2018 and 2022

Russia? That makes a degree of sense given the way in which Russian commodity wealth is making itself felt throughout the sports world. And Vladimir Putin is nothing if not a sports enthusiast. But Qatar? It’s not as if I was planning on attending the World Cup no matter where it is, but an Arab country seems like a rather unusual choice of venue given the present difficulties from Afghanistan to Iran.

An Irish Hitler?

Economist Barry Eichengreen reconsiders the European Union:

It pains me to say this. I’m probably the most pro-euro economist on my side of the Atlantic. Not because I think the euro area is the perfect monetary union, but because I have always thought that a Europe of scores of national currencies would be even less stable. I’m also a believer in the larger European project. But given this abject failure of European and German leadership, I am going to have to rethink my position.

The Irish “program” solves exactly nothing – it simply kicks the can down the road. A public debt that will now top out at around 130 per cent of GDP has not been reduced by a single cent. The interest payments that the Irish sovereign will have to make have not been reduced by a single cent, given the rate of 5.8% on the international loan. After a couple of years, not just interest but also principal is supposed to begin to be repaid. Ireland will be transferring nearly 10 per cent of its national income as reparations to the bondholders, year after painful year.

This is not politically sustainable, as anyone who remembers Germany’s own experience with World War I reparations should know.

I like Eichengreen’s work, but he is incorrect. The failure of the European Union is not a failure of French and German leadership, it is the structural failure of yet another European experiment in authoritarian, anti-democratic, centralized empire. Now, I tend to doubt that Ireland is going to develop into the 21st century version of National Socialist Germany for numerous reasons, chief among them the fact that it is an island without a navy. But given the harsh burden being imposed on the Irish people by their European and Irish governments for the foreseeable future, one can see where The Economic Consequences of the Peace might make for a timely read right about now.

A Congress of Suckers

In which Washington D.C. is shocked, shocked, to learn that greater part of the money that was so desperately needed to save the American banks that were deemed too big to fail actually went to their European counterparts:

Foreign banks were among the biggest beneficiaries of the $3,300bn in emergency credit provided by the Federal Reserve during the crisis, according to new data on the extraordinary efforts of the US authorities to save the global financial system.

The revelation of the scale of overseas lenders’ borrowing underlines the global nature of the turmoil and the crucial role of the Fed as the lender of last resort for the world’s banking sector. However, news that banks such as Barclays of the UK, Switzerland’s UBS and Dexia of Belgium borrowed billions of dollars at favourable terms from US authorities may further anger critics already enraged about the Fed’s rescue of Wall Street….

Barclays was the biggest cumulative borrower from TAF. The UK bank, which bought the US operations of Lehman Brothers out of bankruptcy in September 2008, borrowed a cumulative $232bn from the TAF through various subsidiaries.

It’s interesting to see that nearly four times more money went to the biggest European bank than to the biggest American bank. But as we’ve seen everywhere from Ireland and Iceland to the USA, this is always how the process of structural corruption plays out in a modern “representative democracy”. The legislature forces through a pig-in-a-poke by any means necessary, threatening everything from widespread cannibalism to tanks in the streets if the legislators don’t ignore the protests of the people and obediently “address the crisis”. Then, a few years after the fact, it is learned that the actual purpose of the law was entirely different than the one that was provided in order to push it through the legislature.

I don’t have much sympathy for the people, however. Because it doesn’t matter how many times this happens, they will fall for it just as readily the moment that another crisis is announced and another solution to avert it is presented.