Monthly Archives: May 2012

More like “London, France’s 68th biggest city”

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A piece about the French expat community in London, titled “London, France’s sixth biggest city”, is the most shared article on the BBC News website as I begin to write this post.

That such an article would be popular among BBC News readers is not surprising: the idea of French people crossing the Channel en masse to find a more vibrant, fluid and color-blind society, and staying there despite the mediocre weather and exorbitant rents, is appealing to both London fans and French bashers alike. (The view that French people move to London because it’s the closest large English-speaking city is not mentioned)

What’s more baffling is why the BBC News Magazine editors, who had recently shown a laudable willingness to take oft-repeated but bogus factoids to task, would decide to publish a piece based on such a worthless piece of statistics.

For the idea that “between 300,000 and 400,000 French citizens live in the British capital” is just plain laughable.
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NHS in “worse than unlimited budget for single patient” shock

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The Wall Street Journal Europe uncorks an instant classic in explaining the longevity of Lockerbie bomber Abdel Baset al-Megrahi:

Karol Sikora, a leading cancer specialist who examined Megrahi shortly before his release, explains that predicting how long a patient with end-stage prostate cancer has to live is “a value judgment of probability,” not an exact science. But Dr. Sikora also writes that his initial three-month prognosis was “based on his treatment as an NHS patient in Glasgow at the time, when not even standard docetaxel chemotherapy was offered.” By contrast, “Mr. Megrahi almost certainly had excellent care in Tripoli.” Think about that one: Get treated for cancer by the U.K.’s National Health Service, and you’ll be dead by Christmas. But get treated for the same cancer in Libya, and you may have years to live. No wonder Americans are terrified of government-run medicine and rationing boards.

It’s painfully obvious but apparently nonetheless necessary to point that Mr al-Megrahi was in this case receiving care as a political trophy in a petro-state with an open-ended government budget available to embarrass his former hosts. So Yes, his care was probably better than  the NHS standard available to him in Glasgow, but as Dr Sikora also explains, there was a lot of variability around the now-notorious “3 months to live” prognosis even at the time it was issued. His care was also a lot better than someone without health insurance in the USA would receive, but who wants to descend to cheap health system point scoring based on a single case. Besides the Wall Street Journal.

My own view is that there’s no big conspiracy theory or undiscovered files behind Mr al-Megrahi’s release. Instead, the issue played into the self-righteousness of the SNP government. Up against that, geopolitics didn’t stand a chance.

Can This Really Be Europe We Are Talking About?

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In recent days I have been think a lot, and reading a lot, about the implications of Greece’s recent election results.

At the end of the day the only difference this whole process makes to the ultimate outcome may turn out to be one of timing. If  Alexis Tsipras of the anti bailout, anti Troika, party Syriza won and started to form a government then the second bailout money would undoubtedly be immediately stopped. On the other hand if the centre right New Democracy wins and is able to form a government, as the latest polls tend to suggest, then the country would quite possibly try to conform to the bailout conditions, but in trying it would almost certainly fail, and then the money would be stopped. Before the last election results, it will be remembered, this was the main scenario prevailing. Continue reading →

It’s Time to Stop Using Chewing Gum And Chicken Wire In Spain

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“Every leg of the eurozone crisis has been marked by denial of the full scale of the problems. Whether Spain’s authorities have been deceitful or wilfully blind makes little difference at this point. The banks will need more capital; the government will need external help, with all the market uncertainty and strings attached that this implies. And the pain in Spain will only get worse”.
The top Line, Financial Times

According to reports now widely circulating the Spanish press (in Spanish only), the EU is pushing Spain hard to accept EU aid on completion of an independent external evaluation of the problems in the banking sector that is to be conduced by Blackrock Solutions and Oliver Wyman. The evaluation has been imposed on Spain by both the ECB and the EU Commission following doubts about just how faithfully the numbers published by the central bank do reflect the likely losses to be sustained by the Spanish banking system. Following this weeks revelations about the extent of potential losses in Bankia (product of the fusion of a number of savings banks, and one of the country’s largest financial institutions by assets) it is not hard to understand why. Continue reading →

Some thoughts on institutional capacity in South-Eastern Europe

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Now everyone’s seen the title and stopped reading…Nouriel Roubini has a simple plan for Greece:

Grezxit path: election, default, exit, capital controls, deposit freeze, drachmatization of euro claims, depreciation, return to growth/jobs

Bada bing, bada boom, and it’s peace and jobs and freedom all the way up. Dr Doom makes it all sound so simple, stuffed into 140 characters. Now, I’m sympathetic to the Greeks here, and I think that, for example, the idea of imposing nominal wages cuts across the private sector is not just counterproductive but getting on for gratuitiously cruel. But I think we could do without 140 character eurozone exit plans.

What is being suggested here is a stupendous exercise in sheer administration and logistics. Apart from the problem of issuing a new currency, it’s probably going to be necessary to pull this off as a surprise. Obviously nobody will be very surprised, but there is such a thing as tactical surprise as well as strategic surprise, and although the capital flight is inevitable, less of it would be much better. All kinds of contracts must be re-written, and it’s important to get it right first time in order to minimise the amount of vulture-fund tiresomeness down the track.

Setting up capital controls basically means shutting off international payments, and without fucking up so badly that it will be impossible to start things going again. There are all sorts of trappy administrative details – what happens to OTE’s balance with their roaming partners? Olympic Airways aircraft down-route? And there’s the oil question. Some people seem to think motor fuel rationing is literally the worst thing in the world, some would disagree, but nobody would argue that a good, solid, tested contingency plan is vital.

These are all the kinds of questions Sir Humphrey Appleby would have asked. I was wondering what the Greek equivalent of Sir Humphrey was, until I realised that of course the concept is absurd. Humph is a satire of a powerful, independent, professional, and highly competent civil service, and if Greece had anything like that, it might not be in this mess.

J. K. Galbraith remarked that poverty is an equilibrium state. Now, a government that literally can’t bring in the taxes with a gun to its head isn’t something that arises by accident. There is a qualitative difference between one that could perhaps do more to collect on super-rich individuals who go to expensive and inconvenient lengths to pay no tax (like, for example, Sweden), but generally collects every damn penny it can, one that is a bit flaky but which will, by default, collect your income tax routinely (like France), and one that makes it harder to pay your taxes than not. Being that perverse takes effort, and it happens for a reason, that being “keeping the political nation together and keeping politics mostly non-lethal”.

We could go on, and we’d discover that the history of how things got this way places a lot of responsibility on the UK, Germany, the Soviet Union, and other major world powers with highly effective civil services. But none of this is going to solve anyone’s problems. Neither is barking at the Greeks to bring in the taxes, because their institutions weren’t designed that way. Trying to convert the Parthenon into a supertanker is an insane project no matter how much you need another tanker.

So much for the austerity plan.

But Dr. Doom’s plan-in-a-tweet could be expanded to Jim Hacker sending Sir Humphrey an e-mail like so:

“All the economic policy decisions since 1979. I want you to reverse them, over a Bank Holiday weekend. Can I have a brief on one side of A4 for the Cabinet? Thx xoxo PS THIS MUST NOT LEAK”

Now, well, quite a few people would say that rolling back every economic decision since ’79 sounds great. Some of us have had that feeling for much of the intervening period. But I think everyone would agree that it’s quite the project. In fact, if it came from a left-wing political party we’d probably think it unrealistic, romantic, and impractical. Which of the French Trotskyist presidential candidates was it who wanted to use war emergency powers to requisition the banking sector in its entirety? These days, it’s hard to tell them apart from Roubini and I for one think this is an improvement.

I reckon the UK civil service might be able to come up with a roughly workable contingency plan, and shut up about it. I think this because, at least into the 1970s and possibly later, they regularly maintained an economic analogue of the military’s War Book mobilisation and transition-to-war plan covering the case in which the UK had to quit the multilateral clearing system, never mind the ERM. (And they didn’t leak it.) With all due respect, I’m not so sure about the Greek civil service.

As a result, I’m forced to consider that this might be more bish bosh, loadsa money than bada bing, bada boom. And any half decent civil servant would point out that if your policy advice is impossible to implement, that’s not something you can just laugh off. Plans that cannot be implemented are so much wind, whether they come from Roubini, Syriza, or the European Central Bank.

If you want a one sentence answer-in-a-tweet, Greece doesn’t need the EU to send it a tax commissioner. It needs the EU to send it a default commissioner.

Global Economy Heading Downhill?

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According to the JP Morgan Global Composite PMI report, “Growth of global economic activity eased sharply to a fivemonth low in April.” The authors of the report found that on aggregate across the countries surveyed – 30 across the globe – both new order inflows and job creation fell back, leading them to the conclusion  that “the world economy is set for a softer growth patch heading into midyear”. Looking at the chart below, this certainly seems to be the case (the composite index is a measure derived from a weighted average of the manufacturing and services findings).

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The FN: not just the UMP on the booze.

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Is the Marine Le Pen (and Nigel Farage, and more importantly Patrick Buisson) vision of re-organising the French Right around the FN viable? I prepared what follows for use elsewhere, but I think it helps here.

It isn’t as obvious as you may think that FN voters are the lost sheep of the Right.

In so far as they’re protesting, they’re protesting against French conservative neoliberal euro-atlanticism. This ought to be obvious, because who’s been in charge all these years? Conservative neoliberal euro-atlanticists. The 5th Republic has mostly been governed by conservatives.

Typical FN voters aren’t, in fact, ex-communist voters, but rather, PCF voters’ kids. Studies of the FN electoral breakthrough found that it was actually quite rare for people to switch from the PCF or the PS to the FN. Instead, FN voters in the 1988 and 2002 breakthroughs were typically first-time voters in places that traditionally voted Communist.

As Bernard Girard explains, this time out the FN did well with exurban voters, especially first-time house buyers who did the French equivalent of “driving until you qualify” in the US housing bubble. This meant that places suffering from rural depopulation were partly converted into suburbs, not necessarily getting any more in the way of public services or economic development in the process, and leaving the new exurbanites vulnerable to property and petrol prices. Interestingly, this suggests that the Tea Party and the modern FN are parallel phenomena.

It strikes me that a lot of French politics in the last decade can be summed up as “France discovers that it has suburbs” and in fact I did a post on Fistful about this back in 2007. So, after this somewhat protracted radar vectoring around the Ile-de-France basin, we finally come back onto final approach. If you vote FN, you probably don’t have any socio-cultural ties to French conservatism or any intellectual conviction of its ideas, which in any case are radically opposed to those of the FN, and you’re protesting against French conservatives because they’re the ones in charge, and it makes no sense to assume that you’ll necessarily come back to vote for the conservatives, because you are an extreme-rightist and not a conservative.

FN thinking is far more sceptical of capitalism, more protectionist, more anti-European, and more anti-American than UMP thinking. FN style and tone are far more working-class than the UMP’s. The FN is mostly after a different demographic to the conservatives. The exurbanites sound more like the material of a conservative party…if it wasn’t for the fact they are furious with the conservative party, furious enough to vote for the sort-of fascists.

This has two key consequences. The first is that trying to merge the UMP and the FN might not work, because UMP people don’t want the same things as FN people. The second is that trying to make the FN the replacement for the UMP might not work, because FN people don’t want to be a boring conservative neoliberal Euroatlantic party. They want to vote something that hurts the boring conservative neoliberals.

Now, before the election, pollsters were working on the principle that about 20-30 per cent of FN voters would vote Sarkozy, between 15-25% would switch across to Hollande, and the rest would follow the party line and spoil their ballot or stay at home. We’ll need more data to know whether this happened, and no doubt it is coming. My gut impression is that the pandering had some effect and is partly responsible for the late tightening in the polls, but I don’t actually have any data that supports it. Turnout fell noticeably between the rounds – the difference could be Mélénchonistes who decided that the Left would win anyway and they didn’t need to compromise in round 2, for example.

Anyway, it didn’t have enough effect to win, and winning counts.

Fighting the real enemy

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If the PS isn’t going to give us red meat faction politics, who will? The UMP, that’s who. The parliamentary elections are only weeks away. Nicolas Sarkozy has ruled out taking part in the campaign, and so has Alain Juppé, who has decided not to stand for a parliamentary seat in favour of concentrating on his job as mayor of Bordeaux. (Don’t assume that means he’s ruled anything out in the longer term, though.)

Everyone will have to find some sort of modus vivendi to get through the campaign, but after that it’s a free for all. There are perhaps three key groups in the UMP. Let’s work through them.

One group are the sarkozystes, the former president’s personal following. Despite many efforts to identify a shared ideology among them, the biggest common factor between them is that they are relatively comfortable with the extreme Right, and many of them (like Sarko’s advisor Patrick Buisson) have a background in it, whether the FN, the wider extreme-rightist student movement, or the network around Charles Pasqua and the dodgy fringe of Gaullism. Sarkozy’s personal court was always pretty febrile, and the experience of defeat is only going to make them more so.

As Marine Le Pen is talking about trying to re-organise the Right around her party, they are the ones who like the idea and will try to reach out, although of course they will see it as bringing the FN into the UMP rather than vice versa. But they will also have to decide who their leader is, and that will be a vicious experience.

Group two are the traditional Gaullists, who weren’t particularly happy with Sarkozy and fluctuated between putting up with him and outright sabotage. They are deeply suspicious of the FN, and one of their leaders, the former PM and current senator Raffarin, actually broke surface to criticise Sarko for pandering even before he lost. Look out for much talk about needing to rassembler, social peace, and the Republic. They will see Sarkozy as having lost a great conservative opportunity, and will be after revenge.

And then you have the overlap with the old droite classique, the heritage of Giscard, who don’t like the Gaullists much and don’t really want to be in a party with them. Neither do they like the far Right much, even if some people have been involved in both.

Actually, memberships and life histories tend to overlap all three, which is not surprising in a party whose original raison d’etre was just to support Jacques Chirac in the 2002 parliamentary.

The big short term decision is what strategy to adopt for the parliamentary elections, and how far to cooperate with the FN. Three-way marginal seats between the PS (or other left-wing candidate), UMP, and FN are common, and the question is whether to ally with the FN or fight it for every vote. It’s not hard to see how this fits with the factional divide, but it fits so well with it that it may end up being fudged in order to maintain some degree of unity. The fudge would be to say nothing and tacitly leave it to local initiatives, which has happened before.

The strategic question is whether to head for the centre or to keep going with the Sarkozy/Buisson strategy of “droitisation”. The sarkozystes will point to the fact that the polls pulled in some between the two rounds as evidence that the strategy was working. Everyone else will point to the fact that they still lost as evidence that pandering to the FN turns off moderates, and perhaps that FN voters aren’t sociologically very compatible with the UMP.

Meanwhile, of course, the Left has its own analogous question, which is whether and under what terms to cooperate. Ensuring a left-wing government is very important to the PS, and the degree of influence that the Front de Gauche will have as an awkward partner is vastly greater than what it would have yelling in opposition. Their incentives are to agree, and the cultural gap is less troublesome. Also, coalition between the parties of the Left is a feature of some of its proudest moments, and you can’t say the same about cooperation between French conservatism and the extreme Right.