Morning Jolt - The Conventional Wisdom on Greece Is . . . Slippery

NRO Newsletters . . .

Morning Jolt

. . . with Jim Geraghty

May 30, 2012

In This Issue . . .

1. The Conventional Wisdom on Greece Is . . . Slippery

2. End the Division in Wisconsin! Obey the Will of Public-sector Unions!

3. Give Up 'The Inspiring Biography'? That's All Obama Has Left!

4. Addendum

Good morning!

Here's your Wednesday Morning Jolt.

Jim

1. The Conventional Wisdom on Greece Is . . . Slippery

Here are two shots of doom with your coffee this morning, first from NRO's John Fund:

A Greek member of parliament told me recently that tax reform was "almost impossible" to achieve because "our tax system is run by the Mafia." I laughed and said that many countries had people who thought of their tax collectors that way. "No, no," the parliamentarian insisted. "I mean that organized crime really runs the tax agencies for their benefit, taking a cut of the reduction in taxes they give out to citizens. Every person appointed to reform the system has been pushed out. Respect for authority is nil."

It increasingly looks as if Greece is on the verge of collapse, a sad condition for the nation that gave us democracy and so much of our civilized heritage 2,500 years ago. But the Greeks should have been warned. It was in the famous Greek tragedies that the concept of hubris was explored -- the notion that excessive pride or defiance of the gods leads to disaster. How Greece recovers will depend in part on how much its people take that lesson to heart and start rebuilding.

Then this remarkably grim assessment from Peter Boone and Simon Johnson at Baseline Scenario:

A disorderly break-up of the euro area will be far more damaging to global financial markets than the crisis of 2008. In fall 2008 the decision was whether or how governments should provide a back-stop to big banks and the creditors to those banks. Now some European governments face insolvency themselves. The European economy accounts for almost 1/3 of world GDP. Total euro sovereign debt outstanding comprises about $11 trillion, of which at least $4 trillion must be regarded as a near term risk for restructuring.

Europe's rich capital markets and banking system, including the market for 185 trillion dollars in outstanding euro-denominated derivative contracts, will be in turmoil and there will be large scale capital flight out of Europe into the United States and Asia. Who can be confident that our global megabanks are truly ready to withstand the likely losses? It is almost certain that large numbers of pensioners and households will find their savings are wiped out directly or inflation erodes what they saved all their lives. The potential for political turmoil and human hardship is staggering.

For the last three years Europe's politicians have promised to "do whatever it takes" to save the euro. It is now clear that this promise is beyond their capacity to keep - because it requires steps that are unacceptable to their electorates. No one knows for sure how long they can delay the complete collapse of the euro, perhaps months or even several more years, but we are moving steadily to an ugly end.

When I hear the descriptions of economic life in Greece -- enormous off-the-books black markets, high taxation, rampant corruption, widespread violent riots at the first sign of spending cuts, lying in its official application to join the euro in the first place -- I can't help but feel like we're witnessing a brutal but justified form of karma. I don't want to see widespread economic immiseration, but if you insist upon believing you can get something for nothing in perpetuity, I can't stop you from a head-on collision with reality at 80 miles per hour without wearing a seat belt.

I feel a bit like Bill Frezza wrote last summer:

What the world needs, lest we forget, is a contemporary example of Communism in action. What better candidate than Greece? They've been pining for it for years, exhibiting a level of anti-capitalist vitriol unmatched in any developed country. They are temperamentally attuned to it, having driven all hard working Greeks abroad in search of opportunity. They pose no military threat to their neighbors, unless you quake at the sight of soldiers marching around in white skirts. And they have all the trappings of a modern Western nation, making them an uncompromised test bed for Marxist theories. Just toss them out of the European Union, cut off the flow of free Euros, and hand them back the printing plates for their old drachmas. Then stand back for a generation and watch.

Mind you, Frezza thinks Communism would be disastrous for Greece. But who are we to save them from themselves?

And it feels like a lot of people who know a lot more about finance have been telling me for months that there was no way Greece would leave the euro. This is one of those moments where you can feel the conventional wisdom shifting under your feet.

2. End the Division in Wisconsin! Obey the Will of the Public-sector Unions!

We're one week away from the Wisconsin recall election.

The Walker campaign sent along word:

Governor Scott Walker's campaign announced today that it has raised more than $5 million between April 24, 2012 and May 21, 2012 from a total of 54,112 contributions. 39,813 of those contributions were $50 or less, representing 73.5% of the overall number of contributions.

"More than 73 percent of our contributions were for $50 or less, showing that as the election draws closer, Governor Walker's grassroots support is as strong as ever," said Ciara Matthews, communications director for Friends of Scott Walker. "Governor Walker's reforms have proven successful for the state by saving taxpayers more than $1 billion and helping to create more than 35,000 jobs since January 2011. It is because of this tremendous success that voters continue to stand with Governor Walker."

The Walker campaign finished the quarter with a combined total of more than $1.6 million cash on hand in the recall and general campaign funds. The campaign has raised more than $20 million since January 1, 2012.

Meanwhile, Wisconsin Democrats, who fled the state to avoid voting on Walker's reforms, who let protesters take over the state capitol for several days, who compared the governor to Hitler, and who forced recalls of state legislators and the governor (putting state voters through seven elections in one year), have coalesced behind one final closing argument: Scott Walker has divided the state.

Really.

So the only way to unite the state is to give Wisconsin Democrats what they want!

In related news, the head of a public-sector union in Wisconsin was seen in public with a staff and helmet with giant horns, declaring that the era of pluralism and public disagreement must end, and adding, "Is not this simpler? Is this not your natural state? It's the unspoken truth of humanity that you crave subjugation. The bright lure of freedom diminishes your life's joy in a mad scramble for power. For identity. You were made to be ruled. In the end, you will always kneel."

3. Give Up 'The Inspiring Biography'? That's All Obama Has Left!

Yesterday, we noted that the candidate of hope and change was going to be running on fear and more of the same. Over at the Washington Post, Ed Rogers finds that Frank Bruni of the New York Times, and more than a few others, continue to insist that Obama is some sort of personification of hope:

Like other liberals, Bruni credits Obama's charmed life so far as being "his journey." Conversely, he is not only condescending to Mitt Romney but finds fault with him, saying, "He hasn't succeeded in rummaging through his biography for the sorts of broadly inspirational chapters that can help a candidate bond with voters." He states that Romney, like Bush, is "another child of privilege and political scion." Bruni goes on to say that Romney "seems congenitally closed-off and palpably awkward about transforming the personal into the political." As if "rummaging through his biography" and "transforming the personal into the political" is what makes a good candidate and leader. Bruni and the Obama disciples can't see -- or they just choose to ignore -- any understated grace or humility in Romney. They can't appreciate the example of his exemplary family and his earnest desire to repay part of what he has earned through hard work and good fortune by entering public service. Romney is not good at boasting and the left would hammer him if he tried.

Many on the left have lost any insight into their own bias; nothing Obama says is over the top, and nothing he has done lacks significance or inspiration. Likewise, nothing Romney says or has done amounts to much. By forcing a halo upon Obama, suggesting dark hearts among any who don't see it and follow, and ignoring the virtues of a decent man like Romney, does not serve the president well. It stirs resentment among voters who chafe at being told to love him or else.

But isn't the emphasis of often dodgy "narratives" our daily lament? The news is more interested in narratives than facts. Our friends on the left eat, sleep, breathe, and live in "narratives." They tell stories. That's why they're so at home in Hollywood.

4. Addendum

Our old friend Andrew Stiles looks at Syria and laments a world gone mad: "If Obama's Atrocities Prevention Board and Presidential Study Directive 10 (PSD-10) couldn't stop the Houla massacre, what hope remains?"