April 27, 2010

And Germany made the Greek crisis much, much worse

“Anything that can go wrong will go wrong.” This piece of wisdom is known as Murphy’s Law, and I absolutely hate it, but Prof. Gustav A. Horn, the director of the Macroeconomic Policy Institute (IMK) at Germany’s Hans-Böckler Foundation, says it currently applies extraordinarily well to economic policy in the euro zone. He gets angry with “the German government’s submissiveness to the financial markets and its cowardice towards the tabloid press (the mass circulation daily Bild, for example, wrote in a headline: ‘You Greeks Aren’t Getting a Thing from Us’).” A cowardice which could get very expensive for German taxpayers.

On the one side there are the Greeks, who clearly still do not have their financial statistics under control and who produce one false report after another about the country's budget deficit. On the other side are the Germans, who delight in hindering a rapid and unambiguous European response to the Greek crisis -- in the process driving the cost of a solution through the roof.
Both Greece's calculation errors and the diva-like reluctance of the German government to help Athens are nothing more than an invitation to speculators to bet on the demise of the southern European country. This also explains why risk premiums on Greek government bonds have shot up to previously unimagined heights in recent days. The Greek government must now pay such high interest rates to refinance its debts that it can no longer get by without foreign assistance, despite recent tax increases and massive wage cuts.

But Murphy’s Law isn’t the only piece of wisdom here. As Italy’s Finance Minister Giulio Tremonti told reporters in Washington last Friday, “If your neighbor’s house catches fire, it’s not to your advantage to sit back and do nothing.” To put it quite simply, he argued, if you don’t step in, “you cannot fool yourself into thinking that just because your house is bigger and more beautiful, that it won’t be at risk. In case you are wondering, I am speaking about Germany.” Others may think differently, but this is the piece of wisdom I would suggest here.



Out of the night that covers me,
Black as the Pit from pole to pole,
I thank whatever gods may be
For my unconquerable soul.

In the fell clutch of circumstance
I have not winced nor cried aloud.
Under the bludgeonings of chance
My head is bloody, but unbowed.

Beyond this place of wrath and tears
Looms but the Horror of the shade,
And yet the menace of the years
Finds, and shall find, me unafraid.

It matters not how strait the gate,
How charged with punishments the scroll.
I am the master of my fate:
I am the captain of my soul.

~ William Ernest Henley, Book of Verses, 1888

InvictusArguably William Ernest Henley’s best-remembered work is the above poem, which inspired Nelson Mandela during his 27 years in prison, and which gives the film Invictus its title. In the movie Mandela gives the poem—as a metaphor for never giving up—to François Pienaar, the captain of the South African rugby team, before the start of the 1995 Rugby World Cup, when the Springboks, widely assumed to stand a snowball’s chance in hell against the New Zeeland All Blacks and their superstar winger Jonah Lomu, created one of the greatest upsets in recent sporting history.

As a matter of fact, Clint Eastwood’s Invictus, which I recently had the pleasure of seeing, tells you many things about Nelson Mandela (played with gravity and grace by Morgan Freeman), since “it is predominantly an absorbing character study of one of the most extraordinary characters of our time,” but it wisely does not attempt to tell Mandela’s whole life story. Though, according to some critics, “the trouble with Invictus is that it is more monument than motion picture,” I thoroughly enjoyed it and highly recommend it to anyone.

In the video below, the real François Pienaar recalls the impact that Nelson Mandela had on the historic 1995 RWC victory.

Nine reasons to be alarmed about Biden's stance on Iran

According to Vice President Biden Iran has never been more isolated and the international community never more united against it. He also thinks proposed (tougher) UN sanctions against Iran—the US said yesterday it wants to see a sanctions resolution submitted “as soon as possible” within the UN Security Council—will stop Tehran’s nuclear weapons program. Wishful thinking? Realistic hope? Well, apart from the obvious objections about whether or not new sanctions will actually serve the West’s interests, here are nine reasons why to be alarmed about Biden’s stance on Iran. By Peter Huessy, president of GeoStrategic Analysis and Senior Defense Consultant at the National Defense University Foundation.