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Generational Dynamics Web Log for 13-Apr-2010
13-Apr-10 News -- Backlash over European deal on Greece

Web Log - April, 2010

13-Apr-10 News -- Backlash over European deal on Greece

Ousted Kyrgyzstan president rallies supporters

Backlash begins on European non-bailout bailout of Greece

The financial pundits on TV that I heard on Monday were really bubbly about the EU's decision to provide a bailout of Greece, if asked, on Sunday. (See "12-Apr-10 News -- EU announces aid package for Greece.")

A typical headline was "Euro Rises Most Since September as Greece Wins Aid Package" from Bloomberg.

I've written many contemptuous words about the insanity of these journalists and politicians, but even by the typical very low standards that we see today, it's still hard to see how anybody can see this EU announcement makes any difference whatsoever.

German politicians are quoted by Bloomberg as saying that Chancellor Angela Merkel "buckled" by giving in to the French and other European politicians.

An analysis by Der Spiegel points out that if the plan were ever activated, then Germany "would have to transfer €8.4 billion into Athens' accounts." As a result, Merkel is receiving withering criticism from her political opponents and even some of her allies.

In response, a Merkel spokesman said the obvious -- that nothing has changed. The decision on whether to help Greece was "unchanged," because any activation would have to be approved. "The fact that the fire extinguisher is on the wall," said the spokesman, "says absolutely nothing about the likelihood of its being used."

Ambrose Evans-Pritchard, writing in the Telegraph, points out that the problems are not just political. As large as the bailout would have to be, it's still a short-term fix, and would still leave Greece vulnerable next year.

On expert points out, "It provides some clarity on interest rates and should help Greece through to the end of the year, yet even if Greece accepts the EU offer it will have to borrow a similar amount next year, and a similiar amount the year after, and the year after that it will need to repay this lending."

But before that could happen, we can imagine what would happen if Greece actually asked for aid. The first thing that would happen would be a challenge in the Verfassungsgericht, or the constitution court. According to Evans-Pritchard, the Verfassungsgericht is very likely to nullify the whole deal.

Another problem is that all the eurozone countries would have agree before any actual money could change hands. This would include, for example, Portugal, who would have to agree to bail out Greece, when they want a bailout themselves.

What everyone's hoping for is that this fantasy bailout will somehow convince investors that Greece's bonds are guaranteed not to default, and that therefore the investors can afford to purchase them at low interest rates. We should know more by the end of the week.

Ousted Kyrgyzstan President rallies supporters

Kyrgyzstan <font size=-2>(Source: CIA Fact Book)</font>

Kyrgyzstan (Source: CIA Fact Book)

Ousted Kyrgyzstan President Kurmanbek Bakiyev, who had fled the capital Bishkek after last week's violence, appeared in public for the first time on Monday at a rally of his supporters in Jalalabad, in the Fergana Valley.

Reuters quotes him as saying, "I am the president and no one can depose me. I appeal to all of you who gathered here, to those who travelled from the regions, please convey all of my words to locals and please tell them I am here in Kyrgyzstan, that I have not fled anywhere."

The government that replaced Bakiyev has threatened to have him arrested. Bakiyev responded to threats by saying, "Let them try to seize me. Let them try to kill me. I believe this will lead to such a great deal of bloodshed, which no one will be able to justify."

The Fergana Valley is a hotbed of Islamist extremism, and the site of previous wars between people from Uzbekistan and Kyrgyzstan. Web site readers with good memories may recall that last year when I wrote the article "Islamist Uzbeks lead terrorists in Pakistan and Afghanistan," I asked readers to make a mental note of the Fergana value, as it is one of the most strategically important regions in Central Asia and the world.

Bakiyev is sufficiently unpopular that there is some doubt that he can rally many supporters. But if he does, then there'll be further violence.

Additional Links

The Fergana Valley was in the news for a different reason. The Islamic Movement of Uzbekistan, which has its roots there, is supplying modern weaponry to the Taliban fighting against coalition forces in Afghanistan. Spiegel

As elections approach in the UK, the incumbent Labor Party is announcing plans to require that all new applicants for public sector jobs will be required to speak English. Times Online

"I was hacked by Beijing." NY Times

The new UN climate talks are "fracturing," meaning that the new talks aren't doing any better than the old ones did. Bloomberg

Pakistan and India are both increasing their production of nuclear weapons. NY Times

(Comments: For reader comments, questions and discussion, see the 13-Apr-10 News -- Backlash over European deal on Greece thread of the Generational Dynamics forum. Comments may be posted anonymously.) (13-Apr-2010) Permanent Link
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Generational Dynamics Web Log for 13-Apr-2010 13-Apr-10 News -- Backlash over European deal on Greece

Backlash begins on European non-bailout bailout of Greece

Ousted Kyrgyzstan President rallies supporters

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Generational Dynamics Web Log for 13-Apr-2010
13-Apr-10 News -- Backlash over European deal on Greece