Maybe it’s simply because I’ve been reading a book about complexity theory over the weekend, or maybe it’s because I just have a weird way of looking at things, but following the recent turn of events in Iraq (and especially of course Najaf), I can’t help noticing how something which in the grand scheme of things is apparently so small and relatively insignificant can be having such a huge global impact.
Indeed at one point it did really seem to be the case that the whole future of the world economy might have turned on the posession of a set of keys (obviously the Clavis Universalis, or could it be that all the delay is due to someone having a spare-set cut on the quiet: meantime the price of Brent crude spikes up and down).
Lot’s of bits and pieces of news in from Germany today. Volkswagen one more time threaten to get tough with the unions, the Federal Statistics Office confirm yet another time that it is exports which are driving the German economy, whilst domestic demand actually fell (0.1%) during the second quarter. Meantime a 668-page report from the same statistical office reaches the rather unsurprising conclusion that: “Germany’s three-year stagnation has left economic and psychological scars among its citizens”.
The bath in question here is not of the kind brought to mind by a recent popular film with a similar title, but rather a deeper, broader (more historical?) one, the kind of bath which might even have appealed to good old Hegel himself: when learning to swim what you need is not a manual on swimming but a swimming pool. Or put another way, you can’t get into the water without getting wet.
And this is exactly what I seem to have done with my recent post on Turkey’s ‘economic miracle’, got myself extraordinarily ‘wet’. (Warning, this is a long post. It probably won’t make too much sense to you in any event, but it will make even less if you don’t read the original one :)).
Every now and again, posts on afoe have given rise to a lively discussion about European power projection capability. Usually, in the wake of the Iraq induced “rift through the West” and in the spirit of Robert Kagan’s quip about “Paradise and Power“, these discussions focused on the relative military strength of European forces.
But once you stop focusing on the military and start looking to Athens, Greece, where the world’s youth is currently attempting to celebrate humanity, (as of earlier this Saturday afternoon) Europe’s power projection capabilitiy does look quite impressive, to say the least….
Sorry for long hiatus recently — I’ve been quite busy with the restaurant these last few months.
In the meantime, however, two Eastern European governments have fallen, and nobody really seems to care. In Prague, the ineffectual Vladimir Spidla resigned as Prime Minister in late June. Most of the country was too wrapped up in the Euro 2004 quarterfinals to really give a hoot. As Doug Arellanes summed it up: “Football! Yeah! Oh, and the government fell…”
Then last night I happened to be speaking on the phone with a fellow journalist in Budapest who informed me that Hungarian Prime Minister Peter Medgyessy resigned yesterday. We both snickered at the non-newsworthiness of the event.
Leaving aside political considerations (I would certainly fast-track Turkey’s EU accession process for many, many reasons), the economic attraction of Turkey as an EU member state is rapidly making itself felt. Just look at these numbers from Morgan Stanley’s Cerhan Sevic:
According to our estimates, Turkey?s overall productivity growth accelerated from an average of 2.1% a year in the 1990s (or an average of 3% in the 1960-2000 period) to an average of 8.8% in the last three years. The trend growth rate also increased from 2.3% in the 1990s (and 3.1% in the 1960-2000 period) to 5.8% in the post-crisis era. The productivity acceleration is even more pronounced in the business sector. The rate of non-farm labour productivity growth rose to an average of 9.5% per annum in the last three years, from 2.2% in the 1990s and 2.4% in the 1980-2000 period. The underlying trend growth rate improved from 2.4% in the 1990s to 6.3% in the last three years and 7.4% this year. Moreover, according to the State Institute of Statistics? estimates, the average annualised rate of increase in real output per person in the manufacturing sector during the 2001-2004 period has been 10.2%, compared with 3.8% in the 1990s. In other words, output per worker in the manufacturing sector has increased by a cumulative rate of 30.4%, as the trend growth rate jumped to 7.5% in the last three years.
Now with everything appearing to be so wonderfully lacklustre all over the eurozone, you might have thought an economy with an underlying trend growth rate of 6.3% and rising would be worth taking very seriously indeed.
The other interesting point would be to ask why it is that Turkey is apparently so succesful, even in comparison to the other new EU accession states (and without all the aid). I would suspect that demography has something to do with it, but then I imagine most of you could already have guessed I was going to say that :).
Inflation in the 12 countries of the zone euro slowed for the second consecutive month in July as weak consumer demand seems to have deterred companies from passing on higher energy costs.
Details released today from the EU’s Eurostat show that consumer prices fell 0.2 percent in July, cutting the annual inflation rate for the zone to 2.3 percent from 2.4 percent in June. So for the moment, no inflation scare.
The curious number from my point of view is the stubbornly ‘high’ German rate of inflation, currently around 2%. I would have expected, given everything, inflation to be below 1% by now. Instead it’s Finland who mark the bottom: 0.2%.
The big question, of course, is which way do the numbers move now. This depends on whether the current ‘soft patch’ is simply a blip, or whether, as some are suggesting, the European recovery may have already been and gone.
I’m not sure how much the international press is covering the recent racist violence in Lyon. A Google News search shows only the New York Times offering coverage in English.
The salient facts: Late Saturday night, a 24 year old man surrendered to police in Paris, claiming responsability for the cemetery desacration in Lyon and the murder of an north African Arab man a few days earlier. His name is Micha?l Tronchon. Police consider his confession legitimate and believe that the perpetrator is now in custody.
Barroso has announced who will get what portfolio in the new commission (they won’t take office until november)
The top economic posts have gone to people who favor market liberalization, and Barroso signals he’ll proritize “economic reform.” This represents a break with the past. Previous commission’s were more completely non-partisanpolitical. The leftwing parties dissed Barroso.
So, what do y’all think?