Author Archives: Alex Harrowell

About Alex Harrowell

Alex Harrowell is a research analyst for a really large consulting firm on AI and semiconductors. His age is immaterial, especially as he can't be bothered to update this bio regularly. He's from Yorkshire, now an economic migrant in London. His specialist subjects are military history, Germany, the telecommunications industry, and networks of all kinds. He would like to point out that it's nothing personal. Writes the Yorkshire Ranter.

The Market Speaks…and Jörg Packs

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Well, by 1630 CET today, the Milan stock market had made a very clear judgment on the outcome of the Italian elections – the MIBTEL index being up just under 1 per cent intraday, despite a pasting for Berlusconi’s own Mediaset..down 1.98 per cent at €9.68 a share. Berlusconi’s departure seems welcome indeed.

More exit poll results are spilling out all the time, showing the Left with a working majority in both houses. So far, the only weirdness has been the rather idiosyncratic kerfuffle in the town of Amelia (German link), where a protest led to the removal of crosses from all polling stations on the grounds of constitutionally guaranteed secularism, and predictable moaning from the ex/post/neo/whatever-fascists. A small outbreak of laicisme.

Oh yes, and this…sorry, more German linkage. Seems Jörg Haider, fun-lovin’ pseudofascist scandal monkey and governor of the Austrian province of Kärnten, is going to stand for election in 2009…in Italy, as a candidate for a party advocating Venetian independence. Not just Northern independence as per routine Liga Nord stupidity, but independence for the Most Serene Republic herself.

Strange really. I’ve always thought of Haider as a man out of place, a Mediterranean politician stuck on the wrong side of the Alps with the Germans. His demagoguery, rocambolesque coalition whoring and-to be brutally frank-corruption and barely concealed racism would have fitted beautifully into Silvio Berlusconi’s recent campaign, the municipal authorities of Marbella, or perhaps the intrigues of southern French Gaullism. Carinthia produced far more than its fair share of Nazis, as did many similarly debatable provinces on the edges of the German linguistic sphere, and in a sense his pumped-up nationalism fits the pattern.

Until you remember that he’s not actually from there at all (not far from Linz, actually), and in fact is putting on the overcompensated border nationalism to ingratiate himself with the overcompensated border nationalists. Which fits, too.

But it’s going to be fun to watch.

Es Lebe Das Exportventil!

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Chris “Stumbling and Mumbling” Dillow has a very interesting post on signs of German economic recovery. Interestingly, the bellwether Ifo confidence index has shown a dramatic uptick, reaching its highest level since 1991. Dillow proceeds to examine its correlation with the DAX stock market index.

Now, as Chris points out, DAX-constituents are likely to be the most globalised German businesses. The DAX tracks the Ifo with about a three month lag. This all suggests that a) the most globalised German businesses are feeling chirpy, as you’d expect in an economy struggling to raise domestic demand that trades with several raging boomers, and b) that some things never change.

Back before the Second World War, before the Nazi seizure of power, there was something known as the Exportventil in German. This means something like “export safety valve” in translation. What it meant in practice was that German industrialists believed that exporting was a hedge against the economic and political instability at home, and duly specialised in exporting as much stuff as possible. That is pretty much exactly opposite to what you’d expect – after all, you normally assume that German businesses know more about Germany than Country X and therefore face lower risks at home, not to mention the foreign exchange risk involved.

There were good reasons for this, though – economic conditions inside Germany were dire, the devaluation of the mark was helpful – and alternatively you could price your products in hard currency and thus protect yourself against the hyperinflation. It also helped that you had a stream of foreign-denominated revenue, which meant you could borrow in the US. The downside of the Exportventil, though, was that German businesses were highly operationally geared with respect to world trade, and German banks tended to have long-term German assets and short-term US and sterling liabilities.

The onset of the great depression, of course, slashed demand for German exports – and the beggar-your-neighbour policies drained world trade of liquidity, which hit the Germans twice as hard because of export dependence. So the safety valve turned out to be more of a seacock that let more water into the ship. Germany, however, still seems to love exporting – which perhaps explains the strong “home bias” that Chris claims to have identified.

In a tangential theme regarding historical legacies and the way things don’t change, check out this post at Veronica Khokhlova’s. Seems the Ukrainian electoral map divides along the ancient border of Kievan Rus..

State of Democratic Emergency!

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Or should that be a undemocratic state of emergency?

In past AFOE threads, we’ve been discussing the Italian elections, as you no doubt saw. One thing that came up is the possibility that Silvio Berlusconi might not behave himself in the event that he looks like losing. This is after all a man who has no compunction about changing the law to avoid being prosecuted, associating with barely concealed mafiosi, and generally flouting the principles of the Italian constitution. It’s by no means impossible that, losing power and immunity, he might end up in jail. Can he really be trusted, then, not to try to rig the ballot and to go away if he loses?

This week’s events have lent much point to this discussion. Berlusconi’s behaviour has become a little odd, to say the least. After walking out of a TV discussion, he proceeded to harangue the members of Confindustria for making up all Italy’s economic problems as part of (you guessed it) a communist plot, and finished up by announcing that a “state of democratic emergency” existed after a minor fracas broke out near one of his speeches.

Worryingly, he seems to be assembling the ideological foundations of anti-democracy; he argues that there is a plot by secret communists who incorporate the judiciary, the procuracy, the media and even the top executives of Italian industry, and that the state is in danger from a violent opposition movement aligned with them. They are also part of the communist conspiracy. Perhaps he will soon discover that they are also terrorists.

Is this not something like the arguments of Carl Schmitt’s Ausnahmezustand? To deal with these violent communists who are endangering democracy and the rule of law, presumably, democracy and law must be suspended. If the election is close, I think there is a small but non-trivial chance that he will try to announce that, “to restore order”, the elections will be “suspended” or some such. Fortunately, any such action would have seismic economic and political consequences, national bankruptcy being the most immediate, which ought to deter the people he would need to carry with him from supporting such a move.

Yes, there is a “state of democratic emergency” in Italy. I don’t think it’s too wild to say that Silvio Berlusconi is it.

Steinmeier on Belarus

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Well, following up the last post on Belarus, it seems that German foreign minister Frank-Walter Steinmeier has mirrored what went on in that Patterson School command post exercise to an eerie degree. In the simulation, apparently, Gerhard Schröder made a fool of himself by lining up with the Russians…and, strange to tell, Steinmeier has done so too, at least in the eyes of Transitions Online’s Belarusoblogger.

Seems he’s arguing for a “measured” approach and more “dialogue” with the Belarus government – or to put it another way, doing nothing. Is it “the natural gas, stupid”? Perhaps. One of the delivery pipelines from Russia to Germany (the Yuma pipeline) passes through Belarus, but German policy seems to be more about bypassing the Central Europeans, and surely (as I blogged regarding the Ukrainian gas crisis) it would be in the EU’s interest to limit the degree to which Russia can disaggregate the customer states.

Deeper than that, I think it’s fair to say that Germany – or to be more accurate, the German foreign policy establishment – has an enduring preference for Moscow. As far back as Willy Brandt, in fact. The Treaty of Moscow in 1970 preceded the Treaty of Warsaw and the Grundlagenvertrag with East Germany, and extensive partnership agreements were signed with Gorbachev as a preliminary (indeed a quid pro quo) to the reunification. Timothy Garton Ash, I think, remarked that “this Germany and all previous Germanies have a special interest in good relations with Moscow”.

This was obviously true regarding Deutschlandpolitik and reunification–the Ostpolitik was a prerequisite of the Deutschlandpolitik. But is it still true now? Clearly the degree of hostility between Germany and Russia is much less, which is all good, but the degree of interdependence is much greater. And the conflicts of interest are hardly less.

One thing the German policy establishment did well in the 1970s, 1980s and 1990s was to synchronise their own policy with that of the EU. It would seem that a tension is emerging.

Belarusobloggin’

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Want to know what’s happening in the Belarus civil war? Belarus Today‘s yer blog. Except, of course, it’s not. As it says at the bottom of the page:

This website is part of a foreign policy simulation. The events depicted are not actually taking place.

Thank God for that. After all, by the end of the Norman Patterson School of International Affairs’s scenario simulation, the NATO Secretary General had suffered a heart attack, Gerhard Schröder had made a fool of himself, Minsk was in flames and USAF and Italian aircraft were heading for their targets..

It sounds fun. Just a pity that the transcript isn’t on the web.

Update: (From Edward, apologies in advance to Alex for butting-in like this, but there didn’t seem to be enough for a separate post here). Events still seem to be tense in Belarus with Lukashenko opponents attempting to gain ‘orange-like’ traction, and EU observers keeping up the pressure. Also it may be worth pointing out that Belarus is another one of those incredible shrinking countries, and I’ve just posted a little data about this on Demography Matters, so either way – with or without Lukashenko – the future looks extraordinarily bleak for these long-suffering people (remember they were also hit by Chernobyl).

Update the second: The Patterson School’s website is here.

Theatre of Citizenship

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Everyone’s been terribly worried about France. First of all, last autumn’s carburning outbreak saw a lot of people who really ought to know better gathering to hail the end of days and the Islamofascist conquest of Eurabia, or something. Now, the students are out on the streets to protest the government’s new labour laws, and perhaps the trade unions will be coming too. And then there was the supposedly anti-semitic stabbing of a few weeks ago.

That stabbing, one will remember, brought thousands onto the streets for a heavily earnest, government supported demonstration against antisemitism, terrorism and a few other isms. I’m usually very sceptical about demos like that, and the Spanish tradition of demonstrating against terrorists-they aren’t listening, after all, and it is always worryingly close to demonstrating in favour of the government. There’s a strong case that one shouldn’t take part in a modern version of the demos by (supposedly) torpedoed merchant seamen that Winston Churchill put on in the first world war to shame strikers.

But is there more use to it than I think? (More, and more sense, below the fold..)
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David Irving: My Part in His Downfall

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David Irving, as no doubt we all know, is beginning his new career as a jailbird, in the great grey walls of the Josefstadt prison next to the even greater and greyer Landesgericht between Vienna’s city hall and its university. Now, there are plenty of facile things to say about this: freedom of expression is vital, dammit!/Nazis must be suppressed!/What if he was a Muslim? But I hope to raise some others.

Total disclosure: I participated tangentially in Irving’s lawsuit against Deborah Lipstadt. At the time I was a student of the world Holocaust authority, Professor Peter Longerich, who was one of the team of historians who acted as expert witnesses under the direction of Professor Richard J. Evans. Whilst Longerich was known to be preparing for one of his court appearances, he asked me to borrow various works of reference from the Bedford Library at Royal Holloway for him. I was not pleased, some time later, when the librarians demanded I pay fines on the books, although Irving’s defeat was some relief.

Irving is a liar who deserves nothing but contempt. (Richard Evans’s book on the case is strongly recommended for detail.) It cannot go unremarked that he has always chosen to “challenge conventional wisdom”, in the charitable way people put it, in front of audiences who are both already converted to his point of view and willing to pay well for confirmation of theirs. His lecture circuit – mad US militias, western European fascists, apartheid South Africa – speaks for itself, as do those who admit to financing him.

And there’s the rub. In Britain, his nonsense might just be tolerable. But this is in a sense a luxury afforded by a lack of fascists. I can think of many countries where this is so:
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Viva Ricardo!

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Guy of these pages recently spoke to a “source” who has an interesting counter-take on the Italian economy and the Italian government’s debt problem to that frequently discussed here. Apparently, the feller says, there’s no chance of “an Argentinian-style blowout” because of the low levels of private debt.

The source is essentially arguing that Ricardian equivalence holds for Italy. That is to say, private and public savings ratios match each other-when the government borrows, the private sector saves, and vice versa. Hence the recovery path after a debt crisis would be that firms and households load up on debt to invest and consume, kick starting a Keynesian recovery.

Now, it’s an observable fact that the Italian government is up to its neck in debt and households are hoarding cash, but that doesn’t necessarily mean that Ricardian equivalence holds. Correlation does not imply causation, and Ricardian equivalence itself is anything but uncontroversial. In fact, it’s not so much an economic theory as a point for discussion, despite having been around almost as long as economics itself. There are some cases that support it – Israel in the 1980s being the classic – but a lot that don’t.

Arguments that fit the facts are always preferable to ones that don’t, but yer man is a braver man than me if he is basing his business decisions on this theory. Especially, I’m not at all clear on what the intermediate analysis/microfoundations are meant to be-how do we get from here to there? Presumably the Eurocrisis option would be one – out of the €, deep devaluation, export-led recovery and follow through to the domestic economy. But the pain of such a course would be epic. And it’s still worth pointing out that I still haven’t met a European business person who considers it even within the realm of the non-crazed (perhaps I don’t deal with enough Italians). More seriously, the panic and Weltuntergangsstimmung that would accompany such a course would have dramatically depressing effects on those ol’ animal spirits.

What of a forced Ricardian equivalence, about the only other story I can see that would satisfy our man’s argument? Imagine that the Italian government retires large quantities (perhaps massive quantities in the course of a debt crisis) of bonds from private and institutional investors and refinances them with the banks. Government paper is a reserve asset, and an increase in reserve assets should mean a multiple increase in credit creation to the private sector. One may recall that some monetarist-minded governments have been keen on manipulating the balance between T-bill-like assets held by banks and bonds held by funds and individuals in order to influence the creation of credit, usually in a deflationary direction – so why not in an inflationary direction?

It’s a bit like reversing the economic flux capacitor, and it’s certainly what in computing we would call a horrible, kludgy hack, and the inflationary bit could easily go well out of kilter, and the whole thing would be dependent on a lot of good will from a lot of banks, but it bears a passing resemblance to some proposals of Paul Krugman’s regarding Japan in the late 1990s. Edward Hugh will no doubt call attention to the similarities between the problems.

Does the weirdness of the solutions mark the optimism of the “source’s” argument? Or is it a long shot..but it might just work? A key number will clearly be the percentage of Italian government debt held by banks.

Skinheads Against Royalist Prejudice

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The German newspaper whose website could be better organised has this pleasant-enough storyAber wer hätte gedacht, daß der populäre Name „Rising Sun” nicht den Sonnenaufgang meint, auch nicht die „Animals” und ihr besungenes Bordell, sondern Edward III.? Kein Zeichen freilich bietet so viele Varianten wie „Royal Oak”: Meist zeigt es eine Eiche nebst einer Gestalt in der Krone zur Erinnerung an Charles II., der sich, der Überlieferung zufolge, nach der Schlacht von Worcester 1651 vor Cromwells Skinheads in eine Eiche rettete. So bekannt ist die Szene, daß eine Königskrone über dem Laub als Pars pro toto schon genügt. Doch königlich ist auch die Eiche selbst.

Cromwell’s followers in the New Model army were known as Roundheads…skinheads are something entirely different…

Islam, internal discussion; pt 4

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Maybe so. Most people arguing for this, though, aren’t the ones I’d want to take
sides with in a rerun of the 16th C. I doubt Freeborn John Lilburne would have
been lining up with Sarkozy, Berlusconi, Clarke, or Daniel Pipes.

When push comes to shove, I bet the Islamic Reformation boosters will be the
first to move up a hundred years and give those ungrateful savages a taste of
the Dialektik der Aufklaerung’s thick ugly side for not wanting to be civilised
by the CRS. The problem is that it’s not the Reformation they want, but
Enlightenment in the form Napoleon practiced it on Egypt in 1798. Something THEY
do to YOU.

State-prescribed belief: bad medicine, and one that European doctors have been
far too happy to prescribe in the last century. If the genuine heroes of the
Reformation fought for anything it was liberty of belief, the precondition of
the Enlightenment’s scientific achievements, but also the first thing the
various post-Enlightenment tyrannies destroyed in the name of their own version
of reason.

The problem with AFOE membership is that stuff like this gets used up on
internal emails…