Monday, April 1, 2013

EUROZONE: The Finance Ministers’ Salon

The Finance Ministers’ Salon
by Paula Humfrey
April 1, 2013

I can't help it: the whirl of 'Eurozone finance minister' imagery in the articles that I've been reading since Cyprus' crash began in earnest last week is so evocative that there's no way I can resist bi-locating back to Paris, to the weeks just before the start of the French Revolution. Think 1789. The Bastille is still standing, but it won't be for much longer. We already know this.

I find myself channeling Julie Lespinasse, one of the more storied salonnières of the French Enlightenment. She knew how to bring a room full of intellectuals and their aristocratic patrons together and make it work like nobody's business. If the Enlightenment salon was the cultural hub on which Parisian arts and politics turned, she was at its epicenter. The regularly scheduled evening salon was the venue where big ideas got tossed around and serious deals went down; and the salonnière was the woman leading this largely masculine environment. Which is itself interesting.[1]

The Comte de St. Germain was said to have been a regular Parisian salon attendee (there are rumors of correspondence existing between himself and Lespinasse, in which he helped to arrange the terms of her difficult love affair with the Comte d'Alembert). We could speculate about what St. Germain might be thinking. Because this is my own private little exercise in bi-location, I imagine an evening lit with discussion of political and economic alchemy. Things are starting to look a little grim out there at street level with bread riots on the increase (as it happens, the rioting is led by women, too). Inspiration is required, and salon participants are hoping that St. Germain can provide it. He is said to be a master alchemist.

In the salon of my mind, they all come together in the moments before the revolution, these embodiments of eternal essence, to meet these Eurozone finance ministers standing around with drinks, hoping to be noticed. Jeroen Dijsselbloem, the Dutch Finance Minister (who also happens to be the lead Eurozone finance minister), has a voice that sails loudly over conversation in the room. He is very clear in insisting that the Cyprus deal will serve as a template for future bank restructurings in the Eurozone. [2]

Finland’s finance minister, Jutta Urpilainen—holding forth dramatically, gesturing with her beverage—is ready to leave the party if certain other guests don’t split first. She says Finland would consider leaving the Eurozone rather than paying the debts of other countries in the currency bloc: "Finland will not hang itself to the euro at any cost and we are prepared for all scenarios". [3] Bank Austria´s CEO Willibald Cernko ignores her. He is distractedly wandering about, chasing the hors d’oevres tray, worrying that savers’ protection is endangered. He finally defers to Austrian Central Bank governor Ewald Nowotny, who blows this problem off, countering that “it would take some time until the deposit protection will be implemented.” Why would that be, asks Cernko. After German banks offered “fierce resistance”, it seems that “the Commission decided to postpone the implementation of the centralized deposit protection.” [4]

Meanwhile, French finance minister Pierre Moscovici dances around the group, ardent in his conviction that the Eurozone "unanimously" agreed to the one-time levy on bank deposits in Cyprus below €100,000, a move which he says he pleaded for "right from the start." [5] Luxembourg Finance Minister Luc Frieden is getting pretty wound up too. He doesn’t think there’s a moment left to spare: “It is very difficult to find a solution, the situation is very serious, but I repeat that we need a solution tonight because it is about stability in the whole Eurozone.” [6]

Channeling Lespinasse in my bi-located salon, I’m quite interested in talking to Edward Scicluna, the Maltese Finance Minister. He and I are both products of the same school and related departments, so I figure we might be able to have a reasonable conversation. [7] But what would we talk about, in this glittery environment of insane mutual mistrust? I just don’t see things the same way he does—and me, I’m mindful that the Bastille isn’t going to be standing all that much longer. He’s oblivious. Similarly, I overhear Spanish Economy Minister Luis de Guindos ruefully recounting how, as far back as last October, he was snickered at when he insisted at LSE that Spain wouldn’t need to be bailed out: “You know that something is seriously wrong with your economy when you tell an audience of learned academics and students at an elite university that your country doesn’t need a bailout, and the room rings with the sound of laughter.”[8]

A Financial Times writer leans against the wall, deep in conversation with an Austrian Andreas Treichl. In the time-tested style of the financial journalist, the writer will later insist on using a capital ‘B’ in describing Treichel as “Austria’s best-known and most international Banker.” In conversation, Treichl’s clear focus is on the well-being of the banking community. “Local politicians are bitching that I’m bitching about the country,” Treichl says. “We have to do everything we can to attract financial advisors to Vienna” (here I visualize Trechl feeling Ewald Nowotny’s hot breath just over his shoulder). “But too much intellectuality is going into banking regulation,” Treichl says. The FT writer asks Treichl what his experience as a Chase Manhattan banker meant to him and how it trained him for his current position, “Chase was an outstanding school,” Treichl offers. “It taught me how to work in a team, how to respect hierarchies. It showed the difference that came from having some kind of modesty—something some senior managers in the bank lost later in my career.” Treichl expresses his amazement that “the community of Chase bankers is still around and has an emotional base.” [9]

Perhaps he’s channeling Angela Merkel, who “managed to force herself on Friday to return to the moderate words for which she has become famous” as she confessed that she will try to "be emotionally wise" even though she can’t contain her anger over Cyprus’ defiance of ECB pressure. [10] I visualize the Governor of the Central Bank of Finland, Erkki Liikanen, leaning in: he says he trusts that the Cyprus crisis will be resolved, and that it’s “crucial for any solution to be carried out swiftly.”. Erkki is clearly in a better mood than Angela is this evening. [11] St. Germain looks nervous.

• • •


Enlightenment salonnieres were called "'eternal oracles' for the way their salons combined esprit, elegance, good taste, urbanity, and politesse... Members of the aristocracy reinvested this social capital every time they spoke of tradition, recited their memories, or evoked their illustrious names; and they conjured up the power such traditions afforded them every time they received guests in their exquisite salons... [They] claimed a sort of social jurisdiction that lent them great ritual authority; they alone had direct access to the spirit of France's ancient sociability; they alone professed a profound knowledge of its customs and decrees. It was impossible to enter a world whose rules and practices were based on the wisdom of those venerated as guardians of tradition without already paying homage to the putative cultural superiority of the aristocracy, whose members were always apt to be its most confident, secure, and socially accomplished." Steven D. Kale, French Salons: High Society and Political Sociability from the Old Regime to the Revolution of 1848 (JHU Press, 2005), p. 130.

Dijsselbloem: Cyprus Deal is a Template

Finland could leave the eurozone rather than pay other nations' debts, says Jutta Urpilainen

Austrian Banks View Savers Protection to be Endangered

Cyprus bail-out - as it happened: March 19, 2013

European Council - TV Newsroom Shotlist

Edward Scicluna

Spain Finance Minister’s ‘No Bailout’ Remark Sparks Laughter

Life After Chase: Andreas Treichl

Iron Chancellor Returns: Merkel Can't Contain Anger over Cyprus

ECB's Erkki Liikanen trusts Cyprus crisis to be resolved: Report

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