And It’s A Bailout…..

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Well, it’s not fully official yet, and all the fine print certainly isn’t written and signed, but the will is now clearly there, and where there’s a will, there’s a way, especially when you have the global financial markets breathing down your necks. The first one out of the box was the Economist’s Charlemagne, earlier this afternoon.

In Brussels policy circles, the question asked about a bailout of Greece used to be: are European Union governments willing to do this? Now, I can report, the question among top EU officials has changed to: how do we do this?

Twice in the past 48 hours I have heard very senior figures – both speaking on deep background – ponder the political mechanics of how large sums in external aid could be delivered to Greece before it defaults on its debts: a crisis that would have nasty knock-on effects for the 16 countries that share the single currency. One figure said yesterday that heads of government could not wait “forever” to take decision. That means a decision in the next few months, at most.

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Rumours, Rumours, But No Greek Bond Sales To China

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Well there certainly is a lot happening out there at the moment. And Monday’s successful bond sale which left the Greek government triumphally proclaiming they could comfortably meet their 2010 borrowing program now seems to belong to a lifetime ago. The sale raised 8 billion euros over a 5-year syndicated bond which attracted total bids of EUR25 billion, well above the EUR 3 billion to EUR5 billion initially targeted by the government, who immediately declared a major victory.

That was before yesterday, and the Financial Times announcement that Athens was wooing Beijing to buy up to €25bn of government bonds in a deal being negotiated using Goldman Sachs as intermediary. China had not agreed to such a purchase, according to the FT at the time. In the wake of this announcement – as the FT put it – “Greece’s debt crisis returned to financial markets with a vengeance as agitated investors demanded the highest premiums to buy its government bonds since the launch of European monetary union over a decade ago”. Continue reading →

Can Japan cut public debt before it gets old?

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Today’s ratings downgrade by S&P for Japanese public debt has brought further attention to Japan’s huge and growing debt burden.  Yet with each round of concern, there’s always a viable response that says “So what, yields are still low.”  And it’s true; if you were looking for sustainability concerns to be expressed in the level of yields, it’s hard to find — and those low yields coupled with the yen policy provided the key ingredients of the boom-era carry trade.  An interesting working paper from the IMF looks in-depth at the reasons for the chronically low yields on Japanese public debt and comes to 2 conclusions. 

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Competitiveness Gaps Could Hurt Euro – No Really!

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Reuters Jan Strupczewski gives more details of the EU Commission report first leaked by Der Spiegel. According to Strupczewski the “new European Commission report has expressed concern about gaps in competitiveness that could undermine confidence in the euro zone and point to tensions related to wage levels and capital flows in the 16-member club”. The report was prepared for the finance ministers meeting on January 16. Continue reading →

The EU Does Have The Legal Power To Organise Bailouts

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Sometimes I am surprised by what some people consider to be news. Tony Barber points out today in the FT Brussels blog that the EU has the power to mount bailouts of any member country under “exceptional circumstances”. As Tony rightly points out, under Article 122 of the EU’s Lisbon treaty, which came into effect last December, when a member-state is:

“in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, the Council [of national governments], on a proposal from the Commission, may grant, under certain conditions, Union financial assistance to the member-state concerned.”

So there it is, as he says, “in black and white”, whatever the propaganda smokescreen some widely quoted but anonymous “EU Officials” have been mounting for the press in recent days. Continue reading →

Taking Stock of 2009: Books

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Instead of a straight-up best-of list, a slightly more eclectic look back at what I read in 2009. Best large Russian book, Tolstoy’s big one; best small Russian book (and most scurrilous of any nationality) Moscow to the End of the Line by Venedikt Erofeev. Best fantasy, parts two through four of the Princess of Roumania series. Most overrated, The Time Traveler’s Wife by Audrey Niffenegger. Best SF, Brasyl by Ian McDonald. Best non-fiction, The Discovery of France by Graham Robb. Most off-putting but finished anyway, Live and Let Die by Ian Fleming. Best surprises, The Final Reflection by John M. Ford (along with his How Much for Just the Planet, the first two Star Trek novels I’ve read in a quarter century) and Bleachers by John Grisham. Best look behind the scenes of history (also best dissection of a fellow national leader), To the Castle and Back by Vaclav Havel.

Complete list (in order read) is below the fold. Links are to previous writing about the book or author on AFOE. See also 2006 and 2007.
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Is the Eurozone an optimal language area?

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Some interesting linguistic thoughts from ECB President Jean-Claude Trichet in an interview with Focus —

FOCUS: Has the fact that you have learnt German helped you?

Trichet: It certainly has. At the ECB, we mostly talk in English. But in the corridors you’re just as likely to hear German, French, Italian or Spanish, and many other languages besides. Having some knowledge of the German language has enabled me to better understand the culture of the country. Oversimplifying, I would say that the French and English languages seem to be very much designed to “communicate”. My understanding of the German language is that it is very much designed to “think”, with its verbs at the end of the sentence. I am not surprised that it is such a good language for philosophy.

FOCUS: Are you trying to say that Germans are not as good at small talk?

Trichet: Not at all! I just want to say that the German language itself is particularly well suited to reflection. In speeches, for example, speakers let the audience think along with them. Only at the end of a sentence is the audience able to understand exactly what is actually meant. This is why it is pretty unacceptable for people in the audience to whisper during a speech.

Among other things, it highlights the huge backdoor influence of the Eurozone’s most significant non-member.  Which seems like an advantage for Ireland.

Eurozone Imbalances Weaken Trust in The Euro and Undermine Euro Area Cohesion

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This is the conclusion drawn – rather surprisingly – not by some bank analyst, or by a Credit Ratings Agency, but by the European Commission itself, according to the contents of a report “leaked” to the German magazine Der Spiegel at the end of last week. “(The imbalances) weaken trust in the euro and endanger the cohesion of the monetary union,”. Continue reading →

Slew in the direction of Dalston

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British police forces are making plans to deploy surveillance drones in UK airspace, the Guardian reports. Kent Police is leading the project; four other police forces have signed up. The drones look to be (relatively) cheap and simple machines that are battlespace tested: a manufacturer – BAE Systems – has evaluated its candidate drone (HERTI) in Afghanistan. The Guardian says that only CAA licensing now stands in the way of domestic deployment.

A news piece like this has an aspect of dark comedy. Many people have worried for a while that UK policing has become militarised; here’s a story that’s confirmatory to an absurd degree. What’s next? Precision targetting of Harehills with JDAMs? Don’t be ridiculous …

You’d think there might be some legitimate role for surveillance drones in UK policing. After all, helicopter surveillance and CCTV are both legitimate, and drones constitute the intersection of those methods. Nonetheless, intuition tells you that something is horribly wrong here. But what is it that’s wrong?

The Guardian’s story – and they may be getting over-excited, but I tend to think not – says that Kent Police started out by claiming that the drones were to be used to monitor shipping and illegal immigrants. You might think that at least the shipping part of that would be OK; seas and shipping being what they are. But it turns out that these claims were just spin on the part of Kent Police; they always had a wider role in mind. Documents disclosed to the Guardian under the Freedom of Information Act suggest Kent Police would also like to use drones to monitor “antisocial driving” and “event security”, and also to conduct “covert urban surveillance”. Of course, this last could cover just about anything. And this, I think, points to the problem; it’s a problem of proportionality. Someone, somewhere, has lost touch with the relative seriousness of things. Not only that, they’ve lost touch with what constitutes a safe environment for policing. Is the view from their doorstep just a blur of hurt and evil doing, or what? It doesn’t take much discrimination to be able to tell that “theft from cash machines” won’t justify the same sort of efforts at risk reduction as attempting to interdict bomb plotters in a ‘failed state’. In certain parts of Afghanistan and Pakistan, it’s almost impossible for someone in uniform to move around safely. Britain is not like that at all, and you’re only going to infuriate and alienate British people by seriously suggesting that it is. So what do Kent Police and the other collaborating police forces think they’re doing making plans to hide in a bunker and send out Predators?