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".

Of We Go Again, Ready, Set……….

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After a weekend of semantic analysis the currency markets didn’t take long getting back to work – the euro was only a cent off its all time high by late morning. According to Dictionary.com the relevant meaning of volatility is: tending to vary often or widely, as in price – the ups and downs of volatile stocks. Not much danger of volatility here, not if the only way the dollar is going to go is down. Wouldn’t the more appropriate term have been secular decline? But maybe they aren’t against that, and the markets in turning the pressure back on the dollar, have read the signal exactly right.
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Public Demand and Social Prorities?

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Now here’s an interesting one. (And please note that in keeping with recent Fistful tradition – as identified by Ms T – I am putting a question mark before the title). Pascal Lamy is reportedly considering a discussion paper which proposes allowing countries to impose import bans on products from other countries that do not share their national values and standards.
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Globalise or Die?

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I don’t know if he had Europe specifically in mind, but this is the message from Singapore’s finance minister Lee Kuan Yew in this interview in the latest issue of Yale Global Online. As he puts it:”If you’re not driven by profit, and do what the communists used to, which means price equals cost plus, then your economy will collapse.” Is this message being heard here in the EU? If the comments my posts on Indian outsourcing are anything to go by, it isn’t. And if the results of the survey mentioned in my last post are well founded, the consequences of this neglect may not be long in making themselves felt. To give a measure of where we may be on this one, France currently has China at number 16 on its list of trading partners, behind Peru. Turning your back on global supply chains won’t save your job, it will only completely finish it off.
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Europe’s Jobless Recovery?

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News in today might suggest that far from obsessing ourselves with the current plight of the US economy, our attention might be better directed rather nearer home. Reading off from the results of the latest Purchasing Managers Index survey which appears in todays Financial Times, the services sector is growing, but employemnt in it isn’t. Sound familiar? Now we’d better sit down and start examining the possible causes. Of course, it might be just a temporary blip (this is what they keep saying in the US, but it’s a blip that has been running some months now) and then again it might not be.
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German Beerdrinking On The Wane?

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Population changes are going to bring many cultural changes in their wake: and I’m not thinking only of immigration and multiculturalism here. Ageing populations will have different tastes and preferences, among them, apparently, will be changes in the quantity and types of alchohol consumed.

Among the explantations offered for the fact that the nation of beerdrinkers may soon no longer be one are the trend towards healthier living, economic problems (although that used to be thought to be a cause of raised consumption) and a deposit now payable on many cans and bottles. But there is no getting away from the fact that the big cause is changing demographics. Less young people means less beer. Now what else does it mean?
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In Search of A Lost Time

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I don’t know if one day when historians come to examine what exactly happened (or should I say what went wrong) with the EU they will be able to identify that defining moment, the decisive hour, when everything went sailing down the river. If they are so able I wouldn’t mind a quick bet that it might be sometime about now. The ideal of the EU, it seems to me, is being blown away before our very eyes. Maybe the fault is with the politicians, maybe it is with the institutions, maybe it is with all of us: but this cannot be like this. Failure to advance a consensus on reform and the constitution cannot (or at least should not) let us fall back into our old ways of cynical cutting up the cake, power politics and triple alliances. We have, as I have been trying to suggest, a Euro which is about to fall apart between the competing pressures of Northern stringency (the Netherlands) and Southern laxity (Italy), while what is being proposed here will do nothing to help whatsoever.
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Welcome To The World Of Kofi Annan

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While EU politicians over at Davos have been mulling over the possibilities of Turkey’s membership of the EU, Kofi Annan apparently has things much clearer. In a speech to the European parliament he bluntly told MPs that Europe needs migrants to ensure a prosperous future and that Europeans should stop using immigration as a scapegoat for their social problems.
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Parmalat Update

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Well, well, what do you know: Paramalat’s real debt is much bigger than was first thought. What a surprise. According to the Financial Times Parmalat’s gross debt now stands between ?14.5bn and ?14.8bn ($18.08bn-$18.46bn). At the same time its main Italian operations barely made a gross operating profit last year. Meantime Italy’s unions are threatening a strike iif the government reduces the regulatory role of the central bank. The dispute has arisen as a result of the Parmalat scandal, which the government blames partly on a failure of oversight at the central bank. As a solution the finance ministry wants to reform financial market regulation in Italy so that the central bank would no longer supervise corporate bond issuance and competition in Italy’s banking sector. The unions object to this.

Actually this was meant to be a quick post, but while writing it I cannot help reaching the conclusion that Italy may be begining to fall apart. Just wait till you read this.
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This Is One To Keep An Eye On

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2003 was a good year for the Spanish banks, with interest rates at historic lows, lending boomed. News has it today that net profits at Santander Central Hispano, Spain’s largest bank, rose 29.6 per cent in the fourth quarter to ?681m ($857m) mainly on strong mortgage lending in Spain and growth in its consumer finance business in Germany and Portugal. Net profits totalled ?2.61bn for the full year, a 16 per cent increase over 2002 and the best year on record, while credit inside Spain was up 16.2 per cent as the housing boom continued on its relentless path hence generating strong demand for mortgages.

So good luck to the bank, and that’s it. Well again, not exactly. Why is there a boom in consumer credit and mortgage lending right now in Spain? That really should be the question.
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