Tuesday, March 02, 2010

Yankee Triumphalism Returns

It wasn't but a few months ago the American Financial Press and critical observers (led by the seeming financial tabloid, the WSJ) were quiet as dormice given the great unraveling in the economy, markets and hubris. But with the double- top in the Euro spawned by Greece, and a [brief] interlude of global de-risking in fear of a double-dip, helped along nicely by a veritable gang-bang of the Euro by group-think Macro investors pulling along their trend-following henchman, American triumphalism spewing forth from the press and observers is back with a vengeance, and not without some schaudenfraude.

I am not here to defend Greece, Italy or Spain, their shameful financial engineering, or the practical difficulties of implementing a single currency atop imperfect political integration. Nor am I here to attempt to extol the albeit painful benefits of internal adjustment vs. devaluation, which while not ideal have proven possible. But it seems to me American commentators are in a rather weak position to be triumphantly trumpeting what are essentially political logjams on the periphery of the Eurozone, when the very centre of the American system can agree on absolutely nothing, before ignoring the rampant left-coast denial that makes Greeks feel as if they've done nothing wrong. And it must be pointed out that the Europeans (ex-anglo-saxons) are prodigious savers and can reasonably self-fund their apparent profligacy, unlike the fiscal folly of their new world relations. As such they retain more independence remaining less-beholden to Asian benefactors.

But at least the Europeans are attempting to pragmatically deal with some of their issues: Latvian and Irish internal adjustments, while painful, are moving things in the correct direction; UK tax rises are a precursor to more painful cuts to come - both at the national and local authority levels; retirement ages are being raised (and not just in Greece!). Benefits and spending will almost certainly endure a manicure, if not a larger crop. Yet, in Washington (and New York) demagogues and financial free-riders lobby to retain the status quo, preventing change, thereby forestalling adjustment. And as has become a culturally-defining trait, it seems as if the entire polity awaits the excrement-hitting-the-fan moment before setting aside their petty partisan squabbles and beginning to tackle fiscal insanity, the prevailing inexorable inequitable healthcare vortex, and pitifully-low carbon taxes that prevents more rapid progress towards greater efficiency. "Pre-emptive Action" might as well in sanskrit, it is so foreign. All the while the WSJ ever-more resembles Radio Pyongyang its anti-european rhetorical anathema devaluing the more valid non-sequitirs requiring attention..

Americans can learn many lessons from the world if only they disarm themselves of their sense of triumphal superiority. Austerity, non-partisan pragmatism, issue-confrontation and political compromise are but a few if they cease misplaced victorious chortling and open their collective eyes.


DriveBy said...

I feel like this is a call to end America's current leading exports(Ego & Fraud?). With the sheer volume of imports and a finate amount of space to store things America must export....something? I can only assume that there is some value derived on the other end from basking in our glorious American superiority otherwise why would anyone be a willing "trading partner".

On a completely serious note - Thanks for the blog entry. Your eloquence in combining economic and social commentary keeps you on my bookmark list. I'd be happy for more frequent posts, but I understand there are people who earn a living and enjoy the world around them (I read about these people on the internet so they must be real).

Thanks again

Anonymous said...

You just hate us for our 'freedom'

Anonymous said...

How has the WSJ become a tabloid? I don't recall any Jayson Blair or Rathergate scandals that came from the paper. Personally I think the op-ed page is as harsh on Washington DC spending and deficits and its effects on the USD as it has been on the EU PIIGS and their effects on the EUR. The page was also consistent in lamenting excess spending and deficits during the Bush years, which is more than I can say about the consistency of another paper


Anonymous said...

Anon, you must admit that the "other paper" I believe you are inferring doesn't set the bar very high. The FT remains the benchmark by which others should be judged. In any event my intent was less to disparage the WSJ than highlight the re-emergence of a triumphal tenor in analyses of Europe's recent foibles.


Anonymous said...

Re -C-: the FT is a great paper with unmatched scope, but I find it sometimes jack-of-all-trades-master-of-none and lacking the depth of reporting that the Economist, WaPo and WSJ have, though both US papers and especially the latter can be a bit verbose. I suppose bottom line is all papers have their strengths and shortcomings. But it's difficult not to get the impression you aren't disparaging the WSJ when you describe it as a "tabloid" and "Radio Pyongyang". You may find it antithetical to your own political leanings, but it's difficult to deem it jingoistic when its coverage of EU fiscal woes is comparable to its coverage of US federal spending, entitlements, (no) pay-as-you-go, and deficits and attendant currency effects.

If you want to see economic chauvinism in print at its finest then head over to the People's Daily and the Australian Financial Review, where state-led allocation of capital will yield 8% growth forever and iron ore prices increasing 50% a year will support GDP and meteoric property appreciation forever. Like the US triumphalism 10 years ago amid the tech boom (http://www.amazon.com/Does-America-Need-Foreign-Policy/dp/0743230876/ref=sr_1_1?ie=UTF8&s=books&qid=1267800284&sr=8-1), I suspect the current East Asia economic self-congratulations tree will similarly fail to grow to the sky.

"Cassandra" said...

Your points are taken, though in my defense I would point out that I didn't deny being disparaging to the WSJ, rather it was not the primary focus of the post, since they are not alone in the the guilt I ascribe.

Sadly the Journal was mostly mute on the Bush Admin demagogic destruction of revenues (tax cuts) and increase in expenditure (war) which were major enablers of subsequent federal deficits, international imbalances, asset price booms, and consumption-run-amok. Their new-found voice (running counter to a democratic admin) seems a tad disingenuous. The FT, Martin Wolf in particular, by comparison, was consistently critical of what was all accounts rather poor policy. The Radio Pyongyang accusation, I concede, was probably hyperbole, as you point out.

Anonymous said...


Anonymous said...

C: The FT remains the benchmark by which others should be judged.


That is a low bar. The FT's analysis is generally inadequate. They make assertions regarding the law with no analysis.

Item: FT repeats verbatim unsubstantiated assertions that the off-market swaps entered into by Italy and Greece are legal. And fail to discuss any anti-abuse rules applicable to EU treaties. And fail to address whether any legal opinions obtained by Greece or banks are based on bad assumptions or representations.

Item: FT repeats verbatim unsubstantiated assertions by Treasury/Fed that it would be impossible to restructure big brokers/banks in chapter 11. If that's true, why is it that Bloomberg is having to fight like hell to get the NY Fed's legal analysis on using bankruptcy.

Bloomberg has done a way better job than the FT covering the crisis. Bloomberg's been filing freedom of information act requests to dig behind the disinformation spread by Geithner, Bernanke, and Paulson; e.g., did they actually get advice from Harvey Miller or just hire him.... What has the FT done? Repeat consensus views. Request bailouts, and then act shocked when that means taxpayers refuse to pay for both bailouts and health care reform.

Anonymous said...

"WSJ ever-more resembles Radio Pyongyang"...love that line. WSJ really has gone downhill with Murdoch at the helm. Canceled my subscription to the tabloid earlier this year. Not really fair to single out the WSJ as the "voice" of America as it is more like the lunatic fringe at Fox.

dsquared said...

I don't recall any Jayson Blair or Rathergate scandals that came from the paper

It should be pointed out though that Jayson Blair and "Rathergate" were isolated affairs, while the editorial pages of the WSJ have been pumping out falsehoods five days a week since the Nixon years.

Anonymous said...

dsquared - 1) typical that you make an ambiguous attack but you don't mention any specifics 2) I'm not talking about the editorial page, I'm talking about the reporting quality and integrity. I'm the first to admit WSJ can be verbose but the depth and integrity is much better than the NYT, LA Times, and the Guardian, all of which I read regularly to get both sides of the debate and question my own views. I'm sure you do the same, or do you just stick to the Guardian so you never have to question any of the Left Wing's policies and tenets?