Spain’s current account deficit fell to 2.064 billion euros in July from 7.752 billion euros a year earlier as imports tumbled, according to the latest Bank of Spain data. This is a very sharp and dramatic fall, and my guess is that at this rate the gap will close in six months or so, which will be a very strong correction, and potentially very painful for Spanish living standards.
The Myrdals and feminist natalism
Re this Yglesias post about Sweden, and comment thread, female participation in the labor force is influenced by government policies as well as culture, such as subsidized daycare and paid parental leave, with a month reserved for daddies, which makes it easier for both parents to never leave the workforce. (There’s also surely a feedback loop between policies and culture.)
The Swedish approach goes back all the way to the 30’s and the natalist feminist stance Gunnar and esp. Alva Myrdal persuaded the Social Democrat government to adopt. Continental countries, maybe especially CDU-dominated Germany chose a very different approach, which encouraged women to be homemakers, and now perhaps discourages them from becoming mothers.
The Myrdals were motivated by feminism, but also by their worries about declining birth rates in the 30s, and interest in Edward’s favorite subject, the connection between economics and demography. People stopped paying attention to those issues when the baby boom started.
That Sweden’s birth rates haven’t declined to the same extent as Germany’s is then the outcome of conscious policies.
Natalism is generally associated with reactionary politics in many countries, but feminist natalism is the kind that actually works.
Spain’s Manufacturing Contraction Accelerates in September
Well here’s the first BIG news of the day – Spain’s Manufacturing contraction accelerates in September. Of course, how could it be otherwise. But I do wish all those people who are still in denial on what is now an all too evident reality would finally come out of the woodwork and do something. If Spain really goes down, it will drag the rest of the Eurozone with it, like Moby Dick, taking Ahab Trichet and his crew careering down to the murky bottom with him. Brussels, Frankfurt, you need to react. Zapatero has to go, and he has to go now. Spain needs a set of rational policies to deal with the crisis, before things really get out of hand.
September PMI
Key points:
– The Rate of output contraction accelerated.
– First reduction of new orders in three months.
– Job shedding intensified.
September data pointed to another deterioration of operating conditions in the Spanish manufacturing sector. Both output and employment fell at faster rates, while new business decreased for the first time in three months. The seasonally adjusted Markit Purchasing Managers’ Index® (PMI®) – a composite indicator designed to measure the performance of the manufacturing economy – dropped to 45.8 in September, representing a marked deterioration of business conditions. Moreover, the pace of decline accelerated to the fastest since June. Output contracted solidly in September, and at a sharper rate than in the previous month as demand in the sector decreased. Production has now fallen in nineteen of the past twenty months. Continue reading
Germany – The Bitter-Sweet Tears Of Angela von Merkel
German voters gave Chancellor Angela Merkel the green light for a second term on Sunday, along with a clear mandate to form a new government with the liberal Free Democrat Party (FDP). But just what exactly is the new government likely to do? Merlek has been quick to pour cold water on any idea of early tax cuts, “I expect we’ll agree very quickly on tax policy, especially when you look at the leeway we have with the budget,” she is quoted as saying.
Angela Merkel’s room for maneuver is limited by the fact that Germany has been steadily racking up debt to tackle the crisis. Only today the Federal Statistical Office have said that the deficit in the overall public budget increased to euro 57.2 billion in the first six months of this year from euro 6.9 billion a year earlier as spending rose sharply (8.1%) and revenue declined (1.7%). No figure was given as a proportion of gross domestic product, but it seems to be around 4.89% of the GDP registered in the first six months (unadjusted GDP was reported by the Federal Statistics Office as €1,168 billion over the same period).
So, while the mood in Merkel’s Berlin headquarters was naturally jubilant, the euphoria will not last too long, especially since things are not going to be anything like as simple as they may seem at first sight. The problem, of course, is an economic and not a political one. Simply put, Germany’s apparent recovery from recession may have come “just in time” to see Angela re- elected, but the good economic news may not last much longer than this week. Continue reading
Is Germany Dependent on Exports to Grow?
The analysis that follows should really be taken along with Edward’s recent thoughts on the Global Imbalances situation as well as his latest economic survey of the current state of play in the German economy.
Essentially, I am going to have a look at what is, arguably, one of the more salient features of the current debate over the German economy and the Global Financial Crisis, namely her dependence on exports for economic growth. What I would like to ask here then is whether the current and evident degree of German export dependency is simply a curious oddity, or whether it has some more interesting and fundamental economic dynamic, related to the fact that Germany is one of the oldest economies in the world measured on median age (currently running at approximately 44 years)[1]. Continue reading
Random thoughts on the recent German election
Heard repeatedly yesterday: “Steinmeier has been an excellent Foreign Minister, but I just can’t stand the Social Democrats any more.”
I wonder how many portfolios our Yellow friends will get. In theory, a Conservative/Liberal, CDU/FDP government is perfectly normal. But in practice, the usual Black/Yellow government has been something like “300 Black seats, 40 Yellow”. This is going to be more like “240 Black, 90 Yellow”. The Liberals will be able to claim some serious mojo this time.
And speaking of portfolios, everyone is saying Liberal leader Guido Westerwelle will be the next Foreign Minister. (“And what a shame, because Steinmeier was so good.”) Giving this portfolio to the junior partner is an odd German tradition that dates back to at least the 1970s; the last three foreign ministers have been a Social Democrat under a CDU Prime Minister, a Green under a Social Democrat, and a Liberal under a CDU. For at least one of those (Fischer under Schroeder) I wonder if the point wasn’t to keep a charismatic/energetic leader of the coalition partner out of the country and so unable to work mischief. There are a lot of people who still remember 1982’s “Constructive Vote of No Confidence” when the FDP stuck it into Helmut Schmidt’s back, rotated hard, and then snapped off the handle.
Isn’t Angela Merkel’s lack of charisma amazing? A friend and I recently went down the list of G20 leaders and concluded that she was the single most boring individual on it. It’s sort of awesome that someone so utterly dull can be elected the leader of a major liberal democracy in the 21st century. And not just once, but twice! Fantastic!
The weather was gorgeous here in Bavaria, and nice over most of the country. Nonetheless, turnout was anemic. The Social Democrats are already spinning this as an explanation for their crushing losses. It makes you wonder what the results would have been had it rained.
And speaking of which, whither the SPD? When was the last time a major European center-left party got hammered like this in the middle of a recession? If it’s like this when times are hard, how will people vote if the economy is booming?
In retrospect, didn’t the Grand Coalition work way better than anyone thought it would? A year from now, will we be missing it?
When you hear “Angie and Guido”, what comes to mind? (For me it sounds like the title of a half-forgotten Billy Joel song from the 1970s.)
Other thoughts?
The G20 and Why Export Dependency And Global Imbalances Matter
With the timing of the latest G20 meeting set to coincide with the run-in to the German elections acrimonious debate has not been absent, but even as the passions generated by the arrival of voting day subside, it is clear that just beneath the surface their lie some simmering problems which simply will not go away. Despite the fact that nothing is really on the table that will make that much difference in the short run, I think the structural transformation that they are carrying out at G20 level is going to be very important in the longer term in finding eventual solutions. Continue reading
Germany’s new voters
Something else on German elections. You might not expect it, but there will be more first-time voters this year than ever before – about 3.5 million of them.
The Fistful Option
So, the planned ballistic missile defence installations in Europe have been cancelled, and the US is looking instead at deploying ships with an upgraded version of the Aegis air-defence missile system in European waters, backed up with mobile and airborne radars. (There’s a lot of detail here.) This is sense. It’s sense for a number of reasons:
Firstly, the GMD system that was originally proposed has a famously poor track record, so the concrete advantages to be gained from it were dubious. The SM-3 missile and the Aegis radar/computer complex have done much better, and have the huge advantage of being useful in other tactical roles. And they have significant scope for further improvement.
Secondly, it’s much more likely that any threat to NATO with missiles would involve short- or intermediate-range missiles rather than ICBMs – they are easier to make, more available, and more usable in the context of “not triggering a nuclear strike from the Americans or Russians”. The Aegis system was designed in large measure to deal with precisely these threats; the GMD was designed to intercept intercontinental missiles on their way to the US, and would have been vulnerable to shorter-ranged rockets. However, Aegis does have the potential to engage longer-ranged missiles early in their flight as part of a boost phase defence.
Thirdly, it doesn’t involve stationing a very long range radar very close to the heartland of Russia.
Fourthly, it’s actually in production now, and therefore represents technology under active incremental development rather than an experimental job.
Taken together, you have to wonder who would have ever thought the GMD installation was a good idea. The answer was, roughly, “neocons”; to a large extent, the fact that it pissed off the Russians was a feature not a bug. The cattle-market between Poland and the US over the issue also demonstrates that even the Poles were a lot keener on the side benefits of the deal – i.e. US security guarantees and a great deal of modern equipment for their armed forces – than the actual rockets themselves.
After all, as the system didn’t really protect Poland, it was a pretty weird way to signal Atlantic solidarity and deterrent support. For all these reasons, we blogged back in June, 2007, it was an awful idea and the seaborne option was far better.
The European integration of extreme-right wing nonsense
Here’s a weird story. OK, so we’re into the last lap of the Irish re-referendum; Jean Quatremer has the latest polls, which put the yes camp well ahead. But what about that weird poll last week that put the noes ahead?
British blogging institution Anthony Wells’ UK Polling Report seems to be about the only media outlet to have hit the nail on the head, denouncing it as a voodoo poll as far back as the 21st of September.
As far as I can tell, this poll is hokum. The company don’t seem to have a website so I can only go on what I’ve got, but the sampling of the poll seems to have been conducted at just ten sample points, suggesting a face-to-face survey with no attempt at a broad representative spread of sample. Compare this with a professional Ipsos MORI face-to-face poll, which uses in the region of 200 sampling points. Worse, a couple of sources indicate there is no attempt at weighting the poll…
Now, it turns out, not only is the poll indeed deeply flawed, but it’s the work of an ex-IRA terrorist who left the organisation because it wasn’t nationalistic or Catholic enough. It seems that his “Gael Poll” consisted of asking people he and his friends knew, thus constructing a sample they knew would provide the right answer.
The researchers were friends of the organisers who in turn interviewed people in their social groups, paying some attention to the spread of social class… It is, in effect a huge straw poll of the friends of Gael Poll, a derivative project of a pretty extreme ultramontane Catholic magazine, The Hibernian.
But the really interesting bit is how they got it into the news; they passed the fake poll to UKIP, who distributed it to bloggers, including Mick Fealty’s much respected Slugger O’Toole, and used the blogfroth this generated to reflect it back into the mainstream media. Even more interestingly, the no campaign turns out to have been receiving actual financial subsidies from UKIP; even their anti-Europeanism is European, it seems, and possibly paid for with European Parliament expenses.