11 Temmuz 2020 Cumartesi / 20 Zilkade 1441
Gece modu

Köşe Yazarları ve Köşe Yazıları

Yazarın Sayfası

Greece’s Euro-Zone Exit Will Not Be Painless

03 Ağustos 2012 Cuma

Germany’s vice chancellor said in a recent interview that the prospect of a Greek euro exit has “lost its terror.” Meanwhile, Der Spiegel reported that the International Monetary Fund has decided to pull the plug on more financing for Greece.

I find their lack of terror ... disturbing. I’m not saying that Greece should be kept in the euro zone; ultimately, it’s hard to see how that can work. But if anyone in Europe is imagining that a Greek exit can be easily contained, they’re dreaming.

Once a country, any country, has demonstrated that the euro isn’t necessarily forever, investors — and ordinary bank depositors — in other countries are bound to take note. I’d be shocked if a Greek exit were not followed by large bank withdrawals all around the European periphery.  

To contain this, the European Central Bank would have to provide huge amounts of bank financing — and it would probably have to buy sovereign debt too, especially given the spiking yields on Spanish and Italian debt that are taking place as you read this.

Are the Germans ready to see that? My advice here is to be afraid, be very afraid.

The Radicalizing Effect Of The Euro Disaster

One thing that I don’t think has been sufficiently emphasized as we stare a euro disaster in the face is the amount of damage this will do to the overall European political landscape. 

Across most of the periphery, both sides of the usual political divide have been roped into the policies of austerity and internal devaluation — sometimes in governments of national unity, sometimes with normal majority party rule but with both parties following much the same line.

So if the policies fail disastrously, which is getting close to a certainty, the effect is to discredit the entire political center, leaving radicals on the right and left as the only people who aren’t tainted.

It’s hard to know how this ends. But Europe a few years from now may be a very different place from the nice alliance of democratic nations we all know and love.

The weekly newspaper Der Spiegel reported on July 22 that Greece would be unable to meet its debt obligations on the 130 billion euro bailout approved in March and might need as much as 50 billion euros in additional aid. Der Spiegel cited an unnamed source who said that the International Monetary Fund, one of Greece’s primary lenders, was unwilling to provide the country with further funding — which would suggest the Fund’s consenting to a Greek default.

However, the I.M.F. quickly dismissed Der Spiegel’s report: it released a statement saying that the organization was “supporting Greece in overcoming its economic difficulties” and that officials would work to get its programs “back on track.”

The Spiegel report came on the heels of an article in the daily paper Süddeutsche Zeitung, indicating that Germany would not issue a third round of loans to Greece. An unnamed German official was quoted as saying that it was “inconceivable” that Chancellor Angela Merkel would ask parliament to approve another bailout.

Greece’s lenders will announce in September whether the nation has implemented enough reforms to receive an installment of the March bailout worth 31.2 billion euros. The terms of the loan dictate that Athens must enact budget cuts of 12 billion euros by 2014. Greek lawmakers are already discussing possible cuts in pensions and top-level government salaries.

Meanwhile, economists at Citi estimate that there is a 90 percent chance of Greece’s exiting the euro zone within the next 12 to 18 months.

U.S. Conservatives Pile on the Excuses

The commentators Mike Konczal and Jonathan Chait both had good blog posts recently on “You didn’t build that,” the statement President Obama made during a speech in July that, deliberately misinterpreted, has dominated right-wing discourse these past few days. But I think both of them missed a couple of tricks.

The first is that both in effect shrugged their shoulders over the fact that for several days running the central theme of the Romney campaign has rested on a complete lie.

I understand; going on about the dishonesty can get boring. But we should step back often to look at this remarkable spectacle. I really don’t think there’s been anything like this in American political history: a presidential campaign with a pretty good chance of winning that is based entirely on cynical lies about what the sitting president has said. No, Mr. Obama hasn’t apologized for America; no, he hasn’t denigrated achievement. Yet take away those claims, and there’s nothing left in Mitt Romney’s rhetoric.

The other thing that I think needs clarification is that it’s wrong to think of conservatives as having a single argument for their preferred policies. What they offer instead is more like an onion, with layers inside layers; every time you strip away one excuse there’s another one inside.

Thus someone like Paul Ryan, the Republican chairman of the House Budget Committee, starts by claiming to be a deficit hawk. Push him really hard, however, on why in that case he advocates big tax cuts, and he’ll shift to arguing that big government (as opposed to not-paid-for government) is the real problem. But if you push hard on that, it turns out that there’s yet another layer: the claim that policies like taxing the rich to help pay for social insurance are immoral, because people have a right to keep the wealth they created — which is why suggesting that no plutocrat is an island is heresy.

This onion structure is why you should never believe reasonable-sounding conservatives who say that you’re attacking a straw man, that “nobody believes” that wealth creators owe nothing to society.

Oh, yes they do — it’s usually hidden inside a couple of socially acceptable excuses, but at their core Mr. Ryan and people like him believe that they’re characters in “Atlas Shrugged.”

They Didn’t Build That

A few more thoughts related to the fake controversy over Mr. Obama’s “you didn’t build that” statement.

First, sure enough, a self-reliant businessman featured in Mr. Romney’s follow-up ads was the beneficiary of large government loans and contracts. This doesn’t make him a bad guy; pretending that he did it all himself does. And as many others have pointed out, what does it say about the Romney campaign that to run against a sitting president, one with a three-and-a-half-year track record, they have to lie about what he said to find a point of attack?

On a slightly more elevated note, Matt Yglesias a commentator at Slate, had some fun in a recent article with a prominent libertarian, Peter Thiel, who looks at the contrast between rapid progress in information technology and less rapid progress in “stuff” and blames ... the government.

“I think we’ve basically outlawed everything having to do with the world of stuff, and the only thing you’re allowed to do is in the world of bits,” Mr. Thiel said during a debate organized by Fortune magazine on July 17. “And that’s why we’ve had a lot of progress in computers and finance.”

In a way, I’m reluctant to make too much fun of Mr. Thiel because he points to something that I notice a lot. If you look at what futurists were predicting 40 or 45 years ago, they somewhat underpredicted progress in I.T. (except for the artificial intelligence thing), but wildly overpredicted progress in dealing with the material world. Weren’t we supposed to have underwater cities, commercial space flight and flying cars by now?

But blaming the government is silly. The fact is that technological progress is uneven, for reasons that need have nothing to do with policy: sometimes we strike a rich technological vein that can be mined for decades, like etching circuits using photolithography, and sometimes we don’t.

Consider productivity in two industries, illustrated on the chart on this page, with data from the Bureau of Labor Statistics.

Does anyone think this contrast reflects the heavy hand of government on the grocery store industry — as opposed to the fact that there just hasn’t been a technological breakthrough that lets one guy at the counter serve 10 people at once?

That said, I still want my flying car before I get too old to drive.