The Irruption of the Event

As the inevitable Greek exit from the eurozone seemingly approaches, it’s worth comparing current statements about Greece to how the financial press and regulators considered Lehman Brothers the week before its collapse set the global markets into panic mode. (See below for a selection of illuminating comments from officials about Lehman Brothers pre-collapse and about Greece pre-exit.) Reading these misplaced predictions, one thing becomes clear: the contemporary financial system is far too complex and opaque for anyone to determine the precise consequences of a Greek exit. Add into that the unpredictable nature of crisis politics (e.g. today sees rumors of Greek governing coalitions flying all over the place), and one has a system that quickly surpasses our capacities for forecasting. In this regard it’s interesting to read reports about the current Greek exit fears versus the reports in February when it also looked like Greece might leave (prior to the second of ECB’s long-term refinancing operations (LTROs) that managed to calm markets for a short while). In the earlier reports many commentators considered that French and German banks had largely separated themselves from Greek exposure, while the initial LTRO had purportedly given the financial system the flexibility it needed to survive any temporary disruption. Intriguingly, today’s fears about Greece, after the failure of the LTROs to significantly improve the situation and combined with fears over Spain’s banking system, are much more apocalyptic than in February.

The unfortunate truth is that while a Greek exit will be devastating to the Greek people (of this everyone is confident), it is still a better option than the continued austerity regime. Even the most optimistic IMF estimates of Greece’s economy under the austerity regime only see them returning to 120% debt-to-GDP ratio by 2020 – i.e. the same level that so worries commentators about Italy today. What is being asked of Greece is a state of permanent austerity and permanent social chaos. 

Milos Bicanski/Getty Images

September 9, 2008 – http://www.nytimes.com/2008/09/10/business/10place.html?pagewanted=all

Unlike Bear Stearns, which effectively collapsed when customers fled for the exits and the firm could not finance itself, Lehman Brothers has more sources of long-term financing and like other broker-dealers, access to emergency financing from the Federal Reserve. Mr. Fuld said that the existence of that lending facility should take any question of Lehman facing a liquidity crisis “off the table.

September 12, 2008 – http://www.ft.com/intl/cms/s/0/b3506214-80d5-11dd-82dd-000077b07658.html#axzz1mXeJ33ET

While the crisis at Bear stunned the markets, other financial institutions have had six months to prepare for the possible failure of Lehman. In the Bear crisis, the risks were extreme in part because they were unknown and unmanaged. The New York Fed has conducted extensive stress tests in order to attempt to evaluate the impact of a Lehman failure on markets such as the CDS market and it believes the systemic risk is quantifiable and lower than the risk that was posed by the imminent collapse of Bear back in March. Regulators have also evaluated the risk mitigation strategies put in place by other banks and the authorities believe them to be robust. That suggests the risk that a Lehman collapse could trigger a domino effect of failures at other financial institutions ought not to be great.

September 14, 2008 – http://www.ft.com/intl/cms/s/0/f3586ede-80ca-11dd-82dd-000077b07658.html#axzz1mXeJ33ET

Mr Paulson believes that the systemic risks associated with the potential failure of Lehman have been reduced because the market has had time to prepare for its possible demise, and a new Fed funding facility would assist an orderly unwinding of its positions.

February 15, 2012 – http://blogs.channel4.com/faisal-islam-on-economics/eurozone-reaches-its-lehman-moment-as-germany-insults-greece/16278

All the while, the chatter in euro policy circles, as I wrote on Monday, is that the Greek rot will not infect the rest of the euro area. A default could be managed. Even the odd French bank has managed to dispose of much of its exposure. We’ve had months to prepare. And, so the Lehman moment comes full circle. Three and a half years ago we were told exactly the same by Hank Paulson and co re Lehmans: The system, we were told, was strong enough. Finns, Dutch and some Germans increasingly think the same about a Greek default.

Looking Beyond Spring for the Season: Democratic and Non-Democratic Cultures

This is the fourth part in a series of five posts from Siba Grovogui, Professor of International Relations and Political Theory at John Hopkins University. The first part is here; the second here; the third here. The series considers the character and dimensions of the tension between the African Union and ‘the West’ over interventions in Africa. As before, responsibility for visuals adheres solely to Pablo K.


It is not accurate to say that the African Union has been indifferent to the conflict in Libya. If there has been silence in Africa, it has to do with the extent to which the ‘maverick’ Colonel (Gaddafi) has angered some of his peers over the years by interfering in the affairs of such states as Nigeria, Liberia, Burkina Faso, Sierra Leone and others, with disastrous effects. Even when, as in Sudan and Uganda, officeholders have welcomed his entreaties, large segments of the populations have not appreciated them. Yet, regardless of their personal views of Gaddafi and their political differences with him, African elites and populations have yearned for a more positive, conciliatory, and participatory solution to outright regime change or the removal of Gaddafi preferred by the West. This variance, I surmise, comes from a positive understanding of postcoloniality that include forgiveness, solidarity, and democracy and justice, as exhibited in post-apartheid South Africa and post-conflict Liberia, Angola, Mozambique, and the like.

In opting for negotiated mediation and a new constitutional compact, therefore, the African Union (or AU) aimed to foster a different kind of politics in Libya – admittedly one that has escaped many of the states endorsing that position. As articulated by Jean Ping, the Secretary General of the AU, the Libyan crisis offered an opportunity “to enhance a self-nourishing relationship between authority, accountability and responsibility” in order to “reconstitute African politics from being a zero sum to a positive sum game” toward one “characterized by reciprocal behavior and legitimate relations between the governors and the governed.” Mr. Ping added two other dimensions to his vision. The first is an acknowledgement that events in Libya point to the fact that all Africans “yearn for liberty and equality’ and this yearning is “something more consequential than big and strong men.” The second is that Africa’s destiny should be shaped by Africans themselves based on an actualized “sense of common identity based, not on the narrow lenses of state, race or religion, but constructed on Africa’s belief in democracy, good governance and unity as the most viable option to mediate, reconcile and accommodate our individual and collective interests.”

Coming from a politician, these words may read like slogans. But the uniform refusal of the AU to endorse Western intervention tells another story. Continue reading

Looking Beyond Spring for the Season: Common and Uncommon Grounds

This is the second part in a series of five posts from Siba Grovogui, Professor of International Relations and Political Theory at John Hopkins University. The first part is here. The series will consider the character and dimensions of the tension between the African Union and ‘the West’ over interventions in Africa. Responsibility for visuals adheres solely to Pablo K.


As I indicated in my last post, the decision by the African Union (or AU) to not endorse the current military campaign in Libya has been mistaken by many observers and commentators alternatively as a sign of African leaders’ antipathy to political freedom and civil liberties; a reflexive hostility to former colonial powers, particularly France and Great Britain; a suspicion of the motives of the United States; and more. The related speculations have led to the equally mistaken conclusion that the African Union is out of step with the spirit of freedom sweeping across the Middle East and North Africa (or MENA). The absurdity of the claim is that the only entity that imposed any outline of solution agreeable to Gaddafi has been the African Union and this is that Gaddafi himself would not be part of any future leadership of the country. But the AU has insisted on an inclusive negotiated settlement. The purpose of this series of essays is not therefore to examine the meaning and implications of the absence of ‘Africa’ on the battlefield of Libya, but to point to the larger geopolitical implications of the intervention for international order, global democratic governance, and the promotion of democratic ideals and political pluralism in the region undergoing revolution and beyond.

To begin, it is not just ‘Africa’, ‘African indecision’, and ‘African non-Normativity’ that are at stake in the characterization of African actions or inactions. Much of what is construed as ‘lack’ or ‘absence’ in Africa is also intended to give sustenance to the idea of the indispensability of the West – composed on this occasion by France, Great Britain, the United States, and tangentially Canada – to the realization of the central ends of the MENA Spring. The myth of the centrality of the West to the imaginary of freedom everywhere is inscribed in the name given to the events under description. In the US at least, the Arab Spring evokes many other ‘Springs’ all located in the West (including the 1968 Prague Spring or the 1989 collapse of the Soviet Union and its satellite states). Likewise, ‘Jasmine’, the emblem of the Tunisian revolt has been advanced as evocative of the Ukrainian ‘Orange’ and other colour-coded European events. These allusions have justifications but they are seldom evoked comparatively to elucidate the originality and specificity of the MENA revolutions. In this latter regard, even the suggestion of an Arab Spring assumes that the majorities in the countries involved are Arab. This is not always the case in North Africa but Orientalism obliges!

The fact is that the ongoing revolutions in MENA are at once specific and universal in their own ways. Continue reading