What have we missed? - by Richard... Wednesday, February 22, 2012

What have we missed? - by Richard... Wednesday, February 22, 2012

I cannot think of any situation such as the Greek bailout, where the informed condemnation is so clear and unequivocal - and almost unanimous. You will be extremely hard put to find anyone outside the bubble who thinks the deal will work, and most think it will not hold more than a few months.

Perhaps the most entertaining, if not definitive piece comes from The Washington Post which has asked a group of experts and economists to pronounce on it.

We start with Kevin Featherstone, professor of contemporary Greek studies at the London School of Economics. "With this deal", he says, "Greece has only overcome the first of several hurdles". Barry Eichengreen, economist at the University of California Berkeley, says simply: "It won't work".

Henry Farrell, associate professor of political science at George Washington University offers a more subtle put-down: "The bailout will work", he says, "if by 'working' you mean putting off the really hard decisions for another month or two".

Vincent Reinhart, economist at the American Enterprise Institute, and Carmen Reinhart, economist at the Peterson Institute for International Economics, offer something similar, damning the deal with faint praise: "No doubt, the deal enhances the probability that Greece will be able to squeak past its major debt refunding on 20 March … ".

Dmitri Vayanos, professor of finance at the London School of Economics, is kinder, but still not very encouraging: "While the bailout plan takes care of Greece's funding needs in the short run and puts Greek banks on a sounder footing", he says, "it does not offer a full solution to Greece's problems".

Nicolas Veron, senior fellow at Bruegel, a Brussels-based think tank, is not too far away from that: "This agreement does not set Greece on a sustainable track, and more pain is sure to come down the road …". Yet Mohammed el-Erian, co-chief executive of Pimco is more blunt: " … this agreement is likely to follow its predecessors and fall apart in the weeks ahead".

Richard Portes, economist at London Business School says: "The bailout will fail even if debt restructuring attracts sufficient creditor support now and CDS are not triggered (both uncertain). Debt reduction seriously inadequate. Greece will need more official support, sooner rather than later. The politics are poisonous too, in Greece and in eurozone".

And so on, and on and on it goes. Anywhere you look, you will get the same sentiments. Even the great Gavin Hewitt, on the europhile BBC, can only offer the view that the "colleagues" are buying time (above) – a sentiment shared by many others.

Now, if this bailout is so awful that even the BBC can see it, and we know that the "colleagues" include amongst their number some extremely bright cookies, the fatal weaknesses of the deal must be obvious to them as well. So who are they trying to fool?

Therein lies the mystery. One should always beware of the obvious, and with so many commentators patting themselves on the back for their perspicacity – including me – there is the danger that we are missing something.

That "something" is the next step. The "colleagues" really are not that stupid, and if it is so transparent to us all that the deal cannot work, they surely must have something in reserve … a "plan B".

An alternative, of course, is that there really is nothing left in the locker - that this is the last, despairing fling to stave off the inevitable. But, with their Houdini-like skills for escaping from impossible situations, it is hard to believe that. Thus, the question stands: what have we missed?

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Not even a rounding error - by Richard... Tuesday, February 21, 2012

The warmists making such a fuss about the few million dollars funding directed at the Heartland institute might do well to recall the pledge made in Copenhagen in 2009 and the Cancun Agreements of December 2010.

These formally committed developed countries collectively to providing resources "approaching USD 30 billion for the period 2010 - 2012" to support developing countries' climate efforts.

This so-called "fast-start" finance is supposed to help developing countries, particularly the poorest and most vulnerable, mitigate (reduce) their greenhouse gas emissions, and adapt and cope with the effects of climate change.

These pledges also present an opportunity to build trust between developed and developing countries in the international climate arena, in turn fostering progress towards a comprehensive post-2012 international climate agreement.

The money is being monitored by the World Resources Institute, which now lists $28.222 billion in pledges. By far the biggest single country donor is Japan, with $15 billion. The UK comes next with $2.471 billion and third is the United States with $1.704 billion. The EU member states as a whole, with the commission, have pledged $10.283 billion.

Against that sort of funding, the money going to the Heartland Institute is not even a rounding error. What on earth are the warmists worried about?