Hollywood’s Big Loss

No more free money from Germany.

Even though its focus may be far removed from the geopolitics of Europe, Hollywood has reason to be concerned with the recent results of the German elections. The newly designated Minister of Finance Peer Steinbrück announced on Nov. 12 that he was retroactively eliminating the part of the tax code that allows German investors in media funds to defer their taxes. This German tax shelter, as I have previously pointed out, provided Hollywood with an El Dorado of easy cash for the past quarter-century and allowed studios to increase their earnings without any risk. Now it is dead.

I love Edward Jay Epstein’s columns.

Something Is Moving

The FT reports this morning that France may be about to ease restrictions on certain highly regulated service industries and on business start-ups as part of a package to create jobs in poor suburbs. It is possible that these initiatives might be a test bed for broader economic reform throughout France. French finance minister, Thierry Breton, told the Financial Times:

France had failed its immigrant communities, largely housed in bleak areas of high unemployment where rioters have left one pensioner dead and burned 7,000 cars. “We have put a lot of money into the suburbs over the past 20 years,” Mr Breton said. “But obviously it wasn’t enough. We need to work on how to create more jobs and growth in those areas.”

Among the initiatives being considered is an easing of regulations in the specially designated “zones franches”. Currently companies are encouraged to locate in these areas of high unemployment through a limited range of tax breaks. However, the Finance Ministry is considering a form of “positive economic discrimination” that would exempt companies from certain rules in place elsewhere. These include relaxing professional qualifications on businesses such as hair salons and taxi companies, and increasing the level of state guarantees for business loans.

Europe’s Digital Divide

“A digital divide has appeared among Europeans, with age, income and education determining whether the continent’s citizens use the Internet”, at least this is the conclusion of a new study conducted by Eurostat on behalf of the EU commission.The largest divide by educational level was found in Portugal, and the smallest in Lithuania, only in the Netherlands did more than half of the retired population use the internet. Only in Sweden (70%), Denmark (64%), Finland (54%) and Germany (51%) did more than half of the lower educated use the internet during the first quarter of 2004, while the proportion of the higher educated who used the internet fell below 50% only in Lithuania (38%) and Greece (48%). Now why do I not find all this particularly surprising?

In the EU25, 85% of students (aged 16 or more in school or university) used the internet during the first quarter of 2004, as did 60% of employees, 40% of the unemployed and 13% of the retired, compared to an EU25 average of 47% for individuals aged from 16 to 74. This divide by employment status is also found by educational level: only 25% of those with at most lower secondary education used the internet during the first quarter of 2004, while the proportion rose to 52% for those who had completed secondary education, and 77% for those with a tertiary education.

Ministry Of Silly Things

Hot on the heels of yesterdays report that road maps using miles instead of kilometres are now in danger, Tim Worstall tells us the story of the Belgian town council which is trying to implement standardised clothing rules. As I suggest in comments this issue is not as trivial as it seems, and Maaseik is far from the only municipality across Europe to try to implement dress regulations.


The FT has a timely piece of Spain’s drought. You see, it isn’t simply a question of special pleading on my part :). And note the little detail, 700,000 new homes built last year. I suppose at least when the construction sector stops all those builders will be able to finally cool off.

A severe drought in Spain, the worst since records began in 1947, is playing havoc with livelihoods, sparking forest fires and threatening millions of tourists with water rationing as they head for the beaches this summer.

Worse yet, 2005 is unlikely to be a freak year. Spain is getting hotter and drier, with average temperatures rising by 1?C since 1960. The European Environment Agency estimates that average temperatures will rise by a further 4?C over the next century.

Winters are now so mild that storks have stopped their annual migration to north Africa. Scientists are witnessing desertification many estimate that up to one third of the country may be a desert within 50 years.

World Class Model Services

“Ufff”, my partner said as she put to rest a bunch of plastic bags she had just managed to drag from the supermarket, “so many things to buy”. I was pealing the spuds at the kitchen sink at the time, preparing the lunch, but I still managed to lean over, give her a kiss, and remind her that not everything can be bought: as the Beatles used to say “money can’t buy you love”. Then I remembered this headline.

Cabins designed in the Netherlands, (made in China no-doubt), sex workers from Eastern Europe (some 40,000 of them apparently), (capital possibly kindly provided by hedge funds), and customers from Western Europe, the US and Japan. Well, comparative advantage triumphs again. I imagine the terms of the Bolkestein directive will not be applied.