Here it comes... Markets are going up and down, not knowing if euroland is falling apart or not. "Scheitert der Euro, scheitert Europa", warns Angela Merkel, Chancellor of Germany. Other EU leaders echoes this message, declaring that the eurozone crisis is not to be blamed on the euro but on certain countries, foremost Greece and Italy, having taken on too much debt. But this analysis is wrong. The cause of the crisis is the common currency, the euro. It would be a blessing if the euro were to be replaced with freely floating national currencies. Exchange rates would then be adjusted to reflect each country's competitiveness, which would give a country like Greece a chance to recover. The euro system is very rigid, leaving individual countries without the protection of a national currency and interest rates fitting the country's economic situation. The euro experiment might very well result in a European depression if the euro leaders don't change course and give it up.
The weaker eurozone countries basically walked into a trap when they joined the euro. That's the conclusion of several studies by economists, for example Kash Mansori. Euro adoption encouraged capital to flow into these countries, but when those capital flows came to a sudden stop, and lending rates skyrocketed, they were caught in the trap. This is an inherent weakness in the euro system. Individual countries have no means to deal with an overheated economy, or its opposite, without their own currency and their own interest rate policy. What's left in the present situation is to hit the people directly with tax increases, spending cuts, cuts in wages and finally unemployment.
The way out of this mess is to scrap the euro and reintroduce national currencies. That's no disaster; that's to save Europe.
Wednesday, February 2, 2011
The Egyptian people has through peaceful mass demonstrations demanded the resignation of President Hosni Mubarak as a necessary first step to democratic reforms. But last night Mubarak said he would stay on as planned until elections in September. Today Mubarak supporters began attacking anti-government demonstrators. It seems Mubarak is trying to preserve his oppressive regime, in the face of both Egyptian and international opinion.
Not that international support for the democracy movement couldn't have been stronger. Both the US and the EU have been dragging their feet and neither has come out decisively on the side of the demonstrators. However, yesterday US President Barack Obama made an effort to side with the opposition, calling for the "transition" to start "now". Obviously he didn't dare to directly call for Mubarak to resign.
Despite Obama's effort there is no sign of Egyptians waving the American flag. To that end US policy in the Middle East hasn't convinced people that the US is a true ally in the struggle for democracy. Indeed, former Secretary of State Condoleezza Rice acknowledged this in her 2005 speech in Cairo:
Unfortunately, the policy of supporting democracy hasn't been firmly pursued, reflected in Obama's hesitant response to events in Tunisia and Egypt. Mubarak needs to be told to step down now. Anything less will jeopardize the transition to democracy in Egypt.
Thursday, October 14, 2010
Last week Liu Xiaobo was awarded the Nobel Peace Prize for his fight for human rights in China. He was championed by, among others, Vaclav Havel, who's successful struggle for human rights in Czechoslovakia has been a model for Liu. In December 2008 Liu and other Chinese dissidents launched Charter 08, demanding free speech and a multiparty system. For that Liu was sentenced to 11 years in jail. China now faces the international embarassment of keeping a Peace Prize Laureate imprisoned. Chinese officials are doing their best to condemn the choice of Liu.
In another development an opposition within the Communist Party is emerging. Some of the old guard, like Mao's former personal secretary, has had enough of the censorship system and they are calling for free speech, a free press, and a free Internet. Their demands are presented in a letter to China's parliament, signed by 23 Communist Party elders. In it they compare the state of free speech in China to other nations: "Our present system of censorship leaves news and book publishing in our country 315 years behind England and 129 years behind France." The outspoken veterans may constitute the most serious challenge yet to the conservative party elite, strengthening the movement for democratic reforms in China.
Monday, June 14, 2010
Turkey wants to become a member of the European Union (EU), an aim supported by Sweden and several other EU countries. But recent developments give further evidence that Turkey would be an odd bird in the EU family. Turkey continues to deny the mass killings of Armenians in World War I and protested angrily when the Swedish parliament called it a genocide. Then in May Turkey supported the Ship to Gaza flotilla, severing its ties with Israel. As Christopher Hitchens points out in his analysis of this event, Prime Minister Erdogan seems set on de-secularizing Turkey, a move that won't sit well with the EU. And last week Turkey, and Brazil, voted against the UN Security Council resolution on sanctions against Iran. (See Fred Kaplan for specifics.) Joining forces with Iranian President Ahmadinejad is a bad sign for any leader wanting to play a role in the civilized world.
Saturday, November 7, 2009
In 1989 Eastern Europe said goodbye to communism. The most important force in the uprising was the Solidarity movement in Poland. One of the Polish leaders was Adam Michnik and in a Wall Street Journal interview we're reminded of what he once said: "Solidarity has never had a vision of an ideal society." Michnik, knowing well how visions like the classless communist society lead to totalitarian dictatorship, prefers a society that "wants to live and let live". There's a lesson here for all idealistic people to take it easy and always stay democratic.
Saturday, September 12, 2009
At the last G20 meeting in London on 2 April world leaders promised to reject protectionism but since then many nations have taken steps to protect their own businesses against foreign competition. In the runup to the next G20 summit in Pittsburgh on 24-25 September President Obama last week decided on new measures to curb imports from China. Punitive tariffs will be put on Chinese tires and steel pipes in an effort to help US manufacturers. The Wall Street Journal thinks this will open for demands from other industries to get protection, too.
China objects naturally, and they are right that the US are breaking promises made not to combat the economic crises with protectionism. One can only hope that other countries don't follow the lead of the US in this case. The world economy needs more trade, not a trade war.
Friday, September 4, 2009
In June Honduras president Manuel Zelaya was deposed from the presidency on the order of the country's Supreme Court. Zelaya had violated the constitution by seeking a referendum to change the one-term limit on the presidency. The outside world, led by Venezuela, has called what happened a "coup" and demanded that Zelaya be reinstated as president. But they are all wrong since it wasn't a coup. The laws of Honduras were followed and now there will be new presidential elections in November.
What happened in Honduras is described in this July BBC report. Like everybody else the US abandoned Honduras in what seems a move to please the left-leaning Latin American continent. Wall Street Journal's reporter on Latin American affairs likens the US treatment of Honduras to old time US imperialism in Latin America, although this time to support a left-wing movement. Read Mary Anastasia O'Grady's latest column here.
Yesterday Secretary of State Hillary Clinton met with Manuel Zelaya. The US is now increasing its pressure on the Honduran government by holding back financial support. See BBC article here and Department of State press release here.
The US, the EU and everybody else should stop interfering in Honduras democracy. Not even Zelaya's own party wants him back so why should other countries want it?