10 worst predictions for 2008

Foreign Policy presents the 10 best intuitive (?) predictions made by pundits in the course of the past year. My personal favourite:

“Peter writes: ‘Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?’ No! No! No! Bear Stearns is fine! Do not take your money out. … Bear Stearns is not in trouble. I mean, if anything they’re more likely to be taken over. Don’t move your money from Bear! That’s just being silly! Don’t be silly!” —Jim Cramer, responding to a viewer’s e-mail on CNBC’s Mad Money, March 11, 2008

An economic sonderweg for the 21st century?

As Gordon Brown and Nicolas Sarkozy go on a spending (not to mention PR) spree to avert recession and organize Forums to convince the world of their sound judgment; as the economies of the EU periphery start looking towards the IMF and Brussels for help; as certain politicians in my native Greece and elsewhere, have started realizing that the Euro is no panacea for creditworthiness and have started muttering pleas for Eurobonds; Germany is having a relatively quiet and drama-free Christmas. Last time the Germans were so obviously the gatekeepers of prudence, in the early 1990's, the rest managed to lure them into the EMU through endorsing unification and accepting a Central Bank in tho mold of the Bundesbank. Now what chips do they have on the table? I have a feeling the Germans will remain unfazed:

A former economic adviser to the commission, Belgian economics professor Andre Sapir, says: "The message that Germany has to pay more because it has room for manoeuvre is not a very credible message".

But, I say, that is the way the EU has been run for the last 50 years. "Yes, but I don't think that is the way Europe is going to work for the next 50 years. It's true that Germany was the paymaster because of the past, the war, and the view that what is good for Europe would be good for Germany. I don't think that Germany should be made to pay forever for its sins. They were great, there's no doubt about that, I lost all four of my grandparents to the Germans, but Germany doesn't need to pay forever. Europe cannot be Europe if Germany is put in one corner and has to pay forever for the sins of the past."

"We have to fight the will to ignorance"

This Christmas I will be reading the amazing history of postwar Europe by Tony Judt. I have read only the first 100 pages so far, but the book is fascinating in its clarity and breathtaking scope. Besides being a meticulous historian Judt seems to be a great thinker as well, which in my mind was confirmed by a public lecture I found on his NYU website on the role of modern intellectuals. At the end of two months in which this blog was rocked by both the triumph (Obama) and the defeat (Greek riots) of informed, intellectually sound discourse, I found his views particularly welcome. The video is on the right-hand column.

Merry Christmas from the PoliSci Department

Inspiring postcard from Josep Colomer's website:

-384 -322 Aristotle
1469-1527 Niccolò Machiavelli
1588-1679 Thomas Hobbes
1632-1704 John Locke
1689-1755 Montesquieu
1711-1776 David Hume
1712-1778 Jean-Jacques Rousseau
1723-1790 Adam Smith
1724-1804 Immanuel Kant
1748-1832 Jeremy Bentham
1751-1836 James Madison
1805-1859 Alexis de Tocqueville
1806-1873 John S. Mill
1818-1883 Karl Marx
1864-1920 Max Weber
1883-1950 Joseph A. Schumpeter
1903-1957 John von Neumann
1915- Robert A. Dahl
1915- Paul Samuelson
1917- Maurice Duverger
1919- James M. Buchanan
1920-1993 William H. Riker
1921-1979 Stein Rokkan
1922- Gordon Tullock
1922-2006 Martin S. Lipset
1924- Giovanni Sartori
1926- Juan J. Linz
1930- Gary S. Becker
1930- Anthony Downs
1932-1998 Mancur Olson
1933- Amartya Sen
1933- Rein Taagepera
1936- Arend Lijphart

It is different from 2000

Today's NYT article states what was pretty obvious, that the problem of the economy this time is not overproduction (as was the case in the early phase of capitalism) or a productivity bubble (as in 2000), but a tightening of finance. Companies do not want to lay off productive workers but to stash cash for later times. There is a sense that this crisis is not going to last much longer. Of course, this is far from certain:

A growing number of employers, hoping to avoid or limit layoffs, are introducing four-day workweeks, unpaid vacations and voluntary or enforced furloughs, along with wage freezes, pension cuts and flexible work schedules. These employers are still cutting labor costs, but hanging onto the labor.