World

Exit Berlusconi, Enter Uncertainty

AP Photo
It was a busy weekend in Italian politics. The Chamber of Deputies passed the latest round of austerity measures, Prime Minister Silvio Berlusconi resigned, and President Giorgio Napolitano mandated Mario Monti, a respected economist and former EU commissioner, to form of a new government of national unity. The backdrop to all this frenzied activity was the country’s growing liquidity crisis: As Italy, the world’s third largest bond market, saw its borrowing costs rise to unsustainable levels in recent weeks, the rest of the planet could only watch in numb horror, as if observing a slow-motion car crash. On Monday, as Monti was in talks with the political parties for the formation of the new cabinet—made up almost exclusively of unelected technocrats—the main index of the Milan stock exchange opened with a 1 percent jump. By the end of the session, though, it was down 2 percent as were the main indices in Spain (-2.2 percent), Germany (-1.2 percent), and France (-1.3 percent). The...

A State of Chaos

How political failures and stagnant institutions brought Greece to the brink of collapse

A protester chants slogans during a protest in front of the Greek Parliament in Athens on Saturday, Oct. 15 2011. About 2,000 protesters turned up at Syntagma Square, outside Parliament, to protest against a new austerity package that is to be voted upon on Thursday. (AP Photo/Kostas Tsironis)
(AP Photo/Kostas Tsironis) About 2,000 protesters turned up at Syntagma Square, outside the Greek parliament, to protest against a new austerity package agreed to in October. G reece is at the breaking point. The autumn air is filled with despair at falling living standards and the inability to meet ever-burgeoning tax burdens and with fury at the political class, members of which are routinely mobbed, showered with eggs and yogurt, even occasionally beaten. Because of striking public-sector unions, Athens regularly lacks public transport, and its streets are often strewn with garbage. The young, with little hope of productive work, divide their time between rioting and looking for a promising place to emigrate. The older generation, those with families, medical bills, and after-school tuition fees, grimly hold on, cutting consumption down to the absolute necessities and eating into their savings to survive. Sometimes, they take to the streets, too. The middle class, such as it was,...

We're Not in Athens Anymore

The selection of Loukas Papademos as prime minister heralds a new era in Greek politics.

Greek and international media cover the statements of the new Greek Prime Minister Lucas Papademos , centre, outside the presidential palace in Athens, Thursday, Nov. 10, 2011. Papademos was named Thursday as the prime minister of the new Greek interim government, charged with keeping the debt-strapped country out of bankruptcy and firmly in the 17-nation eurozone. After four days of intense political negotiations, the 64-year-old former vice president of the European Central Bank was chosen to lead a coalition backed by both the governing Socialists and opposition conservatives that will operate until early elections in February. (AP Photo/Thanassis Stavrakis)
Greeks, Europeans, and anyone else who knew the score breathed a huge sigh of relief at the news that Loukas Papademos, the former deputy head of the European Central Bank, will be Greece’s new prime minister. His appointment, especially compared with some of the other names that were bandied about during the past few days as candidates for the post, is the best one could have hoped for if—at least if one believes that Greece belongs in the eurozone and that an exit from it, which became an ominously fashionable topic of discussion among Europe’s leaders the last few days, would be a disaster not only for Greece but for the whole euro project. As I mentioned Monday, Papademos is a serious man, who has the background and the respect among European leaders that will allow him to guide Greece through the treacherous months ahead. As the country moves forward—his term is expected to last about four to five months, though as he said yesterday, there is no fixed date for new elections—his...

Banker's Choice

In this, Monday, Oct. 30, 2006 file photo provided by the Italian presidency, Italian President Giorgio Napolitano, right, shakes hands with Mario Monti on the occasion of the opening of the academic year at the Bocconi university in Milan. Italy's president has unexpectedly named Wednesday, Nov. 9, 2011, as a senator-for-life Mario Monti, the former European competition commissioner who is widely considered to be a top contender for the Italian premiership, now that Silvio Berlusconi has pledged to resign soon. The surprise move Wednesday night could be a prelude to Monti's getting the nod to head the next government. President Giorgio Napolitano's office announced he had chosen Monti, who now runs prestigious Bocconi University in Milan, for the honor. Senators-for-life include notable figures outside of politics and have voting privileges in the Senate. (AP Photo/Enrico Oliverio,Italian Presidency Press office, File)
So Greece has a new prime minister – Lucas Papademos – and Italy looks about to have a new one, too – Mario Monti. To which not just you and I but damn near every Italian and Greek responds, “Who?” Neither Papademos nor Monti has ever held elective office, or even run for one. Neither has been a minister, sub-minister or even civil servant in one of their nation’s ministries. Neither has developed, or sought to develop, a public following from their careers as economic technicians, chiefly on the European supra-national level. Yet each is about to lead a major nation. Papademos and Monti are something new under the sun: national leaders elected by the markets. Imposed, not as pro-consels by foreign occupiers, but by the European banking community, by the finance ministers of the Eurozone powers – chiefly, Germany and France. Each has an impressive resume and a good reputation with the centrist political and economic elites of his own nation, but there’s no reason why the person on the...

Are They Orphans?

Beware of overseas orphanages seeking donations. If you're not careful, you may become the victim of an orphanage scam—in which a savvy entrepreneur in a poor country hustles up some children so that he or she can ask developed-world humanitarians for money for the children's support. In some of the notorious cases , the orphanage director pockets the money while the children are left to starve or sold for sex. Few people know that they may be underwriting kidnapping or other modes of defrauding local families out of their children. In other cases, the traffickers put the children—who are neither abandoned nor orphaned—up for international adoption, which can bring in astonishing fees. One version of the orphanage scam has just been uncovered in India by the Esther Benjamins Memorial Foundation. Several years ago, a now-infamous child-trafficker traveled through Nepal's Humla province, asking families to pay him to take their children to boarding schools in Kathmandu. Instead,...

Bunga Bunga and the Bond Market

It’s clear that the markets don’t want Silvio Berlusconi to continue as Italy’s prime minister. They were cheered yesterday, briefly, when word got around that Berlusconi was stepping down, then subsided into their accustomed grumpiness when he denied it. (We know this by following the interest rates on Italy’s bonds, which are soaring, save during the brief moment when it was thought Berlusconi’s departure was nigh.) But the markets’ moment may be at hand. The leaders of two of Europe’s Mediterranean governments are either hanging by a thread (Berlusconi) or have already gone (Greece’s George Papandreou), unable to reconcile the demands of their people not to have their lives decimated by austerity with the markets’ demands for precisely such austerity. Such a moment marks a triumph of the market over democracy, queasy as I am to identify Berlusconi with democracy. After all, it was Berlusconi who brought the logic of the market, and of marketing, into Italian politics, controlling...

One Big Question

Last Thursday, I attended a conclave, sponsored by the Frederich Ebert Foundation, of about 20 American liberals (chiefly economists and union representatives) and 20 German social democrats (economists, unionists, Social Democratic Party officials, and a couple of stray businessmen) to see what we could learn from each country’s respective economic, social, and political arrangements. Early on, one German friend posed a question to us Americans: “Where’s your [i.e., America’s] learning curve?” What he meant was that Germany and much of continental Europe had relearned certain key lessons after the financial meltdown of 2008 and its calamitous aftermath that America had apparently failed to process—chiefly, the need for an active and resourceful government capable of regulating markets and boosting the economy when the private sector is flat on its back. To be sure, with Northern Europe (Germany in the lead) currently promoting austerity to Southern Europe (Greece above all), it’s not...

Who Will Lead Greece?

Whoever becomes leader of the country's interim government has a tough road ahead.

Greek Prime Minister George Papandreou meets Greek President Karolos Papoulias at the Presidential Mansion in Athens, Greece on November 5, 2011. (J Liakos/Rex Features via AP Images)
After a weekend of intense haggling, sharp public statements, and hope trading places with despair every other hour or so, Greece is set for its first coalition government in 22 years. Last night, a little after ten o'clock, the office of the president of the republic released a short statement announcing that Prime Minister George Papandreou, leader of the left-wing PASOK Party, and the leader of the conservative opposition party, the Nea Demokratia, Antonis Samaras, had agreed to form a new, interim government with the purpose of implementing the bailout agreement reached at the October 26 European Union Summit. Afterward, the country will hold new elections. The statement noted that Papandreou will not lead the new government and that he and Samaras will communicate on Monday to decide on the person who will. (J Liakos/Rex Features via AP Images) Greek Prime Minister George Papandreou meets Greek President Karolos Papoulias at the presidential mansion in Athens, Greece yesterday...

Greece in Limbo as Papandreou Calls for Vote of No Confidence

So in the end, after three days of hysteria both on the home front and internationally, there will be no referendum on the Greek bailout plan. According to the latest news, which, given developments in the past week, could be rendered obsolete at any minute, Prime Minister George Papandreou has given up on the idea that the Greek people should decide whether the country should accept its new bailout package and, by extension, whether the country should remain in the eurozone. Papandreou is insisting on a vote of confidence in his government, scheduled for midnight Friday; the vote will gauge his level of support among his party. He may end up winning, though it is more likely that he won’t. Papandreou has also authorized negotiations between his own PASOK Party and the main opposition party, the conservative Nea Dimokratia, on the formation of a caretaker government, in the event he loses, whose main task will be to shepherd the new bailout agreement through parliament and then call...

Condi the Zombie Killer

The former secretary of state puts to rest the idea that Palestinians aren't interested in a peace deal.

(Flickr/Darth Downey)
S he killed the lie, I thought, as I read Condoleezza Rice's semi-revelations about the Israeli-Palestinian peace deal that was really almost reached three years ago. The lie says that Israel's then-prime minister, Ehud Olmert, offered everything the Palestinians could possibly expect, and Palestinian Mahmoud Abbas said no because he isn't interested in peace. Rice was secretary of state at the time and seems to have believed in peacemaking, despite serving under George W. Bush. In her new memoir, she confirms an account of why peace slipped away that fits evidence and logic much better than the lie does. Then I thought again: The lie won't go away. It provides current Prime Minister Benjamin Netanyahu with his domestic legitimacy and his overseas defense of his policies—a defense that works poorly outside of the United States, but working there is enough to protect him from any sudden impulse by Barack Obama to renew the peace process. The lie is presented softly by Netanyahu's good-...

Bravo Papandreou!

Greek Prime Minister Georgios Papandreou startled Europe and the financial world Monday by announcing that he will be calling a referendum on the terms of the latest deal negotiated by European leaders and bankers. What is the Greek leader up to? On one level, Papandreou is simply weary of being the agent of his own country’s economic destruction at the hands of bankers. He also is tired of the political unpopularity that comes with the role of broker of austerity. (AP Photo/Thanassis Stavrakis) Greek Prime Minister George Papandreou says his country will hold a referendum on a new European debt deal reached last week. But more important, Papandreou is resisting a double-cross already being cooked up by the bankers. He is playing the one card he has: If the bankers walk away from the partial debt relief committed in principle at the recent EU summit, Greece will default. And Papandreou wants that decision to be made, knowingly, by the Greek people and not by technocrats. Here is...

Speaking of Cultures Unfriendly to Homos ...

.... Uganda is reintroducing the bill that would impose the death penalty for being gay. The Open Society Institute (OSI) hosted a photography exhibit last spring called "Being Gay in Uganda" that showed Tadej Žnidarčič's powerful portraits, in which each individual is shown from the back. I had walked into OSI in New York for another purpose entirely when I saw what looked like the backs of some very cute women. (There were men too, but, well, I didn't notice them at first.) When I walked over to look more closely, my heart dropped through the floor. The short interviews—in which these people told of essentially being hunted and hated in their daily lives—nearly made me cry. It's heartbreaking to think that, just by standing still or walking, these people are visible targets. And they're targets, specifically, of religiously incited hatred. In January 2010, The New York Times reported on how three American evangelicals spoke against gay people at a conference attended by thousands—...

For Europe, High Stakes in Greece

Stabilizing one teetering economy won't end the eurozone's dance of death.

(Flickr/Oscar Alexander)
T he problems of the euro turned critical when the Greek government nearly defaulted in May 2010 and the International Monetary Fund and European Union agreed to a bailout. In truth, the 17-nation euro area had deep troubles long before that. Its oversized and undercapitalized banks, its common monetary policy but diverse and fragmented fiscal policies, the persistent economic imbalances among nations that use the euro, and a cumbersome decision-making structure all made the euro-area economy vulnerable. The crisis, which still bears the mark of the Greek tragedy that first set it off, has now spread far beyond Greece. The euro was created for normal times, but the EU lacked good mechanisms for crisis management. At every step of the Greek drama, policy-maker responses have remained behind the curve of economic deterioration. Slowly but surely, this erosion of confidence ensnared other countries, such as Ireland and Portugal, then spread to Spain and Italy, both perceived to be...

Obama's Wheel and Deal

The administration's recent trade agreement with Korea, Colombia, and Panama is expected to destroy more than 200,000 American jobs.

President Barack Obama stands after signing the Korean Free Trade Agreement in the Oval Office of the White House in Washington, Friday, Oct. 21, 2011. He is joined by, from left, Korean Ambassador Han Duk-soo, Commerce Secretary John Bryson, DOW Chemical Company CEO Andrew Liveris, Boeing CEO Jim McNerney, US Trade Representative Ron Kirk, Rep. Dave Camp, R-Mich., Xerox CEO Ursula Burns, Korean Alliance for Free Trade William Hwang and Correct Craft, Inc., CEO William Yeargin. (AP Photo/Susan Walsh)
(AP Photo/Susan Walsh) President Barack Obama stands after signing the Korean Free Trade Agreement in the Oval Office of the White House. A s he gears up for a difficult re-election campaign, President Obama risks losing key swing states that he won in 2008 because of a recent flip-flop on trade commitments. Back on the campaign trail, Obama had committed to a new approach to trade deals that would protect the environment, boost manufacturing, and protect food safety. That was then; this is now. On October 12, he shoved through three NAFTA-style trade deals with Colombia, Korea, and Panama that are officially projected to increase the U.S. trade deficit and cost tens of thousands of American jobs. These deals were negotiated and signed by George W. Bush in 2007, but had not been formally approved by Congress. While Wall Street and the Chamber of Commerce applauded the deals, Obama’s base and most congressional Democrats opposed them; the GOP provided almost all of the votes for...

Europe Buys Some Time

The stock market liked the European deal that was announced in the wee hours of Thursday morning. At this writing, the Dow is up 268 points. But the market, as is so often the case, could well be wrong. For starters, this is not yet a done deal. The European leaders agreed that the banks will take "voluntary" losses of about 50 percent on their holding of Greek bonds, so that the Greek economy can gain some room to breathe—but the banks did not agree. Charles Dallara, who heads the international bankers' lobby, the misnamed Institute for International Finance, was quoted by The Wall Street Journal as saying that "there is no agreement on any element of a deal." He later told CNBC that the deal was "voluntary," permitting issuers of credit-default swaps (mostly banks) to avoid payments they would have to make in the case of a formal restructuring or a default. But never underestimate the ability of banks to impose their losses on somebody else. Under the proposed deal, the banks also...

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