Europe

Kejserens nye Klæder as seen by Jurre Hermans

Wednesday, 4 April, 2012

When the somewhat nerdy-looking Baron Wolfson of Aspley Guise decided to award a prize worth £250,000 (€300,500) to the person “who is able to articulate how best to manage the orderly exit of one of more member states from the European Monetary Union”, the usual tut-tutting about “English euroscepticism” and “titled Tories” did the rounds. […]

Continue Reading »

Name the country at the end of the rainbow!

Wednesday, 14 March, 2012

“Here’s something you probably didn’t know: X today is the richest country in the European Union after Luxembourg.” Baffled by the location of X? Try these clues: “Yes, the country that for hundreds of years was best known for emigration, tragic poets, famines, civil wars and leprechauns today has a per capita G.D.P. higher than […]

Continue Reading »

Patacombos for the PIIGS!

Thursday, 16 February, 2012

Because the PIIGS are prevented from getting their grubby trotters on the printing presses by the European Central Bank, all they can do is stand idly, impotently by as money flows out of their economies and into more stable havens. This is exactly how it was in Argentina a decade ago except that Buenos Aires proved more imaginative when faced with this dilemma. The Argentine treasury began issuing a raft of IOUs with exotic names: lecops, porteños, quebrachos and patacones, for example. These were greeted with disdain by the global money markets, but McDonald’s, that beacon of capitalism and proletarian cuisine, was more humane:

“The Buenos Aires outlet of burger behemoth McDonald’s is preparing to accept one-year bonds in payment for food, as a cash crisis grips the Argentine economy tighter with the continued lack of conclusion to talks between the country and the International Monetary Fund (IMF). The bonds, nicknamed patacones after a currency that became defunct 120 years ago, will be issued as part-payment of wages for the 150,000 state workers in Buenos Aires who earn more than US$740 a month… McDonald’s has launched a special new meal deal called the ‘Patacombo’, consisting of two cheeseburgers, French fries and a drink.”

In the end, the patacones didn’t do the business and at the beginning of 2002 Argentina defaulted on its international debt. The peso’s 11 year-old tie to the US dollar was rescinded and the country was plunged into an enormous financial and socio-economic crisis. Unemployment rose to 25 per cent and wages dropped to their lowest level in 60 years. Moral of story: PIIGS should think carefully about how they intend to pay for their Patacombos, or else change their diet.


The EU North-South divide extends to innovation

Wednesday, 8 February, 2012

Sweden is the highest-ranked EU member state in this year’s Innovation Union Scoreboard, revealed yesterday by the European Commission. But Europe’s most innovative nation, Switzerland, is outside the EU, and the Union trails noticeably behind the United States, Japan and South Korea in the innovation race. After Sweden, the three highest EU countries on the […]

Continue Reading »

Punk Economics

Tuesday, 31 January, 2012

Irish economist, David McWilliams, explains the euro crisis using “punk economics“, which he describes as “a new way looking at the economy based on the central idea that what is important is not complicated and what is complicated is never important.”

Snippet: “The German solution will only cause a recession, or more recessions, in the periphery. This will cause money to flow into Germany, not out of Germany, because the risk of default in the periphery increases and in time much of Europe will begin to look like Greece, teetering on the edge. As money flows into Germany, German bond yields fall, Greece will default, and this will give the others permission to do likewise because a default in Greece sets off a domino effect all over Europe because Europeans will say, ‘Well, if the Greeks can do it, why can’t we?’ Is it any wonder right now that the price of gold is firm, that the yield on German bonds is falling and that the euro is weakening against the dollar?” He’s onto something.


Northern and southern Europe are different places

Thursday, 29 December, 2011

Some of the best commentary on Europe and the euro this year has come from the keyboard of Walter Russell Mead. This week’s column is titled Europe Is Still Hip Deep In The Bad Stuff and here’s the money quote: “But if Europe dodged the charge of an angry bear last month, it is still […]

Continue Reading »

Angie, Angie, where will it lead us from here?

Friday, 16 December, 2011

“My own favorite Merkel story comes from 1981, when she left the husband whose surname she still carries, Ulrich Merkel. They had met while studying physics in Leipzig, married, moved to East Berlin, and for three years Ulrich had the apartment done up while Angela completed her doctorate. When the place was spick-and-span, she decided to leave. ‘One day, she just packed her things and moved out,’ her ex-husband recalls. An almost wordless operation, apparently. She took only one item — the refrigerator, removed while Ulrich was out of the house. That’s Angela Merkel for you: a woman who runs away with a refrigerator.”

So writes Roger Boyes in Newsweek. His profile of the German chancellor “Angela Merkel and the Euro Crisis: Women in Leadership” is highly entertaining but it’s not going to go down well in Germany where it will be perceived as British payback for the recent Merkozy humiliating of David Cameron in Brussels. This is a pity as Boyes has spent 35 writing about Germany and he’s one of the most perceptive analysts of the country, its politics and its culture.

Beyond Berlin, though, the blush is well off the rose and much of austerity Europe now sees Angie through the perceptive eyes of Mick Jagger and Keith Richards who peeked into their crystal ball in 1972 and wrote, “With no loving in our souls and no money in our coats / You can’t say we’re satisfied.” That’s Angie.

Angela Merkel


AEP picks his Unwort: Fiskalunion

Monday, 5 December, 2011 0 Comments

This is going to be a critical week for the beleaguered euro, and the common currency’s most incisive critic is starting the week in top form. We’re talking about AEP (Ambrose Evans-Pritchard) of the Telegraph. With “Fiskalunion is worst of all worlds for Europe“, AEP comes out of the blue corner, hitting hard: “None of Mrs Merkel’s proposals — whether enshrined in EU treaties or not — offer any meaningful solution to the crisis at hand. They continue to ignore the cancer in the EMU system: the corrosive 30pc currency misalignment between North and South, and the German-Dutch trade surplus.” After that jab, comes the right hook: “Her plan clings to the Wagnerian myth that Club Med fiscal extravagance is the cause of all the trouble, though Spain had a budget surplus of 2pc of GDP five years ago and never broke the Stability Pact — unlike Germany — and Italy has long had a primary surplus.”

By the way, the EU might not be the ideal organization to enforce Fiskalunion as its auditors have for the last 17 years running refused to sign off its own budget because of “material errors” amounting, last year, to 3.7 per cent of all its expenditure.

It’s going to be a critical week.