Bob Potter
Syracuse, NY
I'll tell you why Americans don't trust elites anymore.
We don't trust political elites because we can see that they are for sale to whoever comes up with the most campaign cash. The ones with the most cash are always the large corporations, so the government obligingly "gets out of their way". Under relaxed regulations corporations can legally do things that harm the general welfare (need I provide examples?). So we've learned not to trust the corporate elites.
Why don't we trust the elites of the "truth professions" (journalism, science, and education)? Because the corrupted corporate and political elites have waged a concerted campaign to discredit those professions. They simply don't want their misdeeds to be understood by the American people. Every time you hear "biased mainstream media", "global warming hoax", "ivory tower eggheads" or the like, you know what I mean. Even the word "elite" itself has been turned into a pejorative (but only when applied to the truth professions).
I could go on, but I'm too tired and depressed by it all.
Kate Madison
Depoe Bay, Oregon
..."This is not to say that we should return to the days of the WASP ascendancy. That’s neither possible nor desirable."
Could have fooled me, David! Seems like that is exactly what you are saying! Less transparency--hmmm, like more lurid little secrets and cover ups? We all know the long-term corroding effects of secrets in family and other systems. And you say no longer are rich families passing their thrones down to their progeny. What are you saying here? Seems to me that most of the graduates of business schools at elite Ivy League universities ARE the offspring of wealthy, or at least, well connected families! And they go on to work for big wealthy corporations. Oh yeah, a few affirmative action students here and there, but anybody paying full tuition has got to have money!!! Either that or drown in student loans.
I think you are right though that the rich and well connected these days do not go out for two martini lunches and a round of golf. They are much more likely to be workaholics, go home late at night and possibly do a few lines of cocaine.
As for empathy, WHAT? Our modern executive elites are no more or less psychopathic than those who came before. The upper 1% of our pathetic society is entitled, consumptive to a sickening degree, and has no clue what the word "enough" means--just as those who preceded them did not! Please do not try to con us by talking about the good old days! For most people they never existed!!
stevemerlan
Redwood City CA
As the sum of wealth in society has grown, so-called "elite" education has become more and more a matter of learning how to ride the gravy train. As Mr. Brooks says, once your social origins were the key to the share of the pie you were likely to get. Now it's more possible to start on the outside and wind up in a very well paid inside, but at the expense of neglecting studies and activities that don't lead directly to a large bonus. There were good reasons for reading Caesar's Gallic Wars in Latin; first it forced you to learn another language and study a very different society, second it told you that winners and losers alike come to dust.
American education of the last few generations has a lot to answer for.
David Isenbergh
Washington, DC
I accept a lot of what Mr. Brooks says, but there's something I'd like to add:
Back in the 1950's, the elites were defined by their contributions to the practical well-being of ordinary Americans. I can recall a magazine interview of the late J. Paul Getty, in which he was asked to state the accomplishment he was most proud of. He replied that his greatest achievement was providing good jobs for tens of thousands of his fellow citizens. Think of Ford. Think of General Motors. General Electric. These great corporate entities enabled hundreds of thousands of American to enter the middle class. But today such entitites are no longer the great engines of domestic employment they once were. Shifts toward financial operations as well as reliance on foreign-made parts and assembly have greatly eroded their economic value for working American. The need to contribute directly to the common man, in terms of goods, services and jobs, is no longer a priority for America's privileged elite.
Phil in the mountains of Kyushu
Japan
What you take to be diversity at the top only looks that way from the outside -- skin color, gender, ethnic background. Yes, these new inclusions count for much, at many levels, both for the former excluded and their excluders -- or they would count for much, if the insides of all these rainbows hadn't also been corroded and reduced.
These reductions come from everybody who appears different all now getting the same de-personalized courses of instruction at all corporate academe. While people in classrooms shows obvious external diversity, instructors don't call on students to access these differences. Instructors call on students to reduce vocab and ranges of reference to each department's specialization orthodoxies. Americans haven't grown on the inside, but have shrunk -- to fit corporate agendas, such as the frauds that rule Wall Street, ga-ga consumerism that rules masses, the corporate money that rules the White House and Congress, and the permanent cycles of elections that now the Supreme Court says ought be even more lop-sided corporate.
All this diversity in superficial appearance doesn't help, either, as American policy steamrolls the world for the corporate interests, too, with thuggeries of military force as ongoing predictable. Americans don't know more foreign languages. Americans have no new peace initiatives, such as from the Fulbright program, which steadily chugs on simply as reward bennie for corporate academe.
No, you've really missed it here, seeing diversity on the outside, and mistaking that for insides which remain too largely gutted for the corporate training too many have gotten.
Cdr. John Newlin
Vista, Calif.
So, today financial firms recruit heavily from the Ivy League schools? Really? Given the lack of morals and the rampant greed and corruption so starkly evident in the financial community today, one must wonder if the Ivy League schools bother to teach ethics? Or perhaps they teach a different form of ethics. An ethos based on Gordon Gekko's "Greed is good" philosophy.
I'm not sure you are a journalist, Mr. Brooks, but for the sake of this comment, I will assume that you are. So you are a cultured analyst who drinks a lot of water? Actually your definition of modern journalists sounds a lot like that of modern elitists, Mr. Brooks.
Empathy is a skill? You've got to be kidding, Mr. Brooks. How does one, like yourself for example, who has no empathy whatsoever for the common middle class, acquire that skill? I admit that I haven't looked but I would bet that one cannot find a single university or college in this land that offers "Empathy 101."
After reading the rest of your offering today, Mr. Brooks, I am indeed convinced that you are so disconnected with American culture as to deservedly be asked, "From which planet do you submit your columns?"
Calgacus
Britannia
Mr. Brooks has a curious concept of "meritocracy." While certainly more people have obtained formal educations and credentials, those attainments do not make them more learned, nor do they display much merit; for example, the previous president of the US had "gentleman's C's" while at Yale and doubtless also in his MBA at Harvard, yet one would never make the mistake of thinking that any of his achievements in life had anything to do with merit, whether he was running small oil companies into the ground or running a large, nuclear-armed country into the ground.
Elitism, contrary to what Mr. Brooks asserts, is alive and thriving in the United States. It is not the elitism of intellect that rules, however, but the elitism of money. Indeed, the latter has been on the rise for the last several decades; the gap between the rich and everyone else in the country has exploded, and the rich themselves have pulled a disappearing act from the rest of society. The social vacuum left by the vanished wealthy has allowed those making $100k per annum to entertain the delusion that they are the rich. Between the delusions of the merely comfortable, and the explosion of accreditation and formal education, a larger proportion of modern society than that of a few generations ago believes that it should have a share of power. Yet real power follows wealth, and wealth has become concentrated at decidedly feudal levels in the US. Furthermore, the growth of the number of positions of power has not increased with the growth of those who believe they should have it. The natural result of such conditions is an increase in instability, competition and conflict in society. One should note that similar conditions enabled the rise of men such as Crassus, Pompey, and Caesar in the Roman Republic, which did not long survive their contest for power.
Elizabeth Fuller
Peterborough, NH
Since our institutions have become more meritocratic the polar ice caps have shrunk, but few of us would claim that this phenomenon has been caused by widening the pool of intellectual elites or by expanding opportunities for education. Just because two things happen simultaneously does not mean cause and effect is involved. It's interesting to speculate why things have gone to hell in a handbasket now that leadership positions are more open to women and minorities, but we have to be really careful about what conclusions we reach and how we arrive at those conclusions.
You say that our system rewards those who can amass technical knowledge. Is that really true? It seem to me our system rewards those who make money, sometimes suppressing technical knowledge in order to generate profits. Even in the arts our society doesn't reward the conservatory-educated, talented musician with extensive technical knowledge more than the booty-shaking pop star. And when we call for a less progressive income tax, aren't we telling those who devote themselves to amassing technical knowledge and contributing to society that we don't value them enough to educate their children well or to provide them with the kind of health care available to those who generate outsized profits?
When a society elevates selfishness to a virtue, as Ayn Rand did, people don't fear being called selfish, and women and minorities can be just as selfish and venal as the good old boys. Maybe the reason things functioned more smoothly in the past was because those in power felt secure where they were. Now the opportunities to cut throats on the way up are open to more and more people, and the atmosphere has become one of kill or be killed. Ruthlessness is what is rewarded.
You point out that there is a need for empathy, and that empathy has nothing to do with a meritocracy. That depends on how you define merit. For many of us values like empathy are what define merit, and we would love to see it replace selfishness, not gradually, but as soon as possible. Before it's too late.
John T. Compton
Rhinebeck, NY
I'm still not clear how David Brooks defines "elites." George Bush and Barack Obama both went to Ivy League schools, so they are elites of a sort. But George Bush never had anything near a grasp of the facts that President Obama demonstrated when he singlehandedly embarrassed the GOP at their retreat. Neither Bush nor virtually any other politician in America today could have schooled the opposition the way President Obama did that day. No, the term "elite" has become conservative code used to demonize intelligence and complexity. It's used by the GOP to pretend it's a party of populists rather than the actual bought-and-paid-for party of big business and corporate greed. But after eight years of an incompetent Republican President and Congress, who did nothing but make the wealthy wealthier, it's getting harder for them to sell the idea that a great leader can be made out of an average American. Thanks to the Republicans, "plain spoken" is becoming a euphemism for "stupid but supports our platform." President Obama may not solve our problems, but his world-class intellect and natural curiosity should be a prerequisite for his job. That's not elitism - it's common sense. We've already seen what happens when we elect incurious, incompetent beer-buddy leaders. Torture, Katrina, unnecessary war and the Bush Recession.
Vincent Amato
New York City
Your strength as a writer and a thinker, David, is crafty disingenuity posing as innocence. Too much transparency? No power elite? Give me a break. The fact that the "old" power elite has withdrawn from the public political process does not mean that it has given up its power, its elitism, or its role in shaping events, just that it is too refined (in its own view of itself) to get down and dirty in the messier realities of the new, supposedly "multi-cultural" agora.
Janice Herbrand
Tacoma, WA
Thanks, David, for expressing an opinion that's going to make neither of us popular: there is something to be said in favor of an hereditary ruling elite. My family was never part of it, but we shared their values; or assumed we did.
These values weren't particularly complicated. You were to be honest in all your dealings, use your money wisely, and keep your private life private. I don't know which is more embarrassing, hearing about the mess many of those we look up to have made of their lives, or having to listen to their public apologies.
We didn't talk about empathy, or probably have much of it. Helping those less fortunate than you was your duty.
Granted that this ethical system wasn't perfect, but it's better than what we have now: judging people's worth by how much money they have.
I'm all in favor of everyone's having a chance to acquire wealth and power, but we do need some guidance on the responsibilities that come with them.
Prof. Jai Prakash Sharma
India
What C.Wright Mills perceived of the US political system and its power elite some decades back is still relevant, though the nature of power elite does seem to have undergone sea change over the years. For, then, it was socially and politically rooted elite, responsive to its support structure, now the elite is self serving and socially-politically insulated, hence fails to command respect and recognition.
Johnny E
Texas
"The things that will destroy America are prosperity at any price,
peace at any price, safety first instead of duty first, the love of
soft living and the get rich quick theory of life." Teddy Roosevelt
16.2.10
Folk Letter
William
Peoria, Illinois
Were I an unkind person I'd say the boobacracy has awakened, but then I'd have to say "been there done that". I remember in my callow youth, at eighteen, in 1964 standing on one of the main streets in Peoria holding my Goldwater sign aloft as Lyndon Johnson's motorcade drove by. I was against "segregation" but nervous in an inchoate way that LBJ was proposing giving rights to blacks at the expense of the "rights of white men" and would usher in a socialist revolution. I was afraid, even then, that some bogyman was going to take my guns, though I didn't have one and wasn't interested in buying one. It was just the prospect of not being able to wave one any time I wanted at some perceived threat that the Goldwater people had convinced me was an assault on my liberty and the beginning of tyranny. (It seems ironic now that LBJ gave me my first gun and provided me the training in its use.)
I had little grounding in politics and almost no understanding what a modern nation state was about. I didn't realize that we had gone from an agrarian nation to an urban mass society where a highly structured hierarchy was required for cars to move seamlessly from New York to California and a coordinated system of higher education was necessary for all of the technological changes that were to improve my life in so many ways. I was wedded to the idea that if I followed the common sense of any 18th century yeoman farmer democracy would be saved. At eighteen, the life I'd known was changing all too rapidly for me and I was afraid. JFK was dead and LBJ was co-opting his magnificent political vision to his own unsavory ends. The draft and Vietnam were lingering in the not to distant future. The prospect of bombing North Vietnam "into the stone age" seemed preferable to having to risk my own life in the much more reasoned approach of limited warfare in the world of international power politics.
I suspect that this is how many of those attracted to the Tea Party Movement are feeling today. Mr. Obama's characterization when he spoke in San Francisco was apt, if somewhat poorly constructed, when he talked about people "wedded to their guns and their fundamentalist religion". These are basically good people, neighbors who I've worked with and talked to. People who want the world to be as it was, and have no clear understanding that it can never be that way again unless there is a catastrophic change in demography that will sweep many of us away, along with the fears that they have. Nourished by the pabulum of cynical demagogues-- like Glen Beck, Bill O'Reilly, and Lyndon Larouche and exploited by self serving politicos like Richard Shelby, John Boehner, and Jim Demint they are looking for simple answers and people who promise to bring yesterday, a more understandable time, back. One always listens for the simple explanation first, not just because it's the easiest to understand but also because it takes less effort.
Lenin's promise was simple "bread and peace" and eventually the Russian people got bread and peace, but at a horrible price. Hitler's promise was equally simple to restore the German nation to its rightful place on the world stage. The Germans got that, but the price the they and the world paid was horrendous.
Many of the people coalescing around the Tea Party Movement, young and old, are at the beginning of their political awakening. They are angry and frustrated by what they see and rightly so. They're in the midst of a personal storm. They see their own little boats on the verge of capsizing and they're looking for the calmer seas of yesterday. Eventually many of them will realize that there are no simple solutions and reason will moderate their fear struck emotionalism. In the meantime let's hope, for all of our sakes, that God does indeed protect fools, drunks, and the United States of America.
Peoria, Illinois
Were I an unkind person I'd say the boobacracy has awakened, but then I'd have to say "been there done that". I remember in my callow youth, at eighteen, in 1964 standing on one of the main streets in Peoria holding my Goldwater sign aloft as Lyndon Johnson's motorcade drove by. I was against "segregation" but nervous in an inchoate way that LBJ was proposing giving rights to blacks at the expense of the "rights of white men" and would usher in a socialist revolution. I was afraid, even then, that some bogyman was going to take my guns, though I didn't have one and wasn't interested in buying one. It was just the prospect of not being able to wave one any time I wanted at some perceived threat that the Goldwater people had convinced me was an assault on my liberty and the beginning of tyranny. (It seems ironic now that LBJ gave me my first gun and provided me the training in its use.)
I had little grounding in politics and almost no understanding what a modern nation state was about. I didn't realize that we had gone from an agrarian nation to an urban mass society where a highly structured hierarchy was required for cars to move seamlessly from New York to California and a coordinated system of higher education was necessary for all of the technological changes that were to improve my life in so many ways. I was wedded to the idea that if I followed the common sense of any 18th century yeoman farmer democracy would be saved. At eighteen, the life I'd known was changing all too rapidly for me and I was afraid. JFK was dead and LBJ was co-opting his magnificent political vision to his own unsavory ends. The draft and Vietnam were lingering in the not to distant future. The prospect of bombing North Vietnam "into the stone age" seemed preferable to having to risk my own life in the much more reasoned approach of limited warfare in the world of international power politics.
I suspect that this is how many of those attracted to the Tea Party Movement are feeling today. Mr. Obama's characterization when he spoke in San Francisco was apt, if somewhat poorly constructed, when he talked about people "wedded to their guns and their fundamentalist religion". These are basically good people, neighbors who I've worked with and talked to. People who want the world to be as it was, and have no clear understanding that it can never be that way again unless there is a catastrophic change in demography that will sweep many of us away, along with the fears that they have. Nourished by the pabulum of cynical demagogues-- like Glen Beck, Bill O'Reilly, and Lyndon Larouche and exploited by self serving politicos like Richard Shelby, John Boehner, and Jim Demint they are looking for simple answers and people who promise to bring yesterday, a more understandable time, back. One always listens for the simple explanation first, not just because it's the easiest to understand but also because it takes less effort.
Lenin's promise was simple "bread and peace" and eventually the Russian people got bread and peace, but at a horrible price. Hitler's promise was equally simple to restore the German nation to its rightful place on the world stage. The Germans got that, but the price the they and the world paid was horrendous.
Many of the people coalescing around the Tea Party Movement, young and old, are at the beginning of their political awakening. They are angry and frustrated by what they see and rightly so. They're in the midst of a personal storm. They see their own little boats on the verge of capsizing and they're looking for the calmer seas of yesterday. Eventually many of them will realize that there are no simple solutions and reason will moderate their fear struck emotionalism. In the meantime let's hope, for all of our sakes, that God does indeed protect fools, drunks, and the United States of America.
15.2.10
(European) Views on Euro vs. Krugman's: Euro, expression of European Hubris
Harald
Germany
The first thing about the Euro you have to know is that it isn't primarily a financial tool, but a peace project - as the whole European Union is. The Euro gives Europeans a common symbol which tells every european citizen that we belong together. This is a very important point on a continent shaken by wars for centuries. Even nowadays you can see that old, buried conflicts can suddenly show up like it has in Yugoslavia.
You were able to see the power of a symbol like this in Eastern Germany in 1989 / 1990. Millions of people were demonstrating against the communist government. A lot of them were showing posters like "If the Deutsche Mark doesn't come to us, we will go to the Deutsche Mark." So even when a lot of economists told the government of Western Germany that it would economically bad to expand the Deutsche Mark to eastern Germany, it was absolutely necessary - the people of eastern Germany already started to leave their country for the "golden west".
The euro is also a tool for integration: By eliminating currency exchange risks it helps to foster trade relations and thereby strenghens our Union. This helps strenghen common interests and so we can start and implement common projects like the Lisbon treaty, which gives us opportunities to something like a (weak) federal government and easier ways to come to decisions (e.g. elimination of the unanimity principle in a lot of cases).
In fact, the Euro is the solution to a lot of problems. By requiring fiscal responsibility it strenghens the fundament of Europe. But if a country behaves irresponsible and ignores the rules (with the help of Goldman Sachs and AIG) and runs a hidden 13% debt instead of the allowed 3% debt, then we run into trouble. The rules I mentioned to prevent financial crises wouldn't even be there without the Euro.
Somehow it sounds to me that you actually instead of talking about european problems you only want to talk again about your usual point that deficits don't matter right now. I think in the case of Greece you are wrong. The deficits are the problem here, the problem is not the Euro and there is no easy solution for this government. In Spain a devaluation of its currency would have major and harsh social implications - so it wouldn't be an easy way out, too.
I guess we have common ground if we say that more european integration in some areas is necessary, but this will take time. But the Euro certainly isn't the problem here, it's a helping tool.
Louella Santobello
Nice, France
If Europe's adopting a single currency before the continent was ready for it, what is behind the financial disarray of the UK, which did not adopt the Euro?
William Osler
Philadelphia, PA
"A breakup of the euro is very nearly unthinkable, as a sheer matter of practicality. As Berkeley’s Barry Eichengreen puts it, an attempt to reintroduce a national currency would trigger 'the mother of all financial crises.' "
Professor Krugman: I think you might want to challenge the assumption that the Euro won't break apart because the results of such a schism would be too horrible to contemplate. Since when has this stopped horrible events from happening in the past? There are some who are saying quitely publicly that the Euro is already doomed, and thinking investors should prepare for just such an outcome, which would mean (IMHO) a much higher dollar and much lower stock prices. Caveat emptor!
Pierre Garenne
France
I am regularly bored by "anglosaxon" statements on Europe and the euro which, rather than examining Europe's evolving economic and political situation (for better or worse) consists of simple Europe-bashing. A major factor in the slow speed of Europe's drive to some form of unity (the euro was as much if not more a political than an economic decision) has been the perpetually negative interventions by the UK which tries to profit from its US and financial institutional relations and at the same time not lose out on its exports (including financial services) to Europe(the UK's largest market).
In my view European unity and some form of European (federal?) government would already be in place to our great advantage if it wasn't for British (little Englander) obfuscation, and with it the possibility of finding political and economic solutions for the PIIGS (English nomenclature) problems before the event. The UK is clearly a US and financial industry cat's paw pursuing political and economic policies that benefit a transatlantic financial-banking elite, disrupting Europe-wide financial regulation and political unity is seen as profitable.
Whether, as the UK government argues, the crumbs that the ordinary Brits manage to pick up under the table are sufficient compensation for their country's real economic and political situation is an analysis that is long overdue (by Paul?).
British policy has, over several centuries, been to finance sectorial international interests through the national Exchequer at the expense of the ordinary citizen. Profits are not directly affected by the "transfer of such charges" from company balance sheets to the national Exchequer. One could argue a similar thesis concerning US economic and foreign affairs policies. Does the man-in-the street really benefit? I have serious doubts.
JGB
Paris, France
On the other hand,it was my impression that if Ireland hadn't had the Euro they would have suffered a similar financial calamity to Iceland's (which doesn't have the Euro).
JFF
Boston, Massachusetts
Does this mean that the British - who stuck firmly to the pound sterling - got it right?
JC
Parksville, GWN
As this crisis moves forward, deflation will overtake not only weak economies but will eventually come to reside at the doorstep of the United States. The global under-utilization of industrial capacity, over supply of housing, unsupportable debt repayments, and falling wages will all contribute to the collapse of what will soon be the world's last bastion of Leveraged Capitalism. Unless the Federal Government is willing to annul a large percentage of the vast debts of its citizens, corporations, and lower levels of government, any financial stimulus provided will be used to service debts accumulated by these groups. Corporations will continue to be, at least temporarily, at the head of the line due to the inordinate influence that they wield in the circles of power. However, should such a universal attempt be made, international bond markets will not stand idly by. Expect very large rises in Real Interest Rates as a result. The Great Recession is merely a precursor to a far larger scale event, as the limits of credit-fueled growth have now been reached.
In conjunction with Peak Oil, deflation in this scenario is not universal, as energy and it's dependent products (food and fuel primarily) will rise rapidly as a percentage of disposable income. As necessities (see above) consume an ever larger percentage of total income less remains available for discretionary spending. Deflation does therefore not equate to greater purchasing power for the majority (those with net indebtedness) as purchasing power falls at a greater rate that aggregate prices.
Needless to say this is a terrifying outcome, particularly for corporations, as their survival depends on the continued consumption of non-necessities (both goods and services). Citizens can and will adapt to this new economic reality albeit with dramatic adjustments to quality and style of life. Governments may not be so lucky as their flexibility is constrained by shrinking tax bases, rising social program costs, and the political and economic costs of massive unfunded liabilities.
Even at this late hour governments can still hope to mitigate the worst of the social fallout, as to be forewarned is to be forearmed. The first Great Depression could likely not have been prevented but some of the pain, suffering, and disruption that it caused could have been lessened with the soonest possible adoption of reasonable lending standards, curtailment of predatory corporate behavior, and truthful discourse. The same holds true today.
Nostromo
Zurich
“Europe needs to move much further toward political union, so that European nations start to function more like American states.”
Why? What's wrong with small countries?
Almost the only people in Europe who want “political union” are politicians and political commentators. On the very rare occasions when voters have been allowed to express themselves on the subject, they have mostly voted against it. The whole European enterprise has become profoundly undemocratic.
Furthermore, the EU bureaucracy is more wasteful and expensive than the bureaucracy of any member state (which is really saying something). Eliminating it would have the same effect on Europe's economic performance as removing a ball and chain from the legs of a long-distance runner. The money wasted in Brussels and Strasbourg could be more usefully used to help small businesses create jobs.
Thirty years ago, the European Common Market had a real economic raison d'être: reducing tariffs, and thereby freeing trade, among its members. That was very valuable, and made Europe more prosperous. Now, that reason has largely gone, replaced by WTO treaties which have reduced tariffs and freed trade worldwide. Eliminating the EU would not greatly reduce the trade between (say) France and Germany, because WTO agreements would allow each country's companies to compete in the other. Having outlived its usefulness; imposing a huge bureaucratic cost on the continent; and continuing only in defiance to the wishes of most Europeans, the EU should be abolished, not turned into some monster super-state to appease the lust of politicians for power and the liking of commentators for a superficial simplification of the international scene.
Marie Burns
Fort Myers, Florida
You can blame Europeans on the euromess, but I would rather blame Lloyd Blankfein. Louise Story & other Times reporters wrote yesterday that "One deal [with faltering Greece] created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels." AND in some derivatives deal, the Times reports, "In what amounted to a garage sale on a national scale, Greek officials essentially mortgaged the country’s airports and highways to raise much-needed money." The deal is predicted to be a big loser for Greece, but not for Goldman.
Maybe the officials who made these bad deals were dumb, but bankers have a moral obligation not to purposely ruin the economies of major governments (or continents!) for their own personal gains.
"Savvy businessmen" whose wealth we ought not begrudge? These aren't Masters of the Universe. They're Sleazy Little Opportunists & Scam Artists. It was guys just like these who caused europoet Dante Alighieri to dream up the circles of hell.
The Constant Weader at www.RealityChex.com
P.S. OR, the real trouble with the euro is the French don't have words for eighty & ninety. You should look into that, Paul.
Phil in the mountains of Kyushu
Japan
You want Europeans to "start to function more like American states"?
Oh my gosh -- clearly you haven't read a word of your colleague Gail Collins' columns over the past week. She has had a hilarious time trying to decide which U.S. state out-dysfunctionals all the rest --- an impossible competition, as hundreds of readers' "comments" have shown -- so many varieties of idiocy atop the institutions of so many states.
But, even if you've been negligent in your reading of your colleagues, you really expose ivy-towered limits when you suppose Europe even remotely capable of reducing all its systems of education to such laughably and pathetically tragic new lows as Americans "enjoy" for U.S. schools.
Europeans can never be as dumb as Americans -- a possibility made even more remote by the further dumbing down of the U.S.'s "reality" and idol-idolizng TV shows, and what passes for "news" across most all corporate media.
Or do you evince need for Europeans to copy Americans for another reason -- that people are too decorous in your Princeton digs, and you really pine for all the ludicrous sexual shenanigans that demonstrably increase proportionally as American politicians pursue, too, their corporate donors?
So what is it -- the U.S.'s bad schools, bathetic corporate media, or out-of-control personal lunacies in elected officials -- where do you want old-culture decent Europeans to tumble first?
Patrice Ayme
Hautes Alpes
Dear Paul:
The hubris is all yours. You are an American, you have an American mess on your hands, and, with all due respect, why don't you mind your own business?
You obviously understand strictly nothing to the European construction. You view it as hubris. Europeans see it as the way out of 15 centuries of mess.
All you can suggest is that Spain would make economic war through devaluation to the rest of Europe. Let me reassure you: war was tried before in Europe. You would know this if you had learn history in your heart of hearts, instead of knowing a few glimpses, here and there.
Merkel and Sarkozy understand Europe much better, and they want to increase economic integration. thus, they want to construct towards a better future, not destruct, towards the same ugly past, as you propose.
Now it is in the interest of the USA to destroy the Euro, so you try your best. The help given by the American plutocracy to nascent fascism in Europe can be viewed as an opportunistic plot to destroy Europe. but it did not work. Europe, unfortunately for American hegemony, is not to the USA what Greece was to Rome. When Greece was on its knees, Rome crushed it. Now Greece is on its knees, and the rest of Europe will save it. And Europe is powerful, even militarily powerful (a well kept secret).
I may write an essay on the subject, replying more thoroughly to your Europhobia, but it is barely worth it. In Europe, banks and, in the case of Spain, too much development of tourism and real estate are viewed as the problem. Not the Euro.
In the case of Greece, the military budget is a complicating factor, and so is extravagant spending by the state. This is going to be cracked down on. Because France and Germany are going to lend to Greece, with strings attached. Formal structures will follow.
From the heart of Europe, little crisis is to be seen. But the tone about banks and the USA is getting ever sharper, after Obama's pathetic performance in Copenhagen. So mind your American plate: it is full, and it's a big mess, and it is pretty disgusting.
It is true that my house cleaning lady, Agneska, barely speak French, and her English is not any better. my aging Mom has to use sign language with Agneska. But here she is, in the Alps, having followed her Polish plumber husband who works in a big local French firm. She is very young, and she will learn her French. I know two Russians who came here, knowing little, and now they are perfectly integrated. Integration of Europe is happening, and it is hubris to think it could not be done.
Patrice Ayme
Germany
The first thing about the Euro you have to know is that it isn't primarily a financial tool, but a peace project - as the whole European Union is. The Euro gives Europeans a common symbol which tells every european citizen that we belong together. This is a very important point on a continent shaken by wars for centuries. Even nowadays you can see that old, buried conflicts can suddenly show up like it has in Yugoslavia.
You were able to see the power of a symbol like this in Eastern Germany in 1989 / 1990. Millions of people were demonstrating against the communist government. A lot of them were showing posters like "If the Deutsche Mark doesn't come to us, we will go to the Deutsche Mark." So even when a lot of economists told the government of Western Germany that it would economically bad to expand the Deutsche Mark to eastern Germany, it was absolutely necessary - the people of eastern Germany already started to leave their country for the "golden west".
The euro is also a tool for integration: By eliminating currency exchange risks it helps to foster trade relations and thereby strenghens our Union. This helps strenghen common interests and so we can start and implement common projects like the Lisbon treaty, which gives us opportunities to something like a (weak) federal government and easier ways to come to decisions (e.g. elimination of the unanimity principle in a lot of cases).
In fact, the Euro is the solution to a lot of problems. By requiring fiscal responsibility it strenghens the fundament of Europe. But if a country behaves irresponsible and ignores the rules (with the help of Goldman Sachs and AIG) and runs a hidden 13% debt instead of the allowed 3% debt, then we run into trouble. The rules I mentioned to prevent financial crises wouldn't even be there without the Euro.
Somehow it sounds to me that you actually instead of talking about european problems you only want to talk again about your usual point that deficits don't matter right now. I think in the case of Greece you are wrong. The deficits are the problem here, the problem is not the Euro and there is no easy solution for this government. In Spain a devaluation of its currency would have major and harsh social implications - so it wouldn't be an easy way out, too.
I guess we have common ground if we say that more european integration in some areas is necessary, but this will take time. But the Euro certainly isn't the problem here, it's a helping tool.
Louella Santobello
Nice, France
If Europe's adopting a single currency before the continent was ready for it, what is behind the financial disarray of the UK, which did not adopt the Euro?
William Osler
Philadelphia, PA
"A breakup of the euro is very nearly unthinkable, as a sheer matter of practicality. As Berkeley’s Barry Eichengreen puts it, an attempt to reintroduce a national currency would trigger 'the mother of all financial crises.' "
Professor Krugman: I think you might want to challenge the assumption that the Euro won't break apart because the results of such a schism would be too horrible to contemplate. Since when has this stopped horrible events from happening in the past? There are some who are saying quitely publicly that the Euro is already doomed, and thinking investors should prepare for just such an outcome, which would mean (IMHO) a much higher dollar and much lower stock prices. Caveat emptor!
Pierre Garenne
France
I am regularly bored by "anglosaxon" statements on Europe and the euro which, rather than examining Europe's evolving economic and political situation (for better or worse) consists of simple Europe-bashing. A major factor in the slow speed of Europe's drive to some form of unity (the euro was as much if not more a political than an economic decision) has been the perpetually negative interventions by the UK which tries to profit from its US and financial institutional relations and at the same time not lose out on its exports (including financial services) to Europe(the UK's largest market).
In my view European unity and some form of European (federal?) government would already be in place to our great advantage if it wasn't for British (little Englander) obfuscation, and with it the possibility of finding political and economic solutions for the PIIGS (English nomenclature) problems before the event. The UK is clearly a US and financial industry cat's paw pursuing political and economic policies that benefit a transatlantic financial-banking elite, disrupting Europe-wide financial regulation and political unity is seen as profitable.
Whether, as the UK government argues, the crumbs that the ordinary Brits manage to pick up under the table are sufficient compensation for their country's real economic and political situation is an analysis that is long overdue (by Paul?).
British policy has, over several centuries, been to finance sectorial international interests through the national Exchequer at the expense of the ordinary citizen. Profits are not directly affected by the "transfer of such charges" from company balance sheets to the national Exchequer. One could argue a similar thesis concerning US economic and foreign affairs policies. Does the man-in-the street really benefit? I have serious doubts.
JGB
Paris, France
On the other hand,it was my impression that if Ireland hadn't had the Euro they would have suffered a similar financial calamity to Iceland's (which doesn't have the Euro).
JFF
Boston, Massachusetts
Does this mean that the British - who stuck firmly to the pound sterling - got it right?
JC
Parksville, GWN
As this crisis moves forward, deflation will overtake not only weak economies but will eventually come to reside at the doorstep of the United States. The global under-utilization of industrial capacity, over supply of housing, unsupportable debt repayments, and falling wages will all contribute to the collapse of what will soon be the world's last bastion of Leveraged Capitalism. Unless the Federal Government is willing to annul a large percentage of the vast debts of its citizens, corporations, and lower levels of government, any financial stimulus provided will be used to service debts accumulated by these groups. Corporations will continue to be, at least temporarily, at the head of the line due to the inordinate influence that they wield in the circles of power. However, should such a universal attempt be made, international bond markets will not stand idly by. Expect very large rises in Real Interest Rates as a result. The Great Recession is merely a precursor to a far larger scale event, as the limits of credit-fueled growth have now been reached.
In conjunction with Peak Oil, deflation in this scenario is not universal, as energy and it's dependent products (food and fuel primarily) will rise rapidly as a percentage of disposable income. As necessities (see above) consume an ever larger percentage of total income less remains available for discretionary spending. Deflation does therefore not equate to greater purchasing power for the majority (those with net indebtedness) as purchasing power falls at a greater rate that aggregate prices.
Needless to say this is a terrifying outcome, particularly for corporations, as their survival depends on the continued consumption of non-necessities (both goods and services). Citizens can and will adapt to this new economic reality albeit with dramatic adjustments to quality and style of life. Governments may not be so lucky as their flexibility is constrained by shrinking tax bases, rising social program costs, and the political and economic costs of massive unfunded liabilities.
Even at this late hour governments can still hope to mitigate the worst of the social fallout, as to be forewarned is to be forearmed. The first Great Depression could likely not have been prevented but some of the pain, suffering, and disruption that it caused could have been lessened with the soonest possible adoption of reasonable lending standards, curtailment of predatory corporate behavior, and truthful discourse. The same holds true today.
Nostromo
Zurich
“Europe needs to move much further toward political union, so that European nations start to function more like American states.”
Why? What's wrong with small countries?
Almost the only people in Europe who want “political union” are politicians and political commentators. On the very rare occasions when voters have been allowed to express themselves on the subject, they have mostly voted against it. The whole European enterprise has become profoundly undemocratic.
Furthermore, the EU bureaucracy is more wasteful and expensive than the bureaucracy of any member state (which is really saying something). Eliminating it would have the same effect on Europe's economic performance as removing a ball and chain from the legs of a long-distance runner. The money wasted in Brussels and Strasbourg could be more usefully used to help small businesses create jobs.
Thirty years ago, the European Common Market had a real economic raison d'être: reducing tariffs, and thereby freeing trade, among its members. That was very valuable, and made Europe more prosperous. Now, that reason has largely gone, replaced by WTO treaties which have reduced tariffs and freed trade worldwide. Eliminating the EU would not greatly reduce the trade between (say) France and Germany, because WTO agreements would allow each country's companies to compete in the other. Having outlived its usefulness; imposing a huge bureaucratic cost on the continent; and continuing only in defiance to the wishes of most Europeans, the EU should be abolished, not turned into some monster super-state to appease the lust of politicians for power and the liking of commentators for a superficial simplification of the international scene.
Marie Burns
Fort Myers, Florida
You can blame Europeans on the euromess, but I would rather blame Lloyd Blankfein. Louise Story & other Times reporters wrote yesterday that "One deal [with faltering Greece] created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels." AND in some derivatives deal, the Times reports, "In what amounted to a garage sale on a national scale, Greek officials essentially mortgaged the country’s airports and highways to raise much-needed money." The deal is predicted to be a big loser for Greece, but not for Goldman.
Maybe the officials who made these bad deals were dumb, but bankers have a moral obligation not to purposely ruin the economies of major governments (or continents!) for their own personal gains.
"Savvy businessmen" whose wealth we ought not begrudge? These aren't Masters of the Universe. They're Sleazy Little Opportunists & Scam Artists. It was guys just like these who caused europoet Dante Alighieri to dream up the circles of hell.
The Constant Weader at www.RealityChex.com
P.S. OR, the real trouble with the euro is the French don't have words for eighty & ninety. You should look into that, Paul.
Phil in the mountains of Kyushu
Japan
You want Europeans to "start to function more like American states"?
Oh my gosh -- clearly you haven't read a word of your colleague Gail Collins' columns over the past week. She has had a hilarious time trying to decide which U.S. state out-dysfunctionals all the rest --- an impossible competition, as hundreds of readers' "comments" have shown -- so many varieties of idiocy atop the institutions of so many states.
But, even if you've been negligent in your reading of your colleagues, you really expose ivy-towered limits when you suppose Europe even remotely capable of reducing all its systems of education to such laughably and pathetically tragic new lows as Americans "enjoy" for U.S. schools.
Europeans can never be as dumb as Americans -- a possibility made even more remote by the further dumbing down of the U.S.'s "reality" and idol-idolizng TV shows, and what passes for "news" across most all corporate media.
Or do you evince need for Europeans to copy Americans for another reason -- that people are too decorous in your Princeton digs, and you really pine for all the ludicrous sexual shenanigans that demonstrably increase proportionally as American politicians pursue, too, their corporate donors?
So what is it -- the U.S.'s bad schools, bathetic corporate media, or out-of-control personal lunacies in elected officials -- where do you want old-culture decent Europeans to tumble first?
Patrice Ayme
Hautes Alpes
Dear Paul:
The hubris is all yours. You are an American, you have an American mess on your hands, and, with all due respect, why don't you mind your own business?
You obviously understand strictly nothing to the European construction. You view it as hubris. Europeans see it as the way out of 15 centuries of mess.
All you can suggest is that Spain would make economic war through devaluation to the rest of Europe. Let me reassure you: war was tried before in Europe. You would know this if you had learn history in your heart of hearts, instead of knowing a few glimpses, here and there.
Merkel and Sarkozy understand Europe much better, and they want to increase economic integration. thus, they want to construct towards a better future, not destruct, towards the same ugly past, as you propose.
Now it is in the interest of the USA to destroy the Euro, so you try your best. The help given by the American plutocracy to nascent fascism in Europe can be viewed as an opportunistic plot to destroy Europe. but it did not work. Europe, unfortunately for American hegemony, is not to the USA what Greece was to Rome. When Greece was on its knees, Rome crushed it. Now Greece is on its knees, and the rest of Europe will save it. And Europe is powerful, even militarily powerful (a well kept secret).
I may write an essay on the subject, replying more thoroughly to your Europhobia, but it is barely worth it. In Europe, banks and, in the case of Spain, too much development of tourism and real estate are viewed as the problem. Not the Euro.
In the case of Greece, the military budget is a complicating factor, and so is extravagant spending by the state. This is going to be cracked down on. Because France and Germany are going to lend to Greece, with strings attached. Formal structures will follow.
From the heart of Europe, little crisis is to be seen. But the tone about banks and the USA is getting ever sharper, after Obama's pathetic performance in Copenhagen. So mind your American plate: it is full, and it's a big mess, and it is pretty disgusting.
It is true that my house cleaning lady, Agneska, barely speak French, and her English is not any better. my aging Mom has to use sign language with Agneska. But here she is, in the Alps, having followed her Polish plumber husband who works in a big local French firm. She is very young, and she will learn her French. I know two Russians who came here, knowing little, and now they are perfectly integrated. Integration of Europe is happening, and it is hubris to think it could not be done.
Patrice Ayme
From an Iranian to an American Nobel Prize Economist
Hamid Varzi
Tehran
I simply love it when U.S. economists talk down the Euro, as they have been doing since its inception. Even funnier is the justification that Euroland cooks its books, as if the U.S. Treasury doesn't!
Mr. Krugman, would you care to comment on the 'birth/death' rate, or even the omission of U-7 to U-9 unemployment, that the BLS uses to artificially lower its unemployment 'statistics'? Or about the Federal Reserve purchase of over a quarter of auctioned TBills, under the hilarious category of 'household purchases', to create the false impression that foreigners are still lapping up U.S. debt? Or the U.S. Government's discarding of accounting principles in pegging the U.S. National Debt at around $ 14 trillion when its unfunded liabilities are over $ 50 trillion?
Mr. Krugman, you and other U.S. economists do your nation a gross disservice by constantly 'talking up' your economy at the expense of other economies that have massive trade surpluses, better education, better healthcare, lower crime, far more civil societies and a far lower foreign debt than the U.S.A.. You won't encourage improvement unless and until you start injecting doses of realism into your analyses.
Tehran
I simply love it when U.S. economists talk down the Euro, as they have been doing since its inception. Even funnier is the justification that Euroland cooks its books, as if the U.S. Treasury doesn't!
Mr. Krugman, would you care to comment on the 'birth/death' rate, or even the omission of U-7 to U-9 unemployment, that the BLS uses to artificially lower its unemployment 'statistics'? Or about the Federal Reserve purchase of over a quarter of auctioned TBills, under the hilarious category of 'household purchases', to create the false impression that foreigners are still lapping up U.S. debt? Or the U.S. Government's discarding of accounting principles in pegging the U.S. National Debt at around $ 14 trillion when its unfunded liabilities are over $ 50 trillion?
Mr. Krugman, you and other U.S. economists do your nation a gross disservice by constantly 'talking up' your economy at the expense of other economies that have massive trade surpluses, better education, better healthcare, lower crime, far more civil societies and a far lower foreign debt than the U.S.A.. You won't encourage improvement unless and until you start injecting doses of realism into your analyses.
14.2.10
To all journalists cri..., err mediating Sarah Palin
Paul Dorell
Evanston, IL
I wish you'd stop suggesting that Obama is politically inept. Apparently he's talking over your head too. In fact, Lloyd Blankfein IS a very savvy businessman, and his shrewdness is at the heart of the financial crisis. Goldman Sachs was able to outwit its competitors and the federal government without breaking any laws, making billions of dollars in the process, partly at taxpayer expense. The public and Congress, and you too apparently, need to be educated about what happened, and appropriate regulations must be quickly enacted. Anyone who wastes time discussing Sarah Palin is little more than a dupe for her self-promotion, which has nothing to do with serious public policy and will ultimately relegate her to the sideshows of history.
Evanston, IL
I wish you'd stop suggesting that Obama is politically inept. Apparently he's talking over your head too. In fact, Lloyd Blankfein IS a very savvy businessman, and his shrewdness is at the heart of the financial crisis. Goldman Sachs was able to outwit its competitors and the federal government without breaking any laws, making billions of dollars in the process, partly at taxpayer expense. The public and Congress, and you too apparently, need to be educated about what happened, and appropriate regulations must be quickly enacted. Anyone who wastes time discussing Sarah Palin is little more than a dupe for her self-promotion, which has nothing to do with serious public policy and will ultimately relegate her to the sideshows of history.
The Dems' Ailment
Elizabeth Fuller
Peterborough, NH
When the Supreme Court voted to allow corporations to fund political campaigns, a commenter on these pages wrote in to say that this is what we get after President Obama appoints people like Sonia Sotomayor to the Supreme Court, proving Republicans have done an excellent job of convincing stressed-out Americans who don't have the time to read that they are the party of the common man.
I have stopped wondering why so many people continue to vote against their own best interests, believing that because they are busy and tired, they consume only sound bites, and the Republicans have been masters at writing the best sound bites. What I have continued to wonder is why the Democrats haven't taken the time and spent the money to compare political philosophies in a simple but non-condescending manner in order to point out that the deregulation of business sought by the Republicans is what caused all our retirement funds to shrink and raised interest rates to 29% on credit cards we signed on for at 5.9%. It has been inconceivable to me that they haven't done so.
Only recently has it occurred to me that it may be that the Democrats can't do that because they haven't been putting their money where their mouths are. This country has moved to the right, and if Democrats are going to convince the public their positions are more beneficial to the common man, they're going to have to show voting records that prove they care about those without power or money. They're going to have to drop the centrist label and proudly explain and claim more liberal positions-- positions that twenty years ago may have been called centrist. How many of them can now? Why haven't national usury laws been enacted or even seriously considered? If they can't back up their populist claims with real action, they're no better than Sarah Palin. Democrats--and I count myself among them-- need to grow backbones and proceed civilly, but with the courage of our convictions.
Peterborough, NH
When the Supreme Court voted to allow corporations to fund political campaigns, a commenter on these pages wrote in to say that this is what we get after President Obama appoints people like Sonia Sotomayor to the Supreme Court, proving Republicans have done an excellent job of convincing stressed-out Americans who don't have the time to read that they are the party of the common man.
I have stopped wondering why so many people continue to vote against their own best interests, believing that because they are busy and tired, they consume only sound bites, and the Republicans have been masters at writing the best sound bites. What I have continued to wonder is why the Democrats haven't taken the time and spent the money to compare political philosophies in a simple but non-condescending manner in order to point out that the deregulation of business sought by the Republicans is what caused all our retirement funds to shrink and raised interest rates to 29% on credit cards we signed on for at 5.9%. It has been inconceivable to me that they haven't done so.
Only recently has it occurred to me that it may be that the Democrats can't do that because they haven't been putting their money where their mouths are. This country has moved to the right, and if Democrats are going to convince the public their positions are more beneficial to the common man, they're going to have to show voting records that prove they care about those without power or money. They're going to have to drop the centrist label and proudly explain and claim more liberal positions-- positions that twenty years ago may have been called centrist. How many of them can now? Why haven't national usury laws been enacted or even seriously considered? If they can't back up their populist claims with real action, they're no better than Sarah Palin. Democrats--and I count myself among them-- need to grow backbones and proceed civilly, but with the courage of our convictions.
6.2.10
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