Anyone Feel Like Hiking?

At the time of writing the Monetary Policy Committee of the Bank of England is busy deliberating as to whether to raise the base lending rate (currently at 4.5%). The consensus view is that the rate will go up a quarter point. Others speculate on a half percent rise (the National Institute of Economic and Social Research – NIESR – is even advocating this). Of course there is always the possibility that the rate will remain unchanged.

Whatever the speculation about the final decision, there is little mistaking the key factor in the decision: the Uk housing market. The centre of debate is really whether the UK housing market has peaked, or whether more rate raising is needed to bring the market back into line with reality. This is a classic bubble bursting situation.
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Who is Elga Bartsch?

Apart from the fact that she is German, aged 37, and works for Morgan Stanley, perhaps, until recently, little more of any importance would have been known about her. But you try a ‘search news’ click on Google, and you will see how many times the name of ‘our Elga’ shows up in connection with what we might choose to call the ‘German disease’. (In reality the German economy has expanded by an average of only 1.2 percent every year since 1992, which is the same as the Japanese one – and less than half the growth achieved in the U.S. and the U.K. over the same period – so why don’t we say Germano-Japanese disease? This might help us get a bit nearer to the underlying causes). The reason for this: Elga is fast becoming the best known champion of the view that the key problem facing the Germany economy is the high cost of German labour.

“The reason that we go more to India and those countries is we get highly skilled young people in a flexible labor market for cheap prices,” said Henning Kagermann, 56, chief executive officer of SAP, in an interview at the Cebit fair in Hanover, Germany. “This is highly competitive against our home market.”
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A Tale of Two Search Engines

With Google all set to start their IPO this Wednesday, many analysts are busy scratching their heads trying to work out whether the numbers add up.

One little detail that is exercising their minds is the recent fate of the once acclaimed Lycos. Terra Lycos announced this week that it will sell U.S.-based Web portal Lycos, which it bought just four years ago in a deal variously valued at between 7 billion and 12 billion dollars, to South Korea’s largest Internet company – Daum – for just $105 million.
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Italy: Pay Now Live Later?

The Italian government appears to be making plans to get to grips with the mounting burden of its debt. This is a move which is being widely welcomed. Under the latest plan, the deficit is forecast to be 2.7% in 2005, down from the 2004 target of 3.2% of GDP.

Without the changes, experts were suggesting the deficit could rise as high as 4.4% next year.

Apparently the only remaining tricky problem appears to be that of the promised tax cuts. Bloomberg today cites Bank Governor Antonio Fazio as joing the ranks of those questioning the viability of these cuts:

Bank of Italy Governor Antonio Fazio urged Prime Minister Silvio Berlusconi to focus on lowering debt and eliminating bureaucracy to boost economic growth rather than making tax cuts the country can’t afford.

Berlusconi’s government Thursday approved plans to cut taxes and adopt deficit reduction measures worth 24 billion euros ($29 billion) in 2005 to keep Italy’s budget from breaching European Union limits. The document didn’t say how 13 billion euros ($15.6 billion) in promised tax cuts for 2004 and 2005 would be funded.

As is not uncommon I have a different question: what will happen to economic growth in Italy if these cuts are implemented. Italy’s economy is projected by the IMF to grow at a rate of 1.2% this year. The previous two years were also extremely ‘lacklustre’. So the problem is that if you can only obtain a growth crawl when you are increasing the deficit, what are you likely to get when you start reducing.

Of course the attempts to get to grips with the problem – however inadequate they may be – are to be welcomed, but what will be the consequences? That is the uncomfortable question which noone seems to be facing up to at the moment.

When Bad Things Happen to Powerful People

Even cowgirls get the blues, and even world leaders get sick and die. Sometimes it happens while they were in office, although the public seldom knows. It was a long time before we knew just how much Woodrow Wilson’s stroke affected his second term. John F. Kennedy’s medical problems were successfully concealed throughout his time in public office. When Reagan’s fall to Alzheimer’s first set in will probably be a secret for another couple of decades. Miterrand’s cancer was hidden from the French public. The Italian press wasn’t writing about how serious Bossi’s health problems are.

The Rt Hon Lord David Owen, CH, a former British foreign secretary, tackles this issue in QJM, an Oxford journal on medicine, and not your usual place for political reading

Diseased, demented, depressed: serious illness in Heads of State

As both a physician and a politician, I was first touched by the question of how illness can affect the decision-making of Heads of State or Government when I met the Shah of Iran in Tehran in May 1977. He appeared to be at the height of his power: self-confident, and enjoying his global role in helping to determine world oil prices. It would have been a great help to have known then, and particularly a year later, that he had been suffering from chronic lymphocytic leukaemia. …

The French Foreign Minister Louis de Guiringaud told me later, when we had both left office, that he had known of the diagnosis. But he never told me when I was Foreign Secretary, or Cyrus Vance, the US Secretary of State. Had I known I would have pressed far more vigorously early in 1978, and certainly been adamant in the late summer and autumn of that year, that the Shah should stand down immediately on health grounds. … However, we were still treating him as an imperial leader, capable of making bold decisions, when in retrospect what he needed was to be told what to do and virtually forced to take treatment in Switzerland. If he had done so, the Revolution in Iran would not have taken place in the way that it did, President Carter might have won a second term, and certainly the history of the Middle East would have been very different.

There aren’t any easy answers to these questions, as Owen suggests at the end of the article

Reluctantly, I must also conclude that if a Head of State or Government becomes ill in office, different considerations apply and there can be no set rules. … Formal procedures for fixed medical examinations for an elected incumbent is a process with a pseudo-objectivity which can be blind to the complexities and dynamics of government, as well as the uncertain relationship between disease and the capacity to make decisions.

Thanks to Electrolite for the tip.

Writer’s block and the Amish Paradise

As I walk through the valley where I harvest my grain
I take a look at my wife and realize she’s very plain
But that’s just perfect for an Amish like me
You know, I shun fancy things like electricity
At 4:30 in the morning I’m milkin’ cows
Jebediah feeds the chickens and Jacob plows… fool
And I’ve been milkin’ and plowin’ so long that
Even Ezekiel thinks that my mind is gone
I’m a man of the land, I’m into discipline
Got a Bible in my hand and a beard on my chin
But if I finish all of my chores and you finish thine
Then tonight we’re gonna party like it’s 1699

We been spending most our lives
Living in an Amish paradise
We’re all crazy Mennonites
Living in an Amish paradise
There’s no cops or traffic lights
Living in an Amish paradise
But you’d probably think it bites
Living in an Amish paradise

– Amish Paradise, “Weird Al” Yankovic

Belgium is hell in July.

The Belgians, of course, know this instinctively. I don’t quite understand how a nation can continue to function when the entire population is on vacation at the same time for a whole month. The trams get cut back to the point where they’re useless out in the eastern suburbs of Brussels and the weather isn’t much to write home about either. I still have to wear a jacket in the morning in late July.

Of course, I have this extra problem: allergies. Something in Belgium sprays its pollen in July. Something that just about kills me every time. And every summer, I tell myself, next year. Next year, don’t forget to take your goddamn vacation in July like every one else, and get as far from Belgium as you can! And every year – this is my third year here – I have to be in Belgium in July for some reason.

This year, it’s the final report for my research in translation automation. The work is done. The results are excellent, spectacular even. In another year, under other circumstances, I would feel tempted to find some venture capital and see if I can revolutionise the language industry. Instead, I’ve spent the last week wheezing in bed, taking hits off my Duovent bong, popping Tylenol and Claratin, and snorting this foul-smellng shit my doctor gave me for hay fever.

I’m suffering from the most profound writer’s block I think I’ve ever had. I can’t remember ever having felt so unable to organise or express my thoughts. I have tons to blog, and vast quantities of material on how to profit from the statistical properties of the lexicon, but I can barely bring myself to read my e-mail. Writing this paper is like having acute constipation. I push and I push and it hurts like hell, and all that comes out is a little bit of crap.

But, I’m back at work today and that brings me to my e-mail, specifically a letter pointing me to an article in Saturday’s Guardian about Manitoba Mennonite novelist Miriam Toews:
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In other news: Schumacher revealed to be fast driver

Picking up a riff from the gutter-press Bild-Zeitung, the Spiegel* discusses the coming-out of Guido Westerwelle, leader of the Free Democrats. (As a technical matter, this seems in fact to have been more an outing by the press, with the close and willing cooperation of the outee.)

Abiola Lapite waxes indignant at Bild‘s front-page story and photo (‘Westerwelle Loves This Man!‘). It’s sordid, of course; titillation for the nosey, as Abiola rightly classifies it. But then, sordidness is Bild‘s stock-in-trade. Even ‘Sunny weather tomorrow‘ takes on a sordid air, when it appears in Bild.

The thing is, though, Westerwelle’s homosexuality was surely the least-secret ‘secret’ in Germany. Though he hadn’t previously ‘officially’ admitted he is gay, nor did Westerwelle do anything to hide the fact. His gayness might sometimes have provided fodder for jokes in Titanic or on the late and lamented Harald Schmidt show (a blatant rip-off of Letterman that was often better than the original). But so far as I know, nobody ever made an issue of it.
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