Thanks David for the link. I haven’t commented on this because like Dutch finance minister Zalm (who I imagine working away weblogging into the early hours under a dim light provided only by his mobile phone) I am tired. I can’t help feeling that everything that needs to be said has already been said, and many times over. Now all we can reasonably do is wait and see the consequences.
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Tag Archives: reform
The Country That Has it All
Posting under the header: ‘More Signs That We Are In the Twentieth Century After All’ my young Argentinian co-blogger notes crypically “I don’t know what a XIXth (or XXth) century englishman would say, if we told him that English unions would one day protest against losing skilled jobs to India”……… adding…………”and, in the heels of our previous post about Sekhar Kapur interview, today the blogsphere is buzzing with news of the P2P network Kazaa’s agreement to distribute (in a pay-per-view fashion) the indian film Supari. If this works out economically, the sidelining of traditional distribution channels might very well enhance the global reach of Bollywood productions, specially among the growing Asian diaspora in the developed world. We are truly living in interesting times”. (BTW: I owe the post on Kapur to Marcelo: completely. If it wasn’t for Argentina, what would I know about India!).
In the comments I respond “Absolutely, there is another big push going on, Google’s innovative share offer is another example, maybe blog portals will be another. Something is really happening out there”. So it’s wakey wakey time. For the first time since the mid-ninetees the thing is really humming. First-movers, creative destruction, defining moments: get tighly back in your seats. Hold on for the bumpy ride.
And meantime, exceptionally, and on a boring grey Saturday morning: news from the country that has it all: problems, problems, problems.
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Like You, Like Me: Like Me, Like You
I don’t know why I hadn’t seen it before, but it was only while talking with a colleague this afternoon, and being asked what I thought about the unwillingness of the candidate countries to reform that it came to me: with all this coming and going on the Pact, what kind of message is being sent to the new members? Obviously if you give the impression that agreements are not to be complied with, you can get reactions you aren’t expecting, and that you don’t like. The Financial Times article you can find below, begins to give an idea of the size of the looming problem, whilst this one informs us that Standard and Poor’s has just downgraded the Polish currency rating because of concerns about deficits and rapidly growing government debt.
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Berlusconi’s Road to Damascus?
The Italian unions are threatening to strike against pension reform, while Berlusconi says government plans to reform Italy’s expensive welfare system are “necessary, fair and wise” (Silvio ‘el savio’?). The Unions say: “There is no pensions emergency. The government…is dramatizing the pensions problem. It doesn’t correspond to reality,” while Corriere della Sera finds a new Berlusconi, one who is a ‘reformed’ character who “For the first time…..turned his back on the miraculous optimism and creative economic recipes of the last two years and smiling persuasively,……tried to reassure people, to win more of their trust”. Meantime one Bank of America economist is reported as saying that “the reform is very weak. They should have gone for something much stronger but that’s more to do with internal opposition rather than the union threat”.
So where are we, is the pension reform question simply an excuse to have a battle with the unions, or is there a real problem in Italy? My own feeling is the latter. In a way I find myself agreeing with Pedro Solbes (which is why, pragmatically I would prefer him not to resign over the Eurostat scandal, although ethically I think he probably should). We have focussed too much on the question of the 3% limit on the decifit, and not enough on the level of the debt (Italy’s debt is currently over 100% of GDP). Even with this small reform Italy’s financies still look very precarious. But cutting pensions, as we can see, is not popular. So which is it? Can Europe reform itself and face up to its demographic reality, or are we going to have to go for ‘fiscal trainwreck’ US style? Do our politicians have more in common with the US ones than we like to imagine?