Russell Lee Old-timer ‘cornering the market’ in Shawneetown, IL April 1937
Jean-Claude Juncker, a former Luxembourg PM, claims that his EU-wide center right faction, the European People’s Party, “won” last month’s European Parliament elections, but something is not what it seems. They’re the largest faction, that’s true enough, but they had to concede 44 of their seats. In other words, while they claim a win, in reality it was a big loss. Which, in democratic systems, represents a call for modesty. Juncker will have none of that. He demands the leadership chair of the European Commission.
At first, Angela Merkel, without whose consent not a dime is spent in Brussels, seemed hesitant about giving Juncker what he wants, but she has changed her mind. That leaves British PM David Cameron as Juncker’s main foe; Cameron has stated he would never accept him as EC head; but Cameron looks to be overruled by Merkel et al. And that should suffice to see Britain leave the EU.
Not because Cameron’s pride would be hurt, but because the appointment of Juncker would fly in the face of the election results, which left no doubt that the – only – real winners were a wide variety of Euroskeptic parties. To then turn around and put a longtime EU stalwart in charge anyway, the very type of guy so many people in France, Britain and elsewhere pertinently don’t want to be in such a position, is beyond reason. And democracy.
More than anything, it shows how divided Europe has become. And ir no attempts are made to bridge that divide, it can only get wider and deeper. A perfect scenario for a lot of trouble in the future. Brussels will need to – be made to – listen to the voice of the people and adapt its politics and structures, or it will become an instrument of conflict, not of the peace it incessantly boasts to be the engine of.
As the push for and by Juncker continues, it’s no coincidence, in a sign of more eroding democracy, that Mario Draghi, the head of the allegedly independent European Central Bank, gave an interview last week in which he said – paraphrased – that Eurozone countries must surrender more sovereign powers to Brussels in order to allow a “perfect monetary union” to be formed. The interview was published in Dutch newspaper De Telegraaf yesterday, and within hours various Dutch parliamentarians denounced Draghi’s ideas. That’s in a still very pro-EU nation. And Draghi’s still not a politician, but expresses political opnions.
The problem with Brussels is that its bureaucracy wants things the people no longer want or believe in. Not even because the governments of two member states were toppled in order to push through more Brussels, or because of Juncker’s nascent appointment, but because there is a vast and growing feeling of discomfort and mistrust of bureaucrats in far away luxurious buildings built with public funds, who don’t even speak their language (the tower of Babel comes to mind), taking decisions few see as serving the interests of themselves, their neighbors and their countries.
While the EU leadership insists on concentrating powers ever further, into its own hands, a movement which is the exact opposite of that spreads in Scotland, Basque Country, Catalunya, Venice and other places, where people want the right to self-determination as smaller nations, not bigger ones. Brussels was condoned as long as it was perveived as bringing wealth, but that perception is gone, and it won’t come back.
Draghi demands more economic reforms in countries such as France and Italy, so the grand European project can be expanded further. There should be reforms alright, but they should be in Brussels. The old guard needs to go, and talks need to start on the benefits and drawbacks of the euro for different countries. The EU doesn’t need to end as a complete failure, but it will if the current leadership prevails and insists on pushing through outdated plans that nobody in the streets of Rome, Athens, Manchester and Barcelona wants anymore. It won’t just fail, it will set peoples and countries against each other who otherwise would have no reason to quarrel.
There are ancient, profound, and wonderful at the same time, differences between languages, cultures and economies in Europe, and the straightjacket of a single currency will not succeed in eradicating those differences, it will instead bring them out in a much more pronounced and potentially ugly fashion as people try to escape the suffocation they feel it is inflicting upon them.
And that in turn will easily be used as an excuse to do battle. As soon as the crisis deepens. Something Draghi claims he can prevent, but only by taking more of people’s and nations’ liberties away. Which, of course, is the one thing that won’t fly. Europe still has space to avoid the worst outcomes of the mess its urge to unify has put it in, but that space is shrinking. Those 500 million people need reason, not the power games they’re getting today. And if that’s all they’re going to get, they will stand up for themselves.
European Central Bank President Mario Draghi says current rules limiting European Union member states’ budgetary policies — notably deficit spending — are not sufficient, and states should surrender some sovereignty in some economic policy areas, notably labor laws. In an interview with Dutch newspaper De Telegraaf published Saturday, Draghi said “economic policy cannot be a purely national matter” because of the impact European countries’ policies have on each other. Draghi’s office confirmed the remarks were accurate. In the same interview, Draghi said that a further decline in price inflation in the eurozone could be a reason for his office to begin buying government debt, as well as private loans, in a so-called “quantitative easing” program similar to those undertaken in the U.S. and Japan.
French President Francois Hollande and German Vice-Chancellor Sigmar Gabriel signaled they are ready to back former Luxembourg Prime Minister Jean-Claude Juncker to head the European Commission. Hollande and Gabriel met in Paris, along with Italian Prime Minister Matteo Renzi, Belgian Premier Elio di Rupo and five other heads of governments from European Union countries to stake out a common socialist position before all EU leaders gather in Ypres June 26. The summit is being held in the Belgian town as part of World War I centenary commemorations. The endorsement of Juncker to run the EU’s executive arm next year sets up a clash with U.K. Prime Minister David Cameron, who is refusing to drop his opposition to appointing the Luxembourg politician, a British government official said yesterday. Parties backing center-right Juncker won the most seats in elections to the European Parliament last month.
“We said, let’s respect the spirit of the European elections, which is to say that the party that came in first should propose the candidate that was presented — in this case Mr. Juncker,” Hollande said today in Paris, adding that the group would like socialist candidates considered for other commission jobs. The British premier has said repeatedly it’s impossible to discuss the future of the EU without discussing names and will insist on asking those leaders who back Juncker to explain why, the U.K. official said. German Chancellor Angela Merkel, whose governing coalition includes Gabriel’s social democrat party, also backs Juncker. “I believe that Great Britain has made clear where it stands and I don’t think that this standpoint will change,” Merkel said at a joint press briefing in Berlin yesterday with Estonian Prime Minister Taavi Roivas, another Juncker backer.
Dying shopping malls are speckled across the United States, often in middle-class suburbs wrestling with socioeconomic shifts. Some, like Rolling Acres, have already succumbed. Estimates on the share that might close or be repurposed in coming decades range from 15 to 50%. Americans are returning downtown; online shopping is taking a 6% bite out of brick-and-mortar sales; and to many iPhone-clutching, city-dwelling and frequently jobless young people, the culture that spawned satire like Mallrats seems increasingly dated, even cartoonish. According to longtime retail consultant Howard Davidowitz, numerous midmarket malls, many of them born during the country’s suburban explosion after the second world war, could very well share Rolling Acres’ fate. “They’re going, going, gone,” Davidowitz says. “They’re trying to change; they’re trying to get different kinds of anchors, discount stores … [But] what’s going on is the customers don’t have the fucking money. That’s it. This isn’t rocket science.”
Sprawling malls were therefore a natural product of the postwar era, as Americans with cars and fat wallets sprawled to the suburbs. They were thrown up at a furious pace as shoppers fled cities, peaking at a few hundred per year at one point in the 1980s, according to Paco Underhill, an environmental psychologist and author of Call of the Mall: The Geography of Shopping. Though construction has since tapered off, developers left a mall overstock in their wake. Currently, the US contains around 1,500 of the expansive “malls” of suburban consumer lore. Most share a handful of bland features. Brick exoskeletons usually contain two storeys of inward-facing stores separated by tile walkways. Food courts serve mediocre pizza. Parking lots are big enough to easily misplace a car. And to anchor them economically, malls typically depend on department stores: huge vendors offering a variety of products across interconnected sections.
For mid-century Americans, these gleaming marketplaces provided an almost utopian alternative to the urban commercial district, an artificial downtown with less crime and fewer vermin. As Joan Didion wrote in 1979, malls became “cities in which no one lives but everyone consumes”. Peppered throughout disconnected suburbs, they were a place to see and be seen, something shoppers have craved since the days of the Greek agora. And they quickly matured into a self-contained ecosystem, with their own species – mall rats, mall cops, mall walkers – and an annual feeding frenzy known as Black Friday.
The Bank of England’s financial policy committee has reached crunch time. Set up by George Osborne to prevent asset bubbles from derailing the economy, the state of Britain’s housing market provides the FPC with an early test of its mettle. On Thursday it will reveal the concerns aired by its members at their quarterly meeting last week and publish their action plan. Doing nothing is not an option. Sure, there has been an easing in activity in the past couple of months, but it would be a mistake to see this as anything other than temporary, caused in part by the reluctance of sellers to put their homes on the market; in part by tougher checks by lenders on the financial viability of borrowers; and in part by potential buyers taking a good hard look at whether they want to pay the sort of prices currently being asked.
The FPC should look through these temporary factors and focus on the underlying picture. While this shows that, as yet, bubble conditions only really apply in London – where prices are already 25% up on their pre-recession peak (and 55% higher in central London) – there are plenty of warning signs flashing. These include the tendency for property booms to ripple out from the capital, the expectation that prices will keep on rising, the increase in the number of high loan-to-value mortgages agreed in the past year and the fact that house prices began this cycle at a relatively high level. Stir in rising consumer confidence and falling unemployment and all the ingredients are there for the housing market recovery to enter a second phase in the next couple of months. Activity and prices are likely to rise.
Investors have followed the latest twist in the saga of Argentina’s sovereign debt pretty calmly. Soon, they may have second thoughts. In effect, the U.S. Supreme Court has just rewritten the rules of sovereign borrowing — and not in a good way. It did this indirectly, by refusing to intervene in the legal fight between Argentina and an unusually persistent creditor. The immediate implications may be confined to Argentina, whose outlaw tendencies have made it a special case. The longer-term implications go wider. Here’s the short version of a long and tangled tale: More than 10 years ago, Argentina defaulted on its debts. Later, in two phases, it swapped new bonds for old, imposing losses on most of its creditors. But some of the defaulted securities weren’t exchanged. A shifting group of holders led by NML Capital Ltd. has been chasing Argentina through the courts ever since.
In 2012, NML had a huge win. A U.S. appeals court told Argentina not only to pay NML in full but also that it couldn’t pay new bondholders in the meantime. Crucially, it also ruled that third parties – financial intermediaries standing between the debtor and its bondholders — would face sanctions if they helped Argentina to ignore the rulings. In declining to take the case, the Supreme Court affirmed these judgments. Argentina – persistently uncooperative and undeserving of sympathy — is left with no good choices. President Cristina Fernandez de Kirchner has promised to defy the U.S. court’s instructions. That could mean defaulting on all the bonds, old and new alike, worsening Argentina’s economic and financial isolation. The smart thing would be to accept defeat and strike a deal with the “vultures,” as she calls the holdouts, but this would be a humiliating climb-down.
Argentina’s long battle with a small group of creditors, in which the latter won an important court decision this week, highlights a crucial issue in the management of financial and economic crises: What to do when a country is either unable or unwilling to pay its debts. The Argentine case dates back to 2001, when a severe economic depression rendered the government unable to make payments on some $95 billion in bonds. Holders of more than 90 percent of the debt accepted new bonds worth roughly 30 cents on the dollar, but a group of creditors ended up betting that they could get the government to pay more on the rest. This week, the U.S. Supreme Court effectively supported the holdouts: If the government wants to keep making payments on the restructured debt, it must pay them, too.
The decision may further complicate what is already a very difficult coordination problem. When a sovereign faces severe payment difficulties, the best option for the collective good is to find an orderly way to reduce debt and put the country on the path to economic recovery. The parties involved, though, tend to have a hard time agreeing on what constitutes “fair” burden sharing. Private creditors would rather get bailed out by governments and organizations such as the International Monetary Fund than accept losses on their investments. Small groups of private creditors have an incentive to seek better deals at the expense of the majority. And public creditors are loath to see their exceptional support used to pay off private creditors who underestimated the risks.
How deeply sad is this story? What has America turned into?
Anthropologists uncovered a series of mass graves filled with the human remains of immigrants stuffed into shopping and garbage bags in a county-owned section of a cemetery in South Texas. Now, a local politician is calling for an inquiry. The group of anthropology researchers is made of professors and students from the University of Indianapolis and Baylor University, who are working on the Reuniting Families project. The multi-year project seeks to identify the bodies of the hundreds of undocumented immigrants who died (usually from exposure in the 100-degree-plus heat) while crossing the Texas-Mexico border over the last few years. They resumed work two weeks ago, exhuming 52 plots in a Brooks County-owned section of the Sacred Heart Burial Park in Falfurrias. In those plots, they found the remains of multiple people instead of just one.
In one burial plot, bones of three bodies were inside one body bag. In another instance, there were at least five people in body bags and smaller plastic bags were piled on top of each other, Baylor University anthropologist Lori Baker said to the Corpus Christi Caller-Times. Skulls were found in biohazard bags — like the red plastic bags in receptacles at doctors’ offices — placed between coffins. “To me it’s just as shocking as the mass grave that you would picture in your head, and it’s just as disrespectful,” Krista Latham, a forensic anthropologist at the University of Indianapolis, said to the Caller-Times. Due to the commingling of remains, the researchers are unable to determine the total number of people buried in the 52 plots.
Mark Cuban thinks colleges are going to go out of business. In a clip on Inc.com, Cuban talks about the student loan bubble, which he says will burst and end badly for colleges. The end of the student loan bubble, Cuban says, will be like the housing bubble, where tuition collapses the way the price of homes collapsed. These collapses will put colleges out of business. Cuban:
“It’s inevitable at some point there will be a cap on student loan guarantees. And when that happens you’re going to see a repeat of what we saw in the housing market: when easy credit for buying or flipping a house disappeared we saw a collapse in the price housing, and we’re going to see that same collapse in the price of student tuition, and that’s going to lead to colleges going out of business.”
Cuban also talks about the impact student loan debt is having on the economy, saying that people burdened with student loans can’t afford to spend money on anything other than the bare necessities. There are a number of problems with the increasing cost of college both for the colleges themselves and the broader economy. Cuban’s specific call for a cap on student loan guarantees, and a subsequent collapse in tuition prices, portends an ugly future for colleges in the U.S.