Monthly Archives: October 2004

FAZit

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The German newspaper whose web site really could be better organized had a fistful of bloggable things on Tuesday. Just pretend I’m discussing them a little more punctually than two days later.

? Stoiber says collecting signatures to oppose Turkey’s admission to the EU is prudent. I suppose. It’s a good way to find conservative voters, but it won’t do diddly about Turkish accession. First sign the CDU/CSU knows they’ve lost on this issue.

? Headline: Central Government and States Dispute Federalism. Dog bites man. Nighttime dark.

? Suspects nabbed in bombing of Indonesian embassy in Paris. Not to worry, it was just a little bomb. It can’t happen here. (Speaking of bombs, we’ve got our own letter bomber in Bavaria. First it was a number of local officials, but he’s now moved up to the Polish consulate in Munich. And speaking of bombs, the dee-lightful folks who were planning to bomb the cornerstone ceremony of Munich’s new Jewish cultural center are on trial. A couple have turned state’s evidence. The proverbial book is being thrown.)

? Libya awarded Hugo Ch?vez, president of Venezuela, the Moammar Qaddafi Prize for Human Rights. You couldn’t make this stuff up if you tried.

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Talking Points. I have a plan.

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Alright gentle readers, the last Kerry-Bush exchange of talking points has begun. And at this point I would like to mention that I, too, have a plan – and I will even talk about its specificties: I will try to occasionally update this post with my impressions – as this is what really matters ;). Nick Barlow is blogging the event over on his nicely redesigned blog “What you can get away with“.
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Euro-zone: A Default-free Area?

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This is the interesting question that Morgan Stanley’s Vicenzo Guzzo asked a couple of weeks back. The key background details in question are what are known as the cross-country risk spreads. Now this may seem like a piece of technical obfuscation, so what exactly does he mean?

Well, one of the main consequences of the introduction of the euro has been the dramatic reduction in what are known as the ‘interest rate spreads’ on sovereign debt.
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It’s Istanbul (not Cologne)

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Some time ago I wrote about Metin Kaplan, the ‘Caliph of Cologne’, and the attempts of the Keystone Kommisare to pack him off to his Turkish homeland. As I learned from Abiola Lapite this morning, they have finally succeeded. Kaplan has been flown to Istanbul and today stands before a Turkish court. (See here and hier.)

It will prove scant comfort to Kaplan, I suspect, that Turkey now has an ‘Islamist’ government.

Now That’s More Like It

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Germany is reconsidering the deployment of troops in Iraq, should conditions ‘change’. According to the FT, Peter Struck, the German defence minister, departing from previous declared government policy stated in an interview that while ?At present I rule out the deployment of German troops in Iraq. In general, however, there is no one who can predict developments in Iraq in such a way that he could make a such a binding statement [about the future].”

The FT also informs us that Struck welcomed Kerry?s proposal that he would convene an international conference on Iraq including countries that opposed the war if he were to win next month’s election. Now I have already suggested that I think EU leaders would be ill advised to get involved in the US presidential elections (not least because I think any such intervention might well boomerang). I see no harm whatever, however, in indicating that national policies would change under changing circumstances.

No continent is an island, and the EU cannot afford to sit back and watch a disintegration of Iraq. It may seem a long way off, but it could rapidly come to feel like it was a lot nearer.

Perhaps the most significant comments came from an unnamed ‘official’

A senior official said: ?When the situation in Iraq changes, when elections have been held, or there are other developments, then we will make decisions on this basis.? If a democratically-elected Iraqi government were to ask the UN for support, the international community, including Germany, must be in a position to respond, the official added.

Full Disclosure: I am British, I now think the invasion was a mistake, but I think Britain has an absolute obligation to maintain the troop presence. I also think that the debate about who was right and who was wrong is better left for history, since, in the light of what has subsequently happened we now have more pressing concerns. I personally welcome the Kerry proposal, and would also welcome increasing UN and other international involvement. We cannot afford to let this one go wrong.

Addendum: Spain is also reconsidering. Jos? Bono – Spain’s Defence Minister -issued a statement to that effect last week, and then a lightening retraction in the wake of the ensuing controversy. This sort of thing is not unusual in Spain. My reading is that Spanish troops would once more be there, under the right circumstances.

Keep an Eye on the North Caucasus

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The forty-day period of mourning traditionally observed there is coming to an end for the families of people killed in Beslan. When I was in Russia (far, far from the scene of the crime, I hasten to add), I heard numerous predictions that revenge would be taken shortly after the mourning period ended. That’d be soon.

Peter Baker’s story in the Washington Post is very good.

Mama Mia

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Here’s an audio link for a change. NPR’s Sylvia Poggioli reports on changing family patterns in Italy. The report I would suggest is pretty ‘fair and balanced’. As a side issue I think she nicely draws attention to the way ‘gender equality issues’ and unequal family caring responsibilities may impact the ability of Southern european societies to meet the ‘new’ female participation objectives I posted about yesterday.

Recession on the Horizon?

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Morgan Stanley (among many others) have been busy cutting their 2004 and 2005 growth outooks. With Oil prices continuosly hitting new highs this all has some sort of inevitability about it. Whilst it is probable that the slowdown in growth will bring oil back from its current peaks, MS estimate that “the new equilibrium for oil prices is now somewhere in the $30-40 range — well above the $20 average of the 1990s”.

Obviously the oil ‘spike’ is well short of the magnitude of the 1970’s shocks, it is, however, no mere trifle. All of which leads MS’s Eric Chaney to conclude:

If, as we think, the barrel of Brent remains above $40 until the end of this year, the maximum impact of the shock will occur in the first months of 2005, where we see only 0.25%Q GDP growth. Because uncertainties surrounding consumers? and companies? reactions to oil prices are high, we reckon that the odds for a technical recession, i.e., two consecutive declines in quarterly GDP, have become significant despite assurances given by policy-makers.
Source: Morgan Stanley Global Economic Forum

Take care, you have been warned!

Update: this impression is only confirmed by the latest reading on the German-based he ZEW Center for European Economic Research’s index of institutional and analyst sentiment: down to 31.83 from 38.4, and by the decline in French industrial production in August.

Gloomy, or Just More Realistic?

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One of the problems of being a ‘dissenting voice’ is that it is hard for others to get a grip on a yardstick for evaluating what you are saying. Normally I am considered ‘gloomy’. But if what I am arguing against is a concoction of all the ‘best case’ scenarios rolled meticulously into one, it might be fair for me to ask, aren’t those who point the finger really guilty of presenting an excessively rosy panorama.

Latest case in point are the consensus projections for life expectancy, as highlighted by the forthcoming UK pensions Commission interim report, details of which are ‘leaked’ in today’s FT:
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Hardly Breaking News

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That the US jobs report last Friday showed continuing weakness in the labour market is certainly by now far from breaking news. I wouldn’t however want to let it pass by without comment. I think it is now abundantly clear that there is a pattern in all this somewhere (what that pattern is precisely, and what is causing it may be another matter). The US is not creating the quantity of new employment it needs. This means that the output gap (the gap between potential and actual output) is unlikely to reduce, and that the Fed will in all probability be unable to raise interest rates as vigourously as it had anticipated. This is also likely produce downward pressure on the dollar (with a consequent upward pressure on the Euro) and all sorts of other weird and wonderful things which should preoccupy those given to thinking about these matters. I think the debate is effectively over though: this is more than just a ‘soft spot’.
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