German Deficit Continues Above 3%

German Finance Minister Hans Eichel said today that the German deficit would be over the 3 percent limit for the fourth consecutive year this year, and would remain there at least till 2007.

The latest data, from a meeting with state finance ministers, projected this year’s deficit to reach 3.7 percent. In addition, the country is projected to maintain a deficit of 3.4 percent in 2006 and 3.1 percent in 2007, the finance ministry said. On Wednesday, the IMF said as part of its regular review that it expected Germany’s budget deficit this year to be 3.8 percent of
GDP this year.


This morning Spain followed the example set by its one-time colonies in the Low Countries, legalising gay marriage.

Predictably, the post-Francoist Popular Party and the Roman Catholic hierarchy are not amused. One hopes they will take some comfort in the thought that the new law will not actually require anybody to marry a person of the same sex.

And perhaps they might reflect on this. There are many people who dislike cultural conservatism and Roman Catholic teachings, sometimes to the point of thinking these things morally wrong. And that, is, of course, their good right. It is not their good right, though, to marginalise cultural conservatives or Roman Catholics, still less to abridge their liberties. Well, then: sauce; goose; gander.

Elections in Albania (II)

A few weeks back, I blogged a little about the upcoming elections in Albania. Here’s a bit more.

The elections are expected to be close, because the ruling Socialist Party is split. The larger faction supports the current Prime Minister, Fatos Nano. But a breakaway group, under an ex-weightlifter named Ilir Meta, has organized itself into the Socialist Movement for Integration (SMI). The SMI is running a strong third in the polls and might well hold the balance of power between the two larger parties.

Meta used to be Prime Minister himself. To make a long and really complicated story short, Nano engineered his downfall back in 2001; both men were Socialists, but Nano wanted to be Prime Minister himself. Meta didn’t take it well.

The two major candidates — Nano and Democrat Sali Berisha — held a televised debate, Albania’s first ever, next week. (Meta was excluded, much to his irritation.) Although Berisha and Nano loathe each other, the debate went off without a hitch.
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National Cliches

I was reading one of the Sueddeutsche books at lunch, and one of the characters, a Dutchman as it happens, casually drops into the conversation, “Poland has not yet perished.” It’s the opening line of the Polish national anthem, and one of those catchphrases of the culture, a hoary cliche, but one that despite everything still touches hearts.

I could think of one other for a European nation, “Happy is he who can say I am a Turk.” As much as the Polish phrase was a reaction to Partition in the 18th century, the Turkish phrase was a deliberate program from Ataturk, part of the whole effort to transfer loyalty from the Ottoman nstate to the Turkish.

The Germans might once have had one, but haven’t since 1945.

And of course there’s “God bless America.” Once a fervent and perhaps fragile hope, it has been misused by GWB&Co, turned into something of a command. Sets my teeth on edge.

Anyway, I was wondering how many of these national touchstones I’ve been completely ignorant about, lo these many years. What others are out there?

Italy Given Two Years To Correct Deficit

As indicated earlier in the week, the EU Commission has given Italy two years to correct its deficit.

The European Union on Wednesday gave Italy until the end of 2007 to cut its budget deficit in line with euro-zone rules. The EU head office said Italy has been violating the budget rules underpinning the common currency by running deficits above 3 percent of its gross domestic product in 2003 and 2004 and is set to do so this year and next. But due to weakness in the euro-zone’s third-largest economy, the head office said it will give the country two years instead of just one to bring the deficit back in line.”

Hands Off The ECB

Deep seated as my criticisms are of the dithering and lack of imagination and vision over at the ECB, the situation would not be improved by giving national governments more say. I have only one response then to M de Vil-lepin: hands off.

Mr de Villepin suggests the 12 finance ministers of the eurozone should open a ?dialogue? with the European Central Bank about how to deal with low growth and high unemployment by defining a common economic government. Although he stresses the eurogroup must respect the ECB’s independence, his remarks are bound to be seen as a further sign of European politicians’ desire to have a greater say over monetary policy.

Spain’s Florida

Spain’s governing Socialist party celebrated yesterday the conquest of the northwest region of Galicia (the Gallegos are the third of Spain’s ‘historic nationalities’, together with the Basques and the Catalans). The result follows a cliff-hanger election that ousted the centre-right Popular party and its octogenarian president, Manuel Fraga, from power. This result will undoubtedy give power to the elbow of those who are pushing for fundamental reform in Spain towards a federal system. The FT has the story.

The contest in Galicia a conservative bastion and the birthplace of Francisco Franco, the Spanish dictator, as well as the present Popular party leader, Mariano Rajoy had all the drama and suspense of the Florida vote recount in the 2000 US presidential elections.

They Huffed, and They Puffed, and They….

China’s campaign to buy up ‘known brands’ continues. This time it is the US centenarian bicycle manufacturer Huffy. This bid has an interesting twist: Huffy is in bankruptcy, apparently for problems with a defined benefit pension scheme. IMHO this could be the tip of a looming iceberg. Best known canditates for forthcoming problems here would be Ford and GM. With the pace at which things are moving, you need to ask how long they can hold out?

Chinese suppliers and an agent of China’s government are poised to take control of Huffy Corp. (HUFCQ.PK: Quote, Profile, Research) , a venerable U.S. brand name, as the bicycle maker restructures under bankruptcy protection, it said on Tuesday.

Huffy, making bikes for Americans for more than a century, said it had agreed to a reorganization plan which would allow it to terminate its staff pension plans. The company would turn responsibility for the benefits over to the Pension Benefit Guaranty Corp., a unit of the federal government that insures pension plans.

An Interesting Result

The consumer confidence index calculated by the the Nuremburg based GfK market research group fell this month to 3.5 from a revised 4.3 in May. This suggests that while Germans may vote in large numbers for a change of government, they are extremely guarded about the possibility that this will produce any notable turn-round in the economic situation, at least in the short term. (Also see this from the FT).

Despite the announcement that the election will be held in the autumn this year, there are no signs yet of the consumer climate trend reversing,” the Nuremburg-based GfK research group said. “Germans are still uncertain about future financial pressures or relief and do not feel confident about making plans for their future.