Now that the Greek financial crisis is solved – temporarily, at least – the natural question is: Who's next?
Since President Obama hasn't visited Greece, the closest he's come to seeing the effects of a debt crisis firsthand is in visits to Portugal and, most recently, Ireland. For a day late last month, Mr. Obama became O’Bama and discovered that he has vague Irish roots during a brief stop in Dublin, Ireland. Here are two financial lessons – and a diplomatic one – we hope he absorbed during his trip to “The Old Country”:
1. With the US deficit now at $14.3 trillion (ignoring off-balance-sheet debt), he may have asked Irish President Mary McAleese what it is like to live in a country that is going bankrupt. Ireland has avoided defaulting on its short-term debt only by borrowing even more from the International Monetary Fund and the European Union. Economic death is merely postponed.
Ms. McAleese might have suggested that the Irish state might not be in such a mess had it not spent far more than it received over many years. Of course, as soon as he left Irish soil Obama was promising to send out billions more in foreign aid to Egypt, Tunisia, and anyone else who wanted it, suggesting that he did not listen carefully enough to Ireland’s president on the subject of budget deficits.
2. I doubt that Ms McAleese would have lectured the US president on the difficulties of bringing peace to a country where one has to negotiate with terrorists. Nevertheless, Obama has said that he will bring peace to the Middle East, forcing the Israelis to do business with the respectable government of Hamas in Gaza. Of course there is a respectable government in Northern Ireland now containing the men who for 30 years led the terrorist Irish Republican Army organisation.
We have peace in our time. Except we do not.
Sectarian violence in Northern Ireland is at a multiyear high. More than 1,000 people in Ulster are allowed to carry guns as they have received death threats from terrorists who are now shooting policemen and laying bombs in London once again. In Ireland, we pretend there is peace by not reporting the violence and by praising former terrorists who now sit in government. Perhaps that is the sort of peace Obama will bring to the Middle East – maybe he did learn something.
3. When passing through Dublin Obama might have noticed that less than 100 years ago this whole country was part of the British Empire. Back then, the pound sterling was a currency accepted everywhere. Britain was the dominant industrial, military and economic force in the world. Britain even exported its own culture across the globe teaching folk in every continent to speak English, learn about St. George and the dragon, and to understand the complex rules of cricket.
Less than 40 years later Dublin was part of an Irish Free State as the British Empire had all but disappeared. Britain had spent beyond its means. It had overextended itself militarily. Its currency had collapsed and was not accepted anywhere outside Britain and a few rocks in the South Atlantic. Its industrial might had been throttled by excessive state intervention and it wasn’t even very good at cricket anymore.
It took 40 years for Britain to slump from an empire to a bit part player. The world moves faster these days, especially if one is led by a man seemingly determined to repeat the mistakes of history. Somehow, I think this last message was lost on Obama during his brief “homecoming” trip.
– Tom Winnifrith, a fund manager with www.t1psim.com, is originally from Ireland and lives on one of the few little rocks that still form the British Empire – the Isle of Man.