The Economics of the German VAT Hike

I am very happy to be back here at AFOE, if not only, for a brief one-stop guest post about the economics of the German VAT hike and more specifically how market commentators and analists might just be reading the German economy somewhat falsely at the moment in the sense that they are not taking into account the implications of the sustained and evolving process of ageing in the German society. Indeed as Edward noted just a few days ago here at AFOE we might actually be talking about a clash of paradigms or at least a clash between two ways of looking at and interpreting the economic data coming out of Germany and indeed of the entire Eurozone. There are consequently many venues on which this diagreement is fielded and an important one of these is the German economy and more specifically the significance of the VAT hike and below the fold I will give my view on this topic.
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Maroni Hits Back

Roberto Maroni is back in the Italian press again today, and with another interview. This interview is in ilResto del Carlino. (Interestingly enough they are running an online poll, and the result was running at 51.7% euro to 48.3% lira). Unfortunately the interview is in Italian. I have translated a few extracts under the fold. The big issue that he draws attention to (and I was flagging this in an earlier post) is the apparent desire of Berlusconi not to commit himself if he can help it.
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French Referendum: No Vote On The Rebound

The ‘No’ campaign seems once more to have regained the lead in the run-up to France’s referendum on May 29, with French voters apparently ignoring all warnings about the damage that would be caused by rejection of Europe’s constitutional treaty.

One explanation for this may be the fact that leading politicians of the left – like Jacques Delors and Laurent Fabius – have given the impression that a ‘no’ outcome would lead to a probable ‘renegotiation’ of the treaty, with an outcome more favourable to French interests. The latest opinion polls show that an increasing proportion of respondents say France could renegotiate a better treaty after a No vote. According to the Ipsos poll cited below, nearly 62 per cent of respondents now hold this opinion.

Confounding pollsters, pundits and politicians alike, public opinion in France has swung back behind a no vote to the new European constitution, say three surveys published yesterday.

Less than two weeks before France’s May 29 referendum on the treaty, the polls by the TNS-Sofres, Ipsos and CSA agencies for Le Monde, Le Figaro and Le Parisien newspapers showed support for the no camp, trailing since the end of April, had bounced back to between 51% and 53%.
TheGuardian

Bloggeurs In The News

On Thursday it was John Thornhill in the FT, then yesterday Stephen Castle of the Independent joined in. Topic du jour: the battle in cyberspace for the hearts and minds of the French voters.

Conspiracy Theory One: the US administration wants Europe to adopt the constitutional treaty because it would kill off nation states and allow Washington to deal with a more pliable Brussels.

Conspiracy Theory Two: the Bush administration is secretly financing the No campaign in France because it wants to kill off Europe’s ambitions to forge a common foreign policy and rival the US on the world stage.
Financial Times Thursday 28 April

One says that a vote for the EU constitution would please George Bush; another uses a computer game format with arrows from a “yes” vote to a “game over” box. Not only are French opponents of the EU constitution ahead in the opinion polls they are also winning the battle of the blogs.
Independent Saturday 30 April

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Outsourcing and the Global Optimum

The last week has seen the ‘great US ousourcing debate’ hit both new highs, and new lows. On the plus side would be the declarations of the oft maligned Greg Mankiw to the effect that the “outsourcing” of jobs is beneficial to the United States economy (even with the qualification ‘perhaps’ this has merit – since despite the fact that the suggestion may not be as well-founded as Mankiw imagines, it is at least courageous in a situation where the President he is advising doesn’t appear any too clear on the question himself). Among the more evident examples of the low points would be the statement from the Democratic Presidential aspirant John Kerry to the effect that company leaders who promote business process outsourcing are ‘Benedict Arnold CEO’s’.
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The Strange Case of Odysseas Tsenai

In the news today the Comission and Spain/Poland are still haggling over the price of the constitution. Meantime from another pole of Europe, a curious story of one young Albanian, and the struggle to assert his elementary rights in his new homeland: Greece. My feeling is that in our current preoccupations, our conception of Europe lies too far to the North and too far to the West. I also think, that when we come to look at the contribution and participation of immigrants in Europe, we all too often forget the adversity they face.

Background: in 1990 the Greek Alabania border opened. Over the mountains and across the sea the Albanians started arriving in Greece. Their numbers were large but never counted: their number still constitutes material for scare stories on popular Greek TV. The actual number is unknown but it might be as high as a million all over Greece (if you include the ethnic Greek Albanians ). The first arrivals came from a country whose isolation was proverbial. They were destitute, blinded by the city lights and the consumer goods, and clueless as to what they could do to earn a living.
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