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".

Yukos And The Russian Oil Card

Posted on by

The Financial Times is reporting that all senior executives of the Yukos oil company have left Russia. The FT suggests they fear for their safety amid a flurry of arrest and search warrants issued by Russian prosecutors for oil company managers.

?There is not a single member of the management board left in Russia at the moment,? a person familiar with the situation said on Wednesday. Yukos, which has been crippled by tax claims of over $20bn (?15bn) and faces the forced sale of its main production asset, is now managed by remote control, according to the person.
Source: Financial Times

Continue reading →

Ukraine in Pictures

Posted on by

Well Yanukovich has finally been declared the winner. Since someone else is undoubtedly about to post about this I’ll leave it at that. But while we all wait to see what happens next, can I recommend a viewing of the reuters photoslides. I think in many ways these photographs tell a story of their own.

Clearly the scenography of snow and orange lend the images a very special quality, that and the sombre uniforms of the special police, with all those young eyes peering out through the gap beneath the visor. The images of young girls offering them flowers are also reminiscent of earlier epochs – like Prague 68.

These images as also historic. In some ways we are probably approaching the end of something (whatever happens next). I doubt we will see too many more scenes like this on European soil at least. It seems as if a process set off by another group of silent protesters in another city in another country some 15 years ago may now be about to enter its final stages.

Wicked Thoughts Department 1

Posted on by

As Nick notes in an earlier post Barroso and Solana have both been voicing their concerns about what is going on in Ukraine. Barroso has also issued a scarcely veiled threat about possible consequences. (Come to think of it, a strong stand on Ukraine could be one way of recovering some authority after the bruising he’s been taking at the hands of the MEPs). So I ask myself what has the always (even to the point of cynicism) pragmatic Putin got to trade?

Well he could try suggesting that the Russian central bank put a hold on its plans to convert some more of its reserves into euros. Preposterous suggestion, probably. Doable in the modern world of realpolitic, certainly. The irony here is that there were undoubtedly some people around at the time of setting up the single currency who thought that this ‘achievement’ of central bank reserve status was going to be a thoroughly good idea.

Onwards And Upwards We Go

Posted on by

It’s no secret that the euro is now hitting record highs in its exchange rate with the dollar. It is also pretty apparent that some EU leaders are becoming rather preoccupied about the consequences of this for those eurozone economies which are driven by exports. What is much less clear though is what can be done about it.

The dollar early today was trading at $1.3065 per euro in Tokyo, signalling that the $1.30 psychological threshold may now lie behind us. Some experts are suggesting that the ECB would be reluctant to see the euro rise above $1.35, but since what is happening is more a dollar slide story than a euro rise one it is hard to see what they can effectively do about the situation.
Continue reading →

Google Does It Again

Posted on by

Google yesterday released free software that lets you simultaneously search the Web and your PC hard drive for information. You can download here. This time it will be Microsoft and Yahoo who will be fuming in the back office.

What all this new Google stuff does seem to be exciting is some controversy about the privacy issues. Any thoughts anyone?

Germany’s Jobs Woes Continue

Posted on by

With unemplyment currently running at a five year high of 10.7%, yesterday’s news that GM/Opel and KarstadtQuelle are to reduce employment further (‘Germany Loses 15,000 Jobs in a Day’ was the Bloomberg headline) could hardly come at a worse time. There is plenty of evidence of the long promised restructuring, but little of jobs growth. ‘Jobs churn’ US style does require the two halves of the equation to at least balance.

The future does not look inviting. The FT puts it as follows: “KarstadtQuelle?s problems have been exacerbated by the extreme reluctance of Germans to increase consumer spending.” Actually I have been arguing that this ‘extreme reluctance’ isn’t simply shyness, and that there are clear structural reasons why this is the case.

At the same time continued downward revisions on the global growth outlook following the oil ‘spike’ mean that export driven economies like the German one can expect little relief on the global demand front (ECB president Jean-Claude Trichet is the latest to warn on this front, changing the banks emphasis earlier in the week to slow growth rather than inflation as the main concern).

Again – in a kind of ‘euro lament’ – Bloomberg sums up a rather bleak week week like this: “At least eight reports in the past week signaled slowing growth in the $9 trillion euro economy. The pace of expansion at manufacturers and service companies cooled, retail sales declined and industrial production in the region’s three biggest economies dropped more than economists forecast”.

To put all this in perspective, I think it is worth remembering that only six months ago most commentators were anticipating that we would now be entering the vigourous upswing of that long awaited recovery. As it is almost all the indicators seem to be pointing towards negative.

Euro-zone: A Default-free Area?

Posted on by

This is the interesting question that Morgan Stanley’s Vicenzo Guzzo asked a couple of weeks back. The key background details in question are what are known as the cross-country risk spreads. Now this may seem like a piece of technical obfuscation, so what exactly does he mean?

Well, one of the main consequences of the introduction of the euro has been the dramatic reduction in what are known as the ‘interest rate spreads’ on sovereign debt.
Continue reading →

Now That’s More Like It

Posted on by

Germany is reconsidering the deployment of troops in Iraq, should conditions ‘change’. According to the FT, Peter Struck, the German defence minister, departing from previous declared government policy stated in an interview that while ?At present I rule out the deployment of German troops in Iraq. In general, however, there is no one who can predict developments in Iraq in such a way that he could make a such a binding statement [about the future].”

The FT also informs us that Struck welcomed Kerry?s proposal that he would convene an international conference on Iraq including countries that opposed the war if he were to win next month’s election. Now I have already suggested that I think EU leaders would be ill advised to get involved in the US presidential elections (not least because I think any such intervention might well boomerang). I see no harm whatever, however, in indicating that national policies would change under changing circumstances.

No continent is an island, and the EU cannot afford to sit back and watch a disintegration of Iraq. It may seem a long way off, but it could rapidly come to feel like it was a lot nearer.

Perhaps the most significant comments came from an unnamed ‘official’

A senior official said: ?When the situation in Iraq changes, when elections have been held, or there are other developments, then we will make decisions on this basis.? If a democratically-elected Iraqi government were to ask the UN for support, the international community, including Germany, must be in a position to respond, the official added.

Full Disclosure: I am British, I now think the invasion was a mistake, but I think Britain has an absolute obligation to maintain the troop presence. I also think that the debate about who was right and who was wrong is better left for history, since, in the light of what has subsequently happened we now have more pressing concerns. I personally welcome the Kerry proposal, and would also welcome increasing UN and other international involvement. We cannot afford to let this one go wrong.

Addendum: Spain is also reconsidering. Jos? Bono – Spain’s Defence Minister -issued a statement to that effect last week, and then a lightening retraction in the wake of the ensuing controversy. This sort of thing is not unusual in Spain. My reading is that Spanish troops would once more be there, under the right circumstances.

Mama Mia

Posted on by

Here’s an audio link for a change. NPR’s Sylvia Poggioli reports on changing family patterns in Italy. The report I would suggest is pretty ‘fair and balanced’. As a side issue I think she nicely draws attention to the way ‘gender equality issues’ and unequal family caring responsibilities may impact the ability of Southern european societies to meet the ‘new’ female participation objectives I posted about yesterday.