Tag Archives: government

Sparkling Spain

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Spain’s economy is of course booming, (as it has been for the last ten years). The inflation rate is booming too. Some even go so far as to suggest that Spain should now become a member fo the G8. Spanish people are of course buying a lot more houses, indeed more housing units were built in Spain last year than in Germany, France and Italy combined, and since, as Brad Delong pointed out yesterday, as long as interest rates stay low, the housing sector can keep booming, and since in the short term interest rates in Spain will stay low, then the boom looks set to continue. Plenty of reasons then, at least for now, to break open the bubbly.

Which is what, of course, a lot of people having been doing. In Spain by bubbly people normally mean Cava, a Catalan beveridge which is really remarkably similar to French Champagne. This year, however, things may be a little different, at least in some parts of Spain, since in addition to having a smokeless celebration, many will also be having a cava-free one.

So what is this all about? Well funnily enough rather than being about Eve (whether New Year’s or Xmas), this topic is in fact much more about José Luis Rodriguez Zapatero (the Spanish Prime Minister/President).
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The Pébereau Report

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According to the French writer Rabelais debt and deceipt are almost invariably inextricably linked. So it is appropriate that it should be a French banker – Michel Pébereau – who takes it upon himself to try to bring this harsh reality home to a French public which still seems excessively steeped in the finer details of the arts of self-deception. Pébereau does not mince words: over a quarter of a century century French public policy has accumulated for itself a national debt has neither supported economic growth nor reduced unemployment. The debt is “asphyxiating” and unless the State acts to reduce its spending now France will “lose control of the financial situation” before the end of the decade. Indeed so stark is the picture Pébereau paints that French economy minister Thierry Breton, on reading the report, was moved to comment: “Unbeknownst to them, our children are already financing part of our standard of living.”
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What did Schily know, and when did he know it?

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This much is uncontroversial: in late 2003 the CIA kidnapped Khalid al-Masri, a Lebanese-born German citizen, and carried him off to a prison in Afghanistan for interrogation. In the end they released him when they realised that his only crime was to have the same name as some other man they wanted to get their hands on. It took them five months to realise this, five months during which al-Masri says he was tortured. He must be lying about that part, though, because George Bush has said that his administration does not torture.

Now, however, it looks like an extra-large family-size jar of controversy is about to be opened. Otto Schily, who was at the time Germany’s Innenminister — in this context, an analogue to the British home secretary or American director of homeland security — knew about the matter in May 2004 because then-US ambassador Daniel Coats told him. That’s not the controversial part. This is: according to a report in this week’s Spiegel, Schily kept quiet about the Americans kidnapping and falsely imprisoning a German citizen because Coats, his good friend, asked him to.
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The End of the Dolce Vita?

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Are the good times and the good life still going to continue to roll in the Italy of the twenty first century? This is the core question the Economist’s Europe editor John Peet asks in the latest Economist Survey: Italy, Addio, Dolce Vita. As Peet says:

Italy is approaching a crunch. Rather like Venice in the 18th century, it has coasted for too long on the back of its past success. Again like Venice, it has lost many of the economic advantages which underpinned that success. For Venice, it was a near-monopoly on trade with the East that paid for the creation of its beautiful palaces and churches; today’s Italy has benefited hugely from a combination of low-cost labour and a switch of workers away from low-productivity farming (and the south) into manufacturing (mostly in the north). But such good things invariably come to an end.

Italy badly needed a dose of pro-market reforms, liberalisation, privatisation, deregulation and a shake-up of the public administration, all of which Mr Berlusconi had promised. He even pledged to cut taxes. A majority of Italian voters, backed by much of Italian business, were willing to overlook both his legal entanglements and his conflicts of interest and give him a chance to reform the country. But as the next election approaches, very little of what he promised has been delivered, so many of his erstwhile supporters are feeling disillusioned.
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Italian Pension Reform

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The Italian government finally agreed the details of the new penison reform yesterday. Curiously, it does not need to go to parliament for approval. Getting government agreement had not been without difficulty, and again interestingly enough it won’t come into effect for two years, giving next year’s incoming government plenty of time to change its mind.

The reform aims to launch a second pillar of private and occupational schemes to flank state pensions, using money which companies currently hold on behalf of their workers in a fund which employees receive when they leave their job. It will come into force at the same time as a reform of the state pension system which raises the retirement age to 60 from 57. Both measures could be changed or scrapped between now and 2008 by whoever wins the 2006 general election.

When Chams Attack

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Greece and Albania are having a small diplomatic tiff. If reading about that sort of thing interests you, read on.

So: two weeks ago, Greek President Karolos Papoulias’ was scheduled to meet with Albanian President Alfred Moisiu, in the southern Albanian town of Sarande. I’m pretty sure this was the first meeting of Greek and Albanian heads of state in a long time. So, fairly big deal by regional standards.

But it didn’t happen, because of the Chams. About 200 of them. They showed up outside the hotel in Saranda where President Papoulias was staying, waved signs, shouted, and generally made a nuisance of themselves.

President Papoulias didn’t take this at all well. He cancelled the meeting with President Moisiu and went back to Greece in a huff. A day or two later, Greece issued a demarche to Albania. (A demarche is a formal diplomatic note from one country to another. It’s about a 5 on the diplomatic hissy-fit scale, higher than merely expressing disapproval but lower than recalling your ambassador.) The demarche expressed regret that Albania did not “take the necessary precautions so that the meeting between the Greek and Albanian Presidents could take place without hindrance.” Worse yet, they did not “take the necessary measures to discourage certain familiar extremist elements which, in their effort to obstruct the normal development of bilateral relations, continue to promote unacceptable and non-existent issues, at the very moment when Albania is attempting to proceed with steps fulfilling its European ambitions”.

Got that? Okay, now comes an obvious question.

What, exactly, are Chams?
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Promises, Promises, But More Than A Technical Detail

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Well the eurozone government deficit problem has hit the agenda with a thud again in the last few days. Yesterday the FT ran a story about how the ECB has decided that it will not accept government paper (bonds) in the future from any country which has not maintained at least an A- rating from one or more of the principal debt assesment agencies. (Dave Altig at MacroBlog has also covered the story here, and Nouriel Roubini here). Today the FT has another story about how Trichet has confirmed the policy, and how the Commission too plans to get tough (well they would, wouldn’t they, since this may now become a credibility auction).

This topic must appear appaulingly technical and yawn-provoking to the non-economist. In fact nothing could be further from the truth. Let me explain a bit.
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Then and now

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Billmon, in a very eloquent post, says nothing. All he does is put up a series of quotations. Yet his message couldn’t be clearer; or more correct.

Lest visiting American wingnuts misunderstand me: I do not assert that Billmon is correct in inviting us to infer that Donald Rumsfeld is guilty of war crimes. That question would be decided by a court, in the extraordinarily unlikely event that Rumsfeld ends up before one.

No, what Billmon gets undeniably right is the far bigger and broader and more fundamental idea that (to use the words of Telford Taylor with which Billmon’s post comes to a close) ‘law is not a one-way street’. Whether a government is good or bad is decided by what it does and refrains from doing; not by who its members are or by the justifications they offer for their acts and omissions. That goes for the current government of the USA, and it goes equally for every other government entrusted with the running of a state.
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Serbia: A glimmer of light

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Things are looking up a bit for Serbia’s economy.

The 1990s were a lost decade for Serbia. GDP declined sharply in the first half of the decade. A modest recovery in 1995-8 was wiped out by the NATO bombing. Per capita income in 2000 was just about where it had been in 1989… but the average person was much worse off, because income distribution had changed drastically, with a small caste of the rich and well connected now owning most of the country’s wealth.

The fall of Milosevic in October 2000 brought in a new government, but the economy was very slow to respond. GDP grew by only about 3.5% per year between 2001 and 2004, foreign investment was slow to show interest, and the income distribution stayed as bad as ever. I lived in Serbia during those years, and the general impression was one of dashed hopes. The assassination of Prime Minister Djindjic in March 2003 didn’t help matters.
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Fischer’s gain, America’s loss?

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Michael Moore gives us a thoughtful article about Joschka Fischer (and some priceless Fischer anecdotes) in Slate today. Before going any farther I should make clear that I refer not to the notoriously fat filmmaker but to Michael Scott Moore, an American novelist living in Berlin. Of his fatness or otherwise I am entirely ignorant.

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