After a long and rather tense wait, the initial response to the publication of the European bank stress tests was always going to be something of an anti-climax. Indeed the results should hardly have comes as a surprise to anyone It is hardly breaking news to learn that a number of Spanish cajas will find themselves badly undercapitalised if the economic recovery – as surely might be expected – fails to materialise as planned. For the rest, the outcome is really a victory for politically correct: thinking. The situation, we learn, is slightly more serious than previously acknowleged, but we are a long way from seeing the imminent collapse of the European financial system. How could we be, when we have the friendly face of the ECB, always there ready to offer a helping hand. Continue reading
Kosovo and the ICJ: well, damn
So the International Court of Justice (“ICJ”)delivered its opinion on the legality of Kosovo’s unilateral declaration of independence (“UDI”)today. (I blogged about this a few months ago.)
To everyone’s surprise — mine included — the decision was clear, strong, and favored Kosovo. A clear majority of the judges held that the UDI was legal. They tried to frame the decision narrowly, but it’s still a big win for the Kosovars. Some people are saying it’s therefore a big loss for Serbia, but let’s get real — Serbia had no prospects of recovering Kosovo or ever getting the Kosovar Albanians to accept rule from Belgrade, however tenuous, again. (It is a hit for the Tadic administration, but probably not a serious one.)
Immediate knock-on effects: a few more recognitions for Kosovo. It won’t make that big a difference, though, in the short run — the few EU members who are refusing to recognize Kosovo are mostly doing so for internal domestic reasons, and that won’t change. Russia will still veto any UN resolution affecting Kosovo’s status, which sharply limits room for maneuver.
That said, it’s a win. And the longer-term effects could be interesting.
Meanwhile, watch for various other frozen conflicts, from North Cyprus to Abkhazia, to claim that this decision validates /their/ UDIs. Of course, to make that stick, they’d have to file and win similar suits before the ICJ. And to do that, they’d have to get a resolution past the UN General Assembly. Good luck with that, South Ossetia.
I’d say more, but I haven’t read the decision yet — it just came out a few hours ago, and the ICJ’s website has crashed. Give me a day or two.
Thoughts?
Latvia: Living in the Land of Extremes
Here in Latvia the internal devaluation continues and the debate is whether the economy is flexible enough for this experiment. I say perhaps it is, Edward says perhaps it isn’t but one thing is for sure: the Latvian economy is (possibly perversely) indeed flexible.
Kizuna West
A bit more on the Big Society. I mentioned that Rory Stewart wants faster broadband for his constituents in rural Cumbria. Now Rory is a decent guy – I knew him at school – but I don’t think he’s on to anything much with his play to relate the issue of rural broadband provision to Cameron’s Big Society. We might eventually end up with better broadband in Cumbria, but we’ll have gotten there by the hard road: the plan doesn’t do much for the idea of little platoons. The Guardian has a bit more about how Stewart describes his project. Apparently there are three components to it:
1) The government part. The government is going to open up its public infrastructure. It is going to allow us into the fibre optics thick pipes that run to the schools. It is going to put pressure on Network Rail to let us into the thick pipes that run along the Carlisle Settle line.
2) We, as communities, will get a very small government subsidy equivalent to what they would have given us in terms of their universal service commitment. You roll out a parish pump which is to say you go into that thick pipe at your school or on the railway and you bring out a little fibre optic cabinet. Then, and this is the key point, the parish comes and puts together its own plan to get the stuff from the parish pump into their home.
Many of our communities will want to go for fibre optics to the home so they can have super fast stuff. Others will be content to put a wireless hub on top of the pump that will give them two megabytes.3) The final government support for the community is to provide a loan. If it costs a £1,000 to put broadband into your house, if you have a soft loan over 15 to 20 years that is only costing you £50 a year.
Now there’s not quite enough technical detail here to comment on viability. What we can do, though, is make a quick comparison with the way Japan has set about solving the same problem. In 2008, JAXA launched a satellite – Kizuna – which allows any rural Japanese household to connect to the internet at 155 Mbps download and 6 Mbps upload. That’s the domestic transmission rate. Small businesses get 1.2 Gbps download. Compare this with the default 2 Mbps rate mentioned in the Cumbrian plan. Note, that’s megabits. Rural Japanese already get between 75 to 600 times the data rate planned for Cumbria, once the parish meetings are held, and the thousand small disagreements about what to do have gotten thrashed out.
In terms of subscriber requirements, the Japanese subscribers only need to install a satellite dish (45 cm at the lower data rate) to get connected. The Cumbrians are expected to raise loans to get cables laid to their houses (note: wouldn’t line of sight microwave be better in some cases?).
In terms of scope and timescale: Kizuna gave coverage to the whole country from launch day onwards. The Eden Valley Big Society plan, once implemented, will cover part of one county of England.
The talk of parish pumps and railway lines is charming, but I think it’s a shame to be literally parochial about something like this. There are situations where a society needs to amass all of its resources to be effective. Communications infrastructure is one of those situations. What’s more, investment in satellites, specifically, is consistent with fiscal stimulus as generally understood (there are British satellite manufacturers). The Big Society talk is surely better saved for the human-to-human stuff, if we’re going to hear about it at all.
Anway, what do Fistful readers suggest vis-a-vis rural broadband. How has this been solved elsewhere?
Avoid overlap in your answers
I think we’re seeing emergent modes of behaviour with respect to the current UK coalition government. There’s some decent champion-of-the-people stuff happening in the margins. Vince Cable thinks the retail banks are ripping off consumers: he’s probably right to think it. Rory Stewart wants better broadband in Cumbria: he’s probably right to want it.
In the centre of things, though, there’s now a queue of ministers making articulated policy statements. If this were going well, we’d be looking at some systematic law-making; something a Tory supporter could, with a straight face, call reform. What we’re actually getting is a stream of crap. There’s no coordination to any of it. Call it government by assignment. This is a model of government where ministers go away at the beginning of long leave the holidays with a homework topic; on the first day of term, they return each having prepared a presentation, which they then deliver. Conferring is strongly discouraged; ministers should show their own work. Conferring, though, might at least have uncovered some of the obvious problems.
For example, IDS has been doing welfare and benefits, but his department has just given him a D; his proposals are considered both too expensive and too socially destructive by those who’d be put in charge of implementing them. Andrew Lansley’s been doing health: we’ve more to hear on this, but the doctors themselves, as represented by the BMJ, don’t much like what they see. Interestingly, nothing much of Lansley’s presentation was foreshadowed in the Tory election manifesto; it’s good to be the one person to advance a new idea, except of course for those occasions when what’s wanted is a mandate for that idea. At those times, originality bad.
And David Cameron is about to give a presentation on what he calls the Big Society. This is Cameron’s dissertation topic, and we’ve heard about it before. Officially, the main idea is redistribution of power.
The big society … is about liberation – the biggest, most dramatic redistribution of power from elites in Whitehall to the man and woman on the street.
Snark aside, there are basically two kinds of power when it comes to public services. The first kind of power is control over a budget. The second kind of power is direct authority over people in the community served (i.e. the sort of power the police, social workers, or local authority officers have).
Does the Big Society grant either kind of power to anyone who doesn’t already have it? To a first approximation: no. It might well remove some local authority power, though. In that light, the Big Society is simply wrongly named: what’s envisaged is the Smaller Society. Charities existed before the welfare reforms of the twentieth century; did they constitute a Big Society then? And charities still exist today, with tax concessions attached. Charities are doing fine, but if charities don’t already make a Big Society, they’re not about to get made into one. Access to a couple of hundred million from forgotten-about bank accounts (reminder to self: call the building society tomorrow) won’t render charities significantly more empowered. On the contrary: UK charities are themselves susceptible to fiscal austerity; they get around a third of their funding from the government. What’s being pushed at us is a deliberate enlargement of the charity domain. Normally, when we think of charities as having plenty to do, we think of earthquakes and other disasters as visited on poor and unequal societies. To be honest, we’d probably all prefer it if charities had less to do. And better societies – to my mind at least – call less for charity.
Of course, we’re likely to be shown a handful of exemplar schemes. Here the precedent of city academies almost obliges us to watch and see whether or not budgets have been discreetly and conveniently allocated. We’d be mugs not to.
Cameron is spinning and presenting this shtick like he’s got until he end of the week to get it into law. And it’s not just him. As Jamie says, all of this stuff is getting rushed. Collectively, the coalition comes across as deeply and dismally unserious. On the upside – and it’s the IDS situation that suggests this to me – there still exist those with the chops to have gotten to be senior in the civil service. The penalty for causing civil service dismay, most likely, is that your ideas are soon shown to be unimplementable. So I give the show and tell-ers two years of this.
Oh It’s All Gone Quiet Over In The Eurozone!
Or has it? According to Anchalee Worrachate in Bloomberg:
“A report from the Bank of Spain showed Spanish lenders borrowed a record 126.3 billion euros ($161 billion) from the ECB in June as investors shunned the nation’s banks. Spain’s banks increased borrowing 48 percent from 85.6 billion euros in May. That compares with a drop of 4 percent to 496.6 billion euros that the ECB provided lenders in the whole euro area. Spanish banks haven’t sold any bonds publicly in the past two months on concern the nation won’t be able to cut its deficit without hurting the economy.”
Pretty hard to argue now the Spanish bank borrowing from the ECB is simply in line with the country’s share of total GDP I would have thought. Also, after having trended upwards ever so slightly for a couple of months, Spain’s industrial output actually fell back again in May (by 0.3%) while output in Germany roared ahead by 2.9%. Obviously not everyone is getting the same benefit from the weaker euro, could competitiveness have anything to do with it, I wonder?
Quoted in the Financial Times earlier today Klaus Regling, chief executive of the European Financial Stability Facility said the fund would be “ready to act whenever the politicians tell us to act.†I guess the situation of Spain’s banks would be one of the things he must have had in mind.
Using a footballing analogy, you get to see a lot in the press about how this club is chasing this player, while that one is chasing another one, until the moment of the actually negotiations comes. Somehow, at that point the sporting press goes strangely silent.
Of course, when those much talked of stress test finally come out, we’ll all be able to see for ourselves that Spain’s banks – apart from a few ropey old Cajas that no one in their right mind would be interested in anyway – are in absolutely sterling and tip top condition (and not like their shabby German counterparts at all). Won’t we José (Viñals)?
Or are those reponsible for the Spanish banking system finally going to face up to their responsibilities, amble out of that closet they have been tightly locked away inside for the last three years, and follow the advice of Jacques Cailloux, chief European economist at RBS, by seizing opportunity provided by this months “getting it all out in the open” fest to start restoring investor confidence by really getting down to straightening out the mess? Continue reading
Biting The Fiscal Bullet In Poland
There is a good deal of speculation in the press at the moment over the tricky issue of whether or not Poland will be able to comply with its agreed deficit-reduction deadline on the basis of the latest budget proposals announced by the government there. Continue reading
Is There Global Economic Slowdown In The Works?
According to Ralph Atkins writing in the Financial Times last week, “the pace of Germany’s recovery is helping dispel fears of a “double dip†recession across the continent as a result of the crisis over public finances in southern European countries”. Coincidentally, however, on the very same day, Alan Beattie writing from Washington informed us that the IMF feel “the risk of a slowdown in the global economic recovery has risen sharply”. This left me asking myself which is it: is the global recovery a question of up up and away, or are we at the start of a renewed slowdown (whether or not you wish to term this a “double-dip”)? So I thought I would take a look through some of the most recent data (both hard and soft) to see if I could make any sense of the situation. Continue reading
Croatia: On The Brink of What?
As Croatia enters the final stage of its EU membership talks, it is perhaps a fitting moment to review the other half of the picture, namely where the Croatian economy finds itself, and what the outlook might be for a continuing convergence with the requirements of Euro membership. Understandably, EU officials are fairly cautious about the likely shape and progress of the forthcoming talks (the Union has, after all got rather a lot on its plate at the moment), but Croatian Prime Minister Jadranka Kosor is decidedly more optimistic, since while she recognises that this last phase is likely to be “really difficult and demanding” she still believes that negotiations could be concluded by the end of the year, which would mean that membership in 2012 would become a possibility. Continue reading
Germany!
In the wake of Germany-Argentina, I think it’s fair to say that perhaps a lot of the national soul searching about the England team is wasted. Even this initially attractive analysis. The explanation is very simple: Germany are fantastic, will probably win the World Cup, will probably win the European Championship, and might win the next World Cup as well.
In many ways, they implement one of the essential, classic approaches to football – push and run.
Chris might have a point in an inverse sense; if you wanted an anti-Taylorist approach to football, Germany would do rather well. No beanpoles, stars, ball-hoggers, or goal hangers. Just eleven very good general-purpose players with a wide range of skills, operating in a plan with broad outlines and lots of scope to adapt.
J. Carter Wood reports, amusingly, on the team’s impact on sociologists; the Prenzlauer Berg blog has a practical solution.

