Germany has to decide what to do with Spain -- and soon.
I've got some shocking news for you. Things are going badly in Europe.
The big story is Spain's borrowing costs. On Thursday yields on 10-year Spanish bonds touched the dreaded 7 percent level -- which they have continued to flirt with on Friday. What's so important about 7 percent? Two things. First, banks have to post more margin -- i.e., cash -- if yields cross that threshold when they use bonds as collateral. A downward spiral awaits. Banks might sell the bonds off because they aren't as useful -- leading to higher yields and worse margin requirements. And so on, and so on. But it doesn't even really matter. Borrowing costs of 7 percent are already ruinous for Spain. As Brad Plumer pointed out, inflation is so low in Spain that its economy would have to grow at a 4-5 percent clip to not fall into a debt trap with yields that high. But Spain isn't growing at 4 or 5 percent. Spain is in a recession.
So yes, it's fair to call the week-old bailout of Spain's banks afailout. The putative bailout has 1) Added to Spain's public debt, 2) Made that debt riskier, and 3) Likely made it harder for Spain to pay back its debt. The euro zone can hardly take any more such successes.
But the financial apocalypse isn't here yet. Just close. Spain relies on a lot of shorter duration debt to fund itself too. The borrowing costs on those bonds are still semi-manageable -- for 2-year bonds, if not 5-year bonds. Still, Spain is far too close to insolvency for comfort. Unless the European Central Bank (ECB) pushes down yields, Spain will need another bailout. And soon.
That brings us to the most interesting euro development of the past week. German bonds started to sell off -- before rallying recently. This was ... odd. German bonds never sell off when things look bad in euroland. The opposite. There's usually a flight to safety to them. If there's one euro zone country that won't go bankrupt, it's Germany. But things are getting so bad in Spain that Germany might have to cross the financial Rubicon it's so far been unwilling to countenance: joint debt.
Spain is too big to save. But that's almost irrelevant. The bailout status quo is toxic. It hasn't solved anything for Greece, Portugal or Ireland. It won't for Spain either. Southern Europe needs to reduce its debt and reduce the interest it pays. Bailouts do the latter, but not the former. But mutual debt -- so-called "eurobonds" -- would work. There's a problem. Germany doesn't want to give southern Europe a credit card with no limit. Germany wants there to be a very specific limit. That's where the so-called "sinking fund" comes in. The idea here is that each country would dump all of its debt in excess of 60 percent of GDP into a single fund. Each country would have to pay its own portion back over 20 years, but Europe would issue debt jointly.
This isn't a fiscal union. It's not an open-ended bailout of Spain by Germany. It's a one-time bailout of Spain by Germany. It's not perfect, but it could work. And it would cost Germany a good chunk of change. That's why Germany's borrowing costs surged at the beginning of the week. Of course, Angela Merkel gave her best Herman Cain impersonation later -- Nein, nein, nein! -- which is when German borrowing costs receded.
Germany will have to make up its mind soon. Markets don't have much patience for its Hamlet act. Time to decide whether the euro will be or not be.
More comfortable online than out partying, post-Millennials are safer, physically, than adolescents have ever been. But they’re on the brink of a mental-health crisis.
One day last summer, around noon, I called Athena, a 13-year-old who lives in Houston, Texas. She answered her phone—she’s had an iPhone since she was 11—sounding as if she’d just woken up. We chatted about her favorite songs and TV shows, and I asked her what she likes to do with her friends. “We go to the mall,” she said. “Do your parents drop you off?,” I asked, recalling my own middle-school days, in the 1980s, when I’d enjoy a few parent-free hours shopping with my friends. “No—I go with my family,” she replied. “We’ll go with my mom and brothers and walk a little behind them. I just have to tell my mom where we’re going. I have to check in every hour or every 30 minutes.”
Those mall trips are infrequent—about once a month. More often, Athena and her friends spend time together on their phones, unchaperoned. Unlike the teens of my generation, who might have spent an evening tying up the family landline with gossip, they talk on Snapchat, the smartphone app that allows users to send pictures and videos that quickly disappear. They make sure to keep up their Snapstreaks, which show how many days in a row they have Snapchatted with each other. Sometimes they save screenshots of particularly ridiculous pictures of friends. “It’s good blackmail,” Athena said. (Because she’s a minor, I’m not using her real name.) She told me she’d spent most of the summer hanging out alone in her room with her phone. That’s just the way her generation is, she said. “We didn’t have a choice to know any life without iPads or iPhones. I think we like our phones more than we like actual people.”
The legend of the Confederate leader’s heroism and decency is based in the fiction of a person who never existed.
The strangest part about the continued personality cult of Robert E. Lee is how few of the qualities his admirers profess to see in him he actually possessed.
Memorial Day has the tendency to conjure up old arguments about the Civil War. That’s understandable; it was created to mourn the dead of a war in which the Union was nearly destroyed, when half the country rose up in rebellion in defense of slavery. This year, the removal of Lee’s statue in New Orleans has inspired a new round of commentary about Lee, not to mention protests on his behalf by white supremacists.
The myth of Lee goes something like this: He was a brilliant strategist and devoted Christian man who abhorred slavery and labored tirelessly after the war to bring the country back together.
Charlottesville marks a new era of even bolder assertion of the right to threaten violence for political purposes.
It could have been so much worse.
Like ISIS attackers in Europe, the Charlottesville murderer used a car as his assault weapon. But Charlottesville this past weekend was crammed with anti-social personalities carrying sub-military firearms. It could just as easily have been one—or more—of those gun-carriers who made the decision to kill. If so, Americans might this week be mourning not one life lost to an attack, but dozens.
As recently as 2009, the nation retained a capacity to be shocked when individuals carried weapons to political events. Such was the case in Phoenix, Arizona, on August 18, 2009:
A man toting an assault rifle was among a dozen protesters carrying weapons while demonstrating outside President Obama's speech to veterans on Monday, but no laws were broken. It was the second instance in recent days in which weapons have been seen near presidential events.
If the president is concerned about violence on the left, he can start by fighting the white supremacist movements whose growth has fueled its rise.
In his Tuesday press conference, Donald Trump talked at length about what he called “the alt left.” White supremacists, he claimed, weren’t the only people in Charlottesville last weekend that deserved condemnation. “You had a group on the other side that was also very violent,” he declared. “Nobody wants to say that.”
I can say with great confidence that Trump’s final sentence is untrue. I can do so because the September issue of TheAtlantic contains an essay of mine entitled “The Rise of the Violent Left,” which discusses the very phenomenon that Trump claims “nobody wants” to discuss. Trump is right that, in Charlottesville and beyond, the violence of some leftist activists constitutes a real problem. Where he’s wrong is in suggesting that it’s a problem in any way comparable to white supremacism.
The nation’s current post-truth moment is the ultimate expression of mind-sets that have made America exceptional throughout its history.
When did America become untethered from reality?
I first noticed our national lurch toward fantasy in 2004, after President George W. Bush’s political mastermind, Karl Rove, came up with the remarkable phrase reality-based community. People in “the reality-based community,” he told a reporter, “believe that solutions emerge from your judicious study of discernible reality … That’s not the way the world really works anymore.” A year later, The Colbert Report went on the air. In the first few minutes of the first episode, Stephen Colbert, playing his right-wing-populist commentator character, performed a feature called “The Word.” His first selection: truthiness. “Now, I’m sure some of the ‘word police,’ the ‘wordinistas’ over at Webster’s, are gonna say, ‘Hey, that’s not a word!’ Well, anybody who knows me knows that I’m no fan of dictionaries or reference books.
President Trump, forced to choose between working with business leaders and espousing white identity politics, has chosen the latter.
Updated on August 16 at 3:59 p.m.
While Donald Trump is on vacation, there are major renovations going on in the West Wing. Perhaps they’ll alter plans and include a portcullis and a moat, because the White House is under siege.
The president is once again facing loud denunciation (though so far little else) from members of his own party. Vice President Pence is cutting short an overseas trip and returning home to an administration in crisis. And Wednesday afternoon, the president announced he was pulling the plug on a manufacturing council and a strategy and policy forum, both comprised of business leaders, after a spree of defections in reaction to Trump’s handling of violence in Charlottesville.
The scientists are all talking like it’s a sure thing.
On August 21, the “moon” will pass between the Earth and the sun, obscuring the light of the latter. The government agency NASA says this will result in “one of nature’s most awe-inspiring sights.” The astronomers there claim to have calculated down to the minute exactly when and where this will happen, and for how long. They have reportedly known about this eclipse for years, just by virtue of some sort of complex math.
This seems extremely unlikely. I can’t even find these eclipse calculations on their website to check them for myself.
Meanwhile the scientists tell us we can’t look at it without special glasses because “looking directly at the sun is unsafe.”
Antifa’s activists say they’re battling burgeoning authoritarianism on the American right. Are they fueling it instead?
Since 1907, Portland, Oregon, has hosted an annual Rose Festival. Since 2007, the festival had included a parade down 82nd Avenue. Since 2013, the Republican Party of Multnomah County, which includes Portland, had taken part. This April, all of that changed.
In the days leading up to the planned parade, a group called the Direct Action Alliance declared, “Fascists plan to march through the streets,” and warned, “Nazis will not march through Portland unopposed.” The alliance said it didn’t object to the Multnomah GOP itself, but to “fascists” who planned to infiltrate its ranks. Yet it also denounced marchers with “Trump flags” and “red maga hats” who could “normalize support for an orange man who bragged about sexually harassing women and who is waging a war of hate, racism and prejudice.” A second group, Oregon Students Empowered, created a Facebook page called “Shut down fascism! No nazis in Portland!”
Over and over again, the president has explicitly identified his party with white backlash—just as the most diverse generations in American history are gaining power in the electorate.
From his first days as a presidential candidate, the gravest political risk Donald Trump has presented the GOP is that he would stamp it as a party of racial and social intolerance precisely as the most diverse and inclusive generations in American history—the Millennials and the post-Millennials behind them—are growing into decisive roles in the electorate.
After Trump’s morally stunted response to the recent violence in Charlottesville, that wolf is now at the party’s door.
Trump’s election “may be one of the most costly presidential victories in history for a political party, because [it is leaving] a crimson stain on the party,” said Peter Wehner, the former director of strategic planning in the George W. Bush White House. “I don’t think it … will be easy to get away from.”
The House resolution faults the president for failing to adequately condemn white supremacists “and assure the American people of his resolve to opposing domestic terrorism.”
When Donald Trump failed to single out and denounce Nazis, Ku Klux Klan members, and their allies Sunday, even after they marched by torchlight through an American city, where one among them ran down an anti-racist protester, I noted the historic failure of presidential leadership—a failure underscored by the praise that white supremacist leaders heaped on his approach—and called on Congress to step into the breach, reasserting the nation’s conscience by censuring the president.
In the days that followed, Trump buckled to widespread pressure to single out the white-supremacist groups, naming them in a statement that he read from a teleprompter. But he subsequently declared, in a combative, unscripted press conference Tuesday, that there were some good people on both sides of the Charlottesville protest, implying that good people marched alongside swastikas and KKK members.