Author Archives: Edward Hugh

About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

Portugal’s Deficit To Reach 6.8%: It’s Official

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A special commission on the deficit set up by the government of Prime Minister Jose Socrates has just reported that the deficit this year will reach 6.83 % of GDP, that’s more than twice the European Union’s 3 percent limit. Over to you Almunia.

Portugal will have the highest budget deficit of any country using the euro since the common currency was introduced in 1999, the government said today. The announcement will prompt a package of spending control measures that may include freezes on wages of civil servants.

SPD Defeat in North Rhine-Westphalia

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Gerhard Schr?der and the SPD have suffered a major election setback in these regional elections. Schr?der’s response it seems has been to suggest he will call an early general election late this year.

Schroeder made his proposal after exit polls showed the Social Democratic Party (SPD) suffered a heavy defeat in a state election in North Rhine-Westphalia where it had ruled for 39 years.

The conservative Christian Democratic Union (CDU) won 45 percent, comfortably ahead of the 37.2 percent for the SPD, public TV said.

Schroeder said the “bitter defeat” in North Rhine-Westphalia “throws into question the political basis for the continuation of our work” at a time when Germany was in need of wide-ranging reforms.

Xavi Sala i Martin in Beijing

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According to the official version, Columbia University economist and well-known growth theorist Xavi Sala i Martin is in Beijing to give a paper at a meeting sponsored by the IMF. But my confidential sources (OK: I mean the newspaper ‘Sport’) here in Barcelona have another reading: the IMF meeting is a cover. Xavi – who is President of the Economic Commission of FC Barcelona (and a well known cul?) – is there to act as intermediary for Bar?a President Joan Laporta. His mission: sort out the details of the Beijing 2008 sponsorship for Bar?a shirts next season. If they get this the rumours say, then it’s next stop Thierry Henry.
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Human Capital And Trade Deficits

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Michael Mandel had an interesting take on the US trade deficit in Business Week earlier this month (btw: he also has a weblog).

His opinion is that the US trade deficit isn’t as big a deal as people often think. One of the reasons: that the ongoing import of human capital into the US (which of course isn’t measured in the trading accounts ledger) more than compensates for the deficit:

“But get with the 21st century, folks. The trade in goods and services represents only one part of America’s connection with the rest of the world. What’s equally important — and what the trade numbers miss completely — is the incredible flow of people into the country. Each year, the U.S. receives about 700,000 legal immigrants, as well as a host of temporary skilled workers and undocumented immigrants.

Now I wouldn’t go down the same road as Mandel with the deficit question per se, but he obviously raises an interesting point here – and one, of course, that immediately strikes a chord with me.
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Kosovo’s ‘Glowing Progress’

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In the light of what went on around yesterday’s post, I find the following report incredible:

“Kosovo’s U.N. governor will tell the U.N. Security Council next week the disputed province has made major progress on security and minority rights, in a report that could mark the beginning of the end of the province’s uncertain status.

In the report, seen by Reuters ahead of its presentation in New York on May 27, Kosovo’s U.N. governor Soren Jessen-Petersen, a Danish diplomat, details “significant progress” over the past three months on all eight “benchmarks.”

These are democracy standards set by the West as a condition for opening talks on whether the protectorate ultimately becomes independent, as its 90 percent Albanian majority demands, or remains nominally part of Serbia, as Belgrade insists.

Now either the Independent report about the absence of security of minority rights was false (in which case the article was even more absurd) or – more probably – the UN governor, not having read the Independent’s account of the state of things, is giving the clean bill of health in order to move things on, since the staus quo obviously cannot continue indefinitely.

Perhaps the key is to be found here: “The United States and
European Union want the talks to start in the autumn, to head off any risk of fresh violence from Albanians impatient to close the final chapter in the bloody collapse of Yugoslavia which led to war in Kosovo in 1998-99.”

This may be, and pragmatism does dictate that something should be done, but should we really be fooling ourselves that ‘major progress has been made’ if it in fact hasn’t.

Mounting Tensions in Iraq

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This is becoming more and more preoccupying:

Thousands of Shiites, many waving Islam’s holy book over their heads, protested the U.S. presence in
Iraq on Friday after the detention of several supporters of a radical cleric, while Sunnis shut down places of worship elsewhere in a show of anger over alleged sectarian violence against the minority.

Again, this is crying out for a much longer post.

French Economic Slowdown Puts More Pressure on May 29

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French economic growth slowed more than expected in the first quarter and this is bound to have a negative impact on yesterdays ‘big push’ to win support for the ‘yes’ in the European constitution referendum. Gross domestic product in what is Europe’s third-largest economy grew January -March by only 0.2%. This compares with the October-December period, when it expanded by a revised 0.7%.
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German President Criticises UK ‘Stereotypes’

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After the sorry incident of the Independent ‘racism scare’ yesterday, I really have to say I can sympathise with Germans who are getting tired of being treated as if they were all ‘Hitlers Children’.

“Germany’s federal president Horst K?hler called on the British people on Thursday to drop their “stereotypical” and “negative” views of Germany, in comments that look likely to revive debate on problems in British/German relations”….”Germans have a bigger affinity to Britain than the other way round,” he said. In unusually outspoken comments, he added: “I fear that German stereotypes in Britain are largely negative. Britain should take a more open view of Germany.” He criticised British schools for focusing only on the Nazi period when they taught German history..

Sometime I would write a longer post on all this. I am not sure that all German stereotypes in the UK are as negative as K?hler fears. Unless things have changed a lot recently there was always a tremendous regard for German craftsmanship, and efficiency. In the 70’s and 80’s the German model of social compact was extensively admired: Ralph Dahrendorf was brought in to head the LSE, for example.

This is why I was so jumpy about one commentator confusing the Telegraph with the Independent yesterday. I think maybe there were two schools of attitudes: those more on the right – like the Spectator and the Telegraph, who keep harping on about the nazi past, and those like the guardian, independent, economist, who have certainly all at one time or another been admirers of the ‘social economy’. That was why I was so shocked by the Independent yesterday. But then again there is the anglo-phobia to be found in continental Europe (although this is more likely to be found in France than in Germany). As I said, maybe one day a longer post…