Wednesday, 29 October 2008

Cross-Border Suicide is Tricky Terrain

A UK court reached an interesting decision today about the legality of transporting someone to another country for the purpose of assisted suicide. Assisted suicide is illegal in the UK, but the law is unclear about whether it is a violation of the law for someone to take an ill person to another country where assisted suicide is legal and do it abroad.

One such country is Switzerland, and a British woman suffering from MS has been seeking a ruling from the High Court that would clarify the law. She says that if she can be sure her husband won't be prosecuted for taking her to an assisted suicide facility in Switzerland, she wants to wait until the last stages of her illness, when she has lost all function, to be killed. She says if the law isn't clarified, she cannot take the risk that her husband could be prosecuted for transporting her to the facility in Switzerland, and she will have to take herself there, earlier in the stages of the illness when she can still get herself around without assistance.

Her legal argument is that the lack of clarity in the law is essentially forcing her to end her life earlier than she would like, while she could still lead a functioning and happy existance.

Though the practice is illegal, since 1992 almost 100 British citizens have had themselves killed at this facility in Switzerland, and the relatives who transported them there haven't been prosecuted. But the plaintiff, Debbie Purdy, says that she cannot in good conscience let her husband transport her to the facility if she knows there is a possibility that he could be prosecuted.

The high court as ruled that the law's lack of clarity doesn't infringe on Purdy's human rights, and it has concluded that only an act of parliament could clarify the law. Purdy's attorneys say she plans to appeal.

It seems a shame that this woman should have to spend what little time she has left on this earth dealing with a high-profile court case.

Friday, 24 October 2008

Austria's Far-Right Gay Secret: History Repeating?

The death of far-right Austrian politician Jörg Haider took an interesting twist today. The huge outpouring of mourning and sympathy which Haider's death inspired has received much press coverage in Europe over the past two weeks, but the biggest open secret about Haider has not - the fact that he was gay. That is until yesterday, when his lover of five years Stefan Petzner publicly acknowledged their relationship in a tearful confession.

What has followed has been some hesitation from European media about whether it is appropriate to cover the sexuality of Haider, who is married with two children, as a news story. The issue has been further complicated by the fact that his sexuality was hardly inconsequential in the details of his death. He died in a car crash driving home drunk from a gay bar he had been at with his lover. But before Petzner's televised admission, that detail was left out of all press reports in Austria. It's not hard to see why, when the reality of Haider's personal life are so inconsistent with the public image of the party he led - the far-right Alliance for Austria's Future (BZÖ). After his admission, Petzner was fired from his position as leader of the BZÖ. He had already attracted attention at Haider's funeral after television cameras caught him loudly weeping more than Haider's wife and two daughters combined. Petzner said in his interview that Haider's family was aware of their relationship.

The revelation has put the party into full damage-control mode, fearing that the news will scare off the core conservative voters in Southern Austria that make up the group's voters. The hugely popular Haider had recently led the party to great success, ushering in a victory scoring 8 percent in last month's general election. Now that this news might throw the party into disarray, there has been speculation it may merge with the populist Freedom Party (FPÖ). That merger would create the second-strongest political party in Austria.

So, the revelation about Haider's sexuality is hardly inconsequential. But still, Austrian media outlets have remained extremely hesitant to cover it. In fact, it was Germany's Bild newspaper that forced the details surrounding the circumstances of Haider's death into some of the Austrian press. Austria is one of the most conservative countries in Western Europe (many would say the most conservative) and has a particularly bad reputation for gay rights (though it does not have a form of civil partnership). The rest of the European media is full of criticism today for Austria's press, questioning why the country's media seemed to show such deference to the far-right leader in not reporting his homosexuality, which seemed to blatantly contradict the policy goals of his party. However the Austrian media has defended itself by pointing out that though the party's official platform demonized gays, Haider himself was never heard to utter any criticism of homosexuality amidst his attacks on foreigners and his praise for Nazis.

I can't help but wonder what effect all of this will have on the public perception of Austria in the rest of Europe, already badly damaged by the recent string of bizarre imprisonment cases, most notably the horrific tale of Josef Fritzel. That last case was also notable for the shocking way in which people 'looked the other way.'

Fascist leaders who lived secret gay lives while publicly condemning gay people to death is a familiar theme in Europe's history. As Austria slides further and further to the right, revelations such as these are bound to make people pretty uncomfortable, especially due to its almost creepy historical parallels.

Tuesday, 21 October 2008

Europe's Moment

The blog's been noticeably quiet the past week, apologies for that. I had two language exams for my French certification last week, and then this weekend I had a friend from London visiting. My life's been a lot busier than I thought it would be during this sojourn, non-stop French tests all week and then visitors from London on the weekends. It's fun though!

To answer the question I posed in my post last Monday, in the end the US did go ahead and follow Europe's lead on the bank buyout plan. It really has been an astounding thing to watch. Though it initially looked like the EU was stumbling in trying to devise a unified response to the crisis, over the past week that trend has been reversed and the EU has actually taken on a leadership role in the world's response to the crisis, with the United States following!

Perhaps one of the most surprising elements of the past week was to see UK prime minister Gordon Brown rise to the occasion and become the man of the hour. As BBC Europe correspondent Mark Mardell noted last week, Brown has suddenly become the leader of Europe, having devised the bank bailout plan which continental Europe shortly copied and then the United States followed. Though he initially failed to lead Europe with his first summit, French president Sarkozy's gung-ho 'throw everything at the wall and see what sticks' approach has actually served him well during this crisis. He was full of ideas when addressing the European parliament last week, saying the EU must lead in "overhauling capitalism." In fact it is Angela Markel - Germany's chancellor who is respected throughout Europe for her calm, steady and thoughtful leadership - who has really stumbled during this crisis, seeming almost erratic and lost. I couldn't help but smile when I saw Paul Krugman's piece in the New York Times last week praising Brown's leadership (on the same day that he won the Nobel prize, so it got lots of press). The UK had basically given up on Brown until last week. Now he's quickly rising in the polls, closing David Cameron's lead over him to single digits. As the saying goes, "cometh the hour, cometh the man." But how long will the praise last?

The new clout that the EU has during this crisis was in evidence at the Camp David meeting over the weekend. During this crisis the EU has some new clout and it is being wielded loudly by Sarkozy. The EU is, after all, now the world's largest trading block. And for the first time, the EU is being listened to seriously by an American president (albeit a lame duck one). Just to see the sight of a French president standing at Camp David and calling for regulatary overhaul of the world's financial system while the US president stands next to him was an amazing sight. And on his other side was European Commission president Jose Manuel Barroso, whose advice at the end of the summit that the world needs new rules and regulations and that these should be based on the European model, "not gung-ho liberalism." The fact that this is being taken seriously by the US shows how much things have changed in the past few weeks. Is this Europe's moment to take the reigns and devise a new global financial system based on European values? It seems suddenly, and unexpectedly, within reach.

Monday, 13 October 2008

Europe to Semi-Nationalize Banks - Will US Follow?

Perhaps it's appropriate that it is on Columbus Day that the Old World appears to be getting into gear. All I can say is wow. What a day in Europe.

In what can only be described as a veritable financial earthquake, the UK nationized its main banks, the Eurozone unveiled a massive bank bailout plan, and even Poland said it will have a plan in place to inject funds into banks. Across Europe, banks are going to be partly nationalized. And the US could shortly follow suit. Who would have thought they'd see the day?

After much angst over the past week over the EU's inability to come up with a coordinated plan, this morning an emergency summit of the 15 countries in the eurozone (the countries that use the euro), the governments afreed to offer guarantees for the troubled banks, commiting the national goverments to use public money to make sure no European bank is allowed to fail. The market responded well to the news. European trading closed up by the end of the day, and the euro jumped 1.1 percent against the dollar.

British Prime Minister Gordon Brown even stopped by to join the leaders in a show of good fath, even though the UK isn't on the euro. But even before he went, Brown had outlined specifics this morning on the plan for the UK to use public funds to bail out the ailing banks, as announced last week. This morning it was revealed that the UK would undertake a partial nationalization of the British banking system, with the government taking a majority share in Royal Bank of Scotland and Halifax Bank. Continental Europe will soon follow suit. This afternoon each government, from France to Germany to Portugal to the Netherlands, all announced the massive amounts of money they will each make available to buy stakes in their banks. It's a truly stunning development.

And just now Polish government officials said that that country is also coming up with a plan to partially nationalize its banks through funding. This may be an indication that tomorrow, when all 27 EU countries meet in Brussels, the non-Eurozone EU countries will sign on to the plan.

So is this the unified European plan that the markets wanted? Sarkozy was presenting it that way this morning, saying, "This is indeed a common action that we are taking." But the agreement is only a framework, with each government taking steps at a national level according to its own interpretation of what should be done. So far, for today at least, this seems to have been enough coordination to calm the markets, both in the US and Europe. But will it last?

Apparently the US Fed will meet tomorow and iron out the final arrangements for bank funding, and it is thought they may come up with a plan similiar to that announced today in Europe, where the US government would take controlling stakes in American banks. It is expected that if the 27 EU countries do reach a consensus tomorrow on the bank partial nationalization plan, they will also tomorrow recomend that the US follow suit. If the US follows the recomendation, it will be truly amazing. To think that this week the US could follow Europe's lead toward economic nationalization shows just how rapidly things are changing before out eyes. But right now it's anybody's guess what the US will announce tomorrow.

The long and short of all this? I am now a banking customer of the UK government. Amazing.

Wednesday, 8 October 2008

Britain follows with UK Bailout Plan

Those in the US who thought the $700 billion bailout package passed by the congress last Friday was extremely unusual might be reassured by seeing another bailout unveiled across the pond - a £500 billion ($870 billion) plan for the UK. But importantly, the British bailout plan is entirely different from its counterpart in the US. Here's why.

For starters, the £500 billion figure being used by the British media this morning is a bit misleading. Though all $700 billion of the US package will be coming directly from taxpayers, only £50 billion ($87 billion) of the UK plan is coming from taxpayers money. That part of the plan will be used by the government to partially buy out failing UK banks. This is where the plan differs significantly from the one in the US. The $500bn US taxpayer-funded bailout package will be used to buy the bad debt from the ailing financial institutions to clear up their balance sheets. The
£50bn UK taxpayer-funded bailout package will be used by the government to buy partial ownership in failing UK high street banks, the banks most people use to store their savings.

Additionally, because of the differences between the US presidential system and the UK parliamentary system, there is no doubt as to whether this bailout plan will become reality. It's definitely happening.

So where is the £500 billion figure coming from? Some news outlets have decided to include the other part of the plan, half of which is theoretical money being made available and the other half of which is just a larger injection than normal by the Bank of England into the money markets, in the headline. £200 billion will be coming from the Bank of England under its existing Special Liquidity Scheme. The Bank of England always injects money into banks under this scheme, although now it will be putting in much more money much faster. Additionally, the Government is making £250 billion "available" for banks to guarantee medium-term debt in a bid to encourage banks to start lending to each other again, although so far the banks have said they won't use it.

Brown said that the £50 billion investment by the taxpayers will yield a return on the investment, as is being claimed in the US. Like in the US, Brown seemed to be throwing the financial philosophy of the ruling government (in this case New Labour) out the window in order to urge the new plan. "This is not a time for conventional thinking or outdated dogma but for the fresh and innovative intervention that gets to the heart of the problem," he said this morning. This language perhaps struck more than a few people as unusual this morning, as that "outdated dogma" was developed and followed by Brown himself when he was chancellor under Tony Blair. Such quick philosophical rethinking echoes the language that has been being used in the US about the Anglo-Saxon model of free-market capitalism.

The two men said the government had been working on this plan for weeks, but has chosen to unveil it now because of the market meltdown which took place yesterday, in which the high street banks plummeted on the UK stock markets. My bank, for instance, lost 40 percent of its value in the course of yesterday, making me feel quite nervous about my savings. This morning's announcement seems to have had a small rallying effect on the UK markets - for now.

European Plan?

So now that the UK has become the first EU country to come up with its own bailout package unilaterally, does this mean any talk of a pan-European bailout fund is dead in the water? Not necessarily, said Brown. The prime minister also announced that the UK has put forward ideas this morning for a pan-European funding plan. Yet he still ruled out extending the UK's savings account guarantee to cover all deposits, even as other European nations are scrambling to do so.

The fact that Brown didn't have much else to say about a pan-European response probably means that coordinated action is unlikely, which may mean that his announcement does little to calm the European markets in the long run. The market turmoil over the past two days was largely in response to the fact that the EU seems to have disintegrated in response to the economic crisis, with each member nation taking drastic unilateral steps which seem to conflict with one another. As Swedish finance minister Anders Borg told reporters in Luxembourg yesterday, "One country's solution is another country's problem.'' Though Brown's announcement this morning may temporarily calm the British markets, it may send the continental European markets into even more turmoil, and by tomorrow the beneficial effect of the announcement for UK trading could be overtaken by continues fears about the lack of a coordinated Europe-wide response.

Monday, 6 October 2008

Merkel Goes it Alone?

The British media is reeling today from the surprise announcement from Angela Merkel yesterday that Germany would institute a full private bank savings guarantee, a decision which seemed to directly contradict what Merkel committed to on Saturday at the emergency summit in Paris. Though the leaders seemed to jointly criticize Ireland's decision last week to unilaterally guarantee all the money in its private banks without consulting the EU, Merkel has gone ahead and done exactly that for Germany the next day. It would now appear the question of whether there will be a cohesive EU-level response to the economic crisis is back on the table, and Saturday's meeting has been rendered irrelevent.

There is still great confusion over whether Merkel was just making a vague political commitment or an actual change i policy, but the news has thrown European governments for a loop. The fear in the UK is that if other EU countries are allowed to guarantee the full savings in private bank accounts (whereas the UK only guarantees 50,000 pounds - raised from 35,000 last week), it will mark an unfair competitive advantage for them and UK consumers will rush to move their money into foreign banks. Germany's decision has embolden other EU countries to do the same thing. Denmark shortly followed suit, and Greece has also stepped in to guarantee ts banks. Today Iceland is considering the same thing, and the Spanish government just announced that if there is no joint EU action, it will also act unilaterally to guarantee Spanish banks.

Given that Germany is Europe's largest economy, the decision by Merkel means that it is inevitable that all European countries will have to guarnatee the entire amount of its citizens' savings in private banks. Given that reality, many in the UK today were concluding that the only solution is a pan-European bailout fund. Liberal Democrat leader Nick Clegg told the Independent today that he supports a pan-European system of deposit guarantees. But how will British and German taxpayers feel about the idea of using their money to bail out Italian or Greek banks? They probably wouldn't be too enthused. But considering the fact that it is the Northern European banks that are collapsing at the moment, perhaps now is not the time for geographic snobbery.

Incidentally, there is increasing chatter that the current crisis could be exactly the bad medicine Europe needs to get its act together and put realy momentum behind the unification project, convincing EU citizens of the real, practical need for a stronger EU that can deal with such emergencies. In today's Brussels Blog, the Financial Times quotes one EU diplomat as saying today that the current emergency could have the same effect as the 1992 crisis in the European exchange mechanism has in, in the long run, consolidating support behind a single European currency. Similarly, the FT points out, it took the 9/11 terrorist attacks to prompt EU leaders into agreeing, at a summit just three months later, on the principle of a European arrest warrant.

The collapse of a big cross-border European financial institution could be just around the corner, and if this were to occur, no serious economist would be able to argue that rescuing the company is the responsibility of only the country in which that company happens to have its headquarters. But so far European national governments have been very resistant to the idea of creating a pan-European regulatory system.

European finance ministers are meeting tonight, and from the turmoil today it's clear that the market is hungry for some signal of a cohesive coordinated EU response. But with each country appearing to be unilaterally going forward and doing its own thing, it seems unlikely any such strong signal will emerge.

Saturday, 4 October 2008

Verdict Is In: Europe will Respond Nationally

It looks like the question I posed in yesterday's post has been answered. In a press conference just now over at the Elysee Palace, the leaders of the European countries in the G8 laid out a very general plan for dealing with the crisis in Europe, after meeting all day to figure out what to do. And the verdict in, Europe will go forward with reforms on a national level, and there will be little in the way of a EU-wide policy. Sarkozy had reportedly been seeking an EU bailout fund similiar to the one just passed in the US, but apparently Angela Merkel was very opposed to any such plan. So European Commission President Jose Manuel Barroso announced that the EU will temporarily relax its competition rules to allow individual countries to undetake sweeping changes such as Ireland's decision last week to guarantee deposits in Irish banks.

So in the end, it appears the leaders decided the EU was just not ready to deal with a crisis of this magnitude. They said that the response by individual EU nations would be "coordinated," but they were short on details of what that might mean. At the same time, they were very specific about what they will be calling for when they meet with the wider G8.

Friday, 3 October 2008

Europe's Economic Solution: National or Federal?

As the US Congress debates today over the new version of the bailout bill, Europe is also scrambling to come up with solutions to the crisis which, although not of their making, has come to their shores. Despite overconfident assurances even recently that Europe would be immune to the American economic plague, it is clear now that the old world will be affected and there is consensus - unlike in the US - that drastic government action will be needed. But who should take the action? Right now the big debate raging is this: should there be a coordinated EU-level effort to deal with the crisis, or should each country deal with it in their own way tailored to their own situation?

It is not a simple question, and goes well beyond traditional euroskeptic/eurofederalist divisions. With the way the EU is currently set up (and while it still runs on the pre-Lisbon Treaty system), it would likely not be able to act quickly enough for any kind of big pan-European action like the US's bailout bill. But on the other hand, if each county just does it's own thing it could result in chaos and conflicting actions, particularly for the countries within the Eurozone that use the same curency and are regulated by the European Central Bank.

The pitfalls with the 'every man for yourself' plan were already seen earlier this week when Ireland went ahead unilaterally in implementing a savings guarantee program for its banks (similiar to the FDIC in the US) without notifying Brussels. The EU was not too pleased about that, but Irish politicians said that consulting Brussels would have taken too long and the government needed to act quickly. However right after they did it other European countries, most notably the UK, filed objections, saying it gave Irish banks an unfair advantage over other ones. Many Irish banks operate in the UK and it is thought consumers might rush to move their money into UK-based Irish banks because their savings guarantee is higher.

On the other hand, other European governments have banded together to take action.
Fortis received its bailout from a coalition of Belgium, the Netherlands and Luxembourg, and France, Belgium and Luxembourg together bailed out Dexia. And there's been plenty of other activity, reflected in this chart from McLatchy-Tribune above.

The sense of urgency aroud this issue has grown incredibly strong as new data suggests that a recession could be near in Europe's major economies. French President Nicolas Sarkozyis holding a summit tomorrow here in Paris with the other European members of the Group of Eight (UK, Germany and Italy) to reach some consensus on the reforms that are needed. The idea is that they should present a united Europan front when they meet with the larger Group of Eight shortly. But some other EU countries are not too happy about being left out of this meeting, most notably Spain which now has a larger economy than Italy but is not in the G8.

Already the EU has laid out the regualtory changes it is going to make to improve supervision over European banks that operate internationally, but this won't do anything to bail out banks and other financial companies that may fail in the coming weeks. One of these future changes, for instance, will be a requirement that people who sell loan packages must hold at least 5 percent of the investment.

However this works out, one thing is clear. This is new territory for the EU. Of course, globally this situation is quite new and is on a scale that hasn't been seen since the 1930's. But in Europe in particular, there are new institutions and new relationships that haven't been tested like this before. Will the EU be able to deal with the crisis effectively? Or will the magnitude of the problem be too much for the fledgling international body to handle, and will the solutions have to fall primarily on the national governments?

Wednesday, 1 October 2008

Europe speculates on end of US 'Empire'

Watching the live coverage of the US house floor Monday night in Paris was a truly surreal experience. On my cable system I get both French and British news station, and every station from both countries was carrying live minute-by-minute coverage of the vote on the bailout package, waiting in suspense and watching the vote tally. When the bill didn't pass, there was absolute panic over here. The news anchors were absolutely shocked, as were the commentators.

It really underlined how much the European economy still depends on the American economy. As Angela Merkel pointed out yesterday, this crisis is a problem created by the United States, and the United States is the only one who can solve it. So Europe is now in the position of having to sit back and wait for the United States to take some action as it reels from a painful crisis that is not of its own making. As the saying goes, when America sneezes, the world catches a cold. But what happens when America refuses to take any medicine?