Easter Monday in Berkeley.

While most of Europe is still busy eating the chocolate eggs we managed to find yesterday, Brad Delong is back in his office, demonstrating on video that it takes a really, really huge mug of coffee to get through the day of a Berkeley research professor. In addition, he also shares some thoughts about his lunch plans and the equity premium puzzle…

Euro in trouble?

English weblog England Expects has an intriguing post on the vitality of the euro. More precisely, about its lack of vitality:

For the first time, an official French report has criticised the Euro. Indeed, the latest report of the Council for Economic Analysis (CAE) given to the French government on 23 March, “Economic policy and Growth in Europe” and written by Philippe Aghion, Élie Cohen and Jean Pisani-Ferry, draws up for the first time a really tough assessment on the single currency and the actions of the Euro zone.

I have no time to comment, as usual, but the report is definitely worth a read (308 pages). Teaser:

“Economic integration has stagnated and no longer promotes growth. The euro’s creation has not produced the knock-on benefits expected. The increase in trade has been relatively modest and financial and credit markets remain segmented. The single currency even seems to have had a “numbing” effect on the EU members, which no longer need to protect against a foreign-exchange crisis and have become complacent in their efforts to control spending and make structural reforms. Moreover, the euro area’s macroeconomic framework has become obsolete. Furthermore, the Lisbon strategy has become bogged down in procedures and has degenerated into rhetoric. This is because it doesn’t have the means to achieve its objectives, since EU-members remain responsible for supply-side policies and the political economy of reform is still mostly national.”

You can find the report here (pdf).

Putin’s Price

Without support from Russia, Belarus’ authoritarian leader, Alexander Lukashenko, would have a much more difficult time staying in power. A substantial share of recent economic growth in Belarus has come from the difference between the below-market prices it pays for oil and natural gas from Russia and the world-market prices it receives for refined products and for oil and gas transported to Western markets. But now the bill for Putin’s backing is starting to come due.

According to reports in the Russian newspaper Kommersant, Russia is demanding a share of the revenue that Belarus receives for the gasoline it exports; this gasoline is refined from Russian oil that is imported at subsidized rates. The Russian demand is estimated at roughly EUR 900 million, a not insignificant sum for a poor-ish country like Belarus. Furthermore, Gazprom, Russia’s state-owned natural gas monopoly, is tripling what it charges Belarus for gas beginning in 2007. Gazprom also wants control over the Belarusian company that transports gas through the country to Western Europe. Negotiations on these last two items are set to start in early May, but it’s hard to see what cards Belarus holds. Lukashenko will pay the price for Russian support.

Italian Elections, Now The Serious Part Starts

At the time of writing Berlusconi is still filibustering, but it seems to be simply that, rather than any serious attempt to derail the outcome of the electoral process. Meantime the financial markets are adapting themselves to the new reality.

I too am gearing myself up for what looks like being a very bumpy ride ahead. I have dusted off some of the rust from an old weblog I used to maintain – Italian Economy Watch. Many of the posts I have been putting up are simply recycled versions of material which has appeared here at Afoe, but it does at least serve the useful purpose of keeping all the posts tidily in one place. Recent posts include The Future Of Italy’s Young, Addio, Dolce Vita, Or Twilight of the Idols?, Italy Had Zero GDP Growth In 2005, Les Jeux Sont Faits, and The Italian Government Has A New Crisis.

But talking of new crisises, I fear Italy has a pretty old one (puns intended), and the ratings agencies are only just starting to get their minds round the problem.
Continue reading

Senate: 158-156 Prodi

Corriere della Sera is now reporting that the Italian Senate is breaking 158-156 to the Left, with the lower house going 340-277. The controversial six seats for Italians abroad, introduced by neo-well actually quite-fascist minister (a former member of the Salo Republic’s army) Mirko Tremaglia, seem to have backfired badly on their inventor, with 4 out of 6 going to the Left (German link) and pushing them over the hump.

The Italian right was so keen on those seats that Forza Italia appeared on the overseas ballot as “Italians Abroad with Tremaglia”, which sounds to me at least worryingly like a support group for sufferers of some sort of embarrassing disease. Still, all’s well that ends well, which is probably not what the mafia boss of bosses Bernardo Provenzano is saying right now, having been busted after 40 years on the run. Not that I’m saying there was any connection..

It still might not end well, though, as Berlusconi is babbling about a government of technocrats (German), presumably as a way to stay in office and out of jail a while longer. That could happen either on the basis of a grand coalition (which the Communists are pledged to reject) or alternatively, by somehow dodging the election results.

Market Watch: The MIBTEL has given up some of yesterday’s gains, down 0.67% at 1430 local time..

Italian Elections: Still too close to call.

With respect to the Italian elections, there’s still only one thing certain – it’s going to be a long night, and, possibly, not the last one. There have apparently been, if my rudimentary understanding of Italian news broadcaster Rai News 24 is correct, unjustified delays in data processing. Thus, given the closeness of the race between the center-left and center-right coalitions, Italian expatriats may be the ones who cast the decisive votes for both lower and upper chambers of the Italian Parliament, since a law, introduced in 2001 formed four “overseas constituencies.” They will, accordingly, choose 12 of the 630 MPS in the lower, and six of the the 315 senators in the upper house.

So, instead of news, just some more context. At wwitv.com you can find a whole page full of web streams provided by Italian tv stations. Electionresources.com features a long explanation of the Italian electoral systems, both old and new. As the author, Manuel Álvarez-Rivera explains, the system has been altered in numerous ways for this election –

It is widely anticipated that in the event of an Unione victory under the new PR systems, the resulting center-left majorities in both houses of Parliament would be considerably smaller than under the previous systems, and the leader of the Unione, former Prime Minister (and former President of the European Commission) Romano Prodi has promised to undo the changes if the center-left returns to power in this year’s elections.

Finally, here’s the google-translated election website provided by Italy’s interior ministery, which, hopefully, is, where you can find the eventual election results as soon as they are released officially.

Italian Elections: Still too close to call.

UPDATE below the fold.

With respect to the Italian elections, there’s still only one thing certain – it’s going to be a long night, and, possibly, not the last one. There have apparently been, if my rudimentary understanding of Italian news broadcaster Rai News 24 is correct, unjustified delays in data processing. Thus, given the closeness of the race between the center-left and center-right coalitions, Italian expatriats may be the ones who cast the decisive votes for both lower and upper chambers of the Italian Parliament, since a law, introduced in 2001 formed four “overseas constituencies.” They will, accordingly, choose 12 of the 630 MPS in the lower, and six of the the 315 senators in the upper house.

So, instead of news, just some more context. At wwitv.com you can find a whole page full of web streams provided by Italian tv stations. Electionresources.com features a long explanation of the Italian electoral systems, both old and new. As the author, Manuel Álvarez-Rivera explains, the system has been altered in numerous ways for this election –

It is widely anticipated that in the event of an Unione victory under the new PR systems, the resulting center-left majorities in both houses of Parliament would be considerably smaller than under the previous systems, and the leader of the Unione, former Prime Minister (and former President of the European Commission) Romano Prodi has promised to undo the changes if the center-left returns to power in this year’s elections.

Finally, here’s the google-translated election website provided by Italy’s interior ministery, which, hopefully, is, where you can find the eventual election results as soon as they are released officially.
Continue reading

The Market Speaks…and Jörg Packs

Well, by 1630 CET today, the Milan stock market had made a very clear judgment on the outcome of the Italian elections – the MIBTEL index being up just under 1 per cent intraday, despite a pasting for Berlusconi’s own Mediaset..down 1.98 per cent at €9.68 a share. Berlusconi’s departure seems welcome indeed.

More exit poll results are spilling out all the time, showing the Left with a working majority in both houses. So far, the only weirdness has been the rather idiosyncratic kerfuffle in the town of Amelia (German link), where a protest led to the removal of crosses from all polling stations on the grounds of constitutionally guaranteed secularism, and predictable moaning from the ex/post/neo/whatever-fascists. A small outbreak of laicisme.

Oh yes, and this…sorry, more German linkage. Seems Jörg Haider, fun-lovin’ pseudofascist scandal monkey and governor of the Austrian province of Kärnten, is going to stand for election in 2009…in Italy, as a candidate for a party advocating Venetian independence. Not just Northern independence as per routine Liga Nord stupidity, but independence for the Most Serene Republic herself.

Strange really. I’ve always thought of Haider as a man out of place, a Mediterranean politician stuck on the wrong side of the Alps with the Germans. His demagoguery, rocambolesque coalition whoring and-to be brutally frank-corruption and barely concealed racism would have fitted beautifully into Silvio Berlusconi’s recent campaign, the municipal authorities of Marbella, or perhaps the intrigues of southern French Gaullism. Carinthia produced far more than its fair share of Nazis, as did many similarly debatable provinces on the edges of the German linguistic sphere, and in a sense his pumped-up nationalism fits the pattern.

Until you remember that he’s not actually from there at all (not far from Linz, actually), and in fact is putting on the overcompensated border nationalism to ingratiate himself with the overcompensated border nationalists. Which fits, too.

But it’s going to be fun to watch.