Archive for April, 2013

Why the Euro will Survive – and Thrive

American and British commentators are often surprised, annoyed or dismayed by the fact the Euro trudges on, as both the European Central Bank (ECB) and the core states of Europe do what is necessary to protect the currency and avoid contraction of the Euro zone.   Why are German taxpayers willing to pay so much to protect banks in Ireland, or government debt in Greece, Portugal and Spain?   Why do Greeks accept an austerity program that put them into depression – and in 2012 elect a new government that favors that very program?

First, what is the Euro crisis?    On the surface it’s a sovereign debt crisis – southern European states have so much debt that investors are doubting they can pay it back.  This means that to sell bonds states have to offer a higher interest rate, since the risk is higher.  However, it’s not just a debt crisis.   Consider these bond rates:

bonds

Note how Germany and the UK’s rate has been dipping, meaning it’s easier for them to sell bonds, while Spain and Italy’s cost more – though historically near the average.  Only Ireland and Greece had an extreme crisis.   Those two were caused by very different factors.  Ireland’s deregulation of the financial sector was patterned on American practices, and thus they got hit hard by the bubble bursting.

The problem for Greece is not just debt, but structural weakness in their entire economic system (that’s why it’s always a false comparison when politicians try to compare the US or even California to Greece).

debt explosiondebtgdp

 

The first is telling – there has been a debt explosion throughout the Eurozone, including Germany.   This makes clear that one of the structural aspects of this crisis is a need to reduce debt.    Debt always goes up in a recession since revenues are down and claims for aid increase – yet with the bursting of the bubble it has become crystal clear that debt to GDP ratios above 60% are unsustainable.

The second chart shows that there is wide variation of debt growth since 2008 – but Ireland, Greece, Spain and Portugal have had the greatest debt increase, and are four of the problem states.  Italy’s debt growth is less, but while Italy hasn’t had a debt explosion, they’ve had consistently high debt.

spainitalydebt

 

Italy’s actually made significant structural reforms and was not hit as hard by the recession as others in terms of new debt – yet it’s debt level is one of the highest in the Eurozone.

The problem in Europe is that there is a core set of countries with strong economies that simply have to find a way to reduce debt and a set of weaker economies that have managed to hide their structural problems with debt or financial gimmicks.  The recession laid that structural weakness bear.

Many Americans want to blame European social welfare programs for the crisis, but that’s’ also easily disproven.  The chart showing debt to GDP ratio growth since 2008 shows Sweden actually reducing debt, and the Scandinavian countries faring well.   Germany is running a 7% current account surplus and remains the engine of Europe.   Countries with the best social welfare systems are faring very well, even better than the US.

germany

This is evident in bond rates.   Germany’s 10 year note now has a yield of 1.3 %.  That means that despite high debt levels, investors have faith in German bonds thanks to the strength of the German economy.    The US, UK, Sweden, and France all have yields of about 1.8% – still very cheap.   Ireland’s yield is now under 4%, thanks the EU and IMF recapitalizing Irish banks.   The worst of their crisis seems over – Ireland’s was a banking crisis caused by financial deregulation and that’s easier to solve than structural debt crises.

Ever since the ECB, EU and IMF made clear they’d do whatever it takes to protect the Euro, Spanish and Italian yields have gotten down around 4.5%  – historically a common yield.    Portugal is over 6%, and Greece still over 11%, meaning that markets still aren’t confident about Greece despite the EU bailouts.  Clearly, though the sense of crisis is passing, the smart money is now on the Euro.

So why – why has the Euro proven so resilient and gotten so much support?   Simply, the Europeans realize that if the continent fractured between the wealthy core and poor fringe, it would harm everyone.  Greece, Spain and Portugal, late joiners of the then European Community  (EC), would see their progress towards modernizing their economies punctured.   The core countries would also suffer.  They’d lose markets in the fringe countries, and their currency — perhaps a contracted Euro – would appreciate so much that their exports would suffer.

If the Euro were to break up, the poor countries would do like Iceland did – allow a depreciation of the currency to effectively cut everyone’s pay by 50%.    But defaulting and inflating on the fringe would do severe damage to the core’s banking system, as they are heavily exposed to that debt.   So it’s in the core’s interest to make sure that doesn’t happen.

Some of called Merkel the "Abraham Lincoln" of Europe, keeping the EU together

Some of called Merkel the “Abraham Lincoln” of Europe, keeping the EU together

German Chancellor Angela Merkel, in demanding countries undertake austerity programs and reform their economic structures in exchange for bail outs, has been criticized as wanting to force everyone to have the German model economy.   Germany’s gaining control of Europe!   But the German model works – and it’s what Sweden and other northern European countries follow.  You base your economy on supporting production and having sound fiscal and monetary policies.

If Italy, Greece, Spain and Portugal aren’t forced to structurally adjust to the realities of 21st Century globalization, they’ll fall behind and might never recover.  If they do – as hard as the next few years will be – they could emerge with new economic structures in place to allow them to grow and have sustainable, productive economies.   That will be good for everyone.

What the skeptical commentators don’t get is that the European Union has developed a different notion of sovereignty, one that sees the destinies of the European states as linked.  That’s a different way of thinking, people aren’t just German or French, but also European.   Such a re-conception of sovereignty is incomplete and has pockets of opposition.  But as Merkel pushes the EU towards a model of fiscal union, with other states recognizing it is in their self-interest to follow, the European Union might once again defy skeptics and prove itself stronger than ever.

 

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Our Angels Outnumber our Demons

bostonbomb

Trust drives this world.

Think of it, you’re on a crowded expressway with numerous other cars darting between lanes at over 60 miles per hour.  You’re trusting that none of these drivers decides “ah, screw this” and spin out to cause a massive wreck.  If you cross a crowded street you trust that the cars will stop to let you cross.   When you’re at a major event with masses of people you trust that no one is going to try to turn that into an opportunity for mass murder and carnage.

Alas, sometimes that trust is broken.

It’s easy to lose oneself in the sorrow of the Boston bombings, especially the plight of eight year old Martin Richard, who was killed by the explosion as he was there to see his dad cross the finish line in the Boston Marathon.    The pictures are horrific – blood, lost limbs, people in agony, not believing how events are unfurling.   A day that is joyous – Marathon day, with a Red Sox game in the morning and a Bruins game at night – turns tragic.

Eight year old Martin Richard was one of the fatalities

Eight year old Martin Richard was one of the fatalities

Yet the news isn’t all bad.   In a tragedy the ability of humans to reach out to each other, help and often act heroically comes into focus, such as these inspiring images from Boston.    How people empathize, cry and feel a bond with the victims speaks to a core aspect of human nature:  we are connected.   We feel that connection.   Some people find themselves almost unable to function due to the pain caused by the suffering of others.   Some reach out to their loved ones, embracing the reality that they are healthy and together now, regardless of what the future may bring.

Think for a moment – what if it were reversed?  What if all those heroes and average folk who strive to help after an event were all willing to kill and destroy for the sake of some abstract cause?   What if all those who feel viscerally for the victims and are saddened by the events were supportive of murder and terror?    What kind of world would we have?

It’s natural to grieve for humanity at such a time.   The senseless violence, the ability of people to turn off their humanity and kill for some ideology or cause – what a sad world!   To that I say – not so fast!

If people were truly prone to senseless violence, this would happen all the time.   Crowds in sporting events, parade routes, marathons like this are common throughout the country.   Security is never adequate to prevent a determined attack.  It will happen when people are truly motivated to kill.   Yet it is rare.

Former Patriot Joe Andruzzi pitches in to help rescue the victims

Former Patriot Joe Andruzzi pitches in to help rescue the victims

Instead of grieving for humanity or donning a pessimistic view of the world, the fact that such an event stands out as an exception to the norm should cause us to recognize the deep bonds of social trust and connectivity that define our world.   The deaths are tragic – but how many of the 30,000 plus killed each year in traffic accidents are also children?  The fact that this kind of event is so rare says something powerful about the essential goodness of humanity.

Moreover, the way people come together, comfort, help and console shows that our angels far outnumber our demons.  Boston hospitals are turning away blood donors because so many volunteered.    So yes, grieve for the victims, let tears flow for the family that lost their son Martin, feel the sadness of Bostonians grappling with what this means for the city, but don’t become cynical.    Don’t cancel travel out of fear, don’t think that evil is common.   We notice the terror act, we should also notice how often we come together peacefully.

As we grieve for the victims we should celebrate our angels, whether first responders, people who care for and comfort the victims, blood donors and simply those of us who feel from a distance.   Our angels are everywhere, in broad daylight.  Our demons are few and hide in the shadows.    They do not define us.

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Sex and Love

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I’ve posted a lot about consumerism and the corrosive aspects it has on our culture and our ability to be happy.  Two articles I’ve read in the last couple days convince me that the problems underlying materialist consumerism are also influencing love and sex, and not in a positive way.

One story involves the growth of completely impersonal “hook ups” solely for sex, especially among young people.  It was a Wall Street Journal review of the book The End of Sex by Donna Freitas.   It isn’t that I morally condemn such promiscuity — it’s not for me but hey, everyone has to make their own choices.    It’s more that as Freitas notes, the “hookup culture” (which apparently 70% of college students admit to participating in) increases the risk of assault and abuse.   That comes from the impersonal nature of the encounters.

In the ‘hook up’ culture two people are supposed engage in sex totally devoid of emotional connection.   The other is just a body to be used for sexual gratification.   Freitas notes that this is using humans as a means to an end, rather than treating them as an end themselves.     Much of the time, especially with emotionally vulnerable young women, this puts them at real risk of abuse.

Perhaps more disturbing is that this emphasizes the mechanistic side of sex over the emotional or even spiritual.   If young people learn to see sex as nothing more than a pleasurable physical act, it may be hard to be open to intimacy — indeed, the “hook up culture” seems predicated on a dismissal of romantic and intimate love as naive.

This mirrors the way our materialist consumer culture focuses on “stuff” over values.   The spiritual and sublime aspects of human existence give way to a cold mechanistic view.    Approaches like Carl Jung’s intuitive and spiritual psychology are replaced by evolutionary biology, where humans are just mechanisms used by genes to try to keep the genome alive.   If there is only body and no soul, then love is just an illusion.

Look at our culture now – how easy it is for people to use others as means to their ends.   People cheat others, treat them unfairly, rationalize the obscene behavior of banks and mortgage companies during the real estate bubble, and look the other way when someone is suffering.   If we’re just stuff on a spiraling rock in space, then nothing matters.  Collect sexual encounters and material objects.   What else is there to life?

Consumerism and the hook up culture breed cynicism and a kind of despair – if there is no meaning, then there is only sensation.   But sensations get boring and thus more excitement is needed.   Without meaning the material can never truly satisfy.  Sexual encounters need to have more drama, consumers need to always buy more, and people live trying to fulfill  needs that cannot be met.   Not by the new Porsche, nor by the wild (and usually drunken) hook up.

The review said that the writer, a Religious Studies Professor, doesn’t condemn casual sex (though she spends two hundred pages detailing its corrosive effects) but argues instead for a more open, healthy view of sexuality.   And that leads me to the other article.

Allegheny College hosted in its chapel a talk “I heart the Female Orgasm” which included (from the previous link):

• An emphasis on individuals making sexual decisions that are right for them, including whether to use the information now or when married or in a serious relationship
• Analysis of the messages women receive about their bodies and sexuality from media, religion, families, and elsewhere.
• Body image, and the links between “befriending your body” and experiencing physical pleasure
• The value of learning how to say “no” to sex—and the problems college-age and adult women sometimes encounter when they realize that’s all they ever learned
• An opportunity to talk openly in same-gender groups during part of the program
• Female anatomy
• Tips for partners about being patient and respectful
• The problems with pressure to have an orgasm, to orgasm faster, to have multiple orgasms, to orgasm with a partner, to fake or not fake orgasms
• Answers to the most common questions about orgasm

This created a visceral reaction from some conservative commentators who accused Allegheny College of hosting a session on “how to masturbate.”   They said the talk was smut disguised as education, put on by the radical left to denigrate religious values.   The fact it was in the chapel got others riled up.

I could go on and on about what that says about the politics in play (is the next chapter of the ‘war on woman’ the ‘war against the female orgasm’), but I won’t.    I find the increasing openness to talk about sexuality refreshing – sex is universal, almost everyone wants it, and most people know very little about it.   The idea it is never to be talked about is irrational – something so important should be understood and discussed.   Now more than at any time in the past that is happening.

To me the best defense against the corrosive effects of the “hook up culture” is for people to learn about, understand and talk about their sexuality.    Sex is pervasive in the media, often in very unhealthy ways.   The messages given culturally tend to increase ignorance and misunderstanding, creating numerous problems such as low self-esteem, intolerance and fear.   Knowledge about ones’ sexuality – and an openness to talk – is power: Power to reject abuse by those who will manipulate the situation to treat people as objects.

Call me naive, but ultimately I believe the capacity not to see others as only a means to a sexual end makes true love possible.   Just as materialism devoid of spirit becomes a cold playground of things that cannot satisfy the hunger one has for more, sex devoid of love becomes a playground of momentary thrills without meaning.   And everything is better with meaning.

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Children are not property

The Daily Beast reports another bout of silliness  by the religious right in the reaction to a statement by Melissa Harris-Perry that “Your kids don’t belong to you-but the whole community”?

Now, I can see someone not liking the statement, but the silliness is where they go with it.  They trot out the old 20th Century foes of “communism” and “Leninism” to make it sound like the goal of the “left” is to confiscate children and make them loyal to the “state” because they “belong” to the whole community.

Do you belong to a community?  Of course!   You belong to many communities; we all do.  I belong to the Farmington community, the Mallett PTA community, the University community, the community of faculty who lead travel courses, etc.   Belonging to a community is not communistic, it is natural.

Children belong to the whole community, not just the school community or the community of parents.  They will work to support the retiring generation, they will keep society going and enhance the life of the community.   Her point was not to say that the community should control children, but that we should invest in education and programs to help make sure our children have the best possible future.

So why the wild reaction?   One word: property.   Some groups on the religious right have a notion that children can be seen as the property of the parents.   The parents can raise them as they want, educate them or not educate them, indoctrinate them, control them, and sometimes even abuse them.   To these people the parent owns the child, just as a master might own a slave.

Such thinking is inhumane.   Children are humans with all the rights of any human.    Beyond that if you look at human history we are by nature a collectivist species.  We form families and villages.  Villages look at the good of the whole, including not just all the people but the traditions and values of the community, as being more important than the individual.  This is true world wide, and throughout history.

Erich Fromm notes that what changed in the West was the process of individuation, whereby people started to separate from the community and think in terms of their own self-interest.   This is not a bad thing.  It is a particular part of our culture.   That individuation is why we strive, compete and progress – why we reject traditions and embrace change ranging from giving women equal rights to allowing gay marriage.

Yet this capacity for progress rests on a potential contradiction with our collective nature.   We still yearn to form communities.   Look at the popularity of social media, Facebook and blogger communities.    People have psychological difficulties with the demands of trying to be an individual responsible for their own happiness and choices, ranging from depression to anxiety and eating disorders.    People try to escape the pressure of the modern world through alcohol, drugs and other addictions.     We seek the comfort of tradition and a supportive village in a world that finds us disconnected and on our own.   Life for us has become materially easy and psychologically/spiritually difficult.

Which brings us back to the children.   The greatest gift we can give the next generation is the capacity to exercise their cultural individualism with a proper respect for community.   Respect means to recognize I do belong to my community.  I am part of it, I should act to support it and others who are in it.    Individualism requires that people be strong enough to be themselves rather than conform to the expectations of others, secure enough to look inside and learn who they are without feeling like their real self is weird or inadequate, and tolerant enough to accept the choices others make in expressing their individualism.

We have to give children the tools to navigate a world that can be daunting and intimidating.  Only if they learn to be strong, secure and tolerant individuals with respect for their community can they live awake, not giving in to the cultural hypnosis aided by marketers trying to define what one needs to be happy, normal or ‘acceptable.’   They will rejoice in who they are, rather than fear that others will see beneath the facade.  They will accept others for who they are, making real friendship and love, both personal and within the community, possible.

Unfortunately, the lack of funding for education, the removal of the arts from so many school districts (while competitive sports remain hot), the lack of respect for teachers, and our fetish with an individualism devoid of community with children seen as akin property, makes it difficult to give children the life skills they need to remain strong, secure and tolerant.   I take that as Melissa Harris-Perry’s point, and agree.

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