Monday, 29 September 2008
Though the UK was the first country to see a big bank bailout with the nationalization of Northern Rock, since the US institutions such as Lehman Brothers and AIG started started dropping like flies, Europe's banks had held firm. But no longer. Fortis is the first major continal European bank to falter.
Now analysts are saying the next phase of bank bailouts are likely to be seen in Europe. Joseph Kraft, head of Japan capital markets at Dresdner Kleinwort, told Reuters today,"It's definitely moving towards Europe. It's the beginning of the end and a necessary step, so we should see more institutions nationalised, absorbed or going into default."
At the same time it appears the US congress has been able to work out a deal with which they can approve the $700 billion bailout plan for the struggling banks.
Friday, 26 September 2008
The past few years in Europe have seen a fundamental shift toward the right, as Europeans grow anxious about generous social welfare programs that now seem unable to sustain themselves over the long term. First, Angela Merkel's Christian Democrat party wrested power from the socialists in Germany through a coalition goverment. Then Nicolas Sarkozy handily beat the socialist candidate Segolene Royal in the French presidential election last year. Italy's brief period with a leftist prime minister came to an abrupt end earlier this year with the return of Silvio Berlusconi. And in the UK, Conservative leader David Cameron seems likely to lead the Tories to a victory over Labour whenever the next election is called. The only big outlyer is Spain, where socialist prime minister Jose Luis Rodriguez Zapatero ousted the conservative government a few years ago and is still standing strong.
Both Merkel and Sarkozy have made reforming the country's social models a priority - undertaking a liberalization program for the economy. Sarkozy's has been the most aggressive. So with the near collapse of the credit market in the US exposing flaws in the free-market capitalsm that has prevailed in the Anglo-Saxon world over the past decade, I've wondered whether the ascendancy of the European right might be finished.
But Sarkozy seems to be quickly repositioning himself in the face of the crisis. The man the French left has dubbed "Sarko l'Americain" lambasted the US-inspired lack of regulation in the last few years yesterday, saying that the extreem free-market deregulation undertaken by the Bush adminsitration, "was a folly whose price is being paid today."
In his speech yesterday he warned Europe that it cannot escape shock waves from the US financial crisis and that to protect its future, it must take the initiative in rewriting worldwide banking rules to end the "folly" of an under-regulated system he said is now "finished."He said that at the EU's next meeting he would, as the current holder of the European presidency, propose swift action for the EU to tighten controls over European banks. And he said that the world's major parties should gather at a special summit before the end of the year and develop an entire new monetary and financial framework to replace the U.S.-dominated Bretton Woods system set up in 1944.So, I wouldn't count the European center-right out yet. After all, their opposition, European socialism, is largely adrift ideologically these days. If the European center-right can position itself as the political movement that can look out for Europe's interests during this crisis and strongarm the US into increasing regulation, it could end up even stronger from this crisis than it started. I have yet to see any reassuring plan of action from Europe's socialists.
Wednesday, 24 September 2008
In the US, gun control advocates often point to Europe as an example of an area where it is much harder to get a gun, and conversely there is much less gun crime. This is generally true, in the UK for instance even the police don't carry guns - and I saw first hand how rare and serious crimes involving guns are when I saw the police response to my getting mugged in January.
But there is one major exception to the restrive gun laws in Europe, and that is Finland. In Finland it is actually quite easy to get a gun, and owning one is very popular. There are 1.6 million firearms in private hands in Finland, and the minimum age for owning one is only 15. Only the US and Yemen have higher civilian gun ownership.
Now after yesterday's shooting, which closely followed another horrific school shooting in Finland in the past year, the country's prime minister has called for gun laws to be tightened. Matti Vanhanen said today that Finland should consider banning private handguns.
"In terms of handguns that can easily be carried about, we have to think about whether they should be available for private people," Vanhanen said. "In my opinion, they belong on shooting ranges."
Eleven students died in yesterday's shooting, and nine died in a similiar shooting in the town of Tuusula. Both of the gunmen had valid licenses for owning a gun, and both were young men who had posted videos on youtube with their weapons before the shooting. After last year's attack the Finnish government said it would consider changing the gun ownership laws, but no change was ever made.
School shootings haven't been very common in Europe, but they have occured. Outside of Finland there have been only two major ones. There was one in Scotland in 1996 that preceded the Columbine shootings, and another one in Germany in 2002. Though Finland has had several school shootings, gun crime in the country is relatively rare (although crime in general in Finland is rare). According to goverment figures, 14 percent of homicides in Finland involve a firearm.
Like the United States, Finland has a long and deep connection with hunting and personal gun ownership. But unlike the United States, there is no way of interpreting Finland's constitution as guaranteeing the right to gun ownership, and there is no powerful gun lobby. It could be that having these two shootings so close to one another could be the catalyst.
Just yesterday Brown delivered a much-anticipated speech to the Labour Party Conference in Manchester, following months of party turmoil which have seen his approval ratings plummit. The party conferences in the UK are roughly the equivalent of the US party conventions, except that they happen every year at the same time regardless of whether an election is coming up or not.
His speech has been generally well-received by the British media, which has called it a "rallying" speech by a "New Brown" that was a "impassioned defense" of his precarious leadership. The speech also followed a clear effort to crack down on defectors within his cabinet - including the apparent submission of foreign secretary David Milliband, who was thought to be considering challenging Brown for the leadership, but earlier this week definitively shot down those rumours.However, yesterday's good press for Brown may be overshadowed by the news today that Ruth Kelly, the Transport Secretary, is going to resign from Brown's government. This likely means that she couldn't give Brown the full confidence that he is now requiring from his cabinet. So Kelly has jumped from what she probably sees as a sinking ship. Who's next?
Current polling says Labour is destined for defeat at the next election, with Brown as much as 20 points behind the leader of the Conservative Party, David Cameron. However because the UK has a parliamentary system of government, Brown can call that election any time before June 2010.
So can the "new Brown" save Labour? Depends who you ask. Many in the British media seem to think that all the new Brown has to do to instill confidence in the British public is act vaguely like a human being.
Reuters wrote, "Today New Brown skipped on to the stage, cracked funny gags and had not one, but two kisses on the lips for his wife Sarah as the lengthy standing ovation reverberated around the hall."
I have to say from an American perspective it was amusing to see the British press describe the atmosphere at the conference as "a little bit Baptist church, a little bit Butlins — maybe even a little bit Blair." Were we watching the same conference? Here's a video of Brown's speech and the applause that greeted him - sustained certainly, but not the thundering rapture that some of the British press seems to be describing. Watch the beginning of the clip to see Ruth Kelly struggle to make a smile when she sees the camera's on her. She's probably thinking, 'get me the F out of here!'
Yet Brown's speech did seem to take advantage of the way the wind is blowing at the moment by emphasising traditional Labour values like social welfare and increased regulation. The main theme seemed to be that in these uncertain times, the British people need a leader - and a party - which will protect the most vulnerable people in society during this crisis. Though the British press is describing Brown's effort toward enthusiasm and humanity as being "Blairite," the content of the speech was anything but. Though Tony Blair invented "New Labour" at the same time that Bill Clinton was inventing the "New Democrats" in the US (both pulling their parties to the right in order to make them electable), Brown's speech seemed to be pulling Labour back toward the left. At a time like this, that probably makes perfect sense.
In Brown's words there was also a stern warning for those in the party who have the knives out for him. The markets and the population, he reminded them, would not react well if there was perceived instability in the UK government at this time. "The British people would not forgive us if at this time we looked inwards to the affairs of just our party when our duty is the interest of the whole country," he said to the crowd. For now, the stern warning seems to have worked. They may be nervous about Brown's leadership, but the Labour faithful seem to have concluded that the alternative turmoil could spell disaster not only for the party, but for the country as a whole. So, for now at least, they're sticking with their man.
Friday, 19 September 2008
I mean who would have thought they'd see the day that Hank Paulson, who is as aggressively free market as you can get, would be leading the kind of bailouts we're seeing today. He has to, the government doesn't have a choice in these circumstances. But it's truly bizarre to see John McCain blasting "unrestrained greed" on Wall Street as causing the current crisis when he and his party have led the charge to unrestrain that greed over the past ten years.
Beyond that, I think there is something culturally interesting about the language both candidates are using about the crisis, language which shows that no matter which candidate is elected in November, the US is unlikely to address the fundamental problem it faces any time soon.
Big Bad "Washington"
Both candidates are blaming the crisis on purely conceptual factors like "Wall Street Greed." It is symptomatic of the way the entire campaign has been phrased. The many problems America currently faces are the fault of "Washington," "terrorism," "lobbyists," "oil companies," you name it. In fact if you listen to American politicians, the one group that doesn't share any blame for the country's problems is the American people themselves.
But this argument is not only illogical, it's also unproductive. The dirtiest word during this election campaign has probably been "Washington." This is nothing new. Each election since Nixon has been presented to the American public in this way: Washington is broken and we need an 'outsider' or a 'maverick' to change it. It's how Reagan, Clinton and Bush were all elected. But this year the anti-Washington rhetoric seems to have hit new heights. And yet, what is Washington? Washington is a creation of the people, full of democratically elected politicians who the American public put there. Washington is, therefor, a reflection of the US population. So if there's something wrong with Washington, then there's something wrong with the US public.
The current economic troubles have been presented in the same way, as if it's all conceptual factors that are affecting the blameless American people. Nowhere was this more evident than when John McCain made the bonehead mistake of repeating his "the fundamentals of the economy are strong" line in Florida Monday morning on the day of the Lehman Brothers collapse. Rapidly going into damage control mode, he quickly shifted his wording later in the day to say that the 'fundamentals' he was referring to was the 'hard-working American worker.' Beyond being a laughable backtrack, it reflects the fundamental problem with the way American politicians are dealing with this cris. They're not being straight with the American people, because they won't tell them that it is the people who are to blame.
The American economy has been fundamentally operating on borrowed money for decades now. From the most microeconomic level (Americans now have a negative rate of average savings) to the most macroeconomic (the national debt is at a record high level), America is addicted to spending money it does not have to fund an opulant lifestyle. And it isn't just consumer debt like credit cards that has saddled the American people and the American economy. People took out mortgages that they couldn't possibly pay back, thereby spurring the mortgage crisis. People took out student loans that they knew they wouldn't be able to pay back for 30 years (I'm one of them). A combination of a lack of government oversight and assistance and Americans own culture of greed and vanity has pushed the country into a system where it lives far beyonds it means.
The average family debt in America is around $30,000, and that's not even including mortgages and student debt. The average college graduate from a private university leaves school with $60,000 in debt (Me? I had $120,000 in debt by the time I finished grad school). And how does Americans' -0.2 percent rate of savings compare our rapidly emerging superpower rival? In China, the average savings rate is 20 percent.
Jimmy Carter was the last president to touch this issue with a ten foot pole, in a speech he gave shortly before he lost the election to Ronald Reagan. The speech, widely called the "malaise" speech because it seemed defeatist, is widely credited with losing the reelection for Carter, who was defeated by Ronald Reagan who promised the American people "morning in America" with an endless luxurious lifestyle. Reagan then plunged the nation into an unprecedented level of peacetime national debt.
America has a problem. It is addicted to spending money, and resources, it does not have. The only solution to this problem is for Americans to stop spending what they don't have. But no politician is willing to say that. Instead, everyone in government is blaming the ethereal concepts of "Washington" and "Wall Street." And while much of this crisis can be blamed on the deregulation that a Republican congress has championed over the past 15 years (and that New Democrats rubber-stamped), most of it can be blamed on Americans' spend today, worry about it tomorrow lifestyle. The only real solution, for people, government and business, is to live within our means.
But per usual, when something goes wrong with the United States, it is never the fault of its citizenry. When a hijacking disaster came to its shores, it was blamed on the ethereal concept of "terrorism" rather than American foreign policy or the isolationism of its citizenry. When George W. Bush was elected - twice - it was somehow the fault of some larger "Washington" system rather than the fault of the voters themselves. And now, with the financial crisis, once again we see that Americans are refusing to look in the mirror and take responsibility for their own culture and their own lifestyle.
I can tell you that this contrasts sharply with how Europeans view their own problems. When I speak with Europeans about the problems plaguing Europe, and the inability of the continent to address those problems, they throw their hands up in the air and give a morose explanation about how Europeans have petty rivalries and nationalism that make them unable to cooperate, or how they are are rendered complacent by their generous social welfare systems, or how the people of Europe lack any significant ambition or direction. They don't blame their concepts on etherial concepts, but rather themselves. They could never be as sucesful as America, so many of them say to me, because Europeans don't have the same drive for success.
In the end, I'd say Americans could do with a lot less self confidence and Europeans could do with a lot more. Americans inability to take personal responsibilty and tendency to blame vague concepts for their woes has gotten them into a quagmire in which they are unable to come up with real solutions to their problems. Europeans' lack of self confidence and their acceptance of a storyline that paints them as lazy and complacent makes it difficult to achieve any new success.
Maybe America has some extra swagger it could loan to Europe for awhile.
Thursday, 18 September 2008
I've now been here about three weeks, and I'm slowly adjusting to the "work-at-home" lifestyle. I have a freelancing shift I do for a news web site in the morning, and then in the afternoons I have French class every day for four hours (2 hours of phoenetics, two hours of grammar). The schedule has kept me much busier than I thought I would be, as evidenced by my lack of blog posts recently. Obviously the events of this week in the world's financial markets have inspired some ideas, and there's an entry I want to write about the root cause of the crisis, but I just simply haven't had the time. Why aren't I writing it now? Well I'm at a cafe nursing my capuccino, and it seems more appropriate to write about life in Paris!
So far I've actually found everyone here to be really friendly and nice, which is completely different from my previous visits here when I was visiting. Perhaps it's because I'm speaking French with people, although for more complicated interactions that has been difficult. It really is just a shockingly beautiful city. I've been utilizing the city's 'velib' service, in which you can check out bikes from stations posted around the city and return them anywhere else. The first half hour is free, and it's just a euro for each half hour after that.
This past Sunday I rode my bike around the city a bit, first visiting the Palais Garnier, the grand opera house at the center of Paris. It was really stunniny, I'm hoping to see an opera there before I leave. Afterwards I rode the bike to La Defense, the business district outside the city that is similiar to London's Canary Wharf. The tendency in Europe over the past 30 years has been to impose height restrictions for buildings in the city centers and establish skyscraper zones in specific districts outside the city. It was interesting to be in La Defense on a weekend, as it was almost completely deserted and I was able to ride the bike all around the walkways, platforms and planks. It's much bigger than Canary Wharf, and some of the buildings are really quite interesting. I went behind L'Arc de La Defense, a huge arch-shaped building that mirrors L'Arc de Triomphe miles away. >That's where the construction for La Defense stops abruptly, because there's a massive (and chaotic) cemetary there. Bizarrely, there's this long wooden plank that extends out over the cemetary. it looks as if it should be over a beautiful waterfront, and I rode my bike down it assuming that at the end there would be a stairway to go down to the cemetary/construction zone. But there was nothing, just a big plankway overlooking graves and piles of asphalt. Perhaps they're planning to put something in this area later? Afterwards I rode my bike through the Bois de Bologna, a gigantic park on the outskirts of the city just outside the ring road. It was rather uninspiring, as my guidebook predicted. But apparently they're planning to give it a big revamp soon.
Class has been ok, but not ideal. To my dismay the other students turned out to be mostly American college kids, all either 19 or 20. There are some other "older students," but not many, and none of them are anywhere near my age. It would appear the students in the program are either 19 or 40, but nowhere in between! There's a significant contingent of Latin American college students as well, but the Americans make up the overwhelming (and loudest) majority. I don't have a problem with their being American per se, or the fact that they're young. But they're clearly in this course for a very different reason than us old folks. Theyre on their semester abroad, and the course is being paid for by mom and dad. For that reason most of them are not taking the classes very seriously, and seem to be more focused on where they're travelling to every weekend than with how their French is progressing. Don't get me wrong, I was one of them once too! I mean, my study abroad semester in Prague was academically challenging (it's known as the most academic of NYU's study abroad programs), but I definitly didn't take my Czech language course very seriously as a 21 year old spending a semester in Europe and jetting off on fabulous trips every weekend. But I'm not in that situation any more. It's very important for my career that I have a proficient level of French by the end of this course, and I resent it when the American college students speak in English during the class and don't do the homework, because it's wasting my time. Maybe I'm just becoming a cranky old man.
My verdict on the city so far is that it's beatiful, very fun, but I don't think I would live here long term. It may be large and cosmopolitan, but it just isn't an 'international' city on the model of London or New York. It actually feels quite provincial. Most everyone I meet here is French, and most of them have never lived outside the country. In fact, I've met two people who have never even left the country! I can't imagine meeting any such person in London. Paris is just very French, in a way that London is definitly not British! London may belong to the world, but Paris belongs to the French, and they make that very clear!
I have some friends from London scheduled to come visit over the next few weeks, so hopefully the Eurotunnel mess won't mess up their plans. Other than that I hope to take some weekend train trips over the next few weeks. I hope to visit Lille, Normandy and Brittany in particular.
Friday, 12 September 2008
The fire in the rail tunnel, which since 1994 has connected the UK and France running under the English Channel, was apparently caused by a truck/lorry overturning on one of the vehicle transport trains. Some injuries have been reported and hundreds of passengers have been left stranded. By some miracle, there were no passenger trains in the tunnel at the time of the blaze, amazing considering that 100 trains pass through the tunnel each day. The injured people were evacuated through the central service tunnel (the BBC has a cool diagram of how the chunnel works here).
Even more worrying, the overturned truck/lorry reportedly contained phenol, a deadly chemical that isn't allowed to be transported through the tunnel. The people who are reportedly in the hospital for smoke inhalation could have inhaled this chemical as it burned.
According to Wikipedia, the toxic chemical was used in the Second World War at
As someone who was planning to take the Eurostar train many times over the next several months, this is quite worrying. But for the economies of England and France in general, a shutdown of the tunnel for several months could be devastating. The majority of freight traffic between the UK and continental Europe now goes through the chunnel. In addition, the Eurotunnel just recently turned a profit for the first time, and there were big plans for expansion of the passenger services through it.
Just hours before the fire broke out yesterday, Air France announced it was launching its own high-speed train company through the tunnel which would take less than 2 hours, breaking the Eurostar monopoly. The journey currently takes a minimum of 2h 15m. Clearly there's a lot riding on the tunnel and its activity is only increasing. If anything were to go wrong with the tunnel at this crucial time it would have huge reverberations through France and Britain's economy.
Wednesday, 10 September 2008
I thought the results for Europe were particularly interesting, not because Europe's preference for Obama hasn't been well-documented before, but because although Europeans seem to think Obama will usher in a closer relationship between the US and its European allies, many of them aren't particularly interested in that becoming a reality. Although the majority of respondents in the 12 European countries surveyed said they thought Obama's election would bring closer relations with the United States, a majority also said they do not want closer ties with America. This would suggest that even if a president Obama were to heal the rifts between Europe and America, so much damage has been done by the Bush administration that Europeans now view the United States as an unstable or undependable partner. The logic being, if the elected a George W. Bush once, they could easily elect one again in the future, even if the preferred candidate is elected for now. The logic here would be that the election and reelection of George W. Bush exposed a fundamental difference in values between Europe and America.
Still, 67 percent of Europeans said the European Union should deal with international threats in partnership with the United States rather than independently. While this is a healthy majority, it is significantly down from previous years, and is about 10 points lower than the 75 percent of American who agreed with that statement.
Monday, 8 September 2008
There's been speculation over the past two years that MSNBC, which consistently ranks third among the cable news networks (behind Fox News and CNN) and has had trouble finding its voice since its inception, is going to veer to the left to try to become the "Fox News of the left." Fox News, which was launched in the late 90's promising to deliver news free of "liberal bias," is reviled by the left for its strongly conservative slant. All of Fox News' main personalities are right-wing, and its news coverage is often blatantly (and hillariously - as often featured on the Daily Show) enamoured with the Bush Administration and the Republican party. Tapping into the widely held American belief that there is a "liberal bias" in the US media, the network has been remarkably sucessful and consistently ranks above CNN.
So the thought was, MSNBC might try to emulate that success by becoming a network that favors the democrats. They began featuring Olbermann, who is a frequent critic of the Bush Administration and the GOP, more and more prominently. And Chris Matthews, who has been with the network since the begining, has been increasingly critical of the Bush Administration.
Thursday, 4 September 2008
The speech was brilliant. In one fell swoop Palin managed to deliver one of the most vicious political speeches in modern history while at the same time coming off as sweet and domestic. While trumpeting her own "small town values" of compassion and simplicity, she outlined a series of blisteringly cynical attacks on Obama's 'elitism.' Trust me, this will play in Peoria.
Every European should watch this speech if they want to fully understand the current American political climate. The strategy employed here is classically American, and I think it will work. For a week the McCain campaign let the media criticise the Palin choice because of her inexperience (she's only been governor of Alaska for 20 months, and before that she was a suburban housewife - she's only left the United States twice) without seeming to offer any defense of her. Throughout the revelations about her teenage daughter's pregnancy, her questionable dealings while in the governor's office and her past as an Alaskan separatist, the McCain campaign refused to put her forward to answer reporters' questions, and even McCain himself was unavailable for comment. From the outside, it looked like the campaign was in full implosion.
But in reality, it was a set-up. The campaign was using the media circus around Palin to draw a record number of viewers for her speech last night (early speculation is that viewership will rival Obama's speech). Once they were there, she made herself out to be the victim of media elitism. How dare they question her lack of relevant experience for the presidency! They just don't appreciate small-town values like you and me. They are "entrenched interests" who don't want to see a "Washington outsider" come in and shake things up. It was brilliant, and the anti-elitist message will play big in the US.
The crowd went nuts. It's definitely been a long time since a group of Republicans felt so enthused. You can see from the reactions of the crowd, as the camera pans to their faces and they mouth "I love her!" This woman is going to be a force to reckon with.
What was also clear from this speech is that the GOP intends to once again frame this election in the context of the 'culture wars,' an us-versus-them mentality which seeks to capitalize on the fact that one half of the country seems to despise the other half. It's small-town, regular Joe Americans versus those liberal urban elites, and it's a tried and true tactic.
Yet the fact remains the idea of Palin becoming president is almost absurd, with her complete lack of relevant experience. This was echoed by the fact that she didn't bring up a single policy issue in her speech. And yet with McCain's age and his history of melanoma, this is a very real possibility. I'm reminded of the fictional situation that was presented with the short-lived NBC drama "Commander in Chief," in which Geena Davis plays a woman who was selected as vice president as a gimick, but then shortly into her running mates' term he falls ill and dies. She's expected to resign and allow the speaker of the house to become president, but instead she stays on. One can imagine that if something were to happen to a President McCain, such a situation would present itself.
It will be interesting to see what happens after this speech, but its hard to see how the McCain camp won't get a huge poll boost from it. And yet, it will be a tough act to follow for McCain's speech tonight. Perhaps all the enthusiasm and excitement that Palin has generated for the demoralized GOP will fizzle if McCain delivers a lacklustre acceptance speech.
Wednesday, 3 September 2008
Last week I had a series of goodbye drinks and festivities. First Wednesday night I had leaving drinks with my friends, then Thursday I had drinks with my coworkers, then Friday I had another night of saying goodbye in Soho before I left Saturday morning. It was all kind of surreal. On my walk from my flat to Seven Dials, walking down Monmouth Street, there's this spot where a French cafe faces an English cafe, and they each have these giant flags of each country, facing each other across the street. I just kind of stood there for a bit, as it seemed appropriate.
My flat here is great. It's a one bedroom in St. Germain des Pres, which is a really lively neighborhood. It's a nice place, perfect for what I need. And it's right next to the river so Notre Dame and Place St. Michel are just a 3 minute walk from my door. It's quite funny though because the decor is really feminine, kind of the polar opposite of my grubby London flat! It's a quick walk to the Sorbonne so it's perfect for going to class. The only problem is it's on a party street (the locals call it 'the street of the thirst') so there are people out partying in the street below my window every night till about 5am. There's no cars, so it's relatively quiet during the day, but at night is quite a different story! Ah well, I'll adjust to it probably.