The Guardian has this insightful exchange of ideas between two UK top journalists (Paul Mason and Gillian Tett) on the eurocrisis. What both recognise is that this crisis is only the tip of the iceberg of a more fundamental crisis of our political institutions and leadership.
Here are some of the most inspiring extracts:
On the new “post-democratic” replacement of political leaders by technocrats in Greece and Italy:
- Tett: “The problem is you neither have anybody who has the authority to force a solution, nor do you have sufficiently free markets and genuine democracy to get a bottom-up solution. So you’re caught in this limbo-land where you stagger from one mini-crisis to another.”
- Tett: “Just as the past four years have raised questions about the way modern finance works, they are raising profound questions about our systems of government: we have no institutions to plan for the future, nor institutions that can quickly respond to a crisis. This is one of the reasons faith in so many public institutions is collapsing, alongside faith in the bankers. It’s why you’ve got this Occupy Wall Street protest.”
On the current recipes for economic reforms:
- Tett: “It’s still about trying to buy time. People thought, if they bought time, two things would happen: first, Europe would start growing again and make the debt problem less bad. And second, some political consensus would emerge. But the more time that passes, not only is growth faltering and making the debt worse, but consensus is not emerging and arguments are developing instead.
- Mason: “What is likely in the next few months is the emergence of mainstream politicians saying this far and no further, protectionism, roll back the free market, and it could come quite quickly.”
- Mason: “Never in any of the policy actions do you see the seeds of the new, the basis for a new version of capitalism".”
- Tett: “Anyone interested should read two key sources – one is a piece by Carmen Reinhart about financial repression, that argues the way the west cut its debts after 1945 was by forcing the pools of capital in the economy – the savers, the pension funds – to buy government bonds at rates slightly below the rate of inflation. If you can maintain that for 10-20 years, due to the magic of compounding, you actually help pay down debts. The other amazing book is Debt: The First 5,000 Years by David Graeber. He argues that whenever you have periods of crazy expansion of virtual credit, like today, you either have to have a safety valve of forgiveness, like in Mesopotamia where you wiped the tablets clean every seven years, or you have an outbreak of social violence so intense you rip society apart. Either you have inflation, or default, or forgiveness.”
- Tett: “The global economy right now is like a geological region where you’ve had the tectonic plates shifting slowly, largely unseen, and then you suddenly have a clash, and you get new mountain ranges thrown up. The scale of potential change if this turns into full-blown crisis could be significant and it could happen much faster than people think.”
Finally two people who make a lot of sense on this eurocrisis even though they still lack the insight into the link with the other fundamental crisis of resource scarcity and energy descent.