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".

Meantime the IMF’s Rodrigo Rato

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Former government colleague of Jos? Maria Aznar, and now International Monetary Fund managing director, Rodrigo Rato has also been voicing opinions today.

In an interview given to the Spanish magazine Expansion, he says:

A 48-hour limit would push the eurozone in ‘the opposite direction’ from the rest of the world. ‘It is sending the wrong message…. ‘I don’t know what social model they are defending by stopping people doing more’…. ‘There is not an alternative to the US as the engine for growth’

He also reiterated his view that the European Central Bank should be ready to cut interest rates if signs of ‘greater weakness’ emerge. The ECB has ruled out such a reduction.

It seems that outside the ECB there is a growing consensus that we might see a rate cut before year’s end.

Meanwhile the bond markets continue to price in a cut

The 10-year bund yield reached 3.27 percent two days ago, the lowest ever for Germany’s benchmark. Yields, which move inversely to prices, fell amid evidence European economic growth is faltering.

Chavez On Aznar

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I recently posted on Afoe about the frivolous ways in which people tend to throw around the N*Z* word these days. Latest on the list is Venezuela’s Hugo Chavez:

Venezuelan President Hugo Chavez called former Spanish Premier Jose Maria Aznar a “fascist,” saying Aznar once told him to forget about the poor nations of the world. Chavez recalled late Thursday that Aznar had urged him to get on “the train of the future” and distance himself from Cuba’s Fidel Castro.

Chavez, who met Thursday with Spanish Labour and Social Affairs Minister Jesus Caldera, said he once asked Aznar what he thought of the situation of poor African countries and Haiti. “He told me, ‘Forget about them, those nations missed the train of history. They are condemned to disappear.'” recalled Chavez, saying such ideas remind one of Adolf Hitler. “He is a true fascist. That is the thinking of this gentleman who continues attacking us over there,” said Chavez, who also called Aznar an “imbecile.”

Obviously I am not privy to what Aznar may or may not have said, once upon a time to Chavez. What I do know – despite the fact I have very little respect for Aznar – is that he is no fascist. Neither for that matter is Chavez. Indeed the clip Spanish TV showed of Aznar criticising Chavez publicly was a model of reasonableness.

What is far less clear is what Caldera is doing in Venezuela, and why Zapatero has occupied his time selling arms to Chavez.

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.
Continue reading →

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