Thursday, November 10, 2011

Down Eros! Up Mars!

Any fan of Ben-Hur will recognize that quote right away. It was the slogan shared by Judah Ben-Hur and Messala when they were youths together in Judea. And upon seeing each other for the first time in years, they invoked it once again. Here is the full scene, courtesy of TCM (the quote is at about 1:40).

Eros, of course, is Greek god of love, while Mars is the Roman god of war. The introduction of the Greek name is understandble, since "Down Cupid, up Mars!"" doesn't have the same ring to it.

Setting aside the film critique, however, the slogan has new meaning today in several different ways, in reference to the financial crisis in Europe.

First, we have "Down Greece, up Italy!" Greece has become the sacrificial lamb--as I have already noted--since it is small enough, its debts are small enough for the EU to write off (both the nation and the debt). But Italy is a different animal altogether. If the EU has any hope of sustaining itself, it must find a way out that doesn't involve the destruction of the Italian economy.

Second--and more significantly--we have "Down Euro, up Dollar!" The symbolism available is just too juicy to ignore: the enlightened and benevolent nations of Europe versus the savage capitalists in America. Europe is peace and love, America is greed and war. And it had seemed only a short time ago that the future favored Europe and the Euro, at least from the standpoint of the anointed experts and pundits. Countless articles pointed to how the Euro might or would supplant the Dollar as the world's primary currency, how Beijing was preparing to dump dollars for euros, and the like.

But where are we, today? As Nicholas Hastings notes in the WSJ, it's dollar-time once again:
The only way is up. For the dollar, that is, as fears of a new global crisis spread through financial markets... 
Given the lack of good news elsewhere, there is every reason to expect the dollar index, which has already risen about 2% this week, to continue rising for now.
This is not about American Exceptionalism, however, but rather about how deeply ingrained the dollar has become as a means of exchange and maintaining stability in the world market. The foundation of this is the still widespread belief--justified or not--that America will never renege on its debts, that the dollar isn't going anywhere, anytime soon.

It's a painful lesson for Europe in general and Germany in particular, no doubt, and in a way it's a valadation of a reality Europe cannot escape: the post-WWII new world order. And that's just not likely to change without another world war.

Cheers, all.

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