"Eastern Europe needs our help," WSJ Europe article by Sen. Kerry

[TayTay]

Today's Wall Street Journal European edition carries an editorial written by Senator Kerry that focuses on the economic crisis in Eastern Europe. This is yet another part of the world that is undergoing trauma due to the economic meltdown.

Eastern Europe Needs Our Help

We can't risk losing 20 years worth of gains in the region.

By JOHN KERRY | From 2/27/09 http://online.wsj.com/article/SB123570279503890141.html">Wall Street Journal Europe.

Twenty years ago, the Berlin Wall and the repressive Communist regimes of Eastern Europe came crashing down to usher in a new era of political and economic freedom. Today, it is Eastern Europe's banks and economies that are threatening to crash.

The Polish zloty is down 38% against the dollar in the last six months alone. Hungary's forint is down 32%. Ukraine posted a staggering 34% drop in January industrial output from a year earlier. While the entire world is reeling, right now the eye of the global financial storm has moved to Central and Eastern Europe.

If Western nations do not act quickly to address the snowballing financial crisis that is brewing from Latvia to Hungary, we risk replacing an era of promise and progress in Eastern Europe with one of soaring unemployment, instability and a weakening of the influence and ideals we have spent decades building.

While many Americans are rightly focused on our domestic troubles, we must also recognize the global dimensions of the current crisis. Last week, Latvia became the second government, after Iceland, to collapse as a result of a financial crisis that has already sparked riots in the Baltics and Greece and is likely to be a driving geopolitical force for a long time.

More of this OpEd at http://online.wsj.com/article/SB123570279503890141.html">the link.

You know that slogan from the Kerry campaign for Senate last year, "A Senator for Times Like These"? Boy oh boy is that ever true. Sen. Kerry has the experience in foreign policy, banking and international finance and international trade and commerce to really be a great global voice for this country. I am so proud to have been a part of putting someone of this caliber back in the Senate. All of you should be too!

[karynnj]

1. He really is a Senator for times like these

though we all wanted him to get that promotion in 2004. It is amazing that he has worked hard to be a leading expert in all these critical areas. MA deserves credit for electing him in the first place and re-electing him term after term. I really think there are few states who would not have gone for the flashy, media favored, extrovert governor (in 1996). Last year was fun. How anyone voted for the pathetic opponents he had - who both seem to have returned to obscurity - is beyond me.

This is a very sobering editorial. We need to get the strongest action, most likely to fix the banking system, done quickly. His round table on the international impact of the financial crisis surfaced was every bit as sobering. The real number of major problems Obama has to deal with seem to be far higher than I thought before the election - and then it was just 2 wars, the Middle East, global warming, and the financial crisis.

[TayTay]

2. True and I agree.

Part of the reason Massachusetts elects John Kerry is that he is a serious person with some serious intellectual "chops." He is an impressive man who works hard in the Senate.

(We hear about these bonding moments with MA voters and their pols. Politics is personal in this part of the world and people often call their pols by their first names indicating familiarity and personal closeness. This is true for Sen. Kerry as well. There are, as I have always maintained, "Kerry moments" that endear this man to the people he represents. They are there even if they don't fit the harsh profile the media prefers. I have seen this. Go watch the video clip featuring Helen Tilgner and her search for her Dad's medals at jkmediasource.org. It's there.

Sen. Kerry is not a Jerry Springer candidate; he doesn't spill his emotional guts every time he speaks. But that doesn't mean that what he does is ignored either or that it doesn't register emotionally. It's a more quiet thing. But it adds up the reason that this good man and good Senator has been reelected 4 times.)

[karynnj]

3. I did see that when I was in MA before the election

and when I did some phone calls. It did surprise me how many people said things like "John has my vote". I have called for Corzine, Menendez, and Lautenberg - making far more calls - and NO ONE ever called them by their first name. It was also great that not one mentioned corruption.

It seems clear, that MA both has high standards and they pay a huge amount of attention to what their politicians do.

[beachmom]

4. Must read article about this topic on the cover of The Economist this week:

http://www.economist.com/opinion/displayStory.cfm?story_id=13184655&fsrc=nwlgafree

The bill that could break up Europe
Feb 26th 2009
From The Economist print edition

If eastern Europe goes down, it may take the European Union with it

TUMBLING exchange rates, gaping current-account deficits, fearsome foreign-currency borrowings and nasty recessions: these sound like the ingredients of a distant third-world-debt crisis from the 1980s and 1990s. Yet in Europe the mess has been cooked up closer to home, in east European countries, many of them now members of the European Union. One consequence is that older EU countries will find themselves footing the bill for clearing it up.

Many west Europeans, faced with severe recession at home, will see this as outrageously unfair. The east Europeans have been on a binge fuelled by foreign investment, the desire for western living standards and the hope that most would soon be able to adopt Europe’s single currency, the euro. Critics argue, with some justice, that some east European countries were ill-prepared for EU membership; that they have botched or sidestepped reforms; and that they have wasted their borrowed billions on construction and consumption booms. Surely they should pay the price for their own folly?

Yet if a country such as Hungary or one of the Baltic three went under, west Europeans would be among the first to suffer (see article). Banks from Austria, Italy and Sweden, which have invested and lent heavily in eastern Europe, would see catastrophic losses if the value of their assets shrivelled. The strain of default, combined with atavistic protectionist instincts coming to the fore all over Europe, could easily unravel the EU’s proudest achievement, its single market.

Indeed, collapse in the east would quickly raise questions about the future of the EU itself. It would destabilise the euro—for some euro members, such as Ireland and Greece, are not in much better shape than eastern Europe. And it would spell doom for any chance of further enlarging the EU, raising new doubts about the future prospects of the western Balkans, Turkey and several countries from the former Soviet Union.

The political consequences of letting eastern Europe go could be graver still. One of Europe’s greatest feats in the past 20 years was peacefully to reunify the continent after the end of the Soviet empire. Russia is itself in serious economic trouble, but its leaders remain keen to exploit any chance to reassert their influence in the region. Moreover, if the people of eastern Europe felt they had been cut adrift by western Europe, they could fall for populists or nationalists of a kind who have come to power far too often in Europe’s history.

More depressing reading at the link. The Economist figures America has her own problems, and Europeans should not count on us coming to their rescue. Still, it is good that Sen. Kerry is aware of this problem.

[TayTay]

5. Nice find! Thanks!

And good to hear from you again. Welcome back. Your insights are always valued.

Every corner of the Globe is at risk from this financial meltdown. It is amazing to see how far the consequences of our housing fiasco go in this world. Sad and amazing.

[beachmom]

6. Here is some potentially good news. Chancellor Merkel has hinted she will help Ireland and Greece:

http://www.spiegel.de/international/europe/0,1518,610279,00.html#ref=nlint

Merkel Hints at German Aid for Euro Zone

German Chancellor Angela Merkel on Thursday backed euro zone solidarity, giving her clearest hint yet that Europe's biggest economy may dip into its pockets to help struggling neighbors. Ahead of Sunday's emergency EU summit, Merkel called for a "frank" debate.

...

Speaking at an event for foreign journalists on Thursday evening in Berlin, German Chancellor Angela Merkel signaled, for the first time, that her government is considering helping other nations. "We have shown solidarity and that will remain so," Merkel said, responding to a question about Germany's willingness to offer assistance to its euro zone contemporaries. "But this must be on the basis of commitments that form the foundation of our common currency," she added.

Merkel also made special mention of Ireland, one of the euro zone countries facing a growing bill to finance debt, reflecting investors' preference for more financially stable nations like Germany. "A country like Ireland that has been hit quite hard by the banking crisis is clearly in a different situation than a country like Slovakia with fewer banks and where the distorting forces at work are weaker," Merkel said.

Her comments follow growing speculation that Berlin may act under article 100 of the Maastricht Treaty, which permits financial assistance for countries experiencing "difficulties caused by natural disasters or exceptional occurrences beyond its control." ...

It is, of course, politically unpopular for Merkel, for which there are elections coming up in Sept., to bail out these countries. But the alternative is worse IMO. Angela has tended to be slow dealing with the crisis, but usually comes around eventually to what must be done. At the end she mentions Eastern Europe:

Among the "frank" discussions Merkel forsees in Brussels, will likely be banking problems in eastern and central Europe. Asked about the region, she insisted that having the euro was the biggest help on offer to eastern European economies. Germany, however, was seen teetering on a diplomatic tight rope in its eastward international relations. "If we help too much, we're accused of being too forceful, but if we do too little it's not right either," she said. "The time phase within which we can do the right thing is, at best, nano-seconds long."

[beachmom]

7. So far, the EU says no dice to eastern European countries:

http://www.economist.com/daily/news/displaystory.cfm?story_id=13209335&fsrc=nwl

EUROPEAN UNION leaders have rejected calls for a special €180 billion ($229 billion) rescue fund for ex-communist countries in east and central Europe. Leaders gathered in Brussels on Sunday March 1st for an emergency summit to discuss the economic crisis dismissed suggestions, led by Hungary, that a single plan was needed to save the region. Without massive help for ex-communist nations, Hungary’s prime minister, Ferenc Gyurcsany, had said, a “new Iron Curtain” risked splitting the continent anew.

But Angela Merkel, the German chancellor, squashed talk of a dedicated plan for eastern Europe, saying the ten ex-communist countries in the EU faced “very different” degrees of peril in this economic crisis. It was ill-advised to throw “massive figures” around, added Mrs Merkel. Hers is a voice that counts: Germany pays more into EU coffers than any other nation.

In Brussels, it was seen as highly significant when German ministers signalled last month that they might be prepared to step in to prevent a country defaulting within the 16-member group that shares the single currency. But a dedicated bail-out for the ten ex-communist countries that have joined the EU since 2004 is clearly a step too far. Germany will hold federal elections later this year, and voters there are acutely sensitive to suggestions that Germany and other rich nations should bail out weak or profligate members of the European club.

I will add that Angela Merkel always says no first. But sometimes, she changes her mind. Perhaps if it is not all 10 countries at once ...