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The euro: A paradox caught in a conundrum

Thu, 01 Dec 2011

The eurozone crisis, which is holding the global economy to ransom, is a conundrum of nightmarish proportions that even the world’s central banks will find hard to solve.

At its core is a paradox of democratic politics and economic rationality.

American commentator Christopher Caldwell, who is based in Europe, best sums up the plight of a single currency in vastly differing economies.

"The euro created a situation under which the democratically logical thing to do is economically destructive, and the economically logical thing is opaque to even the most well-meaning and well-informed elected representatives.”

In other words, it has become a struggle between money and sovereignty; economics versus politics.

Writing in the Weekly Standard, Caldwell quotes the French economist Charles Wyplosz, who said fiscal profligacy is the “rational outcome of the interplay between elections and pressure groups.”

Essentially, he is saying in political democracies, the decisions over how public money is spent and raised will eventually be done by the electorate – not by a group of economists or panels of experts wedded to a currency concept.

The issue is not dissimilar to the political decision in New Zealand to underwrite bank deposits with taxpayers’ money – a move that saved “mum and dad investors” but also resulted in a billion dollars going to dodgy borrowers who will never pay it back.

The installation of so-called “technocratic” governments in Italy and Greece over-rides politics in both countries – for how long can that be tolerated?

The future of the euro will depend on how these issues play out.

Who's blowing up Iran?
Behind the invasion of yet another foreign embassy in Tehran and the British response of expelling Iranian diplomats from London is deeper story.

Iran has been plagued by a series of explosions in or near natural gas plants, oil refineries and military bases.

Officially, Iran has downplayed them as isolated “accidents” rather than admit they are acts of sabotage or the work of outsiders, which is normally the excuse of anti-western countries.

Two schools of thought have emerged in the western media:

• that President Obama (and maybe Israel) are waging a covert war, including the drones that have used so effectively against Al Qaeda and the Taliban in Afghanistan, Pakistan and elsewhere; or

• that the level of dissidence in Iran is higher than outsiders believe and treachery is afoot all the way up to the top of the Islamic Revolutionary Guard.

New York Times columnist Roger Cohen is in the first camp, while Michael Ledeen is in the second.

The Washington Post’s Thomas Erdbrink, who is based in Tehran, naturally has a more guarded interpretation as well as a summary of events so far.

Lessons in seizing power
Events are certainly hotting up throughout the Middle East, as post-Arab Spring elections throw up a mix of Islamic and secular groups vying for power.

One of the few remaining dictatorships, Syria, has earned pariah status, even among its peers, as a killer and torturer of children, according to a report by the UN’s Human Rights Council.

The reports say some 3500 Syrians have been killed since protests began in March, putting some perspective to events in places such as Libya and Egypt .

As for the elections that have been carried out in Egypt, Tunisia and Morocco, Barry Rubin has words of warning that these will lead to western-friendly democracies any time soon.

Basing his observations of what has already happened in Iran, Lebanon, Turkey and Palestine/Gaza, he writes:

When totalitarians take power, by election or other means, they proceed to consolidate power. There are ways to do this other than lining up all of your opponents and shooting them or chopping off their heads.

The strategy is to take control of national institutions, transform the national debate, use the amount of repression that’s necessary, and pursue populist policies (both economic and demagogic) to win mass support.

… After several years you get re-elected; or, in Iran’s case, steal the election; or, in the case of the Palestinian Authority’s and Hamas, stop holding elections altogether.

Now he's really dead
Filmgoing was never the same in the 1960s and 1970s after Ken Russell burst on to the local television screens with his biographies of composers such as Elgar and Delius, followed by movies in the decade after Women in Love (1969).

I saw and admired them all. His death this week at 84, in relative obscurity, prompted the thought – wasn’t he already dead?

It was a story he told against himself when talking to The Observer back in early 2001, when at 73 he announced he would start making home movies as no one else was asking him.

"Most people think I'm dead,' he says, matter-of-factly. 'I don't really know what happened. Mistakes. And, whoever you are you need an agent, and mine... well, my last agent got me one job in 20 years and my present agent hasn't got me a job at all."

Russell’s last mainstream films were in the 1980s and have since earned him cult status (Altered States, The Lair of the White Worm, for example). Compare that with Bergman, Antonioni, Resnais and others of similar stature, who kept making films until the end.

Russell obviously became an embarrassment but, at the least, his passing will generate new interest in his work, which is only patchily available on DVD.

In 2002, Britain’s C4 showed a documentary called Hell on Earth about the making his most controversial film, The Devils (1971). The Guardian reports a new DVD is about to come out.

One of his TV films, about Richard Strauss, remains suppressed after the Strauss family refused copyright on the music because the composer was depicted as a Nazi.

The Guardian published no fewer than four separate obituaries, including this one by Derek Malcolm, as well as memoirs and other material.

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The euro: A paradox caught in a conundrum