Well actually it’s called ?Treasure Hunting Ship;? in Chinese, the CNOOC bid for Unocal. Read some intersting discussion and analysis here.
Combustible Politics
I have felt for some time that Rober Maroni would not have been so outspoken without at least the tacit permission of Silvio Berlusconi, and now we have the evidence to back my hunch:
“Italian Prime Minister Silvio Berlusconi called the euro a “disaster,” blaming the currency for Italy’s economic slump and seeking to use anti-euro sentiment in his election campaign against opposition leader Romano Prodi.
“Prodi’s euro has been a ripoff,”
With Italy in its second recession in as many years, the euro is proving to be a “disaster,” Berlusconi, 68, said. Berlusconi has blamed the euro for raising prices and choking exports.
Unified Growth Theory
According to Oded Galor it has become evident that in the absence of a unified growth theory that is consistent with the entire process of development, the understanding of the contemporary growth process would be limited and distorted. He quote Copernicus to the effect that:
?It is as though an artist were to gather the hands, feet, head and other members for his images from diverse models, each part perfectly drawn, but not related to a single body, and since they in no way match each other, the result would be monster rather than man.?
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Portugals Ailment
And no, it isn’t gout, though plenty of port and fine stilton are to be recommended in any event.
No, the ailment here is an economic one. The EU Commission has just been lenient with Portugal: she has three years, not two, to put the deficit straight.
Russian Demographics
Just wanted to add a small note to Edward’s ongoing demographic discussion. Lance Knobel quotes Murray Feshbach, an honest-to-goodness expert on Russian demography.
If anything I would now say that I was underestimating the losses to the population of Russia in the future. The current official projection (medium) by the Russian State Statistical Agency is some 101 million in 2050. [July 2005 estimate of current population is 143 million.] My expectation is that the number will be closer to 75-80, approximately the level of worst-case scenario. The current and imminent number of deaths from HIV/AIDS is much worse than anticipated, as well as the number of deaths from tuberculosis. In addition, hepatitis C deaths will, ceteris paribus, begin to be devastating at the end of the next decade. None of these health factors were incorporated into the projection model of the Statistical Agency.
On the other hand, a company I write about is working on a hepatitis C vaccine that, if all goes well, could enter the market shortly after 2010. Still, the outlook for Russia is rough.
Something Worries Me About Peter Bofinger
Really I realise I have been remiss in another important sense. I have long assumed that in fact the decision to reduce deficits was taken due to the coming fiscal pressure from ageing. This certainly was the background to the discussion. However now I look at the details of the SPG this area is not mentioned (as far as I can see) and the other – the free rider and associated – is the principal consideration.
So those who criticize the bureaucratic and infexible nature of the ECB are in the right to this extent. Of course the underlying demographics *should* be part of the pact, but that is another story.
I find myself in a tricky situation, since I am deeply sceptical that the euro can work, and now after the French vote even more so, but since it has been set in motion, the best thing is obviously to try and make it work (even while doubting). So I am thinking about all this. Obviously I should try and write a longer post making this clearer.
The SGP was adopted at the Amsterdam Council 1997. A history of the implementation of the pact, and a summary of the debate over the new pact can be found here. The Stability and Growth Pact was designed as a framework to prevent inflationary processes at the national level. For this purpose it obliges national governments to follow the simple rule of a balanced budget or a slight surplus.
Now if we go back to the origins of the pact, to the communication of the European Commission on 3 September 2004, you will find the following:
“As regards the debt criterion, the revised Stability and Growth Pact could clarify the basis for assessing the “satisfactory pace” of debt reduction provided for in Article 104(2)(b) of the Treaty. In defining this “satisfactory pace”, account should be taken of the need to bring debt levels back down to prudent levels before demographic ageing has an impact on economic and social developments in Member States. Member States’ initial debt levels and their potential growth levels should also be considered. Annual assessments could be made relative to this reference pace of reduction, taking into account country-specific growth conditions.”
Now curiously I have found nothing in Bofingers argument which seems even to vaguely recognise this background.
A good starting point for this topic would be the conference “Economic and Budgetary Implications of Global Ageing held by the Commission in March 2003.
The European Council in Stockholm of March 2001
agreed that ?the Council should regularly review the
long-term sustainability of public finances, including the
expected strains caused by the demographic changes
ahead. This should be done both under the guidelines
(BEPGs) and in the context of the stability and
convergence programmes.?
This document on the history of EU thinking on ageing and sustainability is incredible.
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Stasiland
Don’t pick of a copy of Stasiland
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Too Much Money Chasing Too Many Goods?
Business week has just popularised what was previously a minority sport: debating the ‘global savings glut’ issue. Steven Roach has already responded. Really with all this high-powered economics going on, I feel sorry for the ‘layman’, since it must be kind of hard to reach a conclusion about whether or not to buy a house, or whether to take a summer break or wipe the credit card debt instead.
The issues are pretty complex, but I think can be broken down into two main issues.
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Narodwagen?
BusinessWeek spills a lot of ink on the rise of the car industry in Central and Eastern Europe. The idea that a lot of manufacturing is headed east is nothing new, but to see the numbers and changes laid out so explicitly gives a much clearer idea of the challenges that Western societies are facing.
Volkswagen [in Germany has] the highest labor costs in the industry — close to $50 an hour for a 28-hour workweek, some 20% over the already high average wage for German auto workers. In contrast, Slovaks [at another VW factory] cost $6 an hour and work a 40-hour week, netting VW annual personnel cost savings of $1.8 billion, according to analysts at Germany’s Bank Sal. Oppenheim. If [Thomas] Schmall [chairman of VW Slovakia] needs to boost production suddenly to meet a surge in demand, the new shifts can be arranged overnight. In Germany, negotiations with unions to alter work-time models can take up to six months and cost more in overtime premiums.
Ouch.
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Spain’s Economic Miracle
It has become conventional to distinguish between two groups of countries within the eurozone. On the one hand there are the older, relatively richer countries, who tend of late to have been suffering from ‘sub par’ growth. On the other hand we have the more recent, and relatively poorer, members like Spain and Ireland, where growth (and inflation) have been notably stronger.