Tuesday, June 28, 2011

Monetary Predicaments

Athena Street, AD 2000

Sovereign Wealth and Debt

We take such a drubbing from our legistlators’ speeches.  They seem to be composed, like the lamest, latest interpolations into the Homeric epics, of threadbare fragments all of the same platitudes.  By now one is convinced that the quotations of strings of huge numbers really mean nothing in these persons’ mouths.
One Representative says, “a lot o’ things we’re doin’ we can’t afford to do” and never specifies what we’re doing and can’t afford.  No matter.  We’ve been hammered with this stuff so relentlessly that we know that it merely encompasses whatever the opposing political party thinks worthy.  No need to spell out anything.  It’s like the members of the insane asylum in the old story, who knew all one another’s jokes so well that they just said the number of each and laughed or groaned accordingly.
But I care deeply about economics, and I’ve been working to master the vocabulary, at least, for the last four years.  More.  Ever since Enron was victimizing California more than a decade ago, and I began to learn a bit about ‘creative’ accounting; one had to digest the fact, that such disrespect for the ideals of real wealth could go uncorrected for so long.  Yes, one knew that ever since the end of antiquity money has been ‘debt’ money (even where some governments managed to maintain gold and silver reserves to back it up), but in school they taught us that the arithmetic of the Gross National Product had to be correct.  When one of our own, USA, newsmen today remarked that Christine Lagarde would be able to speak truth to nations who hadn’t faced it, another observed that he hadn’t meant Greece but ourselves.  That’s just what I’ve been thinking, how Greek we all are, how philotimoi, not to say vainglorious, with our Great Nation stuff.  We have lived way beyond our means.  We have believed our stock-market averages, and so forth.
We have let those most capable of paying taxes pay least.  For let no one think that wage-earning Greeks do not pay taxes, but they can’t pay enough to cover the expenses, the legitimate expenses, I mean, of their nation.  Just our own problem: school teachers and bus drivers and builders, and all, no matter how late they wait to retire, have paid for and must have something to live on when they can no longer work.  And that is the least of what a nation must pay for.
Why do we bad-mouth Greece so?  We don’t bully Iceland so badly.  We forget that UBS (to name the most eminent) had some of the Madoff stuff.  He made it, but they ought to have known better, surely, just as our banks ought, than to be tempted by it. 
I take for granted that our own economists as well as Greece’s Papandreou know better than I do, just as surely as Swiss or Scotch bankers do.  But that means that our presidents and premiers and prime ministers may be practically helpless relative to the banks and brokers.  I take some hope, even so, from knowing that Papandreou is a very sound economist.
But I headed this post “Sovereign Wealth”.  That was the first term that I had to look up in 2008.  I gather it is analogous to Capital relative to Income, which persons who are not wage-earning workers refer to in old novels: nice people live on their incomes.  As I recall, however, when I looked it up, only one European nation, Switzerland, had sovereign wealth and only one American State, Alaska.  It seems that sovereign wealth is a good thing to have.  I guess that the USA, even more than one of the large South American nations when in money trouble, has a store of natural resources such as Greece lacks.  Of course, as one who professes Greek art and archaeology, one who loves Greece second only to my own country (without supposing that either of them is faultless or superior, intrinsically, to any other place), I have been agonizing over Greece for months, and I am angry when transalpine nations speak of Greece condescendingly.  It is painful even to a mere philhellene; think how Greeks must feel.  I read their newspapers on line every day, and I am proud of them.  If only I knew the real resolution of all these problems, which (of course) are ours as well as theirs, both in their causes and in their possible effects.  I hope that Christine Lagarde can help.