And were an epitaph to be my story I’d have a short one ready for my own. I would have written of me on my stone: I had a lover’s quarrel with the world.
Commentary & Analysis
This is the 21st century, which is why we should bail out Greece.
You see it a lot in historic and fictional boxing matches – underdogs who come away victorious because they are able to outlast an opponent as he wears himself down. Let me make a quick comparison using this underdog/prizefighter analogy …
Current underdogs: European policymakers.
Current prizefighters: me, the market, and Slovakian Richard Sulik.
Policymakers are battling seemingly insurmountable economic and market forces:
- Moody’s downgraded French banks last week
- S&P downgraded Italy this week
- China says it prefers US Treasuries because the dollar “is relatively safer than the euro”
- Bank of China stops FX forwards and swaps trading with European banks
- German investor confidence is the lowest it’s been in more than 2 and a half years
- Stock markets aren’t happy; S&P 500 and FTSEurofirst 300 …
Everything is pointing down. But to be honest, this whole process is wearing me down. Each day it’s something new: either more evidence that the Eurozone is crumbling or more news that policymakers are staging another weak-wristed 1-2 punch to knock back the juggernaut that threatens their survival. How many times can I really write about the same things that are going to ultimately bring down the Eurozone despite the best efforts on the part of the pesky policymakers?
I guess I (and the other prizefighters among me!) don’t’ have a choice but to keep going.
So today, I’ll turn to Barack Obama’s recent comments on Libya for some insight into what’s coming for the eurozone:
Libya is a lesson in what the international community can achieve when we stand together as one. We cannot and should not intervene every time there is an injustice in the world. And it’s also true that there are times when the world could have and should have summoned the will to prevent the killing of innocents on a horrific scale … This time we, through the United Nations, found the courage and the collective will to act.
Yes, I know – it sounds like a boilerplate speech on foreign policy. Take out ‘Libya’ and you would have no clue which of America’s last 4 or 5 Presidents uttered these words. But the real message didn’t fully resonate until President Obama said:
This is how the international community should work in the 21st century – more nations bearing the responsibility and the costs of meeting global challenges.
I get shivers reading that. (And not the “I got a kiss on the first date” shivers, but rather the “I think there’s an angry bear approaching my campsite” shivers. Not good.
Everyone knows President Obama is not high up on the Facebook’s “Like” tally. So maybe he’s simply trying to change that by instilling some confidence among anyone who might think he was an integral part in the (yet to be determined) Libyan success.
It also seems the President could have been sending an indirect message to Germany who isn’t keen on “bearing the responsibility and costs” of bailing out Greece et al. Or maybe the President was directing his message to Slovakia instead. From Spiegel Online:
The government under the Prime Minister Iveta Radicova has turned the population against itself. Despite an impressive economic record, the country is still Europe’s second poorest and in some regions one in three people are unemployed. The government leader has adopted a tough cost-cutting plan and can hardly dare asking for more from her people. But that’s exactly what she must do: Slovakia is obligated to contribute some €7.7 billion ($10.9 billion) to the euro-rescue fund. It’s a hefty sum for the formerly communist country with a mere 5.4 million inhabitants. At the moment it is highly unlikely that Radicova can rally a parliamentary majority to support the plan.
But that’s not possible, right? I mean Obama summoning the wealthier Germany is only natural; but asking the less affluent Slovakia to pay their share is incomprehensible.
Maybe it’s time Radicova and Obama share a beer in the rose garden so they’re both seeing eye-to-eye on this. I’m sure something can be done amongst the international community so that one of Europe’s poorest countries doesn’t have to bear any responsibility and cost of bailing out others among Europe’s worst off. More from Spiegel Online:
In Brussels the Slovaks are already notorious for their lack of solidarity. A year ago the prime minister and subsequently the parliament rejected calls to provide any financial help for Greece . Slovakia has put up with painful reforms "without being given a cent," the prime minister argued back then.
‘A Direct Path to Socialism’
But there is more at stake in autumn 2011. If Slovak parliamentarians vote against the new EFSF then the plan to support highly indebted nations will collapse. That scenario could lead to the demise of the common currency and no one knows for sure which countries could be brought down along with Greece.
For this reason Radicova has spoken out in favor of the rescue package — but she is virtually alone in this. Leading the chorus of opposition to the EFSF fund is her coalition partner, Richard Sulik of the Freedom and Solidarity (SaS) party, whose votes she relies on. The rescue payments would lead the country "on a direct path towards socialism," he has warned, "we have to let Greece go bankrupt."
Sulik, who is also speaker of parliament, does not approve of state actors or the EU getting mixed up in the economy. He himself owes his business success to the fact that Slovakia has fewer market regulations than most European countries. The self-made man, whose risk-taking entrepreneurial spirit made him a millionaire, has become an icon of success in Slovakia two decades after the end of communism.
I guess President Obama might as well extend the beer garden invitation to Mr. Sulik as well. And make sure he knows this is the 21st century and without his vote you can’t the Eurozone can’t win.
I guess I still have a few punches left. But does the euro?
The resistance at $1.45 and $1.40 looks too powerful. But I guess the moral of this story is we better not count out the underdogs until they’re laying face first on the mat.