On the euro crisis

I have just been reading the comments following an article by Eric Reguly in the Globe and Mail's Report on Business.  Reguly makes the point that anger against foreign demands for Greek austerity is rising, and a lot of it is aimed at the Germans, who are providing much of the funding for Greece's financial lifeline as lenders of last resort.

The more than 400 comments show very little sympathy for the resentment of the Greeks. Very, very little.  The Greeks are characterized as lazy, crooked, and beggars who can't be choosers.

Several commentators cite the old joke I first saw in the comic strip the Wizard of Id:  The joke was that the  "Golden Rule," was "he who has the gold makes the rules." This is used as a point in favor of the "German" position.  But in fact these Greek debts are not gold, nor do the Germans and others have gold to give to Greece.  The money involved in this crisis includes a lot of funny money created by a few politicians and bankers who committed their populations or customers to guarantee the profitability of basically unsound loans.  The question is really who will pay for this imprudence and sharp practice.   In the conflict between lenders of last resort and Greeks resisting debt slavery, the Greeks have almost as much ability to write the rules as the lenders of last resort who are trying to save the banking system from the consequences of its foolish behavior.  Who is the bigger crook, who should suffer, and who can be blamed, can be treated as purely moral questions, but that attitude will not save Greece, the euro, or the banks.

Image:  a gold ecu in more hopeful days for the pan-European currency.

Big spending liberals/social democrats?

Brian Topp in the Globe and Mail sees it another way, taking off from the Greek crisis:

The details have been well covered here on globeandmail.com. It is Papandreou's conclusions about the future that merit thinking about next. “Are we too weak to deal with the financial and banking system?” he asked. “Are we too weak to deal the need for transparency in the financial markets? Are we too weak to deal with the ratings agencies? Are we too weak to fight tax havens?” He noted that bond rating agencies could destroy Greece's financial plan with a single additional downgrade. They have more power over the future of Greece than its people or its Parliament, “and that is totally unacceptable.”

Precisely so – which is why responsible social democrats in all jurisdictions are, and should be, allergic to excessive reliance on debt to finance government.

This is in stark contrast to conservatives in their modern form, eager as they are to finance tax cuts for their friends and other reckless spending through public debt. Doing so provides a perfect pool shot from their perspective. The rich get richer, and government is destroyed. Perfect!

But what we are seeing on our television screens from Athens is the inevitable consequence.

Certainly in Canada it has been the Conservatives who have been most irresponsible with deficits. But no one beats the champion George W. Bush, jr.

Read the whole article.