Politicking

Last week was significant in establishing that politicking had failed because, grudgingly, politicians accepted that technocrats could prove better at cleaning the mess politicians had created, sadly, in democracies all over the world. But that's just the beginning; politicians want to use technocrats as a short-term remedy and no more.
According to the European Central Bank (ECB) policymaker Ewald Nowotny, the first step in overcoming the current crisis is the installation of highly 'trusted' and 'able' regimes that can 'credibly' bring about the structural changes that are needed. Impliedly, political governments have failed to deliver in this key area.
ECB policymaker Juergen Stark, a German, strongly believes that it is up to politicians and not central bankers to resolve the current crisis. "I doubt very much that adding two or three zeros to the bailout volume can solve the structural and political problems". A dejected Stark would be leaving the ECB in early 2012.
Ask any Pakistani and he will swear that political governments are incapable of delivering justice, corruption-free administration, fair-market regulation and law and order. They now believe that a regime of technocrats - the lot that know how to bring about structural changes and manage the economy - alone can deliver.
That's precisely what is being resisted by the regimes in power. Like Italy's Silvio Berlusconi, our prime minister (ably assisted by the country's president) too can't see the collapse of the economy under his 'great' leadership because, as in the case of Berlusconi, President Obama hasn't yet asked for the exit of his regime. The political mindset of the 'democrats' was displayed by Berlusconi, who insisted till the very end on early elections which could have caused a three-month vacuum; he wasn't bothered about doing what was required urgently to ensure that the state didn't collapse and employees kept receiving at least their salaries.
However, Europe has begun realising the need to hand over power to the technocrats. In Athens, former ECB policymaker Lucas Papademos was sworn in as the prime minister and in Italy, the former EU Commissioner and technocrat Mario Monti, has taken over as the prime minister.
US Treasury Secretary Timothy Geithner may not be doing justice to his own responsibilities in the US but he is right in saying that "the crisis in Europe remains the central challenge to global growth. It is crucial that Europe moves quickly to put in place a strong plan to restore financial stability."
Although the EU and US financial markets responded positively to these changes, experienced market analysts don't believe that these changes will revive European economies because austerity measures will hit the poor more than the rich, eg, VAT went up from 16 to 21 percent in Italy, but the rich are yet to be touched.
Some investors doubt that the recovery would last because even a technocrat government might struggle for progress on fiscal reforms. "We can have maybe two or three days of calm but nothing has really changed underneath" - a reference to the fact that the sitting parliaments can still overrule the technocrats.
Not surprisingly, regarding the 440 billion-euro European Financial Stability Facility, Russian Premier Vladimir Putin said the "EFSF, alone or in co-operation with the IMF, doesn't have those resources. I believe that the resources needed to overcome the crisis are about 1.5 trillion euros".
Pressure is mounting on the European Central Bank to act more forcefully by becoming a full lender of last resort like the Federal Reserve Bank and the Bank of England. Those advancing this argument, hopefully, know how much money the ECB has to dish out; for filling up a $1 trillion gap it can only print more euros.
Vladimir Putin doubts that Europe has the "firepower" to avoid the "catastrophe" but hasn't suggested a way out, though it is there if seen with humble eyes and for the common good of all, perhaps because, as with the US, it doesn't suit the Russian strategy in Europe.
That option - Chinese help - was spurned by the politicians because, like the US and EU, China wanted to be ranked as a 'market economy' in the WTO, yuan's inclusion in the list of SDR currencies, and lifting of the ban on China's arms exports to EU; the EU refusal thereto reflects a belief in supremacy even in total adversity.
The British Prime Minister believes that "there is real turbulence in the markets, real question marks over whether countries can deal with their debts and a big question mark over the future" without admitting that the European attitude to Chinese demands makes these questions seem twice as difficult to answer.
ECB has rebuffed arm-twisting from world leaders to intervene massively in bond markets to contain the financial contagion. European markets are unlikely to buy more bonds. According to EFSF chief Klaus Regling "the political turmoil that we saw in the last 10 days probably reduces the potential for leverage."
Europe's rejection of China's demand for including the yuan in the SDR defies reality because yuan is backed by the world's largest exchange reserves. In fact, it amounted to saying that Europe even now is too strong, or is interested only in charity, and would also prevent a possible $100 billion Chinese infusion of cash in the EU.
To its own disadvantage, the EU is overlooking the fact that Chinese leadership is as accountable to its people as the European leaders to their parliamentarians; unless they show results in terms of significant successes (earned wholly by the sweat and blood of the Chinese people), they too won't be spared by their people.
It is odd that Europe resembles Pakistan in the context of financial crisis. Like the Italy and Greece, Pakistan too doesn't have willing lenders because they all are considered bad credit risks, though Pakistan is considered a worse risk because of terrorism. The other commonality is that the mess they are in is the gift of democracy.
The harsh reality is that politicking has wrecked the whole world. Politicians' grudging surrender, as yet only in Greece and Italy, proves beyond doubt that democracy, politics, and the rest of it is a recipe for disaster, more so in countries like Pakistan. Mismanagement and corruption can no longer be covered up by sloganeering.
The "occupy movement" shaking virtually every country, is the proof of the failure of the state everywhere. Do politicians know the implications of globalisation of trade, privatisation and de-regulation - policies stretched beyond their logical limits? No the politicians don't; they are simply goaded by greed-ridden corporate sectors.