Let me, following Barry Eichengreen, restate the question of the euro posed in a previous post in a way that left Bernard "bored." Yes, indeed, the cost of exiting the Eurozone would be prohibitive for a country like Greece. Nevertheless, there is also a very large cost for having opted into the system. Eichengreen reasons in terms of a symmetric economic shock and an asymmetric financial shock. Indeed, faced with a sharp reduction in growth ahead, capital is fleeing for safety. In the United States, that means buying short-term Treasury bonds: real interest rates on 3-month T-bills are now negative. In Europe, the flight to quality means abandoning the sovereign debt of countries perceived to have structural deficit problems or serious housing bubbles. The consequences will be harsh: austerity budgets, wage reductions, transfer payments (bailouts)--and then social unrest. How much longer before the troubling political consequences begin to manifest themselves? In Greece, perhaps we have already seen the beginning with the recent riots, which, far from a fait divers, may prove to have inaugurated a year (or years) of discontent. Will that galvanize the ECB at last to take the final step with the Fed?
If Bernard is still bored, I recommend this.
Tuesday, January 20, 2009
It seems that Carla Bruni brought her president not only happiness and serenity but also a personal trainer, Julie Imperiali, who specializes in Tectonic Well-Being, with a special focus on the perineum:
Her method - focusing on the perineal muscles at the bottom of the pelvis - not only improves posture and delivers a healthier body and mind, but it also improves the sex lives of all her clients, Imperiali claims.
Libé depicts Sarko as sulking jealously in Paris while Obama is anointed in Washington. That may be, but Libé also says that one reason for the alleged jealousy is that "Obama enjoys an extraordinary popularity in his country, which has never been the case for his French counterpart." Polls put Obama's approval rating at 72 to 80 percent, which is indeed extraordinary, but Sarko, shortly after his assumption of office, enjoyed an approval of 72 percent, as high as any French president at the beginning of his term (and indeed, he remained at 65 percent two months into his term. Don't believe me? "You could look it up," as Casey Stengel used to say). To be sure, there is a special aura around Obama, in part because he is the first black president, in part because he comes to office in desperate times, and in part because he succeeds one of the worst presidents in American history, whose eviction from office was greeted by many as something of a deliverance. Sarko may yet have reason to be jealous, if Obama proves clever enough to avoid squandering the great élan that accompanies his accession to the presidency. But it's a little premature to be sulking on Inauguration Day, unless it's because Sarko is still miffed by Obama's refusal to meet with him during the transition period.
... est Christian Estrosi, who attributes the election of Barack Obama to the occult influence of Nicolas Sarkozy and ""l'impulsion qu'il a donnée ces dernières semaines aura sans doute quelque part pesé sur le comportement des Américains"." Something to remember on Inauguration Day.