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Javier E

'Already an Exception': Merkel's Legacy Is Shaped by Migration and Austerity - The New ... - 0 views

www.nytimes.com/...merkel-legacy-germany.html

Germany merkel history liberalism conservative conservatism

shared by Javier E on 06 Dec 18 - No Cached
  • Those contradictions rest at the core of the Merkel legacy
  • As German chancellor, Ms. Merkel oversaw a golden decade for Europe’s largest economy, which expanded by more than a fifth, pushing unemployment to the lowest levels since the early 1980s.
  • As the United States was distracted by multiple wars, Britain gambled its future on a referendum to leave the European Union and France failed to reform itself, Ms. Merkel’s Germany was mostly a haven of stability.
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  • But her decision to embrace more than a million asylum seekers unsettled that cozy status quo. Outside Germany, the austerity she and her longtime finance minister Wolfgang Schäuble imposed on debtor countries like Italy, Spain, Portugal and, especially, Greece sowed misery and resentment that fester to this day.
  • Some, like the former Greek finance minister Yanis Varoufakis, compare Ms. Merkel’s austerity politics to the Treaty of Versailles, which imposed punitive economic measures on Germany after World War I, humiliated the country and fanned the flames of populism.“This is now what is feeding the political beasts,”
  • Her modest and moderate governance style, absent ideology and vanity, is the polar opposite of that of the strongmen now strutting the world stage. Her Germany — that “vulnerable hegemon,” as the intellectual Herfried Münkler calls it — became a beacon of liberalism.
  • Merkel knows a different form of social and societal equality,” Mr. Gysi said, adding of her former center-left rivals: “That made her so much more open to adopting ideas from the Social Democrats.”
  • “Angela Merkel personifies the best Germany we’ve ever known,” said Timothy Garton Ash, a professor of European Studies at Oxford University. “She managed Germany’s rise to once again become Europe’s leading power. But she failed to prepare Germans sufficiently for what that means.”
  • Ms. Merkel has never been one for rousing speeches. (“We had those kinds of speeches 70 years ago,” Ms. Roll said. “Her lack of talent and interest in this department was a good thing.”)
  • She never boasted that Germany got what it wanted after summit meetings (though it mostly did). But as exports and domestic demand boomed, Germany prospered and so did Ms. Merkel’s popularity ratings.
  • Gregor Gysi, a fellow Easterner and political opponent from the Left party, said that spending half her life under Communism gave her a visceral thirst for freedom — but also made her more socially conscious than other Western conservatives.
  • But like her friend and ally President Barack Obama — America’s first black president, who was succeeded by President Trump — Ms. Merkel will be judged by what comes next
  • now in the third so-called grand coalition with the Social Democrats, Ms. Merkel’s habit of taking inspiration from (and credit for) their ideas has left the party a shadow of itself.
  • It has also opened her own party to challenges on its right flank, leaving room for the emergence of the nationalist Alternative for Germany, which capitalized on her decision on asylum seekers.
  • The French president François Mitterrand and his British counterpart Margaret Thatcher had both worried about a resurgence of “bad Germans.” Ms. Merkel’s greatest achievement, Ms. Roll said, was that “she came to represent the good Germans.”
  • “It won Germany incredible respect — this image of a friendly humanitarian Germany, a Germany that protects,” Ms. Roth said. “She marked that image.”
  • “German populism is perhaps not her child,” said Henrik Enderlein, the dean of the Hertie School of Governance in Berlin. “But it is a child of the Merkel era.”
  • “An Adenauer or a Kohl would have done it,” Mr. Fischer said. But Merkel, who had grown up behind the Iron Curtain and without the Western pro-European mind-set, “wasn’t there yet,” he said. “Her European conscience was not fully formed yet.
  • Was hers a European Germany, one that saw Europe’s interests as its own? Or a Germany that ultimately wanted a German Europe?
  • The real missed opportunity, observers say, was to use the crisis to propel a more far-reaching build-out of European Union institutions, which remain unprepared for the next financial meltdown.
  • If there was ever a time to make a bold push to complete the institutions of the eurozone, this was it, said Joschka Fischer, a former German foreign minister.
  • Even before the migration crisis arrived, the debt crisis provided a pivotal test for a chancellor at the helm of a newly dominant Germany.And it led to criticism that Ms. Merkel, while leading humbly, was no less the hegemon — prioritizing German interests; manipulating European Union institutions to Germany’s abiding benefit; turning southern countries into captive export markets; tightening the hold of German banks
  • “But she always made clear: ‘I don’t build deadly walls,’ ” he recalled her saying. “She grew up behind one.”
  • In Germany, too, politics has become noisier and nastier. Open sexism has entered the chamber with Alternative for Germany, said Ms. Roth, the vice president of the parliament.“Merkel has been the target of countless attacks, gendered attacks, sexualized dirt,” Ms. Roth said.
  • Some have begun to referring to Merkelism, a modest but steadfast liberalism built on consensus rather than confrontation, as a recipe for democratic governance in the 21st century. Others fear that Merkelism will disappear with her.
  • “She is so unvain that she does not overly care about leaving behind a blueprint for the West 4.0,” said Mr. Kornelius, her biographer. “She primarily wants to preserve what she can.”
  • She has prevented crises rather than carried out visions, Mr. Kornelius said, and has been reactive rather than proactive. “But that is incredibly valuable at a time when we are dealing with questions of our liberal order in an unraveling world — and with leaders like Donald Trump.”
  • Today, Ms. Merkel’s Germany can feel like a liberal island in a growing sea of illiberal forces. She has not changed — the world around her has.“She is already an exception today,” Mr. Knaus said. “I hope she is not a relic of an era that is coming to an end.”
  • “She was a catastrophe,” said Mr. Varoufakis, the former Greek finance minister, “and she will be missed, because who comes next will certainly be worse.”
Javier E

Opinion | It Doesn't Matter Who Replaces Merkel. Germany Is Broken. - The New York Times - 0 views

www.nytimes.com/...rmany-christian-democrats.html

merkel germany politics economics crisis

shared by Javier E on 07 Dec 18 - No Cached
  • The stability (and even monotony) associated with German politics under Ms. Merkel appears to be coming to an end. Her looming retirement marks a deepening crisis of the German political system that threatens not just the future of the country, but of the European Union.
  • Thirty years later, this society has vanished. Average real incomes declined for nearly 20 years beginning in 1993. Germany not only grew more unequal, but the standard of living for the lower strata stagnated or even fell. The lowest 40 percent of households have faced annual net income losses for around 25 years now, while the kinds of jobs that promised long-term stability dwindled.
  • on the surface Germany appears to be an economic success story. Its G.D.P. has grown consistently for nearly a decade; unemployment is at its lowest since reunification in 1989. In amassing trade surpluses, Germany has enjoyed several advantages: an advanced manufacturing sector; the ability to get primary products and services from other members of the European Union; and being in the eurozone, which effectively gives the country a devalued currency, making its exports more attractive.
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  • But the system has come at a cost. To maintain their competitive advantage in the global market, companies held down wages. Though for skilled workers in the export-oriented manufacturing sector pay remained stable, or even rose, less-skilled and low-wage workers suffered. This was made possible by decentralizing collective bargaining in the 1990s, which greatly weakened the power of unions
  • the erosion of the German social model in recent decades. Though never as socially inclusive as the Scandinavian countries, postwar Germany had a comprehensive welfare state and robust labor unions, ensuring that citizens from the lower strata could achieve a decent living standard and a bit of wealth through full-time employment.
  • full-time employment served as the foundation of social integration. The classic metaphor to describe this arrangement was coined by the sociologist Ulrich Beck in the 1980s: the “elevator effect.” It implied that though social inequality still existed, everyone was rising in the same social “elevator,” meaning that the gap between rich and poor wouldn’t widen.
  • Ms. Merkel, for all her power and influence, is just one politician. Germany’s new political crisis runs much deeper. It stems from an economic system that has resulted in stagnant wages and insecure jobs. The erosion of Germany’s postwar settlement — a strong welfare state, full-time employment, the opportunity to move up in the world — has created a populace open to messages and movements previously banished to the fringes.
  • The number of precarious jobs like temp positions has exploded. At the height of postwar prosperity, almost 90 percent of jobs offered permanent employment with protections. By 2014, the figure had fallen to 68.3 percent.
  • nearly one-third of all workers have insecure or short-term jobs. Moreover, a low-wage sector emerged employing millions of workers who can barely afford basic necessities and often need two jobs to get by.
  • Though the upper-middle class still enjoys a high level of security, the lower middle contends with a very real risk of downward mobility. The relatively new phenomenon of a contracting — and internally divided — middle class has set off widespread anxiety.
  • Germany today now resembles a bank of escalators in a department store: one escalator has already taken some well-to-do customers to the upper floor, while for those below them, the direction of travel begins to reverse. The daily experience of many is characterized by constant running up a downward escalator. Even when people work hard and stick to the rules, they often make little progress.
  • a majority of Germans welcomed the new immigrants, just over two million in number, who arrived in 2015. But significant sections of the lower middle and the working class disapproved. When ascent no longer seems possible and collective social protest is almost nonexistent or ineffective, people tend to grow resentful. This has led to accumulated dissatisfaction with the old major parties, the Christian Democrats and Social Democrats.
Javier E

Europe 'coming apart before our eyes', say 30 top intellectuals | World news | The Guar... - 0 views

www.theguardian.com/...-eyes-say-30-top-intellectuals

europe populism freedom

shared by Javier E on 25 Jan 19 - No Cached
  • “Abandoned from across the Channel and from across the Atlantic by the two great allies who in the previous century saved it twice from suicide; vulnerable to the increasingly overt manipulations of the master of the Kremlin, Europe as an idea, as will and representation, is coming apart before our eyes,” the text reads.
  • Rushdie told the Guardian: “Europe is in greater danger now than at any time in the last 70 years, and if one believes in that idea it’s time to stand up and be counted.
  • “The historical success of Europe made it easier to defend these ideas and values which are crucial to humanity all over the world,” he said. “There is no Europe besides these values except the Europe of tourism and business. Europe is not a geography first but these ideas. This idea of Europe is under attack.”
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  • Pamuk said the idea of Europe was also important to non-western countries. “Without the idea of Europe, freedom, women’s rights, democracy, egalitarianism is hard to defend in my part of the world.
  • The net result is likely to be a far more complex parliamentary make-up, delicate coalition-building, and a European parliament increasingly unable to pass legislation to deal with major challenges, such as immigration and eurozone reform.
  • the manifesto’s signatories said they “refuse to resign themselves to this looming catastrophe”. They counted themselves among the “too quiet” European patriots who understand that “three-quarters of a century after the defeat of fascism and 30 years after the fall of the Berlin wall, a new battle for civilisation is under way”.
  • Despite its “mistakes, lapses, and occasional acts of cowardice”, Europe remains “the second home of every free man and woman on the planet”, they say, noting with regret the widely held but mistaken belief of their generation that “the continent would come together on its own, without our labour”.
  • Pro-Europeans “no longer have a choice”, they say. “We must sound the alarm against the arsonists of soul and spirit that, from Paris to Rome, with stops in Barcelona, Budapest, Dresden, Vienna, or Warsaw, are playing with the fire of our freedoms.”
oliviaodon

"Germany Is Becoming More Normal" - The Atlantic - 0 views

www.theatlantic.com/...546323

germany change

shared by oliviaodon on 15 Jan 18 - No Cached
  • Angela Merkel is traditionally known as Germany’s “safe pair of hands,” but when government-coalition talks unexpectedly collapsed late Sunday night after just four weeks, her future as the country’s chancellor was suddenly in question.
  • A second option would involve a return of the Social Democrats (SPD), Merkel’s former “grand coalition” partner, to the government. While such a coalition would easily command a parliamentary majority, it’s one the center-left SPD ruled out in September after its poor showing in the country’s general election—which delivered its worst-ever result more than half a century—and one it rejected again Monday, reaffirming that it would rather have new elections altogether.
  • With Jamaica no longer an option, Germany is faced with three choices: The first is a minority government, formed by Merkel’s CDU/CSU party in coalition with either the FDP (which would leave the government 29 seats short of a majority) or the Greens (short 42 seats). Though that’s not impossible, Marcel Dirsus, a political scientist at the University of Kiel, told me this option would be alien to both Merkel’s leadership style and the country as a whole. “For historical reasons, Germans are very skeptical of minority governments because it reminds people of the Weimar period,” he said, referring to the post-World War I period between 1918 and 1933 known for its political instability. “For somebody like Angela Merkel, it’s not in her style of governing to run a minority government because she’s not exactly a big gambler.” And a minority government would certainly be a gamble for Merkel—effectively denying her the authority she needs to push through reforms both at home and within the eurozone. “She’s somebody who doesn’t just embody stability, but I think she also likes stability herself.”
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  • pro-business Free Democrats (FDP) party announced that it would no longer take part in coalition talks to form Germany’s next government. Though Merkel’s center-right Christian Democratic Union (CDU) party and its Bavarian Christian Social Union (CSU) sister party won the largest share of votes during the country’s general election in September, they failed to win enough seats to govern on their own.
  • This brings us to the last, and perhaps most drastic, option: new elections. But calling for new elections is hardly easy, nor would it be Merkel’s decision to make (though she said Monday that she would be open to the possibility if a coalition was not possible). Instead, the country’s Basic Law requires that German President Frank-Walter Steinmeier first nominate Merkel as chancellor, after which she would be required to earn a majority of votes in the German parliament, or Bundestag, before she could be reinstated. Only if she were to lose three attempts at such a vote would Steinmeier be able to
  • dissolve the Bundestag; then new elections would have to be held within 60 days. Though a recent poll found that 68 percent of Germans would favor of new elections if Jamaica coalition talks fail, it’s an option Steinmeier appears keen on avoiding, noting in a statement Monday that the parties’ responsibility to form a government “cannot be simply given back to the voters.”
  • “Germany is just becoming more normal. It would be a mistake to over-interpret what is happening. This is not Trump, this is not Brexit. Merkel is weakened, but she’s still in power. … Germany … [is] still very far removed from some of the things that we see around us.”
johnsonel7

Europe Confronts Coronavirus as Italy Battles an Eruption of Cases - The New York Times - 0 views

www.nytimes.com/...italy-coronavirus.html

coronavirus Italy crisis

shared by johnsonel7 on 25 Feb 20 - No Cached
  • CASALPUSTERLENGO, Italy — Europe confronted its first major outbreak of the coronavirus as an eruption of more than 150 cases in Italy prompted officials on Sunday to lock down at least 10 towns, close schools in major cities and cancel sporting events and cultural touchstones, including the end of the Venice carnival.
  • The perception of a rising threat was amplified on television channels, newspaper headlines and social media feeds across Europe, where leaders could face their greatest challenge since the 2015 migration crisis.
  • The Trump administration has barred entry to the United States by most foreign nationals who have recently visited China, where the virus first appeared and spread. Much of the world has adopted similar controls, but the virus has continued to spread, most notably to South Korea, where more cases have been recorded than anywhere else outside China, and this past week to Iran, where eight deaths have been reported.
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  • Fears that the city could be quarantined triggered a run on supermarkets. By 5 p.m. on Sunday, at least one supermarket had run out of fruit, vegetables, meat and nearly all canned food.Some of the customers wore masks, and they all seemed in a hurry to fill up their carts with whatever was left on the shelves.
  • At least five members of the hospital medical staff and several patients have been infected. Other persons who tested positive include the man’s pregnant wife, some friends, and others who spent time with them. The towns surrounding the ones where the man works and lives have been included in the shutdown.
  • Even China — with an authoritarian government that has locked down areas with tens of millions of people in an attempt to stamp out the epidemic — has struggled to contain the virus, which has no known cure.
  • The Italian state, which leads the third largest economy in the eurozone, has not inspired much confidence of late, as it has been consumed by internal machinations. But health experts said they were more worried because the Italian health ministry appeared to have moved aggressively to prevent an outbreak, to no avail.
mariedhorne

China Still Grew and Fueled Its Rise as Covid-19 Shook the Global Economy - WSJ - 0 views

www.wsj.com/...und-on-u-s-economy-11610967016

economy covid

shared by mariedhorne on 18 Jan 21 - No Cached
  • In 2020, China advanced its aspirations by simply emerging with its growth intact from a brutal year when a pandemic shook the world economy.
  • On Monday, Beijing said its gross domestic product rose 2.3% last year. While that is the weakest annual rate of growth since the Mao era, it was enough to make China the only major world economy to gain any ground at all last year, and accelerated its likely overtaking of the U.S. economy, economists say.
  • The World Bank projects the global economy to have pulled back by 4.3% last year, dragged down by a 7.4% contraction in the eurozone. The U.S., the world’s largest economy, is expected to have shrunk by 3.6%
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  • “We had a perfectly V-shaped recovery profile in China, whereas the U.S. looks more like a W,” said Michael Spencer, chief Asia-Pacific economist for Deutsche Bank. “It will have taken the U.S. a year longer than China to get back to the pre-Covid path.”
  • Forecasters now expect China’s economy to grow by another 8% or more in 2021, helping put it on track to overtake the U.S. as the world’s largest economy by 2028, as many as five years earlier than pre-coronavirus projections.
  • Without China’s contribution, says Homi Kharas, a senior global economics and development fellow at the Brookings Institution, the world economy would have shrunk by 5.7% last year, versus the roughly 4.3% pullback now expected by the World Bank.
  • With many of her competitors in Southeast Asia still grappling with their own factory shutdowns and supply-chain issues, Ms. Yang was able to claw away market share, helping Serenity Made finish 2020 with sales 30% higher than the year before.
Javier E

As Russia Chokes Europe's Gas, France Enters Era of Energy 'Sobriety' - The New York Times - 0 views

www.nytimes.com/...russia-gas-europe-france.html

energy france europe conservation crisis policy

shared by Javier E on 05 Sep 22 - No Cached
  • “We have been confronted with a series of crises, one more grave than the other,” Mr. Macron said in a televised speech to the nation late last month. “The picture that I’m painting is one of the end of abundance,” he added. “We have reached a tipping point.”
  • The national effort calls for businesses and individuals to embrace energy conservation by increasing car-pooling, lowering thermostats and shutting off illuminated advertising signs at night — to name a few — or face the risk of rolling blackouts or energy rationing.
  • The government has been spending lavishly — over 26 billion euros ($26 billion) since Russia’s invasion of Ukraine — to keep gas and electric bills affordable, and last week it announced that its cap on household energy bills would be extended until the end of the year. The moves to control energy costs, including the re-nationalization of the energy provider EDF, have helped give France one of the lowest inflation rates in Europe, at 6.5 percent. (The overall eurozone rate for August was 9.1 percent.)
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  • France would seem to be less vulnerable than its neighbors: It boasts the biggest nuclear energy arsenal of any European Union country, and is one of the least reliant on Russian natural gas. But France faces an energy crisis of its own, as its nuclear industry addresses cracks, corrosion and other troubles that have forced EDF to temporarily shut down 32 of France’s 56 nuclear reactors.
  • The outages at EDF, which is also Europe’s biggest electricity exporter, have sent France’s nuclear power output plunging to its lowest level in nearly three decades. In addition, France’s worst drought in 30 years this summer has lowered river levels, cutting supplies of hydroelectric power.
  • On Friday, wholesale electricity prices for 2023 in France set a record, surging past €1,000 per megawatt-hour. Many French companies and retailers buy their electricity with three-year contracts that are set to expire, meaning they will have to be renewed at peak prices.
  • In northern France, some high schools in Brittany will lower their thermostats, while the neighboring region of Normandy will experiment with using wood-burning furnaces for heat in some schools as an alternative to gas.
  • Without the cap, French inflation would be about three percentage points higher, the French statistics agency Insee said in a report issued Friday.
  • In recent days, the government issued announcements calling on the French to curb a range of activities, in hopes of collectively saving energy. Among them: refraining from running washers at night, keeping thermostats at 66 degrees Fahrenheit and increasing use of public transportation
  • Many municipalities outside Paris started closing swimming pools intermittently this summer to save money. Other cities are restricting public lighting, which can account for over 40 percent of electricity bills.
  • The town of Thouars in western France has been turning off streetlights from 10 p.m. to 6 a.m. since June and plans to replace bulbs with LED lighting. Strasbourg, a mid-size city on the German border, will close museums two days a week instead of one.
  • President Macron, who faced a stiff presidential election campaign in April that saw the far-right challenger, Marine Le Pen, gain ground by addressing French families’ worries over purchasing power, has focused on shielding households from rising energy costs.
  • “We need a radical change,” Ms. Borne said. “Everyone must ask themselves what they can do to consume less.”
Javier E

Best of 2023: The Decadent Opulence of Modern Capitalism - 0 views

www.tracinskiletter.com/...-of-2023-the-decadent-opulence

opulence capitalism modern economics US income class middle-class

shared by Javier E on 31 Dec 23 - No Cached
  • while we tend to focus on stories about everything that has gone wrong, in the long run, the bigger news always ends up being the impact of growth and innovation. But because we’re so pre-occupied with everything else, it tends to sneak up on us.
  • In the left’s view, market crashes and recessions reveal the real essence of the capitalist system. In reality, they are just temporary glitches and setbacks in a larger story of persistent innovation and growth.
  • new figures showing the widening gap in wealth between the US and Europe. Jim Pethokoukis describes it as a Doom Loop of Decline and attributes it partly to the impact of heavy European regulation.
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  • The basic driver is this: “Europe has an aging population that values its free time and social benefits over work and productivity. (This reduces labor force participation, innovation potential, and the economic growth of the continent.)
  • The eurozone economy grew about 6% over the past 15 years, measured in dollars, compared with 82% for the US, according to International Monetary Fund data. That has left the average EU country poorer per head than every US state except Idaho and Mississippi
  • If the current trend continues, by 2035 the gap between economic output per capita in the US and EU will be as large as that between Japan and Ecuador today
  • even in Smith’s figures, there is no Northern European economy that outperforms the US.
  • The US economy has grown 82% in fifteen years! Barring anything more than a mild recession, that means that we can expect the US economy to more than double by the time we hit 20 years from 2008. Isn’t that wonderful?
  • It’s not just a case of doubling the overall size of the economy. The increase in wealth has been widely distributed.
  • I was struck by a calculation by George Washington University’s Stephen Rose that he describes at a center-left newsletter called The Liberal Patriot
  • Deciding what is “middle class” versus “lower middle class” versus “upper middle class” is difficult, and every analysis sets up different cutoffs between these categories. But Rose sets a reasonable level, describing “upper middle class” as an income between $100,000 and $350,000
  • Using this measure, there was real growth in every rung of the economic ladder over the period from 1979 to 2019, with each ascending step having slightly higher percentage gain….
  • In brief, economic growth from 1979 to 2019 led more of the population to move up to higher social classes. As Table 1 shows, the bottom two categories—poor and near-poor plus lower middle class—went from a combined 49 percent to 29 percent
  • The size of the [core middle class] also declined, down from 39 percent to 31 percent over these years
  • These declines manifest themselves in a massive—and massively under-covered—growth of the [upper middle class], spiking from 13 percent in 1979 to 37 percent in 2019.
  • America has always thought of itself as a middle-class country. But we are rapidly becoming an upper-middle-class country
  • This is now the largest category, and at the rate we’re going, it will soon be an outright majority.
  • upper-middle-class people can afford more welfare-state spending, and they also have more access to education and, frankly, the luxury of agonizing over something other than our pocketbooks. It has been a long time since most Americans were concerned about how to put a roof over our heads, so we have moved on from “kitchen table” issues to concerns about values and status and self-image.
  • in this context, the Old Left welfare-state programs look, not merely unnecessary, but callous and cruel
  • the incentives created by welfare programs discourage work for the poor. But in a growing and thriving upper-middle-class country, this looks like a way to create a permanent underclass who are kept in poverty so we can congratulate ourselves on our compassion and generosity
  • some of this may also explain the right’s belligerent opposition to immigration. If we are becoming an upper-middle-class country, perhaps we are taking on some of the attitudes of a gated community that wants to keep out the riff-raff.
Javier E

Bernanke review is not about blame but the Bank's outdated practices - 0 views

www.thetimes.co.uk/...s-outdated-practices-drlv8vvn0

central bank UK policy history economics

shared by Javier E on 13 Apr 24 - No Cached
  • Bernanke’s 80-page assessment, the result of more than seven months’ work, is the most comprehensive independent analysis of a big central bank’s performance since an inflationary crisis hit the world economy in early 2022. He offers a dozen recommendations for change at the Bank, the strongest of which is for the MPC to begin publishing “alternative scenarios” that show how its inflation forecasts stand up in extreme situations, for example in the face of an energy price shock.
  • The review lays bare how the Bank and its international peers all failed to model the impact of the huge energy price shock that followed Russia’s invasion of Ukraine in early 2022, the disruption in global trade during the pandemic after 2020 and how workers and companies would respond to significant price changes.
  • In choosing Bernanke, one of the most respected central bankers of his generation, to lead the review, the Bank has ensured that his findings will be difficult to ignore. The former Fed chairman carried out more than 60 face-to-face interviews with Bank staff and market participants and sat in on the MPC’s November 2023 forecasting round to assess where the Bank’s forecasts and communication were failing short, from the use of computer models to the role played by “human judgment”.
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  • In his review, Bernanke compared the MPC’s forecasting record with six other central banks — in the Nordic countries, New Zealand, the United States and the eurozone — and found the Bank was particularly bad at understanding dynamics in the jobs market and had consistently forecast far higher unemployment, which had not materialised. Its other errors, on forecasting future inflation and growth, put it largely in the “middle of the pack” with its peers.
Javier E

Europe Has a New Economic Engine: American Tourists - WSJ - 0 views

www.wsj.com/...omy-american-tourists-f6112f78

europe tourism portugal greece

shared by Javier E on 21 Jun 24 - No Cached
  • the Mediterranean rush is turning Europe’s recent economic history on its head. In the 2010s, Germany and other manufacturing-heavy economies helped drag the continent out of its debt crisis thanks to strong exports of cars and capital goods, especially to China.
  • Today, Italy, Spain, Greece and Portugal contribute between a quarter and half of the bloc’s annual growth. 
  • While Germany’s economy is flatlining, Spain is Europe’s fastest-growing big economy. Nearly three-quarters of the country’s recent growth and one in four new jobs are linked to tourism
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  • In Greece, an unlikely economic star since the pandemic, as many as 44% of all jobs are connected to tourism. 
  • Can Europe’s emerging “museum economy” support sustained wealth creation and the expansive welfare systems Europeans have become accustomed to since the end of World War II? And what happens if the dollar falls and the tourists leave?
  • Rent and other living expenses are rising in hot spots, making it harder for many locals to make ends meet. A heightened focus on tourism, which turns a quick profit but remains a low-productivity activity, tethers these economies to a highly cyclical industry
  • It also risks keeping workers and capital from more profitable areas, like tech and high-end manufacturing. 
  • some economists, residents and politicians are concerned about the boom’s long-term implications.
  • “It is literally, for Americans right now, the place to go,”
  • The strong dollar—and a powerful post-Covid recovery—has empowered millions of Americans who would have vacationed in the U.S. before the pandemic. They are now finding they can afford a lavish European holiday.
  • One reason is the brutal sovereign debt crisis that hit the continent’s south especially hard just over a decade ago. Unable to stimulate demand with public spending or to energize exports by devaluing their currency—the euro, which is shared by 20 states—those countries could only boost their competitiveness by lowering wages.
  • “Your dollar goes a lot further,” Cross said over coffee in the lobby of her five-star hotel. “You don’t feel you’re scrounging as much.”
  • Tourism now generates one-fifth of economic output in Lisbon and supports one in four jobs. That boom has reverberated far beyond the capital.
  • Portugal’s gross domestic product grew nearly 8% between 2019 and 2024, compared with less than 1% for Germany,
  • The government recorded a rare 1.2% of GDP budget surplus last year, and its debt-to-GDP ratio is expected to fall to 95% this year, the lowest since 2009
  • Portugal’s population is growing again after years of decline, thanks in part to an influx of migrant workers and to various tax incentives and investor visas that have attracted high-income workers. 
  • Moedas, Lisbon’s mayor, says there’s room for further growth. For a city that doubles in size to around one million every day, including commuters, only around 35,000 are tourists, he said. “We are very far from a situation of so-called overtourism.”
  • The trend is part of a global readjustment following the Covid-19 lockdowns. Spending on travel and hospitality worldwide grew roughly seven times faster than the global economy over the past two years, according to Oxford Economics. That pattern is expected to continue for the next decade, though to a lesser degree.
  • Europe, especially southern Europe, has benefited more than many other regions. Though it is home to just 5% of the world’s population, the European Union received around one-third of all international tourist dollars—more than half a trillion dollars—last year. This is up roughly threefold over two decades, and compares with about $150 billion for the U.S., where tourism has been slower to rebound.
  • In Portugal, a country of 10 million that juts out into the North Atlantic from Spain, Americans recently surpassed Spaniards as the biggest group of foreign tourists. 
  • This and a real estate collapse that left hundreds of thousands of workers suddenly available made the region’s tourist industry ultracompetitive, much cheaper than Caribbean beach destinations and on a par with Latin American destinations like Mexico. 
  • Once an owner of TAP, Neeleman increased the number of direct flights to the U.S. eightfold between 2015 and 2020, adding major hubs such as JFK and Boston Logan, betting that would open up an untapped market. As bookings soared, other U.S. airlines followed. 
  • “It was actually comical, because I went from knowing no one who had been to Portugal to everyone telling me they were going to Portugal,”
  • For Gonçalo Hall, a 36-year-old tech worker, the influx of foreign cash that has transformed Lisbon has been overwhelmingly beneficial for the city. When he lived in the capital 15 years ago, he wouldn’t walk in the historic downtown after 8 p.m. It was “full of homeless people, not safe. Lots of empty and abandoned buildings,” he said. 
  • “The quality of life in Lisbon doesn’t match the prices. Even expats are leaving,” said Hall, who moved to the Atlantic island of Madeira during the pandemic and continues to work remotely.  
  • The average Portuguese employee earns around €1,000 a month after tax, or around $1,100 a month, and only 2% earn more than €2,000. A one-bedroom apartment in Lisbon can easily cost more than €500,000 to buy, or over €1,200 a month to rent. Rents in nearby cities are also climbing as people leave the capital, squeezed out as lucrative short-term rentals transform the housing market. 
  • Jessica Ribeiro, a 35-year-old sociologist, pays around €490 a month for an apartment that she shares with her ex-husband in a town close to Lisbon. Neither can afford to leave. Both make a little more than the minimum wage of €820 a month, and soaring rents mean it is impossible to find an apartment in the neighborhood for less than €700, Ribeiro said. 
  • “The harm that tourism has brought is infinitely bigger than the benefits,” Ribeiro said. “It sends people away from their place of work, making their lives much harder.” 
  • A frequent complaint from residents and housing advocates is that some of the boom’s biggest winners are American companies, from Airbnb to Uber, which often pay little tax in the places where they do most of their business.
  • Lisbon is cracking down on Airbnbs and increasing taxes on tourists, doubling the nightly city tax from €2 to €4, which should raise €80 million a year. Airbnb has paid Lisbon and Porto, Portugal’s two biggest cities, more than €63 million after entering into voluntary tax collection agreements with local officials. Moedas said he is considering “a bit more regulation” of the city’s many Ubers, whose drivers he said don’t always respect traffic rules. 
  • Around nine in 10 Airbnb hosts in Portugal rent their family home and almost half say the extra income helps them afford to stay in their homes, according to a spokesperson for the company. “Guests using our platform account for just 10% of total nights booked in Portugal, and we follow the rules and only allow listings that are registered with local authorities,”
  • Higher rents are forcing many businesses and cultural and social spaces catering to locals to close, according to Silva. “This is not an economy that is serving the needs of the majority of people,” she said.
  • Signs of discontent are bubbling up across the region. Tens of thousands of local residents marched in Spain’s Balearic and Canary islands in recent months to protest mass tourism and overcrowding. On Mallorca, activists have put up fake signs at some popular beaches warning in English of the risk of falling rocks or dangerous jellyfish to deter tourists, according to social-media posts.
  • Serving foreigners is difficult to scale up and is more exposed to economic headwinds. Like the discovery of oil, southern Europe’s new focus on tourism can crowd out higher-value activities by hogging capital and workers, a phenomenon some economists have dubbed the “beach disease.”
  • “Portugal isn’t an industrialized country. It’s just the playground of the EU,” said Priscila Valadão, a 43-year-old administrative assistant in Lisbon. She makes €905 a month and rents a room from a friend for €250 a month. “The type of jobs being offered…are restricted to a type of activity that really doesn’t enrich the country,”
  • For Europe’s policymakers, having people open hotels or restaurants is easier than incentivizing them to build up advanced manufacturing, which is capital intensive and takes a long time to pay off, said Marcos Carias, an economist with French insurer Coface. 
  • “Tourism is the easy way out,” Carias said. “What is the incentive to look for ingenuity and go through the pain of creating new economic value if tourism works as a short-term solution?”
  • Proponents say tourism attracts capital to poor regions, and can serve as a base to build a more diversified economy. Lisbon’s Moedas said he is trying to leverage the influx of foreign visitors to build up sectors such as culture and technology, including by developing conferences and cultural events. 
  • “Some extreme left parties basically say we need to reduce tourism,” Moedas said, but that is the wrong approach. “What we have to do is to increase other sectors like innovation, technology…. We should still invest in tourism, but we should go up the ladder.”
  • While Dias, the hotel owner, is diversifying into nightlife, he refuses to envisage a future where the sector would have to rely heavily on visitors from elsewhere.
  • More than one-third of highly qualified Portuguese students leave the country after graduating,
  • Even higher-paid technology workers have started decamping to cheaper places. 
  • Tiago Araújo, chief executive of tourism tech startup HiJiffy, has held on to his employees but says many of them have been moving out of Lisbon. The trend, which started during Covid, is now being primarily driven by the housing crisis.
  • In Athens, Mayor Haris Doukas says he is working on extending the tourist season, increasing the average length of stay and promoting specific types of tourism, such as organizing conferences and business meetings, to attract visitors with higher purchasing power. He’s also called for new taxes to help the city accommodate the millions of additional tourists thronging to the ancient capital.
  • If Americans stop coming to Lisbon, he said, “I don’t think we can charge this kind of [price] because we will have to go to Europeans, and the Europeans, they don’t have money.”
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