MacroScope

from Jeremy Gaunt:

Greeks on the street

Greeks smashing windows and setting fire to shops and banks in a fury of opposition to yet more austerity is gripping.  But it is hardly unique. A few years ago there were similar scenes for weeks after police shot a 15-year old schoolboy.  And back when I lived there, U.S. President Bill Clinton was treated to a similar welcome -- mainly because of his military assault on Serbia (a fellow Christian Orthodox nation) during the Kosovo conflict.

There are doubtless degrees. The latest level of destruction was the worst since widespread riots in 2008 -- and austerity being imposed on Greeks is very painful. But it is worth noting that there are two underlying elements than make such uprisings more common in Greece than elsewhere.

The first is a division in Greek society that goes back to at least the end of the second world war. The civil war that followed the end of the German occupation was brutal and split the country between those wanting western free market democracy and those favouring Soviet-style communism. This carried though into the 1967-74 junta.

The second element is the role of outsiders on Greek history. The Civil War brought in western intervention and the junta got U.S. support -- to the deep-seated bitterness of those on the other side. Going back further -- and Greeks have long historic memories -- there are Persians, crusaders, Nazi Germans and the particularly hated Ottomans trying to make Greeks be something other than Greek. Here is a feature on it.

Add to that mix the Washington-based International Monetary Fund, the Frankfurt-based European Central Bank, the Brussels-based European Commission, derisive artilces in British and German tabloids and a drumbeat of tough talk from Berlin.

You say ’30s, we say ’20s

Neil Dwane, fund firm RCM‘s chief investment officer in Europe, has an interesting take on the current spat between Germany and the United States over printing money to get out of trouble. You can see Juergen Stark for the latest volley.

Dwane reckons it is all a matter of history. The American psyche, he says, is scarred by the Great Depression of the 1930s. It is up there with the Civil War. Think John Steinbeck or John Boy Walton.

For Germans, however, the 1930s mean something else. It was the era that the Nazis took over, leading to the country’s great nightmare. But that, the German psyche has it, was bred in the 1920s when incompetent government led to hyperinflation and worthless money. Think one trillion marks to the dollar. Think wheelbarrows.

from Davos Notebook:

Hank Paulson is not Gavrilo Princip, Lehman is not the Archduke Franz Ferdinand

Was letting Lehman go down the biggest mistake of the crisis? Many, including George Soros in the Financial Times, have argued that letting Lehman go down sowed panic to markets, consumers and businesses.

Not so fast, says Harvard historian Niall Ferguson, in an interview in Davos:

"My position is this is a typical error of historical understanding in which a single event is blamed for much more than it can possibly have caused. You can say ‘Hank Paulson is to blame for my troubles' and if you can change one thing in the story it would have a happy ending.

It's like saying if only Princip had not shot the Archduke Franz Ferdinand in 1914 there wouldn't have been a First World War.