It should be noted that Germany is not the only EU member state where controversy is growing about economic stagnation and what to do about it. Luca Cordero di Montezemolo, the chairman of Confindustria, Italy’s employers’ group, has made his preferences clear: ?I don’t want an Italy like Disneyworld”.
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Author Archives: Edward Hugh
An Asian IMF?
Yes, that’s what Bloomberg’s William Pesek suggests we might see evolving. As Pesek notes, the creation of an Asian Monetary Fund would:
“have major consequences for the global elites and the so-called “Washington Consensus” on how developing nations should go about raising living standards for their swelling and often poor populations.”
In particular, if this came off, not only would we be talking about a European social model, we would also be looking at an Asian one.
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ECB: Rate Cut In The Autumn?
Despite a widespread feeling that interest rates in Europe may be about to rise, futures markets seem near to pricing in a rate cut for the second half of the year.
One interesting knock-on consequence of this that no-one seems to be twigging is that any such move might well cramp the style of Alan Greenspan over at the US Federal Reserve. To date everyone is imagining that interest rates in the US will continue to rise at a ‘measured’ or ‘not so measured’ pace. But with the current account deficit to worry about there will be a limit to how far Greenspan can push the difference in rates (or spread) without driving up the dollar, something I’m sure he dearly wants to avoid doing.
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When Sorry Is The Hardest Word
Vladimir Putin, speaking in Moscow today, paid tribute to the courage of “all Europeans who resisted Nazism.” He also stated something which for my generation seems to be simply a fact: that the war?s most ?ruthless and decisive? events had unfolded within the Soviet Union, whose sacrifice of 27m citizens had underpinned the Allied victory. Had the Stalin-Hitler pact held, the war in Western Europe would probably have looked very, very different. However, as the FT notes:
Mr Putin stopped short of issuing the apology demanded by the Baltic states for the four decades of Soviet occupation that followed the war. He also made no reference to the post-war division of Europe.
Why is it sometimes so hard to say sorry?
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Changing Perspectives On Immigration.
Views of immigration are changing. Back in the mists of time, when I first came to the conclusion that ongoing demographic changes were going to be important, the voices in favour of a reconsideration of immigration policy were few and far between. Perhaps the first and most notable of these voices was the UN population division. Now things are different, and a series of recent international conferences and reports highlighting the positive advantages of immigration as an economic motor only serve to underline the fact that discussion of this important topic is very much back on the agenda.
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Better News on Agricultural Tarrifs
For once something positive to report:
After months of deadlock, the Doha round of global trade talks has taken a big step forward, thanks largely to an abstruse but important deal over agricultural tariffs….On May 4th, negotiators from America, the European Union, Brazil, India and Australia hammered out a formula for converting specific tariffs on agricultural goods, such as 10 cents per pound in weight, into percentage (or so-called ad valorem) tariffs.Measuring all tariffs as a percentage of the goods? value is a prerequisite for further progress in talks about reducing trade barriers for agricultural goods. Under the broad outline for the farm-trade talks agreed last summer, countries pledged to divide their tariff barriers into different tiers. Higher tariffs will be cut more than lower ones. Not surprisingly, those countries that protect their farmers most wanted a conversion formula that translated specific tariffs into lower percentages, as that would imply smaller cuts down the road. In the end, the deal was based on a compromise proposal made by the European Union.
Source: The Economist
Obviously this is a dense technical issue, but the good news is that the EU has moved to break the deadlock. The slightly ironic detail is that the meeting where the agreement was ironed-out was held in Paris with the French referendum campaign as a background. Still I suppose this puts the suggestions that current EU policy is being driven exclusively by the needs of obtaining a ‘yes’ vote in some sort of context.
Also, as the Economist notes there is plenty yet to do. In the first place all the details on agriculture have still to be worked out. And then there is the tricky question of services……………
The Sort Of News We Don’t Need
The FT is running the following story about Barroso:
Jos? Manuel Barroso, European Commission president, will drop his supervision of antitrust cases affecting the shipping industry, shortly after it emerged he took a holiday on the luxury yacht of a Greek shipping tycoon….the timing of Mr Barroso’s decision is likely to reignite the controversy over his summer holiday as a guest on a yacht belonging to Spiros Latsis, son of John Latsis, the Greek shipping magnate.
Are these people all so desparately lonely that they have nothing better to do with their time? I have simply one question: with all the money we pay our leaders, don’t they have sufficient resources to organise their own holidays?
ECB: Plus ?a Change?
The ECB met earlier today to conduct the monthly review of interest rate policy. It came as a surprise to noone that the outcome was to leave everything just as it is. Surprisingly though the decision this month is surrounded by a little more controversy than has been the case of late since Italy’s Berlusconi and economic opinion in Germany have been suggesting that some reduction of rates might be no bad thing, whilst Spain’s economy minister (and former EU commisioner) Pedro Solbes is reported to have been pushing for an increase. Why the difference?
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China and Protectionism
The Chinese minister of trade Bo Xilai was in Paris yesterday. Most likely this is simply a happy coincidence, but the timing couldn’t have been better. The issue of Chinese textile imports has become one of the issues in the French referendum, and minister Bo was conveniently available to make all the right gestures:
“We want to soften the shockwave that there could be from the rise in Chinese textile exports,” Bo told a news conference after talks with French trade minister Francois Loos…”It is a temporary phenomenon and this phenomenon will weaken or disappear”.
Source: Reuters
China’s Currency and Trade
Currency traders around the globe lazily staring into their screens must have found themselves transfixed last Friday when the flatline indicating the value of the Chinese yuan (or renminbi if you prefer) suddenly jumped to life. And so it was that during a brief 20 minute interval the yuan surged to a level of 8.270 to the dollar from the hypnotic and seemingly eternal value of 8.276. Now 6 thousandths of a dollar isn’t really a very big deal, but it is the sheer fact that it happened that is causing all the fuss.
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