While I was on the road last week, I see that Greek elections managed to accomplish two things:

1)  A requirement for yet more Greek elections; and

2)  A recognition among European banking officials that this time, Greece might actually be leaving the eurozone. 

Sooo ... what happens then? The Financial Times has a useful article that asks the appropriate big questions while providing some useful information.  Particularly interesting is the emerging belief that the eurozone now has erected the necessary firewalls to prevent contagion from Greece to the rest of the southern Med and Ireland: 

[W]ith a new, permanent €500bn rescue fund backed by the strength of an international treaty with multiple tools to buy sovereign bonds on the open market and inject capital into eurozone banks, some officials believe the contagion could be contained -- much as it was after Athens finally defaulted on private bondholders last month.

"Two years ago a Greek exit would have been catastrophic on the scale of Lehman Brothers,” says a senior EU official involved in discussions about Greece’s future. “Even a year ago, it would have been extremely risky in terms of contagion and chain reaction in the banking system. Two years on, we’re better prepared."

The new eurozone firewall -- now backed with additional resources for the IMF -- is not the only reason some officials are becoming increasingly sanguine about losing Greece. Spain and Italy, they say, have taken huge steps to put their economic houses in order, enabling them to bounce back quickly if credit markets suddenly dry up and their banks wobble.

Still, uncertainty over how Europe’s banks would be affected has continued to be the primary concern.

Paul Krugman is somewhat more pessimistic. Sketching out the possible endgame, he posits that Spanish and Italian banks would experience massive capital flight, triggering the key decision faced by Germany:

4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy -- basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:

4b. End of the euro.

And we’re talking about months, not years, for this to play out.

Krugman has been predicting Greece's exit from the euro for some time now, but in this case I do think he's correct about the choice posed by Germany -- as yet more signals accrue about Merkel's declining political strength. 

Now, actually, I suspect that Greece stays in the eurozone for longer than anyone suspects.  That said, based on my two empirical observations during the past two years -- namely, eurogoggles and the Merkel Algorithm.  Here is how I would game out the "Grexit" scenario: 

1.  Greece's departure is announced at the same time as an EU summit announces a boost to its new rescue fund and modest pro-growth German policies.  Markets initially react to this news favorably.

2.  Within 48 hours, negative news about the Spanish and Italian economies, combined with a second wave of stories revealing that the rescue fund isn't as big as anyone thought it was, rattles financial markets and triggers the behavior described by Krugman. 

3.  The ECB does nothing, calling on Merkel European political leaders to take "decisive action." 

4.  After a week or two of agnonizing non-action, Germany announces half-measures that end the immediate panic gut set up Spain for more stagnation and a new crisis in 2013. 

Am I missing anything? 

Your humble blogger has been banging on about how China's weaknesses are significant and its strengths have been badly overestimated.  So you would think I'd be happy to read this Edward Wong front-pager for the New York Times:

After the economies of Western nations imploded in late 2008, Chinese leaders began boasting of their nation’s supremacy. Talk spread, not only in China but also across the West, of the advantages of the so-called China model — a vaguely defined combination of authoritarian politics and state-driven capitalism — that was to be the guiding light for this century.

But now, with the recent political upheavals, and a growing number of influential voices demanding a resurrection of freer economic policies, it appears that the sense of triumphalism was, at best, premature, and perhaps seriously misguided. Chinese leaders are grappling with a range of uncertainties, from the once-a-decade leadership transition this year that has been marred by a seismic political scandal, to a slowdown of growth in an economy in which deeply entrenched state-owned enterprises and their political patrons have hobbled market forces and private entrepreneurship.

“Many economic problems that we face are actually political problems in disguise, such as the nature of the economy, the nature of the ownership system in the country and groups of vested interests,” said Zhang Ming, a political scientist at Renmin University in Beijing. “The problems are so serious that they have to be solved now and can no longer be put off.” 

Wong didn't even delve into the state of China's big banks, which Bloomberg's Jonathan Weil examines and concludes that they're facing a world of hurt, or China's civil-military conundrum, which I blogged about earlier in the week. 

So China is doomed, right?  The bubble is gonna pop big time, right? 

Well... maybe.  Whenever I get too bearish on Beijing, two things drag me back from the brink:  1) China's sheer size means it can muddle through and still increase its relative power; and 2) it's possible for China to experience a severe downturn and still recover quite nicely.  As I pointed out a few years ago:

[I look] at China and see the parallels with America's rise to global economic greatness during the late 19th and early 20th centuries. From an outsider's vantage point, America looked like a machine that could take immigrants and raw materials and spit out manufactured goods at will. By 1890, the U.S. economy was the largest and most productive in the world. As any student of American history knows, however, these were hardly tranquil times for the United States. Immigration begat ethnic tensions in urban areas. The shift from an agrarian to an industrial economy led to fierce and occasionally violent battles between laborers, farmers, and owners of capital. With an immature financial sector, recession and depressions racked the American economy for decades.

It is not contradictory for China to amass a larger share of wealth and power while still suffering from severe domestic vulnerabilities.

China-watchers tend to be divided between the Bubblers and the Extrapolators.  I'm still more sympathetic to the Bubblers, but if the "China is doomed" meme goes mainstream, I might have to defect. 

Lots o' stuff to chat about in the higher education universe, but let's keep it to three items in this blog post:

1)  My student-soon-to-be-Doctor-of-Philosophy Patrick Meier and Chris Albon blog "Advice to Future PhDs from 2 Unusual Graduating PhDs."  They make some interesting, provocative, and dare I say counterintuitive arguments. 

I disagree with a couple of their points.  First of all, I ain't buying "the blog is the new CV."  The blog is a calling card, and if you're lucky it's a branding device -- but it's not the same thing as a vita.  Second of all, I think they tend to inductively generalize from their own experiences and capabilities.  Not everyone should take on outside projects or teach at every opportunity, because these are excellent not-writing-your-dissertation activities.  Finally, I think their seven pieces of advice are out of sequence.  Their #3, #6 and #7 are the most important things.  Only once you've answered those questions should you even consider following the rest of their advice.  Still, read the whole thing. 

2)  I see that Naomi Schaefer Riley got fired from her Chronicle of Higher Education gig for writing a 500 word blog post bashing dissertations-in-progress in African-American studies without reading them.  Riley has written her response on the Wall Street Journal op-ed page.  James Joyner provides an excellent round-up of the affair.  My take is similar to Joyner in that, to be blunt, neither the Chronicle nor Riley come out of this looking very good.  The Chronicle looks like it kowtowed to the pressures of academic political correctness by either not reacting sooner or standing their ground.  Riley, on the other hand, has put herself in the indefensible position of calling for greater academic rigor while whinging that those standards shouldn't apply to her when she blogs for the Chronicle.  So, a pox on everyone's house for this affair. 

3)  The House of Representatives, in its infinite wisdom, has voted to cut funding for political science -- and only political science -- from the Social, Behavioral and Economic Sciences part of the National Science Foundation.  Representative Jeff Flake's justified cutting the funding using pretty much the same logic as Senator Tom Coburn did in 2009 when he lamely tried to do the same thing [At least he didn't claim that "social scientists brought our world to the brink of chaos"!!--ed.  Thank goodness for small favors.] . 

See John Sides, Erik Voeten, Michael Flynn , Seth Masket and Jay Ulfelder  for some useful responses.  Ulfelder's point is particularly trenchant:

There’s real irony here in a Republican-controlled House of Representatives voting to defund a political-science program at a time when the Department of Defense and “intelligence community” seem to be increasing spending on it. With things like the Minerva Initiative, ICEWS, IARPA’s Open Source Indicators programs, the parts of the government concerned with protecting national security seem to find growing value in social-science research and are spending accordingly. Meanwhile, the party that claims to be the stalwart defender of national security pulls in the opposite direction, like the opposing head on Dr. Doolittle’s Pushmi-pullyu. Nice work, fellas.

Indeed. 

Yesterday your humble blogger attended a Hoover Institution conference devoted to China's evolving military and its implicatons for U.S. foreign policy.  I can't say who said what, but I can say that atendees included several high-ranking military folk, multiple former policy principals, top China people from the academic and think tank communities, and at least one former presidntial candidate. 

Chatham House rules prevent me from revealing who said what, but what was interesting was the areas of consensus among most of the attendees.  In order: 

1)  China has bigger worries than the United States.  It is easy to look at China's military modernization and interpret it as a dagger placed against the throat of the U.S. and its allies.  It's worth remembering, however, that China currently spends more money on internal security than defense.  Their actual capabilities in the anti-access/anti-denial area are... let's say a bit exaggerated (though growing).  Sure, Beijing wants to expand its sphere of influence -- its a rising great power -- but it sees its greatest threats as internal rather than external. 

2)  If you want to worry about something, worry about China's civil-military relations.  The U.S. defense establishment is quite keen on ramped-up military-to-military connections.  It's the People's Liberation Army (PLA) that is not keen on this at all.  The civilian leadership has... let's say limited control over numerous aspects of the PLA.  Plus, the Chinese military has a corruption problem that makes the Bo Xilai scandal look like minor kerfuffle.  Relations with the United States are difficult because of clashing interests... but also clashing styles.  The PLA is quite transparent about intentions, but opaque about their capabilities.  The United States is the reverse -- transparent about capabilities but ambiguous about intentions.  This is not a recipe for comity. 

3)  The Chen case didn't really affect the Strategic and Economic Dialogue.  This is not to say that the S & ED solved anything, but it did appear to be a productive meeting -- which is, after all, the point of a dialogue. 

4)  You know what would be super?  The United States ratifying the U.N. Convention on the Law of the Sea (UNCLOS).  There was unanimous consent the United States could do far more damage to itself than China ever could.  Exhibit A on this front was the continued failure of the U.S. Senate to ratify UNCLOS.  This is, in theory, the treaty that can provide the framework for resolving disputes in the South China Sea and East China Sea.  It's a treaty backed by every president and secretary of state in the post-Cold War era.  It's a treaty that the U.S. Navy desperately wants to see ratified.  But because it hasn't happened yet, the U.S. always finds itself wrong-footed on these issues in negotiations.  Well, I'm sure that in the current political climate, the Senate will eventually get around to it.  Oh, wait...

I spent most of today on a transcontinental flight either sitting on the tarmac or cursing at the executives at United Airlines dumb enough to think 1) A Katherine Heigl movie will put everyone in a better mood; and 2) Running out of food -- for purchase, mind you -- halfway through the flight would be a swell idea.

I was, in other words, in a very cranky mood.  And then someone asked me to look at a Paul Saunders essay over at The National Interest.  Here's how it opens:

The Obama administration’s poor handling of its interaction with Chinese dissident Chen Guangcheng has prompted renewed denunciations of its “realist” foreign policy, already a focus for critics of its approach to Russia, the Middle East and other major international issues. Yet while criticism of the administration’s conduct is appropriate, calling it “realist” is misguided. In fact, the administration’s aimless and stumbling pragmatism is giving realism and realists a bad name.

Pragmatism is a central component of foreign-policy realism, but it is only so when firmly subordinated to a strategic vision founded on American interests and reflecting American values. While President Obama and senior administration officials cling rhetorically to a strategic vision based on a pragmatic version of liberal internationalism, attempting to build a rule-based liberal international order, the sum total of U.S. policy appears instead to define a considerably narrower goal: avoiding international problems, particularly when they have domestic political consequences.

Oh thank you thank you thank you -- there's nothing that puts me in a better mood than seeing tripe like this and ripping it to shreds.

Look, there's been a lot of debate nowadays about what a realist foreign policy would look like and what that really means, but I am sure of a few very important things about realists: 

1) They don't give a flying fig about promoting "American values" overseas;

2) They don't sweat the small stuff.  

The first point is Realism 101, and doesn't need to be elaborated upon.  It's the second thing that matters more here.  Seriously, all realists pretty much care about is the relationships among the great powers.  And if you step back, the signal theme of the Obama administration's foreign policy guidance and national security guidance has been to disengage from costly ground campaigns in Iraq and Afghanistan and refocus energy on the most dynamic region in the global economy and the only one with a possible rising hegemon.  That seems to fit this description of a realist foreign policy pretty well.  That's exactly what the Obama administration has done with its "strategic pivot" or "rebalancing" or whatever they're calling it this week. 

If you focus on the big picture, this administration is really realist.  If you focus on small tactical errors like the Chen case and inductively generalize from that, well, you've revealed yourself to be someone without a firm grasp of realpolitik principles in the first place. 

Congratulations to Mr. Saunders for being this week's Vizzini Award winner -- I don't think "realism" means what he thinks it means. 

There's a lot that's happened over the past week with respect to Chen Guangcheng's status, and your humble blogger could write a 5,000 word essay on it if someone wanted to pay me gobs and gobs of cash because I'm remodeling my home I had the time.  I don't however, so I have one big thought on the matter.

Before I begin, given the rapid real-time developments in the Chen case, I'm operating on the assumption that China's last Foreign Ministry statement suggests the denouement:  Chen and his family will be able to go to the United States to study, and he then may or may not be allowed back into the country.   

My Big Thought:  contrary to just about every headline I've seen in the past three days, I think Chen's case demonstrates the surprising resilience of the Sino-American relationship.  Recall what I wrote earlier in the week: 

The fact that both Beijing and Washington have kept their mouths shut on Chen is a pretty surprising but positive sign about the overall stability/resilience of Sino-American relations. Bear in mind that according to the latest reports, much of the leadership in Beijing takesan increasingly conspiratorial view of the United States. As for the mood in Washington, well, let's just call it unfriendly towards China. Both sides are in the middle of big leadership decisions, making the incentive to cater to nationalist domestic interests even stronger than normal. With the rest of the Pacific Rim trying to latch themselves onto the U.S. security umbrella, this could have been the perfect match to set off a G-2 powderkeg.

Despite all of these incentives for escalating the dispute, however, it hasn't happened. Kurt Campbell was dispatched to Beijing, talks are ongoing, and neither side appears to be interested in ramping up domestic audience costs. That escalation hasn't happened despite massive political incentives on both sides to let it happen suggests that, contrary to press fears about Chen blowing up the bilateral relationship, there are powerful pressures in Washington and Beijing to find a solution that saves as much face as humanly possible for both sides.

Now, in the three days since I wrote that post, Chen has been released, calling every Chinese dissident, U.S. congressman and international reporter with a phone/recording device/Twitter account and is loudly and frantically describing the intimidation he and his family have experienced.  The man has asked to be flown out on Hillary Clinton's plane as she departs from the Strategic and Economic Dialogue.  In other words, everything that has transpired in the past three days has given a black eye to both the Chinese and American governments' handling of this case. 

Despite the near-overwhelming incentive to ramp up bilateral tensions, however, it really hasn't happened.  China's Foreign Mnistry has issued a couple of garden-variety press statements demanding a U.S. apology that won't be forthcoming.  There have been no leaks or anonymous criticisms of the United States otherwise, despite the fact that this entire case is a burr in China's saddle at veery awkward moment.  None of the U.S. State Department statements or press leaks have been terribly critical of the Chinese side either.  Indeed, as the Washington Post observes:

Neither Clinton nor her Chinese counterparts mentioned Chen in their formal remarks at the end of their two-day meeting, saying instead that U.S.-Sino differences on human rights issues must not disrupt the broader relationship between the two world powers.

State Councilor Dai Bingguo, China’s top foreign policy expert, said his country and the United States still have “fundamental differences” on human rights issues. “Human rights should not be a disturbance in state-to-state relations,” Dai said. “It should not be used to interfere in another country’s internal affairs.”

Clinton promised to “continue engaging with the Chinese government at the highest levels” on the “human rights and aspirations” of all people.

This is pretty extraordinary.  Even more extraordinary is the possiblity that despite Chen's outspokenness, he actually could be able to leave the country with his family. 

Now, as the Post shrewdly observes, "China’s Foreign Ministry said the self-taught lawyer would have to apply 'through normal channels ... like any other Chinese citizen' — which would mean returning home to the village where he has been confined and beaten, in order to obtain a passport."  Still, if the rhetoric between the U.S. and China on this boils down to Clinton asking the Chinese government to "expeditiously process" Chen's visa application, then this is a really big dog that didn't bark.   

For other big thoughts on the matter, read these posts by Sam Crane, as well as this assessment by Walter Russell Mead.

What do you think?

Your humble blogger has spent the last 48 hours trying to follow up on his last Chen Guangcheng post.  Unfortunately, a recurrent cycle emerged that has caused some serious delays: 

STEP 1:  Development in Chen case

STEP 2:  Me cogitating on development

STEP 3:  Brilliant insights that will transform the Sino-American relationship emerge from blog brain. 

STEP 4:  Start writing blog post

STEP 5:  Check Twitter feed five minutes later

STEP 6:  New development in Chen case that renders prior insights totally overtaken by events. 

STEP 7:  Trash draft of blog post... go back to Step 1.

Seriously, I think I get web 2.0 stuff pretty well, and I have never dealt with an ongoing policy issue that mutated faster than I could blog about it. 

I think the latest developments have stabilized matters a bit, so I promise a follow-up blog post in the next hour.  We apologize for the inconvenience. 

Your humble blogger has been silent on the ongoing Chen Guangcheng case in China.  To be fair, however, I was merely copying what the Chinese and U.S. governments were doing:  furiously not commenting on the case as the next Strategic and Economic Dialogue between Washington and Beijing commences. 

Since other people are starting to say really stupid things comment on it, however, I'm required by the International Brotherhood of Foreign Policy Pundits to weigh on the matter.  So, a few random thoughts:

1)  My expectation on how this will play out:  unless Wen Jiabao has a lot more authority than I think, this ends in a year or so when Chen leaves China.  Chen wants to stay in China.  Given that he was under some kind of extralegal confinement rather than house arrest, one could envision Wen using this as a way of expanding on the "crush Bo" campaign currently emanating from Beijing.  In other words, Wen could use this to clamp down on abuses by out-of-control regional governors.  But, to be honest, I doubt Wen has that much authority -- in which case this ends with Chen out of China in a way that embarrasses Beijing the least. 

2)  The fact that both Beijing and Washington have kept their mouths shut on Chen is a pretty surprising but positive sign about the overall stability/resilience of Sino-American relations.  Bear in mind that according to the latest reports, much of the leadership in Beijing takes an increasingly conspiratorial view of the United States.  As for the mood in Washington, well, let's just call it unfriendly towards China.  Both sides are in the middle of big leadership decisions, making the incentive to cater to nationalist domestic interests even stronger than normal.  With the rest of the Pacific Rim trying to latch themselves onto the U.S. security umbrella, this could have been the perfect match to set off a G-2 powderkeg. 

Despite all of these incentives for escalating the dispute, however, it hasn't happened.  Kurt Campbell was dispatched to Beijing, talks are ongoing, and neither side appears to be interested in ramping up domestic audience costs.  That escalation hasn't happened despite massive political incentives on both sides to let it happen suggests that, contrary to press fears about Chen blowing up the bilateral relationship, there are powerful pressures in Washington and Beijing to find a solution that saves as much face as humanly possible for both sides. 

3)  Mitt Romney has been vocal about Chen's case, concluding:  "Any serious U.S. policy toward China must confront the facts of the Chinese government’s denial of political liberties, its one-child policy, and other violations of human rights." 

To which I say... good for him!!  It's the job of the opposition party in the United States to bring up questions about China's human rights problem.  It's the job of the opposition party because the moment the opposition takes power, all those structural pressures I alluded to previously kick in, and the human rights rhetoric from the campaign trail inevitably fades away.  So Republicans who expect a President Romney to be all over the human rights issue will be sorely disappointed.  That said, even someone like myself who is more realpolitik-friendly nevertheless would be sorely disappointed if human rights faded away completely (it's also worth noting that after the Obama administration's first year in office, they seemed to find their rhythm with respect to talking about human rights towards China). 

Am I missing anything?