Men of sense often learn from their enemies.
It is from their foes,
not their friends,
that cities learn the lesson of building high walls and ships of war;
and this lesson saves their children, their homes, and their properties.
Aristophanes
Germany, France and PIGS: What Now?
Bruce Krasting has published an interesting followup interview this morning with "Athens", the pseudonym for an Athens-based Greek shipper in the aftermath of this weekend's election (HT The Daily Crux).
Athens was on the record before the election:
When the next election comes, Greeks will not vote in anger and they will not vote for the idiots on the fringes. The centrist parties will rebound. A National Salvation Government will be formed.Some key takeaways/predictions (my edits):
- Short-term reprieve. "I fear that social unrest is going to spring up again. There will be another crisis in less than three-months. In a few weeks the government will not be able to pay workers. The decision on more aid for Greece comes from Berlin. I think the Germans will say, “No.” "
- The important election? France. "The most important election this weekend for Europe was not in Greece. It was in France. The cooperation between France and Germany over the past few years is finished."
- Plan A. "Greece leaves the Euro ." PIGS implode in cascading dominoes.
- Plan B. "Germany will leave the Euro. It will reestablish the old Deutche Mark (DM). "
If the Germans reestablished the mark, the likely effect would be the mirror effect of the Greeks returning to the drachma. We would have a strong mark against a weaker euro. This, of course, would serve to make German exports more expensive/German imports cheaper, which is something the rest of Europe would like. The German economy would take a short-term hit on currency strength, and I would expect banks holding on to euro-denominated bonds to take a hit as well (although I expect some losses have been anticipated). I just don't see how the Germans can or will bail out one European country after another under the status quo, especially after the French elections.
I saw the following comment by British PM Cameron:
“The euro zone has two choices,” he said. “Either they try to force down wages and prices in the periphery as fast as they can to restore competitiveness, with all the political and economic tensions that will entail, or the core of the euro zone has to do more to support the periphery through greater fiscal burden-sharing.”Before proceeding, "try to force down wages and prices"? I'm sorry: that sounds a little to activist statist to me coming from a so-called conservative leader. How about "deregulate labor, fix notorious tax evasion and balance the government's budget"?
More fiscal balance after recent anti-austerity votes in Greece and France? Yeah, right. "Greater fiscal burden-sharing": I wonder what that means? Maybe writing down even more PIGS debt? Make it another round of bank bailouts....
As much international pressure is on Chancellor Merkel, I strongly suspect that that there is little appetite in Germany, on either the left or the right, to bail out countries with more generous policies--or to be the only country to bear a disproportionate portion of the burden. I'm all but certain that Merkel knows this, even though she is publicly supporting a more powerful European parliament with fiscal disciplinary authority. Even if the parliament gets that authority (and my understanding is most European countries haven't signed on yet), I don't suspect that the resistance will be any less given real decisions over their lives being imposed by an even less accessible government, not to mention the possibility that Germany may not lead or dominate that body's agenda.
On a side note, it's getting to the point that anything Barack Obama does or says annoys me. When I hear him lecture Europe (as he has done in the past) about the need for Keynesian (government spending) initiatives or he starts mouthing out vacuous, trite, nonconstructive nonsense like "“The world is very concerned about the slowing of growth that has taken place. Now is a time, as we discussed, to make sure that all of us do what’s necessary to stabilise the world financial system", I have to hold my tongue.... I'm sure that the rest of the G20 must have responded, "Yes We Can!"
When, for once, are statists going to acknowledge the role and responsibility of socially liberal government in making unsustainable promises? That the unwieldy size and cost of government impairs economic growth? That "they" can't do squat--it's the market itself that extends an invisible hand...
Let me conclude by noting this entire commentary has been speculative in nature, I am not a currency guru, and I don't have any inside information on what's going on in Europe. Three or 4 months from now I may look back at this and say, "What was I thinking?
Christopher A. Preble / CATO Institute,
"Obama's Drone War in Yemen": Thumbs UP!
There is something surreal that a President, with enough problems on Capitol Hill, getting personally involved with alleged terrorist "kill lists". It eerily reminds me of LBJ getting involved in the details of bombing runs. Let us hear from the Gray Lady:
Mr. Obama has placed himself at the helm of a top secret “nominations” process to designate terrorists for kill or capture, of which the capture part has become largely theoretical. He had vowed to align the fight against Al Qaeda with American values. Mr. Obama is the liberal law professor who campaigned against the Iraq war and torture, and then insisted on approving every new name on an expanding “kill list".
In interviews with The New York Times, three dozen of his current and former advisers described Mr. Obama’s evolution since taking on the role, without precedent in presidential history, of personally overseeing the shadow war with Al Qaeda. They describe a paradoxical leader who shunned the legislative deal-making required to close the detention facility at Guantánamo Bay in Cuba, but approves lethal action without hand-wringing. While he was adamant about narrowing the fight and improving relations with the Muslim world, he has followed the metastasizing enemy into new and dangerous lands. When he applies his lawyering skills to counterterrorism, it is usually to enable, not constrain, his ferocious campaign against Al Qaeda — even when it comes to killing an American cleric in Yemen, a decision that Mr. Obama told colleagues was “an easy one.”There are so many issues here, one hardly knows where to begin. Before going further, I want to point out that this is not a partisan attack; I am critical of Romney on Defense issues as well. I've been consistently saying for some time now that I believe that Big Defense needs to be streamlined just as much as everything else in the federal government, I've strongly denounced nation building, I've talked about scaling back on military bases and entanglements abroad, and I've been critical of Obama's liberal bombing runs in Pakistan, Yemen and elsewhere and high-profile interference in Libya, Syria, etc. Obama getting involved in terrorist kills makes about as much sense as Jimmy Carter's micromanagement, at one point even approving swimming pool privileges!
I heard a media report suggesting that Obama was particularly anxious about being perceived as "soft of terrorism" against his potential political adversary Mitt Romney. There is no doubt that recent leaks (like the above) which details an activist Obama as Commander in Chief have been made on purpose. I'm not interested in Obama and Romney arguing whom is tougher on terrorists. Here are some of the problems that bother me:
- Remember the progressive talking point that the US in Iraq was breeding a whole new generation of terrorists? But yet we have had a very aggressive drone bombing program, many with civilian casualties in a vastly expanded target area, clearly subject to the same concern.
- We have a former Constitutional law professor whom describe to decision to kill an American cleric, without due process, "an easy one".
- Obama has bombed countries, e.g., Pakistan, Yemen, Libya, etc., with which we are not in a state of war, which I consider, at best, legally dubious, and has flown unauthorized flights elsewhere (e.g., Iran)
- all military costs, including occupation and related activities (including the War on Terror), must be included in a single budget (NOT a separate war budget)
- military actions, unless defensive in nature, against a foreign country must be explicitly approved by the Congress
- war/occupations should be authorized for a limited time frame (never open-ended) and funding should be explicitly approved annually
- any American targeted by our military is entitled to due process
Boudreaux's Signature Closing
I subscribe to daily emails from my blogroll, but there are two in particular I look forward to reading each day: Mark J. Perry's Carpe Diem and Roberts/Boudreaux's Cafe Hayek. (I'm sure that the regular reader will recognize my frequent reference to these economists (tied to George Mason University: Perry got his doctorate there, and Roberts and Boudreaux are on faculty).)
Each morning I look forward to peeking inside the "Latest from Cafe Hayek", which is like a wrapped candy in a box of chocolates. Don Boudreaux's wonderful pithy letters to the editors (a reminder: Boudreaux's latest book is a collection of such letters, available here), an inexhaustible supply of great quotes, collections of annotated links, even an amusing debate as to whether Paul Krugman is a contemporary neo-Keynesian version of Bastiat (OH, PLEASE!). I have no idea how he comes across all this great stuff while teaching, researching, etc: I find myself sometimes writing for hours on a single post. Briefly, going back to Bastiat and his wonderful parables about broken windows, candle makers, et al.: I think if anyone deserves to be compared to the free-market icon, it's Boudreaux whom cuts through economic nonsense with the precision and efficiency of a surgeon.
I neglected to acknowledge Father's Day in yesterday's post (maybe I'm jealous because I don't have kids of my own), but while I'm discussing Don Boudreaux, he wrote what I consider a moving tribute to his late father in 2009 available here (highly recommended). Don briefly touches growing up in the New Orleans area in a lower-middle class neighborhood, being raised on basic virtues (e.g., no class envy), and liberally quotes from a speech Don made at his dad's 2001 retirement from the shipyard where his father had worked as a pipe fitter.
Now I knew that Boudreaux was a good Cajun name; in this post, I discussed how my Cajun friend Rob at UH Catholic Newman had an inexhaustible supply of Boudreaux & Thibodeaux jokes. Cajuns had their roots in decades-occupied Acadia before the British forced their expulsion during the French and Indian War; Acadians were cultural cousins to my ancestry, the Québécois in New France. (I also took the opportunity to republish a climactic excerpt from an epic love poem, Longfellow's Evangeline, the fiancée of Gabriel Lajeunesse, tragically separated by the Great Expulsion.)
It suddenly clicked on me that we were fellow Franco-Americans when he once again closed a post with the saying: Plus ça change, plus c’est la même chose.
I found myself saying, "D'accord". (French was my first language; my parents were bilingual but decided to stop speaking French at home after the school threatened to hold me back in kindergarten (it took me little time to pick up English). To this day, my younger siblings blame me for the fact that they aren't bilingual. It had more to do with my Mom's experiences.) I think I have heard the saying so many times (I can remember my maternal grandfather saying it), it's seared in my memory.
Musical Interlude: My Favorite Groups
Tom Petty & the Heartbreakers, "Change of Heart"
