The Balkanization of Europe.

About a month ago, I and others (see here) commented in another blog against the Catalonian move to secede from Spain. The readers might be aware the regional Catalonian elections are due to take place next November, 25.

The Catalonian parliament has 135 seats. According to a recent poll (La Vanguardia, October 28), Artur Mas' nationalist/centre right CiU could win between 65 and 66 seats; the PSC (local PSOE branch) and PP are disputing the second place (18 and 17 seats, respectively). The left wing Esquerra could become the fourth parliamentarian party, with 16 seats. (See here, Spanish)

Out of the 4 main parliamentarian parties, only PP has spoken openly against the independence.

Mas has promised a referendum over the issue of secession, even though such a move is unconstitutional and members of the armed forces have threatened with violence.

In the recent Basque regional elections, the nationalist parties from all over the political spectrum, won by a landslide. (See here)

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But Spain is not the only European country affected by this outbreak of regional nationalism and separatism. (See here)

In my comment, I mentioned the German-speaking South Tyrol province, which could try to break away from Italy and perhaps join Austria. Others mentioned Padania (northern Italy, more generally) with the nationalist Lega Nord.

Recently, the extreme right Bart de Wever, of the New Flemish Alliance, popular among segments of ethnic Dutch Belgians, won the local elections for Antwerp on an anti-Wallonian platform.

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What could be the consequences of this?

If you believe The Financial Times' Tony Barber (see here), there is little to fear in this process. For Barber, only a South Tyrolese independence and union to Austria could have serious consequences.

I fear Barber's view is almost panglossian, because it assumes the only consequence to fear is open military conflict. In my opinion, he also underestimates the likelihood of such an outcome.

Furthermore, he ignores the possibility that garden-variety nationalism could morph into outright racism and xenophobia. And experience shows that is far from a remote possibility.

For good or ill, we could be witnessing the beginning of the end for European nation-states. So far, the examples of Yugoslavia and the Caucasus seem far from auspicious.

The Lagarde List Affair.

After Greek journalist Kostas Vaxevanis published (October 28) a list containing the names of 2,059 alleged high-profile tax evaders, the Troika occupation Greek government ordered his arrest and trial. The BBC covered the whole affair, day by day. Here is a timeline of the affair, in headlines:

Sunday, October 28 (last updated at 16:28 GMT)

Greece arrests journalist over 'Lagarde List' banks leak

Monday, October 29 (last updated at 23:23 GMT)

Greece bank leak reporter Costas Vaxevanis sent to trial

"The prosecutor issued a warrant for Vaxevanis's arrest because he published a list of names without special permission and violated the law on personal data".

Thursday, November 1 (last updated at 16:39 GMT)

Greek journalist Costas Vaxevanis on trial over bank list

"French authorities gave the names to their Greek counterparts two years ago, but documents were never investigated".

Thursday, November 1 (last updated at 20:15 GMT)

Greek bank list editor Costas Vaxevanis acquitted

"Lawyers for Mr Vaxevanis, 46, (...) said no-one on the list had actually complained of a breach of privacy.
"After a one-day trial, a court in Athens found Mr Vaxevanis innocent. (...)
"The BBC's Mark Lowen in Athens says the swift ruling will be an embarrassment to the Greek government".

If you ask me, to call this an embarrassment is an understatement.

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Consider prominent PASOK politician George Papaconstantinou:

"Then Greek Finance minister, George Papaconstantinou, said precisely last Wednesday in the Greek Parliament that he did not know what happened to the [then French Finance minister Christine] Lagarde list's original version". (See here, in Spanish, my translation)

Aussie readers might remember Papaconstantinou's words when he spoke last May 12, in SBS TV Insight show:

"So nobody is outside this, nobody is innocent to the crime. Of course politicians bear the biggest burden, and of course they will be punished for this, as they are being punished (...)."

For a man so ready to re-distribute responsibilities for the Greek fiasco, Papaconstantinou seems strangely uninterested on determining who should "bear the biggest burden".

Just like the current Greek government, that appears more interested in harassing (very clumsily and ineffectively, at that) the whistle-blower than in punishing those who should "bear the biggest burden":

That's a bit more than an "embarrassment".

Toxic Rembrandt.

Rembrandt as Zeuxis,
c. 1662. [A]

Over a year ago a number of Australian city councils initiated a class action against RBS (ABN AMRO before 2010), S&P and Local Government Financial Services for losses suffered with the Rembrandt CPDO. (See here)

Today Michael West (Fairfax Media) informs us that "The Federal Court's Justice Jayne Jagot has accepted the evidence from 12 NSW councils - who claimed they had been duped into buying a toxic financial product - that the ratings agency Standard & Poor's was little more than a lap dog for slick merchant bankers".

Rembrandt CPDO had been rated AAA by S&P, in spite of being a highly leveraged and risky financial product, which lost 90% of its value a few months after the councils purchased it.

The court ordered the 3 financial agencies to pay AUD30 million, plus interests, to the plaintiffs; S&P claims it intends to appeal.

This decision, together with rulings against Lehman Brothers a few weeks ago, could have international implications:

"It remains to be seen whether the Court's finding that S&P engaged in misleading and deceptive conduct in assigning its coveted-AAA rating to the CPDO will open the flood gates for actions against credit rating agencies in relation to other structured products such as CDOs. Logically, CDOs are also in the gun. Most enjoyed the top rating, most blew up."

Image Credits:
[A] Self Portrait as Zeuxis, c. 1662. Wikipedia.

The Ironies of Monopoly.

An extraordinary article by Christopher Ketcham, from Harper's Magazine, on the history of the popular board game Monopoly (h/t Occasional Links & Commentary), which I highly recommend.

Henry George (1839-1897) at 26,
American political economist. [A]

It turns out that the game was invented in 1903 by a largely forgotten Maryland actress, by the name of Lizzie Magie, as a device to teach the thought of Henry George, the once popular American reformist socialist who intended to bring about his own brand of socialism by taxing landowners, while abolishing all other taxes.

Although Magie conceived the basic idea, by the time her version of the game (called the Landlord's Game) began to be commercialized, gamers had spread and further developed the game, until its putative inventor, Charles Darrow, finally learned of it and marketed his own homemade sets, sought and received patent and sold the rights to game publisher Parker Brothers:

"Sometime in 1932, Darrow copied the layout of the board, the rules of play, the property names, the deed values, and the Chance cards, and made his own version of the game. His only innovation seems to have been to claim the mantle of sole inventor. He would soon be assumed into the pantheon of American heroes of commerce."

Apart from the irony in this ending, the narrative is enriched by a wealth of fascinating details: some magnificent quotations (Andrew Carnegie: "The greatest astonishment of my life was the discovery that the man who does the work is not the man who gets rich"), anecdotes and descriptions from a Monopoly tournament, a fascinating footnote on the work of Michael Hudson. There are also passing references to Mark Twain, Leo Tolstoy and Marx.

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There were Marxists among George's followers. Some of them wrote enthusiastically to Marx, praising George and his writings.

Marx was not impressed, however:

"All these 'socialists' (...) have this much in common that they leave wage labour and therefore capitalist production in existence and try to bamboozle themselves or the world into believing that if ground rent were transformed into a state tax all the evils of capitalist production would disappear of themselves".

Considering how the article describes the end of the movement, he might have had a point:

"By the time of his death in 1897, when 100,000 New Yorkers lined up to view his body in state, George's 'great idea' was already, as Tolstoy would lament in 1908, on the long road to being forgotten".

But Marx considered that not all the effort was wasted:

"On the other hand George's book, like the sensation it has made with you, is significant because it is a first, if unsuccessful, attempt at emancipation from the orthodox political economy".

I'd add that George's followers, while misguided, meant well. Their efforts and creativity, if ultimately fruitless, deserved better and are to be commended.

Image Credits:
[A] Henry George (1839-1897) at 26, American political economist. Wikipedia.