the financial world breathe a sight of relief, and EU leaders congratulated themselves and the Greek parliament for avoiding a default. For now…

Because I believe the austerity that has been voted will be the last we will get out of Greece. The last two votes were won on the edge and it is very unlikely that any deeper austerity package would be accepted, even by the member of the majority. Greek citizens clearly had enough with budget cuts and won’t accept any more of it.

Now, we have to wait and see if the austerity measure deliver. If not, asking for more would be stupid: as A. Einstein said “The definition of insanity is doing the same thing over and over and expecting different results.

FYI: Council presidency is moving

It is the time of the year again, when the Council presidency – maybe Chairmanship would be a better word – moves from one member state to another. Of course, there is not much going on with a Council presidency, now that an actual president is in place, but still, the rotating presidency, even depleted from its meaning is going to stay for the pride of the member states… For the second half of the year, Poland is taking over from Hungary.

Some of us might remember that in January, the Hungarian presidency sparked a controversy around a law restricting the media, and other conservative moves from the government. Times has passed and it’s not on people’s minds anymore. The euro-blogging community will remember from this six months that they had access for the first time to official events.

Time now to get into the Polish presidency. The official website is here.

Emballement présidentiel

Les médias français adorent la campagne présidentielle, peut être même un peu trop: LeMonde.fr vient en effet d’utiliser son système d’alerte via application iPhone pour communiquer une actualité brulante:

Utilisation des nouvelles technologies de l’information instantanée complètement abusive et inutile car non seulement ce n’est pas une surprise, mais nous le savions déjà depuis des jours.

Le Monde n’est pas le seul concerné, car les autres journaux français, notamment par le biais de leur compte twitter ont alerté les citoyens de cette annonce innattendue.

2012 Budget: For a smart budget

In the upcoming battle over the European budget, a recent document should get our attention.

The European Economic and Social Committee adopted on June 16th its conclusions and recommendations for the future of the EU budget (approved at 96%).

The opening is particularly revealing:

The EU budget review is not a question of figures but rather a tool serving a political project.

The rest of the text is of the same order: a courageous and uncompromising view point: it is not enough to reinforce the European budget, it will also be necessary to make it clear, efficient, transparent.

An important element to add to the issue of 2012 budget and the next pluri-annual framework.

Budget 2012: pour un budget intelligent

Dans la bataille sur le budget Européen qui commence, un document récent devrait retenir notre attention.

Le comité économique et social Européen a en effet adopté le 16 juin (à 96% !) ses conclusions et recommandations pour l’avenir du budget de l’UE.

L’ouverture est particuliérement marquante:

Le réexamen du budget de l’UE n’est pas une question de chiffres mais un outil en faveur d’un projet politique.

Le reste du texte est du même ordre: un point de vue courageux et sans concession : il ne s’agit pas seulement de renforcer le budget Européens, il faut également le rendre claire, efficace, transparent.

Un éléments important à apporter au dossier du budget 2012 et du prochain cadre multi-annuel.

2012 Budget: the parliament stands on its position

Before summer, the Parliament stands on its position on the issue of the European budget for the next years: no freeze on the budget, and even, increase of it. Not growing the budget will make necessary to stop some programs.

During the late June plenary sessions, MEPs voted on a report setting the mandates for the trilog negotiations (Commission, Council, Parliament). Approved by 379 votes against 128 (75% of expressed votes, 63 % of MEPs in favor),  the EP resolution follows the recommendations from the Commission, in particular, an increase of 4.9% for the year 2012.

The council was meeting in summit at the same time, but was silent on the budget topic, busy as it was at stabilizing the eurozone by all means except those involving a greater European integration, apart from a short episode involving the Europe building project, where the summit will be held in several months.

Budget 2012: le Parlement affirme sa position

Avant l’été, le parlement continue d’appuyer sa position sur le budget Européen des années à venir : pas de gel du budget et même augmentation de celui-ci. Ne pas augmenter le budget de l’Union nécessiterais de discontinuer des programmes.

Lors de la session plénière de fin juin, les eurodéputés ont votés un rapport établissant le mandat de négociation lors du trilogue (Commission, Conseil, Parlement). Approuvé à 379 voix contre 128 (75% des votes exprimés, 63% des députés), la résolution du parlement suit les recommendations de la Commission, notamment l’augmentation de 4.9% du budget pour 2012.

Le conseil qui se réunissait en sommet au même moment a été silencieux sur la question du budget, tout occupé à la stabilisation de la zone euro par tout les moyens à l’exclusion d’une plus grande intégration Européenne, à part un court épisode tenant au projet du bâtiment Europa qui devrait accueillir les sommets dans plusieurs mois.

All in this together

A short piece in the Financial Times (issue of June 23rd) titled “Euro all in this together” (which I could not find a link for on the web) explains in simple mathematics why a more federal union with shared deficit would absorb the shock of the Greek debt (and also for the other “PIGS”) without  blink…

Sure, it is probably a very simplistic view and demonstration, but that is one more example of how a more integrated Europe would be a more than appropriate response to the debt crisis in the Eurozone.

Debt defaulting: not only in Europe

It is quite well-known all over the world that Greece is on the brink of a default. What is not as publicized is that other states face the same budget shortfall,why do those states get a pass on huge deficit ? Because they are on the other side of the Atlantic.

Illinois is ending its fiscal year with 8 billion dollars of unpaid bills, California budget has a 26 billion deficit, Minnesota might have to go into shutdown

What’s different ? The federal government, a unified monetary policy, … yes. But here are three less obvious factors (*):

  • States don’t have the right to go into bankruptcy. It is just not allowed in the US. That is a legal guarantee that there will be no default, however deep the budget deficit might be.
  • The federal government maintains a guarantee fund for the states to help them get loan at an affordable interest rate.
  • Finally, and not the least, the rating agencies will not be able to downgrade states like they’ve been doing for Greece (and also Ireland, Portugal, …). Congress would have quickly organize hearing on the issue where the agencies would have had to explain their downgrading, a publicity they would not have appreciate.
(*): I am no economist nor a specialist of the US states details. This is just a summary of facts gathered over different (trusted) sources. If you know more, please, by all means, complete or correct me.

Dépenses inutiles ?

J’avais il y a quelques mois exprimé mon scepticisme vis à vis de la nécessité du projet de positionnement par satellite Européen Gallileo, arguant que ce projet très couteux ne va pas apporter grand chose par rapport aux systèmes déjà existants (GPS, …).

La commission n’a pas tenu compte de mon point de vue (en même temps, ça m’aurait surpris) et vient d’annoncer que

A un moment où Galileo mobilise une bonne partie des crédits européens pour la recherche et les projets scientifiques, il aurait été bienvenue que ces 500 millions soient redirigés vers d’autres applications qui apprécierais un petit soutient financier. De façon plus générale même, 500 millions d’euros, ce n’est certes pas énorme, mais ça pourrait être  très utile à d’autres endroits: j’ai entendu dire par exemple que la Grèce été un peu short en cash…