Jörg Haider has died in a car accident. This will make a christian democrat+far right coalition even more unlikely.
Can his party survive him? I suppose some people might be reluctant to vote for the more overtly nasty Strache, and I don’t imagine the government parties getting more votes next time. Still, probably not.
A few days ago, Edward explored the gap between the Eurozone’s monetary and political architecture (and the lack of the latter) as a potential risk to the Eurozone itself. But in what looks likely to be a weekend of rapidly changing events, here is a new wrinkle: Nicolas Sarkozy has convened an emergency heads of state/government summit for the Eurozone countries, along with the ECB and EU Commission presidents, at 5pm in the Elysee Palace on Sunday. Since it is a Eurozone and not EU summit, neither Gordon Brown or most of the eastern European EU heads will be present; thus the outcome at best will be a coordinated initiative among the euro countries rather than the EU as a whole. Which is still better than nothing, but it does raise the question of how any spillover from a new initiative (e.g. a Eurozone interbank liability guarantee) would be handled. It also puts a new spanner in the works of the G7 and G20 finance/central bank meetings in Washington this weekend, since the outcome of the Paris summit won’t yet be known when they meet. About the only statement we can make with certainty is that the bankers and politicians better keep their Blackberries charged.
Martti Ahtisaari, former president of Finland, has won the 2008 Nobel Peace Prize “for his important efforts, on several continents and over more than three decades, to resolve international conflicts”.
Ukrainian President Viktor Yushchenko has officially dissolved the parliament, and new elections are set for December 7. He made no secret of why he thought the coalition broke up:
The democratic coalition – I am convinced, deeply convinced – was destroyed with only one thing – personal ambition. The personal ambition of one individual which was propelled by the thirst for power, and by a preference for personal interests over those of the country.
The coalition’s understanding and the coalition’s agreements are destroyed; the economic reform is not implemented; the fulfillment of electoral promises has grown into a total social populism, which has caused the largest inflation in Europe and the lowering of social standards of living, as reflected in the salary, pension, and many other social programs.
This really looks like the end of the Orange coalition. In the end, there could be only one. Now the question is whether all three parties will continue in rough parity, or whether one Orange party will decisively displace the other, or go into coalition with the Blues (Party of Regions, Yanukovych).
It’s up to the voters now, but it’s still sad to see so much time and opportunity squandered.
Asset freezes. Threats of litigation. Expressions of mystification about the intentions of a foreign government. The latest round with another axis of evil country? No: the current state of relations between the UK and Iceland. As we were saying before we were so rudely interrupted, Iceland is leading the way from a banking crisis to a sovereign debt crisis, and significant overseas impact is being felt in the UK given the presence of subsidiaries of Icelandic banks. The recent statements from Alistair Darling tell the story.
Thought this article made for interesting reading:
When commentators invoke 1929, I am dubious. According to most historians and economists, that depression had more to do with overlarge factory inventories, a stock-market crash, and Germany’s inability to pay back war debts, which then led to continuing strain on British gold reserves. None of those factors is really an issue now. Contemporary industries have very sensitive controls for trimming production as consumption declines; our current stock-market dip followed bank problems that emerged more than a year ago; and there are no serious international problems with gold reserves, simply because banks no longer peg their lending to them.
In fact, the current economic woes look a lot like what my 96-year-old grandmother still calls “the real Great Depression.” She pinched pennies in the 1930s, but she says that times were not nearly so bad as the depression her grandparents went through. That crash came in 1873 and lasted more than four years. It looks much more like our current crisis.
With European countries in a rush to take banking sector liabilities onto the public balance sheet, they might want to take a look at where that route goes, in extremis: Iceland, as a banking crisis becomes a full blown macroeconomic crisis. Today has seen a bewildering series of events, even against the backdrop of a problem that had been viewed as unsustainable for a long time (gross external debt 550% of GDP). We have: Russia apparently emerging as the lender of last resort (which must indicate other requests that were turned down), and the adoption of a what looks like a crazily overvalued peg for the króna (130/euro official when it’s trading at 200/euro). The underlying cause is the huge size of the banking sector and its reliance on overseas liabilities relative to the size of economy — a situation that will have uncomfortable echoes in non-Eurozone eastern Europe. Indeed, it’s only that Iceland is so small that the situation has not already caused more panic than it has. But it’s a disturbing parable for the overall banking crisis.
in the American Presidential election!
Well, sort of.
Those 16 votes? Georgia, because McCain has been rather more truculent towards the Russians. Some say there’s not much difference between the candidates, but apparently the Georgians disagree! Macedonia, because Obama has supported a resolution taking Greece’s side in the Great Name Debate. That hasn’t attracted much attention in the US, but it certainly has in Macedonia. (Why? Remember, Obama is from Chicago. Large Greek-American population. Macedonians, not so many.)
Otherwise, it’s… pretty consistent. Wonder why?
“We do not have a federal budget, so the idea that we could do the same as what is done on the other side of the Atlantic doesn’t fit with the political structure of Europe,”
Jean-Claude Trichet, commenting last week on the Eupean “summit” in Paris last Saturday“If you concentrate on California or Florida, it is not at all like Massachusetts or Alaska……It is the same in our case and we have to make a judgment what is good for the full body of the 320 million people” in the euro area.”
Jean Claude Trichet in an interview with Ireland’s RTE radio last July, following the controversial decision to raise ECB interest rates to 4.25%“Europe gives up on a joint rescue plan against the crisis,” since the EU “lacks the necessary institutions to respond as the United States has done”.
Spain’s El Pais yesterday (Sunday 5 October)
For Europe, this is more than just a banking crisis. Unlike in the US, it could develop into a monetary regime crisis. A systemic banking crisis is one of those few conceivable shocks with the potential to destroy Europe’s monetary union. The enthusiasm for creating a single currency was unfortunately never matched by an equal enthusiasm to provide the correspondingly effective institutions to handle financial crises. Most of the time, it does not matter. But it matters now. For that reason alone, the case for a European rescue plan is overwhelming.
Wolfgang Munchau, The Financial Times, Monday 6 October 2008
The euro experienced its biggest one-day drop against the yen in seven years this morning as the deepening credit crisis prompted European governments to pledge bailouts for troubled banks while stopping short of giving any concrete programme of coordinated action. The 15-nation currency declined to a 14-month low against the dollar – hitting $1.3598 at 8:52 a.m. in London – and to its weakest in two years versus the yen after European leaders meeting this weekend avoided announcing any plan that would be equivalent to the U.S.’s $700 billion bailout. And the reason for the euro’s fall is clear, the ability of the eurozone countries to apply a concerted startegy to address the problems in the banking and financial system has been called into question, and nowhere is the huge gap between the currency’s ambition and its political architecture so evident as it is in the above two quotes from Jean Claude Trichet. When push comes to shove, the US Treasury, as we have seen last week, does not concentrate on the needs of Florida or Massachusetts, but on those of the entire United States, and who, may we ask is in a position to concentrate at this point on the financing needs of the whole 15 member eurozone-area, since trying to manage economies which are one organic whole by splitting them analytically into monetary and fiscal entitites simply isn’t going to work, and it never was. Let me expain. Continue reading
In my work inbox this morning, a message from TeleGeography. Their latest report on IP transit pricing is out. This bit struck me: 1,000Mbits of transit over Gigabit Ethernet in Bucharest now costs no more than it does in London – and only a couple of dollars more than in San Francisco. That’s incredible, and impressive. Talk about returning to Europe. Interestingly, the price is almost identical whether you’re in North America or Europe; but it’s higher by a factor of seven in Sao Paulo.