Politeía Digest

Quis custodiet ipsos custodes?

Sunday’s New Yorker (II)

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The Balance Sheet
 
Merkel’s Mess

Posted by James Surowiecki

When I wrote about the Greece crisis a few weeks ago, I argued that in trying to draw a hard line with the indebted PIIGS (Portugal, Ireland, Italy, Greece, and Spain), Europe—and in particular Germany—was threatening the status of the eurozone and running the risk of putting the region’s economy back into recession. Rather than emulating what the United States did back in the early eighteen-forties, when it allowed eight states to default (worsening the depression at the time and setting back the economies of the states for years to come), Germany needed to grit its teeth and bail out its profligate neighbors.

And for a while there, it seemed like this was what was going to happen, at least until Angela Merkel, Germany’s chancellor, recently decided that it was time to start talking tough again, and raised the possibility that Germany might not deliver on the loan package it had promised. It was Merkel’s newfound public ambivalence that initially destabilized the markets and sent Greek bond yields soaring, with ripple effects across all the PIIGS countries. Now, of course, Germany is supposedly back on board—and Greece is committing to even deeper budget cuts (though whether it’ll be able to deliver on these is anyone’s guess). Even so, Merkel’s attempt to demonstrate her fiscal rectitude to German voters has ended up making the cost of the bailout more expensive, not less. And it’s reduced the chances that the bailout will work. The painful thing is that this all happened, really, because there’s a regional election in Germany coming up, and Merkel was trying to win over voters who have no interest in helping the Greeks. All in all, it’s a fairly dismal commentary on Europe that the fate of an entire currency zone is being shaped by the politics of North Rhine-Westphalia. Read more in The New Yorker.

The Flaky Stock Market

Posted by James Surowiecki

Another flaky session in the stock market today: after opening in positive territory off the news of a genuinely terrific jobs report (pdf), the market started tumbling, and at one point was down as much as three per cent, before getting all the way back to even, only to then slide again. Still, this is obviously nothing compared to yesterday’s bizarre late-day sell-off, when the Dow fell nine hundred and ninety-eight points in a matter of minutes. It’s still not clear exactly why the sell-off started. There seems clearly to have been some kind of technical error in entering trades, although the rumor that someone entered “billion” when they meant “million” still hasn’t been confirmed. But what does seem clear is that the plunge was exacerbated by the markets’ heavy reliance on computerized trades—both explicit “stop market” sell orders (that is, orders to sell a stock once it hit a certain price) and algorithmic trades that dictate buying and selling depending on different market factors. Nina Mehta and Chris Nagi at Bloomberg have an excellent piece showing how the fragmentation of markets—instead of most trades all going through a centralized market, like the NYSE, trades are now routed to various other markets when volume spikes—may have propelled the plunge, by making it seem as if there were no buyers for any of the sell orders. Read more in The New Yorker.

A Critic at Large

Pandora’s Briefcase

It was a dazzling feat of wartime espionage. But does it argue for or against spying?

by Malcolm Gladwell

On April 30, 1943, a fisherman came across a badly decomposed corpse floating in the water off the coast of Huelva, in southwestern Spain. The body was of an adult male dressed in a trenchcoat, a uniform, and boots, with a black attaché case chained to his waist. His wallet identified him as Major William Martin, of the Royal Marines. The Spanish authorities called in the local British vice-consul, Francis Haselden, and in his presence opened the attaché case, revealing an official-looking military envelope. The Spaniards offered the case and its contents to Haselden. But Haselden declined, requesting that the handover go through formal channels—an odd decision, in retrospect, since, in the days that followed, British authorities in London sent a series of increasingly frantic messages to Spain asking the whereabouts of Major Martin’s briefcase.

It did not take long for word of the downed officer to make its way to German intelligence agents in the region. Spain was a neutral country, but much of its military was pro-German, and the Nazis found an officer in the Spanish general staff who was willing to help. A thin metal rod was inserted into the envelope; the documents were then wound around it and slid out through a gap, without disturbing the envelope’s seals. What the officer discovered was astounding. Major Martin was a courier, carrying a personal letter from Lieutenant General Archibald Nye, the vice-chief of the Imperial General Staff, in London, to General Harold Alexander, the senior British officer under Eisenhower in Tunisia. Nye’s letter spelled out what Allied intentions were in southern Europe. American and British forces planned to cross the Mediterranean from their positions in North Africa, and launch an attack on German-held Greece and Sardinia. Hitler transferred a Panzer division from France to the Peloponnese, in Greece, and the German military command sent an urgent message to the head of its forces in the region: “The measures to be taken in Sardinia and the Peloponnese have priority over any others.” Read more in The New Yorker.

The News Desk

An Interview with Ahmadinejad’s Chief of Staff

Posted by Laura Secor

Yesterday morning, I had a rare opportunity to sit down with a man many see as the right hand and most trusted advisor of the Iranian president, Mahmoud Ahmadinejad. He is a longtime friend of Ahmadinejad, a relative by marriage, and a member of his innermost circle, a coterie so tight as to form a faction within a faction in Iran’s ruling establishment. His name is Esfandiar Rahim Mashaei, and he is the Iranian president’s chief of staff.

Mashaei is a controversial figure among the Iranian hardliners, a lightning rod for the few known tensions between Ahmadinejad’s circle and the Supreme Leader, Ayatollah Ali Khamenei. Curiously, this is because Mashaei has a reputation for being comparatively moderate and unpredictable. In 2008, when he was a vice-president (Iran has twelve) in charge of tourism, Mashaei made headlines for suggesting that Iran’s quarrel with Israel was with its government and not its people. Iran, he claimed, was a friend of all the world’s people, including Americans and Israelis. Mashaei walked that comment back, but it clearly sat badly with the traditional conservatives around Khamenei. Mashaei had already come to their attention when he attended a ceremony in Turkey at which women performed a traditional dance. In Iran, women are strictly forbidden to dance in front of men.

After last summer’s contested presidential election, Ahmadinejad appointed Mashaei First Vice-President. In an unusually public rebuke to Ahmadinejad, Supreme Leader Ali Khamenei demanded that Mashaei be removed from that position. Ahmadinejad complied—he had no choice—but he shocked analysts with a show of defiance, making Mashaei his chief of staff. Iranian journalists speculate that Mashaei is close to the president spiritually as well as politically, and that the two men hold similar views of their personal relationships with the hidden imam—the Shiite messiah.

I caught up with Mashaei at his hotel in New York. He was here for this week’s United Nations talks about the Nuclear Proliferation Treaty. A slender forty-nine-year-old with salt-and-pepper hair and a fixed expression, he wore a dark suit with a collarless striped shirt. He did not shake my hand.

Before his professional translator arrived, we spoke briefly about the Iranian regime’s backtracking from the fall’s agreement, in Vienna, to send enriched uranium to Russia. I told him that, to American observers, it seemed the Iranian government did not speak with one voice on these matters. Mashaei responded that the Iranian position on this had remained constant; it was the American government that did not speak with one voice. President Obama seemed to want to improve relations with Iran, but other forces in his government, particularly in the State Department, were not in accord with this agenda.

It was a rhetorical turn I’d heard often in interviews with Ahmadinejad, as well as in the public speeches of Ayatollah Khamenei: the Iranian leaders describe the American government exactly the way American analysts describe the Iranian one, as an opaque, factionalized system with competing power centers, over which the president exercises very limited authority.

The translator arrived, and, with Mashaei’s previous comments in mind, I asked whether he thought Israel had reason to fear that Iran poses a threat to its survival. Mashaei told me, “A lot of people are making this propaganda and publicity that Iran has the intention of attacking and invading Israel. That’s just negative publicity. It is baseless and not correct. Read more in The New Yorker.

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Written by Theophyle

May 9, 2010 at 10:44 am

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  1. […] Sunday's New Yorker (II) « Politeía Digest […]


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