Accountant-In-Chief

The term “hot political Autumn” is a staple of post-holiday media diet in Slovenia. It’s supposed to represent the exact opposite of the Silly season and signal re-entry of many-a-player into political orbit. Only that the Silly season was not really happening the past few years. In fact, until this Summer, Slovenia has been experiencing one long, drawn-out political and economic re-alignment, making the period between 2010 and 2016 one big political blur. Just think about it: four governments, just as many elections (on national level only) and seven referendums, with one being a 3-in-1 special. And then there was the euro-crisis and the migrant crisis and the Patria affair and a whole range of clusterfucks large and small. Thus many people were befuddled when the government of Miro Cerar declared a collective holiday and got the hell out of Dodge for most of August. Maybe it was the Olympics, maybe it was real, but no one really missed them, except for a few warning shots from the media and the opposition, but most of those were catching a few extra z’s around that time, too.

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Mateja Vraničar Erman, FinMin-to-be (source)

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Rule 34a

That Slovenia fought against watering-down of the Telecom Single Market directive (a.k.a. Single Digital Market) was for all intents and purposes the most surprising piece of information coming from this sorry little excuse for a country in the last ten days or so. Even more surprising than the decapitation of the bad-bank where the CEO and chief of the supervisory board were dismissed over excessive pay. And infinitely more surprising than the story of the NSA and German BND bulk-intercepting international calls from Slovenia between 2005 and 2008. Both of which will get written up here in due course. But first, this net neutrality thing.

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(source: savetheinternet.eu)

You can read it up, but the nuts and bolts of it are fairly simple: either everyone gets to use the web under the same conditions in terms of speed, access and services provided or network operators get to decide which services or users get preferential treatment (for a price, of course) and which get to crowd with the rest of us sorry bastards on the slow end of the interwebz. Or, what could happen is that the network operators get to pick their favourite service(s) and charge less – or nothing at all – for their use, relegating every other competing service to the status of an also-ran. Point being that under the proposed Single Digital Market directive the telcos get to pick the winners and the losers.

This is about where and how you’ll get your news, for example. Or your porn. Not that there’s much difference, but still. On the neutral net, where telcos/network providers compete with one another with plans, prices and ease of access, you’re able to pick and choose between RTVSLO, BBC, Russia Today, NaturalNews.com (yuck) or even FoxNews. On the not-so-neutral net your provider will most likely limit you to a handful of news sites, at least one of them being their own. Everything else will either be available at a premium or at lower speeds. Or both. The same goes for porn. The neutral net brings you PornHub, Redtube or plain old /hc/ board on 4chan.org, depending on your fancy. The other web brings you your provider’s porn service. It is a sort of Rule 34a.

 

If it exists, there is porn of it – no exceptions. Provided you pay for it and we get to deliver it.

 

And would you really like your network provider to know exactly what sick turn-ons you have? Methinks not.

And this is just the way things are today. Imagine a couple of years from now, when the IoT takes off for real. You buy a net-enabled fridge telling you what’s missing and updating your shopping list. But on the not-neutral web your network operator gets to choose which brand of the fridge gets preferential treatment within its network or which on-line shops are available for such a device. Hell, it can even limit your online shopping experience, preventing you from getting the best deal out there. Or maybe it can charge you extra if your wifi-enabled car needs an update. The list goes on forever.

Also, this is about cats.

All of the above makes it all the more astounding that Slovenia actually took up the issue on the EU level. I mean, here we have arguably the single most important long-term policy issue since the introduction of the euro and this country actually wants to do something? Wow. Just wow. In fact, Slovenia and the Netherlands were out-voted on the issue, with Croatia and Greece abstaining, while the 24 remaining member states green-lighted the draft (page 13 of the link).

You see, the thing is that next to the Netherlands, Slovenia is the only EU member to have set net neutrality as a legal norm. More or less. In Slovenia at least the legislation was watered down via lobbying by the telcos, but not enough to prevent the first-ever rulings by AKOS, the comms watchdog, which in January fined the two largest mobile providers for providing zero-rating services. And now, as the year slowly draws to an end, the European Commission put forward a draft Single Digital Market directive which would have made these rulings next to impossible as it basically trades the much-hailed abolition of roaming charges (two years hence) for a two-speed Internet (most likely to commence in various forms immediately). Little wonder Slovenia and the Netherlands have problems with it since it directly undermines their national legislation, several orders of magnitude better than what the draft directive provides for.

At its most crudest, this is a case where a drop in profits in one segment of the industry is mitigated by a free-fire zone of surcharges in another segment. Not to mention the fact that the move will have massive repercussions far beyond the consumer sector. Limiting speed and/or access to information will impact education and research, creative industries will once again be divided into haves and have-nots and home will no longer be simply where the wi-fi is.

This, despite the name, will be anything but a single digital market.

The ball is now in the European Parliament’s court. Last year, the EP shot down a directive draft which – compared to the current one – was more than acceptable. But with Brussels packing more lobbyists than Washington D.C., one can never be sure of the final outcome. (Slighty OT: Here is a handy tool on lobbying stats, courtesy of Politico.eu).

Which is why a number of grass-roots initiatives sprang up all over the EU to, well, save the internet. In Slovenia, too, where media and the politicos have apparently finally started paying attention. Whether this will be enough remains to be seen, but if the fate of the ACTA treaty a few years ago and the recent Safe-harbour ruling by the European Court are omens to go by, then this whole thing can still be overturned.

Because as it stands, for all the goodies it brings vis-a-vis mobile roaming, the TSM directive in fact heralds yet another social stratification. This time of a digital nature, ordained by the industry whose hey-day has long since passed.

Oxi


… and then, after the dust had settled, after placards had peeled away and the international clamour dissipated and supporters from foreign lands went home, when hangovers were cured and the euphoria subsided, when there was nothing more to say that hadn’t been said a million times over, the people of Greece were left to pick up the pieces all by themselves…

Shituation in Greece: What We Have Here Is Failure To Communicate

A few things need to be said vis-a-vis the impending Greek clusterfuck. Namely, we’ve been listening for weeks on end how the two sides, that is the heavily indebted Greece on one side and the don’t-call-it-Troika on the other were haggling over the finer points of tax hikes, spending cuts, projected values and sums calculated. But for some time now the one thought that has been bugging pengovsky was that we’ve seen it all before. Not in terms of the current economic and financial omnishambles – although one could argue that nothing has apparently been learned either from the Cypriot example or from previous failures of “saving Greece” – but more generally.

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(source)

While most of the following is, obviously, based on media and other reports which inherently carry their own bias, it would seem that what we’ve got here is a failure to communicate. The shituation in Greece is not unlike the run-up to World War One or The Cuban Missile Crisis. In both cases, the conflicting sides were convinced they understood the position of the other side perfectly and in 1914 it ended in disaster, while in 1962 disaster was only narrowly averted. This is what happens when parties involved expect each other to behave according to their respective plans. When that doesn’t happen, bad things occur. And when bad thing occur, every new move, if not carefully calculated, only adds to the clusterfuck. And it is safe to say that calculated and measured moves were very few and far between, on both sides.

Greek PM Tsipras and his stellar FinMin Varoufakis seem to have expected the EU will simply roll over for the two of them after Syriza won the Greek elections. As if things will automatically start moving in a new and more healthy way just on their say so. Well, they didn’t and had they understood what was it that the Troika was after, they would not have spent months grandstanding and posturing (look ‘ma, no tie!) around Europe, achieving practically nothing. But on the other hand, had the Eurogroup and especially Frau Merkel understood what the Syriza victory in Greece actually meant in terms of legitimacy of austerity policy (rather than trying to prove to Greek voters they voted wrongly), things might have moved forward, despite the initial clumsiness of the Greek Duo. As things stand, there is not an innocent party in this sorry story. All of them have boxed themselves in with their own rules of engagement that could only degenerate into the current shituation.

As pressure bar goes way up into the red, accusations of communists in Athens trying to set Europe alight as well as accusations of fat cats in Brussels trying to make an example of Greece and shift the burden of the bailout squarely on the shoulders of the poorest strata of Greek society. Neither are exactly true, in pengovsky’s opinion.

Yes, this is an ideological fight. Whoever maintains that it is only the Greek government who is flaunting ideology suffers from a massive (self-inflicted) blind spot. Even adhering to pure maths means taking an ideological position. But just as the Greek government is “far left” only in terms of the general European discourse being right-of-centre, the don’t-call-it-Troika is a far cry from a 21st century incarnation of the Sherrif on Nottingham, case in point the latest proposal by the European Commission which, for example, calls for a larger cut in defence spending, a wider base for luxury tax, closing of tax loopholes, et cetera.

Point being there is nothing to be gained from an ideological shouting match. Other than shifting the blame, that is. Which is what the current rush to win the battle for interpretation looks like. Not so much wanting to find a way forward but making sure the other party is to blame when things go all the way south. Thus Varoufakis says Greece has a clear conscience re negotiations. That may be. And I’m sure Merkel, Dijsselbloem and the lot feel the same.

Isn’t that nice. The whole common currency project is about to go tits-up, possibly dragging the Union with it but everyone will have a clear conscience. Here’s a newsflash: you dimwits were not tasked with runing the show to have clear consciences but get shit done.

Conspiracy theories aside, plenty of European press seems to be clamouring for a “12th hour deal”, either counting on Tsipras/Varoufakis to see the light or Merkel, Draghi and even Juncker balking at the idea of going down in history as leaders under whose stewardship the euro (and by extension the EU) started to disintegrate. This line of thought has a big problem: Both “The Institutions” and the Greek government are convinced it is precisely their actions which can save the euro/EU while actions of the opposite side are “uneuropean, inhumane and illogical”. Not necessarily in that particular order. It is, as KAL some time ago so aptly pointed out, a classic case of irresistible force meeting an immovable object. It seems doubly ironic that a renowned expert in game theory should be an active participant in the dismal failure of the entire enterprise. Yes, I’m looking at you, Yanis.

True, both Greece and the don’t-call-it-Troika seem to have gone so far down the chute that a working deal is for all intents and purposes impossible without either of the sides caving in completely. So perhaps what is needed is a non-working deal? Something both sides need to save their respective faces (if not asses), knowing full well that the goals laid out will not be met. Because it is not as if all the previous goals set for Greece were met with flying colours.

So, here we are, with Greek banks closed, capital controls in place and EUR 60 cash withdrawal limit per bank account and/or person. Save a surprising yes vote by the Greeks on the #greferendum (which would, in turn, probably trigger new elections, further complicating events), the country is moving rapidly towards leaving the euro. Just how this plays out no-one knows.

A wise man once said that to jaw-jaw is better than to war-war. The same goes for current omnishambles. The EU and the euro were always perceived as one-way streets. If Greece leaves the euro and possibly the EU as well, the Pandora’s box will have been opened and things thought impossible will suddenly become deceptively easy and many-a-politician’s weapon of last resort. Because if Greece leaves the euro, why not Germany? I’m sure a relevant political party with an anti-euro agenda would appear in no time.

Oh, wait…

 

Eurothings Slovenly But Syrizaously Going South

Since Greece and the rest of the Euro zone gave each other the finger the other day, a few things need to be said before things go syrizaously wrong in this neck of the woods. What was expected to be the day of another euro-compromise, brokered in the wee hours of the morning, the whole thing fell apart, seemingly with Greece and its new government on one side and he rest of the Eurozone on the other.

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But in reality, what we have here is not a game of playing chicken, with Greece and the Eurozone counting on each other to blink first. Rather, what we are witnessing is a Mexican stand-off of gigantic proportions where almost every member of the Eurozone is holding a gun to the head of most other members and at the same time virtually all Eurozone governments are held at gunpoint by their electorate, something they’ve only themselves to blame. Namely, by bailing out German and French banks with their taxpayers’ money and now trying to make the Greeks foot the bill, they’ve found themselves in exact opposite of Greek Syriza: while Tsipras and Varoufakis promised to end the vicious cycle of more cuts for more money, leading to less growth which creates the need for even more cuts and the need for even more money (and so on ad nauseam), the governments of Germany, The Netherlands and even Slovenia (to name but a few) are under increasing pressure to make sure the taxpayers get their money back.

Thus, a clustefuck of gigantic proportions was created, where legitimate positions of all governments involved preclude one another and are starting to resemble the old joke about an irresistible force and the immovable object. There rarely was a greater need for the (black) art of the European compromise.

The position of Slovenian government is especially interesting in this case. Apparently, finance minister DuÅ¡an Mramor more or lees told his Greek colleague Yanis to go Varoufakimself with his ideas of increasing public sector employment and expenditure while everyone else – including Slovenia – is slashing costs to make ends meet. Not that the ends are anywhere near each other – Slovenia will have to raise 1.5 billion, 15% of the budget, in loans in 2015 alone.

Reassuring Mramor

Mramor was apparently indignant over the fact that in per capita terms Slovenia is among the most exposed member states in the Greece omnishambles but was having no say in the matter as Tsipras and Varoufakis were negotiating with the big boys (and girl) only. As if Mramor way trying primarily to reassure himself by lashing out at Greece rather than trying to find some middle ground or even support Greece in its, well, “need for more time“.

But reassuring himself or the Slovenian taxpayer Mramor is not. It is more than obvious that most (if not all) money loaned to Greece will never get repaid and that Franci Križanič, FinMin in the Borut Pahor government (2008-2011) was talking bullshit when he said Slovenia will make money with the loan.

Mramor’s going after Greece suspiciously coincides with feces coming dangerously close to a mechanical air ventilator in the case of 3-billion-heavy bailout of Slovenian banks in late 2013.

Junior bonds extinction

Namely, accusations were made by Tadej Kotnik (curiously, a biophisycist and vicedean of faculty of Electrical Engineering) that recapitalisation of the banks and especially the accompanying extinction of subordinated bank bonds (in effect, complete nationalisation of Slovenian banks) was illegal, pre-arranged and non-transparent. But the gist of it, it seems, lies in the allegation that the Bank of Slovenia (this country’s central bank, aptly shortened to BS) back-dated a key measure to cover up the fact that eradication of junior bonds was agreed-upon in advance with the European Commission and was not some sort of a last-ditch measure to save the banks.

Now, Kotnik, a private individual and a member of the Association of Small Shareholders, apparently invested heavily in subordinates and thus lost quite a substantial amount of money. He also challenged the bond extinction at the Constitutional Court but the court deferred to the European Court of Justice as the bailout measures were coordinated with the European Commission and under EU law directly.

Anyhoo, the thing is that the Bank of Slovenia, specifically Governor BoÅ¡tjan Jazbec fucked up their initial response, hiding behind legal clauses and non-disclosure of financial information, thus giving credence to Kotnik’s accusations which are, it seems, mostly based on one or two sources within the BS.

obviously all hell broke loose, with MPs screaming for a parliamentary investigation, various political parties scrambling for cheap political points and Jazbec, after a press conference was finally held, fucking up further with a seriously distorted view of (non)accountability of the institution he heads and the office he holds.

Namely, Jazbec, after explaining that everything is OK and within the bounds of the law and that two wildly different appraisals of the state of the largest bank NLB are not all that unexpected decided to explain the matter further to… the government. As if it wasn’t the parliament who appointed him to the position and as if it wasn’t the parliament who represents the sovereign of this country, the people. Or, as they are more commonly known these days, the taxpayers.

While the government of course needs to be in the loop, Jazbec would do well to address the parliament first, since it was the people’s euros he spent on propping up the banks. But as things stand now, he is making one small(ish) mistake after the other and if he doesn’t stop digging soon, he may find himself in a hole too deep to climb out of. Especially since political parties are scrambling to put a daylight betweeen them and anything that might make them look responsible for the disastrous state of the banking sector. Which is why the Social Democrats are all of a sudden deeply worried about the situation. As if it wasn’t them who ran the financial portfolio in the ill-fated Pahor government (when things started going south for real) and who were junior partners in the BratuÅ¡ek government which engineered the bailout. Almost the same goes for the SDS, which led the government during the pre-2008 spending spree and which performed a couple of smaller recapitalisations of the NLB (couple a hundred million a pop) and is now screaming bloody murder and demanding a parliamentary investigation.

The sad reality

The reality, of course, is much more prosaic. After Greece and Cyprus, Slovenia was to be next in line for the Troika Treatment. And since the political mantra in the Eurozone at the time was that individual stakeholders, not just the state as such must bear the cost of the bailout, it was more or less obvious that erasing junior debt was unavoidable. Even more. If there is one point where Tadej Kotnik is correct is that the whole process was most likely pre-arranged and coordinated with Brussels. You see, at the time Slovenia for all intents and purposes was under administration, with the European Commission pouring over every aspect of economic and/or fiscal policy, confirming some, rejecting others. And so it seems plausible that the bailout of the banks, the extent and the mechanics of it were approved by the EC before they were enacted by the Bratušek-Čufer-Jazbec trio. That the Commission formally approved the measures taken fairly soon thereafter only goes to strengthen the point.

The above seems to suggest that the problem was not so much in the execution of the bailout but in the definition of the problem. You see, at the time the fate of Slovenia was in the hands of a budget specialist (BratuÅ¡ek), a higher-level bank manager (ÄŒufer) and a macroeconomist (Jazbec). None of them were in office for a particularly long time, while the country as such was held at gunpoint, not to mention the political turmoil on the home front. For them to understand that the problem was one of policy concept and not (only) of numbers would demand an extraordinary insight. Even more – even if they had the insight (it seems plausible that at least some people advising them did manage a wider outlook), it remains doubtful if they had the room to manoeuver.

Which, not surprisingly, brings us back to the current Greco-German spat. Unlike the Slovenian government of Alenka BratuÅ¡ek, the new Greek PM Tsipras and his FinMin Varoufakis fully understand the problem is political, even ideological. But they, too, have precious little wiggle room. Because just like Syriza is acting on a mandate by the people, so, too, are the Germans and the rest of the Eurozone. At some point they will have to explain to their voters why they used their money to prop up mostly German and French banks, overexposed in Greece. I’m sure it seemed a good idea at the time and in the panic that gripped the EU when Greece all but defaulted, the last thing anyone wanted was a bank run. But to bailout its banks, the Eurozone took out an even bigger loan with their voters and not being entirely candid on what the money was being spent on.

Extend and pretend

With this in mind, it is not only Greece that is – in the words of Yanis Varoufakis – resembling a drug addict. The (rest of the) Eurozone, too, is asking their voters trust and understanding they may not be ready to give anymore. Which makes the ruling centrist(ish) parties in Europe nervous which, by extent, leads to some uneasy moments of disturbing clarity, such as German FinMin Schäuble apparently saying the Tsipras government is acting irresponsibly. Patronising, even smacking of colonialism. But in reality most likely nothing more than a show of frustration at the realisation that even if the new Greek government does decide to play ball and continue with the established sparprogram, the game is more or less up and “extend and pretend” is from now on a two-way street.

And that no one knows how long the voters are going to continue buying it.