The Euro, as a single currency, should be abolished
Another black and white motion statement leaving me no option but to choose No. While I agree to the first part I am not prepared to contemplate the idea that the Euro should get abolished. Abolished? Then what? All 17 countries now sharing the single currency would revert back to their old monies? Or a new version of yesteryear's currencies?
Simplistic as I made it out to be packed in a few odd questions, every single serious economic, financial and social consequence is inextricably wrapped up within each. That is where the stakes are high enough to ensure that the Euro is given a new lease on life. It calls for closer European integration. What form and shape this will take is for policymakers and far-sighted politicians to grasp and propose.
It would seem to me that the Euro has many underlying strengths but will not - contrary to the founder's beliefs - assure convergence between all the economies it services. How could it? The divide has been felt acutely lately (1-2 years) the logical consequence of relevant economic under-performance among member-countries.
There has obviously got to be a political solution rooted in realistic economic fundamentals. The road traveled so far proved artificially smooth during the first 10 years I dare say but unsurprisingly very bumpy in the last 1-2. It could not have been otherwise given the structural differences setting these countries apart. And excessive spending pursued mostly by a few Southern European States who could not see beyond the present. Adherence to the Maastricht criteria never again seemed to be taken seriously once countries landed themselves inside the Euro club. Not to mention Greece that never fulfilled the criteria in the first place or ever bothered to balance its books.
Very disappointing to admit but the Euro Zone is indeed right in the middle of a storm testing its main crews to the limit. The latest summit decisions seem to indicate that where there is a will there is a way. It may have just been one first small step in the right direction.
The specifics are very hard to work on. Yet it would seem to me that the 17-member Euro Zone and the larger EU can hardly afford shooting down the Euro. The broader picture needs to come into full view. An hypothetical demise of the single currency would deal another severe blow to Europe's economic fortunes. Its relative decline vis-a-vis the rest of the world would get a further boost.
I do not like misplaced calls for solidarity from Southerners but would rather see the stronger half of the dividing line realize where their medium-to-long interest lies. To that end many balances across the Euro Zone need to be restored at the earliest.
Europe agrees a "shock and awe" bailout for Greece
A rescue package of epic proportions, epic challenges for the Greek government and people, epic uncertainties and epic stakes for the single-currency.
It was the Euro's defence that ultimately forced politicians from Germany to Malta to perform a hard balancing act whose overall success is far from assured.Each finance minister has enough reasons to fret and grumble about.It being the Euro as a common currency, because of Greece despite Greece. Up to now every 'least damaging' approach failed miserably to cool down the financial markets that remained as unimpressed as ever throughout. For its part Greece is effectively the main winner in this high-finance gamble.The country bought time the markets were not willing to give it once confidence vanished.Precious time desperately needed to restore credibility and good governance at home. A daunting internal fix with daunting external implications. Three full years is what the government and Greek society top-down and bottom-up now have to set the record straight in so many ways. Literally and figuratively.
For the other 15 Eurozone countries - each facing own troubles to varying degrees - keeping fingers crossed would be mild to describe the monitoring of Greece's performance over the coming 36 months.Potentially they are all losers, starting out by losing simply to avoid bigger losses! There are so many relevant questions that might be asked to which full answers ought to be provided. They won't get asked or get answered. Tellingly, each and every single one of them would now seem rhetorical or at best an exercise for academia.
The spectre that haunts Europe
I am still hopeful that Greece will not require a bail-out in whatever form pinning my hopes on the PM's own words.
He did sound very bold and brave in the face of such overwhelming odds but until a deal is actually in place I would rather believe the Greeks can and will take care of themselves.
My stance is wholly based not on immediate needs triggered by the Western financial meltdown that led to the economic downturn.This in turn led to a collapse in tax revenues across countries caused by economies shrinking badly.
To a large extent Greece is indeed a one-off case-study for the worst reasons, its latest fiscal deficit the sum total of profligate spending, widespread cultural-rooted tax evasion, underbudgeting, creative accounting, weak notion of public service and duty, etc - all conspiring over decades to bring the country to the brink of bankruptcy.
I am sure many Greeks will have seen it coming and warned their governments in years past.To no avail as even the present government was elected as recently as late 2009 on a platform to increase spending.
According to EMU rules public finances were clearly to remain national responsibilities.A considerable chunk of sovereignty for States to manage through their democratically-elected governments of the day.
Would the Greeks have liked their Finance Ministry to be ruled or dictated to from Brussels or Frankfurt just so the Maastricht-agreed criteria could not have been so despondently ignored?
Current turmoil is the Euro's hardest test ever but one that will also represent a defining moment in the single-currency's future.
It is a fact that Southern European countries are faced with similar issues though not on the same scale and urgency.Others in Northern Europe, the US and Japan also recorded their biggest fiscal deficits and added up noticeably to their debts in 2009. Each one has its own track-record, however. This is exactly what sets Greece apart from the rest. Each country is unique in its own way, there being obviously overlapping between them.
International rating agencies must make the effort to closely monitor and register those differences and then advise financial markets.
After all it is sovereign countries and sovereign debt one is dealing with.
There is much more at stake than strictly soulless bundling of nations.
Rich information confirming the economic realignment taking place in Asia even as we write... I detected that years ago when the gathering pace of growth in the NICs-Asian Tigers seemed unstoppable, South Korea outstanding for its demographic weight/size compared to the others.
Striking is the fact that up to 1990 all five countries/lines showed the same slope with four going steeper since, odd Japan nearly flattening out - arguably the two lost decades.
Japan still is the world's third largest economy but it no longer dwarfs its Asian neigbours - both in absolute and relative terms - as it once did.
North and South of the Equator, Eastern and Western Hemispheres point to a fast changing world based on current trends.
Taking the chart for what it shows there are many surprising data. Enough to trigger a few questions in one's mind on cross country comparisons. The US being on top with the breakdown displayed confirms widespread notions of a gun culture society and traffic accidents owed to a number of specific domestic factors. But peaceful, paradise country New Zealand coming second with the most suicides (outdoing even Japan's competitive specificity) and very many road accidents too?
It also contradicts long held views that Scandinavian countries have the highest suicide rates. Finland does rank among the highest in this age bracket but Sweden, Norway and especially Denmark do not.
More can be drawn from here but I would lastly wish to highlight Singapore's low aggregate rate - none to violence - as well as the breakdown.
Relevant people should carefully read through these chart bars and draw rational conclusions from them. It is not required to be ideologically tainted, utopian or hold views on social justice to realise what should be crystal clear to most.
Relationship between lower taxes for top earners and economic growth is hardly relevant. There is abundant evidence to show it was mainly pornographic individual and group greed aided by complacent government that ultimately drove many Western economies to their current predicament.
Elected representatives of the people and policymakers must draw clear lines between different issues disallowing ambiguity, mixups and confusion. Above all seeking to build a stable tax framework based on fairness and what I still deem sound judgment.
I don't think any lesson has been properly understood from the appalling events started in 2007/8.
A half-hearted endorsement of Nicolas and complete disapproval of François. This is what the article boils down to in impeccable spot-on expression of views only just saving the former while dumping the latter.
Well, neither 'The Economist' nor me vote for France's Presidency.That brings the French sentiment from within into sharp focus.
What is democracy and politics all about?
Like every other society France faces multiple challenges some of which, given the country's pivotal role in the EU, have consequences reaching far and wide across the embattled bloc. So, many more in Europe will be watching closely.
I will save my views for a later stage but have to admit to being quite excited at the prospect of a kick up of sorts in the current resigned and sad stalemate enveloping the Eurozone and the larger EU.
If Sarkozy does it again we know what to expect. If Hollande makes it to the Palace Élysée there could be a few surprises ahead. In both cases France's real worth is about to be tested.
This is a provocative question deserving nearly as provocative an answer. In my view such a tit-for-tat would be entirely wasteful which therefore calls for thoughtful analysis as to why so many French voted for Marine Le Pen. Indeed 'The Economist''s author provides most of the answers I broadly, and narrowly, agree with.
There's a mix of ingredients driving people to this particular fringe not-so-fringe-any-more party. Mainstream moderate politics has failed to convincingly address, let alone resolve, some of the issues concerning the common man in the street the most.
France will have a number of self-declared outright racists in the truest etymological sense of the word racism - as are found in any society - but to hint that they may top 6.4m is pretty much delusional.
The French will vote for their President early May. Choice is now down to two, the known devil(?) and the unknown good(?). For all his faults Nicolas Sarkozy has on several occasions shown the steel he's made of. One may or may not agree with his actions but should not confound style with substance.
François Hollande is very much an unknown quantity (so what(?)) but has been outspoken enough to cry out against the prevailing status quo in the EU. That alone holds out a ray of hope against a backdrop of overriding disillusionment.
Whoever emerges the winner should read very wisely into the 18% who voted for Marine Le Pen in the first round. Most of them are mainly worried about the direction France is headed for: daily issues affecting their lives, their identity, their jobs and their gains/losses as a society. Concerns that have piled up over many years. Every other concern is contained in the article.
Quite a surprising news that shows how technology has helped leapfrog from no banking to the very latest in modernity. Banking remains very low across most of Africa - South Africa excepted - especially outside of urban areas. For the Continent to be able to register the highest levels of mobile banking amongst bank-account holders is a major feat doubtless. Brought about by the widespread use of cellphones and likely aggressive marketing for ease and convenience.
Wonderful world we live in that enables people to shoot past several would-be-conventional-stages to arrive at a sophistication unseen in latitudes where it might be expected to have penetrated en masse already.
Time will tell but for now I vote no in the knowledge that the whole region is undergoing quick transformation. China is of course the mammoth country whose fast economic growth and scale have made it possible for the military to expand and modernise. Hasn't China been comparatively powerful over decades anyway? It did wage war with India in 1962 to occupy territory it claimed had previously been usurped by the British. And there was the annexation of Tibet a decade earlier. Given this record can it be argued that growing muscle now will inevitably lead to renewed expansionary threats across East Asia?
I believe that one can't assume that China's inexorable rise spells threats to and bullying of its closest neighbours. Not least because Chinese leadership has plenty to entertain itself with while requiring markets and commodities from around the region too. Moreover, if armies from surrounding countries may ultimately be no match for the PLA, some do have enough firepower to give it a costly bloody nose. That which they lack in scale is still partly made up for in technological edge. If ever push comes to shove that alone should make Chinese generals think twice before undertaking an adventurous impromptu.
On an optimistic note let us face the fact that China is building up its military. That is a necessary but not sufficient condition to endanger East Asia's stability.
A carefully worded cautious letter
targeting FT readers at large but mainly those who matter in the indiscernible
world of financial markets.
The Portuguese PM is a well meaning man who has so
far displayed steadfastness and strong will in the face of great odds. His
government's task remains daunting but already there are more than a few
results to show for it achieved in less than a year in office. The downside has been a huge jump in the
unemployment rate whose peak is yet to be reached. Also, acknowledgment of a flawed growth model - I
doubt there ever existed one - raises hope that when the current austerity
programme is over Portugal will eventually find a new balanced path to
Until then the economy needs a sharp focus
regardless of all else. I believe the PM and the cabinet are generally
aware of it.
The more I read on the current situation affecting the Eurozone the more I realize the folly of it all. Each country is of course, to a relevant extent, one of a kind. There lies the challenging beauty of it. There is also considerable multiple overlapping between neighbours, groups of countries or at a higher level even regionally. The EU can appropriately be cut up into several regions using multiple criteria although I believed the primary goal used to be to pull ever closer together.
Having said that, the major issue - as long as the EU remains an essentially loose bloc with common political institutions - is for national governments to fulfil their primary obligation: govern as best they can within generally accepted standard rules of good government for all time. Over-indebtedness is but a predictable consequence of a spent growth model that never should have been in the first place. Excessive borrowing was bound to come to an end raising largely self-answered questions of what the money was used for(?)...
If the Eurozone is not to become a transfer union like a Federal State would or the ECB a truly full-fledged central bank, i.e. catering to the individual needs of 17 States, then a deep rethink of the whole Eurozone system will remain topmost of the political agenda for years.
No matter how it is viewed the Eurozone has served Germany right for reasons that are cleverly borne in the text. In-house societal strengths, mindful government and a host of factors nearly all played to Germany's favour over a decade of Euro merriment(?)for many others. Germany's model is not exportable or adataptable wholesome to different countries/societies/cultures nor would that be desirable. Quite a different matter is the need to have medium-to-long-term sensible policies implemented across the Eurozone by responsible national governments accountable to the citizens who elected them first and foremost. Here I find Germany can provide powerful insights to ruling political and business establishments in many a country.
A small but not-so-small proud nation of 5-6m people whose contribution to the greatness of Great Britain can in no way be underestimated readies itself for an historic decision. If it should signal the end of the 3-century long Act of Union with England then the more likely outcome will also mean the dissolution of modern-day United Kingdom of Great Britain and Northern Ireland. The political and administrative consequences are of course relevant but to a newspaper like 'The Economist' the economic fallout must be dealt with in earnest beforehand. Are average Scots reasonably well documented on the subject or will they get carried away by overblown feelings of cultural heritage and self-identity?
Two years is quite enough time for there to be serious debate within Scotland on which path to choose. Scotland's economy has had multiple strengths over the centuries, remaining to this day basically sound and a diversified one. Oil features topmost but is not overwhelming. Some of those strengths originated from its close interaction with the UK as a whole. It is obvious that relations with England have faced many ups and downs as would be expected of neighbours showing such disproportionate demographies.
Looking in as an outsider with little knowledge of Scotland's main grievances towards England I am led to believe Scotland has done, on balance, remarkably well as one of the constituents of the UK. Not just economically. Then again I am mostly ignorant of how deep nationalist feelings for political independence run amongst common folk taking into account their kinship with the English nurtured over so many years now. Besides, devolution of government has meant that Scotland already enjoys a great degree of autonomy running its own affairs.
Ultimately it will be the Scottish people's call. Hopefully it will be one taken in full knowledge of the pros/cons as well as the consequences.
A lot can be inferred on quick glance over the charts.
First of, it should be noted that the overwhelming majority of Americans or nearly 79% are left out of this brief analysis. Second, the striking reading is that there has been significant convergence of tax rates between income groups shown. Lastly, while rates for middle-income earners have risen slightly within the 15-20% range, high-incomes saw a decrease with very-high-incomes seeing the steepest decline of all from 1960.
There is plenty policymakers can work from to produce a fairer tax system that restores balance to American society as a whole.
Warren Buffet is a sensible voice calling out for that which should seem obvious to most. The crux of the matter is not about the share rich households already contribute to Federal taxes (+25%) or Federal income taxes(40%). Progressively upward tax rates have always formed an intrinsic part of income tax philosophy in so-called advanced/civilized societies, indeed as a presupposition to them being so.
A little talked about topic now neatly exposed in this graphic description. To me it has not come as a surprise although levels of domestic consumption in relatively thinly populated Middle East have reached amazing heights. True petrol is cheaper than water in much of the region which backs up part of the story. The other part is explained by massive gas-guzzling machinery in the broadest sense and, in all likelihood, sheer waste.
Time and again there's talk in the air to justify rising oil prices from tight markets to ever increasing demand, China being the main culprit. Fact is, despite on-and-off disruption to supplies from a set of producers - Iraq, Libya, Nigeria and now Iran - global supply has so far kept up remarkably well with global demand.
Then the real reason for pricier oil at source is down to perceived trend demand and speculative gains ever present in commodity markets. Time for Saudi Arabia to kick in opening up the taps to check prices once more. Ultimately the goal should be getting them down to within the US$100-110 range.