Are the Germans about to give up on the Greeks? Are they about to allow the Greeks to leave the euro? It certainly feels like that. The EU has just issued an ultimatum to Greece. All the talk of a friendly deal is gone. Greek politicians say they need more time to examine the austerity attached to the release of the next tranche of the €110bn loan.
But austerity isn’t working and the Greeks know it. Athens adopted the troika’s strict budget targets in May 2010 — nearly two years ago — in return for a €110bn rescue. Last year the Greek economy shrank by 6pc and the country’s budget deficit is still close to 10pc of GDP. Its current account deficit is also stuck at 10pc of GDP and anyone who could have got their money out of Greece will have done so ages ago.
With no credit, unemployment has risen to 18pc. As we pointed out in this column last week, over half of young Greeks are out of work. This can’t go on. And as the great American economist Herbert Stein observed, “when something can’t go on forever, it will stop”.
Leaving the euro now must be an option for the Greeks, because they are looking down the barrel of what they see as years and years of indentured slavery to foreign creditors. Maybe they will vouch for the uncertainty of a new drachma rather than the absolute certainty of 10 years of contraction. Who wouldn’t?
At the highest level in Europe the cracks are beginning to appear.
In Brussels, Jose Manuel Barroso — maybe thinking that his native Portugal will be next — insisted that eurozone leaders would continue to strive to keep Greece in the euro. This was in contrast to Neelie Kroes, the Dutch commissioner who suggested to the Dutch press that a Greek exit wouldn’t be a big deal.
The Portuguese should be worried because with the latest round of cheap ECB financing, the Germans may be confident that they could allow Greece to go overboard without capsizing the project. The language has changed in the past week. Up to now, the deal was to quarantine Greece on a drip-feed of money, keeping it barely alive but sending the message out that while Greece is different, the family will look after it.
The Greeks are gambling that they can get cash without having to cut yet more.
They are hoping that they can just borrow more and more to maintain their standard of living. The Greek threat is if you don’t give us cash, we bring the whole thing down around you. The Greek position or ace is that Germany will blink first. Up to now this might have been the case.
But much has changed over the past week. The ECB is now lending enormous quantities to European banks at 1pc for the next three years. By the end of this month it will have lent close to €1 trillion. The banks are getting a free 5pc carry on this and are delighted.
The Germans might now be thinking that we have enough liquidity from the ECB to call the Greeks’ bluff.
Emboldened by the fall in Italian and Spanish bond yields, what if the Germans see beyond the Greek threat?
If they cut Greece off and inject money into every other nook and cranny of the eurozone, maybe they can get rid of Greece and manage the shock. If this could be achieved, the Germans would be delighted. This would allow them to get rid of a delinquent member and send a strong signal to the rest of them that more messing won’t be tolerated.
If this is an accurate interpretation of the last few days, then it will be reminiscent of the demise of the Gold Standard in the 1930s.
Back then the French behaved like Germany now. The French wanted to punish the Germans when the Germans, like the Greeks, desperately needed to roll over huge borrowing they owed to the Americans.
While the Greeks now are a different proposition to the Germans in 1932, the end game was the same. The Germans abandoned the Gold Standard but the French couldn’t control the consequences.
In fact the Swedes were the first to see through the Gold Standard. They abandoned it, printed money, allowed their exchange rate to fall and slashed interest rates. And guess what? Sweden was the first country to come out of the Great Depression.
Could the Greeks do the same as the Swedes? Yes why not? At the moment, Greece is facing a generation of austerity. It has to borrow 10pc of its GDP just to pay for its imports each year. Its economy is in freefall. The deal with the euro is that every country has to become more German to survive. Greece will never be Germany, so what’s the point?
Leaving the euro would lead to months of chaos as savings were converted to the new drachma. The local banks would see their balance sheets wiped out, if they were to pay their foreign creditors, so guess what? They won’t pay. They will pay in drachma. Inflation will take off and wipe out the debts, which have been converted from euros. The government will balance its books overnight or will borrow heavily from its central bank, which is printing the new drachmas.
It will be the cheapest place in Europe to go on holidays. And like all the other countries that abandon a strict currency regime that they can’t bear — such as Iceland a few years back — the economy will start to grow again. They will fall back on the IMF to stabilise the economy with a big loan, which will be senior to all the defaulted stuff. This worthless debt they will buy back at some ridiculous price. And life will start again.
On the 20th anniversary of the Maastricht Treaty, that’s the way things are likely to work out.
Once the world sees that there is life after the euro, as there was after the Gold Standard and lots of other now defunct currency arrangements, the financial markets will ponder who is next.
Don’t be fooled that this European debt story is over. It is not; in fact the interesting bit hasn’t even started yet.
Brilliant from the New Yorker.
Of Course I Take Pictures of My Penis
and Send Them to People
Why wouldn’t I?
It’s my penis. And as a great man once said, it’s meant to be photographed. Though I have no idea who that great man was.
Where some people have photos of their families on their desks at work, I have photos of my penis. My penis on vacation in the Bahamas. My penis in Madrid, on a business trip, the Prado in the background (slightly out of focus). My penis receiving an award for Outstanding Employee of the Month.
At birthdays and holidays I like to send photographs of my penis to friends and family. My in-laws, Marge and Walter, say they always look forward to getting my penis Christmas card.
Someone asked me recently when I started taking pictures of my penis and sending them to people, and I honestly couldn’t remember. College, maybe? All I know is that one day I picked up a Nikon SLR and thought, “Maybe I should look down my pants and take a photo and then send it to some people.”
And I’m not alone in history.
Teddy Roosevelt, for instance, was a big fan of photographing his penis, and would pose for hours at a time. In Paris, in the twenties, it was all the rage. Hemingway’s little-known short story “Look at This Photo of My Penis” attests to it. Stalin often adorned his dacha with framed eight-by-tens, coyly saying to visitors, “Boy-oh-boy, is that a lovely penis, or what?” (The wrong answer proved costly).
Go back further, of course, and you’ll find the drawings. Jefferson was a madman for it, often sending John Adams dozens of sketches of his penis in a single day. Adams is said to have enjoyed them with his wife, Abigail, who was herself a fan of penis portraiture. Even further back, we find that Michelangelo, Raphael, and Titian all made frequent charcoal sketches of their penises, giving them as gifts (a common practice in Florence to this day). And then there are the famous cave drawings at Lascaux, France, purported to be more than seventeen thousand years old, where one sees dozens of penis portraits, crudely drawn, but a statement in their own right: a plea, as if to say, one cave man to another, “My name is Dave. This is my penis. Let us be friends.”
You enjoy your spinning class, your yoga class, your gardening and bird-watching and power-walking. I photograph my penis and send those photos to people, some of whom I know, some of whom are complete strangers or corporate headquarters. I recently got a very nice note from the head of public relations for Citibank, thanking me for the enlarged photos I sent, suggesting them as lobby murals.
At dinner parties, where I often share photos of my penis on my iPhone with anyone who talks to me, people sometimes say, “Glen. Have you ever considered photographing your testicles as well as your penis?” And always I’m deeply offended. You have to wonder sometimes what people are thinking.
Diarmuid Ferriter on Ireland’s ’embarrassingly archaic, macho and deeply inequitable’ political culture.
So Joan Burton gave a very good account of herself with Charlie Bird the other day. http://www.rte.ie/radio1/marianfinucane/She was dignified, articulate, passionate and there is little doubt but that she will be a great minister. So good was she that it – almost – made one feel better about her sidelining.
But not quite.
Although I don’t quite agree with Marian McKeone http://www.tv3.ie/shows.php?request=tonightwithvincentbrowne&tv3_preview=&video=33569 that affirmative action is not needed in Irish politics – I think at this point the blunt instrument of quotas is going to be necessary in order to crack this impenetrable nut – I do agree with her when she says that Joan Burton was clearly the best person for one of the two jobs in Finance.
It may not have suited – who, Fine Gael? – to have her there, but believe me, it would have suited the country. The fact that she didn’t get the job does a disservice, not only to Burton herself, but to us, the people. As a married woman with a child who is – almost but not quite – in her 40s, I am deeply concerned that few, if any of my interests (which are similar to the interests of many women my age) will not be represented by this new government. Burton in Finance would have been a good start.
Just a final point. The Finnish prime minister had a quick word with RTE news the other night. The prime minister was young, articulate – and a woman.
How long more until this becomes the norm here?
And now Ruairi Quinn is at it too.
“This is one of those questions you can’t win either way, women know more about children than men because they spend more time with children.”
Yesterday, in the library, I met a dad with his little girl. After they finished reading their stories, they were heading off to do the shopping. Then the dad was going to work. Earlier this week, my own little girl’s dad took her up to an open night for her new school. I couldn’t go, because I had to work.
I have the height of respect for Ruairi Quinn as a politician, but his comments are just insulting – to men as well as women.
Yes, more women than men still do spend time with children (I’m sure the stats would bear this out), but more and more fathers are doing day shifts, night shifts, any kind of shifts with their kids, as Irish families change and evolve. I love to see my daughter heading off with her dad to go to ballet, or to do the shopping, or just to hang out. Do I know more than him about her? Probably. Does this mean, when he is put to it, he won’t do as well as me at the open day for the new school? Unlikely.
This is a bad start lads. Pigeonholing women – and men too – is a bad start. Bad start Eamonn Gilmore. Bad start Labour. Bad start Government.
Agree with both maman poulet http://www.mamanpoulet.com/minister-burton/ and Olivia O’Leary http://www.rte.ie/podcasts/2011/pc/pod-v-4m53s080311drivetime-pid0-293496.mp3 that Joan Burton deserved a senior economic ministry.
Why was she sidelined? She is articulate, informed, frank, courageous, honest and consistent. She will, as Maman Poulet says, no doubt make a great minister for Social Protection. But she deserved, given her record in opposition, to be at the heart of the situation. And we, the women – and the people – of Ireland deserved it too.
Don’t just take my word for it. This is what our friend Michael Lewis, of Vanity Fair fame, had to say about her last year.
“And in an hour of chatting about this and that, she strikes me as straight, bright, and basically good news.”
Of course, he also said this: “But her role in the Irish drama is as clear as Morgan Kelly’s: she’s the shrill mother no one listened to. She speaks in exclamation points with a whiny voice that gets on the nerves of every Irishman—to the point where her voice is parodied on national radio.”
Dear God – could we care less about her voice? Bertie spoke in riddles, yet he got to be Taoiseach. Cowen spoke in jargon, yet he was still elevated to the highest position. If Burton was a man, would she have been offered an economic portfolio?
Just asking boys…..
Here’s the Michael Lewis article. Read it and weep.
“Former Green Party ministers Eamon Ryan and John Gormley have said they will give their payments to charity or to the party.
Other TDs who did not get re-elected are entitled to a lump sum of up to 75,000. Government ministers are entitled to a further 90,000.”
Once again, all at the bequest of the cheerful taxpayer.
For all that Greens stayed in government too long, and to my mind, should never have allowed the IMF/EU deal to bed down, the Green ministers did achieve something tangible and were arguably the best-performing ministers in that sorry administration. The fact that they are willing to give their severance payments to charity indicates a level of idealism that is hard to imagine anywhere else in Irish politics. (Will Dermot, Noel, and particularly Bertie ‘the architect’ Ahern be following in their footsteps? Not likely.)
No Greens in the Dail is a loss to Irish politics, and the party did not merit its recent wipeout. We, the electorate, need to be very careful of turning the smaller party in government into the whipping boy. To do so is largely to miss the point.
He’s right of course, it won’t work. And unless there is some form of renegotiation, we the citizens will now pay for the greed of Irish and international bankers.