I spend more time bashing bad press work than praising good. I don't know if that's because there isn't very much good stuff, or because I'm mean-spirited, but today I can happily praise this article on Greece and the IMF by Sewell Chan and Liz Alderman of the NY Times. Let's parse it a bit:
In the last two days, Greece’s finance minister has threatened to turn to the International Monetary Fund for a bailout if Chancellor Angela Merkel of Germany and other European politicians resist pledging aid to help Greece cope with its newfound frugality. Asking the fund for help could create a new round of financial and political turmoil by sending the message that Europe cannot resolve its own problems, analysts said.
“It would be damaging for the euro zone going forward because it would sow seeds of doubt about whether this is really a currency union, or just a group of countries that share a currency,” said Simon Tilford, the chief economist of the Center for European Reform in London.
Good, quick summary of the issue, similar to the take I've been taking recently (see here and here for examples, and Dr. Oatley's take here). It frames the issue appropriately: this is not (just) about what Greece has to do about its debt; it's a political issue about who pays for maintaining a non-optimal currency zone. Next we get details about what that political fight is about, and what the stakes are:
Policy makers and leaders of many countries that use the euro see Greece’s troubles as a problem within the family. They want a homegrown political solution to show that Europe can fix internal economic crises without outside help.
Turning to the I.M.F., which often helps struggling emerging-market nations, is seen as a stigma that is to be avoided, a concern underscored by the European Central Bank’s president, Jean-Claude Trichet, on Wednesday. “I do not trust that it would be appropriate to have the introduction of the I.M.F. as a supplier of help,” he said.
No member of the euro zone has had to borrow from the I.M.F. since the official use of the common currency began in 1999, and no major industrialized country in Europe has done so since Britain in 1976.
But from Greece’s perspective, the I.M.F. would force the government to swallow nearly the same bitter medicine that Germany, France and others have required — but at least Athens would receive guaranteed financial aid from the I.M.F. in return.
In addition, it is not clear that Germany and other European governments seeking to contain the crisis have the resources or expertise to monitor Greece and other profligate euro members for the many years that it will take for the troubles to blow over.
Again, very well said. But even better... the journalists actually talked to some people who know some things about the political economy of the IMF, and named them by name! None of this "some economists say" or "many economists believe" nonsense: get good sources, tell us who they are, and let them say what they mean. This article enlists Randall Stone, Kenneth Rogoff, James Vreeland, Michael Mussa, Mark Copelovitch, and Simon Johnson (among others). That's a strong roster! I don't want to quote all of what they all said for space reasons, but the quotes are used well and impart useful information to readers who may not have a strong knowledge background in these topics. I do want to highlight one part from Copelovitch, tho:
The biggest challenge is in Germany, which has historically tended to enforce fiscal and economic rectitude on its neighbors. Many German taxpayers are vehemently opposed to paying for the profligacy of their free-spending neighbors in Greece and other southern European countries that let their deficits soar sky-high instead of taming them when times were good.
At the same time, German banks also underwrite much of the Continent’s debt and exert considerable influence in domestic politics, according to Mark S. Copelovitch, a political scientist at the University of Wisconsin, Madison. Germany “doesn’t want its banking sector to go under because Greece has defaulted,” he said.
A-ha! Here we have more politics: German citizens don't want to pay for Greece's profligacy, but German leaders don't want to sacrifice the German banking sector (which has underwritten or purchased a lot of Greek debt) to prove a point.
The article closes by talking about the personal/political rivalry between Sarkozy and IMF head Strauss-Kahn as another complicating dimension. It's a very good piece, and I commend Chan and Alderman on their work. They convey a lot of meaningful information in 1000 words, and make use of very good sources. Please read the whole thing.