Getting it Wrong with Krugman

Paul Krugman’s latest in the New York Times is that the euro was a blunder. Focusing on the problems in Spain (conceding that the Greek crisis really was, at least in part, caused by government profligacy) Krugman writes that

The . . . core economic problem is that costs and prices have gotten out of line with those in the rest of Europe. If Spain still had its old currency, the peseta, it could remedy that problem quickly through devaluation — by, say, reducing the value of a peseta by 20 percent against other European currencies. But Spain no longer has its own money, which means that it can regain competitiveness only through a slow, grinding process of deflation.

Stiffing those foreign creditors who were foolish enough to lend in pesetas, of course. But hey, they’re wealthy bankers. Of course, the obvious problem with this “painless” solution is that the peseta might not go down 20 percent. It might get dumped in a wave of panic selling and go down 90 percent. Along with the drachma and the lev and the forint and all the other folk-dance coinage from the European fringe.

Spain and Greece would then have to pay for imports – including stuff like oil, which they kind of need and kind of don’t produce – in dollars or Deutsche Marks, thereby throwing their own economies into an oil-shock recession while running down their foreign currency reserves. Which means that sooner or later (guess which) they would run into trouble paying back those foreign lenders who were foolish enough to lend in real money.

This would then spread the contagion – like the Asian currency upset and Russian defaults in 1998 which wiped out Long-Term Capital and almost transmitted the crisis to the US. Tottery banks would see more of their assets – loans to peripheral Europe – impaired or wiped out. No, there’s nothing wrong with a lot of itty-bitty currencies and lots of cross-border lending. Except international speculators trying to screw everything up. Doubtless the Krugster would be all over them.

Useful Quotes to Remember

Next time you are in a debate with a climate change activist and use a non-peer reviewed source of information, if they protest angrily that only peer reviewed material should be acceptable, give them this quote.He said many of the criticisms were based on a mistaken belief that the IPCC could not use so-called grey literature – reports from outside academic journals such as from campaign groups

Our crap-ass justice system

Everybody’s watching the Olympics. Well, not Jane Creba. Actually, since she was shot in 2005, she missed the last Olympics – the twentieth winter games, held in Turin in February of 2006. The resultant legal proceedings, on the other hand, seem to have a life of their own. One of the trials is still running, more than 4 years after the alleged fatal shooting. How is it that it takes longer than an Olympic cycle, or a presidential term, to wrap up a murder case?

Another example: John O’Keefe was out walking on Yonge St in the early morning of January 12, 2008 when he was fatally shot by a stranger. The alleged perp was apprehended within hours, but the trial is only starting now, two years later. In April 2006, 8 members of the Bandidos motorcycle club were murdered near London, Ontario by their associates. The trials concluded in October, 2009 – 3 ½ years later. But then, this is from the same justice system that could only charge mass-murderer Robert Pickton with 6 counts of murder even though there was evidence for 26 (and the real toll was probably closer to double that) because the system just couldn’t process that much information and it was feared that a full trial would collapse. In the event, time from arrest to conviction was almost 6 years.

On the other hand, if anybody actually cared about this it would be a public issue. The legal establishment seems fine with this length of proceedings and the public doesn’t even notice. Back to short-track speed skating . . .

It's the law

Unless you just don't care. CBC reports on suspended drivers leaving the courthouse . . . in their cars. Apparently there are over 250,000 suspended drivers in Ontario. According to MADD (Mothers Against Drunk Driving) about 75% of them are driving anyway.

And why not? There's too many to lock up. And besides, it wouldn't be the Canadian way. Certainly an object lesson for those, like Mohawks and polygamists, who are on a collision course with the law as currently constituted. If you dig in your heels, you'll probably win. It's surprising that dope smokers haven't picked up on this and started smoking flagrantly in public; well, more flagrantly. Maybe they're a little zoned out. One or two mass toke-athons this summer would probably be enough to break the back of criminalization, if anybody could be bothered to organize them.

But on the other hand Canadians are naturally so law-abiding that maybe the absence of enforcement doesn't really matter. As long as the ranks of the obstreporous don't swell too quickly we'll probably be ok.

Modern Art

Barbara Kay in the Post:

Conceptual art, whose roots go back to the 1960s, privileges ironic statement and self-reflexive cleverness over talent and discipline.

And about time, too.