THEY SHALL RUN AND BE WEARY?

How far can you run, John?

From William James (1842-1910) via John Kallio (a little younger): "You have enormous untapped power that you will probably never tap because most people never run far enough on their first wind to ever find they have a second."

GUESTS

Rotarians:  Alicia and Anna, the golf nuts from Lafayette Noon

 Donn Black, St. Helena, former Lafayette Mayor

It's about time, Mary!

Other:         Mary Mark, 5th time, will drop   

                   off this list next week. 

Anne-Liisa, soon to be Larks       Tina Bettencourt, on her annual visit to check up on Joe

                   Kara Boatman, speaker

IT'S NICE TO BE RECOGNIZED

Well, maybe not always so nice. Gary Fulcher was hit with double trouble: joined

Pony up, Gary

the club on 5/1/09 and has a birthday on 5/17 every year. But he smiled bravely and volunteered $50 for the cause.

Walter Nelson was recognized for Kathe's 5/28 birthday, which was spent ministering to a grandchild with the flu, then having a wild yogurt celebration.

Somewhat similarly, Brad Davis led a celebration of Carol's birthday on 5/27 with a grandkid, featuring a hot game of T-ball and chili dogs all around. This inspired him not only to kick $100 into the Endowment, but to refer to the head Endowerer as CAPTAIN Paul Bettelheim, in observance of this Veterans' Day season.

Donn Black, now a member of the St. Helena club, wandered back into Lafayette armed with a banner. After a quick and desperate search, one of ours was produced for him to take back to the wine country.

THINGS TO HAPPEN

Sign 'em up John

John Fazel grabbed the floor and waxed eloquent about two events near and dear to his heart: the 13th annual 3/4 Century Club luncheon on Wednesday 6/20/12, and the July 4th Run and Pancake Breakfast on, you guessed it, 7/4/12. He'd like some volunteers at both or either. John promises the 7/4 event will be over by 10:30 am.

Prez-Elect Mark Roberts, feeling the pressure, encouraged -- nay, exhorted -- everyone to join a committee. This is vital for all avenues of service and, frankly, for fundraising. Rich Shearer observed that we'll probably be hearing that same announcement around February 2013.

Who are you really, Gillett?

Then there was this strong-arm group of Nooners pushing the golf tournament at Rossmoor on Monday, 6/11/12. Anna Stevenson promised she'll do the adult beverages. Then there was a ruckus about Gillett Johnson furnishing peach wine and having a badge on the hip, and being called "Mark" by Anna, that was a little hard to follow from across the room.          

EVERYONE STAYED AFTER SCHOOL

What a great sense of humor!

Professor of Economics (or Doctor if you prefer) Kara Boatman of St. Mary's College had everyone enthralled from the get-go. Her line is international trade & finance and economic development. When introducing her, Pat Flaharty (who hangs around St. Mary's quite a bit) quipped that she bought Enron at its peak and predicted 14 of our last 4 recessions. But he did show enough respect to admit that she's a full professor and was formerly the managing director of KPMG Consulting in S.F.

Kara (who was congenial enough to be called by her first name) addressed "What's Next For The Euro-Zone." The E-Z is not to be confused with the European Union, which was formed in the hope of eliminating trade barriers, creating a free trade zone, and giving Europe a stronger voice in international affairs. Unfortunately they assumed this would allow cross-border labor mobility among countries with different languages and cultures.

The Euro-Zone was created in 2002 giving a common currency throughout much of Europe. From the beginning it was a case of Heads We Win, Tails You Lose, particularly for Germany which had huge trade surpluses with Greece, Spain and Italy. German banks recycled deposits from German companies to public and private borrowers in those countries, chasing higher returns. The borrowing countries used the proceeds to finance construction projects and fuel their real estate boom. The "United States of Europe" was looking good.  

But there were some fatal flaws in this idyllic scene. There being no EU Treasury, the Euro-Zone had monetary but no fiscal union. Members were expected to maintain low inflation and balanced budgets, but there was no mechanism forcing them to do so. In the US, the federal government effects massive transfers of tax revenues to poorer states, but this doesn't happen in the EU. Accordingly, monetary policy can't be used as a stabilization tool in the Euro-Zone. They can't use money supply to reduce interest rates and depreciate currency. They can't use currency depreciation to reduce debt load.

How do we get into one of her classes?

Reality hit in 2008 with the US financial meltdown. With the economic downturn, countries were unable to repay debt and there was no central Treasury to bail them out by issuing risk-free assets and transferring proceeds to struggling countries. Germany demanded austerity in exchange for restructuring debt. Governments started being tossed out of power.

Greece is a candidate for pulling out of the Euro. Depositors are pulling Euros out of Greek banks, and the banks are writing off bad loans. If Germany doesn't change its position, the only way for Greece to stabilize its economy is to bow out, which would be a signal to larger troubled countries that the unthinkable can happen.

Spain and Portugal could follow Greece, as investors may pull out of their government bonds and interest rates will rise as governments cannot pay off their debts. These conditions could trigger another recession in the US where the dollar would appreciate, causing a deterioration in the trade balance and a credit crunch spreading globally.

What to do?

One alternative:   Limit Euro-Zone to core countries. This however will introduce instability, cause severe adjustment costs to countries that leave the Euro, and political fallout in countries where the citizenry pay extremely high taxes and lack faith in domestic currency.

Another alternative: Strengthen institutional support by establishing an EU Treasury. Bonds could be issued as a risk-free asset, and revenues transferred much like the US Treasury, restoring fiscal stabilization policy.

Kara, though, is pretty sure negotiations are going on behind closed doors to keep Greece in the Euro-Zone, although Greece should never have been admitted until it got its own tax house in order.

When asked about the US's performance, Kara opined that our system is well designed, but the execution is horrible. Referring to a certain northern politician known for bridges to nowhere, she deplored this outlook.

At this point, someone woke up to the fact that it was 8:30. It is to be hoped that Kara is invited back, since her fascinating topic could go on forever, but of course she would be fined for violating the time limit.

CALENDAR

Friday 6/8, 7am - Lesher Center Artistic Director Michael Butler

Tuesday 6/12, 7am - Board meeting

Friday 6/15, 7am - Motorama revealed

Sunday 6/17 9 am - Motorama, Postino Parking Lot

Wednesday 6/20 - Three Quarter Century Club luncheon

Friday 6/22, 7am - Gabriel Angelo - Magical musical story

                   5:30 pm - Demotion party, Waal home

Friday 6/29, 7am - Jim Margraff exposes himself

Wednesday, 7/4 - Pancake Run - Orinda

Friday 7/6, 7 am - Antje Jahnke - Procrastination

Tuesday 7/10, 7am - Board meeting

Friday 7/13, 7 am - Club Assembly

Friday 7/20, 7 am - John Yoo, Legal Counsel, George W. Bush

Friday 8/3, 7am - A woof and a meow

Friday 8/10, 7 am - Economist Tappan Monroe

Tuesday 8/14, 7am - Board meeting

Friday 8/17, 7am - Dan Borenstein & Pensions continued