Posted 5:15 AM by Dil
December 07, 2003

Caught in the coils of Giscard's folly
Gisela Stuart MP was one of the 13 people who drafted the new EU constitution. She doubts the process, the motive and the final product
http://www.timesonline.co.uk/article/0,,2092-921964,00.html

Posted 5:14 AM by Dil
Very nice piece on MacShane - don't know exactly where he is, but he is forcefully pro-European.

http://www.guardian.co.uk/eu/story/0,7369,1109536,00.html

On the plane home I show Tony Blair extracts from Douglas Hurd's memoirs. In it, the former foreign secretary and an incarnation of British Torydom writes: "I saw the EU as a huge achievement compared to anything Europe has seen. By historical standards it was still young - imperfect and often irritating because we had not yet learned the art of working effectively together. Rhetoric had run ahead of achievement, but that was an argument for moderating rhetoric, not for abandoning achievement."

In Hurd's view saying "No" to Europe by opposing ratification of constitutional treaties like Maastricht was "foolishness" which would help "to bring about the nightmare which had always alarmed our predecessors: a continental union influencing British lives at almost every turn over which we had no control."

Posted 5:12 AM by Dil
http://www.timesonline.co.uk/article/0,,2-1081987,00.html
Reasons Blair may have changed on constitution

Posted 5:11 AM by Dil
France ends coal mining with tears but not a single protest
By John Lichfield in Paris
24 April 2004

The French coal miner, a powerful symbol of social revolt and industrial strength for more than a century, passed into extinction yesterday.

The last lump of coal was ceremonially carved last night from the La Houve mine near Creutzwald in Lorraine. An industry that produced 60 million tons of coal and employed 150,000 people as recently as 40 years ago has ceased to exist.

Although several smaller European countries have already stopped coal mining, France is the first of the world's large industrial powers to abandon production of what remains the world's second largest energy source.

Paris decided10 years ago to close its remaining mines, rather than compete with cheap, open-cast coal from other countries. The last shipments of French coal cost €130 (£86) a tonne to extract. Coal imported from Australia costs €40 (£26) a ton, including transport costs.

French coal miners, once numbering 300,000, built a fearsome reputation as the spearhead of social revolt and the champion of workers' rights - illustrated by Emile Zola's novel Germinal, based on the strikes in the northern coal fields in the 1880s. The last pit closed yesterday with nostalgic ceremonies but not a single protest.

By agreement with the unions, all redundant miners are paid 85 per cent of their salary until they are 45 and then 80 per cent until they reach normal retirement age. They keep their free homes and generous health and other social benefits.
http://news.independent.co.uk/europe/story.jsp?story=514677

Posted 6:06 AM by Dil
MPs want tougher checks on tax fraud
By Andrew Sparrow, Political Correspondent
(Filed: 13/01/2004)


The Inland Revenue should investigate tax evasion more rigorously because fraudsters probably believe "the chance of being caught is remote", MPs say today.



In a critical report, the Public Accounts Committee suggests that the taxpayer could be losing billions of pounds a year because tax fraud is not being investigated thoroughly enough.

The Inland Revenue spent £428 million investigating non-compliance in 2001-02. It investigates between 400 and 450 serious fraud cases a year. But the Department for Work and Pensions prosecutes 12,000 people for benefit fraud annually, achieving a 98 per cent conviction rate.

Urging the Inland Revenue to tackle the problem more aggressively, the MPs point out that the Revenue has failed to produce an official estimate of the "tax gap" - the amount of money lost through fraud.

One study showed that about five per cent of income tax self assessment revenue was being lost through non-compliance, costing the taxpayer £2.5 billion a year.

Self assessment accounts for roughly a quarter of the money collected by the Revenue. In 2001-02 its total receipts were £214 billion, suggesting that the overall amount lost through fraud could be much higher than £2.5 billion.

"To those contemplating fraud the chances of getting caught could appear minimal, since the Revenue carry out only 400 serious fraud investigations and 60 prosecutions a year on a customer base of more than 30 million," the MPs say.

In 2003-04 the Revenue will be responsible for distributing £15 billion to low-income claimants in the form of tax credits and the MPs suggest that it should be doing more to investigate fraud in this area.

Edward Leigh, chairman of the committee, said: "With only 400 serious fraud investigations a year against 30 million customers, those contemplating tax fraud may well calculate that the chance of being caught is remote. I urge the Revenue to step up its fraud investigation work."

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2004/01/13/ntax13.xml&sSheet=/portal/2004/01/13/ixportal.html&secureRefresh=true&_requestid=149957

Posted 8:04 AM by Dil
Peter Kellner's Column


How to Persuade the Public to Love the Euro
Date Posted: Wednesday, June 11, 2003
In announcing that conditions are not yet right for Britain to join Europe’s single currency, Gordon Brown also gave the clearest sign yet that the single currency would be good for our economy in the long term. What, then, must be done to win over a still-sceptical public? In the immediate aftermath of the Chancellor’s June 9 announcement, YouGov surveyed more than 1,800 electors for The Daily Telegraph.

Although voters still divide almost two-to-one against joining the euro “if a referendum were held soon”, other figures show that, looking further ahead, public opinion is more divided. 46% agree with the argument advanced by Tony Blair and Mr Brown, that “it would be in Britain’s long-term national interest to join the single currency if the economic conditions are right”. 44% disagree.

So the biggest task of persuasion, ahead of a future referendum, is to show that the economic conditions have come right. What would this involve?

YouGov’s latest survey confirms the importance of Mr Brown’s own position. We asked: “Looking ahead, whose judgement do you think is likely to be better on the question of whether Britain should join the euro – Tony Blair’s or Gordon Brown’s?”

55% opt for Mr Brown, only 12% for Blair. (33% say “don’t know”.) As might be expected, Mr Brown holds a vast lead among people who are currently opposed to joining the euro.

What is striking is that Mr Brown also holds a large lead among those who would currently vote FOR Britain to join the euro. 52% of this group say they have more trust in the Chancellor; only 22% prefer Mr Blair.

These are the people who might be expected mainly to choose Mr Blair, as he is on their side in the euro debate. However, barely one in five of them do so. This is remarkable, and potentially extremely significant. It suggests that something more is going on than simply the views of Labour’s two top ministers on the single currency itself.

It seems that the Prime Minister is suffering from a general decline in public trust – a combination of, one the one hand, the arguments swirling around Iraq, the intelligence services and Iraq’s weapons of mass destruction; and, on the other hand, Labour’s perceived failure to provide better schools, hospitals and public transport.

Against that, the Chancellor is still credited for running a strong economy. He is widely regarded as a successful minister. Because of this, many voters would be willing to accept the merits of joining the euro from him – but would be wary of accepting the same message from the Prime Minister. Bluntly, Mr Blair cannot win a referendum without Mr Brown’s enthusiastic support. This means that, as long as the Mr Brown continues to want to resist joining the euro, the Prime Minister would risk making a huge mistake were he to insist on his constitutional right to overrule his Chancellor.

What, though, if Mr Brown did change his mind? Our survey shows that a referendum would then be winnable – but that victory is far from inevitable. A number of specific public fears would then have to be overcome.

The nature of these fears becomes clear when one looks at the results of a pair of questions about the possible long-term consequences of joining the euro. We gave respondents a list of ten possible advantages, and a parallel list of ten possible disadvantages, and asked to pick out all those the apply.

The first point is that most people picked more disadvantages (4.5 on average) than advantages (3). The second point is that the issues that have the biggest impact on daily life – jobs, prices, taxes and mortgage rates – figure more prominently on the disadvantages list. Thus 55% list “higher prices” as a likely disadvantage, while only 15% cite “lower prices” as a likely advantage.

Likewise, 50% fear higher taxes, while just 7% anticipate lower taxes. 31% pick out dearer mortgages as a downside; just 19% look forward to cheaper mortgages. 33% fear job losses; 22% hope for more jobs.

These are fears that any pro-euro campaign will have to work hard to overcome. I doubt it can be done quickly. The prospects of Britain joining the single currency before the next general election look remote in the extreme.
http://www.yougov.com/yougov_website/asp_besPollArchives/bes_kelMain.asp?aId=558&sID=2&wID=0&UID=

Posted 7:12 AM by Dil
ZEIT - article Dec 31 2003

euro

Amerika bangt um Kredit

Die Stärke des Euros liegt an der Schwäche des Dollars

Von Robert v. Heusinger für ZEIT.de


Der Euro ist auf Rekordkurs. Unaufhaltsam steigt die Gemeinschaftswährung. Im Dezember gab es kaum einen Tag ohne neuen Rekord, zuletzt lag er bei 1,2436 Dollar je Euro. Das ist auch in alter D-Mark-Rechnung immerhin ein Siebenjahreshoch. Doch es lohnt nicht, in Europa nach Gründen für den Kursanstieg zu suchen. Die gibt es nämlich nicht. Die Wahrheit ist tragischer: Es handelt sich um eine ausgeprägte Dollarschwäche.

Die ausländischen Investoren sind nicht länger bereit Amerikas exzessiven Konsum zu finanzieren. Das Finanzkapital meidet den Dollar und setzt ihn so unter Druck. Fast 50 Milliarden Dollar Zuflüsse von außen brauchen die Amerikaner Monat für Monat, um weiter über ihre Verhältnisse leben zu können, sprich mehr ausgeben zu können, als sie im Inland erwirtschaften (Ökonomen nennen den Saldo „Leistungsbilanz“). Dabei ist es egal, in welcher Form das Geld ins Land kommt, über Investitionen in US-Aktien, in US-Staatsanleihen oder als Direktinvestition.

Sechs Monate in Folge ziehen die ausländischen Anleger nun schon Geld von der Wall Street ab, obwohl die Kurse steigen - allerdings nur in Dollar gerechnet. Zum Glück gibt es die asiatischen Zentralbanken, allen voran die japanische und chinesische. Sie sorgen mit Staatsgeld noch dafür, dass der Dollar nicht kollabiert. Sie subventionieren den Dollar, damit ihre Exportgüter nicht teurer werden. Und das geht so: Die asiatischen Notenbanken verhindern per Intervention am Devisenmarkt ein Nachgeben des Dollar gegenüber Yen, Renminbi oder Hongkong-Dollar. Sie kaufen mit dem eigenen Geld unbegrenzt Dollar auf und legen sie in US-Staatsanleihen an. Das verhindert einerseits den ultimativen Dollar-Crash, anderseits hält es die Zinsen auf US-Anleihen schön niedrig.

Die internationalen Investoren haben dieses Spiel durchschaut. Sie wissen, dass das Leistungsbilanzdefizit nur noch durch öffentliches Geld gedeckt ist. Irgendwann werden auch die asiatischen Zentralbanken aufhören, Amerika unbegrenzt Geld zu geben, fürchten sie. Dann droht Ungemach.

Denn eins ist klar: Das Leistungsbilanzdefizit ist zu hoch. Es beträgt rund 5 Prozent des Bruttoinlandsproduktes (BIP). Keine reife Volkswirtschaft hat je so kräftig über ihre Verhältnisse gelebt. Die Analysten von Deutscher Bank Research haben mal nachgerechnet, was passieren muss, damit das Leistungsbilanzdefizit in fünf Jahren auf 3 Prozent des BIP schrumpft. Entweder muss der Dollar gegenüber allen Währungen - auch gegen Yen und Renminbi - um weitere 30 Prozent abwerten. Der Euro notierte dann oberhalb von 1,60 Dollar. Oder: Der Dollar verharrt auf seinem heutigen Niveau, dafür muss aber der Rest der Welt Jahr für Jahr mit utopischen 6,5 Prozent wachsen, Amerika selbst aber nur mit jährlich zwei Prozent. Diese Szenarien skizzieren den mühsamen Anpassungsprozess für die Weltwirtschaft. Dabei weiß niemand, ob drei Prozent Leistungsbilanzdefizit langfristig überhaupt durchzuhalten sind, oder es noch kleiner werden muss. Sicher ist nur, es wird zu einem Mix aus Abwertung und langsameren Wachstum in den USA kommen, will man den Krach vermeiden.

Für Euroland und vor allem Deutschland heißt das, dreierlei: Erstens, die Aufwertung des Euro ist noch lange nicht beendet. Darunter werden die Exporte kräftig leiden. Zweitens muss die Europäische Zentralbank die Zinsen weiter senken, damit der beginnende Aufschwung nicht gleich wieder über den Export abgewürgt wird. Im Notfall muss sie auch Dollar kaufen um den Krach abzuwenden. Und drittens müssen die Regierungen endlich mehr für Wachstum tun, endlich die Nachfrageseite der Volkswirtschaft stimulieren - auch wenn das nicht in die herrschende Wirtschaftsideologie passen mag. Strukturreformen wie sie zur Zeit in Deutschland umgesetzt werden, bringen kurzfristig gar nichts. Sie verunsichern nur, führen zu geringerem Einkommen und Konsumzurückhaltung. Aber genau das Gegenteil ist in dieser kritischen Situation vonnöten: Mehr Konsum durch Steuersenkungen, höhere Renten oder mehr Kindergeld und gleichzeitig mehr öffentliche Investitionen - und zwar schnell.

Sicher ist: Der Dollar wird noch viel weiter fallen. Unsicher dagegen, ob er die europäische Wirtschaft mit in die Tiefe reißt. Eine mutige Geld- und Fiskalpolitik kann das verhindern.

Posted 4:10 PM by Dil
WHAT ABOUT UK RATHER THAN EU PENSION PROBLEMS?

FRS17 to reveal £100bn hole in NHS pensions
By AccountancyAge.com [11-08-2003]

The controversial pension accounting rule FRS17, which has revealed massive deficits in UK company pension schemes, is set to do the same to the National Health Service.
Link: FRS17 special report
Now taxpayers are likely to have to cough up to cover the cost of pensions owed to 1.3 million civil servants at the NHS, estimated as being equivalent to the revenue from 5p on the basic rate of income tax.

And it could even be worse, according to Charles Cowling, worldwide partner at William M Mercer actuaries, the NHS pensions bill could be as high as £125bn.

He told The Times: 'Before the accounting change the government was simply reporting the cash cost of paying benefits each year, not the cost of the benefits it is storing up for future generations to pay.'

FRS17 takes a snapshot of company pension schemes' assets and liabilities.




NHS shortfall to swallow 1p of income tax
By James Mawson
07 December 2003


The Government is to pour £3.4bn into the pension scheme for NHS employees to try to deal with a shortfall that has soared to nearly £110bn.

The Treasury is being forced to set aside the equivalent of a penny on income tax because the cost of payments to existing pensioners in western Europe's largest public service pension scheme, which has nearly two million members, has risen by 50 per cent in the last five years.

Including employee contributions, the pensions bill in 2004-05 will be about £5bn, compared to this year's £3.5bn. The total NHS budget was forecast to be £68.7bn in the next financial year and typically two-thirds of the budget is swallowed by staff costs.

Christopher Daykin, the government actuary, has identified £109.3bn of NHS pension liabilities, up from £71.3bn five years ago. As this is a long-term estimate, it has not been taken into account in the public sector borrowing requirement, although the annual contributions are part of the overall NHS budget, according to the Treasury.

Without fanfare, the Treasury has sharply increased the amount of money being paid into the scheme. It pays a direct contribution of 7 per cent of NHS salaries to the pension scheme.

However, the amount paid by the NHS employers, which also comes from the Government, has been increased to 7 per cent, up from 4 per cent in 2000. Most employees pay 6 per cent.

The Treasury's direct payments had been a concealed subsidy to the NHS. In future, all this money is to come out of NHS employers' budgets. The Treasury, via the Department of Health, will provide a matching increase in funding to the NHS Trusts above that set aside by the Chancellor, Gordon Brown, in the last spending review.

A Treasury spokesman said this accounting move was to "rationalise and improve, not to shift long-term liabilities or immediate payments".

However, the Department of Health, in a background briefing, said NHS employers would have the freedom to vary the way they do things within their budgets, of which pensions, as deferred pay, is one element. None of the trusts contacted would comment on the changes.

A review of the pension scheme is also under way.

One proposal, which Unison, the main union, opposes, is to increase the retire- ment age from 60 to 65. The review is likely to be finished in 2005.

Pat Corless, the interim chief executive at the NHS Pensions Agency, which administers the scheme, said: "We are at a preliminary stage and are consulting widely whether we need a totally new scheme or just a tweak to the existing one."

Posted 4:44 AM by Dil
Euro steadies ahead of ECB rate decision
By Gordon Smith
Published: December 4 2003 11:04 | Last Updated: December 4 2003 12:21


The recent rally that has pushed the euro to record highs against the dollar ground to a halt on Thursday as caution set in ahead of the interest rate decision from the ECB.


The single currency crept back above the session lows by midday in London after falling half a cent in Asian trade. A report in the Daily Telegraph suggesting the European Commission was planning measures to limit the single currency's rise, halted euro's recent rise to lifetime highs.

The report suggested that Pedro Solbes, EU Commissioner for Economic and Monetary Affairs, had commissioned a report to study whether Brussels could legally impose "quantitive restrictions" on capital inflows into the eurozone.

But the euro selling eased after analysts dismissed the reports as "spurious" and the European Commission called the claims "completely groundless". By midday in London the euro stood at $1.2063 above the $1.2050 level tested in the Asian session.

"We believe any moves [currency controls] would be a step back to the 1970s and we don’t believe the EU will take these draconian measures," said Paul Robson, a strategist a Bank One.

"The ECB will take a three-step approach to limiting euro gains. First, it will talk about the effects of a strong euro on exports and the eurozone recovery. Second, interest rate cuts will be back on the aganda to stimulate demand and only after these two measure have been taken would the EC consider using currency control measures to stem the rise of the euro."

Mr Robson suggested European policy makers would grow nervous if the euro reached the $1.25 level but said it was the speed of the rise rather than the rise itself that worried officials. His 12-month target for the single currency is $1.30.

The single currency closed at $1.2108 against the greenback in New York on Wednesday after hitting a new record high of $1.2128 in European trade. The fragile eurzone recovery has been put in doubt by an increase of more than 20 per cent for the euro against the dollar in the past twelve months.

After the initial flurry trade slowed as investors waited for an interest rate decision from the European Central Bank due at 1245 GMT. The central bank is expected to leave its main refinancing rate unchanged for a sixth month at 2 per cent.

Traders said investors were also cautious ahead of key employment data from the US on Friday. The monthly non-farm payrolls figure is expected to show first-time unemployment claims continue to fall. Later on Thursday the weekly jobless figures are expected to confirm that the US economy is continuing to create jobs.

Sterling weakened against the dollar after the Bank of England decided to leave its key lending rate unchanged at 3.75 per cent. Shortly after the decision the pound stood at $1.7218 against the dollar after closing at $1.7244 on Wednesday.

Sterling hit a five-year high against the dollar in the previous session as figures showing US productivity grew at its quickest rate for 20 years failed to stem the decline of the greenback.

Posted 4:22 AM by Dil
Brussels considers imposing currency controls
By Ambrose Evans-Pritchard in Brussels (Filed: 04/12/2003)

The European Commission is examining the legal basis for 1970s-style exchange controls to stop the euro surging to destructive levels.

A team working for Pedro Solbes, economics commissioner, claims Brussels may lawfully impose "quantitative restrictions" on capital inflows, clearing the way for a crisis response if the dollar continues to fall.

The document, drafted last month on the orders of Mr Solbes's director-general, Klaus Regling, concludes: "Should extremely disturbing capital movements endanger the operation of economic and monetary union, Article 59 EC provides for the possibility to adopt restrictive measures for a period not exceeding six months."

Any decision would be taken by EU finance ministers under qualified majority voting, leaving Britain with no veto.

The move came as the euro hit highs against the US dollar, touching 1.2125 yesterday before closing at 1.2109. It has gained 42pc in less than two years.

The euro-zone has borne the brunt of the global realignment. The Chinese yuan is pegged to the dollar, while Japan has capped the yen by buying US bonds.

Industry leaders in Germany and France say the euro has crossed the "pain threshold" and risks aborting the euro-zone's fragile recovery. The latest survey data shows a renewed fall in confidence among French consumers and German retailers.

Jean-Philippe Cotis, the OECD's chief economist, said further appreciation posed a "great danger" to the euro-zone.

It is widely assumed EU law guarantees the free movement of capital but, after combing through the treaties and court judgments, EU experts have concluded that this "absolute freedom" can be limited in an emergency.

"Among the actions that can be undertaken when a member state experiences serious balance of payments difficulties, Articles 119 and 120 EC provide for the possibility to reintroduce 'quantitative protective measures' against third countries."

The document is is annexed to the Commission's 2003 EU Economic Review, released quietly last week. Some officials in Brussels, Berlin, and Paris believe the Bush administration is engaged in a "beggar-thy-neighbour" currency war.

Strong factions within the French and German governments want the European Central Bank to counter the "easy credit" policy of the US Federal Reserve with aggressive monetary expansion in Europe.

Faced with stubborn resistance from the anti-inflation hawks at the ECB, they are instead eyeing exchange rate policy as a means of imposing their will.

While capital controls are viewed as the "nuclear option" if all else fails, the collapsing dollar is rapidly bringing the issue to a head. A senior EU official told the Daily Telegraph that an exchange rate of 1.35 against the dollar is a likely trigger.

It is unclear where such a decision would leave Britain. While treaty law does not allow controls between EU states, any restrictions on dollar inflows into the euro-zone would create a legal nightmare and play havoc with the City of London.

Oliver Letwin, the shadow chancellor, said: "It is utterly risible for the EU to take a step back in time and pretend it can effectively control global capital markets."

The European Commission said there were no plans to impose exchange controls. "It's utter rubbish. The fact that we have carried out a study doesn't mean we are going to do it," said a spokesman.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2003/12/04/cneu04.xml&menuId=242&sSheet=/portal/2003/12/04/ixportal.html&secureRefresh=true&_requestid=68120

Posted 1:56 PM by Dil
December 01, 2003

The age of the dollar is ending in a sea of debt
William Rees-Mogg

I have sometimes written about international terrorism and sometimes about the world’s monetary system. I am sure that more people actually read what I write about terrorism. Yet the world monetary system is the more important subject of the two. The breakdown of monetary order would be a far greater threat to the wellbeing of readers of The Times.

These historic processes take decades to complete themselves. Nevertheless, the era of dollar hegemony, which started in 1945, seems now to be coming to an end, just as the era of the gold standard came to an end when Britain went off gold in 1961. The present danger is that the world’s central banks may lose control of the coming transition.
http://www.timesonline.co.uk/article/0,,482-914835,00.html

Posted 12:47 PM by Dil
On firmer ground without Stability

William Keegan
Sunday November 30, 2003
The Observer

Farewell Stability and Growth Pact! Welcome to the evolving Growth and Stability Pact.

The nomenclature of the pact has caused endless confusion since birth. When European finance ministers agreed in 1996 on the need for a fiscal framework to reinforce the powers of the future European Central Bank, they called it the Stability Pact. The words and 'and Growth' were added later, at the Amsterdam European Council of 1997 - the one at which Tony Blair rode a bicycle. They were added because the French were concerned to inject a 'political element' into the interpretation of the pact.

Never forget that one French motive for supporting creation of the Eurozone was the belief that they could thus dilute what they regarded as the baleful influence of the German Bundesbank on monetary policy - ie, interest-rate decisions - on Europe. The Bundesbank hit back by insisting, during the crucial negotiations over the Delors report of the late Eighties, that the new European Central Bank (at that stage it was even being talked about as the EuroFed) should be even more orthodox and counter-inflationary than the Bundesbank itself.

The French were therefore desperate - rightly - for something to suggest that the new arrangements would not be too 'monetarist'. After much huffing and puffing, the Stability Pact, agreed in Dublin in 1996, became the Stability and Growth Pact.

Pohl was strongly critical of the Stability and Growth Pact when addressing a seminar at the Financial Times not long ago. He had nothing to do with the pact (he had already retired) but the Bundesbank and the German finance ministry did. It is perhaps no wonder that Theo Waigel, the Finance Minister at the time, was almost apoplectic last week about its manifest demise, when Germany and France joined forces to defend their 'excessive' budget deficits and refused to pay the designated fines.

But as the Organisation for Economic Co-operation and Development calculates in the preliminary edition of its December economic outlook, the (cyclically adjusted) fiscal deficit of the Eurozone next year looks like being 1.5 per cent, compared with a forecast 6.5 per cent in Japan and 5.1 per cent in the US.

One of the mistakes made in devising the Stability Pact was for the drafters to insist on treating all 'regions' in the same way. This was a pre-Keynesian approach, as indeed was the failure to allow sufficient scope for the effects of the economic cycle, and for distinguishing between consumption and investment.

An article in the November issue of the Cambridge Journal of Economics by Ronald Schettkat ('Are institutional rigidities at the root of European unemployment?') throws a welcome bucket of cold water over the conventional wisdom.

The author notes that, by contrast with Germany's high unemployment levels, the Netherlands has achieved an unemployment rate of 3 per cent. He finds that, although 'A widely held view regards a distorted incentive structure in welfare states as the "root of the European unemployment problem" ... welfare state institutions in the Netherlands are more generous than German ones.' He finds the explanation in different approaches to macroeconomic policy.

In the US, macroeconomic policy has become wildly expansionary. In Europe the embarrassing collapse of the Stability Pact affords an opportunity for a sensible rethink of an inadvisably restrictive fiscal policy.
http://observer.guardian.co.uk/business/story/0,6903,1096117,00.html