Chris, run out of reply tags, but the grenade analogy is totally appropriate. On the other hand, despite the $'s traditional role, and believe me I have been paid in bucks as a consultant forever, there are other currencies (inc €s!) being offered by UN agencies and NGOs for the first time ever. I have had an offer in Brazilian R$s from an Italian NGO recently, OK the work was in Brazil, but I would have been paid here in France where the last 12 days of the contract would have been written up at home. Strange times. I still think there will be rescue packages anyway, but things are changing and what I knew about 40 years ago when I started working in Peru, for instance, would never have allowed me to believe they could boom ever, but heck they are are present. The notions of end of Soviet Union or BRICs and the financial changes they have brought were not even considered possible 20 years back. So let's ride it out and hold on tight.
Sorry, this site is in an open window and I am multi-tasking. Yes, "PIIGS" and it will be a global event. The US will be in a better place, but not untouched by the events of a currency collapse in euro-land. The US has alot of debt, but not to the same extent or levels of euro-land (combined private & national). It also has one major advantage over the euro: it is the world reserve currency and one in which energy prices are pegged so for the foreseeable future all real assets will be translated into US$. Not forever, just longer than the the others: its like grenades. The loser is the last soldier to be holding it when it goes boom.
Ironic that JPMorgan Chase JP are in this up to their necks after creating the 'BISTRO' ,that convoluted bundle of credit default swaps that sowed the seeds of what is now happening. I take it you mean PIIGS (Portugal, Italy, Ireland, Greece and Spain). Michael Larson, the 'investment adviser' explained the symptoms that provoked the PIIGS (rather than PIGGS) financial difficulties as 'too much debt, oversized federal deficits, shaky economies, politicians spending money like drunken sailors, and government lack of fiscal discipline--are all present in the U.S.'. Bill Gross, MD of Pimco, also rated the USA and UK in with the PIIGS and made particular note of the negative implications.
The reality is that if there is a crash, which nobody can afford because of the fiscal and general economic knock on, then it is likely to be global rather than a small number of European countries. As much as I love sticking my nose in economics, I am really glad I am not one at the moment, this is a tough poker game with stakes piling very high. For all of that, I suspect the EU will change tack and come up with a rescue packet - for which our great grandchildren will still be paying.
Adding to the Swiss bit. My Swiss OH's newspapers from there tend to indicate that the SFr is in big trouble. My sister-in-law who is here at the moment, whose partner is an Algerian businessman trading between North Africa and European countries but studied economics is, according to her, investing in Algerian and Moroccan businesses for the first time ever and pulling out of the SFr/€/$ (but never £) areas where he used to put his money to grow. On verra senz altro!
On verra. d'acc. Yesterday and again today the Swiss have poured billions into euro/franc to maintain at 1.20. Reports are that mules have doubled in the last 3 weeks carrying francs over the border. (Ignoring for the moment the amount of rubles being exchanged)
on verra !
It is a currency cascade now ... with Greece and Spain, the euro has passed the tipping point. There are only 2 issues: who is left standing and how long. Germany has as much to loose as any of the PIGGS. Will Germany go for roast pork or snitzel?
Man, will they be angry if they find they have been ripped off!
Pimco and JP Morgan have halted vacations of its top personell to prepare for European economic crash... that is the latest rumor.
Me too! :D
I think you are right John. Inflation and inflationary pressure are as big a scourge as a contracting economic cycle in that inflation gets out of control very quickly and will eventually lead to the balloon bursting and a rapid downturn.
My opinion is that we should be aiming for balanced growth (much as one would run one's households finances). A balance on saving and investment, but not wholly everything in one camp. As you say inflation is a dangerous tool. How we achieve that balanced growth in today's climate is a much more difficult question to answer.
Over to the experts.....
As a consultant in my field (child research/rights internationally) most of us working for the UN and various NGOs get a best two-thirds of what we were paid (daily rate) 10 years ago. Some 'non-Europeans' who were already paid on a lower scale (there's social justice within the human rights sector for you) are getting roughly half the rate. There are several websites offering all the posts and consultancies imaginable and I am wondering how some of the people live? If that is in any sense representative of any kind of real world, where are we going?
Thanks for that Brian. Re cash, I have to say inflation worries the hell out of me. I remember getting a pay rise of 21% in 1979. 4% was merit (out of a maxiumum of 5%) and 17% was cost of living. If we end up there again we've all had it.
John, for me it is simple. I would place all of my money in the highest possible interest savings accounts for my young children. As for the 'financial world' it has, and I say this from a professional perspective as one who has worked with impoverished children and even now see numbers of working children increasing of necessity, think that the distribution of capital is iniquitous because we are watching the number of billionaires growing whereas some of us are sadly aware of people in some countries with incomes going down and actual numbers of people definably living in poverty increasing. That, incidentally, includes the UK and France.
As for executive summary. My message is simple behind all else, why are such excesses driving the € to its present precarious condition when money can be thrown away on things that should in principle be modest? I sadly see the Olympics producing the deceptive image of what 'we've got' vis à vis European neighbours particularly when post Samaranch there were moves by 'advisers' to the IOC to give the Games a permanent home not far from Athens. It was killed off by the Salt Lake City controversy. I think it is time to bring it back, do it and make it a pan-European effort instead of our inter-city 'we are better than you' mentality that infects entire countries. It is a fairly simple wish, but I suspect the modern material (urban) mentality has all but killed off the possibility of it being realised.
Brian, Could you do an executive summary on this? If you had to place your cash somewhere now where would that be?
In recent times, to be somewhat more precise would be to say since the rapid industrialisation of the early to mid 19th century ‘European’ society (I include, for instance, much of the Americas without disregarding indigenous people who became the minority) has become urban by its nature. Capitalism requires urban populations for mass production, trading and indeed today for the financial sector. Modern cities became the heartland of revolutionary politics where the social and political change has arisen. Subsequently cities became the subject of a great deal of utopian philosophy. Above all else though, they are the centres of capital accumulation and the frontline for struggles over who has control of access to urban resources and, thus, who shape the quality and organisation of daily life. The question is today whether it is the financiers and developers or the people and the politicians they elect to represent their views?
Many of us have been looking at the question posed by Jo Blick as to whether ‘The London 2012 Olympics, sham? scam? or are you a fan?’ It is a question well placed in the context I am trying to describe. We are, and including the many of us who have moved to the most remote rural corner of France or wherever else, essentially urban people. Indeed many of the locals we live amongst also, since the world they have to live and work in makes them thus.
The Olympics are part of that. The original Olympic Games were a series of competitions held between representatives of the several city states and kingdoms that made up what we now consider ancient Greece. It featured mainly athletic events but there were also physical combat and chariot racing events. The first noteworthy attempt to emulate the ancient Olympic Games was the L'Olympiade de la République. It was a national ‘Olympic’ festival held each year from 1796 to 1798 in revolutionary France. It included several disciplines from the ancient Greek Olympics but introduced some of the forerunners of modern events and also marked the introduction of the metric system into sport so that, for instance, 100 metres sprint has always been that wherever the Games have been held since. 241 participants representing 14 nations took part in 1896 Games in Athens but this year we will see something like 12,000 participants from well over 200 nations.
It has become commercial. The IOC initially resisted funding by corporate sponsors. It was after the retirement of International Olympic Committee (IOC) president Avery Brundage in 1972 that the IOC began to explore the potential of television. There were also the money-spinning advertising markets on offer to them. Under the leadership of Juan Antonio Samaranch the Games shifted in the direction of international sponsors who wanted to link their products with the Olympic brand.
The IOC has also often been criticised for being an inflexible organisation that has several members on the committee for life. The leadership of IOC presidents Brundage and Samaranch were both especially controversial. Brundage was president for over 20 years and during his term he at least protected the Olympics from political involvement. He was however accused of racism, for his conduct with the South African delegation on the question of apartheid, and anti-Semitism. Under Samaranch the committee was accused of both nepotism and corruption. Samaranch’s association with the Franco regime in Spain was also a source of criticism. Then in 1998 it was revealed that a number of IOC members had accepted bribes from members of the Salt Lake City bid committee for the hosting of the 2002 Winter Olympics to make certain enough votes were cast in favour of the USA’s bid.
The Olympics have been used as a stage on which to promote political ideologies almost from 1896. In 1936, Nazi Germany wished to portray the Nationalist Socialist Party as compassionate and peaceable when they hosted the Games although they used them to exhibit Aryan superiority. Germany was the most successful nation at the Games, for them supporting their assertion of Aryan supremacy. However noteworthy victories by African American Jesse Owens, who won four gold medals, and the Hungarian Jew Ibolya Csák dulled the point they were trying to make about Aryan invincibility.
Other controversies include the inclusion of professionals when the founding principle was one of an event at which the best amateurs had the opportunity to compete against each other. Then performance enhancing drugs have added a further question about where these games are going.
The Games have simply become a money generating machine like all else in the capitalist world. They area also tied to the idea of the benefits for the cities they are held in. Not in terms of benefits for the inhabitants of those cities but to the overall economic survival and success of those places. David Harvey, the geographer and philosopher raised points that address the Games, although indirectly because he was not looking at them. The Enigma of Capital (2010) book begins with an analysis of the current crisis which he sees stemming from the phenomenal build up of debt that occurred in places such as the USA throughout the 1990s. For him this was a reaction to the fall in profit rates after the long boom. Capitalists wanted to restore profitability by attacking labour’s share of wealth by which they meant consumption could only be sustained by credit. In other words, they were out to see debts increase. The Games has been set for Rio de Janeiro in 2016. It is a massive city with vast numbers of poor slum dwellers. Many of them are already being evicted without compensation and the predictions about the level of debt Brazil is going to acquire for itself is stunning. So what has that got to do with ‘the € and the many passions it arouses’?
I simply see it as yet another way of making a quick buck for a few from the many. England, after all that is the country in which the Games are taking place will be ‘the place’ again in its collective mind. Except that it is really London and indeed lots of regeneration of a poor area has taken place to hold these games. The collective ego of a city will be raised and nobody else will gain much from. Well, except something different on television, for a change, and lots of flag waving no doubt. It will be ‘we’ are the best and the few medals the UK winds will headline newspapers and fill TV screens. That the origins of the games and even its revival began in Greece will be cast from the collective memory. If anything goes wrong then no doubt Berlin 1936 and Munich 1972 will be brought up as a reminder of when things go wrong then Germans are often to blame. European leaders who do not show their noses at some stage will be censured for their notable absence. Above all London will feel so showcased that nowhere else will matter and that is because one other aspect of urbanism is that whilst we see ourselves as individuals as human beings, which indeed we indubitably are, we also take on the collective nature of ants, bees and others who form massive communities. Capitalism and its main shakers and movers will watch every penny in London and just for a while Europe will be forgotten. The moment the Games finish then we could probably bet a pound to a penny that the almost certain and immediate demise of Europe is upon us. If more gold medals are won by all EU countries together than the UK then the kind of idea Jean Monnet had of a single united Europe who could join together to stage an EU Olympic Games might would be a wonderful idea. But no way it would come from Little Englanders who still have a massive empire in their minds instead of the peaceful and united Europe in which a 28 nation joint effort to stage these Games could genuinely make it an event of the people, for the people. Something true to both the Olympic and European ideals.
Perhaps, on the other hand, I am out of place in the modern world because I am an optimist. The Olympic Games are conspicuous capitalism because as much money is spent staging them as is also required for the aid efforts for numerous countries that would give them a good kick start in the contemporary world. Profits it will generate will disappear into a small number of pockets, some of them of the state, others corporate and a fair few individuals. As similarly said already, capitalists want to see profitability by taking labour’s share of wealth by means of consumption that will be sustained by credit. Visa and its’ like will benefit by the debts made for the purchase of tickets by people who are already likely to have debts that stretch their ability to pay them and are working all hours to stay solvent. Is that not what the ECB and IMF have tried to do to Greece, the birthplace of the Olympic ideal with the support of Frau Merkel and some of her former fellow leaders?
Some people may call me unpatriotic, since I suspect that is in some minds. I am as patriotic as anyone can be. I belong to the human race, I am a patriot of that, and shame myself that there are people in this world who on the one hand put down fellow humans because they are ‘Greek’ or whatever and then act superior because they have wasted their taxpayers’ money on yet another monument to imagined greatness. If only some of that passion could be directed toward at the very least the EU, the € and showing solidarity with brethren rather than wanting to always be the very ‘best’!
All true and perhaps between those contributing here we have touched on so much truth that the whinges and wails of protest I expected are not forthcoming.
The Irish majority in their vote this week should remind people that just because a few London based newspapers wrote Ireland off not so long ago, they were as sure as anything can be sure that Ireland would soon be ex-EU, we have seen Greece's like before. In terms of information anyway, it certainly comes out that way in the wash. I think the likes of Monnet have changed the world, perhaps just in time, certainly 1945 and the bitterness of the war still fresh in minds it was a very brave ideal. I want it to work as it says on the plaque in his honour as: '... a proud citizen of a united Europe...'.
It's a start.
Firstly, a human being. Secondly much more interesting than a Little Englander. One could go on, but those two are more than enough for any of us - I hope.
As for my heritage, my Grandfather was Scottish, of the Aberdeen Johnstons, who married an Irish woman and went to serve in the Raj, in India, where my father was born. I'm not sure what that makes me, but not a Little Englander at least.
Mark: I was in my college debating society in Cambridge in the late 1960s, I learned to think, challenge and so on. The default scenario is not entirely being discouraged, because it would clean the slate. Obama all but said that and Hollande did not contradict him. Spain, maybe, maybe not, I think probably not.
The bottom lin is that the bill for the demise of the € is too big for any of Europe to stand, including thos not in. For years my income has most been $ and now many of us are paid roughly 2/3 of what we were a decade ago with a less favourable exchange rate. Money, it appears, is in a mess and perhaps Dr Marx's predictions about capitalism are coming to pass, albeit a good century later than he expected. Whatever, they are interestin times.
Suzanne, oh yes, words like Grexit grate somewhat. I do not like them. I've just mentioned my income above, the $ is not something one wants to earn unless they live within that economy - and that's having big problems too.
Children. My wife is Ticinesi (Italian Swiss) and I am a Scot - our daughters were born in England, both speak English and French and the clever one is learning Italian from Mama and German from me (I have always been bilingual by fluke rather than mixed blood). Their two passports but likely long term residence in France make it interesting too. But what they are also not is English which they are called from time to time which they then shred by expaling the above. Europeans through and through.