Author Archives: Edward Hugh

About Edward Hugh

Edward 'the bonobo' is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

Angela Merkel The New Mrs Thatcher?

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It was inevitable I suppose. Comparisons between Angela Merkel and Margaret Thatcher are starting to roll. Such comparisons seem ludicrous to me, but I’d love to know what our German readers, who are undoubtedly a lot better informed than I am, think of it:

“Think of Angela Merkel as German chancellor and Nicolas Sarkozy as French president, and an intriguing notion arises – could Thatcherism belatedly arrive in Germany and France?

As soon as one imagines it, qualifications flood in. Ms Merkel has some characteristics of the former British prime minister – notably support for more radical economic reforms than previous CDU leaders – but not the same implacable force. She will probably tone down reformist zeal so as not to frighten the voters, and in any case faces internal resistance from conservatives, including the CSU sister party.“

Euro Under Pressure

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The euro continues its fall against the dollar today after yet another opinion poll showed French opposition to the European Union constitution continues to strengthen before Sunday’s referendum. Against the dollar, the euro fell to $1.2545 at 8:33 a.m. in London, from $1.2601 late yesterday in New York. The euro wasn’t exactly strengthened by the fact that Sarkozy had to deny a reprot that he had already informed Chirac that the vote was lost.

In itself this decline – in fact the euro has fallen against the dollar by 7.9% so far this year – is relatively benign, and may even be beneficial for hard pressed exporters. Mathew Lynn provides a reasonably summary of the issues here.

The problem is that there are a confluence of problems – the constitution, the absence of growth, elections in Germany, Italy and Portugal and the Stability and Growth pact, and now, divisions and lack of solidity in the ECB. The danger is that uncertainty among politicians following from a ‘no’ hangover, could be just what it takes to turn a benign slide into a run.

If At First You Don’t Succeed…..

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Well people are already busy positioning themselves in the face of what seems like an increasingly possible ‘no’ vote in France on Sunday. Yesterday it was Giscard D’Estaing, today it is the turn of the current EU president Jean-Claude Juncker. His basic point, if French and Dutch voters don’t say ‘yes’ the first time, then don’t give up, try and try and try again.
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Ankara Steps Up To The Plate

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This is a very intelligent move:

Between the rock of the French and Dutch referenda and the hard place of the looming early elections in Germany, Turkey has reiterated its determination to seek full EU membership. Ankara has also named its chief EU negotiator.

Turkey’s 38-year-old chief EU negotiator Ali Babacan is a founding member of the ruling Justice and Development Party (AKP) who believes that there is no slowdown in Ankara’s reforms, notwithstanding that “political reforms, unlike economic reforms, do need some adjustment time to change the mental framework of the people”. In an interview with Reuters a few days prior to his appointment on 24 May, Babacan said that Turkey had no reason to fear from the referendum in France provided that Ankara stayed calm, pursued its own reform agenda and met all EU conditions for opening accession negotiations on 3 October 2005. He has said that he had “no solid reason” to believe that the scheduled 3 October launch of accession talks would be in jeopardy.

Handling matters this way throws all the pressure back on the EU. “We are ready to negotiate, now lets get on with it”.

Car Bomb In Madrid

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“A car bomb exploded in the Spanish capital on Wednesday, injuring three people, 45 minutes after a Basque newspaper received a warning in the name of Basque separatist group ETA, police said.”
Reuters One Hour Ago

Thankfully no-one was killed. On this occassion there seems little doubt who was responsible. This bombing follows recent controversial moves by Spanish president Zapatero to open a peace process. At the time of writing the linked post I was optimistic. Despite what has happened today I remain so. Eta is not to be trusted, and it is important to keep this in mind all the time. My ‘off the top of my head’ analysis: negotiations about the conditions for holding negotiations are in process, both sides are trying to exert pressure, the Spanish government is demanding a permanent truce from Eta, Eta is demanding a concentration of prisoners in the Basque region, and so things continue.

Crisis Looming At The ECB?

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A right royal row is brewing at the ECB. Basically the old guard theorists of the ‘one size fits all’ monetary policy are being challenged by more pragmatic observers of day to day realities. For the moments it is the politicians who are making the running (but there are plenty of competent economists in Germany and Italy who are ready to back them up), and yesterday the OECD joined the fray.
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Advantages Of Trade With China

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I remember it was not so long ago that people imagined China was so, so far away. Now this kind of news is almost daily.

“Media and publishing group Bertelsmann on Tuesday announced the first big Sino-foreign wholesale book distribution business in China, as overseas investors seek new ways to get access to the country’s book-sales market.

Bertelsmann’s DirectGroup said it had set up a joint venture with Liaoning Publishing Group worth Rmb30m ($3.6m), with the Chinese group controlling 51 per cent“.

Martin Wolf On Italy

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The ever readable Martin Wolf has been writing in the FT on Italy:

“Let us think the unthinkable: could the eurozone disintegrate? The answer is yes. Disappearance of the zone as a whole seems hugely unlikely, so long as the commitment to the European project survives. But the exit of one (or more) members, a sovereign default or both is not at all inconceivable.”

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