Would Germany be better off now if it were on the pound rather than the euro?

I don't really feel very qualified to talk about European monetary and macroeconomics, which is why for the most part I've avoided writing about Greece and the Eurozone's crisis, but – and maybe it's just the benzos – I feel like I have something slightly relevant to say.

First of all, Tyler Cowen has a great round-up of recent events and indicators (although I hate his first point) here. Additionally, I hear that even Paul Krugman – someone who, sometime during his transition from serious economist to columnist, turned into a man who never met a bailout he didn't like – thinks Greece is going to be dropped from the euro. (Although later in the article he seems overjoyed at the fact that a Greece back on the drachma would be able to destroy the currency to its heart's content.)

As far as I can gather, the consensus among economists is that debt restructuring (in Krugman's words, "a polite term for partial default") is certain, a more serious default is likely, and Greece leaving the eurozone – an that was seen as very fringe a few weeks ago – is now a distinct possibility. In the end, I think that the quicker Greece leaves the euro, the better. Many in Europe worry about the resultant instability won't be worth the risk – after all, even Greek dogs like to riot. But in the end, Greeks have become too accustomed to capitalism and liberal democracy, and once its leftist protestors no longer have the euro and lack of monetary and fiscal sovereignty to blame, the rioting will stop and the hard reforms will begin. Greek voters are too sophisticated to give into geography and regress to the level of its Balkan neighbors, who despite Greece's problems, they still make it look like Switzerland in comparison.

The big European monetary debate has always been whether the UK and Scandinavia should give up their pounds and crowns in favor of the euro. But it now looks like it would have been better for Germany, the Benelux, and Scandinavia to give up their marks, francs, guilders, and crowns in favor of the pound sterling.

Jews and taxes in Berlin, ca. 1900

Arnold Kling writes about a book called Capitalism and the Jews, says some interesting things about a link between Keynes' economic theories and his anti-Semitism, but here's an unrelated fact that I liked:

By [1900], Jews, who constituted about 4 percent of the inhabitants of Berlin, paid 30 percent of the municipal taxes.

Eastern European inferiority complex

The NYT's website is currently featuring an interesting article about an ethnic German politician in Romania, and it touches on something that I've always found interesting about Eastern Europeans: they have a tremendous inferiority complex vis-à-vis the West. The article is about Klaus Johannis, mayor of the town of Sibiu (Hermannstadt auf Deutsch), who very well might become the country's prime minister.

Mr. Johannis also benefits from the positive stereotypes Romanians associate with the German population, known as Transylvanian Saxons, who have called the region home since the 12th century.

The Saxons, known in German as Siebenbürger Sachsen, are considered hard-working, precise and uncompromising, an attractive mixture in a country tired of mismanagement and corruption, and one of the hardest hit in Europe by the economic crisis. It also does not hurt that the country experienced some of its best moments under German kings more than a century ago, even though the monarchs were unrelated to the local German population.

“I think it’s a real advantage that he’s German,” said Bianca Florea, 18, a student, as she passed through the main town square in Sibiu on Friday. “Well, not exactly German, but Saxon.” Asked why, Ms. Florea responded, “We Romanians are a bit lazy, that’s my opinion.”

Romania's once large German minority mostly moved back to the Fatherland (sold by Ceaușescu to West Germany for a couple thousand bucks each), so Johannis is a bit of a novelty. Despite its power, the Eastern European inferiority complex apparently doesn't override Eastern European pessimism:

But like most of the dozen residents interviewed here, she was skeptical about Mr. Johannis’s prospective move to Bucharest, despite praising his work as mayor.

“He could go there and do a good job for a while or he could be a puppet for others,” Ms. Florea said. Mr. Johannis belongs to none of the major parties, but instead to the small German Democratic Forum, which represents the 60,000 ethnic Germans remaining in the country.

The chicken tariff spat that killed Detroit

The NYT has an editorial online about the unintended consequences of government interference in the market. The editorial traces the roots of American auto makers' disproportionate share of the light truck market (a declining one in the face of $100+ barrels of oil) to a retaliatory trade war started in the 1960s. Germany, in an attempt to protect its own domestic poultry market, convinced the European Common Market (the second incarnation of what has become the EU) to triple the tariff on frozen chicken imported from the United States. The US retaliated, imposing a 25% tariff on light truck imports, a move directly targeted at Germany's Volkswagen automaker. However, the tariff was also imposed on Japanese imports, giving Detroit an advantage when it came to competing with the Japanese over the American auto market. The chicken tariffs ended long ago, but American carmakers got too cozy with the benefits from the light truck tariff, and now it's coming back to bite them in the ass with that market in free-fall and consumers going for smaller cars. A nice example of the unintended consequences of government action.

Once an KGB agent, always a KGB agent

Departing Italian Prime Minister Romano Prodi has been offered a job shilling for Russia's energy interests in Europe, but has turned it down. This would seem to be a good thing on the face of it: outgoing German Chancellor Gerhard Schröder took the bait just weeks after pushing through legislation favorable to the company, and became the chairman of the Gazprom division that was to build the very pipeline that he had just pushed through. He has been a reliable shill for the Russians ever since, even defending the Russians during the row over the Bronze Soldier statue in Tallinn.

But, Romano Prodi is unfortunately not so innocent. In 1978, amidst what the Italians called the "Years of Lead," during which many terrorist attacks were carried out by far-left and far-right organizations, the prominent Christian Democrat Aldo Moro was assassinated by the Red Brigade before he could negotiate a political truce between the Communists and the Christian Democrats. But before he was killed, while he was being held hostage, Romano Prodi at the time claimed to have taken part in a séance on a whim with a few Italian intellectuals, during which time the place where Moro was being held hostage appeared to him. The police searched the village named Gradoli, but didn't find anything. However, after Moro's death, it turned out that he was being held on via Gradoli, outside of Rome – Prodi either received the information correctly in a séance, or was tipped off by a source in the leftist terrorist organization, the Red Brigade.

The story that Prodi received the correct name in a séance is pretty absurd, but it makes sense if you consider the allegations against him by the Mitrokhin Archives (a series of documents about the KGB's external operations obtained by an FSB double agent). Romano Prodi was accused of being the "KGB's man in Italy." There was an investigation, but nothing ever came of it. The controversy was rekindled in 2006 when it was revealed that assassinated former FSB agent Alexander Litvinenko was told by assassinated former FSB deputy director Anatoly Trofimov that Romano Prodi was "one of ours" – that is, an FSB agent. Funny how they both happen to have been assassinated.