Wednesday, August 24, 2011

Collateral Damage of DSK Affair: Socialist Enthusiasm

Take a look at the CSA poll result below. Notice that the proportion of respondents who say that they will "probably or certainly" vote in the PS primary has dropped steadily since DSK's arrest in may.

Profile of Christine Lagarde


Not a moment too soon, given a world in financial turmoil and an IMF shaken to its core by the scandal of her predecessor, Dominique Strauss-Kahn, who resigned over allegations of sexual assault in May. A moderate Socialist, DSK pushed for lenient fiscal policies and stringent financial regulations and opposed austerity programs in beleaguered euro zone economies like Ireland, Portugal and Greece. Lagarde, an unabashed free marketer, takes a much flintier approach to the crisis. It’s time, she says, to return the IMF to its roots, “that fiscal consolidation line, which I think is right.”


"The French FDR"

DSK's team apparently had it all figured out. He was to resign from the IMF in late June, announce his candidacy on June 28, preceded by a "blitzkrieg" in the last two weeks of June, positioning himself as "the French FDR," savior in a time of crisis. With Laurent Fabius as his campaign manager!

The best laid plans ... I especially like the idea of taking it easy through the summer. I've always thought that DSK was a lazy politician with little taste for the thousand indignities of campaigning (who can blame him for that?). A blitzkrieg campaign followed by a sequence of stealthy appearances would have been just his style.

Gros: Eurobonds are not the answer

Daniel Gros argues that eurobonds are not the answer to the crisis of the euro. He makes several points, the last and most important of which is "quality of governance":

These differences in the quality of governance, more than any technical problems, are probably the reason why the electorate in Northern Europe is sceptical about Eurobonds. With these fundamental differences in the way different member countries work it would in practice be impossible to conduct a unified fiscal policy even if the post of a Eurozone finance minister were created.
UPDATE: another, similar critique of the eurobond idea here,  from Yannis Palaiologos.

False Hopes

European stock markets are rising again on hopes that the US Federal Reserve will soon initiative a third round of "quantitative easing." This is foolish. QE1 and 2 were hardly models of effectiveness, and the Japanese central bank has amply proven that expanding the money supply, though undoubtedly the right thing to do in a slump, cannot by itself turn things around: the famous "pushing on a string" analogy is, alas, more than just a metaphor. But Europeans seem to like grasping at American straws, while Americans persist in their Lafferish delusion that tax-cutters walk on water. It would be more useful, perhaps, if Europeans could prevail upon their own central bankers to ease up on their side of the Atlantic. The euro is too high against the dollar, and European inflation is too low. The IMF has recommended higher inflation targeting as one way to reduce the danger of overhanging debt, but the cry has gone unheard in the European wilderness. Indeed, continental inflation rates have begun to diverge from US and UK inflation rates:

(Source: FRED CPI data)

Europe needs to raise its inflation rate and depreciate its currency. It can't count on the Federal Reserve.

Pascal Bruckner Délire

Pascal Bruckner is a writer who often has interesting and provocative things to say, but something about the United States seems to have unhinged him. He thinks he sees an "alliance du féminisme et de la droite républicaine, ultra conservatrice. Ces deux forces se sont unies, au nom d'intérêts différents, pour refermer le couvercle ouvert par les années 60-70." The old saw of America's "puritanism" is revisited, but only to assert that its existence is proved by its antithesis: "La qualifier de puritaine ne suffit pas car c'est un puritanisme retors, d'après la révolution des mœurs, qui parle le langage de la liberté amoureuse et coexiste avec une industrie pornographique florissante." It was absurd to have charged DSK with rape because America is guilty of so many crimes of its own:

Il semble que l'establishment médiatique d'outre-Atlantique, si prompt àcondamner la France à travers l'un de ses représentants, ait déjà oublié les tortures d'Abou Grahib : des grappes d'hommes nus entassés les uns sur les autres ou forcés de se masturber, sous les ordres, notamment, de la sergente Lynndie England qui en tenait certains en laisse (les femmes, en position de pouvoir ne sont pas meilleures que les hommes, on le sait depuis le nazisme). La torture existe partout, même dans les nations démocratiques, mais seul un pays malade de sa sexualité peut imaginer de tels sévices. On s'étonnera par ailleurs que Dick Cheney et Donald Rumsfeld, soupçonnés de corruption et d'incitation aux interrogatoires violents, n'aient pas été poursuivis, après 2008, par la justice de leur pays toujours encline à sanctionner la moindre peccadille amoureuse.
And so we are back where we began in the DSK affair, with a member of the French elite excusing a sordid hotel-room encounter as une peccadille amoureuse. Amoureuse! Even the defense admits that whatever transpired between the naked Strauss-Kahn and the chambermaid wearing two pairs of tattered pantyhose was confined to an interval of nine minutes maximum. It is hard to imagine the part played by amour in such an encounter.

Bruckner tries to redeem himself in the end by allowing that, despite its depravity, America knows the difference between rape and la moindre peccadille amoureuse, as does France:

Entendons-nous : de part et d'autre de l'Atlantique le viol est un crime, le harcèlement un délit et c'est un progrès objectif. De part et d'autre, les tensions entre hommes et femmes, consécutives à l'émancipation, demeurent et s'exacerbent parfois. Mais tandis qu'aux Etats-Unis, cette coexistence semble toujours au bord de la guerre, sous l'œil vigilant des avocats prêts à faire les poches des époux désunis, l'Europe latine semble mieux protégée de ce fléau par une culture ancienne de la conversation et une tolérance aux faiblesses humaines.
On croit rêver. Some in France seem to have learned nothing from this whole sordid affair. Fortunately, it seems clear that most of M. Bruckner's countrymen are not quite so broad-minded in their "tolerance of human weakness." France2 reported last night that DSK's approval rating has plummeted from 52% before his arrest to 28% today. And The Times reports that

Gérard Grunberg, a political scientist who studies the left in France, said that Mr. Strauss-Kahn’s “image in public opinion is very damaged” and the Socialist Party itself, already annoyed with him for ruining an important political opportunity to challenge Mr. Sarkozy and with its primary soon, “does not want to have this collective occasion spoiled.”
Let's hope that Pascal Bruckner represents the embittered few rather than the sober majority.