Time to Let Greece Go: It Doesn’t Belong in the Euro

Despite Greece’s resounding “no” to more austerity, European leaders are trying one last time this week to get the country to sign up to another bailout and keep it in the eurozone.

They shouldn’t bother.

If Sunday’s referendum made one thing clear, it’s that Greece just doesn’t belong. After more than 60 percent of Greeks allowed themselves to be deluded by far-left leaders who said the vote wasn’t about the euro at all but rather a chance to stick it up to the faceless institutions that have “humiliated” this nation of eleven million for five years by trying to make it see reality, the generous thing to do would be to prepare for an orderly Greek exit from the single currency. Read more “Time to Let Greece Go: It Doesn’t Belong in the Euro”

Threat of Snap Elections Shows Greek Leaders Delusional

Germany’s Bild reports that Greece could call snap elections if its European creditors refuse to relent in debt negotiations. “We have nothing to lose,” one cabinet minister told the tabloid newspaper. “If the EU remains hard, we must show that we stand firm.”

If true, the report shows that three months into government, Greece’s ruling parties still don’t understand that their problem isn’t one of legitimacy. Their problem is that the other twenty-seven nations in the European Union are democracies as well that would rather Greece kept its word.

Since winning the election in January, the far-left Syriza party and its Independent Greeks coalition partner have insisted that “democracy” triumphed over austerity and that the wishes of a majority of Greek voters should trump any commitments or promises previous Greek governments made.

The rest of Europe isn’t so sure. Read more “Threat of Snap Elections Shows Greek Leaders Delusional”

Brazil’s Chickens Come Home to Roost

Dilma Rousseff’s failure to liberalize Brazil’s economy is finally catching up with her. After narrowly winning reelection last year, popular outrage is backing the left-wing president into a corner.

Earlier this month, more than a million protesters took to the streets of Brasília, São Paulo and other major cities, angered by revelations of embezzlement at the state oil company, Petrobras.

The inclusion of members from the Brazilian Democratic Movement Party (PMDB) in a Petrobras corruption probe caused this biggest party in Rousseff’s ruling coalition to threaten to block austerity measures, such as tightening access to pension and unemployment benefits.

The PMDB has almost as many seats in Congress as Rousseff’s Workers’ Party and a reputation for allying itself with whomever is in government in order to reap the spoils. Read more “Brazil’s Chickens Come Home to Roost”

Greece Wants New Loan Without Conditions

Greece’s new government made clear on Wednesday it wants a six-month loan extension from the European Union while dumping the bailout it campaigned against.

In a speech to parliament on Tuesday, Greek prime minister Alexis Tsipras, whose far-left Syriza party won the election last month, reiterated his commitment to rolling back many of the reforms that were enacted under the country’s bailout agreement with the European Union and the International Monetary Fund.

Tsipras said he would not accept an “ultimatum” from the rest of Europe and was in “no rush” to find a deal.

However, Greece’s current aid program runs out by the end of February, raising the fresh prospect of a sovereign default if it can’t find help before then. Read more “Greece Wants New Loan Without Conditions”

British Health Service Politically Sensitive for Conservatives

For anyone who watched the opening ceremony of the 2012 Summer Olympics in London, the pride Britain takes in its National Health Service (NHS) is clear. Far from the apathy that most Americans feel toward government-provided services, the NHS has been a popular feature of British life since it emerged during the late 1940s as part of the Labour Party’s postwar government. That makes the debate about how to prepare the system for an expected rise in demand at a time of austerity politically sensitive.

The NHS is a public health provider that offers treatment “free at the point of use” and gets the majority of its operating income from taxes. But like health-care providers across the developed world, the organization is coping with strain as it balances Britain’s aging population against the country’s generally lower economic activity and rising health-care costs.

The Conservative Party-led coalition government has tried to improve the situation by privatizing an array of NHS services, creating a hybrid model in which most of the services that patients interact with are government-provided but many of the auxiliary services no longer are.

This has generally not been received well. The breakdowns in service provision directly attributable to this health-care delivery method have been documented in a number of recent studies. Polls show voters trust the opposition Labour Party more to improve the NHS than they do the Conservatives. This is not in itself new but alarming to Conservative Party strategists nonetheless. In response, George Osborne, the chancellor of the exchequer, announced a £2 billion funding increase for the NHS last week. Read more “British Health Service Politically Sensitive for Conservatives”

Belgian Premier Unveils Labor, Pension Reforms

Belgium’s incoming prime minister Charles Michel emphasized labor and pension reforms in his first speech to parliament on Tuesday as head of a coalition of right-wing parties.

Alternating between Dutch and French, Michel, whose liberal Mouvement Réformateur is the only Walloon party in the new government, called for structural reforms in order to modernize Belgium. “To do nothing is to regress,” he said. “We reject fatalism and paralysis.”

For a country that hasn’t seen unemployment below 8 percent in two years, Michel can ill afford not to liberalize a jobs market that is far more rigid than those of its neighbors. Read more “Belgian Premier Unveils Labor, Pension Reforms”

Britain’s Osborne to Freeze Benefits, Cut Pension Tax

Britain’s chancellor George Osborne on Monday promised a next Conservative Party government would freeze welfare benefits for people of working age and abolish taxes on pensions. In a conference speech, he positioned his as the “party of progress” and dismissed the opposition Labour Party as living in the past.

Speaking in Birmingham, Osborne said the freeze would not include disability benefits, maternity pay and pensions but save £3 billion — money he would put toward financing three million apprenticeships for young Britons, “three million more chances for a better life so we help our citizens get jobs instead of more immigration from abroad.”

The freeze would nevertheless be “a serious contribution to reduce the deficit,” said Osborne, who argued it was also fair. “Families out of work should not get more than the average family in work.”

According to the Treasury, some ten million households would be affected by the freeze, roughly half of which are working. Read more “Britain’s Osborne to Freeze Benefits, Cut Pension Tax”

To Halt Decline, Argentina Needs to Shake Off Perón’s Legacy

The “tragedy of Argentina” is not so much one of unfortunate economic circumstances as the failure of one particular ideology which the country refuses to shake off — Peronism.

The Economist this week studies the causes of the country’s century of decline as Argentina looks set for a repetition of the 1998-2002 financial crisis.

The newspaper notes that in the early twentieth century, the Argentinians were among the richest people in the world. Their income was 92 percent of the average of sixteen rich countries now in the Organization for Economic Cooperation and Development. In the four decades leading up to 1914, growth had averaged 6 percent per year. But, as The Economist puts it, “It never got better than this.” Today, income per head of the population is only 43 percent of those same sixteen countries.

One underlying cause is that even when Argentina was booming, it was overly reliant on commodity exports. It failed to educate its masses and build an industrial base of its own. Read more “To Halt Decline, Argentina Needs to Shake Off Perón’s Legacy”

France’s Hollande Laments High Labor Costs But Unlikely to Act

French president François Hollande has recognized that his country should cut labor costs to bring down unemployment, but his leftist government is unlikely to enact comprehensive reforms.

Many in the ruling Socialist Party are wary of reducing social contributions for employers or increasing work hours, which they feel would erode the French social model. Read more “France’s Hollande Laments High Labor Costs But Unlikely to Act”

Budget Deal Gives Short-Term Relief, No Long-Term Improvement

Democratic and Republican Party negotiators announced that they had reached a budget deal on Tuesday. If their compromise agreement is accepted in both houses of Congress, it could end some of the uncertainty about government spending and taxes that has dampened growth in the world’s largest economy this year.

The chief negotiators, Democratic senator Patty Murray and Republican congressman Paul Ryan, both described the compromise as a step in the right direction during a news conference in Washington DC. “This bill reduces the deficit by $23 billion, it does not raise taxes and it cuts spending in a smarter way,” said Ryan, who was his party’s vice presidential candidate in last year’s election. Read more “Budget Deal Gives Short-Term Relief, No Long-Term Improvement”