There have been some rumbles about Italy for a while. Italy's budget deficits are relatively modest compared to, say, Ireland, but their debt is about 120% of GDP. The government has passed a plan that will balance the budget by 2014, but as with most such plans, most of the cutting comes later, while the current cuts are small. This may well be sensible fiscal policy, given the current economic climate, but it is not reassuring to the markets. Mike Shedlock estimates that Italy needs to borrow about €356 billion ($500 billion) in 2011 to cover its deficit, and roll over outstanding debt. Their 10-years are now trading at something north of 5%. Most of the estimates I've seen say that a debt death spiral becomes likely when rates hit somewhere between 6-7%, because the debt service costs start blowing up the budget deficits.
If Italy goes, it's not clear that the rest of Europe can save them. In the FT, Neil Dennis says people are talking about doubling the euro bailout fund to €1.5 trillion--or about three times the size of TARP. And you may have noticed that the bailout fund has not actually stopped Greece's descent into debt madness. Italy's public debt is not much smaller than Germany's, even though the latter obviously has a much bigger (and richer) economy. In the event that things really go south on the Italian peninsula, I don't think there's enough money in the rest of Europe to provide a rescue package.
Meanwhile, conditions in the other PIIGSs are worsening. European leaders seem to be giving up on the notion of some sort of voluntary debt swap after the ratings agencies noted that they would be forced to call this what it is: a default. Since the Greek debt load does not seem to be in any way sustainable, they're going to have to do something. Riots in Athens seem to be making it increasingly clear that over the long term, "something" is not going to be indefinitely decreasing their government consumption in order to make debt service payments. That leaves making bondholders take some sort of a haircut, aka default. It sounds as if the continent's financial leaders are starting to decide that if Greece's only option is some kind of default, they might as well bite the bullet and do the thing.
This will not be pretty. For starters, if they default, but stay in the euro, then unless really considerable aid is forthcoming from the rest of Europe, they're going to lose most of the advantages of the euro (low debt premium) while retaining the disadvantages (excessively tight monetary policy for a country that is going to be experiencing capital flight and even deeper recession). Countries like Argentina got at least some tourism and export boost from very cheap prices after they defaulted and went off their currency peg; Greece won't even get that if the euro remains at an ouchy 1.4 to the dollar. (If it doesn't remain there, but instead sinks . . . well, that means the euro zone will be having all sorts of other problems. More on which in a minute.)
Of course, even defaulting and going off the peg is hardly a gateway to paradise. It is true that after an initial period of horrifying double-digit contraction, Argentina boomed . . . but Argentina was an agricultural commodity exporter in an era when soaring Chinese demand was causing rapidly rising prices in many commodity markets. And after playing hardball with their foreign investors, Argentina has had limited access to global capital markets, which means they've had to resort to some desperate measures, like seizing the Argentinian equivalent of 401ks, and running the printing presses, to keep the government's finances in balance. This weekend, the Wall Street Journal informed me that Argentina has now resorted to filing criminal charges against economic consulting firms whose reports indicate that actual inflation exceeds the officially reported numbers by a factor of two to three.
Either way, what Greece does will have implications for the rest of Europe--and for us. As NPR's Jacob Goldstein says, interbank lending between various European nations, and the US, "looks like a web made by an insane spider".
Once Greece defaults, the immediate outcome is crisis, not calm. Within Greece, they'll need to find some way to close their primary deficit, and stem capital flight, while the economy craters. Outside of Greece, Portugal, Ireland, Spain and Italy will face growing pressure on their debt. The euro may plummet--good for German exports, not so good for attracting the kind of capital needed to keep the banking system solvent. And the rest of us will be scrambling to keep the contagion from taking down our banking systems, or our economies. No one wants another Credit-Anstalt. But I'm not sure anyone feels quite confident we can prevent it. As I tweeted yesterday, if the drama continues on both sides of the Atlantic, we may soon get to witness a paradox: where does a capital "flight to safety" go if America defaults while the euro implodes?
The agreement doesn’t guarantee that Tehran will never produce nuclear weapons—because no agreement could do so.
A week ago I volunteered my way into an Atlantic debate on the merits of the Iran nuclear agreement. The long version of the post is here; the summary is that the administration has both specific facts and longer-term historic patterns on its side in recommending the deal.
On the factual front, I argued that opponents had not then (and have not now) met President Obama’s challenge to propose a better real-world alternative to the negotiated terms. Better means one that would make it less attractive for Iran to pursue a bomb, over a longer period of time. Real world means not the standard “Obama should have been tougher” carping but a specific demand that the other countries on “our” side, notably including Russia and China, would have joined in insisting on, and that the Iranians would have accepted.
Orr: “Sometimes a thing happens. Splits your life. There’s a before and after. I got like five of them at this point.”
This was Frank offering a pep talk to the son of his murdered former henchman Stan in tonight’s episode. (More on this in a moment.) But it’s also a line that captures this season of True Detective so perfectly that it almost seems like a form of subliminal self-critique.
Remember when Ray got shot in episode two and appeared to be dead but came back with a renewed sense of purpose and stopped drinking. No? That’s okay. Neither does the show: It was essentially forgotten after the subsequent episode. Remember when half a dozen (or more) Vinci cops were killed in a bloody shootout along with dozen(s?) of civilians? No? Fine: True Detective’s left that behind, too. Unless I missed it, there was not a single mention of this nationally historic bloodbath tonight.
Has the Obama administration’s pursuit of new beginnings blinded it to enduring enmities?
“The president said many times he’s willing to step out of the rut of history.” In this way Ben Rhodes of the White House, who over the years has broken new ground in the grandiosity of presidential apologetics, described the courage of Barack Obama in concluding the Joint Comprehensive Plan of Action with the Islamic Republic of Iran, otherwise known as the Iran deal. Once again Rhodes has, perhaps inadvertently, exposed the president’s premises more clearly than the president likes to do. The rut of history: It is a phrase worth pondering. It expresses a deep scorn for the past, a zeal for newness and rupture, an arrogance about old struggles and old accomplishments, a hastiness with inherited precedents and circumstances, a superstition about the magical powers of the present. It expresses also a generational view of history, which, like the view of history in terms of decades and centuries, is one of the shallowest views of all.
The former secretary of defense lobbied for the repeal of “Don’t ask, don’t tell,” and has now ended the Boy Scouts’ ban on gay scoutmasters.
Eagle Scout. Young Republican. CIA recruit. Air Force officer. CIA director. Secretary of defense.
It’s not the resume of a radical civil-rights campaigner, but Robert Gates has now integrated two of the great bastions of macho American traditional morality—first the U.S. armed forces, and now the Boy Scouts of America. In both cases, Gates pursued a careful, gradual strategy, one that wasn't fast enough for activists. In both cases, he was careful to take the temperature of constituents. And in both cases, once he was ready to act, he did so decisively. In the end what seemed to matter most was not Gates’s personal feelings but his determination to safeguard institutions he cared about and his deft skills as a bureaucratic operator.
Companies that overvalue alpha-male behavior need to change—both to retain female talent and for the bottom line.
When it comes to gender equality in the workplace, the research on its economic benefits is clear: Equality can boost profits and enhance reputation. And then there’s also the fact that it’s more fair. But the progress of women in the workplace is so far inadequate: Women are woefully underrepresented in executive positions, the pay gap persists, and the motherhood penalty is very real.
Barbara Annis is the founder of the Gender Intelligence Group, a consultancy that works with executives at major firms (including Deloitte, American Express, BMO Financial Group, and eBay) to create strategies to transform their work cultures into ones that are friendly to both men and women.
I recently spoke with Annis about her work and the challenges to achieving gender parity. The following transcript of our conversation has been edited for clarity.
This is the third in a series. Readers are invited to send their own responses to firstname.lastname@example.org, and we will post their strongest critiques of the book and the accompanied reviews. (The first batch is here.) To further encourage civil and substantive responses via email, we are closing the comments section. You can follow the whole series on Twitter at #BTWAM and read all of the responses to the book from Atlantic readers and contributors.
Several years ago, Ta-Nehisi Coates took his son, not yet 5, to see a movie on the Upper West Side of Manhattan. As his son made his way off the escalator, a white woman pushed him and said, “Come on!” Chaos ensued. There was a black parent’s rage and a white man’s threat to have the black parent arrested. Coates narrates the incident in cool, steady prose. Ultimately, he writes of the regret he carries: “In seeking to defend you I was, in fact, endangering you.”
Connecticut, Missouri, and Georgia have dropped the slave-owning presidents from their annual fund-raising dinners, and many more states could follow suit.
The Democratic Party is on the hunt for a new pair of fathers.
Last week, Democrats in Connecticut rather matter-of-factly decided to oust Thomas Jefferson and Andrew Jackson from their place of honor as the namesakes of the state party’s annual fund-raising dinner. The debate—such as it was—over the legacies of the two slave-owning presidents took all of two minutes, a spokesman for the state central committee said, and the vote to strip their names from the dinner was unanimous. A week earlier, Missouri changed the name of its Jefferson-Jackson dinner to honor native son Harry Truman instead, and two days after Connecticut’s vote, Georgia Democrats announced a similar change with even less fanfare.
A controversial treatment shows promise, especially for victims of trauma.
It’s straight out of a cartoon about hypnosis: A black-cloaked charlatan swings a pendulum in front of a patient, who dutifully watches and ping-pongs his eyes in turn. (This might be chased with the intonation, “You are getting sleeeeeepy...”)
Unlike most stereotypical images of mind alteration—“Psychiatric help, 5 cents” anyone?—this one is real. An obscure type of therapy known as EMDR, or Eye Movement Desensitization and Reprocessing, is gaining ground as a potential treatment for people who have experienced severe forms of trauma.
Here’s the idea: The person is told to focus on the troubling image or negative thought while simultaneously moving his or her eyes back and forth. To prompt this, the therapist might move his fingers from side to side, or he might use a tapping or waving of a wand. The patient is told to let her mind go blank and notice whatever sensations might come to mind. These steps are repeated throughout the session.
Educators seldom have enough time to do their business. What’s that doing to the state of learning?
It’s common knowledge that teachers today are stressed, that they feel underappreciated and disrespected, and disillusioned. It’s no wonder they’re ditching the classroom at such high rates—to the point where states from Indiana to Arizona to Kansas are dealing with teacher shortages. Meanwhile, the number of American students who go into teaching is steadily dropping.
A recent survey conducted jointly by the American Federation of Teachers and Badass Teachers Association asked educators about the quality of their worklife, and it got some pretty harrowing feedback. Just 15 percent of the 30,000 respondents, for example, strongly agreed that they’re enthusiastic about the profession. Compare that to the roughly 90 percent percent who strongly agreed that they were enthusiastic about it when they started their career, and it’s clear that something has changed about schools that’s pushing them away. Roughly three in four respondents said they “often” feel stressed by their jobs.