a curious Yankee in Europe's court

A few days ago in an email conversation with my daughter I mentioned that the political and economic turmoil in Europe had intensified this past two weeks. Writing back, she asked me to send her a few links to news stories that could give her some insight into the situation.

Harrumph, I mumbled to myself, I wish I could ask the same of some wise news guru.

And I suspect I’m not the only one. It’s much more difficult than it should be to find news reports that aren’t simplistic re-cyclings of various prejudicial stereotypes or political ideologies posing as expertise.

As an example, just last week economist Bill Black strongly criticized the mighty New York Times‘s coverage of the European crisis as “overwhelmingly written from the German perspective.”  You can read the post here on the Naked Capitalism website.

So when I found these two videos this morning featuring Harvard University economist Richard Parker talking about Greece, I decided to post them. Parker has a bit of an inside track on Greece especially. He served as an adviser to former Greek Prime Minister George Papandreou from 2009 to 2011 (see bio).

In the first video (click on screenshot above), Parker advises against falling for easy answers “about the character or moral values of other people to explain a crisis of the kind we’re seeing in Greece.” He then quickly refutes some of the worst stereotypes against the country that are found in daily news headlines.

I particularly liked Parker’s summing up comment because he calls for citizen activism as part of the resolution. Here it is:

Now in Europe as in the United States there have been attempts to rein in the power of an unregulated financial system. But it’s very difficult to do. So the way forward in the 21st century in the wake of this crisis that we’re still living through is going to require a kind of intelligence and vision that transcends national borders. And that will have to come in part from citizens demanding behavior of public leaders of all sorts that moves us to a new world.

This video is a concise three and a half minutes and was posted online earlier this week (May 14).

The second video I found, via Googling, is a six-minute excerpt of a lecture Parker gave last October to the World Affairs Council of Connecticut. In this video, the economist traces step by step how the Greek economic crisis began some years ago to its current deepening turmoil.

In a feature titled Vangelis: A message of hope, the Greek composer gives a rare interview to Al Jazeera. He discusses his ideas about beauty, music and culture. Click on screenshot below to listen (25 min approx).

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.

At the end of a short interview early this week on a CNN news show, the anchor Charles Hodson asked Jamil Anderlini, the Beijing correspondent for the Financial Times, what was the point, the purpose of this week’s “enormous offensive, this diplomatic offensive by the Chinese in Europe?”

Hodson was referring to the official visit of Chinese Premier Wen Jiabao to Europe this week. The premier won headlines with his favorable remarks about the Eurozone. They included a pledge to support the Euro, and an announcement during a visit to Greece that China will buy government bonds to try and aid the struggling country (see here and here).

Anderlini, after offering his analysis of the reasons for China’s proposed largesse to Europe, summed up with this:

“Well I think what you’re seeing is, China is obviously now the world’s second largest economy, it’s the biggest energy user, it’s the biggest emitter of carbon and greenhouse gases in the world, and it really is – China is really rising very rapidly on the world stage, both economically, militarily, politically.

And I think, you know there’s a re-evaluation going on of the traditional foreign policy in China which is — it was laid out a couple of decades ago by former paramount leader Deng Xiaoping — and that policy was that China should hide its brilliance, hide its light, and bide its time. But I think China has really reached the point where it’s re-evaluating that policy and that strategy.”

But Europe wasn’t the only target audience of what amounted to a media blitz this week of the European, Anglo-American world by the Chinese premier. Wen Jiabao also sat for an hour-long CNN interview for U.S. television with superstar journalist Fareed Zakaria.

Pointing out that the Chinese premier rarely gives interviews to Western journalists, Zakaria introduced the session by also listing some of China’s recent power moves in international relations.

Here are some excerpts from the interview:

In his opening questions, Zakaria asked Wen Jiabao about the worldwide financial crisis, about China itself, and whether Chinese leadership has lost faith in the U.S.  The premier responded with a diplomatically amiable comment about President Obama and then spoke about his own country:

In the face of the financial crisis, any person who has a sense of responsibility towards the country and towards the entire human race, should learn lessons from the financial crisis. As far as I am concerned, the biggest lesson that I have drawn from the financial crisis is that in managing the affairs of a country, it is important to pay close attention to addressing the structural problems in the economy.

China has achieved enormous progress in its development, winning acclaim around the world. Yet I was one of the first ones to argue that our economic development still lacks balance, coordination and sustainability. This financial crisis has reinforced my view on this point. On the one hand we must tackle the financial crisis, on the other we must continue to address our own problems. And we must do these two tasks well at the same time and this is a very difficult one…

Later Zakaria asked Wen Jiabao about the much reported, and widely criticized censorship of the Internet by Chinese officials. Somewhat surprisingly, the premier praised the freedom of expression and freedom to criticize the government allowed on the Internet in China.  Zakaria challenged this appraisal, citing his own experience of the many restrictions he has encountered when he himself has visited China.

Wen Jiabao didn’t refute Zakaria’s assessment but responded:

“I believe I and all the Chinese people have such a conviction that China will make continuous progress and the people’s wishes for and needs for democracy and freedom are irresistible. I hope that you will be able to gradually see the continuous progress of China.”

In the last segment of the interview Zakaria mentioned a series of speeches that Wen has given in the last few months. He mentioned one in particular in which the premier said that along with economic reform, China must keep doing political reform. Zakaria then said that a lot of people he knows in China have told him that there has been a lot of economic reform but not much political reform: “What do you say to people who listen to your speeches and they say we love everything Wen Jiabao says but we don’t see the actions of political reform?”

After a preliminary comment on the importance of the ruling governing party being faithful to the constitution and its laws, Wen Jiabao ended with this:

I have summed up my political ideals into the following four sentences. To let everyone lead a happy life with dignity, to let everyone feel safe and secure, to let the society be one with equity and justice, and to let everyone have confidence in the future. In spite of the various discussions and views within society, and in spite of some resistance, I will act in accordance with these ideals unswervingly and advance within the realm of my capabilities political restructuring.

“I would like to tell you the following two sentences to reinforce my case on this or my view on this point. That is, I will not fall in spite of the strong wind and harsh rain, and I will not yield til the last day of my life.

To see the full interview, go here.

In an earlier post today about a Vanity Fair article about Greece and its ongoing financial morass, I highlighted a question posed by the writer of the piece, Michael Lewis:

Even if it is technically possible for these people [Greeks]to repay their debts, live within their means, and return to good standing inside the European Union, do they have the inner resources to do it?

The last phrase of this question — do they have the inner resources to do it? — won’t stop echoing through my mind. Could it be my (blogger) conscience nudging me to recall something else Lewis said in the Q&A interview with him that accompanies his article? He was answering a question about a rather sizeable ongoing financial mess of another country, the United States.

Specifically, Lewis was asked if he could foresee a scenario in which the US Treasury goes bankrupt.

Excerpt of his reply (that begins with “Yes”):

…It’s not that hard to see us getting to a moment where we are essentially restructuring our debt. I think it is a long way off, but how can it not happen? We are so indulged by our creditors. Even though we have grotesquely mismanaged our financial affairs, people are willing to lend us money on terms that they would not lend on to anybody else in the world. It’s unbelievable to me that the U.S. Treasury can borrow 10-year money at around 2.5 percent.

The Chinese are willing to lend back to us all their surpluses basically for free, and we keep running these deficits. The benefits are just too great to our society for us to turn away…

So that question about having the inner resources to clean up your act is also being posed by Lewis here, more obliquely, about the US and its citizenry.

(Blogger) conscience clean now.

When it comes to figuring out complex things in today’s world, Michael Lewis has proven himself better than most at doing so. Along with this, he has an uncanny sense for the perfect doorway into a narrative, and an eye (and ear) for the telling detail that raises the bar to new highs.

The reading public must agree — most of his ten or so books have made the New York Times bestseller list (see Vanity Fair bio and Wikipedia). And his 2006 book, “The Blind Side,” was made into a hit movie of the same name that earned an Academy Award nomination for Best Picture (2010).

But coming away from reading the more than 11,000 word feature about Greece by Lewis in next month’s Vanity Fair, I was struck by the series of questions he posed — and left unanswered — in the piece’s final paragraph (“Beware of Greeks Bearing Bonds” Oct 1, 2010).

Two, for example:

Will Greece default?…

Even if it is technically possible for these people [Greeks] to repay their debts, live within their means, and return to good standing inside the European Union, do they have the inner resources to do it?

To research the Vanity Fair article, Lewis spent some time in Greece,and interviewed some key figures and government workers in the national financial drama underway there. It makes for interesting reading — the full article is here.

Also interesting is the magazine’s companion Q&A with Lewis about the piece. Here you can read some opinions he has of the possible economic prospects of various other countries in Europe, in particular Germany.

My favorite segment  was a question asking Lewis to compare specific European countries to major baseball teams in the U.S. Of course, unless you’re a baseball fan, the metaphoric word play is illusive (and I can’t be of much help here — the sports world is certainly Greek to me).

One sample, though, was more explicit. His description of Italy — he compared the country to the baseball team The Marlins — is generous and apt, I think. He said:

Even though Italy is in financial trouble right now, like the Marlins are always in financial trouble one way or another, it still somehow feels like a successful place. Italy is this giant wild card; they can win the series at any point.

Italy certainly can do with a good word just about now. And maybe I’m biased, but I do favor such optimism. And I do so hope Lewis is as astute about this as he has been about so many other things. Vediamo.

From the blog Fabius Maximus: The response by major national governments to the Greek crisis is rational, and inevitable (“The hidden key to understanding Europe’s crisis — and ours” May 11, 2010)

Short and to the point. Recommended.

A highly readable telling of the center-stage action in the Greece-Euro-EU-Germany squabbling of recent months was offered this week by Gavin Hewitt, BBC‘s Europe editor (“Greece and the story of George and Angela” May 3, 2010).

Even for those in faraway lands who pay less attention to Europe than they do to passing clouds, Hewitt’s informative narrative of the high-stakes duel between Germany’s Angela Merkel and Greece’s George Papandreou is easy to follow.

Excerpt:

So round after round they eyed each other. As the cost of borrowing increased for Greece George played his club card. They were all in the European family together. He waved the flag of European solidarity, guessing correctly that others , particularly EU officials, would come to his side. He was after a big loan that would persuade the financial markers to back off. Angela didn’t buy into this. Greece had to do more…

Saw the link to Hewitt’s piece on Bloggingportal.eu.

Who says Greeks don’t know how to manage their money? An article by Bulgarian journalist Vladimir Simeonov last week at presseurop describes how residents in northern Greece are flowing across the border into southern Bulgaria in order to beat the increasingly high prices in their own country (“Welcome the Greeks bearing euros” April 01 2010).

Bulgaria’s two small towns of Sandanski and Petric are welcoming the influx of euros, according to Simeonov:

Over the last few weeks, the two border towns have literally been invaded by Greek shoppers, who throng cafes and restaurants, and queue up to visit doctors and dentists. In an apt illustration of the adage, “It’s a ill wind that blows no good,” Bulgarian traders are rubbing their hands with glee. ‘I can’t say we are delighted about our neighbours economic problems,’ explains one business owner, ‘but without them we would be going under too…

The financial leaders of the European Union are almost ready with a rescue package for the being-pushed-downhill-fast Greece, according to an article last week in Spiegel Online International (“PIIGS to the Slaughter/Can the Euro Zone Cope with a National Bankruptcy?” Feb 22, 2010). Officials have been ordered to keep everything hush-hush for now, according to the article, but it offers a glimpse at some of the details.

The bones of the rescue package were put together by the combined efforts of German and French officials, the article states, who then brought the rest of the 16-country Euro zone financial members into the loop.  Excerpt:

The German Finance Ministry expects support for Greece to amount to between €20 billion and €25 billion. All the members of the euro group are expected to participate, including those, like Spain and Portugal, who also might find themselves needing help soon.

In coming together and drafting the rescue package for Greece, the Eurozone countries had no choice but to do so, according to the article. The speculators attacks on the euro and on Greece reportedly are showing no letup. Europe is under threat of member-country bankruptcies, the writers say in the article’s opening lines:

The consequences would be dramatic for the whole of the continent, especially German banks, which are highly exposed to risky debt. EU politicians are willing to pay almost any price to help the beleaguered countries.

I would say this article is a must read for those of us standing on the sidelines trying for a glimmer of understanding of what’s happening in Europe now. The Spiegel article lays out a detailed and comprehensible chronology of how this potential crisis has been created, and what may or may not happen in the future.

It’s also stomach-churning reading, if you don’t share the to-hell-with-everybody-but-me profiteering views of speculators and bankers gone bonkers.

A little further reading: (Why?)

“This Crisis Won’t Stop Moving” by Gretchen Morgenson, New York Times, Feb 6, 2010

“Just a few lessons” (editorial by Jean-Dominique Giuliani, Feb 10, 2010)

“Rescuing Greece. Economic union. Two different things” by Charlemagne, The Economist, Feb 12, 2010

“Greece turns on EU critics” Financial Times, Feb 12, 2010

“Eurozone overhaul” by Mark Schieritz, presseurop, Feb 12, 2010

“Greece Derails: Is Europe Far Behind?” by Simon Johnson, Huffington Post, Feb 12, 2010

“Wall St. Helped Greece to Mask Debt Fueling Europe’s Crisis” New York Times, Feb 13, 2010

“The Greek Tragedy That Changed Europe” Wall Street Journal, Feb 13, 2010

“Goldman Goes Rogue – Special European Audit To Follow” by Simon Johnson, The Baseline Scenario, Feb 14, 2010

Portugal – “Slow progress to avoid decline” by Guido Rampoldi, presseurop, Feb 15, 2010

“Senior Goldman Adviser Criticizes Greece – Without Disclosing His Goldman Affiliation” by Simon Johnson, The Baseline Scenario, Feb 15, 2010

“The evolution of Greece’s financial woes” by Stamatis Assimenios, Deutsche Welle, Feb 16, 2010

“Euro flounders amid Greek woes” by Siva Sithraputhran, FRANCE 24, Feb 16, 2010

“The Dutch Join the Germans in Rejecting Bailout of Greece” by Edward Harrison, Roubini Global Economics, Feb 16, 2010

“A reminder for the EU: America did not create federalism to back the dollar” by Charlemagne, The Economist, Feb 17, 2010

“Feldstein’s Euro Holiday” Paul Krugman blog, New York Times, Feb 17, 2010

“Wall Street’s Bailout Hustle” by Matt Taibbi, Rolling Stone Magazine, Feb 17, 2010

“Fear of Mediterranean Contagion Grows” by Julio Godoy, IPS, Feb 18, 2010

“Crash of the titans” Commentary, Kathimerini English edition, Feb 19, 2010

“Greece Asks for Details on EU Aid Plan” Spiegel Online International, Feb 19, 2010

“Greece not looking for EU handouts with debt crisis, says Papandreou” by Zoe Wood, Guardian, Feb 21, 2010

“Prospects For Financial Reform” by Simon Johnson, The Baseline Scenario, Feb 23, 2010

This morning, I read in the New York Times that the banks who helped Greece hide its massive debt  may actually now be pushing the nation closer to the brink of financial ruin (“Banks Bet Greece Defaults on Debt They Helped Hide” Feb 24, 2010):

…credit-default swaps, effectively let banks and hedge funds wager on the financial equivalent of a four-alarm fire: a default by a company or, in the case of Greece, an entire country. If Greece reneges on its debts, traders who own these swaps stand to profit.

“It’s like buying fire insurance on your neighbor’s house — you create an incentive to burn down the house,” said Philip Gisdakis, head of credit strategy at UniCredit in Munich.

Crazy, right? Legal, oh yes. Perfectly. These days. (see here)

As I wrote about in an earlier post, I’m reading Jacques Barzun’s history of our past five hundred years (“FROM DAWN TO DECADENCE 1500 to the Present/500 Years of Western Cultural Life”).  Today, reading the Times story, I recalled something I just read in the Barzun book.

He is describing the 16th century Protestant Reformation,  a revolution against the widespread (Perfectly. Legal.) institutional decadence of the time:

The system was rotten. This had been said over and over; yet the old hulk was immovable. When people accept futility and the absurd as normal, the culture is decadent. The term is not a slur; it is a technical label.

Continuing to try and find the god/devil in the details of what the European Union is doing or not doing to help the oh-so-ailing Greece, I came across some helpful clues supplied by Jürgen Stark, the European Central Bank Chief Economist.

In an interview in today’s Spiegel Online International, Stark faces some grueling questions and is unshakable in his tough love fiscal perspective (“‘Everyone Is a Sinner at the Moment'” Feb 12, 2010).

Topics covered include, of course, Greece’s teetering on the brink of bankruptcy, plus the debt of other member states of the EU, and the health of the Euro itself these days.

One of the first questions was about how safe the Euro is at present. Stark’s reply:

Stark: We have been in a global crisis for more than one-and-a-half years now. We still can’t say whether it’s over. But you could just as easily apply your question to other regions. No one talks about whether the United States could break apart because of California’s ailing finances. So let’s not take things too far!

SPIEGEL: Washington and the US central bank, the Fed, would certainly intervene before allowing California to go bankrupt.

Stark: To be honest, I don’t see that they would do that. There are many examples to the contrary in the history, including American history.

If you want info about the Greece-EU-Euro situation, other than the one-note dirge that’s commonplace in the headlines of USA and UK news coverage, this interview’s a good place to begin. (For earlier posts on this topic, go here and here)

Today, European Union leaders met in Brussels to talk about Greece and its terrible, great big money woes. With the EU’s biggest players, Germany and France, guiding the way, the member states agreed to bail out Greece, according to a Spiegel Online International article. But only in the case of a “complete emergency.”  (“Germany and France Take on the Euro Speculators” by Susanne Amann, Feb 11, 2010)

The article goes to say that in the eyes of Germany and France, a bankrupt Greece is not an option. One, Greece owes the banks in both these countries a lot of money, according to Spiegel, plus there’s an even bigger potential disaster looming:

“…A Greek bankruptcy could result in a collapse of the entire euro system,” says financial market expert Rudolf Hickel with Bremen University’s Institute of Labor and Economy. Currency market speculators are currently earning well by betting against Greece. “After Greece, Spain and Italy would then become the focus of the speculators,” says Hickel “and that is what France and Germany have to stop.”

Greece is bankrupt, Nouriel Roubini said today, speaking during an interview at the World Economic Forum in Davos (“Roubini At Davos: Greece Is Obviously Bankrupt” Jan 27, 2010). He advised the country to ask China to rescue it, and added that the European Union may also be forced to help in order to hold off a threat to the Euro monetary system itself.

None of this is news to the leaders of the European Union who have been stewing over what to do about an economically wobbling Greece for some time, according to an analysis in Der Spiegel last month, “Should the EU Save Athens from Bankruptcy?” (by Wolfgang Reuter, Dec 14, 2009).

Reuter explores how the situation presents the EU and its leaders with an urgent new governance question.  He reports in detail on some of the high-level discussions. Central theme:

“…Everyone was asking the same question: What happens when a country, even a member of the European monetary Union, goes bankrupt? Can the EU allow this?…”

Another very interesting money pot to watch boil, as if there aren’t enough already.