Romney takes his Political Inspiration from Europe’s Worst Mistakes

By William K. Black

One of Governor Romney’s criticisms of President Obama is that he “takes his political inspiration from Europe….”

Romney never gives specifics on this criticism.  The irony is that Romney (and Representative Ryan) “takes his political inspiration from Europe” and that the European policies they embrace have already proven disastrous in Europe.  Here are five examples:

  1. Austerity.  European austerity has promptly forced the Eurozone back into recession.  Romney, channeling Germany’s Prime Minister Merkel, claims that deficits are “immoral” and must be ended.  Austerity is pro-cyclical policy that makes recessions far more severe.  It has pushed several European nations into Great Depression levels of unemployment, which has reduced income and tax revenues and increased budget deficits.  The EU’s Stability and Growth Pact (an oxymoron designed by regular morons) produces instability and negative growth by banning EU nations from using effective counter-cyclical fiscal policies that have proven successful for decades in reducing the severity and length of recessions.
  2. Slashing working class wages.  Ryan is an implacable opponent of unions and wants to end the minimum wage.  Merkel is demanding the repeal of European laws protecting workers and is coercing the periphery to reduce working class wages.  Unemployment rates are roughly 25% in Spain and Greece and the unemployment rate for the young is nearly 50%.  The old sick joke is true again in Ireland – its leading export is the Irish.  Real wages in Europe has fallen and unemployment has increased sharply.
  3. Ryan wants to remove the Federal Reserve’s statutory mandate to seek full employment consistent with price stability and have it subject to a solitary mandate to maintain price stability.  That mimics the disastrous single mandate of the European Central Bank (ECB).   The ECB lacks the legal authority to help the nations of Europe respond to the worst economic catastrophe since the devastation caused by World War II.  It is an insane policy.  The ECB’s crippled mandate meant that our Federal Reserve had to intervene in Europe to save several European Central Banks from collapse, which could have led to a global depression.  Ryan wants to adopt a European policy that has proven grotesquely self-destructive.
  4. Romney wants to end any vigorous financial regulation.  He is inspired by the now infamous European “lite touch” regulation.  The United Kingdom (UK) epitomized lite touch regulation.  The failure of most of the UK’s largest banks, the Libor, HSBC, and Standard Chartered scandals and the allegedly rogue operation of JPMorgan’s Chief Investment Office in the City of London  constitute a record of failure and scandal without equal.  Romney and Ryan oppose any serious regulation of banking and call for the immediate repeal of the Dodd-Frank Act in its entirety and the re-adoption of European-style “lite touch” regulation.
  5. Romney’s lead economic advisor, N. Gregory Mankiw, continues to champion the regulatory “competition in laxity” that produced the “race to the bottom” that simultaneously destroyed effective financial regulation throughout the developed world.  This perverse dynamic has created the criminogenic environments that drive our recurrent, intensifying financial crises.  Mankiw is pushing the “need” for the U.S. to win that race to the bottom against the City of London.  The only way to “win” a race to the bottom is to refuse to race, but Mankiw takes his policy inspiration from Europe and the City of London.  Mankiw’s advice has caused Romney to ignore the recurrent disasters and the warnings of effective regulators, economists, and white-collar criminologists that his European-inspired anti-regulatory policies are criminogenic.

 

The truth is that Europe has some excellent and some terrible economic policies.  Romney and Ryan have shown an unerring talent for embracing Europe’s worst financial policies and denigrating its best policies.  What is amazing is that no matter how badly the European policies fail, Romney and Ryan ignore the failures and promise to drag us down the path to inevitable failure.  Romney and Ryan complain about unemployment in the U.S. while pushing Europe’s austerity policies that would massively increase unemployment, debt, and deficits in the United States.

5 Responses to Romney takes his Political Inspiration from Europe’s Worst Mistakes

  1. Is Randy or Warren going to write a piece for the Huffington Post?

  2. WOW.
    “New Economic Perspectives …Romney takes his Political Inspiration from Europe’s Worst Mistakes
    Posted on August 15, 2012 by Devin Smith | Leave a comment
    By William K. Black

    “One of Governor Romney’s criticisms of President Obama is that he “takes his political inspiration from Europe….”
    The truth is that Europe has some excellent and some terrible economic policies. Romney and Ryan have shown an unerring talent for embracing Europe’s worst financial policies and denigrating its best policies. What is amazing is that no matter how badly the European policies fail, Romney and Ryan ignore the failures and promise to drag us down the path to inevitable failure. Romney and Ryan complain about unemployment in the U.S. while pushing Europe’s austerity policies that would massively increase unemployment, debt, and deficits in the United States.”
    WE MUST ADD:
    …” Prof. Bill Black describes banks as becoming criminogenic and innovating “control fraud.” High finance has corrupted regulatory agencies, falsified account-keeping by “mark to model” trickery, and financed the campaigns of its supporters to disable public oversight. The effect is to leave banks in control of how the economy’s allocates its credit and resources.
    If there is any silver lining to today’s debt crisis, it is that the present situation and trends cannot continue. So this is not only an opportunity to restructure banking; we have little choice. The urgent issue is who will control the economy: governments, or the financial sector and monopolies with which it has made an alliance.” Michael Hudson (http://www.globalresearch.ca/index.php?context=va&aid=28938)
    To William Black and Michael Hudson, please, please do a paper together.
    Justaluckyfool, who of course is still merely a fool hopes and prays that togetther you make find the “flaw ” acknowledged in American Capitalism and make it known.This fool believes that to be
    “the power of banks to issue currency by a scheme that demands servitude” (Google “justaluckyfool”)

  3. Bayard Waterbury

    Professor Black, you are my hero. This wonderful article only fails by a tiny bit. It doesn’t identify why Romney and Ryan can do what they do, why Obama’s justice department and regulators won’t deal with Wall Street, etc., and why Friedman and Hayek’s failed ideas continue to proliferate. Simple. It’s the power of government by and for the rich and powerful. This is called Plutocracy. Wherever it has occurred historically, the ultimate result has been collapse (look at the USSR, France, ala 1789, etc.). Without election reform and manditory voting (like in Australia), it will continue, unabated.

  4. Mankiw led the charge against taking steps to address the financial collapse, stating there was no liquidity crisis. Of course there wasn’t, you schmuck; the problem was insolvency. Was and is.

    • As per Frederick Soddy (author,Noble Laureate) “Wealth, Virtual Wealth, and Debt” written in 1926 ,1933, he states since banks were allowed to issue money via credit they are and will always be insolvent.Since if ever everyone were to request conversion there would never be enought to give them.
      READ:
      http://archive.org/stream/roleofmoney032861mbp/roleofmoney032861mbp_djvu.txt
      THE
      ROLE OF MONEY
      Please, William K Black and Michael Hudson, just a foolish question:
      Does he not predict 2008 ? Caused by credit expansion? If so then does he state the cure is to make the lenders 100% liquid (solvent)?
      As “justaluckfool” (google) states, “Perhaps the answer lies in how you redistribute the wealth of a nation; as well as how you acquire it.”

      WHAT IT SHOULD BE,
      CONTRASTED WITH WHAT IT HAS BECOME

      By

      FREDERICK SODDY

      M.A. (Oxon) ; LL.D. (Glasgow) ; F.R.S. ; Nobel Laureate
      in Chemistry, 1921 ; Author of ” Science and Life ” ; ” Wealth,
      Virtual Wealth , and Debt ” ; ” Money versus Man ” ; etc.