Guest Post: The Welfare Kings Of Europe

Tyler Durden's picture


Submitted by John Aziz of Azizonomics

The Welfare Kings Of Europe

In spite of the fact that 85% of Greeks want to stay in the Eurozone, I was reasonably confident that Greeks would support Syriza to a first-place finish, and elect a new government willing to play chicken with the Germans. However Greeks — predominantly the elderly — rejected change (and possible imminent Drachmatization) in favour of the fundamentally broken status quo.

But although Syriza finished second, the anti-bailout parties still commanded a majority of the votes.

And New Democracy may still face a lot of trouble building a coalition to try to keep Greece in the bailout, and in the Euro . There has long been a rumour that Tsipras wanted to lose, so as to (rightly) blame the coming crush on the status quo parties. What fewer of us counted on was that the status quo parties wouldn’t want to win the election either. The pro-bailout socialists Pasok have thrown a monkey wrench into coalition-building by claiming they won’t take part in any coalition that doesn’t also include Syriza. This seems rational; when the tsunami hits, all parties in government will surely take a lot of long-term political damage. Pasok have already been marginalised by the younger and fierier Syriza, and Pasok presiding over an economic collapse (for that is undoubtedly what Greece now faces) would surely have driven Pasok into an abyss. The economy is such a poisoned chalice that parties seem willing to fight to keep themselves out of power.

And with more austerity, it’s only going to get worse. Once a society is hooked on large-scale debt-fuelled state spending, austerity in the name of government deleveraging is tough enough when the economy is booming, but during a depression as spending falls, tax revenues fall, very often producing (as has been the case in Greece, Spain, Portugal and the UK) even bigger deficits.

So let us not forget who the most welfare-dependent nations (i.e. the ones who would be hurt the most by attempting an austerity program during an economic depression) are in Europe (clue — it’s not Greece):

International economics is a fast game. It’s only sixty years since America was exporter and creditor to the world. It’s only fifteen years since the now-booming German economy was described as the “sick man of Europe”.

The same Euro system that is slamming Greece, Portugal, Spain and Italy today — in the aftermath of bubbles caused by easy money flowing into these countries as a result of the introduction of the Euro — could (if it were to somehow survive)  do the same thing to Germany in ten or twenty or thirty years.

A monetary union without a fiscal union is a fundamentally unworkable system and Westerwelle, Schauble and Merkel insisting that Greece play by the rules of their game is just asking for trouble. And trying to introduce a fiscal union over a heterogeneous, tense and disagreeable land as Europe is just asking for political trouble.

No matter how many nations are browbeaten by fear into committing to the status quo, it still won’t be sustainable. Greeks (and the other peripheral populations) can commit to austerity from here to eternity, but it won’t stop those policies resulting in deeper contraction, and more economic catastrophe.

But the collapse of the Euro would at most-recent estimates cost the core and particularly Germany a lot more than handing over the money to the PIGS. Eventually they will hand over the money to shield themselves from falling masonry. The real question is whether or not the entire system will spiral into pandemonium before Germany blinks.

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Mon, 06/18/2012 - 12:04 | 2536429 DaveyJones
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You would think Sweden would not need such liberal welfare tools

what with those tough condom rules

Mon, 06/18/2012 - 12:05 | 2536431 MillionDollarBonus_
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And once again, Europe's modest leader, President Herman Van Rompuy has received no credit whatsoever from the ungrateful European whiners. If Thatcher was the iron lady, then surely Van Rompuy is the wooden man: a President of understated and modest charisma, grounded in sturdy principles, with a solid commitment to his vision for Europe. President Rompuy will go down in history as one of the most underappreciated leaders of the modern world. It's sad that in today’s political environment, wisdom, commitment and passion is not accepted as a substitute for political charm and cheap sound bites.

Mon, 06/18/2012 - 12:08 | 2536437 Element
Element's picture

ha-ha! ... you've been holding that one back, haven't you?

Mon, 06/18/2012 - 12:11 | 2536450 hedgeless_horseman
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There has long been a rumour that Tsipras wanted to lose, so as to (rightly) blame the coming crush on the status quo parties. What fewer of us counted on was that the status quo parties wouldn’t want to win the election either.

As the flood waters rise, do not be suprised to see so many politicians fighting for a spot atop Mount Deniability.

Mon, 06/18/2012 - 12:19 | 2536482 FXPortent
FXPortent's picture

It only makes sense for a hedged bureaucrat, just look at Mitt Romney, he's on both sides on every side of the issue.

Too bad for Romney, I still think Obama has a decent chance of pulling through, precisely because of Romney's big fat, ugly mouth.

He's literally been handed the election on a silver platter, yet he still may wind up blowing that oppurtunity as well.


But, nor do I actually care what transpires this election cycle, once again there is nothing to really see here.


I really wonder how Mitt made it so far with Bain Capital, it really seems like he has no idea what the hell he is doing or what he is saying..

People like that usually never make it past square one.




Mon, 06/18/2012 - 12:29 | 2536500 derek_vineyard
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how come cutting government payouts = austerity?   then those receiving government checks will have to live in slavery like the rest of their countrymates?  just because you have a car and enough to eat doesn't mean you are  not a slave. enjoy your 40-50 years of servitude to the elite while shopping at walmart.

Mon, 06/18/2012 - 12:55 | 2536596 Bob
Bob's picture

Those handouts are necessary to protect the "slavery" that the rest of us experience.  Or at least that which the working class knows so well, pendantry of the dying "middle class" not withstanding. 

Destruction of jobs previously available to the working class has made neoliberal "free market" mythology a tough sell to the working class. 

If they are not supported, they may get more than just the "clue" that they already have.  They might get organized.  Better wage war on unions.

Why not altruistically eliminate the minimum wage so all those poor souls will be able to find "work"?  At whatever price the invisable hand and wisdom of the "free market" will bear?

Government is obviously the "problem."  Without its meddling, freedom would reign under the rule of the free market.  No minimum wage, no benefits to keep the poor and dying working class quiet in unearned splendor.

Look at all the resentment that all these "parasites" getting something-for-nothing generates among the "producers" . . . who seem blind to the real function that these benefits serve: To keep quiet the people who the private sector will not employ. 

Rock and hard place for free marketeers.  It seems odd to me that, in spite of all the resentment of the inactive working class they so tirelessly foment, they never argue simply for putting people to work on things that we all recognize need to be done.  CCC style.

They'd rather the country physically disintegrate than allow anyone but "free market" contractors/profiteers benefit, it appears to me. 

Must. drown. government. in. bathtub.  We gotta declare declare war on the indolent working class (ignore the men behind the curtain of "free market" capitalism.)

Free the Market and Let Liberty Reign!

Mon, 06/18/2012 - 13:53 | 2536808 The Alarmist
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"And with more austerity, it’s only going to get worse. Once a society is hooked on large-scale debt-fuelled state spending, austerity in the name of government deleveraging is tough enough when the economy is booming, but during a depression as spending falls, tax revenues fall, very often producing (as has been the case in Greece, Spain, Portugal and the UK) even bigger deficits."

You wonder why some of the more popular or promising characters chose to stay out of the primaries for the 2012 US Presidential elections?

Mon, 06/18/2012 - 14:58 | 2537015 Bob
Bob's picture

Clowns to the left of me,
Jokers to the right, here I am,
Stuck in the middle with you.

BarryO has been on public display long enough to make "perfectly clear" his amorality. 

I guess Rmoney's the answer to parasitic government:

Mon, 06/18/2012 - 12:26 | 2536501 GCT
GCT's picture

MDB I needed some good humor on this Monday, thanks for providing it!

Mon, 06/18/2012 - 12:27 | 2536504 falak pema
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Van Rompuy will probably go down in history; not sure how down that will be.

Mon, 06/18/2012 - 12:36 | 2536544 CrashisOptimistic
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Odds are non zero that this MDB guy is Tyler, generating traffic.

Mon, 06/18/2012 - 12:48 | 2536586 falak pema
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lol, thats below the belt! TD does not need flash of mirrors to bring the public to ZH; he (they) have their unique, uncompromising excellence. MDB is perfect antidote but I don't think TD's mindset is that zany or that sly in a CIA sort of way. 

Mon, 06/18/2012 - 13:55 | 2536814 The Alarmist
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"President Rompuy will go down in history as one of the most underappreciated leaders of the modern world."

Haiku Herman may oddly enough go down in history more for his poetry than for for his remarkable leadership.

Tue, 06/19/2012 - 04:21 | 2538725 Ar-Pharazôn
Ar-Pharazôn's picture

i seriously hope you're fucking joking!!!


Van Rompuy is a fucking bastard and he should hang in the city square of Bruxelles

Mon, 06/18/2012 - 12:05 | 2536433 Azannoth
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Yes because the total failure of a monetary union is not enough! Now let's try a fiscal union and if that does not work let's try a political union, ... talk about doubling down to the bottom

Mon, 06/18/2012 - 12:06 | 2536434 WiretapWilly
WiretapWilly's picture

Bullish.  All that's needed is some slave-masters with whips to drive some economic benefits from all the 25% unemployed across Europe and then everything will be to the moon.  Get people working and being productive for their handouts.

Mon, 06/18/2012 - 12:10 | 2536447 Azannoth
Azannoth's picture

Seriously why doesn't the government simply give those people shovels and tell them to dig holes 1 day and fill them in again the next ? Why is that such a difficult concept for people to understand that you have to work to eat

Mon, 06/18/2012 - 13:04 | 2536648 bagehot99
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That is a very neat description of the idiocy that is applied Keynesianism/Obamunism (the theoretical kind is more sensible, which is why Democrats gravitate to the idiotic kind). We have a President who actually thinks borrowing money to spend on digging holes or infrastructure or green energy or whatever-the-fuck-shiny-object he sees that morning (despite a 100% rate of failure) is more likely to create growth than cutting taxes and expenditures (despite a 100% rate of success). He is the epitome of a modern elite liberal, hopelessly wedded to policies that fail every time they are implemented. Romney isn't much better, but he IS better. He's at least a grown-up, who's had a job, made payroll and accomplished things in life. Obama's just a Real Good Talker.

Mon, 06/18/2012 - 13:23 | 2536707 jumbo maverick
jumbo maverick's picture

Part of the problem is guys like you! I mean come on "whatever-the-fuck-shiny-object", the technical term is thingamajig. Get a clue jeeze!

Mon, 06/18/2012 - 12:08 | 2536440 neptunium
neptunium's picture

Fucking idiots, the lot of them.  


At least we might get to see some eurocrats swinging from lampposts before this is all over, although they may have an exit strategy, Argentina perhaps.



Mon, 06/18/2012 - 12:08 | 2536442 yogibear
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Just lie. Max out your credit card and stop paying. Lie again and the banksters will throw more money at you. Brussels and the IMF will do anything to save the Euro and look good politically.

Mon, 06/18/2012 - 12:41 | 2536558 ATM
ATM's picture

It isn't jut the euro it is the worldwide financial system built upon debt that they are trying to save.

They cannot in th eend save it, we all know that. but they sure as hell can make things a whole hell of a lot worse by leveraging up even more in the attempts to save it rather than simply letting it crash and self destruct. But by doing so they would lose power and they ain't ever going to give up the reigns until they are yanked from their cold dead hands.

Mon, 06/18/2012 - 12:09 | 2536445 Jack Sheet
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The Greek coat of arms is a toilet with a maelstrom of 10^9 € credits disappearing down it at high angular velocity.

Mon, 06/18/2012 - 12:12 | 2536458 FXPortent
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The knife industry is a potential booming manufacturing job for the citizens of Greece. You know since stabbing harmless and underserving people is in vogue over there now...


As a Greek, it's a very unfortunate series of events to watch Greece go down this counter-intuitive path (as with the rest of Europe), they should all be ashamed of themselves in the old country.

Mon, 06/18/2012 - 12:13 | 2536464 delacroix
delacroix's picture

where's france on that chart?

Mon, 06/18/2012 - 12:22 | 2536491 123dobryden
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countries listed are only with avg.  penis length over 12cm

Mon, 06/18/2012 - 12:24 | 2536497 falak pema
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you make me feel sorry for the Irish women! 

Mon, 06/18/2012 - 12:13 | 2536465 Dr. Engali
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By holding this faulty system together they will be responsible for the wars that the system was put together to avoid. They need to recognize that it won't work as is  and either fully integrate or scrap it.

Mon, 06/18/2012 - 12:14 | 2536467 kridkrid
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I think the notion that a monetary union can't work without a fiscal union is a red herring.  What can't work, in the long run, is a monetary system based on credit/debt money and fractional reserve banking.  A system where virtually all money is loaned into existence with interest attached to that loan requires that debt be in a state of constant growth.  Pointing fingers as the pieces who carry the most debt is looking at the symptom, not the cause.  If the EU had a fiscal union, the same problems would still exist... look at the US, for example.  

Mon, 06/18/2012 - 12:17 | 2536474 Abraxas
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"The same Euro system that is slamming Greece, Portugal, Spain and Italy today — in the aftermath of bubbles caused by easy money flowing into these countries as a result of the introduction of the Euro — could (if it were to somehow survive)  do the same thing to Germany in ten or twenty or thirty years."

Actually, with a help of geometric progression it could happen to Germany much much sooner than that. The world is not linear, even though we sometimes think it is.

Mon, 06/18/2012 - 12:21 | 2536487 kridkrid
kridkrid's picture - Geometirc progression / exponential growth... explained.

Mon, 06/18/2012 - 12:17 | 2536478 Conman
Conman's picture

Old people were told that voting for Syriza meant double gas and food prices. Its no secret why they voted agaisnt syriza, they were scared into it like america was scared into a second term for dub-ya.

Mon, 06/18/2012 - 12:25 | 2536499 123dobryden
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well, there s nothing they can do against double gas and food prices, actualy sooner they get double the better

Mon, 06/18/2012 - 13:11 | 2536670 bagehot99
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Scared of what? I think you'll find Jon Carry was the one doing the scare-mongering. Because that's the Democrat/Socialist playbook - create a designated villain, etc. Two minutes hate, etc. It's as old as the fucking hills, but the stupid sheep that we allow to vote keep falling for it. Hence major American cities with 50 years of Democrat 'leadership' are shitty, dangerous sinkholes with useless schools, and nobody wanting to stay, but the public sector unions all have great pensions!! Socialists always do that. 

Mon, 06/18/2012 - 12:20 | 2536483 Patriot Eke
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Why would they vote to leave?  That's like a person voting to have their EBT card turned off.  It's not going to happen.  Once on the gravy train, people tend to try and stay on it!

Mon, 06/18/2012 - 12:28 | 2536507 Abraxas
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Perhaps, people are not always as stupid, lazy and cowardly as TPTB believe. Perhaps, they will realize that they are paying a huge price for come perceived comfort and convenience.

Mon, 06/18/2012 - 12:27 | 2536505 dizzyfingers
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Germans, run, run for your lives!

Mon, 06/18/2012 - 12:28 | 2536511 Kaiser Sousa
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Man fuck Greece and the Greek people themselves....Iceland gave those bitch ass debt slaves the blueprint but they still prefer 2b banker whore slaves instead free people....
fuck em...this shit is way past tired....
More Silver mother fuckas....

Mon, 06/18/2012 - 12:40 | 2536553 CrashisOptimistic
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For the 15 millionth time, Iceland didn't owe money.  Iceland's problem was not that they ran up debt with social services. 

Iceland's banks took gambles and lost, and the depositors in those banks' high rate savings accts lost their money.  Iceland got involved only because of FDIC like guarantees.

Mon, 06/18/2012 - 13:02 | 2536642 LawsofPhysics
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Just like all the big banks in the U.S.S.A. (which is also running up the debt- double wammy bitchez)

Mon, 06/18/2012 - 13:27 | 2536717 Kaiser Sousa
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Say it 16 million times and it still would b false....

"Once it became clear back in October 2008 that the island’s banks were beyond saving, the government stepped in, ring-fenced the domestic accounts, and left international creditors in the lurch. The central bank imposed capital controls to halt the ensuing sell-off of the krona and new state-controlled banks were created from the remnants of the lenders that failed."

and who were those intn'l creditors??????????????

Thanks but no thanks for the uneducation....

Mon, 06/18/2012 - 12:44 | 2536567 LawsofPhysics
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So the success story that is Germany actually re-invests its revenues in it's own people and it's own infrastructure. Imagine fucking that.

Possession is the fucking law, bitchez...


Mon, 06/18/2012 - 12:57 | 2536617 elwu
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"The same Euro system that is slamming Greece, Portugal, Spain and Italy today — in the aftermath of bubbles caused by easy money flowing into these countries as a result of the introduction of the Euro — could (if it were to somehow survive)  do the same thing to Germany in ten or twenty or thirty years."

Only if there were a bubble caused by money inflow into Germany. Which isn't.

Mon, 06/18/2012 - 13:58 | 2536823 Snakeeyes
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Greece is a snapshot of the USA. Athens, like Chicago, is the center of leftism/welfare statism. Just like Chicago, New York, Detroit, LA, etc., there would be no appetite for austerity, just demands for more spending.

That map of the Greek elections says it all!

Mon, 06/18/2012 - 14:05 | 2536853 Stuck on Zero
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The Euro is just a currency.  Let Greece and Spain declare bankruptcy and let the creditors take the loss.  If the creditors go under, reorganize them.  It's no different than having Illinois go under and having to reorganize.  Better shaking the faith in the system than shaking the faith in the currency.


Mon, 06/18/2012 - 15:00 | 2537019 carbonmutant
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Syriza is in the perfect position to act as a serious problem for any Greek government that does not want to renegotiate...

Mon, 06/18/2012 - 18:26 | 2537665 W10321303
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Whenever I hear an economist use the word “efficiency” (or “productivity”), I can guess with near 100% accuracy that he (it usually is a he, as I’ll explain below) hasn’t the slightest idea what he’s talking about. With rare exceptions, he is inappropriately applying an engineering term to an economic process he does not understand.

But if the only way to get the increased labor efficiency is to chop down all the trees, pollute the water, and destroy the view, then we might pause before concluding that this is really increased productivity. Sure, each labor input to the production process produces more corn, but that is a mismeasure of productivity if it also takes trees and water; further if the view matters to us then we have also mismeasured consumption.

So even in our little corn model we encounter problems in using the engineering concepts of productivity and efficiency. But the real world is infinitely more complex, and the corn model is entirely misleading as a description of capitalist production even aside from the greater complexity. First, production is typically highly social, the result of integrated processes involving dozens or hundreds of workers producing multiple products using the output of other dozens or hundreds of workers. As Sraffa put it, we’ve got a system of production of commodities by means of commodities, each of which was produced by social labor. And of course it is even more complex than that because labor (or, more technically, labor power) is itself a commodity produced by means of commodities.

So far as I can understand it, the BIG claim is that the market efficiency fairies will ensure enough new output is created by some combination of harder work by the 80 efficient workers plus some new jobs for some of the 20 less efficient workers so that welfare is not inflationary. However, in truth, the BIG proponents want to provide the welfare to all 150 members of the society so that no one is forced to work. But the efficiency fairies will ensure that sufficient corn is produced by the few who decide to continue to work so that the multitude who decide not to work can continue to consume at noninflationary prices.

Personally, I like the original term for capitalist, applied by thefather” of economics, Adam Smith, to the businessman: the undertaker”. Today, we mostly limit the term to the capitalist engaged in the business of death, but I think it is appropriate to reclaim the term for all our capitalists. It is the undertaker who does most of the bidding of the efficiency fairies—continually striving to weed out the inefficient, the unproductive, the unfit.

He proclaims himself to be the “job creator”, but as we know, a good undertaker—like Mit–is a job destroyer. That is what the Darwinian process is supposed to do: increase efficiency by destroying jobs.

New Economic Perspectives Skip to content

MMP Blog #51: The Efficiency Fairy and Inflation Goblins

Mon, 06/18/2012 - 18:29 | 2537669 dcb
dcb's picture

I'm not sure the parties that won, won!!!

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