Sunday, October 26, 2008

Paris-Prague: Ça chauffe aussi

Czech president Vaclav Klaus is accusing Sarkozy of trying to "siphon off" the powers of the upcoming Czech presidency. Worse, Klaus notes that the four powers that met privately to formulate a European reaction to the economic crisis--France, Germany, UK, and Italy--are the four who "wrote the Munich accords" that led to the Nazi invasion and annexation of Czechoslovakia. The absurdity of the analogy reveals the depth of Klaus's resentment and of the fissure that now threatens to divide "old Europe" from the new member states of the EU. Sarko had better initiate repair work soon before this crack widens into a rift. Trouble with Merkel, trouble with Klaus, trouble with Bush (first over Georgia and then after Sarko moved away from neoliberalism and toward state capitalism), and perhaps trouble as well with Gordon Brown. The French EU presidency has not gone at all as expected, and Sarkozy has been too busy putting out fires to stand back, assess the situation, and draw the consequences.

Dani Rodrik's Doomsday Scenario

Dani Rodrik sees this as the make-or-break week for emerging markets and their currencies. The IMF must act, he says, or we enter the first act of a doomsday scenario in which collapsing emerging market currencies trigger protectionist responses in the advanced industrial countries. A "vicious cycle of unemployment and protectionism" would ensue, à la the 1930s. Hence the just-in-the-nick-of-time salvation of Dominique Strauss-Kahn from the sequellae of his Davos dalliance may be something we all need to be thankful for.

Mirror, mirror on the wall ...

Mirror, mirror on the wall, who's the most competent of them all? Bertrand Delanoë? So say respondents to this poll. Whereas Ségo, who doesn't figure among the top 3 Socialists in the competence sweeps, takes top honors in the sympathique and "good listener" categories.

One wonders who pays for polls of this sort or what they think they've learned from them. I suppose it's just something to blacken newsprint with. It would be more useful to pay a good political reporter. What exactly does this reputation for competence rest on? Delanoë has the advantage of occupying a more visible executive position than his rivals. He has avoided scandal and been a competent financial manager. He has managed to mute factional squabbling in his city. And he has taken some very visible measures, such as Paris Plage and the Velib initiatives. He has, if not charisma, a rather personable charm.

Of course all this adds up to a rather thin dossier for a candidate for party leader or, eventually, the presidency. One doesn't know much about his thinking on matters of foreign policy, domestic economic policy, energy policy, defense, etc. His low-key campaign for the party leadership has been an exercise in positioning rather than philosophizing, except for one much-reported statement of compatibility between socialism and liberalism, which was in fact merely a distillation of all his other positioning moves rather than an extended meditation on the relation between the two terms.

If he becomes party leader, his affable, sometimes pointedly ironic style may prove more attractive than the rather ringard franc-tireur acidulousness of Hollande (his "coup d'éclat permanent" dart at Sarko could be turned back on himself: his tenure has been a coup de blabla permanent, a steady drizzle of similarly harmless darts, which bring a momentary smile to the lips but leave no mark on the mind). As for Delanoë, I'm not at all sure what he would add up to as a presidential candidate or how he would fare in a confrontation with Sarkozy.

DSK Survives

Dominique Strauss-Kahn has been slapped on the wrist by the IMF board but retains his position. If the Wall Street Journal, Russia, and other interested parties were attempting to engineer a putsch, they failed.

Will DSK's effectiveness be reduced? I think not. The severity of the crisis requires a competent technician at the helm, and no one doubts DSK's competence (though his work ethic has been questioned). Will it compromise any thought he might have of running for the French presidency in 2012? At this point, speculation on this matter is mere blather and froth. A week is a long time in politics. In the midst of an economic meltdown, 24 hours is a long time, and each weekend seems to bring a new round of restructuring of capitalism. 2012 is a century away.

But bloggers are licensed to blather, so ... if you push me, I'd say that Dominique Strauss-Kahn will never be president of France. Not because of this latest instance of philandering. I think he doesn't want the job badly enough. A sybarite and philanderer can become president of France: Sarkozy proved that. But he has to be the kind of sybarite who thinks of his future glory while shaving in the morning, while yachting in the Mediterranean, while dining at the trois-étoiles, and while disporting himself 'twixt satin sheets. DSK's mind wanders. He hasn't got the right stuff.

Bank Guarantees

At VoxEU, Viral Acharya and Raghu Sundaram, finance professors at NYU, compare the US and UK bank guarantees. The two plans are quite different, and the authors ask what will happen if the crisis deepens. The answer seems to be more panic and failures in the UK, and taxpayer-subsidized relative calm in the US. In the end, taxpayers in both countries will bear the cost, however.

In France, Sarkozy has offered blanket guarantees of everything related to banking: deposits, loans, what-have-you, but details, so far as I am aware, have been thin. So it would seem on the surface that France more closely resembles the US plan. My sense--possibly erroneous--is that the government of France has been profligate with promises and short on particulars. Now that various bailout plans are being analyzed in detail, it would be nice to know more about what the French have actually proposed. If anyone knows where to find this information, please let me know. As usual, the French media (at least the media I have seen) have not been much help.