Monthly Archives: May 2005

Kapitalismus III

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More from behind the great PPV firewall. Unfortunately only the reproduced extract is available to non-subscribers (like me):

The German economy, once the economic powerhouse of Europe, is stalling. Annual average growth in gross domestic product since 1995 has been just 1.2 per cent, unemployment has increased since 1970 to 11 per cent, the social security system could no longer be financed even if the population were not ageing, and the government’s finances are in disarray. This is a knot of problems, and it is difficult to disentangle the many threads, isolate one issue and solve it.

Unfortunately, Germany also finds itself in a political trap. Germans have become accustomed to the current high level of GDP used for social protection. In the west, this is due to earlier expansion of the welfare state; in the east, to the expectation of equal treatment created by the one-to-one exchange rate chosen for unification of the two halves of the country in 1990. Unfortunately, expectations determine voters’ behaviour, and political parties anticipate how the electorate will vote. Politicians are reluctant to tell the true story and to propose the reforms that are necessary. Witness the campaign leading up to Sunday’s regional election in North Rhine-Westphalia, where Gerhard Schr?der’s Social Democratic party, facing defeat, has stepped up its anti-capitalist rhetoric.

I think this is a clear statement of the problem from Horst Siebert. Of course we may all agree on the diagnosis, and yet beg to differ over the medication needed. Even if you can’t get through the firewall, you can browse his complete book at Amazon.

That Dreaded D Word

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“Dial D for Deflation” declared the Economist in 2002 in an article which amazingly is still available online. Since Alan Greenspan officially declared the deflation scare over, the word has hardly cropped up in economic debates.

Yet anyone looking at the rapid rise in value of the euro, and the absence of growth in some key economies – Germany, Italy – could have been forgiven for thinking that the ‘all clear’ signal was being given a bit too soon.

Today the latest EU inflation figures are out from Eurostat (PDF file), and Goldman Sachs are warning that: ?without preventive action from the ECB, unit labour costs threaten to pose a future risk of deflation?.
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Barroso Has No ‘Plan B’ Ready

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The EU Observer has the following:

The President of the European Commission has called for a French yes to the European Constitution, pointing out that there will not be a “plan B” if France rejects the treaty next week……….But Mr Barroso asserted there was no plan B in case the French rejected the treaty.
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And Chirac Agrees

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President Jacques Chirac said there will be no renegotiation of the proposed EU Constitution if French voters reject the treaty in their referendum on May 29.

‘There will obviously be no renegotiation,’ Chirac said at a joint press conference with German Chancellor Gerhard Schroeder and Polish President Aleksander Kwasniewski in the eastern French city of Nancy.

‘There is no plan B possible,’ he added, since other EU members will refuse to open new talks on the treaty. ‘We will not renegotiate because we will have nobody to negotiate with.’
Source: Forbes

Controversy Over Kosovo Refugees In Germany

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This is an updated version of an earlier post. I first retain the post as it was, then I have added some reflections in the light of comments received.

The Independent is running the following story:

“Germany is deporting tens of thousands of Roma refugees to Kosovo despite clear threats to their safety and dire warnings from human rights groups that they will face “massive discrimination” on arrival.
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Kapitalismus II

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The FT asks today (behind the dreaded ppv firewall I’m afraid) whether the current “Kapitalismus” debate in Germany may not represent something more than short-term electioneeering. Could a real shift in the SPD be actually taking place?

The most ignominious defeat of Gerhard Schr?der’s political career may be at hand. On Sunday, in the 12th regional election since Mr Schr?der, the chancellor, scraped back into national office in 2002, polls suggest that his Social Democratic party will be routed in North Rhine-Westphalia – Germany’s most populous state, the industrial heartland of the country’s postwar economic miracle and an SPD bastion for decades.

Defeat would not only turf the SPD out of regional government in the state for the first time since 1966 but would end the last ruling coalition of Social Democrats and Greens in any of Germany’s 16 regions, leaving the federal government in Berlin as the last “red-green” partnership in the country.

The central point is: where is all this leading? It is far from clear. There is a clear danger of electoral setbacks in Germany and a ‘no’ in the French referendum producing an ‘anti-reform’ backlash, with growing protectionism as a backdrop.

Bird Flu Early Warning System

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This is no joke. The danger of a mutation of the virus is a real and present risk. The EU decision is a prudent and intelligent one.

The European Union will on Friday take another step towards creating an early warning system to prevent, or at least to limit, an influenza pandemic by the launch of a new continent-wide monitoring system. Establishing a round- the-clock surveillance network to identify any European outbreaks will be the first task for the newly created European Centre for Disease Prevention and Control (ECDC), which becomes operational in Solna, nearStockholm, on Friday.
Financial Times

The Blog Next Door

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If a fistful of euros aren’t quite enough for your daily needs, hop over to A Few Euros More.

A Few Euros More is having a trial run because the authors here wanted more, too. On the one hand, discussion about our posts is one of the best parts of the blog. Talking with our excellent readership, having people react to what we write is one of the most gratifying parts of writing here. On the other, discussion tends to taper off rapidly as a post slides down the page. So sometimes we are reluctant to post a short thought on a news item, or ineed short thoughts on almost anything, because we don’t want to push a good discussion further down the page. Which means we’ve been missing the chance to blog on different things.

Hence, A Few Euros More. It’s in the experimental stage, though it probably won’t stay in beta quite as long as Google products seem to. We’ll find out what we like, what our readers like, and adjust accordingly. Right now, it’s full of quick newsy thoughts just waiting for comments. Thoughts on the experiment itself can come here.

Update: One way reader/bloggers could help is by adding a link to A Few Euros More in your sidebar, and of course, if you like the idea, mentioning it on your blog.