Monthly Archives: August 2009

Twenty Percent of Spanish Mortgages Now Considered To Be High Risk

Posted on by

According to an article which appeared in the Spanish newspaper Expansion this morning, one in five Spanish mortgages is now considered as being high risk and liable to become “non performing”.

The mortgages at greatest risk are naturally those contracted after 2005 where the loan to valuation was over 80% of the total. In 2006 and 2007, according to data from the bank of Spain, LtVs were over 80% in 17.7% of the mortgages granted, since prices are now heading back towards the 2005 level, we can easily conclude that something in the region of one in five Spanish mortgages are now high risk. Continue reading →

A Eurovision story

Posted on by

Ex Caucasus semper aliquid novo:

Rovshan Nasirli, a young Eurovision fan living in the Azerbaijani capital Baku, says he was summoned this week to the country’s National Security Ministry — to explain why he had voted for Armenia during this year’s competition in May.

“They wanted an explanation for why I voted for Armenia. They said it was a matter of national security,” Nasirli said. “They were trying to put psychological pressure on me, saying things like, ‘You have no sense of ethnic pride. How come you voted for Armenia?’ They made me write out an explanation, and then they let me go.”

A total of 43 Azeris voted for the Armenian duo Inga and Anush, and their song, “Jan-Jan.”

Nasirli, like others, used his mobile phone to send a text message expressing his preference, little imagining his vote would eventually result in a summons from national security officials. (By contrast, 1,065 Armenians voted for the Azerbaijani team, apparently without consequence.)

— That’s actually a fairly good index of the relative freedoms of the two countries. Armenia is a managed democracy, where the opposition is kept pretty toothless. Last year, when the government got tired of peaceful protests over a stolen election, they gunned down a bunch of protesters in the street. (And then blamed the opposition, of course.) Continue reading →

From Original Sin To The Eternal Triangle – Lessons From Central Europe

Posted on by

The non-biblical concept of original sin, as Claus Vistesen notes in this post, when propounded in its standard Obstfeld & Krugman textbook version refers to the situation where many developing economies who are not able to borrow in their own currencies feel forced to denominate large parts of their sovereign and private sector debt in non-domestic currencies in order to attract capital from foreign investors – as evidenced most recently in the countries of Central and Eastern Europe. Well, piling insult upon injury, I’d like to take Claus’s point a little further, and do so by drawing on another well tried and tested weapon from the Krugman armoury, the idea of the “eternal triangle”. Continue reading →

Germany’s Economy Returns To (Timid) Growth In Q2

Posted on by

The German economy, Europe’s largest, unexpectedly returned to growth in the second quarter, technically bringing an end to its worst recession since World War II. The euro climbed 0.2 percent to $1.4248 on release of the report.

But don’t get carried away just yet, since while gross domestic product rose a seasonally adjusted 0.3 percent from the first quarter, when it plunged 3.5 percent, the most since quarterly data were first compiled in 1970, compared with Q1 2008 Compared with the second quarter of 2008, the price-adjusted GDP product was down 7.1%, while after adjustment for calendar variations, economic performance decreased 5.9% on a year earlier as the quarter had three working days less than the same period of the previous year.

Continue reading →

No law beyond the twelve mile limit

Posted on by

This morning the BBC had news that the MV Arctic Sea may have been hijacked in the Baltic and sailed through the Straits of Dover before vanishing. There is probably less to this than meets the eye – for all the speculation of pirates and illegal arms transfers, this looks like a commercial dispute being solved using Russian traditional law and custom. But it raises a more general point.

Continue reading →

Alain de Botton on ‘success’

Posted on by

Just a small post to direct you to an interesting and entertaining lecture by Alain de Botton on career crises and the psychology and sociology behind ‘success’ (hat tip BNET):
One quote: “It is not the material goods we want, it is the rewards. (…) The next time you see someone driving a Ferrari, don’t think this is someone who is greedy, think this is someone who is incredibly vulnerable and in need of love.” I suppose this could be another way to look at the bonuses in modern banking…

Greek journalist sued for writings on Bosnia

Posted on by

Via Marko Hoare’s blog, here’s an unhappy story about Greek journalist Takis Michas. A few years back, Michas wrote a book about the links between Greece and the Bosnian war — Greek support for Milosevic and Karadzic, Greek volunteers going to fight for the Serb side in Bosnia, and so forth.

Well, now he’s being sued by a Greek veteran of the Bosnian war. The lawsuit seems pretty dubious; the volunteer is claiming that he’s been libelled because Michas described the Greek volunteers as “paramilitaries” who took part in the Srebrenica massacre when (the volunteer says) they were in fact members in good standing of the Serb Bosnian army who just happened to be in Srebrenica around that time. The suit is being funded by something called the “Panhellenic Macedonian Front”, which is an umbrella group for a variety of extreme nationalists. A short interview with Michas, discussing the lawsuit, can be found here: Continue reading →

“Advances in Development Reverse Fertility Declines” – Science or Hocus Pocus?

Posted on by

According to a once-upon-a-time post on the Economist’s Certain Ideas of Europe Blog Edward Hugh “was very cross” about some of the journalism they were serving up over at that prestigious journal. Well, not to worry, since this time he is hopping mad. And the issue which lies behind his wrath is essentially the same one, how to interpret and understand the demographic processes which are currently so evidently affecting our societies. In what is simply the latest episode in a long and sorry saga (if you want documentation, please see the comments Claus Vistesen and I nailed to their “Wall” in the above linked post) this week’s print issue contains a research review from their science and technology correspondent who is evidently not backward in coming forward with headline grabbing claims. According to the said corresponedent the demographic transition (a process which has been ongoing for over two hundred years now) has finally and definitively gone into reverse gear:

“One of the paradoxes of human biology is that the rich world has fewer children than the poor world. In most species, improved circumstances are expected to increase reproductive effort, not reduce it, yet as economic development gets going, country after country has experienced what is known as the demographic transition: fertility (defined as the number of children borne by a woman over her lifetime) drops from around eight to near one and a half. That number is so small that even with the reduced child mortality which usually accompanies development it cannot possibly sustain the population.

If Mikko Myrskyla of the University of Pennsylvania and his colleagues are correct, though, things might not be quite as bad as that. A study they have just published in Nature suggests that as development continues, the demographic transition goes into reverse.”

Well quite a strong claim is being made here. The idea that a group of researchers have come up with a finding that shows the “rule….that people have fewer children as their countries get richer…no longer holds true” is certainly not one to be sniffed at. Such a strong claim needs some very heavy backing you would think, given all the research that has gone into the topic in recent years.

In fact, the research makes no such direct claim, since Myrskylä et al simply find statistically significant evidence for a reversal in the relationship between the human development index (HDI)
and the total fertility rate (Tfr) at HDI levels around 0.85–0.9. The rest is only interpretation. As we will see, to move from a simple statististical correlation to formulating a hypothesis you need an explanatory framework, and you need to be able to make falsifiable predictions. The Nature letter from Myrskylä et al is far from being at this stage of development. They have simply found an interesting correlation, and the rest is in the eye of the observer.

“Back in 1975, a graph plotting fertility rate against the Human Development Index fell as the Human Development Index rose. By 2005, though, the line had a kink in it. Above an HDI of 0.9 or so, it turned up, producing what is known in the jargon as a “J-shaped” curve (even though it is the mirror image of a letter J). As the chart shows, in many countries with really high levels of development (around 0.95) fertility rates are now approaching two children per woman. There are exceptions, notably Canada and Japan, but the trend is clear.”

However, according to the Economist the trend is clear. But is it? Edward has been doing some digging. Continue reading →

Gazprom in Serbia: How’s that working out?

Posted on by

A year and a half ago, I wrote a post about the sale of Serbia’s oil and gas company, NIS, to Russia’s Gazprom. Here were the high points:

— Gazprom was able to buy NIS for much, much less than its real value — 400 million euros for a company whose value was estimated to be more than 2 billion euros.

— The reasons for this have never been made clear. It may have involved corruption and/or a political quid pro quo for Russia’s support on Kosovo. Or perhaps the last Serbian government was just really bad at negotiating.

— The purchase was made without competitive bids, even several other large oil companies expressed interest, and two publicly stated that they would bid at least 2 billion euros.

— The deal gave Gazprom 51% ownership, but included provisions that ensured its total control. For instance, the Serbian government — which owns the other 49% — cannot sell its shares to anyone without Gazprom’s consent.

— Gazprom promised to assume NIS’s debts, which are about 600 million euros, mostly owed to the Serbian government, and also to invest about 500 million euros in NIS.

— Gazprom committed to building the South Stream gas pipeline through Serbia — giving Serbia transit fees — and also building a large gas storage facility at Banatski Dvor.

Okay, so. All that was a year ago. Since then, the deal has been signed and finalized. Gazprom formally took over NIS early this year; six of the ten members of the company’s board of directors are now Gazprom appointees, as are the Chairman of the Board and the company’s new general director. Although it was the last (Kostunica) government that negotiated the deal, the current (Cvetkovic) government has accepted it; three of the four Serbian board members are politicians involved with the current government.

So how’s it working out? Continue reading →

Germany’s elections: um… what?

Posted on by

Germany is having elections for the Bundestag at the end of September!

But you’d never know it. Walking through the village, driving to the county seat, I haven’t seen a single sign or poster. It barely gets mentioned on TV news. Newspapers, some discussion, but it’s mostly below-the-fold stuff. Nobody’s that excited.

I haven’t lived in Germany long enough to know if this is perfectly normal, or if this is just a particularly drab and dull election. On one hand, maybe it is? We’re in a recession, but neither of the major parties seem to have good solutions. It’s not like the election is going to make a big difference. The parties of the left are so far behind that Merkel is almost certain to be Chancellor again.

On the other hand, it is very much an open question whether we’ll be stuck with another Grand Coalition. My very tentative guess is yes. If the election were held today, the polls say that Merkel and the CDU/CSU would win a mandate to rule (along with their junior partners, the FDP). That’s because the Socialists are way, way down right now — polls show them as low as 20%, which is truly horrible. That’s a recent Stern poll, BTW, which showed the CDU/CSU with 37% and the FDP with 14% — just enough to form a government.

It seems really strange to me that, in the middle of a harsh recession, voters are abandoning the center-left party in droves. Wouldn’t the Socialists normally reap the benefit of voter unhappiness and fear? Yet it’s the stubborn, none-too-charismatic center-right Prime Minister who’s prospering; the worst-case scenario for Merkel is four more years of the same.

That 20%… just brutal. But surely it’s going to tighten as election day approaches? That would be normal, right?

— Okay, I admit that after more than a year here, I still don’t understand German politics.

Comments? Can someone explain this to me?