12-Apr-10 News -- EU announces aid package for Greece - 12-Apr-2010 - Generational Dynamics

Everybody is hailing the agreement by European leaders to provide a financial rescue for Greece.

In an article entitled "Europe Unifies to Assist Greece With Line of Aid," the NY Times says that the Europeans are "offering the country up to $40 billion in aid to meet its giant debt obligations."

It's sounds like a great plan, too. The European Union will supply $40 billion in aid at 5% interest, and the International Monetary Fund (IMF) will supply an additional $20 billion, at an even lower interest rate.

That's great! The Germans, who would have to provide the greatest amount in a bailout, have agreed to a bailout of Greece! The Greek financial crisis is over! Now we can forget about it, and move onto something else! What a relief!!!!! Hooraaaay!!

Errrrrr, wait a second. According to the article, the funds would become available only if Athens asks for them. Well, that's OK.

Oh, but "If it does, the heads of government from the euro zone would have to sign off on the package."

Well, there's a little clarity in a Dow Jones Newswire report appearing on capital.gr. The report quotes a spokesman for Germany's Finance Ministry as saying the following:

"This decision today was no decision on aid for Greece. But it was only about technical preconditions for aid by further specifying the decision of the heads of state and governments. We expect, we hope that Greece is now in a situation where it can continue to refinance itself on the capital markets, as previously.

We hope Greece now has good chances to continue to refinance itself on the capital market on sensible credit conditions, or reasonably bearable conditions."

According to the spokesman, "There is a big step between what has happened today and what would happen if Greece would actually ask for this help."

Correct me if I'm wrong, Dear Reader, but despite the ebullient headlines, there's no aid package in place at all. As usual, all I can do is shake my head is near disbelief at the idiocy and insanity going on today.

If this spectacle convinces investors that the danger of a Greek default is over, then I'll eat my keyboard.

The NY Times headline reads, "Europe Unifies to Assist Greece With Line of Aid." Well, it turns out that all that's happened is the Europe has unified to issue a meaningless press release.

Greece's financial situation has been trending downward rapidly, as we've been reporting almost every day for the last couple of weeks. On Monday and Tuesday, there will be new bond offerings, as Greece tries to borrow enough money to meet its payments next month. We'll see what happens.

Peter Galbraith comments on a US partial withdrawal from Afghanistan.

Peter Galbraith is the son of John Kenneth Galbraith, whom I've quoted many times from his book, "The Great Crash - 1929."

Peter Galbraith has served both Republican and Democratic administrations as a foreign envoy. He used to be second in command of the U.S. mission in Afghanistan, but was fired for getting into a big argument with Afghan president Hamid Karzai over election fraud.

On Sunday, he appeared as a guest on CNN's Fareed Zakaria GPS news show, where he recommended that the US abandon the "surge," and cut back on the number of troops in Afghanistan. Zakaria asked him if he was giving up hope on creating a more stable Afghanistan. Here's his response, according to the transcript:

"Yes, as well as preserving the non - the - the stability in the non-Pashtun areas, which is at least half the country.

But we're in a war that we cannot win, and we also cannot lose in the sense that the Taliban cannot retake Kabul. They - they got there in the 1990s, when the whole world had turned away, and with - on - basically on Pakistani tanks. That isn't going to happen again. They can't take the Tajik, Hazara and other non-Pashtun areas.

So, even if we were to reduce our presence, I don't think the situation would look very different from what it is now. You would have a - a separate, basically autonomous Tajik and Hazara regions, and you would have an - a Pashtun region. As it is now, where the countryside's controlled by the Taliban and where, as now, they control large parts of the cities, including large parts of - of Kandahar.

You - you speak about giving up on the mission, but I - we don't - if the mission can't be accomplished, we don't need to debate whether the mission is important or not. Before we commit troops, 100,000 troops and hundreds of millions of dollars, we need to see how it is we're going to succeed.

Everybody says that for counterinsurgency strategy to work, we need a credible local partner, and I think nobody can persuade me, and I suspect most other analysts, that Karzai really is capable of being a - a credible local partner. That's the dilemma we face."

I've written many times that the "surge" strategy cannot possibly work in Afghanistan the way it worked successfully in Iraq. An important difference between the Iraq war and the Afghanistan war is the tribal area of Pakistan, on the border with Afghanistan. In Iraq, al-Qaeda linked suicide bombers are far from their base, but in Afghanistan, the Pashtuns flow back and forth through the tribal areas.

What Galbraith is saying makes a lot of sense to me. He's not recommending a withdrawal from Afghanistan, but he says that a cutback in forces would not change things much.

Additional Links

Russia is being blamed for the Kyrgyzstan uprising because it had been conducting a media campaign portraying president Kurmanbek Bakiyev as a repugnant dictator. Washington Post

The right and far right have made significant gains in Hungary's parliamentary elections. They capitalized on anti-Semitism, and on sentiment against the Roma (Gypsy) ethnic minority, as well as rising dissatisfaction over the economy since the global financial crisis began. BBC

Iran is accusing President Obama of violating the Nuclear Non-Proliferation Treaty by issuing its U.S. Nuclear Posture Review and appearing to threaten Iran and North Korea with nuclear war. Tehran Times

Generational Dynamics Web Log for 12-Apr-2010
12-Apr-10 News -- EU announces aid package for Greece

The European Union announces a $40 billion aid package for Greece

Peter Galbraith comments on a US partial withdrawal from Afghanistan.

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Generational Dynamics Web Log for 12-Apr-2010 12-Apr-10 News -- EU announces aid package for Greece

The European Union announces a $40 billion aid package for Greece

Peter Galbraith comments on a US partial withdrawal from Afghanistan.

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Generational Dynamics Web Log for 12-Apr-2010
12-Apr-10 News -- EU announces aid package for Greece