Counterparties: Why Europe wants to be more Austrian

May 28, 2013

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European leaders convened at Sciences Po in Paris today to tackle the continent’s increasingly scary youth unemployment crisis. They did a great job of delivering concerned rhetoric (“We have to rescue an entire generation of young people who are scared,” said Italian labor minister Enrico Giovannini). They weren’t quite as good at nailing down specifics.

However, there is some evidence that leaders are slowly becoming motivated to do something. Their clear incentive: the political ramifications of inaction could look something like last week’s riots in Stockholm, if not much worse.

Joe Weisenthal points to the below chart, showing Germany (DE) and Austria (AT) both with youth unemployment rates below 8%, Greece (EL) and Spain (ES) well above 50%, and Italy (IT) and Portugal (PT) each approaching 40%. Far more countries in Europe are above 20% youth unemployment than are below it.


The most serious step toward reducing unemployment is the Youth Guarantee, adopted last month by the EU’s council of ministers (though implementation is left to the member states, so the plan’s fate is far from certain). The plan would ensure a job or training program to anyone under the age of 25 within four months of leaving school or becoming unemployed. This is all based on programs already in place in Finland and Austria, which have youth unemployment rates of 20% and 8%, respectively. The plan is estimated to cost a total of €21 billion, a fraction of the €150 billion youth unemployment is currently costing the economic union annually. Euro zone countries have already set aside €6 billion for the guarantee over the next six years.

The Italian government announced last week it was considering a job-sharing program between older and younger workers. While this neo-apprenticeship model is a way to get more young people into the workforce, “it wouldn’t create any new jobs, and taxpayers would have to pick up the tab for pension contributions for the older workers who choose to participate,” according to the WSJ— Shane Ferro

On today’s links:

The Fed
The Fed’s latest obsession: managing our expectations – Jon Hilsenrath

Alpha
Finally, a financial innovation that helps investors – Tadas Viskanta

Fiscally Speaking
A handful of states are slowly approaching budget surplus territory – Calculated Risk

Surprising
Sony makes money on music and movies, not electronics – NYT

Housing
Home prices up 10.9% over March – Case-Shiller
The housing recovery visualized – Matthew Phillips

Rants
“Dear Dumb VC: You don’t realize you are going out of business” – Andy Dunn
“Finally, someone who deals with VCs writes a long, angry post about how shitty they all are” – Sam Biddle

Health Care
Walmart is flying employees to top hospitals to have surgery — and saving money – National Journal
Obama’s Cadillac tax is working – Matt Yglesias

Bad Data
A happiness study that only samples bloggers – The Atlantic

“Hot Money”
Criminals need non-bank financial intermediaries too – WSJ

EU Mess
Why a German exit from the euro zone would be disastrous — even for Germany – Pedro da Costa
Angela Merkel is reversing her stance on austerity in a fashion that’s possibly entirely symbolic – Der Spiegel

Wonks
What if quantitative easing is actually deflationary? – Frances Coppola

Awesome
“We’re starting the Uber of organ transplants” – McSweeney’s

Big Government
How Washington is dealing with the food truck lobby – Bloomberg

Ouch
Streaming video is slowly killing cable – Pando Daily

And, of course, there are many more links at Counterparties.

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