And speaking of Eurovision

Just a quick update on Croatia’s EU candidacy.

Eight countries have signed a letter to British PM Tony Blair supporting Croatia’s membership. The letter was presented to Blair — who currently holds the rotating EU Presidency, and will until January 1 — in the recent confence at Newport, in Wales.

The signing countries were Austria, Greece, Italy, Latvia, Luxembourg, Malta, Slovakia, and Slovenia.
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Lovely Rita?

Well with all due apologies to the beatles Rita isn’t exactly as lovely as she seemed. Now she’s past her prime the insurance companies amongst others are busily counting the cost.

And on top of the obvious comes news that Rita really is number one: according to the FT she “has caused more damage to oil rigs than any other storm in history and will force companies to delay drilling for oil in the US and as far away as the Middle East, initial damage assessments show”.

So just to get things straight: the temporary supply bottleneck just got a little longer (this time my apologies to Ry Cooder) and finding more oil to raise output capacity just got a little harder. I haven’t got an envelope handy, but I don’t think I need to do too many complicated calculations to work out that if this is for real then oil prices can stay higher for longer and global growth will, as a consequence, be just a touch lower.

Meantime Econbrowser James Hamiliton explains why you shouldn’t be counting on getting too much relief from oil shale.

Alcohol Consumption Pro-Cyclical?

Thanks mainly to indirect encouragement from commenter Teme, I am continuing to plough the Finland furrow. Today I found this very interesting piece of research:

ARE SLUMPS REALLY DRY SEASONS?

This paper explores the connection between alcohol mortality, drinking behaviour and macroeconomic fluctuations in Finland by using both aggregate and micro-level data during the past few decades. The results from the aggregate data reveal that an improvement in regional economic conditions measured by the employment-to-population rate produces a decrease in alcohol mortality. However, the great slump of the early 1990s is an exception to this pattern. During that particular episode, alcohol mortality did indeed decline, as there was an unprecedented collapse in economic activity.
The results from the micro-data show that an increase in the employment-to-population rate and expansion in regional GDP produces an increase in alcohol consumption while having no effect on the probability of being a drinker. All in all, the Finnish evidence presented does not overwhelmingly support the conclusions reported for the USA, according to which temporary economic slowdowns are good for health. In contrast, at least alcohol mortality seems to increase in those bad times that are not exceptional economic crises like the one experienced in the early 1990s. However, there is evidence that alcohol consumption is strongly procyclical by its nature. This suggests that alcohol consumption and mortality may be delinked in the short-run business cycle context.

KEY WORDS: alcohol mortality, drinking, business cycles

German Confidence Indexes

The sharp eyed will have noticed that I have copiously refrained from commenting on the unexpectedly high reading obtained in yesterday’s German Ifo Institute Business Climate index. The index registered a slight unexpected increase, but as Ifo President Hans-Werner Sinn notes: “An evaluation of responses submitted before and after the federal election showed a tendency to more unfavourable expectations after than before the election, so the reading may in fact say a lot more about sentiment before rather than after the election.

More informative in many ways may be the Gfk consumer climate survey out today (follow link and click on button). The survey, which attempts to forecast the climate going forward, saw an increase in the number expressing scepticism about private income expectations and the propensity to buy:

While in August this year the consumer mood was still relatively unaffected by the hike in oil prices and yet fired by the prospects of the elections, both the tax reform and the trend in oil prices seem to have been felt in September. Indicators covering private income and private consumption are particularly affected. Consequently, the consumer climate was also slightly down. In contrast, economic prospects have become more optimistic. The findings of the September survey given below do not reflect the outcome of the recent elections, since the survey was completed just before the date when the elections were held.”

At the present time it is very hard to assess what the impact of Germany’s election stalemate will be on the economic climate moving forward.

Italy’s Fazio To Stay?

Antonio Fazio, the Bank of Italy governor whose defiance in the face of criticism recently hit the international headlines and lead to some embarassing photos in Washington still refuses to go. Berlusconi seems almost resigned to the fact that he may stay:

Silvio Berlusconi, Italy’s prime minister, on Tuesday told parliament he had already done everything in his power to secure the resignation of Antonio Fazio….The government could not intervene directly, and so I did the only thing that could be done. I appealed to the governor, to his sensitivity and to his conscience, Mr Berlusconi said.

Europe’s Shame

What is happening right now in Ceuta and Melilla is shameful, it brings no credit to any of us. The anomolous position of these two Spanish North African enclaves should have been resolved long ago. As an urgent interim measure some sort of dual-sovereignty agreement between Spain and Morocco (such as that which was applied between France and Spain in the case of Andorra) should be thrashed out as a matter of urgency. I will try and find the time for a longer post on Afoe later.

Hundreds of African immigrants stormed a fence surrounding the tiny Spanish enclave of Melilla on the Moroccan coast on Tuesday, trying to climb over on makeshift ladders before being repelled by police in riot gear.

Spanish authorities called it the biggest ever mass attempt to breach the fence guarding the coastal enclave, about 100 miles from the Spanish mainland across the Mediterranean. At least 19 people suffered minor injuries.

Of the 500 who stormed the enclave, some 100 immigrants, all from sub-Saharan Africa, managed to break through and enter Spanish territory. They were taken to a police station for identification, said Narciso Serrano, from the Interior Ministry in Melilla.

Serrano said police found some 270 ladders made of tree branches in the area.

Germany Not An Immigrant Country?

This is the opinion of Hamburg State Interior Minister Udo Nagel, as interview for an article which appears in the English version of Der Spiegel today. The context for the quote is the implementation of a decision taken at a conference of German state interior ministers last November which determined that Afghanistan was now sufficiently stable for the 58,000 Afghan refugees currently living in Germany to start returning home. 10 months later, that decision is finally being acted upon and as Der Spiegel reports Hamburg is taking the lead. Hamburg is home to some 15,000 Afghan refugees — the largest such population in Germany — and the city state plans to deport 5,000 of them over the next two years.

Nagel, for his part, makes no apologies for the deportations. He insists that Germany has fulfilled its duty to Afghan refugees and is proud of his nation’s asylum policy. The bottom line, he insists, is that Afghanistan is now safe. He even paid a short visit to the country before the ban on repatriation was lifted in May this year. “When a crisis has passed, and emergency assistance is no longer required, then refugees should return, because their country needs them to help the reconstruction,” he says.

Nagel also notes that the twice weekly flight to Kabul from Frankfurt was booked solid with holidaymakers throughout August. His point is clear: Afghans who have been granted permanent residency in Germany are happy to return to their homeland. The others are just trying to exchange their refugee status for immigrant status. Then, puffing on his trademark pipe, he repeats a line cited often by German conservatives: “Germany is not a country of immigration

.

Looking at this in the context of the recent debate in Germany about Turkey and the EU, and in the context of Germany’s inability to avail itself of the recent wave of migration from the new EU accession countries, I cannot but feel – looking at the age pyramid of the German population – that a mistake of historic proportions is being made right before our eyes.

Poll Pressure On Berlusconi

The FT reports that as the Fazio affair drags on, and doubts about the future course of the Italian government deficit continue to linger, Berlusconi is suffering notably in the opinion polls:

Silvio Berlusconi, Italy’s prime minister, was dealt a blow on Monday when an opinion poll showed a collapse in support for his Forza Italia party and his leadership of the Italian centre-right.

With a national election due by May, a survey by the SWG research institute put Forza Italia’s support at 17.5 per cent, the party’s lowest score since it swept to power in 2001 with 29.4 per cent of the vote.

The Budget ‘Sin Bin’

Eurostat reports that 12 EU states exceeded the 3% stability and growth pact limit last year. But let’s start with the good news: 6 states – Denmark, Finland, Estonia, Sweden, Ireland and Belgium – had a budget surplus in 2004. The three countries with the highest deficits were Greece (6.6%), Hungary (5.4%), Malta (5.1%), and Cyprus (4.1%).

All the larger EU states (with the honourable exception of Spain) had excess deficits: Poland (3.9%), Germany (3.7%), France (3.6%), Italy (3.2%) and the UK (3.1%). Eurozone total government deficit rose to 70.8% of the total GDP of the region.

Polish Plumbers Arrive In Denmark

The EU Observer has a piece on a row which has blown up in Denmark over some ‘new arrivals’ from Poland. The issue is itself interesting since there has been a good deal of talk in recent weeks about flexibility in the Danish labour market and the idea of ‘flexicurity’:

Danish trade unions have accused the Polish embassy in Copenhagen of encouraging Polish construction workers to ignore the collective agreements that regulate the Danish labour market….

They argue that the Danish labour model is being undermined but their opponents believe that the Danish trade union model itself undermines the EU principle of freedom of movement.

The Polish embassy website had informed Polish workers interested in coming to Denmark that they should comply with regional and national agreements on salaries and working conditions, but also points out they are not under legal obligation to do so.

This would mean that Polish workers could technically work for under the agreed minimum wage – making them more attractive than Danish workers.