a curious Yankee in Europe's court

This is an annotated Beppe Severgnini.

And what might that be, you may well ask if you’re not up to date on Italy’s culture today.

Severgnini is one of Italy’s most celebrated journalists and satirists. He writes a column for Italy’s top newspaper, Corriere della Sera, he is an Op-Ed writer for the New York Times, and earlier in his career he was the correspondent from Italy for the Economist. In 2001, he was awarded an OBE from Queen Elizabeth. There’s much more to Severgnini’s resume but if I don’t stop now I’ll have to send him a bill.

You may or may not know that all is not as well as it might be in Italy at present in terms of economic rosiness. I leave you to search for the details on your own, but I can tell you that the eloquent hand wringing of many Italians has increased to the level of Lady Macbeth and her spot removal problem. And not infrequently these Italians are blaming themselves for the hard times.

An example: Recently while out to dinner with some friends at a neighborhood trattoria specializing in fresh fish dishes, I heard one of them mutter between bites of the delicious roasted Rombo overlaid with a crosta of potato she had ordered, “How can we Italians be so good at food and so stupid about politics?” Her fellow country folk at the table immediately made noises of agreement.

In a recent Corriere column, Severgnini chose to provide some inoculation against this outbreak of nationwide self-flagellation. He titled it “100 Reasons we are happy to be Italian.” He offered it as “a list from the heart” to counterpoint the gloom-mongering. It’s a good list, especially for those who are fans of Italy and its inhabitants. But for the many who haven’t the time or patience to read a hundred of anything, I’ve pared the plaudits down to my favorite five.

Here they are, with their original numbering from Severgnini’s list:

5. Because no one else is so skillful at turning a crisis into a party

7. Because we have good taste. We instinctively recognize beauty

9. Because we’re interesting. Tourists, business travelers and Angel Merkel are never bored with Italians around.

28. Because we have our head in Europe, our midriff exposed and our feet dangling in the sea

88. Because we love exceptions and occasionally remember there are rules

And now my annotation.

Numbers five, seven, and nine are self-evident, in my opinion, so much so that if subjected to a planet-wide referendum on their validity they would probably get a happy nod of approval from all the tourists who’ve visited the country. But numbers twenty-eight and eighty-eight may merit some commentary.

Regarding twenty-eight, I submit to you that it is wonderful primarily because you need to be an Italian to know what it means. But the metaphor is interesting, and I’m happy to accept Severgnini’s word that the declaration is true.

As to number eighty-eight, I can here offer the perspective of a former Californian, married to an Italian, and resident in Italy for 13 plus years. Not long ago, husband and I were chauffeuring two friends from San Francisco from their hotel in Rome to a seaside restaurant for lunch. Though the fact isn’t indispensable to this anecdote, one of these friends is a Superior Court judge. So that may be why he mentioned wryly at one point that during the previous 20 minutes, he had ticked off five stop signs that my husband had breezed by without even slowing down.

Which brings me to the second half of Severgnini’s number eighty-eight statement – “…and occasionally remember there are rules.” In the US and in some other parts of the Western world, as we all know who live or are from there, the stop sign is sacrosanct (perhaps too much so — the Italians I know find the four-way stop a particular source of hilarity). And if that slips your mind too often, a police officer will soon remind you, or at the very least your fellow drivers will.

Not so in Italy, generally speaking. For many drivers, I’ve noticed, most stop signs seem to be invisible considering the zero effect they have on slowing forward motion. In my first years here, I often tried (futilely) to elicit some illumination from my husband about this habitual disregard of the stop sign. What was most confusing to me is that sometimes he does observe stop signs. So what is the determining factor in this behavior?

Finally after some time passed I had my answer, though it arrived via intuition rather than via spousal comment. I realized that the stereotypical belief that Italians don’t observe rules isn’t true. Rather, as Severgnini points out, they “occasionally remember there are rules.” What he doesn’t mention, though — a reality I now accept with resignation as we continue to fly by stop signs — is that only Italians seem to know precisely what these rules are.

In this regard, I’ve decided to add one one more favorite from Severgnini’s longish list, number 92:

Because governing Italians is like herding cats (but cats have more personality than sheep).

Yes, and what would the world be without cats?

(Here’s the link to the full list: “100 reasons we are happy to be Italian” May 16, 2014, Corriere della Sera).

This morning while reading a couple of analyses about the great Greek referendum brouhaha, the shade of John Lennon floated past murmuring “Democracy is what happens while politicians are busy making other plans.”

Might that be the case if the Greeks are allowed to vote on the EU’s latest proposal to rescue/doom them into penury for years to come? Wouldn’t that be nice (shades of the Beach Boys just now floated by). Messy? Maybe yes, but maybe not.

The two informative commentaries mentioned above are “Time to resign Mr Papandreou” by Greek economics professor Yanis Varoufakis (here), and “Papandreou shows no regret as he faces a grilling from Sarkozy and Merkel” by the Guardian‘s Helena Smith (here). They offer differing perspectives on the Greek PM. Varoufakis scorns his government leader’s latest referendum maneuver as political ploy only. Smith, in contrast, casts Papandreou more admirably, as in this quote from an unidentified “adviser”:

He is not afraid to upset others if he firmly believes it is in the interests of his country. And as a committed socialist George really does believe in the value of participatory democracy.

Well, notwithstanding that Varoufakis makes powerful argument to the contrary, we can hope that Smith’s featured adviser may prove to be auspicious. That whether mere political operator or democracy’s champion, Papandreou will by hook or crook give the people a voice. That would be true democratic process, wouldn’t it?

Imagine.

It’s not at all hard to find China in the news headlines, given that increasing numbers of people — experts and ordinary citizens — reportedly see it fast arriving as the world’s new superpower.

Highly detailed views from particularly informed experts, however, are not so plentiful. A lengthy video discussion recently between Carl Walter of JP Morgan and Victor Shih of Northwestern University, hosted by G+, is “spectacular” (per MacroBusiness.com) and informative.

For me, one of the most thought provoking observations comes in the first video (starts at 13:44). Walter describes the reaction of the Chinese government to the 2008 financial crisis and the fall of Lehman Brothers. At that point, the highly alarmed Chinese, according to Walter, lost all faith in the Western financial model.

Summing this up, Walter says:

The Chinese want to have a clear model that they can try out and see if it works and then expand on, and now that [Western model] financial system is gone…

Watch the full discussion here, posted on MacroBusiness. Note — the comments section is also interesting.

At least, and that’s rather exceptional, Nouriel Roubini spreads the gloom around evenhandedly. Writing an op-ed piece this week for Project Syndicate about problems of the Eurozone, he grounds the assessment in a disapproving scowl at most of the world’s biggest economies (“The Eurozone’s Autumn Hangover” Sept 15, 2010):

.. all the factors that will lead to a slowdown of growth in most advanced economies in the second half of 2010 and 2011 are at work in Germany and the rest of the eurozone. Fiscal stimulus is turning into fiscal austerity and a drag on growth. The inventory adjustment that drove most of the GDP growth for a few quarters is complete, and tax policies that stole demand from the future (“cash for clunkers” all over Europe, etc.) have expired…

Roubini’s primary concern seems to be that European leaders have largely postponed having to account for Europe’s economic problems, rather than finding a real resolution for them:

In the periphery, the trillion-dollar bailout package and the non-stressful “stress tests” kicked the can down the road, but the fundamental problems remain: large budget deficits and stocks of public debt that will be hard to reduce sufficiently, given weak governments and public backlash against fiscal austerity and structural reforms; large current-account deficits and private-sector foreign liabilities that will be hard to rollover and service; loss of competitiveness (driven by a decade-long loss of market share in labor-intensive exports to emerging markets, rising unit labor costs, and the strength of the euro until 2008); low potential and actual growth; and massive risks to banks and financial institutions (with the exception of Italy).

You can read the whole essay here.

The sentiment, “It’s the economy, stupid,” apparently also holds prime position in the hearts of Europeans when money troubles hit, according to the results of a European Union survey just released this week (“Spring 2010 Eurobarometer: EU citizens favour stronger European economic governance” Aug 26, 2010).

Survey results show that 75 percent of Europeans favor more coordination of economic and financial policies among countries belonging to the EU, the 2010 Spring Eurobarometer reports. The survey, conducted earlier this year at the height of the European debt crisis included more than 26,000 people in 27 EU member states.

“The clear majority for enhanced European economic governance shows that people see the EU as a decisive part of the solution to the crisis,” said Viviane Reding, Vice-President of the European Commission, who is also in charge of Communication. “Our spring survey – conducted at the height of the crisis – reflects the difficult times and challenges that Europeans faced during the past months…

See full report here.

John Lanchester’s newly-released book “Whoops!: Why Everyone Owes Everyone and No One Can Pay” is getting raves from critics. One reviewer described it as “Acidic, frightening, and sharply funny.”

The subject of the nonfiction book is the craziness of the world of contemporary finance, and how the lunacy came to be.

Earlier this month, Lanchester offered a peek into the material of his book when he spoke at an event sponsored by the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) in London. I’m especially taken by Lanchester’s ideas because his thesis — my own favorite one — is that we as citizens can and must become informed.

The video is below and I hope you will watch it. As an inducement, I’ve excerpted a few comments.

In his opening remarks, Lanchester alludes to the longstanding idea of the two cultures of arts and science and the gap between them. He suggests that this gap no longer exists, but another one does:

It seems that there’s a much bigger gap between the world of finance and the general public, and that there’s a need to narrow that gap if the financial industry aren’t to become a kind of priesthood administering to its own mysteries and feared and resented by the rest of us. Lots of bright, literate, functioning well-educated people… have no idea about all sorts of economic basics of a type that financial insiders take as elementary knowledge about how the world works…

To people who don’t, as it were, speak finance the language can seem impenetrable and the interlocking ideas too complex to grasp or unpack. I’ve become very preoccupied by this gap which seems to me a real problem not least because the idea of a democracy implies an informed electorate. If you don’t have an informed electorate, which I would argue that we don’t really in this area, then the democracy is thinner, and I tried to do my bit in addressing that gap by writing about it.

Lanchester goes on to describe the faulty mathematical models used by those in today’s finance world. He details their persistent refusal to acknowledge the undeniable proof during recent decades that these models were broken. And, after describing the magnitude of the errors that occurred in 2008, he adds:

That is so wrong you just can’t put it into words. It shouldn’t be humanly possible to be that wrong. We’re talking about a drop in house prices causing people with bad credit to have trouble paying back their mortgages. And they managed to turn that into literally the most unlikely thing in the history of the universe.

And the really outrageous thing is that the banks are still talking about it as if they were unlucky.  As if it were some sort of freak, perfect storm or 100 year event, which is what the bank chairman in the U.S., has just been telling Congress. That’s absolute rubbish — it’s like closing your eyes and trying to run down the strand without opening them and then complaining that you’re unlucky when you get hit by a bus.

In a seven-minute interview on Thursday for The Washington Note, Nobel Economics winner Joseph Stiglitz prescribes good sense remedies for the USA economy:

And in a two-minute talk to the public this week, Harvard law professor Lawrence Lessig explains why  Congress isn’t listening:

Learn more about the work of Change Congress here.

Why is this recession so deep, and how can we fix it? Writing on his personal blog, earlier this week former U.S. Labor Secretary Robert Reich explains why this recession is deep, and how to fix it.

Excerpt: (Robert Reich’s Blog, Jan 27, 2009)

In 1955, more than a third of working Americans belonged to one. Unions gave them the bargaining leverage they needed to get the paychecks that kept the economy going. So many Americans were unionized that wage agreements spilled over to nonunionized workplaces as well. Employers knew they had to match union wages to compete for workers and to recruit the best ones. Fast forward to a new century. Now, fewer than 8% of private-sector workers are unionized. Corporate opponents argue that Americans no longer want unions. But public opinion surveys, such as a comprehensive poll that Peter D. Hart Research Associates conducted in 2006, suggest that a majority of workers would like to have a union to bargain for better wages, benefits and working conditions.

I found this link at Talking Points Memo.

In his short whodunit article, “Capitalist Fools” in this week’s Vanity Fair, Nobel-laureate economist Joseph E. Stiglitz identifies exactly who led the world into its current state of economic havoc (Jan 2009).

Intro blurb:

Behind the debate over remaking U.S. financial policy will be a debate over who’s to blame. It’s crucial to get the history right, writes a Nobel-laureate economist, identifying five key mistakes—under Reagan, Clinton, and Bush II—and one national delusion

It’s going to get worse, Nouriel Roubini says in an interview last week (Nov. 28) with Bloomberg.com. He notes that the global economy is now in crisis.

Other comments: the U.S. economy is in free fall and the effects are spreading across the globe, and the European Bank needs to be more aggressive in cutting rates, and more stimulus spending is necessary.

Most interesting questions: is confidence the key to restoring stability in the markets, and will bank rates drop to zero?

Watch video here (17:02)

Some items of interest this week:

I. Are Wall Street bankers losing their influence over the White House?

In appointing Timothy Geithner to the cabinet post of Treasury Secretary, President-elect Obama is breaking a long chain of Wall Street bankers running U.S. government, according to William D. Cohan at The Daily Beast (“Obama Gives Wall Street the Cold Shoulder” Nov 24, 2008).

Analyzing Obama’s choice of Geithner, Cohan writes:

But this surely drives home the point that one of Obama’s definitions of change is to not allow Wall Street its traditional role in running things. Tim Geithner, the presumptive Secretary of the Treasury, is all of a regulator, an academic and a civil servant. One thing he is not is a Wall Street banker (although he would have been an effective one.) Larry Summers, soon-to-be Obama’s director of the National Economic Council, is the son of economists, an economist himself, a former president of Harvard University and a former Secretary of the Treasury. He was never a banker and never worked on Wall Street. Indeed none of Obama’s cabinet picks, or rumored cabinet picks to date have worked in any substantive way on Wall Street.

The current U.S. Treasury Secretary is Henry Paulson — previously the Chairman and Chief Executive Officer of the investment bank Goldman Sachs.

To see short biographies of Obama’s new economic team, go here (“President-Elect Barack Obama and Vice President-Elect Joe Biden Announce Key Members of Economic Team” TPM, Nov 2008).

II. Obama’s not happy with Wall Street’s legendary greed is good credo

Obama offered a reprimand to the country’s top businesspeople last week in an interview with Barbara Walters on ABC network (Nov 26, 2008).

Excerpt:

BARBARA WALTERS: How did you feel when you read about the three heads of the auto companies taking private planes to Washington?

BARACK OBAMA: Well, I thought maybe they’re a little tone deaf to what’s happening in America right now. And this has been a chronic problem, not just for the auto industry, I mean, we’re sort of focused on them. But I think it’s been a problem for the captains of industry generally. When people are pulling down hundred million dollar bonuses on Wall Street, and taking enormous risks with other people’s money, that indicates a sense that you don’t have any perspective on what’s happening to ordinary Americans. When the auto makers are getting paid far more than their counterparts at Toyota, or at Honda, and yet they’re losing money a lot faster than Japanese auto makers are, that tell me that they’re not seeing what’s going on out there, and one of the things I hope my presidency helps to usher in is a, a return to an ethic of responsibility. That if you’re placed in a position of power, then you’ve got responsibilities to your workers. You’ve got a responsibility to your community. Your share holders. That if — there’s got to be a point where you say, ‘You know what, I have enough, and now I’m in this position of responsibility, let me make sure that I’m doing right by people, and, and acting in a way that is responsible.’ And that’s true, by the way, for members of congress, that’s true for the president, that’s true for cabinet members, that’s true for parents. I want all of us to start thinking a little bit more, not just about what’s good for me, but let’s start thinking about what’s good for our children, what’s good for our country. The more we do that, the better off we’re going to be.

III. Obama names his National Security team

Yesterday, Obama held a press conference to introduce his choices for his National Security team. From the Obama website change.gov:

Nominees announced today include Senator Hillary Clinton as Secretary of State, Eric Holder as Attorney General, Governor Janet Napolitano as Secretary of the Department of Homeland Security, Susan Rice as Ambassador to the United Nations, and General Jim Jones, USMC (Ret) as National Security Adviser. President-elect Obama also announced that he has asked Robert Gates to stay on as Secretary of Defense.

Video of the press conference here (27:01)

IV. The everlasting Clinton(s) factor

As noted above, Obama has picked Hillary Clinton to be his new Secretary of State. And as Newsweek‘s Senior White House correspondent Richard Wolffe said in an interview yesterday (Countdown with Keith Olbermann, MSNBC, Dec 1, 2008):

“…for the media, Hillary Clinton has overshadowed every other pick coming out of this transition…”

My impression while clicking around online is that this Hillary media storm occurred with news outlets worldwide, given the high international profile of the former First Lady. Visiting various USA newsites and blogs, the two questions I saw posed most often were: one, why did Obama really choose his former arch-rival Hillary; and two, what does this choice tell us about what kind of president Obama will be?

The answers, of course, can largely only be speculation. But in a column yesterday, Matthew Yglesias captured the central focus of the discussion well, I think. Recalling some of the major differences on foreign policy between Obama and Hillary Clinton during the campaign, Yglesias writes (“A hawk in the roost?” The National, Nov 27, 2008):

For all the speculation about Obama’s offer to Clinton, there has been no real account of the rationale or motivations for his decision – at least not beyond vague, and endlessly repeated, references to Doris Kearns Goodwin’s book, Team of Rivals, a profile of the cabinet Abraham Lincoln assembled under wildly different circumstances. The transition team has done very little to outline the substantive agenda it expects a Clinton-led State Department to tackle, and indeed, perhaps the ongoing financial crisis will mean any bold new foreign initiatives will be put on the back-burner.

What is unclear at this point is whether Clinton joining the Obama team means that Clinton has gained faith in Obama’s approach, or that Obama has lost faith in his own. The very fact of Obama’s election would seem to tilt things in his direction: there was a consistent trajectory to their disagreements, and Obama was on the right side – a judgment vindicated by his victories over both Clinton and McCain. It’s not merely that he won, but that winning demonstrates his supposedly “risky” positions were not so risky after all.

V. Do you wanna speak English, Uncle Sam asks

The U.S. Department of Education is sponsoring a new online program offering free English language instruction. Titled U.S.A. Learns, the website…

…promotes programs that help American adults get the basic skills they need to be productive workers, family members, and citizens.  The major areas of support are Adult Basic Education, Adult Secondary Education, and English Language Acquisition.  These programs emphasize basic skills such as reading, writing, math, English language competency and problem-solving.

Read more background about the program here (“Learning English the Web Way” The New York Times, Nov 24, 2008).

See previous A glance at online news of politics USA

If you want to see the debate and the vote today in the U.S. House of Representatives as it returns a second time to Treasury Secretary Paulson‘s $700 billion plus bailout plan for Wall Street, click on to C-SPAN, the only news media organization that regularly televises the legislative proceedings of the U.S. House and U.S. Senate.

The deliberations begin at 9 am Eastern Standard Time (USA).

Definitely check out this article yesterday from David Leonhardt at the New York Times about some of the stinkier aspects of Treasury Secretary Paulson’s bailout proposal (“Could Warren Buffett Negotiate a Better Deal for Taxpayers?” Sept 24, 2008).

One of the article’s insights:

Now, what would Mr. Buffett have said if Goldman asked for his money and wouldn’t let him share in the upside? “He would have said ‘no deal!’ ” said Daniel Alpert, of Westwood Capital, an investment firm. “And that is what Congress must say as well in defense of the American people.”

The article’s closing paragraph is especially a heartwarmer.

Another assessment from economist Nouriel Roubini in a CNBC interview yesterday about the ongoing Wall Street meltdown (“‘Socialism’ on Wall Street” Sept 17, 2008). Asked about the advisability of Uncle Sam rescuing the sinking insurance giant, AIG, Roubini says it’s a very bad idea.

So where was the regulation and supervision? They screwed up big time over and over again. Now we’re in a situation in which the profits have been privatized, and now the losses have been socialized…

“This is not a market economy. This is socialism for the rich, for the well-connected on Wall Street…”

Roubini rounds out his analysis by explaining his idea of what constitutes a practical and important use of public money, what should be done about the distressed U.S. housing sector, and the way to avoid massive home foreclosures.

Watch:

See previous post on Roubini here.

UPDATE: Today’s New York Times gathers some opinion from around the world on the AIG bailout (“Abroad, Bailout Is Seen as a Free Market Detour” by Nelson D. Schwartz, Sept 17, 2008)

In an interview earlier today, Nouriel Roubini from New York University’s Stern School of Business explained what many people are most worried about (the FDIC), why they’re right, and how long the tough times are going to last (“Top Economist: Americans Should Worry About Bank Deposits if Congress Doesn’t Act” by Aaron Task, Yahoo! Finance, Sept 15, 2008). See article and video here.

Yesterday, Germany’s Der Spiegel (SPIEGEL ONLINE International) ran a fascinating piece about the hows and whys, and what’s yet to come in the ongoing, lopsided relationship between the dollar and the euro.

Writing about the Federal Reserve in the U.S. and the European Central Bank, Christian Reiermann offers a snapshot comparison of the two men in charge of them, and a history of how the contrasting philosophies of the two institutions came to be (“KEEP CALM AND DON’T PANIC” April 29,2008).

The article’s intro:

Never before have the central banks of the United States and Europe pursued such divergent strategies when it comes to dealing with a financial crisis. The increased value of the euro against the dollar reveals which strategy is working.

Reiermann writes in clear, straightforward prose that illuminates a subject that’s often presented — at least for mere mortals –as if it’s organic chemistry poorly translated from the original Swahili. Grazie!

Read more here.

Interesting short video interview here with Italy’s Minister for Economics and Finance (“TOMMASO PADOA-SCHIOPPA talks to Martin Wolf — The Italian Finance Minister discusses market turmoil”, Financial Times, Dec 20, 2007). Padoa-Schioppa talks about the Euro-zone, various key issues at present, and how Europe is being affected by what’s happening in world market conditions.

Toward the end of the nine-minute talk, interviewer Martin Wolf complimented Padoa-Schioppa on recent improvement in Italy’s economy, describing it as “remarkably successful on the fiscal side.” In response, the Italian minister agreed that he is “much more comfortable” with Italy’s situation now than a year and a half ago, saying that Italy is “out of the financial emergency.”

Answering Wolf’s question about Italy’s situation at present in “what may be a very turbulent world economy,” Padoa Schioppa said that the “recent turbulence doesn’t seem to hit Italy in any significant sense.”