As per April 27, 2010, the long and short term Issuer Credit Rating for the Hellenic Republic are rated BB+ and B, respectively, by Standard & Poor’s. A more accurate description than ‘Junk’ status is “considered highest speculative grade by market participants” for BB+ and “more vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitment” for B. While this might not sound like complete ‘Junk’ it doesn’t sound good, especially given that we are talking about sovereign debt rating. But then, one might wonder how valid S&P ratings are in first place.

I have never been to Greece for holidays and I never moved to Greece for work. Therefore, my knowledge about Greek government, its structure and functioning, the Greek economy and the people of the republic is to be considered zero. Further, I have not studied the recent events in depth. As such, I should perhaps not comment at all. That said, I would like to leave a thought. It is actually not specific to the Hellenic Republic.

I consider financial responsibility to be an imperative, for individuals, corporations, sovereigns, or supranational. An entity on the brink of default to me signals first and foremost failure to meet this responsibility. Actually, I consider default the last stage of not meeting financial responsibility. Not being able to zero debt monthly equals to not meeting the responsibility. Though, my view might be a bit too strict the apparently widespread nonchalance w.r.t. financial responsibility, starting at the level of individuals, is distressing.

You might argue that meeting financial responsibility requires different sacrifice by individuals living in different countries. True. A good example is a US student who struggles with tuition fees vs. a Finnish student with no such fees, a few hundred Euro each month pocket money issued by the government plus subsidized housing and lunch. Very different realities, indeed. Though, I still argue, it doesn’t actually matter. No matter how the conditions, it is your personal responsibility to meet financial liabilities, at least in an economy where this is theoretically possible.

From my perspective, going on strike because the seat belts might feel too tight under dire circumstances equals to not having understood that financial responsibility is an imperative. Whatever the reason for the circumstances, I think there is no other way out of debt than fasten the seat belts. Yes, possible misconduct at sovereign or corporation level eventually drips down to the individual level which might be unfair, awful, wrong, mad, inhumane, unethical, amoral, whatever. However one may feel, nothing changes at the basic reality, whether as individual or as individual citizen of a country.

Unless proven wrong, I don’t think bailing out corporations or governments is the right thing to do. It is not the responsibility of Germany or any other country to clean up the mess by pouring billions into a failed entity even if for decades countries have been housing funds of massive tax evasion, a practice that might not have been blocked but is decided and carried out by the tax evader who rests alone responsible for his or her actions. Pointing at Goldman Sachs for having the ultimate tricks to pull white rabbits out of black top hats might not be completely wrong but not complete either as the magician was most likely hired to perform the tricks.

Finally, I don’t think this is a Greek only problem but increasingly so an eurozone concern and from there, you bet, it becomes in a matter of minutes a global issue. (Just consider the DJIA today at the close: -213.04 (-1.90%).)

For the records. Though I had no exorbitant tuition fees, covering costs in Zurich required a yearly income of roughly $25k which implied one or more part-time jobs throughout the years leading to a delayed graduation by a few semesters to make sure I do not fall into debt. Currently, my wage is as low as 10 years ago and it was clear to me from day one that I had to scale back in everything to meet financial obligations. Of course, the real cost to society of my existence likely exceeds total balanced liabilities but one can only balance what is actually measured or measurable. As such, I consider a balance sheet to be positive when all liabilities are met, typically when there is no unpaid check left at the end of the month. With this I don’t want to claim I’m better. I was just lucky to have had an upbringing where financial responsibility and savings were almost sacred.

I vividly remember my bus trip from Las Vegas to San Diego late Summer 2005. I was reading a short biography of Van Gogh, just came from Virginia where I first saw digital photography prints on canvas when, suddenly, my mind started to combine the two. Imagine a canvas with Van Gogh’s rendering of a sunset over the Grand Canyon that blends with a real digital picture. For half the trip to San Diego and the next few days I was head over heels about the idea until I shared it with one of my best friends who’s answer was “Markus, blending paintings with photography is as old as photography.” Calling me back to earth came with a price tag but was necessary else I might have thrown overboard my, then, yet to complete computer science studies for painting academy. (Yes, it wouldn’t have been my worst idea ever.)

Such events actually happen to me on a regular basis, perhaps echoing the still ongoing enthusiasm for limone. However, whenever I share thoughts with people I consider light years ahead of me — which happen to be most of the folks I know — in both computer science, economics and, more recently, environmental science — not to mention the rest of human knowledge and life experiences — I need to overcome the fear of spreading nonsense and, consequently, appearing like an idiot. All this wouldn’t be much of an issue if “keeping quite because I might be wrong” wouldn’t happen to be also one of the most significant deterrents to personal growth and development.

An interesting note is that this fear is currently greatest in the exchange with folks in exactly that corner of the world west of the Atlantic where I learned to love and value sharing ideas no matter of the risk of spreading nonsense, where I started to maintain a blog with a sequence of posts in which I may be utterly wrong and uninteresting. As I recently said to someone across the Atlantic, I think not to share thoughts may well avoid the pain of exposing others to 80% of nonsense but it will equally not expose others to the 20% that may actually be interesting.

It is not critique that I’m afraid of but the silence that may follow sharing a thought, a silence that occasionally precedes wondering whether own thoughts may not be worth commenting. Yes, I’m talking about a lack of self-confidence here and if you never experience it, congratulations. For the rest of us, assuming I’m not alone, I think it is a repeated courageous act to share what in the small personal world may evoke the enthusiasm of having discovered “the next big thing” and in the greater world out there is likely, and possibly correctly, interpreted as the smallest of the steps — if at all it is one.

(*) This actually is a true event in my life and I think it marks one of my earliest memories and likely the first time my mother went almost insane because of me. Limone is the Italian translation for lemon.

I’m sure Mr. Schäuble is a reasonable man and I respect his opinion. Cross-border tax cheats as well as banks that resort to illegal practices are a problem that likely contributes to the financial destabilization of countries [1] and is probably pronounced in our ever more global world and in times of recession. However, I’m not sure if stating that “we will disestablish the bank secrecy in Europe” (Wolfgang Schäuble, interview with NZZ) is the most sensible approach.

What Mr. Schäuble does not appreciate is the core idea of the Swiss bank client confidentiality, namely, the freedom of financial privacy. Disestablishing the “bank secrecy” equals to giving up individual freedom and move power into the hands of a few, the likes of Mr. Schäuble or government at large, a dynamic that is inherently problematic. Homo sapiens with power has yet to evolve into knowing and wise.

Freedom never comes for free. With respect to bank client confidentiality, Swiss law sets decisional power into the hands of each individual. You, as holder of a Swiss bank account, are free and responsible to do the right thing, a privilege that comes with a price tag, i.e. to file a tax return faithfully knowing you could do differently. In the interview with NZZ, Mr. Schäuble argues that “he wants to assure the people of Germany that nobody can withdraw from tax liability.” I quote,

Er [Herr Schäuble] wolle vor allem den Menschen in Deutschland das Gefühl geben, dass sich niemand seiner Steuerpflicht entziehen könne. (NZZ)

Do we really trust an anonymous, transient, non-transparent, government made of people more than our neighbor or, for that matter, a random person, that it will not abuse of power? To me, Mr. Schäuble’s parental-like authority sounds more like the irate voice of a teacher who feels the urge to castigate students because (s)he has lost the attention of a few. My voice goes more along Pink Floyd’s lines “We don’t need no education//We don’t need no thought control,” Mr. Schäuble.

On the contrary, I wonder what speaks against introducing bank client confidentiality everywhere.

[1] Werner Vontobel und Viktor Parma. Schurkenstaat Schweiz?: Wie sich der größte Bankenstaat der Welt korrumpiert und andere Länder destabilisiert. C. Bertelsmann Verlag, Januar 2009, ISBN: 978-3-570-01083-9

In return for making nice on climate change, reaching out to Iran, shutting down the military prisons at Guantanamo, pledging not to torture, and sundry other things which the Bush administration wouldn’t do, the Obama administration will expect Europe to give things to the United States that it denied Mr. Bush. (NYT)

I certainly have no idea about politics, international relations, and most likely whatever else is required for this type of relationships. Further, I’m probably way too naive in my interpretations and reasoning. Nevertheless, I raise a question. Shouldn’t the US government be concerned about climate change, talk to Iran, close Guantanamo and other secret prisons, not torture simply because it is the right thing to do? I think, this is a sufficient justification to quietly act without conditions.

I conserve some hope that somewhere between the brains of Obama’s national security team and the words of the NYT article, thoughts have altered their semantics, like in Chinese whispers.

Addendum: Make sure to read the comments to the article. I have read the first 34 (oldest first) and I think there is just one I agree with. Interestingly, it is the first, and in this set the only, to be marked as Editor’s Selection.

We encourage you to invite friends to the discussion. Comments should be in English language. If you don’t feel comfortable writing in English, feel free to drop me an email (markus.stocker@gmail.com) with your name (or nickname), your email, and your comment. I’ll translate it and publish your original comment with the translation.