Draco, the seventh-century BC Athenian legislator from whom we get the word “draconian” replaced the system of blood feud and oral law with a harsh, but transparent, written legal code. One of the provisions of Draco’s code was that any debtor whose status was lower than that of his creditor was forced into slavery. It’s hard not to think of Draco when contemplating the current to and fro between the Greek government and the “troika” of the European Central Bank, the European Commission, and the International Monetary Fund, representing Greece’s creditors, trying to avert a sovereign default and keep Greece from leaving, or being ejected from, the European monetary union. These discussions are more properly considered a dictation of terms rather than negotiations. [click to continue…]



Attentive and loyal readers of this blog will recall that I wrote, almost exactly a year ago, about China’s proposal to replace the dollar as the world’s reserve currency with the special drawing right (SDR), a unit of account used by the IMF, which is based on a weighted basket of currencies that includes the dollar, the euro, the yen, and the pound. I wrote then that this proposal had virtually no chance of being adopted, one reason being that the Europeans would be loath to abandon their new currency, which already accounted for a growing share of world reserves, in favor of a faceless accounting unit. [click to continue…]