EU

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. […]

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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 […]

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The austerity referendum

Wednesday, 29 February, 2012

Ireland’s domestic economy is in a truly dreadful state. The IMF forecasts growth of 0.5 per cent, while Citigroup predicts shrinkage of one per cent. Home prices continue to slump, the unemployment rate has climbed to 14.5 percent and emigration has returned to 1980s levels. Meanwhile, the government is pushing through huge cuts in public […]

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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 […]

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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.


Written in a time of fever

Tuesday, 10 January, 2012

When the fever was upon the true believers, visions were common occurrences and those who had been so blessed were moved to set down their insights on paper so that others might be saved. For example, economist Jeremy Rifkin wrote The European Dream: How Europe’s Vision of the Future Is Quietly Eclipsing the American Dream. Similarly, after having seen the light, Washington Post reporter T. R. Reid authored a bestseller, The United States of Europe: The New Superpower and the End of American Supremacy and, possessed by the same spirit, foreign-policy guru Mark Leonard explained Why Europe Will Run the 21st Century.

These things I have witnessed with mine own eyes, and they occurred during the first decade of this century.


Rappers join models insisting on euros

Wednesday, 7 December, 2011 0 Comments

Ah, those were the days. And those days were in 2007, which is when the Independent was telling its envious readers, stuck with their dull sterling, about the product placement in “Blue Magic”, the new video from the “mega-star rapster Jay-Z”. Here’s the lyrical bit: “It is not a fancy car that he is endorsing — although both his rides, a Rolls-Royce and soft-top Bentley, are plenty spiffy — but rather a currency — and it is not the dollar.” It was, of course, the euro!

Rappers join models in insisting on euros as greenbacks fall further out of fashion” was the headline. Gossip about other celebrity endorsements was rife: “Chatter about his video comes on the heels of reports that Gisele Bundchen, the world’s richest model, is asking that payment for her numerous advertising gigs be in euros.”

And today? “Metallica rocked by euro crisis“. According to the Telegraph: “Heavy metal band Metallica has brought forward a European tour scheduled for 2013 to next year over fears the single currency will collapse, jeopardising the chances of getting paid for the gigs.” O tempora o mores as Cicero said. Watch Jay-Z flashing those €500s at 0.50.


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.