Spain’s Balance of Payment Deficit

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I don’t have time to go into this much further right now, but Spain’s Current Account Deficit is ballooning enormously. According to figures realesed by the Bank of Spain today, Spain?s trade deficit increased to 6.56 billion euros in March. The deficit was up from 4.0 billion euros in the same month a year earlier. The full report from the Bank of Spain shows that:

El d?ficit acumulado de la balanza comercial se elev? en los tres primeros
meses del a?o hasta 14.736,5 millones de euros, desde 9.734,8 millones en igual per?odo del a?o anterior. En el per?odo enero-marzo, las exportaciones de mercanc?as aumentaron un 1,7%, en tasa interanual, mientras que las importaciones crecieron a un ritmo sensiblemente mayor, un 12,3%.

ie that the accumulated deficit on the commercial balance in the first 3 months rose from 9,734.8 millon euros, to 14,736.5, (an increase of 51% y-o-y). Exports increased 1.7% whilst imports increased 12.3%. Last year Spain had a trade deficit of 5% GDP, at this rate we could be heading for the 7-8% range in 2005. This *is* unsustainable, but no-one has any idea what to do about it.

The Never To Be Forgotten List

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This decision is long overdue. That doesn’t make it any less welcome.

Argentina’s Supreme Court overturned two amnesty laws Tuesday that had prevented the prosecution of hundreds of military officers, soldiers and police linked to this country’s “dirty war,” in which tens of thousands of people may have been slain.

The ruling allows the reinstatement of hundreds of prosecutions and civil lawsuits that had been dropped nearly two decades ago, legal experts and government officials said. Government sources and human rights activists said new charges naming as many as 300 defendants ? the majority retired military and police officers ? could be filed in the coming weeks.

The Kurdish Factor

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Evidence has been mounting for some time now of ‘ethnic cleansing’ type activities in Iraq’s Kurdish zone. The latest addition to the list is a piece by Washington Post reporters Steve Fainaru and Anthony Shadid. They claim to have gotten hold of a US State Department memo which states that “extra-judicial detentions” form part of a “concerted and widespread initiative” by Kurdish political parties “to exercise authority in Kirkuk in an increasingly provocative manner.”

As Juan Cole argues:

Kirkuk is a powderkeg. AFter the fall of Saddam, the city of about 1 million was estimated to be about 1/3 each Turkmen, Arab and Kurdish. But many Arabs have been chased out, and many Kurds have come into the city (in many cases returning to a place from which Saddam had expelled them). Fainaru and Shadid now seem to suggest that the Kurds are about 48 percent of the population, with Turkmen and Arabs a quarter each.

The kidnapping tactics extend to Mosul and perhaps to Tel Afar.

Arab on Kurdish violence could provoke a civil war. Kurdish on Turkmen violence could bring Turkey into northern Iraq, since Ankara sees itself as a protector of Iraq’s 750,000 Turkmen.

I am finding it increasingly difficult to see how this story is going to come to an end without the disintegration of Iraq.

ECB Dispute Continues

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I don’t like saying ‘I told you so’, but if you can spare the time to go through some of my posts, the ‘reading the tealeaves’ rate hasn’t been too bad lately. First there is the question of ECB rates, they need to come down. I started indicating this at the time of the May meeting. Then there is the trouble at mill story about the ECB, and then the negative consequences for the euro of a French ‘no’ (and here), all of which you were able to read on Afoe well before they got to be a commonplace in the mainstream press.

Well today there is more confirmation of my ‘crisis’ ECB hypothesis:

European Central Bank uncertainty about whether interest rates might have to be cut to boost the flagging eurozone economy has spilled into a semi-public debate among members of its rate-setting council.”

Hints by Jean-Claude Trichet, ECB president, and Otmar Issing, the bank’s chief economist, that the possibility had increased of borrowing costs falling have contrasted with comments by several national central bank governors on the committee.

The differences highlight the dilemma faced by the ECB. Economic growth, lacklustre for the past four years, has slowed again, and politicians are increasing the pressure for a further cut in borrowing costs. But excess liquidity and oil price increases are sounding inflationary alarm bells.

Incidentally speculations are already begining about Otmar Issing’s successor. I wish I could say for my part that his presence will be sorely missed. Doubtless he will be looking forward to all the extra time he can spend with his family.

Now, I have two more strong calls out (well three if you count the fact that I dismiss out of hand the inflation round the corner story, and have been doing so for the past three years): the EU commission will have little alternative but to try to strictly enforce the Stability and Growth Pact, and Alan Greenspan won’t be able to get very far with the ‘measured rate increases’. Inflation, collapsing dollar, China bust: I just don’t know how so many bright people can get things *so* wrong.

Online Music Revolution?

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I don’t know if this thing actually works, whether it will become the next big thing, or whether it is simply just another load of hype. It certainly looks interesting and do-able. What I do know is that this is the kind of thing we need here in Europe, and much, much more of it. I also know that half of these people are working just round the corner from me, here on the outskirts of Barcelona.

A Spanish Internet start-up that tracks how people listen to music on computers and other devices hopes to profit from enhancing the success of the online music business, its chairman said on Tuesday.

MusicStrands aims to grow by using its exclusive new technology to delve into listeners’ computers, mobile phones or i-Pods to help determine their preferences, not just what they purchase, and make recommendations. “You can have fairly crude forms of recommendation technology, which is just if someone picks A then you recommend B,” Chairman Derek Reisfield told Reuters. “We are going to the next level. We can personalize the recommendation.

Whilst we are on internet topics, this is what I am anxiously waiting for, cheap mobile broadband, and whilst we are on Spain, this promises to be hilarious.

Micro Effects of Aging

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Following up on Edward’s entry, I just want to point out that the Washington Post recently reported on a part of the US whose demographics now approximate the national structure in 2025. The newspaper followed a study by professors at Wake Forest University’s business school (Sherry Jarrell and Gary Shoesmith, though the study doesn’t seem to be on the web) to look at the micro effects of an aging population. It’s interesting, and mixed.

The Lakeland [Florida] area is not a retirement community, dotted with shuffleboard courts and senior centers, but the businesses that cluster here reflect the subtle influence of a population that is markedly older than the current national average.

Polk Community College may attract ambitious young students, as college President J. Larry Durrence says, but they’re training to be nurses or respiratory therapists. His wife, an attorney, specializes in “elder law.”

Nearly a third of Maureen Shaw’s florist business comes either from out-of-state children sending flowers to their retired parents or seniors sending condolence bouquets. Keith DeLoach grew up here. After West Point, the Special Forces and combat in Afghanistan, the 32-year-old just moved back to open a financial services firm — largely to help retirees stretch their savings.

Subsidiarity To The Rescue?

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The wrangling continues. To the world this must present a pretty unedifying spectacle of day-to-day political life here in the EU.

Italy has now threatened to use the veto, Peter Mandelson (taking time out from advising the US on how to handle China) asks Blair to think again, Blair himself is on a whilstlestop, and the whole question of how to handle Turkey admission is – like the proverbial hot potatoe – rapidly moving from one hand to the next.

Yesterday the euro – reeling from the referendum and the ECB rate crisis, went bobbing up and down like a yo-yo, and all in all we’re having a ‘very happy time of it’.

What the EU needs now is some short term success, some visible signs that things actually work, some ‘baby steps’ even.

Well one possible area where things could advance, and to everyones pleasure, might be related to the so-called ‘early warning system’ contained in the Consitution Treaty. Ian Cooper explains:
Continue reading →

No Answers Only Questions

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One person who could rightly claim to know more about global ageing and its possible consequences than anyone else in the business is the German Director of the Manheim Research Institute for the Economics of Ageing Axel B?rsch-Supan. If there’s a conference being organised, he seems to be there. Actually his comments at both these meet-ups are well worth reading in and of themselves (here, and here).

In a sense B?rsch-Supan is almost uniquely qualified to express opinions on the topic since he has both devoted a large part of his professional career to studying the question, and he lives and works in a society which is already reeling under the impact. As he says:

“Today?s Germany has essentially the demographic structure that the United States will reach in a quarter of a century. The dependency ratio (the ratio of persons aged 65 and over to those aged from 20 to 59) is at 28 percent, and it will reach 75 percent in 2075, if we dare project that far. Almost one-fifth of the German population today are aged 65 and over. One quarter are aged 60 and over, which is relevant because the average retirement age in Germany is 59.5 years. Thus, in this sense the United States is not ?entering largely uncharted territory,? …. Rather, they can look to Europe?in particular to Germany and Italy?to see what will happen in the United States.”

I mention B?rsch-Supan because he serves as a good pretext for going over where we are to date with the issue. As he says himself. watching demography change is rather like watching a glacier melt, on a day-to-day basis it’s hard to see that anything is happening, but over time the impact is important.

One of his recent papers has the intriguing title: “Global Ageing: Issues, Answers, More Questions“. It is a good up-to-date review of the ‘state of the art’, and a quick examination of the points he makes probably serves as a good starting point, since I can’t help thinking, in the case of global ageing, it isn’t so much what we know that matters, it’s what we don’t know.

So here we go, a review of what we “know”, what we think we know, and what we don’t know:
Continue reading →

Italians Don’t Vote

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The low turnout – a 25.9 which fell far short of the necessary 50% minumum to secure a binding impact on parliament – means that the proposal to reform Italian law on assisted reproduction and embryo research effectively did not prosper.

In fact a majority of those who did vote voted to change the law.

This result is being widely covered as a ‘victory’ for the moral preachings of the new pope Benedicat XVI. I am sure it is nothing like that simple.

Czech Voters Becoming Constitution Sceptics?

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Evidence is growing that the legacy of the French and Dutch votes will be more enduring than many of our leaders seem to have thought. Now a survey in the Czech Republic finds voters increasingly unwilling to vote the constitution.

The poll showed that 29 percent of Czechs would reject the constitution and 19 percent would support its ratification… More than a quarter of the population is not concerned whether or not the document will be ratified, and another quarter believe ratification is unnecessary in the current situation. “At present, the European constitution would not be approved in a referendum and in addition, a very small number of voters would have take part in it,” Jana Hamanova from SC&C said, in reference to the results of the poll.

This means that the EU constitutional treaty is not currently supported by the majority of potential voters of any of the parties represented in the Chamber of Deputies.