The Eurozone Crisis Thread

Tourism is what you do when there's nothing left

Realistically, Portugal has no possibility of having a resource-extraction economy, it has limited agricultural potential and its high-value products (wine, olive oil) compete in already saturated markets, it can't compete with other tax havens that have far smaller populations and even fewer resources. And so on. iow, the avenues it can go down toward greater prosperity are quite limited.

Tourism at least has the advantage of being a product you can sell over and over again without depleting it and if you develop an international reputation as a desirable destination based on something other than cheap package holidays for people who only care about sun and cheap booze, then even when you are no longer so destitute that you must sell yourself cheap you can continue to attract tourist money. It works for France.

Start-ups are also pretty damn smart under the circumstances. At first, all you need to do is offer tax advantages to foreign companies looking for low-cost attractive places to perch. To move to a more robust domestically-based industry, you need a pool of smart young people, well-educated in STEM, which can't appear overnight, but with the right sort of encouragement can be produced within a decade. Israel has made hay with that strategy.

I'm not sure in what other directions Portugal could realistically go, but I'm sure they'd love to hear about good new ideas from any quarter.

sad lols at the idea that we need "a pool of smart young people, well-educated in STEM" when one of our main structural problems is we have an entire generation with university degrees and nowhere near the job market to absorb them. The investment in startups has very little to do with attracting foreign investment, it's mostly Portuguese business graduates/assorted creatives hoping they'll strike gold with some app or other.

I certainly agree our traditional industries can't guarantee any kind of stability in the future - things have always been precarious, this is part of why EU membership is so important to Portugal that, even at the height of austerity, it never turned euroskeptic in a significant way. But I'm not too confident that this boom in tourism (which again, is absolutley a direct consequence of the financial crisis) will provide that, and am very worried about what its oversaturation is going to do to culture (and the environment, but to be fair that's been going on for ages).

If you're already flooded with talented, educated young people, but have no jobs for them in the current economy, then their attempting to create high value jobs for themselves is x100 better than their all sitting around in cafes waiting for jobs to appear. Better than their all emigrating, too, since all that child-rearing & education is a sunk cost for the nation.

What you're saying is almost identical to the rhetoric employed by the recently ousted right-wing government (well, except they approved of emigration, as well - believing people would make their fortune elsewhere and then return. Fat chance, despite what that NPR article suggests.); Passos Coelho was all about pulling yourself up by your bootstraps, seeing a time of crisis as a time of opportunity, going out there and creating jobs, etc. Entrepeneurship was valued, almost worshipped.

Thing is, it was a terrible strategy. The nature of start-ups is that only very few succeed - it's a game for people with reasonably secure social safety nets. Meanwhile, though, the job market picked up all sorts of bad habits - the aforementioned unpaid internships became omnipresent, "it'll help for your CV/exposure" a common refrain, the mentality became prevalent that it was 100% ok for employees to work crazy hours for nothing because "we're all in this together" and hey, there's always the hope that if the company starts doing better they'll start being able to pay.

It's funny that you mention sitting around cafes because, honestly, looking at where a lot of my friends worked, I can sincerely say that they didn't gain anything more in terms of career and remuneration than they would have if they had stayed in the cafes - but you can read in cafes, and the conversation's better.

I think Portugal should really double down on film production. Always great Portuguese films at every festival.

Yeah, that's been a really good development! The tradition is somewhat weak (we never developed a strong popular cinema, scattered auteurs operated in a kind of vacuum), but things have really picked up over the last decade or so (mainstream cinema still terrible and not in a way that's easily exportable though).

letting greece (the country that named europe) languish was not a good sign for the viability of the EU

almost identical to the rhetoric employed by the recently ousted right-wing government

except I'd be in favor of giving everyone a universal basic income, so that failing in one's startup doesn't result in falling into penury. everyone needs to eat, have a safe place to sleep, and get basic health care. guaranteed.

btw, the original idea behind the phrase "pulling oneself up by the bootstraps" was that it was describing a ridiculous impossibility, not a recommended strategy for success.

oh, and unpaid internships are bullshit and always have been.

european civilization has been in stasis since socrates had to defend his life in front of the athenian 'parliament'. meanwhile, donald trump golfs every weekend

That is simply unbeatable ball in the street, hats off

let us all genuflect before the le pens / trumps / putins. the blues is number one. the blues is number one!

It looks more likely than ever that Poland is going to get hit for an Article 7 breach.

http://www.dw.com/en/eu-threatens-to-trigger-article-7-for-poland/a-41869331

idk how many of the V4 are going to line up with them - Hungary for sure but Czechia seems likely too. I think that would rule out the suspension of voting rights but Poland might find its economic support from Germany and France limited.

https://www.theguardian.com/world/2017/dec/20/eu-process-poland-voting-rights

It’s on.

The last stories of the Slovak journalist Jan Kuciak, who was assassinated alongside his girlfriend last week:

https://www.occrp.org/en/amurderedjournalistslastinvestigation/

He had been researching EU farming subsidies getting siphoned off by the'Ndrangheta in deals that had links to some of Slovakia's ruling party.

do journalists get murdered with any regularity in Italy in connection with mob investigations? seems no, & that journalist murders like this are very uncommon in the EU

In Italy - not for years as far as i know.

The other high-profile EU one recently was Daphne Caruana Galizia.

ah right, of course.

I was thinking of organized crime related murders of journalists like you get in Mexico, and thinking that that's not really a European phenomenon at this point.

From what I can see this has never happened in Slovakia before, for one thing.

Twenty years since it happened here and that one was unparalleled iirc

Was gonna say hasn't it happened in Ireland then realised it was that long ago - I did an exchange term at Trinity College, Dublin just after that happened so the aftermath was in the papers when I was there.

Huge repercussions- establishment of the CAB and I think a special non-jury court for gang related offences

Recent pieces on past and future Euro upheavals to come.

Here is a piece by Thomas Jones on the aftermath of the Italian elections: https://www.lrb.co.uk/v40/n11/thomas-jones/short-cuts

As populists are reduced to making noises all that is left is to punish migrants - something the EU and many of its citizens don't have a problem with.

And this .ppt by Adam Tooze is very good on Italy:

https://adamtooze.com/2018/05/25/europes-political-economy-a-gamble-gone-wrong-notes-on-the-backdrop-to-the-italian-crisis/

the state of Japan on that debt/GDP chart!

Yes, but Japan can introduce fiscal policies that Italy (due to being a memeber of the single currency) cannot.

Its a point Larry Elliott made recently: https://www.theguardian.com/business/2018/may/20/italys-policies-make-sense-its-eurozone-rules-that-are-absurd

But hasn't Japan famously been unable to handle their crisis for, like, thirty years at this point? I'm not sure they're a good counterexample. Or have they gotten better?

No matter what, though, thanks for the links!

Wow, Conte gives up! President Mattarella won't accept a euro-skeptic finance minister. This won't end well...

Italy is not struggling because of the euro, but because of lack of structural reforms. Italy should do what France has started to do. Reforms, reforms, reforms, and Italy will be saved! #EPlenary 🇮🇹🇪🇺

— Guy Verhofstadt (@guyverhofstadt) May 30, 2018

I'm sure once Berlusconi is back in power everything will work itself out.

This fucking Verhofstadt guy.

I'm sure austerity will work out well in Italy rn

The reason is simple: the decline in EU support across Europe was primarily related to the so-called “refugee crisis”. Once this was “solved” by the EU-Turkey deal, support rebounded and support for rightwing populist parties started to decline again (while remaining higher than before). Italy bucked this European trend, because immigration remained a major problem in the country.

A year ago, at a workshop in Berlin, an MP for Italy’s then ruling centre-left Democratic party pleaded her social democratic colleagues to help with the country’s ongoing influx of asylum seekers. But, just like the pleas of her colleagues, they were ignored in Brussels. Scared that an acknowledgement of a “crisis” in Italy would bring the refugee issue back on the agenda in their own countries, and show that the “problem” had not been solved at all, Italy was sacrificed for the alleged good of the union.

https://www.theguardian.com/commentisfree/2018/may/30/eu-italy-crisis-refugees-populism?CMP=Share_iOSApp_Other

The reason is simple: the decline in EU support across Europe was primarily related to the so-called “refugee crisis”. Once this was “solved” by the EU-Turkey deal, support rebounded and support for rightwing populist parties started to decline again (while remaining higher than before).

Some victory.

This is a pretty good piece in describing the awfulness rn (the mention of Musil totally lands):

https://www.theguardian.com/commentisfree/2018/may/30/italy-regime-change-future-repressive-alliance-five-star-league

And the EU are doing zilch to alleviate the pain (EU grants that are squandered):

https://www.theguardian.com/commentisfree/2018/may/30/romanians-uk-tragedy-homeland-corruption-poverty

Hard to know what its good for. Open borders work only for so long if you are met with hate in the country you land in.

To be fair, we (Romanians) are also partly responsible for our inability to properly make use of EU membership beyond resorting to exile. More specifically, our ruling class is so utterly unable to divest itself of centuries-old habits (chief among them corruption, mistrust, superstition, fatalism, sexism, racism), further aggravated by half a century of so-called 'communism', that the country seems doomed to systematically sabotage itself until it perishes for good. I wouldn't mind a more interventionist EU (as regards Hungary and Poland as well), especially since the culprits are notorious and well aware that getting caught red-handed means nothing, but imagine the optics! Wouldn't it be an attack on Eastern Europe's relative sovereignty? As a result, mobster politicians will continue to line their own pockets with EU money then blame Germany or France or whoever for endemic poverty (worse yet in rural regions), and every time the election cycle comes full circle they are proven right, again and again, by their voters, who just lap it up. And they have the nerve to call themselves 'socialists'. Not that the EU is an ideal entity by any stretch of the imagination but it is not the be-all and end-all of its less successful members' problems.

That's true, but wrt Hungary and Poland why aren't threats made on their membership? After all they have denied Turkey so far (even before the events from the last few years).

I don't know about Hungary, but Poland's pretty substantial demographically and getting more so economically.

Not enough is being done, I agree, and it is a failure on the EU's part no matter which way you slice it. Orban in particular makes a habit of saying one thing when he's in Brussels and wholly another when he plays for a home audience. He is about as egregious as it gets.

xp

Easier to not admit than to kick out - though threats have been made against Poland’s ability to vote if PiS continues to muck about with the judiciary. Enforcement powers are subject to veto, though, and the Visegrad group have a collective interest, to some extent, in them not being voted through.

It’s pretty likely the rest of the EU will put some kind of financial pressure on them sooner rather than later though.

Didn't know where to put this, but Spain's Rajoy is almost certainly a dead man walking because of corruption.

Good riddance.

Lol what sort of cuck loses power cos of corruption in 2018

Tom D. otm. Particularly nice touch that it's five Basque MP's that are going to put him on the grill.

Long time comin

Interesting reading the Lisbon discussh upthread. I was just there last week. I hung out with an econ journalist friend of mine and he basically backed up everything Daniel was saying. Economy totally unbalanced towards tourism, it's changing the city centre and not for the better, house prices have gone through the roof because people can use their flats as tourism money-makers, actual people who live there now pushed out. Everything gentrified. Jobs are in the service/tourism industry. etc

yes I've heard the same thing from locals there. they're concerned that this tourism push is a last gasp effort to recover something of a european economy and that if it fails, there is no other hope, for what is at base still a small agricultural country.

Looks like I picked the wrong time to quit sniffing glue go to Lisbon.

I hung out with an econ journalist friend of mine and he basically backed up everything Daniel was saying.

Your friend sounds like a smart guy.