dagblog - Comments for "The Greek Mistake"

I think this is why a

Michael Maiello — Wed, 29 Jun 2011 23:04:10 +0000

I think this is why a tangible, attainable and shared American dream is important. The EU shares a currency but not a common interest. The best monetary policy for Greece is not the best monetary policy for Germany. But absent the shared American ethos, wouldn't the same fissures erupt between, say, California and Michigan?

Interesting. Bit of a

Michael Wolraich — Wed, 29 Jun 2011 22:53:04 +0000

In reply to I think the dynamic in Europe

Interesting. Bit of a Catch-22 for the Euro-philes. If the EU keeps pressing austerity, it will push the suffering Greeks and Irish towards the nationalists. But if the rich countries bail them out, it will push their own citizens towards the nationalists.

It seems to me a more

Dan Kervick — Wed, 29 Jun 2011 21:34:14 +0000

In reply to Like most people, I'm not an

It seems to me a more powerful European central banking authority and political union could nationalize at-risk banks, give haircuts to a bunch of the shareholders and creditors, and yet keep the credit and payment system flowing with an infusion of Euros and fiscal response. The only reason there are serious sovereign debt crises in Europe is because countries control their own budgets but don't control their own monetary policies. There is no effective means for debt restructuring and writeoffs.

I think the dynamic in Europe

Dan Kervick — Wed, 29 Jun 2011 21:24:19 +0000

In reply to PS Ironic that the Socialist

I think the dynamic in Europe is that the left parties have traditionally been the most pan-European pro-EU and pro-Euro. And that does indeed makes sense given their progressive socialist and universalist outlook. The right inclines more toward nationalism and national sovereignty, and against centralization. The left is trying to hang on to save the European dream, which is facing a dire crisis and threat, even though this means making very unpleasant and ugly deals with the creditors who have them in a lock.

The right wingers are exploiting the crisis, under the guise of a new-found compassion for Europe's downtrodden and recession-slammed masses, as a way to encourage the periphery countries to ditch the Euro. They hope the new, populist Euro-skepticism coming from the left can be used as an additional hammer to smash the Euro, and maybe the EU.

But the status quo and may be unsustainable. What the European left needs to decide is whether they are prepared ot use this crisis as a way of pushing for even more centralization in the direction of something closer to a "United States of Europe", capable of conducting a comprehensive fiscal and monetary policy with centralized political and currency sovereignty, or whether they want the right wing to succeed in pulling Europe apart as the Greeks, Irish and others are forced to reclaim their sovereignty as the only way of saving thier prosperity.

You are right on, the money

Resistance — Wed, 29 Jun 2011 18:02:34 +0000

In reply to In case your interested, my

You are right on, the money

As I've argued, I don't think

Michael Wolraich — Wed, 29 Jun 2011 18:02:00 +0000

In reply to I think you're right. But

As I've argued, I don't think that the Democrats should concede anything. The negotiations are all pretty murky, so it's not clear whether they have. The leadership may just want to put on a show of flexibility to make the Republicans look like the assholes.

In any case, I don't think that Democrats need to waste their political capital on convincing voters of the necessity of the bill, and it would be a bad idea to identify the party as champions of raising the debt ceiling (which any attempt to sell the bill to the public would invariably do as the difference between want-to and have-to get lost in nuanceville). Democrats just need to sit tight and let the Republicans to sweat it out.

In case your interested, my

Michael Maiello — Wed, 29 Jun 2011 17:38:32 +0000

In reply to Like most people, I'm not an

In case your interested, my opinion here is very close to Barry Ritholtz's. He says it's not the Greek people or government being bailed out by austerity by Greece's creditors. I take it a syep further to argue that if you want to bail out Greece's creditors, do it directly and leave the Greek people out of it.

I think you're right. But

Michael Maiello — Wed, 29 Jun 2011 17:29:26 +0000

In reply to What does very, very close

I think you're right. But then, why are the Democrats conceding anything? Or maybe they're not and it's all just concessions for show? I suppose one problem the Democrats have is public opinion in the country generally. People don't really understand what the debt limit is, how it works or what it does. If they did, raising it wouldn't be such an unpopular move.

Good points, AT. My take is

Michael Maiello — Wed, 29 Jun 2011 17:28:18 +0000

In reply to Like most people, I'm not an

Good points, AT. My take is this: If banks in Spain and France start failing because of the declining value of the Greek debt they hold, the EU can bail out those banks directly. I'm not making the "let them fail" argument here. I'm making the argument that if somebody is responsible for the solvency of these banks, it's the European Commission, not the youth of Athens. Forcing Greece into an austerity budget is a way of putting the solvency of those banks on the backs of ordinary Greek citizens. But really, it's the EU's problem.

What does very, very close

Michael Wolraich — Wed, 29 Jun 2011 17:12:00 +0000

In reply to Yeah. Greek politics is just

What does very, very close mean in this context? In true brinkmanship negotiations, the edge is razor. You can plummet off that cliff in an instant, so the other guy has to negotiate on his gut feeling that you will or won't do it.

But the debt ceiling isn't like that. As we get closer to the edge, all sorts of alarm bells will start going off--stock market declines, devaluation of the dollar, international condemnation, nervous business leaders calling their reps--all before we're even close to truly defaulting.

Now if there were one really brilliant or really crazy Republican running the show, maybe he could pull it off and take it all they way to the bitter end. But there isn't. Instead there are a bunch of self-interested politicians who are willing to play the game as long as they can, but when the alarms go off, they will sweat harder than anyone else because they know that if they really go over the edge, their careers will be finished. Some of those folks will break ranks, and it won't take many to get a majority.