Newspapers : 20th October

'Without me, EU would be in a real mess' . Gerard Baker and Charles Bremner, The Times (en)
Editorial comment: It’s Super Gordon!. The FT (en)
Europeans blame bankers for turmoil. Ralph Atkins, The FT (en)

Europeans signal clash with US over capitalism. Bruno Waterfield, The Telegraph (en)
" ..."The EU must take over the leadership of change because that is what it has long been calling for while the US was not favourable," said José Luis Rodriguez Zapatero, the Spanish Prime Minister. "There has to be regulation and limits to everything to do with incentives and rewards."

IMF chief denies misconduct after affair. John Lichfield, The Independent (en)
" ... Just before the appointment was confirmed, a senior French journalist warned that "DSK" might be a liability at the IMF because of his reputation as an "insistent" womaniser. The Brussels correspondent of the newspaper, Libération, Jean Quatremer, wrote: "The only real problem with Strauss-Kahn is his attitude to women. Too insistent ...he often borders on harassment. "The IMF is an international institution with Anglo-Saxon morals. One inappropriate gesture, one unfortunate comment, and there will be a media hue and cry." ..."

In the long run, Keynes is not the answer . The Telegraph (en)
" ... Deficits intended to take a country through a contraction become structural, because governments find it easier to initiate programmes than to terminate them. Moreover, there is usually a lag between recognising the downturn and pushing money into the system, with the result that state intervention can end up slowing a recovery that had already started rather than stimulating one ...
... In any case, it is too late for Labour to discover Keynesianism only now, when the hard times come. Had it been pursuing counter-cyclical policies, it would have made savings during the boom years. Instead, it allowed the deficit to balloon in those years: it is now the fourth-largest of any major economy. Labour used the years of plenty to squeeze the productive part of the economy in order to fund an unprecedented enlargement of the unproductive part. It swelled the state budget, not to fund New Deal-style infrastructure schemes, but to hire outreach workers and liaison officers and diversity advisers and quangocrats ... "

The cost to the economy could be high and long-lasting. Edmund Conway, The Telegraph (en)
" ... The market has him in this uncomfortable headlock for a simple reason: Britain has overborrowed in the past decade. Both its consumers and the Government have fuelled the boom of recent years by living beyond their means. The message is that we must cut back and endure a few lean years. Borrowing and spending more today will only serve to build up inflation in future years. This was the lesson which Keynesians learnt to their cost, when the high-spending years of plenty were followed by the misery of the 1970s ..."

Banking crisis gives added capital to Karl Marx’s writings. Roger Boyes, The Times (en)
" ... “An over-expansion of credit can enable the capitalist system to sell temporarily more goods than the sum of real incomes created in current production, plus past savings, could buy,” said Ernest Mandel, the Marxist scholar, quoting his guru, “but in the long run, debts must be paid”. Since these debts cannot be automatically paid through expanded output and income, capitalism is destined for a “Krach” - Marx’s word for a crash ...
... In the manifesto, published in 1848, he lists the ten essential steps to communism. Step five was: “Centralisation of credit in the hands of the state. . .” ..."

Russia's successful new It girls . Alastair Gee, The Times (en)
" ... The changing fortunes and tastes of ordinary Russians are also driving the interest in these women. While there’s still a bedrock of poverty, affluence is spreading. The average Russian wage has increased from $79 a month in 2000 to $529 in 2007, and in Moscow it’s around $1,000. Living standards in the 12 or so provincial Russian cities with a population over 1m, known as the millioniki, are rising. St Petersburg and Yekaterinburg are the most hyped; the latter, a city in the Ural mountains, already stocks Versace and Cartier. “Being classy and stylish is in demand. There’s a growing middle class here. Being this crazy blonde who dances all night, maybe it was hot five or 10 years ago. Now it’s the era of women who have something more to offer,” says Svetlana Kolchik, deputy editor of Russia’s Marie Claire ..."

A very expensive one night stand. Charles Bremenr, The Times (en)
" ... "Quel con" translates into polite English as 'what a fool'. That's the expression that many in France are applying to Dominique Strauss-Kahn, the talented and popular Socialist who has made his mark lately in Washington as boss of the International Monetary Fund ...
... When he heard of the matter a few weeks ago, Sarkozy was furious that DSK, one of the most admired French politicians and a likely Socialist candidate for the next presidency, had risked his chance to restart his career and help France ...
... "The affair may well be ridiculous compared with the destiny of the world but it touches the heart of the culture of the American government and the IMF," he said. "It is less about sexual puritanism.. than a deep horror of lies and conflict of interest. The absolute sin is not fornication, but denial, in which private life is mixed with public behaviour." ...
... At lunch today the (French) majority around my table argued that affairs at work are nobody's business if coercion is not involved. A woman who has une aventure with her boss should take responsibility and not seek to have him punished and pilloried, it was said. And before people pile in here, we all know the counter argument to this ... "

Sweden launches financial stability package. David Ibison, The FT (en)
" ... Sweden on Monday became the latest European country to take action to stabilise its financial system with the creation of a $205bn programme to boost liquidity in the system and take direct stakes in its banks if needed ...
... The Swedish government also agreed to guarantee deposits at foreign banks with clients in Sweden if their own governments cannot do so and widened the types of accounts covered.
Sweden has gone out of its way to quell fears the country’s largest banks could be dangerously exposed to an Iceland-like crisis in the Baltics ...
... All three nations admit their economies had overheated and face a period of economic slowdown. Latvia and Estonia are already in recession, while Lithuanian growth has slowed markedly, but all three bristle at the suggestion that they face an Iceland-style crisis.
They point out that their banking systems are controlled by Swedish banks, meaning the chances of an Iceland-style collapse are slim. All three nations also support their currencies with currency boards or pegs to the euro, providing a degree of exchange rate stability ..."

Wolfgang Münchau: Crisis needs more than one shot. Wolfgang Münchau
" ... What makes this credit crisis so toxic is that it involves numerous feedback loops with the real economy ... First, the housing market ... Second, credit cards. In a credit crunch, they are often the last source of freely available credit for many households ... Third, corporate bankruptcies and payment defaults ...Fourth, valuations of stocks and credit products ..."

Christopher Caldwell: French culture’s existential angst. Christopher Caldwell, The FT (en)
" ... Even the mightiest non-Anglophone culture – France’s – faces erosion in the face of globalisation. For the past quarter-century, France has proceeded on the confident assumption that its cultural role resembles that of the US. It should be a protector of diversity, sheltering smaller regional and immigrant cultures in its midst. But France is coming to see it is not so much a protector of minority cultures as a minority culture itself. Its culture is now just one item on the world’s menu of “diversity”, an exotic taste. That – alas – will be true for a long time, no matter how good its novels are ..."

Crisis Comes to Hungary in Loans of Francs and Euros. Nicholas Kulish, The NYT (en)
" ... Average Hungarians are also in trouble. They flocked in droves to banks here in the last several years for once-cheap loans in Swiss francs and euros to buy their cars and houses. Now, they find themselves exposed to rising debt payments ...

Russia Is Striving to Modernize Its Military. Tom Shanker, The NYT (en)
" ... The Russian military fell to third world standards from neglect and budget cuts in the turbulent years when Boris N. Yeltsin was president, they say. The new Kremlin leadership is working to create a force that can actually defend the nation’s interests ...
... “What the Russian leadership has discovered is proof of an old maxim: that a foreign policy without a credible military is no foreign policy,” said Dale R. Herspring, a scholar on Russian military affairs at Kansas State University ...
...Experts here say that audits ordered after Vladimir V. Putin took over from Mr. Yeltsin in 2000 found that 40 percent of the budget for some weapons programs and salaries was lost to theft and waste. The new defense minister, Anatoly E. Serdyukov, was a surprise choice, given that he had no military background but was an expert in finance and taxes. As he moved to clean house across the military-industrial complex, the reason for his selection became clear ..."