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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: Elsewhere who wrote (27216)	1/31/2004 12:52:50 PM
From: Nadine Carroll	Respond to of 793600

Bush administration sources say they have recovered enough Iraqi government and Baath party documents to fill 100 semi-trailers. "We're overwhelmed with information," says one Pentagon official. "It's going to take a long time to go through it all." The Ba'athist sure kept records, didn't they? One reason why, "we destroyed the WMDs without orders or records" was not an acceptable answer to the inspectors or any intelligence officer.

To: Elsewhere who wrote (27216)	2/2/2004 11:12:18 AM
From: LindyBill	Respond to of 793600

InstaPundit: HERE'S A FASCINATING DISCUSSION THREAD on German and American culture, from MedienKritik. medienkritik.typepad.com

To: Elsewhere who wrote (27216)	2/4/2004 3:41:45 AM
From: LindyBill	Read Replies (1) \| Respond to of 793600

The European Predicament By Robert J. Samuelson washingtonpost.com Wednesday, February 4, 2004; Page A23 Let's be clear. If Europe's economy was healthy, it would grow about 4 percent annually for a few years and then settle down to a respectable 2.5 percent or 3 percent. The initial burst would absorb surplus unemployment (the jobless rate is near 9 percent). Once that happened, Europe would ride the gains of new technologies. Nothing like this is occurring. Since 2000, the economy of the "euro zone" (the 12 nations using the euro) has averaged growth of about 1 percent a year. That's bad for Europe -- and everyone else. In the past year, American-European relations have fixated on Iraq. Europe's loathing of the war distracted attention from its own failures. Its economic model could once be defended as a justifiable political choice. People could select their flavor of prosperity. America's flavor -- more competition and insecurity -- wasn't for everyone. Europe could pick less anxiety and more vacations. It could sacrifice some economic growth for a bigger welfare state (more jobless benefits, universal health care). This argument no longer works. Why not? Well, the economy is so enfeebled by high taxes and restrictive regulations that it can't pay for all the benefits. The gap between promise and performance must widen and, in the process, spawn disillusion and discord. One early example involves France's and Germany's violation of the Stability and Growth Pact, requiring member countries to hold their budget deficits to less than 3 percent of gross domestic product. In 2002 and 2003, France and Germany failed and, rather than face penalties, forced other countries to suspend the rules. Naturally, smaller countries that complied were furious. Greater conflicts loom. In May the European Union will expand to 25 members by adding 10 countries with 74 million people (the largest: Poland, Hungary and the Czech Republic). The presumption is that shared prosperity will promote mutual good will. The danger is that shared stagnation will aggravate mutual ill will. A larger threat arises from aging populations and expensive retirement programs. Government spending in the European Union already averages 48 percent of GDP (the United States: 34 percent). By 2030 the older (65-plus) population is projected to rise 55 percent, while the working population (15 to 64) will shrink by 8 percent. Promised benefits can't be paid without crushing taxes or implausible budget deficits. For now, what's worrisome is that Europe isn't helping the global recovery. True, growth in the euro zone should be better this year than last -- perhaps 1.8 percent compared with 0.5 percent in 2003, estimates the forecasting firm Global Insight. But Europe is feeding off the revival of its export markets, including the United States (expected 2004 GDP growth: 4 percent to 5 percent). Even this is imperiled by the recent rise of the euro on foreign-exchange markets. It's now worth about $1.25; in December 2002 it was worth $1. Most economists think it will go higher -- maybe to $1.50. By making exports more expensive, a stronger currency could undermine Europe's recovery. Europeans will probably complain about this at a meeting Friday of finance ministers from the world's richest countries. But little can be done. The rising euro is part of an inevitable adjustment. The global economy became overdependent on massive U.S. trade deficits, leaving foreigners with more dollars -- earned by exporting to the United States -- than they wanted. The shift out of dollars causes the euro, the yen and other currencies to rise. What's needed is faster growth in Europe, which would reduce joblessness and bolster global trade. One obvious step is to cut interest rates. Compared with the Federal Reserve, the European Central Bank (ECB) has been overly cautious. Its key interest rate is 2 percent; the Fed's is 1 percent. The ECB's timidity reflects excessive worry about higher inflation (now 2 percent) and a more defensible belief that Europe's main economic problems are "structural" -- meaning high taxes and regulations. Thoughtful Europeans now recognize this. Last year Germany trimmed unemployment benefits and the tax used to pay for health insurance; that meant reducing some health benefits and requiring some co-payments by patients. In France, the government defied street demonstrations to increase the retirement age for public employees. Although these were remarkable political steps, they won't single-handedly reinvigorate Europe's largest economies or avert the long-term budget problem. The predicament faced by Europeans -- one shared to some degree by all advanced nations, including the United States -- is this: Unless they take modestly unpopular steps today, they will be faced with hugely unpopular consequences tomorrow. But no one knows when tomorrow arrives and what those consequences will be. The temptation is to do nothing in the hope that nothing bad ever happens. The lesson of Europe's wobbly economy suggests that something already has. © 2004 The Washington Post Company