The Best and the Brightest

What you have to remember about them is that they’re not very good and they’re not very smart but they do have an overweening arrogance and sense of entitlement that makes them think that they’re better than you.

And they’re very, very afraid that some day some one will point out how stupid and wrong they are which is why they hate democracy so much.

Revenge of the Sovereign Nation

By Ambrose Evans-Pritchard, The Telegraph

November 1st, 2011

The Greek referendum – if it is not overtaken by a collapse of the government first – has left officials in Paris, Berlin, and Brussels speechless with rage. The ingratitude of them.

…

Every major claim by the inspectors at the outset of the Memorandum has turned out to be untrue. The facts are so far from the truth that it is hard to believe they ever thought it could work. The Greeks were made to suffer IMF austerity without the usual IMF cure. This was done for one purpose only, to buy time for banks and other Club Med states to beef up their defences.

It was not an unreasonable strategy (though a BIG LIE), and might not have failed entirely if the global economy recovered briskly this year and if the ECB had behaved with an ounce of common sense. Instead the ECB choose to tighten.

When the history books are written, I think scholarship will be very harsh on the handful of men running EMU monetary policy over the last three to four years. They are not as bad as the Chicago Fed of 1930 to 1932, but not much better.

…

Certain architects of EMU calculated that the single currency would itself become the catalyst for a quantum leap in integration that could not be achieved otherwise.

They were warned by the European Commission’s own economists and by the Bundesbank that the undertaking was unworkable without fiscal union, and probably catastrophic if extended to Southern Europe. Yet the ideological view was that any trauma would be a “beneficial crisis”, to be exploited to advance the Project.

This was the Monnet Method of fait accompli and facts on the ground. These great manipulators of Europe’s destiny may yet succeed, but so far the crisis is not been remotely beneficial.

…

And as my old friend Gideon Rachman at the FT writes this morning: the Greek vote is “a hammer blow aimed at the most sensitive spot of the whole European construction – its lacks of popular support and legitimacy.”

Austerity Faces Test as Greeks Question Their Ties to Euro

By STEVEN ERLANGER, The New York Times

Published: November 1, 2011

“This is clearly the return of politics,” said Jean Pisani-Ferry, director of Bruegel, an economic research institution in Brussels. “The management of all this by the Europeans has been fairly technocratic. But now we see the gamble of a politician, which creates uncertainty again, but in a different form. But it was bound to come at some point.”

Mr. Papandreou’s decision to press for a popular referendum on the bailout was the inevitable result of Greece’s loss of sovereignty to Brussels and the International Monetary Fund, said Jean-Paul Fitoussi, professor of economics at the Institute of Political Studies in Paris. Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France were acting as if they were the real government of Greece, he said.

“It’s as if the Europeans – or Merkel and Sarkozy alone – believed that they were in control of the people of Greece,” Mr. Fitoussi said. “But this is a democracy. In Greece, and even in Italy, you cannot expect to rule without the support and consent of the people. And you can’t impose an austerity program for a decade on a country, and even choose for them the austerity measures that country must implement.”

…

Mrs. Merkel and Mr. Sarkozy are clearly irritated with Greece, but so far they insist that the restructuring deal agreed upon Thursday in Brussels remains, as Mr. Sarkozy said Tuesday, “the only possible path to resolve the Greek debt problem.”

But Greece’s turmoil has the makings of a turning point. Greek elections during a deep economic slump would be likely to usher in a government that would, at a minimum, to try to renegotiate the bailout deal with European and foreign lenders, a messy process that would force Germany and other European lenders to decide how strictly to stick to their austerity formula. The uncertainty would undermine confidence in other indebted countries like Italy at a time they can ill afford it.

There is also the possibility that an election or a popular referendum would pose the question more bluntly, with Greeks essentially deciding whether they want to stick with the euro or not – if they want to put sovereignty over their own affairs ahead of membership in the common currency. That could mean the fraying, or at least the shrinking, of the euro zone.

Mr. Fitoussi believes that Greeks had no choice but to ask themselves that question. “There are only two possibilities in a democracy: the government has to resign or consult the people,” he said. “Of course, I don’t know which is the worst for Europe.”

Crats, Maybe, But Not Much Techno

Paul Krugman, The New York Times

November 2, 2011, 11:15 am

Atrios complains, rightly, about the description of the policies being followed in Europe as technocratic. His point is that

we’ve conjured up images of very sensible highly educated wonky people doing the right thing, even as they destroy the world.

But it’s more than that: these alleged technocrats have in fact systematically ignored both textbook macroeconomics and the lessons of history in favor of fantasies. The European Central Bank has placed its faith in the confidence fairy, while imagining that it can run policy in a way that has never worked in several centuries of central bank experience. Meanwhile, the European policy elite has simply wished away the clear evidence that the euro zone needs to make an adjustment that is virtually impossible unless inflation targets are raised.

The point is that I know technocrats, and these people aren’t – they’re faith healers who are making stuff up to suit their prejudices.

You can say something similar, although a bit less pointed, about the Obama administration. The line from people there, including the president, has been that it was too technocratic. But the real technocrats – people like Christy Romer and, well, me – were saying right from the beginning that the stimulus was too small, etc.; people like Geithner who opposed stronger action were basing their position on gut feelings about confidence, not number-crunching.

See also Progressive Realists.