Denial on Thames, sur Seine and Rhine

Americans are too detached from crisis in some small country in “Yurrup."

‘A quarrel in a faraway country, of whose people we know nothing.” This was Neville Chamberlain’s famous defense of his agreement achieved in his meetings with “Herr Hitler,” which sealed the fate of Czechoslovakia – the said faraway country.
The world has supposedly gotten much smaller in the intervening 50-plus years, and most Englishmen have visited European countries, some as far – or farther – than that one with the unpronounceable name. But the sentiment of the average bloke in Ilford, Ilfracombe or Isley toward Europe has barely changed. Thus, even if there is a crisis in Greece, it is of no direct concern, unless he happens to have booked his summer holiday there.
The degree of detachment of the average American, the proverbial Joe Sixpack, toward a crisis in some small country in “Yurrup” – and a financial crisis at that, not even a war – is far greater than that of his British counterpart.
As for the average Chinese citizen, whether toiling in the rice paddies or in a new factory or office building, it is reasonable to assume that he not only knows nothing of the development surrounding Greece, Portugal and Spain this week, he couldn’t find out even if he wanted to.
Nevertheless, all of them, and us, are caught up in the rapidly snowballing global sovereign-debt crisis, of which Greece still serves as the focal point.
Make no mistake, however: The crisis is still only in its early stages, and Greece has almost exhausted its limited potential to be the lightning rod. Already, other southern European countries are jostling to seize the limelight, whether they want that dubious distinction or not.
Thus this week has seen a slew of developments across southern Europe, with not only Greece but Portugal and then Spain suffering the ignominy and severe financial pain that comes from being downgraded by one of the main international ratings agencies.
But the shame and the slumping prices of the shares and bonds are only the first courses in a country’s feast of disaster on the road to bankruptcy. They are followed by massive cuts in public spending, hefty tax rises and the cancellation of all kinds of benefits previously provided by the public sector at local or national level. All of these are already happening on a small scale in the Iberian countries and on a steadily larger scale in Greece.
If citizens of northern European nations, or of America, Japan and other developed, rich but debt-laden countries, think that all of this is a tale of woe relating to people in a faraway country, they are sadly mistaken.
In most cases that’s what they think because they indulge in the most extreme form of wishful thinking – and because neither their politicians nor their media, the supposed bloodhounds of the democratic system, have bothered to tell them the truth.
The result is that the British are headed into a general election next week that is certain to turn the country’s political system inside out. But they do not know what any of the competing parties will do on the key issue facing the country: its huge budget crisis.
They do not know, because the official data are unavailable, obfuscated or obscured. Mocking the Greeks for their regimen of lies, half truths and warped statistics is par for the course in London, as it is in Paris and Berlin. But the bitter joke is on the British themselves, because they will soon be prescribed some of the nasty medicine the Greeks have been swallowing in steadily increasing doses for the last six months.
If – an unprecedentedly big if for Britain – there is a functioning government in Westminster this summer, it will have to first tell the truth about the size of the budget deficit and then detail how it intends to reduce it sharply. Failure to convince the markets on either count will trigger the kind of trial by torture via the bond markets that has pulverized Greece and is now in play in Portugal and Spain.
The French should find nothing risible in the woes of their southernneighbours, because the budget and debt data of la belle France are notthat much better than benighted Portugal, For some reason, France hasbeen basking in the undeserved reputation that its finances are assolid and its firms as efficient as its German partner. That, however,is far from the truth, and, sooner or later, the market will shine itsspotlight on the French data and be displeased with what it sees.
TheGermans are in the best shape, but they are not laughing. The prospectof an endless stream of bailouts of their profligate, inefficient andlargely corrupt fellow travelers in the European Union and the euroseems to be filling them with rage rahter than mirth. But thealternative, of bailing out their banking system, which lent heavily tothe Greeeces and Portugals, is also very costly and politicallyunattractive.
De-nial, as they say, is not just a river in Africa – and it seems that the Thames, the Seine and the Rhine are its tributaries.