The PIIGS Who Fell to Earth
Just past the bank closing time of 4 pm on Friday, passers-by at a number of secluded locations throughout Germany could hear the rumble of diesel engines coming to life, as rows of large unmarked trucks escorted by security vehicles began moving out onto the public highways. Roads were busy coming out from the city centers as holiday-makers were anxious to enjoy one of the last weekends of summery weather. Traffic was light coming into town, so the long convoys had little trouble moving quickly. A few outbound motorists gazed with curiosity at the sight, but most paid little heed.
The convoys reached their destinations — the rear entrances of most of the major bank locations throughout the Bundesrepublik. The security vehicles, blue lights flashing, blocked off the ends of the streets, and uniformed men began unloading one trolley-load after another of boxes, as armed guards scanned the streets. Within an hour the trucks were empty, and the supervisors spoke briefly into their mobiles. Then the men began extracting other boxes, filling the trucks again. Another hour, and they were gone.
In her office in Berlin, Angela Merkel waited by her phone. A small group of advisors waited with her, unusually quiet. Their eyes moved back and forth between the clock and the telephones. Finally, a ring shatters the silence. The defense minister picks it up. He listens, nods, barks an acknowledgment into the phone, and hangs it up. He turns to the chancellor.
The Rubicon has been crossed.
She nods. She turns to the foreign minister.
Time for the first call, then.
The aide dials a very private number. It is answered. He hands the handset to the chancellor.
Nicholas. This is Angela. I am very sorry to have to tell you this, under such circumstances. But you will understand why it must be like this. And I wanted to tell you first.
She relayed her news.
The aides could hear the scream of pure anger as Merkel held the phone away from her ear. The tirade continued for about half a minute. Then there was complete silence. She put the phone back to her ear.
My dear Nicholas, you can hardly complain. After all, you threatened me with the same thing back in May. You see, when you did that, you made explicit what has been the case for some time now. You have placed us in the Prisoner’s Dilemma. You are familiar with that?
Of course. We French know philosophy. The first prisoner who cooperates, gets the deal. In order to avoid having one prisoner betray the others, they must all have confidence that none will cooperate.
And among the Euroland nations with the ability to have a strong currency, the situation is the same. If any one suspects that another is about to leave, the only thing to do is leave first. When you threatened to leave, we realized that was the position in which we had been put. So we had to make our preparations.
Sarkozy spoke in a calm, level voice.
But I was not serious. It was a bargaining position.
Perhaps. But the Prisoner’s Dilemma requires certainly, not probability.
Sarkozy was silent for a long moment.
This is irrevocable? There is no action on our part that could stop this from happening?
No. We did not call to bargain. The time for that is past. The position of German bonds has begun to erode. We decided we had to act.
Very well. When will the public announcement be made?
At 11:50 tonight. The decree takes effect at midnight. That will give some time for adjustments to be made before the markets open. And of course New York will be closed Monday, as it is a holiday there. We will close Frankfurt as well for the day; you may want to close the Bourse. I imagine Cameron will close the London markets as well.
Ah, who knows what he will do. Who will you call next?
The other major Eurozone leaders, except of course for the PIIGS. It is better that they have no warning.
Of course. What about Obama?
Just before midnight. I see no reason why he should have much warning. He might actually try to do something about it. Then I will call the Asians, too — Japan, and the Chinese.
What about Von Rompuy?
Who? Oh yes. Why would I want to call him?
I see your point. Well, I am sorry that it has come to this. Of course, we must follow your lead, and we have little time to make the practical arrangements. You will excuse me, I need to make some calls.
Of course. I am sure you will need to summon your Cabinet.
Actually, New York is still open. If I call my broker I can get a few short contracts placed before they close.
Better than Stephen King. Just financially and politically scary. Wonderfully done.
Der Rubikon ist gekreuzt worden.
Well, well, well what’s that supposed to be, a conscious attempt at faux-translationism?
I’d say it’s time for some Berlitz:
“to cross”, as in “to cross a street” or a river = überqueren
“kreuzen” (past participle: “gekreuzt”) = to hybridize, to interbreed. to beat about (nautically). to intersect (geographically).
Sorry, but a Rubikon that has just been interbred makes no sense at all in German.
Corrected, the sentence would read: Der Rubikon ist überquert worden.
But since a passive construction is very unlikely if you cross a river, the phrase should of course be an active construction: Wir haben den Rubikon überquert.
Seems odd that nobody should know any languages…
Thanks for making the same point I was about to, though I think there are alternatives to ueberqueren that would work better – perhaps ueberstreiten would convey the sense better, or even (since Caesar did not cross at a bridge) durchwaten = to ford.
oops, should have been ueberschreiten, not ueberstreiten….
Oh, there’s nothing wrong with a passive construction, in German any more than in English (generations of pedantic schoolmarms notwithstanding); the subject of the sentence should be, well, the subject of the sentence. Rubicon is the significant term.
This is perhaps more especially the case here, since what Caesar actually (is said to have) said at the crossing of the Rubicon was, yes, in passive voice: Alea iacta est, “the die is cast.”
People know lots of languages. Just, not dead ones.
> time for some Berlitz
That’s so XIX century … Just pick up a native text from the net, e.g.:
http://de.wikipedia.org/wiki/Rubikon “den Rubikon überschreiten”
Any day now.
And the Europeons’ Canada-styled (We are not an American!) Neo-Soviet? Within five years.
Would that be the Canada with the rock solid, well regulated banks now buying up distressed US bank assets and cleaning them up? The Canada that had a much shallower recession than the USA? The one that sells the USA fully one third of its oil, more than anyone else? The one whose currency recently rose 30% against the US dollar?
Jeez, hate to be like them.
You nailed it, Fred. The same Canada whose CBC Radio gives spot gold and silver quotes with the hourly news (or did, anyway when I lived there). Like enough people cared what the price of real money was, the stuff they mine. The same Canada that has abundant forests, fresh water, grain, technology, and a decent reputation. That sorry bunch.
Sarkozy stared back, calmly.
Sarkozy didn’t stare back calmly: he immediately fired his assistant guilty of saying “le fin” (the slim, the subtle) instead of “la fin” (the end). A presidential assistant earning ze big bucks is supposed to speak correct French.
Like a true political thriller, if this happens in real life the shockwave and aftermath of such move will break Europe in half: A Franco-German alliance and the rest of Europe. The European Union would be destroyed after such action and everybody would quickly get rid of the Euro. Guess Britain got lucky by keeping the Pound Sterling.
So why wait until Sept. 3? I am thinking July 4 might be a better date. And I have to assume my bear ETF’s may finally move into the green.
And now a word from our sponsor….
It’s the first Friday in September. Being more traditionally minded, I think July 30th might have been even better. And a month more campaigning weather….
September 3rd?
I don’t know, but I do know we declared war on Germany on the 3rd September, in 1939, and later that day so did France.
I’d say it was an apposite date to choose to rub that irritating little frog’s nose in the merde of his own making while sticking two fingers up at him. Wait until he catches on later. Ha ha ha. I like it. Great story.
Maybe the next time she calls him she should ramp it up a bit and have the Horst Wessel Lied playing in the background.
I would.
she won’t cuz her people would have got rid of her before. Look like the popole here are all of german origin. Glad that petit Nicolas vous emmerde tous !
uh, 55% of the Germans think that Merkel will not finish her mendate until 2013, 79% of the german population is disgusted by her “austerity plan”, va y’avoir des riots de Linke when the poor pressurised workers will realise that their savings are also vanished
and tout le monde démissionne les uns après les autres de son gouvernement !
er hmm
Wanted
position of governess in Santa Barbara
with Cat o’ nine tails experience
convenient to former Chancellerin
Schwarzenhegger
Actually, you got the wrong scenario, Germany has no other chance left to stay out of the chaos, her banks are blowing up !
see this well informed site,
and please notice Schadenfreude comments
“I worked at one of these banks in Frankfurt. I resigned last year because i saw this coming. Now, the hard and horrible truths of these banks will be made public. DB’s Ackermann was right to say, that nobody should know about German banks because if they did, it would cause panic. These banks are stuffed with poorly UW loans that are going under now. These banks have failed to raise capital in teh last 2 yrs during this “American problem” and now its time to come clean. The state wont be there anymore. However, the taxpayer will be left on the hook “again” for more bailouts of banks. No bailout money is going to Greece but rather the vaults of banks in frankfurt.”
http://www.economist.com/blogs/charlemagne/2010/06/euro_crisis_2
looks like Spain isn’t going to let Germany to play her selfish game against the other eurozone countries anylonger, Germany has to show how unsane her banks are ! Hey, at Santander bank there are some Spanish with nuts.
You should write a novel of some kind.
Der Rubikon ist überschritten
For fifty years, the US perceived that a united Europe was in its national interest. Such a united country would not be subjected to the constant turmoil and internecine warfare that has plagued that continent. Then, once the project was accomplished, the EU immediately set about attempting to curtail the power of the US. This was straight balance-of-power politics, and made perfect sense to the Europeans. Except for two things:
First, the EU remains militarily dependent on the US. We talk about fiscal responsibility in North Europe, but they’ve only been able to finance their lavish welfare states because they have Americans footing their defense bills. America grants them international power over all kinds of issues because of our cultural investment in legalistic international structures like the united nations. Absent that support, their global influence would be purely economic. None of the other world powers recognize international law except as a technical mechanism; for them, the currency is raw power. Weaken the US, and you don’t automatically strengthen Europe. In fact, since some of the EU’s power is essentially borrowed from the US, weakening the US has had the effect of weakening the institutions on which the EU depends. The EU hasn’t significantly weakened the US in any real measure of power; but they’ve greatly harmed themselves. The current president, is a fan of Europe, but he’s even more a fan of sitting around watching crises unfold while giving speeches. The EU has cut the umbilical cord too soon.
The other problem is that the EU has been undergoing integration pains. Any conservative (european-style or american-style) could have seen this particular crisis brewing for decades. But even if this one was averted (and even if this one is), there are bound to be more. Europe needs a quiet, prosperous couple decades to cement its fragile unity peacefully. (Or, more fitting the historical pattern, it needs a ruthless imperial power to exert dominance and enforce a Pax Romana.) Either way, even a moderate external force could ruin the whole thing. I’d have expected that force to be Russia, and it still might be. But the EU’s first and so far only major foreign policy initiative has been to nakedly oppose the US on Iraq, while openly dragging its feet in Afghanistan. Even people who support the substance of their position have to recognize what this means.
So the EU has alienated its key benefactor and put itself in a position of medium-term vulnerability. But will that be enough? Turn the table around for a moment. Withdrawing from the Euro would be a deathblow to the EU. Don’t just look at the political impact or how it would affect “momentum” or “the Narrative” or whatever. Even on base, raw power terms such a withdrawal means doom for a unified Europe. As I said, most of the EU’s power is economic. Not just its power against non-Eurozone countries, but its power to hold the Euro zone together. Countries have enacted very painful policies dealing with agriculture, unified business codes, trade, regulation, immigration, and political systems– all because of the carrot of the Euro and the stick of being left out. Take away the monetary union and there’s no leverage to create the political union.
From their point of view, a collapse of the Euro would be an economic and political disaster. Sure, you could use this as an “Articles of Confederation” moment to accelerate integration, but the EU’s integration process so far has been wildly unpopular; I think they’ve burned that bridge. The EU bureaucracy would probably not disappear, but it would quickly become a paper tiger like the OAS and other similar groups. This has severe political and national security implications. It’s worth heroic effort and crippling economic pain to maintain that union. And even if America and other countries feel a united Europe is in our interests, it’s worth it to quietly make unification as difficult and expensive as possible.
The prisoner’s dilemma doesn’t apply here, because enduring the risk of France leaving first is essentially paying an option on avoiding the incalculable damage of a Euro-zone collapse. Also, of course, a German withdrawal wouldn’t be so Teutonicly tidy as you suggest; it’s unthinkable that France wouldn’t get wind of it far in advance. They would rush to catch up. If it does happen, it will be sudden, sloppy and utter chaos for all parties. Either side would hear about it in advance, and so the timing conditions of the Prisoner’s Dilemma aren’t satisfied, either.
Bottom line is that Germany and France are in a major bind. France is more interested in the global power of Europe and know they won’t have to foot the bill for a bailout, so naturally they’re eager to get the economic crisis over with. Germany focuses more on economics and knows that they’ll be in the hole, not just this year, but every year from now on, subsidizing Mediterranean welfare states (plus Ireland). Either way, they’ll both use brinksmanship and tough talk to leverage the PIIIGS to tighten up their fiscal policies, but they can’t hide the underlying realities. The Franco-German axis depends on the Euro-zone as much as the EU countries depend on them. The crucial difference is that the French and Germans have the power to make or break the EU, and therefore they have all the power, and therefore they are the ones most responsible for maintaining it. Individually, each minor country has no power to harm the EU and can potentially get a bailout. Collectively, such a chain of bailouts would ruin the EU. So how do you handle it? Well, if you can, you hold as much of the Union together as you can while you make an example of the rest. If things get bad enough, you’re more likely to see attempts to kick the PIIIGS out rather than Germany simply leaving.
Bottom line: as much as America would probably benefit from a German withdrawal from the Euro, the consequences would be so disastrous for the Europeans that it seems unlikely that the Germans or French would let it go that far if they could stop it. Europe is very vulnerable, and if they survive this storm, there will be more. They can’t count on the US or anyone else for help. Count on Russia at a minimum to covertly work to break them up. Meanwhile, the minor countries’ individual interests are outweighing their collective interest in maintaining the Euro. Are France and Germany strong enough to keep things together on their own? I don’t know, but they’ll certainly try. If it does fall apart, will break up from the outside and work inward.
My, that is far too lucid and perceptive an analysis to be credited to a mere single-letter nom de keyboard.
Actually Cameron is making a big deal of the “entente cordiale” between France and UK
Firt time that the 18th of june is fested in London
is it a sign ?
http://www.france24.com/en/20100618-france-london-sarkozy-degaulle-resistance-world-war-two-nazis-bbc?autoplay=1
It is a sign, but a sign from the past. Your present and future are not so “glorious”, therefore the focus on the past. Some days ago in the Guardian, Timothy Ash wrote the article ” De Gaulle and Churchill have a message for Sarkozy and Cameron” and then the statement followed: ” All British foreign policy since 1940 is footnotes to Churchill, all French foreign policy footnotes to de Gaulle”. That might be correct. But what about this:” The two statesmen-bards told us stories about who we are- the British, the French – and because we believed them, we became in some measures the people they have invented”. Products of de Gaulle`s and Churchill’s myth-constructing? Churchill treated de Gaulle very badly during his time in Britain and afterwards. That’s why de Gaulle said “non” when the Brits wanted to join the EWG in 1963.
Marianne
better the article than your interpretation
http://www.guardian.co.uk/commentisfree/2010/jun/16/de-gaulle-churchill-message-cameron-sarkozy
now, the guardian isn’t a paper that is known for supporting Cameron, so this is just a blah blah from a deluded guy !
As far as the sign, yes
The Brits conservatives have shown more than once their wish to come to a closer cooperation with France as far as defense is concerned.
looks like he isn’t very “hot” to develop “entente cordiale” with Merkel.
I tell y’a he is right, Merkel only think Teutonic
http://www.eubusiness.com/news-eu/germany-britain.4v5
Churchill treated de Gaulle very badly during his time in Britain and afterwards. That’s why de Gaulle said “non” when the Brits wanted to join the EWG in 1963.
It was Roosevelt and Eisenhower who treated De Gaulle badly. Churchill went to great lengths to build him up anticipating the postwar period. The great insult to De Gaulle was Eisenhower refusing to lend the French planes to allow them to escape Dien Ben Phu.
I considered this possibility and came to the conclusion that it is unlikely given the Germany economy’s reliance on exports. Products produced in Germany would have costs denominated in the strong German currency, but a large percentage of their exports would be sold in countries with far weaker currencies. The German economy would likely be recession-bound until the value of their currency dropped to a level comparable to that of their trading partners.
Things are so bad all over that it might be time for everyone to just start over from scratch; and I mean from SCRATCH! Let all the governments of the world default on all debts simultaneously. Meanwhile, let all governments suspend all taxation and distribution from the treasury. Let all people keep what they earn and live whatever lifestyle that amount will support. Let things run this way for a generation, then see if anyone REALLY misses all this stuff!
Just daydreaming!
I hope Merkel will read this.
So do I.
I particularly liked the line: “If I call my broker I can get a few short contracts placed before they close.”
Perfectly encapsulates the cynical and narcissistic nature of most politicians, especially the French.
The euro is the Deutschmark. Why give up that kind of control?
dummen Sprüchen auf Deutsch übersetzt
Why not Reichsmarks?
While I am not fluent in German [actually, even when I was using it, I never was truly fluent], I will agree with the previous commenters that the phrase Der Rubikon ist gekreuzt worden is a bastardized formulation. However, as someone who writes as a sideline; may I offer a possible defense for Mr. Bennett?
He is delineating a particular picture and mood, drawing the reader in [most successfully, I note]. The use of a correct German phrase that baffled the reader would break that mood terribly. Most Americans are NOT at all knowledgable in German, and the use of a close homonym Kreuz to an English cognate, especially in conjunction with “Rubikon” naturally connects to any English reader with a knowledge of classical history. Just the audience he is aiming for. I suspect that it is a well planned literary device; possible here because we don’t have an Academe Francais equivalent watching our grammar. We do have a PC police looking for thoughtcrime, but that is another matter.
As to the substance of the matter … be still my beating heart. The breaking of what is historically the Vierte Reich* is a necessary precursor to the return of a nationalism which is the only remaining defense of Europe [and at long distance, us] from a number of internal and external mortal enemies. Yes, that return of nationalism contains risks, but subsuming everyone in Europe to a faceless dictatorship does also. One must choose, and a refusal to choose is a choice itself.
*- First, Charlemagne. Second, Hohenzollern Germany. Third, NSDAP Germany.
Subotai Bahadur
Sie haben den Hai uebersprungen.
If the writer were serious he would have written:
Alea iacta est!, as Seutonius has it, or Ἀνερρίφθω κύβος , as Plutarch has it.
Iulius himself does not mention the river in Bellum Civile
“But I was not serious. It was a bargaining position”
Sarkozy was but serious, see why:
http://www.businessinsider.com/heres-why-its-the-germans-pushing-for-the-euro-wide-short-selling-ban-2010-6
“Der Rubikon ist gekreuzt worden” reminded me of something I said years ago in German class. “Der Passiv sollte am besten vermieden werden.”
This reminds me of the two words of German I learned from my aunt: Arschloch and Scheiße. My aunt would be so proud.
I hate to be a pendant, but the Prisoner’s Dilemma does not support cooperation under any circumstances. Even if one player is completely certain the other will cooperate with him, it is still in his interest to defect. The only way to get cooperation is to embed the game in some larger framework that gives the other player a chance to punish you if you don’t cooperate.
Perhaps Merkel could reference the Centipede game, where you can get cooperation for a while if both players are certain the other will cooperate. Although absolute certainty is not required. I’m having trouble thinking of a game in which absolute certainty would be required – it seems like the only way you would require 100% certainty would be if the cost to you of the other player defecting were infinite.
“pedant”.
Hey, I’m an editor. It’s my job.
Sorry, to correct my post above: The only way you would require 100% certainty of the other player cooperating would be if there’s no benefit to you from cooperating when the other guy cooperates, but there is a cost to you from cooperating if the other guy defects.
Army brats all retain a little German from their adventure among the Krauts. Probably because Army towns keep the favorites for occasional use. Like “kaput” and “mox nix.” Which are handy for a description of the euro and how important it is. Vietnam vets brought back Vietnamese words but all I remember is “beaucoup.” Like a little gold and silver is way better than beaucoup paper geld and argent.
Pour le plaisir
Germany Leaked Information To Try To Stoke Fears Over Spain http://bit.ly/bAaVj2 Le Rotweiler Merkel gronde pour cacher sa misère
so, à quand le retour DDR ?
Do not insult our Kanzlerin, please. Frau Merkel, no matter what I think about her, is a woman and not a dog. To “Germany leaks information”: FAZ.NET(Frankfurter Zeitung)wrote today: Wettbewerbskommissar(competition-commissioner) Almunia expects that some further Spanish and Greek banks could run into difficulties and might need help. Perhaps Europe leaked information but not we! After all we should pay for the whole mess and nervous markets do not need stimulations like that. And to all those anti-German people out there: We Germans love to enjoy life too and do not think that the sense of life is work and nothing else.
You, Germans, started the hostilities with the xenophobic caricatures of the “Mediterranean club” (in which you included France too) with the falsh assumption that you were the virtue model(with the northern countries), while your banksters were the ones that bet on Greec, spanish… debt, that made them earn billions on these countries’ backs . Merkel, with her denies paso-doble, was hidding and protecting your banks weaknesses and bad behaviour (that were attacking the euro), filled with bad debt bonds, not alone from the eurozone, but still from the US housing bubbles. Merkel managed in a few months to anihilate the confidence that we had in Germany that took decennies to construct
Reading this conversation, I can’t help, but say: “Yay for the European unity and solidarity!”
Seriously, from a Czech viewpoint, we do no have a really good outcome now. If Germans and French act together now, they will basically bully us smaller nations into submissio, regardless of merit of the ideas.
If, on the other hand, they develop unbridgeable disagreements, then the whole EU worth lowers to the scrap metal of the Euro buildings in Brussels. Both ways, no benefits for us. The mojo spent, the magic gone.
The economist Bhagwati from Princeton University said in an interview with “die Sonntagszeitung”: The French love to spend German money(Source: faz.net). Furthermore,
he added that even a Greek failure would not harm the Euro too much. However, I deeply reject his opinion about the free market. Typical American(ok, perhaps a bit of contradiction in my argument). No, we actually do not intend to bully small countries. My son and his friends, for example, supported New Zealand against Italy, the world master for the last four years(result: 1:1). Now they are happy and my husband is sad. He deeply misses European solidarity.
The economist Bhagwati from Princeton University said in an interview with “die Sonntagszeitung”
“The French love to spend German money”
http://www.faz.net/s/Rub3ADB8A210E754E748F42960CC7349BDF/Doc~EBE43A6C8B417457CA3A219F3AD17B55B~ATpl~Ecommon~Scontent.html
“Die französische Finanzministerin sagt: Wenn die Deutschen nicht so viel sparten, hätten die anderen Länder es leichter.”
Es könnte passieren, dass die Währungsunion zu einer Transferunion wird. Wenn die schwachen Länder Probleme haben und alle sich Sorgen um den Euro machen, wird das schnell von einer wirtschaftlichen zu einer politischen Frage. Schließlich ist es nicht gut für Europa, wenn Länder wie Griechenland zusammenbrechen. Deshalb wird man in solchen Situationen zu Transfers, zu Geldzahlungen, gezwungen. Zumal die Franzosen gerne deutsches Geld ausgeben. Damit so eine Situation nicht eintritt, muss man zurück zum Maastricht-Vertrag.
that’s right ! poor Deutschland !
“Ferguson isn’t an economist, but he is acutely aware of the influence of money upon history. Recalling that the euro was created to bind Europeans into one economy, preparatory to binding them into one nation, he suggests the path forward to a United States of Europe is looking rocky.
The Germans simply wouldn’t vote for the American kind of arrangement, in which the federal government taxes rich states and subsidizes poor ones. (Americans have had the system so long they scarcely recognize that it exists, much less agitate to end it.)”
ils sont nuls ces Germains, z’ont rien compris depuis le début de l’EU
http://online.barrons.com/article/SB50001424052970203296004575311132039434008.html
Germans prefer to believe that that the French want them to spend their money
But
They don’t know that their banks prefer to play casino within their neighbours debt bonds, and were betting on their insolvency, which filled billions in liquidities into german banks
http://www.youtube.com/watch?v=I77UwYM-884
If this happens there will be nothing short of World War. Unfortunately, that is the end result of grand political schemes that take place in Europe.
“Again and again in politics, great schemes don’t work – Soviet Communism, for example, and now the euro. Rational people tend to conclude that, because a scheme doesn’t work, it will quickly stop. Unfortunately, rational people are wrong. Bad political schemes are usually given up only when they have been tested literally to destruction. It would be much better for Europe if the euro had never happened, and I long for it somehow to fade away, but the process of destruction will be horrendous, and it is only just beginning.”
-Charles Moore