Arnold Kling  


The Roaring Thirties... A Quote I Will Use Often...

I am making the mistake of reacting to the latest twists in the saga of Greece and other European countries. I started by reading this:

Britain is poised to provide billions of pounds for a new global economic rescue package, prompted by concerns that the EU plan to save the euro will not be enough to stabilise the world economy.

This would be via an expansion in the International Monetary Fund, presumably requiring an even larger contribution from the United States. The Anglo-Saxons to the rescue of Europe?

So, I went to Google News to find out the latest, and got to this:

After a tumultuous day in Greek politics, the chances of the referendum being held dwindled to almost nothing on Thursday. Papandreou offered to drop the idea anyway if the conservative opposition backed the bailout in parliament.

So it seems that the Greek politicians will circle the wagons against the voters. What could go wrong?

But what I was really looking for was more information on the IMF intervention, so I Google-newsed the International Monetary Fund and found this.

The Group of 20 developing and industrialized nations is discussing three options for how the International Monetary Fund could help struggling euro-zone governments finance their debts, European Union officials said Friday.

Again, this looks to me like elites circling the wagons. We are going to have TARP for Europe, laundered through the IMF. My guess is that the G-20-crats are trying to come up with an option that has the best chance of being approved by--or even better, bypassing--democratic legislatures.

It is hard to see this as anything other than the political class awarding itself a bailout.

We may be observing an international Crisis and Leviathan moment. It may represent a turn, and a decisive turn, toward world government freed from popular restraint.

Comments and Sharing

COMMENTS (9 to date)
DW writes:

No atheists in foxholes and no libertarians in a financial crisis.

tm writes:

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E. Barandiaran writes:

Arnold, I agree with you to the extent that the elites are attempting to circle the wagons. They will not succeed to strengthen some form of world government, however. Governments of advanced economies are bankrupt and other governments are very reluctant to offer the large amounts needed to succeed. In particular, the Chinese know they cannot trust the clowns governing the advanced economies because almost all of them will be out of power soon and the outcomes (people and policies) of electoral processes are so difficult to predict. The Chinese will pay only a small fee to continue at the table.

Anyway, what a show: the Western elites trying to entice the Chinese into governing the world!

I recommend to follow the show at the BBC Live

nofreelunch writes:

Regardless, the fact is they are all running out of other peoples money.

il falcone writes:

No "Have a nice day"?

PacRim Jim writes:

When Eurosocialists sink a boat, they jump to another boat. America, guess who the other boat is.

Matt C writes:

> It may represent a turn, and a decisive turn, toward world government freed from popular restraint.

I think we have crossed a line in the U.S. The public can't effectively challenge the politicians on anything that the politicians really want.

Arguably the defining moment here was second vote on the TARP bailout funds.

I think it was Theodore Dalrymple who pointed out that public referendums don't really matter. If the public votes the wrong way, the politicians just hold another referendum, as many times as needed, until the public votes correctly. Then the referendums stop.

(FWIW, my personal moment of despair was when we passed the Affordable Care Act and half the country rose up to cheer how they had been *saved* from the evil insurance companies. I kinda lost hope for the American people then.)

Anyway, as others have pointed out, there's only so much money left for the politicians to award themselves and their cronies. It will all hit the fan eventually. I hope at that point the people wake up a little bit, although I am not sure that Krugman et al will not convince them all the bad stuff was because of the radical laissez faire policies of George Bush II.

Various writes:

Hmm...that's an interesting proposition. I think you're correct that the political elites will try to get the U.S. and others to foot the IMF (or other European TARP conduit) bill. But I'm not sure it will succeed. The bill may be large indeed for a successful European bailout. Time will tell. If the bill becomes sufficiently large, there may be some in the House of Representatives that will object.

I am ignorant as to how the IMF is funded by the U.S., and especially how off-balance sheet funding is committed (through guarantees, etc.).

Various writes:

As I think more on this subject: I think if the mechanism for the U.S. funding (or guaranteeing) of an IMF facilitated Euro-TARP was discovered, it could be communicated to some politicians and there would be about a 50/50 chance that they would scream bloody murder. Call me an optimist, but I think the political climate, post TARP, Solyndra, etc. is receptive.

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