1. Europe Swerves Left
Bird’s Eye: In the past fortnight Greece, France, and Germany all have voted against austerity as a solution to economic problems. We precede individual articles about each with two overviews: Paul Krugman looks at the possible breakup of the Euro, while Adam Gopnik writes about how successful the EU has been at reining in European nationalism. It remains unclear where we’re going, or why everyone is in these hand-baskets.
* Eurodämmerung Paul Krugman New York Times
Some of us have been talking it over, and here’s what we think the end game looks like:
1. Greek euro exit, very possibly next month.
2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.
3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.
3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.
4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:
4b. End of the euro.
* Hollande, Sarkozy, and Democracy in France Adam Gopnik The New Yorker
The hope of American liberals that an Hollande victory would vindicate their position that austerity is bad policy—even though that may be the case—seems unlikely to take hold here. To the American right, anything that goes wrong in Europe does so because Europe is wrong, and not because of austerity, because austerity is right.
This anti-European bias is producing an indecent-seeming amount of schadenfreude—on the right but also on the left—about the prospect of the dissolution of the European Union. The potential Franco-German split, Germany’s own ambivalences, the Greek crisis, the fall of the Dutch government, the backslide of the British economy—the tone about all this is oddly punitive here, as though the E.U. had been the product of some Brussels bureaucrat’s utopian folly rather than a miracle of coexistence wrought by a handful of quiet visionaries after more than fifty years of catastrophe. In thinking about Europe and its union, the number that one needs to keep in mind is not the rate of the euro exchange or the measure of the Greek deficit but a simpler one, of sixty million.
That is the approximate (and probably understated) number of Europeans killed in the thirty years between 1914 and 1945, victims of wars of competing nationalisms on a tragically divided continent. The truth needs re-stating: social democracy in Europe, embodied by its union, has been one of the greatest successes in history.
* Eurozone crisis: Merkel tells Athens and Paris to stick to spending limits The Guardian
Europe’s 30-month effort to save the euro by slashing spending and debt levels risks turning into a crisis of political legitimacy after EU leaders’ strategies collided spectacularly with the wishes of voters inGreece and France.
The impasse was most graphically demonstrated when Germany’s chancellor, Angela Merkel, insisted Athens must comply with the stringent terms of its €130bn (£100bn) bailout even though more than 60% of the Greek electorate had voted for parties rejecting those terms.
Following a French election campaign in which she strongly backed the loser, Nicolas Sarkozy, and snubbed the president-elect, François Hollande, Merkel stressed her opposition to Hollande’s central campaign pledge: reopening the euro’s new rulebook, or fiscal pact.
“That’s just not on,” she told a Berlin press conference called to address the huge shift from right to left in France.
* In Rebuke to Merkel, Social Democrats Win German Vote New York Times
Chancellor Angela Merkel’s party suffered a stinging defeat in Germany’s most populous state, one likely to embolden her opposition both at home and abroad as the European debt crisis enters a critical new phase.
One week after Socialists seized the French presidency, the Social Democrats won the parliamentary election in North Rhine-Westphalia, early results and exit polls released Sunday showed….The strong showing for Ms. Kraft and the Social Democrats, as well as what the German news media described as a “debacle” and a “disaster” for the conservatives, sends a clear signal that Ms. Merkel could face a difficult road to re-election.
* Greece Takes A Leap Into The Dark, Driven By Defiance And Despair Maria Magaronis The Guardian
The message of Sunday’s election in Greece is clear: the Greeks have said no to more of the cuts and austerity measures that have devastated the country, pushing unemployment above 20%, shattering the healthcare system, tearing families apart and leading some to suicide. It was above all a vote of rage against the two major parties, Pasok and New Democracy, which between them ran the economy into the ground, signed up to a disastrous austerity programme in exchange for dead-end bailouts from the EU and IMF, and then allowed the blows to fall on the most vulnerable.
The medium, though, is more confused and troubling. As elsewhere in Europe, the draining away of the centre has revealed a jagged landscape: the shorthand of “extremes of left and right” doesn’t begin to map it. The most obvious rift in Greece in the last months – a rift that’s been described to me more than once as a “civil war”– has been between those who are for and against the “memorandum”, the EU/IMF schedule of demands. The pro-memorandum forces want to keep Greece in the eurozone at any cost; most of their opponents also want to stay in Europe – but not of “Merkozy”, austerity and the banks.
