Apology to the so-called 'PIIGS'
Sincere apologies to Portuguese, Italian, Irish, Greek and Spanish nationals: you are no PIIGS.
My May 14 column was altered. As submitted, the sentence read: "Wall Street's meltdown and growing unease with fiscal performance of Greece, Ireland, Spain, Italy and Portugal (GISIP) have for months led to speculation concerning the stability and long-run viability of the euro."
To use the now commonplace PIIGS acronym, the order in which I listed the countries was changed.
I'm unaware of the PIIGS acronym's originator. Apparently, it was created by international investors, reported in the Wall Street Journal of December 10, 2009. It seemed to be coined for its derogatory 'pigs in the trough' connotation: lazy Greeks, evade taxes, singing and dancing in the streets, binging and generally being profligate. They're the same as swarthy southern Europeans and binging Irish.
Public opinion among Germans is close to 60 per cent against any rescue operation for them. But Germany has benefited significantly from workers, migrants from 'southern European' countries who for years cannot, honestly, be said to have been treated by and large as first-class citizens.
These issues, proverbial 'elephants in the room' - not meant for polite conversation.
The offensive acronym perpetuates unpleasant nuances and prejudices oft-times unconsciously held. The deeper irony is that the 'rescue' is not for Greece, but the euro!
I created GISIP instead of the commonly used PIIGS deliberately, not wishing to use the offensive 'pigs-in-the-trough' metaphor.
To arrive at that metaphor, Greece, the major immediate sovereign debt problem case, has to be ranked fourth on the list. There are a raft of issues involved in European Union (EU) integration, including exploitation and what some commentators actually view as racism.
So I steer clear of PIIGS. But I also do so because I was a black man in Britain and Europe. I know the prejudices and false feelings of superiority colonialism has generated, not to mention the feelings of inferiority created among us - hence Bob Marley's call to emancipate ourselves from "mental slavery".
The issue is by no means personal, although I give a personal recollection below. Dissenting web comments make the point: United Kingdom as the biggest fiscal deficit problem in the EU. Then what about Iceland? Why not UKPIIIGS - United Kingdom, Portugal, Iceland, Italy, Ireland, Greece and Spain? As we pointed out in last week's column, Bank of England Governor Mervyn King was quoted as saying whichever party won the election, distasteful austerity measures necessary for financial stability would cast them out of power for a generation.
Here's the personal bit: Student in the UK at a seminar. In the room, two 'blacks', myself and an African from Ghana, a working-class Englishman, Oxford man with mastery of the attitude and accent, a Thai national, with the lone female, an Iraqi national. The other eight or so students are white - not ex-colonials. The professor expounds on a relatively complex and controversial issue in money and macroeconomics. He reaches equation four in the process, whereupon I think he has made an error. Not sure, being no mathematical genius, I remain mum. But by equation 10 or 11 the problem appears to be exploding. I raise my hand indicating this.
I'd never seen an Englishman, save cricketers after five hours fielding in the hot sun at Sabina, show such a ruddy complexion. In mere seconds, his face flushed red. He stepped to the side of the blackboard - no whiteboard and Expo dry-erase markers in those days; chalk, blackboard and talk - listened to me and changed the terms in the offending equations without emerging from an apparent trance.
He then asked: "Where were you trained?" Granted, I proudly, if nonchalantly, said: "UWI."
A week later, on visiting a brilliant, hard-working, midnight oil-burning schooldays friend at the London School of Economics, I recounted the incident. He thought it mild, if typical. One of his professors actually remarked to him that he was "one of us". So indeed it was as if we colonials were not thought to be cerebral enough to master the intricacies of law, and, in my case, economic dynamics.
A contemporary example of similar attitudes from the other side of the Atlantic, through an influential Washington Post columnist, May 13, establishes that the "European package - postpones problems rather than resolves them" and does not deal with the "spendthrift 'Club Med' countries of southern Europe that used the euro as a credit card." Amazing.
Imagine a US-based commentator speaking of using the "euro as a credit card" when the biggest true credit-card users were to be found in the US - subprime bubbling with Chinese uptake of Treasuries as the Federal Reserve gave Wall Street almost zero-cost money, guaranteeing endless profits with no true effort to squeeze balance sheets to reality.
Such attitudes, absorbed as if by osmosis, take long to die.
I, like Bob Marley, have no wish to be associated with indolence of mind, 'mental slavery', even if by mere association.
But getting back to the economic and financial substance of the matter, I note there are competing claims for the potential of Europe's mega-bailout plan to work. It has been hailed by some as a "speculator-killer".
This view, to my mind, could not be further from being accurate.
Indeed, this week's move by Germany to ban short trades on Sovereign debt is proof of the difficulties the system still faces.
The euro is plagued by its members' fiscal problems, a 'web of debt' which a New York Times interactive graphic captures perfectly:(http://www.nytimes.com/interactive/2010/05/02/weekinreview/02marsh.html?...) French and German Banks owed by Greece and Portugal, etc, entirely criss-crossing obligations.
Indeed, Greece's US$236 billion is small potatoes compared to Italy's US$1.4-trillion debt. Fears of these countries' future ability to service their debt - default - panic investors into denying short-term funds to Europe's banks.
Yes, speculators prowl but they would have no basis for bullishness on short betting apart from real anxieties of fund managers apprehensive of future value of their holdings.
European countries may well copy a page from states in the United States union.
They borrow for capital works, not ongoing salaries, park-maintenance and garbage collection. California balances its budget, most times! Members of the eurozone, once they maintain their wish for and commitment to unity in diversity, will have to achieve something like this - funding expanded current operations with growth as opposed to loans. Common currency, for stability, inevitably requires perceived fiscal prudence.