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The EU: The Dutch did even worse than the French
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PostPosted: Wed Jun 01, 2005 3:48 pm    Post subject: The EU: The Dutch did even worse than the French Reply with quote

Today they rejected the Constitution by a wide margin - 63% of the vote.

Also for all the wrong reasons: discontent with the government, fear of immigration and cheap labor, a feeling that Europe is building up too fast, with too many new members coming in practically en masse...

The situation is not helped by the recent murder of Theo Van Gogh (a nephew of the painter Vincent Van Gogh) because he had written a book criticizing the way Moslems treated their women. That set off quite a number of clashes and demonstrations. With another Moslem country - Turkey - at the gate, fears and disquiet are running high.

I did say earlier, didn't I, that if the votes had taken place when there were only 15 countries, they would have all passed without a hitch. But 10 more countries at one go, then two more (Bulgaria and Rumania have recently signed the accession treaty) just a couple of years later is more than "old Europeans" can take... Sad
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PostPosted: Wed Jun 01, 2005 4:07 pm    Post subject: Reply with quote

Remember I once commented that Europe was slow to progress? Very Happy

This is one of the confirmation.
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PostPosted: Wed Jun 01, 2005 4:33 pm    Post subject: 50 years Reply with quote

X wrote:
Remember I once commented that Europe was slow to progress? Very Happy

It took European countries 50 years to go from 6 countries to 10, then 12 then 15. Then, poof, all of a sudden the number abruptly almost doubled: 15 to 25, then 27. That's a lot to absorb - too much, too fast. That's half a billion people there all told, with some of the newcomers a lot less industrialized, a lot poorer, a lot less used to a market economy than the early members. No wonder the "old members" find it hard to cope.

It took the US almost 200 years to go from 13 to 50, in totally different circumstances - and yet it hasn't been easy sailing all the way either. The Civil War, the mythical melting pot that didn't always work, the ethnic tensions, the social and economic divide between the very rich and the very poor. The advantage was, it was one country to start with, trying to integrate new immigrants. A lot more difficult to integrate 27 countries of different sizes, wealth, economic and social systems, size of populations, laws, ethnicities, some with history of fighting each other. The idea of Europe started with economic integration first, but also with the aim of avoiding a fourth big war between France and Germany, who are now actually the two pillars of European building, or were before the "No" vote in France. Will it be able to go on? That remains to be seen.

Some commentators are saying "the European Constitution is dead". It will certainly be if other countries vote "no" in the coming months.
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PostPosted: Wed Jun 01, 2005 5:27 pm    Post subject: Reply with quote

Nice thought but I don't think it as a setback.

I look at the vote as a win-win situation for the Europeans. A win for the NO vote because the people are free to make up their minds about how they want to live, something that is being totally denied to the Americans (who are so dumb to think that they are free and more progressive than others). A win for the YES vote because it would bring Europeans closer to each other.

The Europeans at least have a choice in determining what is good for them. The USA people didn't even get to vote on or even have a say over something like that. It's the politicians and wealthy corporations who get to decide what is good for the average Americans.
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PostPosted: Fri Jun 03, 2005 9:58 am    Post subject: Defending Europe Reply with quote

Europe's secure, well-paid leaders have caused the crisis

The public must be convinced that the EU is a safeguard against globalisation

Robin Cook
Friday June 3, 2005
The Guardian

A number of us from the pro-European wing of the trade unions and the Labour party got together this week for group therapy. Hilariously we had originally planned the meeting to decide how we would sell a yes vote in a British referendum that now lies buried beneath a <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />mountain of French nons and Dutch nees. In the event our clandestine gathering in an attic room up a back staircase took on the character of an embattled resistance plotting how to fight back.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

At least we are spared another wasted year trying to excite the interest of the British public about the finer points of the 448 clauses of Valéry Giscard d'Estaing's draft constitution. I always did have my doubts about how long I could keep passers-by in my local shopping mall in conversation on whether it was time for the council of ministers to move on from a six-month rotating presidency.

There are many useful steps for the better in the new treaty and I have a lot of continental friends who have spent the best part of two years trying to perfect its text, but the harsh truth is that the whole exercise has been an extravagant diversion of energy, imagination and time that would have been far better put into addressing the legitimacy of the European project among the public. We have all behaved in a way that almost lives up to the caricature of Europe as an institution that exists for the perpetual extrusion of ever-longer treaties that meet the preoccupations of the political elites rather than the priorities of its peoples.

It would be a strategic blunder if Tony Blair was to let the British presidency waste the second half of this year in scrabbling around in the rubble of the recent referendums to find what can be salvaged from the collapse of the constitution. The priority must be to move the debate about Europe away from process and on to outcome. This is all the more essential as process is about how top politicians arrive at communiques in exclusive summits, while outcome is about how it all benefits the lives of the public.

There is an unhealthy tendency these days to regard a concern with the practical benefits to real people of European integration as some kind of sellout on the grand vision. This is not a perspective to which Jean Monnet and the founding fathers would have given house room. There could have been nothing more intensely pragmatic than where they started with the creation of a common market in iron and steel. If Monnet were to return now I suspect his first response would be delight that the seed which he planted has produced the largest, richest single market anywhere in the world, bigger even than the GDP of the US. His second reaction would be incomprehension that the current generation of politicians do not talk more about what this means to their public in terms of increased trade and jobs, and of greater competition that has halved the price of airline flights and telephone calls around the continent.

It is commonplace to talk about a democratic deficit in Europe, but in truth the immediate problem in the present crisis is a leadership deficit. The referendum debacles catch Europe at what is possibly the first time in its history when all the leaders of the big four nations are serving out their time, waiting to be replaced. What Europe needs are credible figures with a political future who can convince the public that the European Union is a necessary, effective response to the pressures of a globalised economy.

That must not be confused with turning Europe into the conduit by which those pressures are brought home most painfully to its people. There are too many people who believe they demonstrate they are modern by lecturing the workers on the need to work longer for less security and for poorer pensions. All too often they themselves turn out to enjoy well-paid jobs with good pensions and lifelong job security. It is for other people to make the painful adjustment to globalisation that they preach.

If the European Union allows itself to be labelled as part of the forces of globalisation it is doomed to fail in any project to rebuild public support. There are warning signs from the recent referendum campaigns, particularly from the hostility of the young, that too many people already equate the European Union with the pressures that are eroding their job security and quality of life. The challenge is to persuade them that the European Union is an intelligent way of meeting those pressures by forging a continental economy on the same scale as the US or China. Those who are most worried about globalisation are the very people who should be most supportive of the European Union.

If Tony Blair wants to use the British presidency to kick-start such a project to restore the credibility of Europe among its peoples, there are two changes of direction that would help.
The first is to stop talking about economic reform as if it were a threat. The French and German public may go along with our economic agenda if we present it as the road to full employment and prosperity, but not if we constantly lecture them on the necessity of giving up their job security and letting deregulation open the window to the chill winds of laissez-faire competition. A touch of humility before embarking on these lectures would also not come amiss. Both France and Germany after all have much higher productivity and greater investment than ourselves and, despite our superior conviction that we know how to handle the global economy, they have big trade surpluses with it while we have a whopping deficit.

The second is to stop standing in the way of the popular measures that do come out of Europe. Why should Downing Street make it an issue of principle that British workers be denied the European limit of 48 hours on the average working week, when they know it would be popular with the great majority of those who are forced to work excessive hours? Should it not be part of any progressive package of economic reform to remove one of the reasons why British business does not face up to poor productivity per hour?

In return the left should resist the Newtonian dynamic of being anti-Europe because Tony Blair is pro-Europe. There is no point in complaining about George Bush if we do not create in a united Europe the one alternative powerful enough to offer another world vision. Anyone who doubts that should pause to consider the balance of forces at the forthcoming G8 summit, where any progress on Africa or climate change will only happen if European leaders put up a more united front than their peoples have over the past week.
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PostPosted: Fri Jun 03, 2005 12:14 pm    Post subject: Reply with quote


I have not seen a single good argument against globalization. You once mentioned the conern of lower labor cost from the outside to France. It is really silly. It is ridiculous to think that the plumbing industry is critical to French economy. If Eastern European enter France to do the menial works, that would allow France to focus on industry that really matter such as telecommunication or pharmaceutical.

When NAFTA was ratified by Congress, people were concerned that Mexicans would take over American jobs. That did not happen. It is true that many labor intensive jobs were moved to Mexico, but overall, America gained jobs because they were allow to focus on better things.
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PostPosted: Fri Jun 03, 2005 1:03 pm    Post subject: Perception is everything Reply with quote

Seed wrote:

I have not seen a single good argument against globalization. You once mentioned the conern of lower labor cost from the outside to France. It is really silly. It is ridiculous to think that the plumbing industry is critical to French economy. If Eastern European enter France to do the menial works, that would allow France to focus on industry that really matter such as telecommunication or pharmaceutical.

Hey, don't pick a fight with me over this - I'm not the one who voted "Non" or "Nee" at 55 and 62 percent! I happen to agree with you, but it's the French and Dutch who don't want integration and competition with cheap labor. It's the French plumbers who are afraid of the Polish ones.

It's been said that the vote reflected a social split between "la France d'en haut" and "la France d'en bas" - Upstairs French and Downstairs French if you want. The rich and educated mostly voted "yes" (81 percent in Nicolas Sarkozy's affluent district voted "yes")and the blue collar and poorly educated voted "no". In other words, it's the people doing menial jobs because they don't have the skills to go higher who don't want cheap labor coming to take those jobs. Not everybody can go into telecom and pharmacy.

You can theorize all you want, those people have a daily living to make, and they perceive the "invasion" from Eastern Europe (and cheap products from China) as a threat to their livelihood. It's a question of perception, there's nothing we here on the other side of the Atlantic can do about it.

See the sentence I put in bold at the end of the article. That's what the "Upstairs French", who see the big picture, voted for - a strong Europe to counterbalance the US and the rising Asia. That picture means absolutely nothing to the farmers, unskilled workers, street cleaners, auto mechanics, etc.

I'll bet you that if over here there was a proposal, for example, to unite North America and Latin America politically as well as economically and do away with border controls (NAFTA is limited in scope compared to the EU Constitution), the same fears you mention would surface again, and stronger. This time they would be afraid, not that the labor intensive jobs would move to Mexico, but that Mexicans, Peruvians et al. would move to the US and settle here and take over the "menial jobs". Look at how already people are afraid of illegal immigrants who provide cheap labor, be they Mexican in agriculture or Chinese in sweat shops. If those people were allowed to actually move freely beyond borders, you can imagine how "Downstairs America" would ovewhelmingly vote "No" to the abolition of border restrictions.
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PostPosted: Fri Jun 03, 2005 1:13 pm    Post subject: Another point of view Reply with quote

Pol's Own Disclaimer: The fact I'm posting this doesn't mean I agree with it. Actually, I think it's a bit simplistic. It's a good counterpoint to Seed's argument, though super grin

A Race to the Top
Published: June 3, 2005
Bangalore, India

It was extremely revealing traveling from Europe to India as French voters
(and now Dutch ones) were rejecting the E.U. constitution - in one giant
snub to President Jacques Chirac, European integration, immigration,
Turkish membership in the E.U. and all the forces of globalization eating
away at Europe's welfare states. It is interesting because French voters
are trying to preserve a 35-hour work week in a world where Indian
engineers are ready to work a 35-hour day. Good luck.

Voters in "old Europe" - France, Germany, the Netherlands and Italy - seem
to be saying to their leaders: stop the world, we want to get off; while
voters in India have been telling their leaders: stop the world and build
us a stepstool, we want to get on. I feel sorry for Western European blue
collar workers. A world of benefits they have known for 50 years is coming
apart, and their governments don't seem to have a strategy for coping.

One reason French voters turned down the E.U. constitution was rampant
fears of "Polish plumbers." Rumors that low-cost immigrant plumbers from
Poland were taking over the French plumbing trade became a rallying symbol
for anti-E.U. constitution forces. A few weeks ago Franz Müntefering,
chairman of Germany's Social Democratic Party, compared private equity
firms - which buy up failing businesses, downsize them and then sell them -
to a "swarm of locusts."

The fact that a top German politician has resorted to attacking capitalism
to win votes tells you just how explosive the next decade in Western Europe
could be, as some of these aging, inflexible economies - which have grown
used to six-week vacations and unemployment insurance that is almost as
good as having a job - become more intimately integrated with Eastern
Europe, India and China in a flattening world.

To appreciate just how explosive, come to Bangalore, India, the outsourcing
capital of the world. The dirty little secret is that India is taking work
from Europe or America not simply because of low wages. It is also because
Indians are ready to work harder and can do anything from answering your
phone to designing your next airplane or car. They are not racing us to the
bottom. They are racing us to the top.

Indeed, there is a huge famine breaking out all over India today, an
incredible hunger. But it is not for food. It is a hunger for opportunity
that has been pent up like volcanic lava under four decades of socialism,
and it's now just bursting out with India's young generation.

"India is the oldest civilization, the largest democracy and the youngest
population - almost 70 percent is below age 35 and almost 50 percent is 25
and under," said Shekhar Gupta, editor of The Indian Express. Next to
India, Western Europe looks like an assisted-living facility with Turkish

Sure, a huge portion of India still lives in wretched slums or villages,
but more and more of the young cohort are grasping for something better. A
grass-roots movement is now spreading, demanding that English be taught in
state schools - where 85 percent of children go - beginning in first grade,
not fourth grade. "What's new is where this movement is coming from," said
the Indian commentator Krishna Prasad. "It's coming from the farmers and
the Dalits, the lowest groups in society." Even the poor have been to the
cities enough to know that English is now the key to a tech-sector job, and
they want their kids to have those opportunities.

The Indian state of West Bengal has the oldest elected Communist government
left in the world today. Some global technology firms recently were looking
at outsourcing there, but told the Communists they could not do so because
of the possibility of worker strikes that might disrupt the business
processes of the companies they work for. No problem. The Communist
government declared information technology work an "essential service,"
making it illegal for those workers to strike. Have a nice day.

"This is not about wages at all - the whole wage differential thing is
going to reduce very quickly," said Rajesh Rao, who heads the innovative
Indian game company, Dhruva. It is about people who have been starving
"finally seeing the ability to realize their dreams." Both Infosys and
Wipro, India's leading technology firms, received more than one million
applications last year for a little more than 10,000 job openings.

Yes, this is a bad time for France and friends to lose their appetite for
hard work - just when India, China and Poland are rediscovering theirs.
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PostPosted: Fri Jun 03, 2005 6:30 pm    Post subject: Reply with quote

Nobody in his right mind would want to invest in this country. The US government can lock you up at anytime and put you there indefinitely without filing any charges. Everything you own can be confiscated, you bank account(s) seized and your life and those of your family amount to less than a strand of pubic hair to those righteous G-men. The USA has only political idiocy, government graft, religious inquisition looking at its future.

Invest in China and Europe. In another 12 years (2017), China is expected to surpass the United States in wealth. Europe has a huge momentum right now with all the political reforms going on. They are the genuine future.
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PostPosted: Fri Jun 03, 2005 8:12 pm    Post subject: It's not a good place to invest even without Reply with quote

the abusive government...Take your hard-earned money somewhere else.

Soft and flat? Danger!
Slow growth signs and flattening interest rates have economists and investors seeing trouble ahead.
June 3, 2005: 4:26 PM EDT
By Chris Isidore, CNN/Money senior writer

NEW YORK (CNN/Money) - Not too fast and not too steep would normally be a good path to follow. Unless, of course, you are hiking in today's land of economics. Then that path, to some, looks pretty scary.

First, the slow part ...

Worries about the strength of the economy abound. The latest sign came Friday, when the May job growth was the slowest in two years. But that only followed a week that saw a manufacturing executives suggest the two-year industrial expansion may be running down, and another report showing a big jump in planned layoffs last month.

"Today's disappointing labor report supports the notion that the emerging soft patch in the U.S. economy is here to stay," said Ashraf Laidi, chief currency analyst for MG Financial Group.

Economists are now projecting the United States could see slower economic growth in the second half of the year, perhaps in the 2.5 to 3 percent range, rather than the 3.3 percent to 4 percent growth of the recent past.
Placing slow growth bets

But far more important than past economic numbers or economists' forecasts are investors' ever-bigger bets in the bond market on slower growth ahead. This reflects a growing belief on Wall Street that the Federal Reserve may soon pause from, or even halt, its quarter-point rate hikes sooner rather than later.

Following the May employment report the yield on the benchmark 10-year treasury fell to a 14-month low early Friday.

"It's more important what investors believe, because those people are willing to put their money on the line like that," said Rich Yamarone, director of economic research at Argus Research.

Which brings us to the flat part ...

The investment activity that has the attention of Yamarone and other economists is the difference between long-term and short-term rates.

The yields on longer-term Treasury securities such as the 10-year note have fallen over the past year, even as shorter-term rates, such as the Fed's key short-term rate, the fed funds rate, or the 3-month Treasury yield, have steadily gained ground.

The condition is known as a flattened yield curve -- a warning sign for the economy that economists take seriously.

History tells us that as short- and long rates get closer, slower economic activity is almost sure to occur. If short-term rates rise above longer-term rates, a recession is virtually always in the offing. The last time the yield was inverted was from July through November 2000, right about when the last recession began.

The gap between the weekly averages for 3-month and 10-year Treasury yields fell to 1.12 percentage points in the week ending May 25, according to figures from the Fed, the narrowest gap since April 2001. As of midday Friday, the gap was just under 1 point.
Flat's a drag

That's of particular concern, according to economists, because current bond market conditions can serve to cut down on credit available to businesses, and thus be another drag on economic activity.

Jim Grant of Grant's Interest Rate Observer newsletter said that when there's a large gap between short- and long-term rates, conditions are ripe for financial services firms to make money by extending credit. That in turn fuels economic activity.

"In the opposite condition, when short-term rates are on par with or higher than long-term rates, it sucks oxygen from the financial economy," he said. "It deprives lenders of profitable operations, and it discourages capital creation."

Some economists say a flattened yield curve is more of a concern when both rates are at high levels, as they were in late 1989, when short rates outstripped long rates and both were around 8 percent.

"It really depends on when you get the flat curve," said Mark Vitner of Wachovia Securities. "Right now with the low rates, I don't see dire implications from a flattening yield curve. It just is accurately indicating that the economy is slowly or moderating."

Vitner said even if there is an inverted yield curve at these levels, it wouldn't necessarily mean a recession as long as long rates didn't drop too far below short-term rates, or stay lower for too long. He puts the risk of a recession at roughly one in six.

Vitner's view is echoed by Bernard Baumohl, executive director of the Economic Outlook Group of Princeton, N.J. He said when the spread between long and short rates narrows but both remain below 4 percent it's "just not problematic for an economy with a low underlying rate of inflation and still healthy productivity growth. There's still plenty of liquidity out there and the cost of capital remains relatively cheap."

Some economists also argue that several unique factors are contributing to low long-term rates, including slow growth in many economies overseas, a flight to quality in the bond market after GM's bonds got cut to junk, and big purchases of Treasuries by foreign central banks.

But that said, most economists say the narrowing gap even at today's yields is a caution sign on economic growth.

"That (pulling back on lending) is a lot of what you're seeing now," said Argus' Yamarone. "Then you exacerbate the situation by having skyrocketing energy and health care costs, and you start to see why businesses may not be investing as much as we originally thought they would."

MG Financial's Laidi said the narrowing spread yield spread is a big reason for the weaker-than-expected economic reports this week.
Is the Fed to blame?

Fed Chairman Alan Greenspan has called the low long-term rates in today's environment a "conundrum." Some economists say part of the problem with the narrowing yield spread is due to the Fed's insistence on raising rates more than is justified by current economic conditions.

"The conundrum is the Fed, and why the it keeps raising rates," said economist Robert Brusca of FAO Economics.

But Greg Valliere of Stanford Washington Research Group, said the central bank is right to keep raising rates due to concerns about issues such as rising labor costs, which could lead to more inflation down the road, and the risks posed by a possible housing bubble.

Valliere thinks 10-year Treasury yields will start rising as soon as investors become convinced the Fed is not as close to abandoning its policy of rate hikes as now commonly assumed.

"I don't think it's going to flatten totally," he said about the yield spread. "You can't fight the markets, but I think the markets are being unrealistic right now."

For more on the economy and how it affects you, click here.
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