PowerLine: Eurocrash Update #2
Thus far in this incipient series I’ve written about some of the political and constitutional aspects of the Eurocrisis, but at the end of day this is mostly a matter of dollars Euros and cents sense. The weak agreement reached last Friday is surprisingly similar to the weak climate agreement reached almost at the same hour down in Durban—large on sentiment, but lacking meaningful specifics or an enforcement mechanism. The debt hole that needs filling is somewhere north of $1 trillion, but the bailout fund is only about $230 billion—how’s that going to work?
Perhaps the most pungent assessment comes from Brit journalist Ambrose Evans-Pritchard, who says, among other things:
All this upheaval for a mess of pottage, a flim-flam treaty? The deal is not a “lousy compromise”, said Angela Merkel. Well, actually that is exactly what it is for eurozone politicians searching for a breakthrough.
It tarts up the old Stability Pact without changing the substance (although there will be prior vetting of budgets). This “fiscal compact” is not going to make the slightest impression on global markets, and they are the judges who matter in this trial by fire.
Last week I attended an off-the-record briefing from someone I can’t name who has been on the inside of several sovereign debt defaults and restructurings over the last couple of decades, and who is shuttling between European finance ministries on a regular basis right now. This person made several points, a few of which have not appeared in much of the news or commentary on the scene. From my notes (with my embellishments in parentheses):
—The European political class doesn’t understand markets, and doesn’t like markets. The resent the pressure global financial markets are placing on them, which helps explain why they are lashing out at “London bankers.” (Apparently they have completely forgotten how Britain railed against the “gnomes of Zurich” during Britain’s currency crisis in 1964. What goes around comes around.)
—The default mode of politicians is to compromise, but compromise won’t work on this problem. The European political class is still in deep denial that the solutions proposed so far simply won’t work.
—Southern Europe believes that richer Northern Europe owes them a bailout. Solving the problem requires breaking the entitlement mentality of the weaker members of the EU. Moreover, wage levels in Southern Europe are too high by about 25 percent. Adjusting this problem ever over the long term is going to be extremely painful for the southern economies.
—France keeps siding with the weaker members and undermining Germany, even though it is against France’s own fiscal interests, because France would like to grasp leadership of the Euro zone away from Germany. (Maybe Germany should occupy Alsace again?)
—The Eurozone is likely to slip into recession next year, which will drag down growth in the U.S.
My financial interlocutor offered up a couple of other axioms worth keeping in mind, such as: “A monetary union that can’t make up its mind is a crisis waiting to happen.”
And this one, which could apply to Middle East peace talks and other arenas: “99 percent of the trouble in the world comes from too much talking.” Europe’s government should shut up and get down to action. They won’t.
Bottom line: “You have to say no [to bailouts of Greece, etc.] and make everyone believe you.” This is going to drag on for several more months—if not years—with a familiar pattern of crisis, emergency meetings with new patchwork agreements that calm the markets for about 48 hours, until everyone sees that nothing has been fixed, and the cycle restarts itself.
My bottom line: make sure your investments have seat belts and air bags.
UPDATE, 8:45 a.m. EST: European markets and Wall Street futures appear to be unimpressed.
FP: First, this confirms my question in a previous post: does Europe really want to be managed by Germany and France? Germany and France? Second, this confirms my claim that the West is operating with the illusion of power—and that’s true of both the US and EU. Do you see this West do anything effective about Iran and the Middle East? The Islamists were lucky: they are taking over just when the West has collapsed (of course, they would have never succeeded had the West had power rather than illusions). And the sad thing is that the West will continue to bankrupt itself even further by pumping the Islamists full of Jizziya as, more or less, protection money. That will, of course, signal weakness and invite more soft Jihad.
Dinner with terror ringleaders: $2,500
For the low, low price of $2,500, one lucky bidder and five friends are set to have dinner cooked for them by Weather Underground leaders Bill Ayers and Bernadine Dohrn. The auction was hosted by the Illinois Humanities Council (IHC), a non-profit founded — and still funded — by the National Endowment for the Humanities.
Bidders were invited to “[e]njoy an unforgettable and scintillating dinner for a party of six cooked by veteran activists and educators Bill Ayers and Bernardine Dohrn.
“Fascinating conversation over a meal,” the auction promised, “is the agenda for this special evening.”
The National Endowment for the Humanities, the Powerline blog reports, “provides almost all the funding for the IHC.”
In the late 1960s and early 1970s, both Ayers and Dohrn were leaders of the communist, terrorist organization Weather Underground — a splinter group from the radical Students for a Democratic Society. The Weather Underground conducted a terrorist bombing campaign with the goal of ending the U.S. war against communist Vietnam. Attack targets included the U.S. Capitol, the Pentagon and at least one police station. The two married while on the run from the FBI in the early ’70s.
Ayers came into the national spotlight again recently when it was alleged that he had a close relationship with then-presidential candidate Barack Obama. He and Obama sat together on the board of the Woods Fund.
FP: When a president friendly with unrepentant former terrorists is elected (Ayers probably wrote Obama’s book) and the government funds a dinner with them the collapse becomes crystal clear.
William A. Jacobson: What If Palestinians Were Settlers?
Barack Obama’s insistence that Israel cease all building in Jewish neighborhoods of East Jerusalem, calling such neighborhoods “settlements,” raises an interesting question. Who are the settlers in Jerusalem?
A good example of the lack of clarity over Palestinian claims to Jerusalem is found in prominent Palestinian-American spokesman George Bisharat.
Bisharat is a Professor at Hastings College of Law, and a leader of the movement to delegitize Israel as a Jewish state and in place create a single state encompassing what now is Israel, the West Bank and Gaza.
Bisharat compares the Jewish claim to the land of Israel as a homeland to a rapist and the Palestinian resistance to that of the victimized woman. (Video, at 7:25). Bisharat repeatedly refers to Jews “taking another people’s country” (Video at 9:00) even though there never was a country called Palestine or a separate national entity for the Arabs of Palestinian.
…
Bisharat’s family narrative, while moving, is at best exaggerated. In fact, Bisharat’s family was not indigenous to Jerusalem or any part of what now is Israel, and his grandfather did not grow up in Jerusalem.
Rather, Bisharat’s family members were immigrants to Jerusalem who lived in Villa Harun ar-Rashid for just a few years in the late 1920s and early 1930s before renting it out as absentee landlords and then leaving for greener pastures abroad.
I base this statement on Bisharat’s own documentation of his family history which appeared not in any of the Western newspapers in which he recounts his moving family narrative, but in an article he published in 2007 in the Palestinian Jerusalem Quarterly.
FP: Read it all for the details. In a previous post I wrote that many (if not most) of the Palestiians who claim to have become refugees in 1948 are either not native to Palestine, or absentee landlords, or, as in Bisharat’s case, both.
Antony Jay, co-creator of Yes, Minister, on the leanings of the BBC:
It would be astonishing if the BBC did not have its own orthodoxy. It has been around for 85 years, recruiting bright graduates, mostly with arts degrees, and deeply involved in current affairs issues and news reporting. And of course for all that time it has been supported by public money. One result of this has been an implicit belief in government funding and government regulation. Another is a remarkable lack of interest in industry and a deep hostility to business and commerce. […] This deep hostility to people and organisations who made and sold things was not of course exclusive to the BBC. It permeated a lot of upper middle class English society (and has not vanished yet). But it was wider and deeper in the BBC than anywhere else, and it is still very much a part of the BBC ethos. Very few of the BBC producers and executives have any real experience of the business world, and as so often happens, this ignorance, far from giving rise to doubt, increases their certainty.
See also Jay’s Confessions of a Reformed BBC Producer (MUST READ!!!)
FP: Yes, Minister and Yes, Prime-Minister are two of the smartest television political satire programs ever produced, and by the BBC no less. You can learn from them a lot about the British upper class on government welfare that populated the BBC management. Makes the anti-Israel leftist bias of the BBC and the anti-Semitism of the British political elite easier to understand. Highly recommended.
Theodore Dalrymple looks back on the summer’s opportunist looting:
One rioter told a journalist that his compatriots were fed up with being broke all the time and that he knew people who had absolutely nothing. It is worth pondering what lies behind these words. It is obvious that the rioter considered being broke not merely unpleasant, as we all would, but unjust and anomalous, for it was these qualities that justified the rioting in his mind and led him to suggest that the riots were restitution. Leave aside the Micawberish point that one can be broke on any income whatever if one’s desires fail to align with one’s financial possibilities; it is again obvious that the rioter believed that he had a right not to be broke and that this right was being violated.
When he said that he knew people with “nothing,” he did not mean that he knew homeless, starving people left on the street without clothes to wear or shoes on their feet; none of the rioters was like this, and many looked only too fit for law-abiding citizens’ comfort. Nor did he mean people without hot and cold running water, electricity, a television, a cell phone, health care, and access to schooling. People had a right to such things, and yet they could have them all and still have “nothing,” in his meaning of the word. Somehow, people had a right to something beyond this irreducible “nothing” because this “nothing” was a justification for rioting. So people have a right to more than they have a right to; in other words, they have a right to everything.
FP: I agree, more often than not, with Dalrymple. And he is probably right about many of the looters in Britain. But it is very difficult to accept this argument when Western economy and polity are in deep decline due essentially to being robbed by the kleptocracy that is the allaince of the financial industry and other corporate interests and a corrupt government. Conservatives seem to be concerned only with looting on the streets, but not looting by the pillars of society, that are bringing the West down.
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