“I suggest you blog Barca vs Chelski later this week, in order to disperse the fog of wonkishness that hangs over AFOE.”
Alex Harrowell
Well, to please Alex even if it will please no-one else, I will. I have just two wordsto say: Leo Messi.
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Good lord, this looks serious:
A dawn bomb attack devastated a major Shi’ite shrine in Iraq on Wednesday, sparking nationwide protests and sectarian reprisals against Sunni mosques despite appeals for calm from government and religious leaders. The attack on the Golden Mosque in Samarra, one of Shi’ite Islam’s holiest sites, provoked more violence than attacks that have killed thousands but the Shi’ite-led government insisted it would not provoke civil war…..
No one was killed in the attack on the mosque in Samarra. However a Sunni cleric was killed, police said, at one of 17 Sunni mosques in Baghdad fired on by militants. One mosque was damaged by fire, though most damage appeared relatively minor.
Prime Minister Ibrahim al-Jaafari, a Shi’ite, declared three days of mourning and called for Muslim unity. He said the interim government had sent officials to Samarra. Residents said police sealed off the mainly Sunni city, 100 km (60 miles) north of Baghdad; police fired over demonstrators’ heads as they chanted religious and anti-American slogans.
Armed Mehdi Army militiamen loyal to radical Shi’ite cleric Moqtada al-Sadr took up positions on streets in Baghdad and Shi’ite cities in the south, clashing in Basra and elsewhere with Sunnis; a Sadr aide said: “If the Iraqi government does not do its job to defend the Iraqi people we are ready to do so.”
Witnesses said rocket-propelled grenades damaged a Sunni mosque in Basra and there were heavy exchanges of fire after Sadr’s Mehdi Army militia attacked an Islamic Party office in the city. Thousands of people marched in Shi’ite towns across the country and through the capital, condemning the Samarra attack.
It all started with the Catalan Statute, then there was this piece, then Wolfgang Munchau joined in. Today comes the news that:
“The European Union’s top competition regulator will this week issue formal antitrust charges against Telefónica, alleging that the Spanish telecommunications group has abused its dominant position in the fast-growing market for broadband services.”
And there is the situation with the takeover bid from the German group Eon for the Spanish utility company Endesa (full copy here):
ImageEon, Germany’s biggest power group, on Tuesday launched a €29bn cash offer for Spain’s Endesa, raising prospects of renewed consolidation in Europe’s energy sector.
If Eon succeeds it would be the word’s largest utility deal, valuing Endesa at €55bn, including debt and minority interests. It would create the world’s biggest utility with 50m customers across 30 countries in Europe and the Americas.
But the move, which trumps a rival bid from Gas Natural, threatened to disrupt Spanish efforts to create a national champion in the power sector and presented a challenge to Brussels just days after it announced an antitrust crackdown in the energy sector.
The curtain is about to be drawn like never before on Spain’s inner ‘boudoir’. Let’s just hope that everything which is to be found there makes for suitable public viewing.
Methinks the first serious test of the eurosystem is now looming on the horizon. The title of this post refers to an earlier point made by Nouriel Roubini. The FT this morning is reporting that:
“The German cabinet will on Wednesday endorse a 2006 budget that breaks the European Union’s fiscal rules for the fifth year in a row, amid criticism that Angela Merkel’s coalition government is failing to meet its own target to cut spending.”
If this is confirmed the EU Commission and the ECB will then have to respond. One of these fine days all hell is going to break loose in the financial markets. Will that be sooner or later? We await developments.
Yes gentle readers, les jeux sont faits. Italy has entered the election season, and this time the game is for real. The outcome of this election, and the decisions which are subsequently taken will be important not just for Italy, but for the whole EU, and the stakes are not small ones: the whole European process is in play. (This post needs to be read in conjunction with the last one from Alex, and contsitutes the start of our campaign: Italian elections 2006. Incidentally, since none of us are in Italy, and since I for one tend to see everything Italian through a Spanish filter, if there is anyone out there in Italy reading this, and who fancies their hand at some guest blogging during the Italian campaign, then please consider yourself invited to contact us directly to talk about this.)
The starting point for getting a handle on Italian Elections 2006 is undoubtedly a blog post from the US economist Nouriel Roubini following an amazing outburst at the recent Davos forum by Italian economy minister Guilio Tremont (also see here).
Wolfgang Munchau takes up the issue in an FT article today.
There was a revealing incident at the World Economic Forum in Davos this year. Nouriel Roubini, the New York-based international economist, took part in a panel discussion during which he raised questions about Italy’s future in the eurozone. A fellow panellist was Giulio Tremonti, the Italian finance minister. Professor Roubini wrote in his web log* that his presentation “caused a stir with Minister Tremonti who interrupted me in the middle of my remarks, went into a temper tantrum and shouted: ‘Go back to Turkey!’ I happen to have been born in Istanbul.”
Perhaps one should not conclude too much from this incident, but it does show one thing: European officials are getting nervous about the future of the euro. A few years ago, no one would have raised an eyebrow.
Now Munchau’s focus is Spain, but Spain and Italy here are but two sides of the same coin, the existence of low, and thoroughly inappropriate, interest rates. In the one case it is the private individual who is hopelessly in debt, in the other it is the state. Now as Munchau states:
“Italy is often mentioned as the country most likely to leave the euro. I disagree. Leaving the euro would not solve any of Italy’s problems. Since Italy’s debt is mostly euro-denominated, Italy would be facing an Argentinian-style debt crisis.”
This is undoubtedly true. Leaving the euro would clearly leave Italy facing a horrible mess, of gigantic proportions, but it ducks one key question: will Italy be able to stay inside? It may well be that Italy would never ‘choose’ to leave, but can Italy find a sustainable path to maintain its membership? That is the real question, and I, for one, have serious doubts on this, doubts which I have never really tried to hide. In the face of Italy’s inability or unwillingness to correct its course, the issue is, as Roubini himself asked in an earlier post, in the game of chicken which is now being played between the Italian state and the EU institutions who will be the first to blink? Certainly no-one here has a very viable exit strategy to hand. The latest news on the current attempts to reign in the debt is certainly far from reassuring.
So, to start the ball rolling, here are a number of the key issues as I see them:
1/. The existence of a huge and unsustainable public debt, no clear evidence that anything is going to be done about this, and the accompanying serious policy headache both for the EU Commission and the ECB.
2/. The presence of a high level of private saving, coupled with a far from dynamic internal economy.
3/. The fact that Italy has one of the lowest fertility rates in Europe which make the population pyramid unsustainable in the long term together with a lack of the real resources needed to introduce a programme of public policy to address this problem.
4/ The presence of strong xenophobic attitudes among leading members of the Berlusconi government (and here) which makes recourse to serious immigration as a paliative to the demographic problems extraordinarily complicated while at the same time making the conduct of EU foreign policy even more of a headache.
5/ A long and complicated history of corruption at many levels of private (and here) and public life (and here), and a complete lack of infomational transparency in dealings with the EU.
6/. The presence of a heavily ‘familiaristic’ approach to public policy which prevents realism and objective debate in looking for solutions to Italy’s long term structural difficulties.
7/. The existence of a strong sense of denial inside Italy itself about the scale of the problems and a real and present willingness to blame the euro itself for all the problems.
This list of headaches is undoubtedly long enough already, and undoubtedly more topics could quickly be added, they do howvere form a starting point for a full and frank dicussion of the problem. Let the games commence!
The Guardian is running a story which seems to cast Jyllands-Posten Jens Kaiser editor in a very sorry light indeed. If this story is confirmed I think the expression would be ‘rank hypocrisy’ rather than ‘free speech outpost’.(Many thanks to commenter Hans for drawing this to our attention).
Jyllands-Posten, the Danish newspaper that first published the cartoons of the prophet Muhammad that have caused a storm of protest throughout the Islamic world, refused to run drawings lampooning Jesus Christ, it has emerged today.
The Danish daily turned down the cartoons of Christ three years ago, on the grounds that they could be offensive to readers and were not funny.
In April 2003, Danish illustrator Christoffer Zieler submitted a series of unsolicited cartoons dealing with the resurrection of Christ to Jyllands-Posten.
Zieler received an email back from the paper’s Sunday editor, Jens Kaiser, which said: “I don’t think Jyllands-Posten’s readers will enjoy the drawings. As a matter of fact, I think that they will provoke an outcry. Therefore, I will not use them.”
Japan’s second-largest trading company Mitsui & Co. have just published a forecast: oil may rise to a record $96 a barrel in August, when hurricanes typically cut U.S. output. Like all such forecasts, this is subject to a large margin of possible error. But the arguments are coherent and certainly plausible. At least there is food for thought.
“Oil reached a record $70.85 on Aug. 30 the day after Hurricane Katrina made landfall on the U.S. Gulf Coast, wrecking oil platforms, pipelines and refineries, and cutting production in the world’s largest energy market. Global oil demand may rise 2.2 percent this year, almost twice as fast as in 2005, the Paris-based International Agency said last month“.
“Global growth, led by China and the U.S., will quicken to about 4.5 percent in 2006, the International Monetary Fund’s Managing Director Rodrigo de Rato said on Jan. 30“.
“Oil on the New York Mercantile Exchange has risen 6.2 percent this year after Iran, the world’s fourth-largest producer, pressed ahead with its nuclear research program, defying the U.S. and European Union. Rebel attacks on oil facilities in Nigeria cut shipments from Africa’s top exporter“.
“Not all analysts agree prices will increase. Rising supply may cause oil to fall this year, the Royal Bank of Scotland, the U.K.’s second-largest lender, said last month. Oil in New York may average $52.50 this year as global output increases, it said“.
News is coming in that France Soir and Germany’s Die Welt have now reprinted the Danish cartoons from Jyllands-Posten. From the freedom of Speech point of view there is no doubt that they have every right to do this, whether the action is well- or ill-advised is obviously another matter altogether. I guess we are about to find out.
Of course, I could be accused of only latching-on to the data that suits me, and it is true that there has been some reasonably optimistic reporting about the German economy of late: we had the German IFO index, and there was the apparently world cup driven consumer confidence index rise. So todays news that retaill sales fell by 1.4 % in December as compared with November while German unemployment rose in January for the first time in four months must have come as a bucket of cold water for some. Not here at Afoe though, since at least one of us has been stubbornly maintaining (and here) that a sustained internal consumption driven recovery was one thing which was definitely *off the cards*.
“Unexpectedly weak German retail sales figures for December have setback hopes that Europe’s largest economy is staging a comeback. Retail sales in the Christmas month tumbled by 1.4 per cent compared with November, according to the federal statistics office. Economists had expected a rise. The figures will heighten fears that overall German growth weakened at the end of last year.”
“Unemployment in Germany rose in January for the first time in four months, the Federal Labour Office reported today. The seasonally adjusted jobless total increased by 69,000 to 4.699 million from December, pushing the rate to 11.3 from 11.2 percent. In unadjusted terms, the jobless total rose by 408,000 to 5.012 million, taking the rate to 12.1 percent.“
This post has one sovereign virtue: apart from in the current sentence it will not refer, either directly or indirectly, to the Catalan Statute. The topic it does deal with however is probably equally vital for the future of Spain. The issue is Spain’s housing boom, and the role of immigration in fuelling it. Two facts above all others stand out: Spain is currently ‘enjoying’ the longest and deepest housing boom (in the current round) among all the world’s developed economies (see this useful article from the Economist, or this one from Business Week), and Spain is also enjoying sustained rates of immigration which – at around 2% of the population per annum, may well be the most intense ever experienced in a developed economy. For purposes of comparison I could point out that Spain’s net migration rate of 17.6 per thousand in 2003 contrasts sharply with that recorded for the old European Union 15 for the same year – 5.4 per thousand – and is even well above the level recorded by Germany in the early 1990s – a maximum of 9.6 per thousand in 1992 – or by France in the early 1970s. So there is a housing boom, and there is immigration, the question is, what is the connection?
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