Russia’s by now well known demographic problems are not, IMHO, going to leave us in peace, the danger is always going to be there of a nasty political evolution which we will in the end have to sit up and take notice of. One of the many possibilities seems to take the form of the Rodina party which Neil Buckley and Arkady Ostrovsky write about in the FT today:
A blonde, Slav-like woman pushes a pram over the rubbish. Then two respectable-looking men arrive. One is Dmitry Rogozin, leader of the nationalist Rodina (Moth- erland) party. They order the men to pick up the litter, while Mr Rogozin’s companion asks menacingly, “Do you understand the Russian language?” On the screen, the slogan appears: “Let’s rid our city of rubbish.”
So runs a television advertisement for Rodina that may have got Russia’s fastest-growing political party banned from elections to the Moscow city parliament next Sunday. The city court ruled this weekend that Rodina’s advertisement incited ethnic hatred and the party should be struck off the ballot. Mr Rogozin is appealing to the supreme court.
The advertisement has been central to Rodina’s campaign for the Moscow parliament poll, the biggest test of its popularity since it unexpectedly won 9 per cent of the vote in national parliamentary elections in 2003.
Just when he’s left the FT concludes that Schroder’s labour market reforms are in fact working. It is perhaps worth bearing in mind that although the German economy is producing a lot of jobs, a very high proportion of these are temporary.
Controversial labour market reforms introduced in Germany by Gerhard SchrÃ¶der in 2004 are showing results, according to data published less than a week after he stood down as chancellor…..The state-run BA employment service in NÃ¼remberg said the total number of job placements by employment offices across Germany would exceed 1m this year, an increase from 496,000 in 2004. The average length of unemployment had fallen from 22 months a year ago to about 21 months today – a downward trend that was set to continue next year.
You will likely have heard by now that George Best — Northern Ireland international, star of Manchester United and, later, player for a long list of increasingly obscure clubs — has died. Best was a weak and pitiable alcoholic, and also one of the greatest footballers ever to grace a pitch. My own thoughts on the matter at T6I.
The Italian government finally agreed the details of the new penison reform yesterday. Curiously, it does not need to go to parliament for approval. Getting government agreement had not been without difficulty, and again interestingly enough it won’t come into effect for two years, giving next year’s incoming government plenty of time to change its mind.
The reform aims to launch a second pillar of private and occupational schemes to flank state pensions, using money which companies currently hold on behalf of their workers in a fund which employees receive when they leave their job. It will come into force at the same time as a reform of the state pension system which raises the retirement age to 60 from 57. Both measures could be changed or scrapped between now and 2008 by whoever wins the 2006 general election.
This link is not exactly recent, but it is a reasonably good summary of something.
The idea that there was a global savings glut now having gone out of fashion, some are presently arguing that what we have is an investment dearth (my own view is that these two effectively mean the same thing, since the issue is a relational one). More evidence for this investment dearth hypothesis comes today from the UK.
UK Business investment grew sluggishly in the third quarter, official figures showed, confirming survey evidence that British-based companies are cautious about capital spending even though profit levels are high.
As the FT also notes:
Just as in other European countries, companies have decided to save most of the money they have been making rather than risk investment in new opportunities to generate profit in the future. The reluctance of companies to invest when interest rates are low and the return on the existing capital stock is high has puzzled economists for some time.
Dave Altig had a piece earlier in the week about the BoE rate decision wher he tries to put a brave face on the UK data. This investment news is another little bucket of cold water for the upside optimists. I’m more or less neutral here. The monetary policy committee intimate that the weakening of investment intentions â€œmay also reflect uncertainty about the near-term outlook for the economy in the face of sluggish consumer spending and higher energy pricesâ€. Dave concludes that “Perhaps the uncertainty will lift sooner than later”, and I agree, I’m sure it will: I’m just not sure which way the resolution of the quandry will lead us.
Well, the Antonio Fazio question seems definitely to have decided that it doesn’t want to go away. The FT today informs us that the European Commission will take legal action before the end of the year against Italy over the allegations that against Fazio ( governor of the Bank of Italy). This threat is, however, not without its own problems since:
the Commission would be suing the Italian government, which has asked Mr Fazio to step down but cannot remove him. Mr Fazio is appointed for an indefinite term and can be removed only by the central bankâ€™s board. Mr Fazio has denied any wrong-doing. On Thursday, he told Bank of Italy employees: â€œTo serve the state independentlyâ€‰.â€‰.â€‰.â€‰is the attitude that has always inspired the actions of the central bank.â€
“To be independent, or not to be independent, that is the central bank question”
The New Yorker: The Critics: Books
Still, â€œPostwarâ€ can fairly be called an interpretation of European history since 1945, and its thesis can be put in a sentence. It is that Europe was able to rebuild itself politically and economically only by forgetting the past, but it was able to define itself morally and culturally only by remembering it. The forgetting was necessary not just because the behavior of most Europeans under Fascism and Nazi occupation was less admirable than anyone wished to acknowledgeâ€”but that was, naturally, a big part of it.
In comments here, Edward has addressed a question I was also thinking about this morning. He writes, “So the new coalition’s ‘play’ will be to try and really push-start domestic consumption in 2006. Obviously they hope some consumption will be brought forward in order to avoid the tax.”
Tax and a positive contribution from the ECB are important, of course, but I wonder if there aren’t other hindrances to domestic consumption. I’d be hard pressed to think of an upswing in the German economy that wasn’t led by exports and fed by investment. Domestic consumption brings up the rear.
Add to that strong admonitions in the culture that consumption is bad. Look at any apartment building and count the number of “No ads please” stickers on mail slots. Add in the Ã–ko (“ecological”) position that the best contribution to the environment is to consume as little as possible. Add deep cultural mistrust of credit. Add some of the demographic trends that Edward has written about in detail. All of these suggest that there are barriers to a recovery sustained by domestic demand that go beyond fear of the taxman.
Or I could be wrong. Americans, after all, have famously overthrown their Puritan heritage and consume enough to keep the world economy afloat. The hard-core economists could be right, and culture might play no role at all in household decisions. I honestly don’t know what to think about German consumption. Further thoughts, anyone?