The United States is typically a very self-absorbed nation. As the largest economy in the world, and separated by two oceans, US based news and the opinions it shapes have always been centered on domestic concerns projected out into the world. This has only been exacerbated by the a pathologically self-absorbed president.
Because of this problem, the simple fact that the world is fleeing away has escaped many Americans. What has been a growing practical reality as the US share of the world economy slips is becoming a necessity thanks to severe foreign policy mistakes, all of which cater to a domestic audience. “All politics is local” remains true, even though it clearly should not be.
The two biggest foreign policy areas, a trade war with China and sanctions against Iran, appear to be two different situations with the US at the center of both. They are not, and increasingly will become less and less about the US. This simple fact is going right past us, too – making our policies even more ridiculous and harmful to our own interests.
The Greek Crisis has everyone nervous, and for good reasons. If this is what happens when a nation hits a financial crisis people around the world have to reasonably ask, “Are we next?” Every nation on this planet is deep into debt, although few are as bad off as Greece.
A lot of national debt is a threat to the world we live in for two related but distinct reasons. The first is that a nation loses the ability to make its own decisions and operate as a legitimate sovereign nation – which, in the case of democracies, means a de facto taking of power by creditors at the expense of the people. The second is that a large debt load has to be serviced by the government somehow which ultimately is a drain on the economy, reducing the standard of living and generally hurting personal opportunities.
With all this debt floating around causing so much pain it’s best to look at who holds it and how the world can get a handle on it.
Greece has voted “no”. The word is “oxi”, pronounced something like “ohee” in phonetic English, but with a little bit stuck in your throat on the “h” as if you are spitting on the European Central Bank (ECB).
It may well be that this deal had to be rejected and Greece has to essentially go over the cliff to be able to really stand on its feet one day. It may be that the ECB deserves to be spat on, and for that matter perhaps all banks have it coming to them.
But banks today are what we have to watch – in Greece and all around the world. The proud Hellenic people may be about to find out what a world without banks is like as theirs are at the very least going to remain closed for a while longer. Life is going to become increasingly more difficult for everyone.
But this is hardly the first time Greece stood up and said “no” to the great powers of the world.
On Sunday, 5 July, voters in Greece will head to the polls on an utterly unique referendum on a proposed bailout. The process is non binding, the question itself is strange, and the consequences of it are completely unknown.
What does any of it mean? The short answer is that Greece, and all of Europe, are in completely uncharted territory at this point. The five year crisis has gone from slow simmer to a full boil in the hot summer sun. Greece is calling Europe’s bluff, and Europe is not backing down. The only thing we can be sure of is that there will be a resolution shortly, one way or the other. What exactly that means is itself completely up in the air as well.
Here are a few questions and answers on the Greek Crisis based on a variety of news sources. Follow the links for more information in each question.
Twenty years ago I was working in Germany, staying in the small town of Burghausen on the Austrian border. The cycle of holidays that mark the progress of the daily life of the town festooned red, white and blue as they turned towards “French Week” early in the Bavarian Spring. Buses of people from their sister city of Fumel, France came in and the menus in all the restaurants were replaced with copies in French. Burghausen celebrated the arrival of their guests as a family reunion of sorts.
I asked Herr Miterer, owner of the Hotel Post where I was staying, if this “European Union” was going to be successful. His piercing Teutonic glance betrayed the seriousness before he said a word. “It has to,” he said quietly, “We’ve seen the alternative.” Without moving his eyes he pointed to a picture of on the wall of this beautiful little inn that he and his family ran, taken in 1945. The top floor had been blown off and rubble littered what had become the biergarten.
The earnestness of Miterer comes back to me as the latest round of Greek crisis bubbled through the news this week. We’ve seen the alternative. Yet, somehow, it is never quite enough for Europe, this strange forced marriage that stays together for the kids, for the ideals, and for the sheer obligation of it all.
Last Friday the ongoing “Currency War” claimed an unlikely casualty – Switzerland, a nation best known for being solid in money and neutral in war. The central bank had to remove the ties to the Euro under pressure from foreign investors and the result was an upward explosion of 39%, before settling in at 15%, in the Swiss Franc (CHF, known by its French name Confédération Helvétique).
That may sound like good news for the alpine nation, and it is if you are holding a lot of CHF in a bank account. But if you make precise equipment or other things that the Alpine nation is known for, your stuff just got 15% more expensive. Managing this situation is going to be a tough one for the Swiss, certainly, but it’s a disaster for those who borrowed money from their famously solid and discreet banks.
It’s also an earthquake that rattles our whole idea of “globalism”.
After years of low interest rates and quantitative easing that amounts to more or less printing $4.5T, it would be easy to predict that inflation is bound to rise eventually. More dollars means, by supply and demand, that they have to be worth less, yes?
But the opposite is happening as the US economy charges ahead as the strongest economy in the developed world. While we have stopped stimulating our economy, Japan and Europe are only accelerating their programs. The US is poised to lose the currency war with the strongest currency standing – and a guarantee of lower prices for a lot more than just gasoline in the near future.