Possibly not the best result for a sitting government.
(That’s how British people do understatement, right?)
It also shows at least one of the perils of writing headlines. UKIP did well in 2004, so this result gains them one additional seat in the European Parliament. The Conservatives, who placed first, also gained only one seat, as did the Liberal Democrats. The British National Party gained two, the biggest seat gain of any UK party. Labour lost five seats on a decline of 7 percent in votes.
“As long as excessive debt is not digested, both monetary and fiscal policies are inefficient. There is not much of an alternative. Either to let the economy collapse, in order to reduce debts, and then use fiscal policy to revive it, or inundate the insolvent economy with public credit, to avoid the collapse, and loose the ability of fiscal policy to pull it out of a prolonged lethargy. Either a horrible end or an endless horror.”
After the Crisis: Macro Imbalance, Credibility and Reserve-Currency: André Lara Resende
Well, I think the title to this post makes my view on the high-profile shenanigans we are currently witnessing on the part of two widely respected contemporary intellectuals clear enough, even if Paul would probably respond that he is perfectly well able to take care of himself, thank you very much. Nonetheless, looking at the way the tone of his most recent and most public debate with Niall Ferguson has deteriorated (yes, it is Niall I’m talking about here, and not Sir Bobby, although sometimes even I have my doubts), let me confess, I am not entirely convinced on this point (Niall Ferguson’s argument can be found summarised in his Financial Times Op-Ed here, and in his rejoinder letter to Martin Wolf reproduced by the FT Alphaville’s ever interesting Izabella Kaminska here, while Paul Krugman’s “input” to the debate can be found here, here, and here).
So, since the thunder and lightening that such high profile exchanges generate tends to obscure more than it reveals, let me be so bold as to add my own 2 centimes worth – even if, apologies in advance, the whole affair ends up being most terribly “wonkish”. If you want to save yourself a good deal of trouble, and heart searching, the central point is a simple one: are long term US interest rates rising because investors are worrying about having to buy so much public debt (as K would point out, what else were they thinking of doing with the money – which isn’t really “money” at all, but, oh, never mind), or are they rising because investors expect the time path of US short term interest rates to move steadily upwards? It’s as easy, or as hard, as that. So now, you decide! Continue reading
The Latvian economy is certaily stuck in a hard and not especially pleasent place at the moment, and really one chart tells it all, since as we see above the local interbank overnight interest rates have been storming upwards and through the roof over the last two weeks. As a result of this unfortunate state of affairs the country has attained a higher profile in the international news media than most Latvians would ever have dreamt possible, or even, probably, considered desirable. Ever since Claus Vistesen’s last post, my inbox hasn’t stopped filling up with reports, analyses, forecasts etc. (apart from Claus, FT Alphaville’s Izabella Kaminska has had a steady stream of posts – here, here, here and here – while RGE analyst Mary Stokes is a regular follower of the issues – and see again here for some thoughts on the contagion question). Continue reading
The antiliberal collective have a good data thread going on; it’s been interesting listening to the BBC Radio feed on one brain interface and reading actual data on another, an experience that reminds just how conventionalised the news experience is. Based on the numbers, it looks like the EPP-ED parties have held their own and gained a little (this is “a triumph” in mediaspeak), some of the social democrats have suffered – notably the French and British – and the Greens and some extreme-rightists have done well.
But the UK Tory blowout hasn’t happened yet. The Tory speakers on the BBC were trying to make out that their results from places like Norfolk, West Dorset, Elmbridge, and Richmond were spectacular, which sounds good until you realise that all of these are areas which have never had any statistically significant Labour support in the history of democracy. Labour has had one stinging experience, the election of a BNP member in Yorkshire.
I’m sorry.
Well, like most BNPers in office, he’ll probably crash in flames in months. Knowing how some of them managed to fail as local councillors, I really wonder what he’ll do with the financial possibilities of being an MEP. He is giving a truly bizarre speech about the D’Hondt system as we speak.
In France, meanwhile, the Socialists’ ego wars have had their impact, and as expected, the Bayrou wave was a flash in the pan. The PS is down as far as 17%, and the Greens had a blowout night, especially in Paris. This suggests that the wing of the party that supported Dominique Strauss-Kahn has swung Green, an interesting result; he did say back in 2007 that “il faut preparer l’apres-petrole”, I suppose. On the comedy wing, one seat has moved from the FN to the Hunting, Fishing and Traditions Party.
Hungary really has seen a disquieting burst of hard-right voters; the quite ugly Jobbik got almost 14%. And Sweden saw both a Socialist majority and a seat for the Pirate Party, which won hugely in the youth vote. The organised hackers/sinister nazi copythieves, depending on media version, are planning to align with the Greens.
The really weird story, though? The British Tories have won big in Wales, where they have no history or support and whose autonomy they opposed. They’ve shut up about that bit lately.
Update: The Scottish Nationalists are claiming to have won heavily.
Update 2: The BNP MEP: not the disaffected ordinary man they would like, but a long-term neo-nazi maniac.
Update 3: German results: CDU 20 points ahead of the SPD, who are down 3 points. That group is equally split between the Left, the Greens, and minors.
Update 4: Oh dear, yer man from the BNP is on the radio. Apparently he thinks that the test of Britishness is “anthropological”, and specifically “like the population after the war”. Fucking idiot. He mentions the voluntary repatriation clause in the 1971 Immigration Act. Ha. Some people used to request voluntary repatriation under the Act, take their air ticket to Jamaica, and take a holiday – because the Act’s drafters set up that any such action was without prejudice to one’s immigration status. He doesn’t seem to know that.
Update 5: Suggested UK figures – Tories 20-odd, UKIP 17, Labour 16, Liberals 15.
Update 6: Results for London. 2 Tories, 2 Labour, 1 Liberal, 1 UKIP, 1 Green. ‘Kippers in fifth place. A good point from Liberal London chairman Simon Hughes – BNP in Yorkshire has only gained 2%, Greens have doubled their share in the UK.
Update 7: UKIP aristocrat babbling on the BBC about Marta Andreesen. “Wouldn’t sign the EU’s fraudulent accounts”. The UK’s national accounts aren’t externally audited, but then, it was never about that. It looks like she beat Tim Worstall though.
Update 8: Jesus wept, Griffin’s in. Can’t wait to see how often he shows up, how much money goes missing, and what happens when he has to shake hands with Danny Cohn-Bendit.
Peering out of the window on a rainy and cold Sunday (election) afternoon in Copenhagen it is difficult not to paraphrase, yet again, one the Economist’s many classic cover stories but really; it sure has been one hell of ride this week in Latvia. One wonders whether politicians and economists in the central bank really want to see what happens come tomorrow as markets and the flow of news re-commence. The truth however is that they really do not have a choice. Consequently and what actually started a little more than a week ago has now steadily turned into the well known story of politicians and official authorities doing their best to maintain a crumbling edifice. Markets, analysts, and commentators, on the other hand, are beginning to smell a rat and this particular rat looks set to gnaw its way right to the core of the Latvian economic edifice in the form of the Latvian peg. Continue reading
From Brad DeLong:
The key irrationality [causing the present crisis] was a private-sector failure on the part of the shareholders and top managements of the banks to make sure that their traders had an appropriate stake in the long-run survival of the bank and not just in constructing a portfolio that would be marked-to-market at a high valuation on Dec. 31. And the government needs, for all our sakes, to compensate for this private-sector irrationality.
That’s the conclusion of a very interesting argument.
Global factory activity continued to improve in May amid growing optimism that the worst of the recession may be over. Output contracted at a much less ferociously than at the start of the year in one economy after another, and this month three countries actually registered output growth – India, China and Turkey. The JP Morgan global manufacturing index (PMI) rose to 45.3 in May from 41.8 in April, the highest level in nine months, although still a long way below the 50.0 mark dividing growth from contraction. The component indexes for output and new orders were both running at much higher levels than in April.
However, the headline PMI is still at a very low level by historic standards, and well below one which would be consistent with outright recovery. On the other hand, it is clear that the easing of the worldwide manufacturing recession which we have been seeing over the past two months has continued and has been substantial. The month-on-month gains in the PMI, output and new orders indexes in April and May are the greatest in the series history (which is not that surprising follow a series of record falls). All of the national indexes for these variables rose during the latest survey period.
Among the countries surveyed (see foot of post for details) only India, China and Turkey reported increased production. Japan (slowest for 13 months), the United States (weakest fall in current nine-month downturn) and the United Kingdom (slowest drop in a year) saw substantial easings in their respective rates of contraction. Although the Eurozone vastly underperformed relative to the global average, its output index rose to the greatest extent in survey history and to an eight-month high.
New orders contracted for the 14th month running in May, the longest period of contraction in the survey history. However, the Global Manufacturing New Orders Index climbed to 48.6, its highest level in a year. The rate of decline in global trade slowed sharply to its weakest since last September. China and India reported increases in total new orders for the second successive months in May. The U.S. and Turkey were the only other nations covered by the global survey to report gains, with new business rising for the first time in one-and-a-half years in the U.S. and for 17 months in Turkey.
Although May data pointed to substantial jobs losses, the rate of decline eased to a six-month low. Employment has now fallen for 14 successive months. Almost all of the nations covered reported lower staffing levels, the exceptions being India (slight gain) and China (no change). Among the other countries, only the U.S. and Austria failed to report slower rates of decline. The pace of job cutting eased to five, six and seven-month lows in the Eurozone, Japan and the U.K., respectively.
At 40.8 in May, the Global Manufacturing Input Prices Index posted its highest reading since October 2008 but remained below the neutral 50.0 mark for the eighth month running. Only India and Russia saw increases in costs. The rate of decline eased sharply in the U.S.
What follows is a very extensive country-by-country, blow-by-blow account assembled from across the national reports. It is probably too dense to read at one sitting, but you can simply pick and tick the regions and the countries that interest you, as I do think the monthly manufacturing PMIs give a reasonable picture of what is actually going on, as opposed to what some would like to believe is going on. Continue reading
As I pointed out recently in the context of Latvia and the impending potential for a devaluation there is a distinct risk of falling victim to the sin of crying wolf. Yet, as the plot inevitable thickens I am maintaining, as it were, my cry. There are two significant points to think about in the context of what we might call recent developments. First of all there is the news that the 2009 deficit envisaged in the budget before the Latvian parliament will amount to 9.2% of GDP – significantly higher than the original IMF agreed “limit” of 5%, and even well above the latest negotiating objective of the Dombrovskis government of 7%. Of course, this is just number salad but at the end of the day it is important because it determines whether and under what condition the IMF funded bailout packaged continues. The fact that Latvia reports a deficit of this magnitude almost amounts to throwing in towel in my opinion or at least it means that the playing field is now a different one when it comes to IMF funding. Continue reading
Usually when an IMF mission issues a departing statement, it’s along the lines of thanking everyone for their hospitality and generally sounding positive about the scope for progress even when circumstances aren’t that great Not so the just issued statement after the latest visit to Moscow. It quickly gets to blunt criticism of the government for: lack of clear policy on domestic banking crisis, mismanagement of capital inflows and the exchange rate, botched fiscal stimulus, backtracking on WTO Accession, and in a nod to a favourite topic of our own Edward —
The urgency of advancing reforms is heightened by adverse demographic factors, which are leading to a contraction in the labor supply.
It’s probably hard to get the government to focus on declining labor supply as a problem when they are more focused on unemployment. But in fact, part of the Fund’s exasperation with Russia may reflect the collateral damage the crisis is already inflicting on its CIS neighbours, which provide a critical part of the Russian labour force. The decline in remittances to these countries is causing major problems (see pages 24-28) — in fact, the problems look much worse than the more talked about impact of the Arab Gulf slowdown on South Asia.  Overall, the tone of IMF-Russia dialogue sounds like a case of an important country that isn’t planning on needing a Fund program but the Fund views as too important to be left entirely to its own devices.
As media furiously refrain from speculating, it’s odd to be hoping that a lightning strike, an electrical malfunction, or some combination of both was responsible for the crash of an Air France flight that disappeared over the Atlantic Ocean last night while en route from Rio de Janeiro to Paris. Because there aren’t a whole lot of other possibilities that don’t involve explosions.
While flying between the two cities is far, far safer than driving regularly in either of them, the stratosphere is an unforgiving environment, and the possibility of deliberate harm is also still out there. A sad day for both countries.