Keys Corner » Europe

Broken Economies

John — Fri, 21 Oct 2011 16:07:14 +0000

Outside the European Central Bank 2011-10-21

I had to go to the dentist this morning, which took me right past the European Central Bank. There are still a large number of “Occupy Frankfurt” people camping out, despite the near-freezing temperature over night, protesting the mess that we are in.

I have just read “The Greatest Crash: How contradictory policies are sinking the global economy” by David Kauders (it’s only available on the Kindle at the moment, I think). It’s worth reading.

David Kauders takes a fresh look at the possible cause of the economic crisis and argues that it is a massive credit bubble (like the housing bubble in the USA that burst a couple of years ago) that has been growing since the early 1960′s and is now starting to burst. The bubble has been promoted by western governments, (democracy encourages politicians to take the easy way out and expand the amount of credit available when there are economic difficulties), and we have now reached the point where no one – neither governments nor private individuals and industry – can afford to take out more credit.

He thinks we are going to experience a generation (30 or more years) of fiscal deflation while everybody tries to pay back the debts they owe, and puts the blame for the mess squarely on the politicians of the western world, and not on the banks.

An scary but interesting and plausible read.

A depressing shade of grey

John — Tue, 21 Jun 2011 03:40:40 +0000

The German and Greek views of each other have become increasingly polarised over the last few months. The Greeks are “lazy spendthrifts who retire at 50 (women) or 55 (men) and make a national sport of not paying their taxes”, according to many Germans; the Germans are “not following the solidarity spirit of the EU and are putting their national and domestic interests first” if you ask the Greeks.

Stephen King, Group Chief Economist of HSBC Bank Plc, has a different take on the problems in Europe and the western world. Namely, that irrespective of the financial crisis, we would have a problem, due to the inversion of the population pyramid. And that the future is neither bright nor orange but, instead, a depressing shade of grey. The financial crisis may have thrown the problem into focus, but it would have been exposed at some point anyway:

While it’s convenient to blame the financial crisis, we need to dig a little deeper. As Western populations age, we end up with an inverted population pyramid: the boomers head off into retirement while the population of those who are working age shrinks.

But if the boomers’ savings are made up of pieces of paper – claims on future economic activity – and the working-age population is shrinking as a share of the total population, it’s hardly surprising that, collectively, these pieces of paper may turn out to be worth less than they originally appeared to be. If future output is lower than the claims made upon it, those claims will have to be reduced.

And that, sadly, is what we’re seeing today. In the eurozone, we’re witnessing a struggle between those who own pieces of paper – most obviously German creditors – and those who issued pieces of paper – Greek debtors. The Germans legally have a claim on future Greek tax revenues. The Greeks, meanwhile, are discovering their economy isn’t quite as strong as it once was and they’d rather use their – limited – tax revenues for domestic purposes rather than repaying the Germans.

Additionally, he argues that the western nations are collectively suffering from too much debt and that the current low interest rates won’t be enough to help their economies to recover the rates of growth that we have historically seen in the West. He could be right; Japan’s economy has not yet recovered from the property boom and subsequent bust in 1990 despite having had negative interest rates for periods since the bust, and it looks increasingly as if the path the western world is following is similar to that of Japan.

King foresees that the the emerging nations – Brazil, India and China – will increasingly be trading with each other in the future, leaving the sclerotic West more and more isolated.

My guess is that the economic pressures on the western nations will force their governments to pursue national interests more vigorously as they weigh up where to invest the limited resources at their disposal, which could lead to a lot more friction between those nations. Not an encouraging thought if you live in the West.

Brain-damaged bureaucracy

John — Tue, 07 Dec 2010 20:57:22 +0000

I mentioned the Israeli approach to airport security a few posts ago – they aim to have you out of the carpark and into the departure area in a maximum of 25 minutes by applying intelligent security checks.

Contrast this with Europe:

Check in 15 days in advance with Ryanair - and confirm no-one has interfered with your luggage

With Ryanair, and most other airlines you can use the internet to check in. It speeds up the check-in process when you get to the airport. In Ryanair’s case, you can do this 15 days in advance. But only if you confirm that no-one has interfered with your baggage or any item that you are carrying or checking in, and that you are not carrying anything for someone else. Otherwise you can’t check in on-line.

Right – don’t leave your coat in the cloakroom in a restaurant for the next 15 days; don’t let your colleagues or kids touch that laptop you are going to be taking.

How mindlessly stupid can bureaucracy get? Accepting a statement like this 15 days in advance is brain-damaged. And expecting anyone with a brain to take this form seriously, when it asks for this confirmation given 15 days in advance, is too.

Kill the form – lets see a minimum of intelligence being applied by our well-paid bureaucrats, and streamline the check-in process without such idiocy. (Yes – I have been flying more often recently )

Pay for your Ku Klux Klan membership with Visa/Mastercard…

John — Tue, 07 Dec 2010 16:44:49 +0000

… but you can’t pay to support WikiLeaks.

Wikipedia on the Klan:

Today, a large majority of sources consider the Klan to be a “subversive or terrorist organization”. In 1999, the city council of Charleston, South Carolina passed a resolution declaring the Klan to be a terrorist organization… …In April 1997, FBI agents arrested four members of the True Knights of the Ku Klux Klan in Dallas for conspiracy to commit robbery and to blow up a natural gas processing plant.

From today’s Guardian at 4.14pm (my emphasis):

Charles Arthur, the Guardian’s technology editor, points out that while MasterCard and Visa have cut WikiLeaks off you can still use those cards to donate to overtly racist organisations such as the Knights Party, which is supported by the Ku Klux Klan.

The Ku Klux Klan website directs users to a site called Christian Concepts. It takes Visa and MasterCard donations for users willing to state that they are “white and not of racially mixed descent. I am not married to a non-white. I do not date non-whites nor do I have non-white dependents. I believe in the ideals of western Christian civilisation and profess my belief in Jesus Christ as the son of God.”

It seems that Visa and Mastercard don’t have consistent interpretation of their own terms and conditions. Which organisation is most likely to be involved in criminal activities? (Remember too, that when the Washington Post investigated the Watergate scandal, that was no talk of action being taken to close down the newspaper or to cut off funding from subscribers.)

England’s in the wrong place…

John — Sun, 02 May 2010 20:35:04 +0000

… according to the Economist, who have redrawn the map of Europe, putting similar countries together. In the case of the UK, its components have been placed down by Portugal and Spain as the UK’s finances are in a similar state to those of its southern European compatriots.

In place of Britain, the Economist would like to see Poland towed across adjacent to Ireland, while the Czech Republic needs to swap with Belgium, and Switzerland should be integrated with the Nordic Countries.

Follow the dust

John — Sun, 18 Apr 2010 14:36:18 +0000

RadarVirtuel following the volcanic dust cloud over Europe

You can follow the track of the volcanic dust cloud over Europe, and the flight tracks and details of the few flights that are still taking place despite the cloud, over at RadarVirtuel.com.

Ryanair’s additional charges up by factor of 7 since 2006

John — Tue, 13 Apr 2010 18:53:12 +0000

If like us, you have the feeling that flying with Ryanair is no longer the bargain it used to be, you could be right.

The Sydney Morning Herald has just published a report showing Ryanair’s charges have increased by 700% since 2006.

You can avoid part of the increases by using a prepaid MasterCard (NB: prepaid Visa cards are not OK for this purpose) to pay for the bookings.

You save 5 Euro per person on each flight (ie. 10 Euro if you book a return ticket). Since we plan to be flying to Valencia quite often this year, I have just ordered a prepaid MasterCard from the Commerzbank. (You can also get them from many Sparkassen (Building Societies) in Germany). The cards cost the usual 30 Euro per year issue-fee from the bank, so it only pays to apply for one if you plan to travel by Ryanair several times in a year.

Very well paid

John — Mon, 18 Jan 2010 17:32:58 +0000

I noticed an article in the Daily Mail today about what Spanish air traffic controllers earn (here). I thought that must be typical exaggeration by the popular press, but decided to see if I find out what they “really” earn. It turns out that the figures are probably accurate – here’s an article in El Mundo quoting similar figures (translation here):

There are 2300 Spanish air traffic controllers. 28 of them earn more than 700,000 Euro per year, 135 earn more than 600,000 Euro and 713 have wages that range between 360,000 and 540,000 Euro. A few make more than 900,000 Euro. According to AENA, the average is 350,000 Euro per year, almost triple the amount that a British controller and twice that of a Frenchman, German or Italian.

I thought working in IT (information technology) was pretty reasonably paid, but there are very few employees in IT earning over 350,000 Euro a year. I would say there are not many salaried IT employees in Germany earning a third of that.

(By the way I am using the European separators for thousand (“,”). It is always a problem knowing which to use, the comma comes automatically to me after 30 years in Germany, and it is also what you see in Google’s automated translation above).

Not so compatible Europe

John — Sat, 28 Nov 2009 07:44:41 +0000

Although the EU guarantees the right to work in other member countries, there are still quite a few things need sorting out before life in the EU is as straight-forward for its citizens as life for Americans is when they move from one state to another. Here some examples from our experience over the last weeks:

We have opened a bank account in Spain, at one of the major banks. When we got back here, I tried to log on to their internet banking. When you first log on, you have to provide a phone number which the bank sends text messages to when you want to transfer money to another account (I haven’t used it yet, I think they will send an text message containing a one-time password to approve the transaction).

The field will only take a Spanish phone number – land line or mobile – but not a number abroad (German mobile numbers are longer than Spanish ones and the field truncates the German number if you try to enter it). Hmm..

When I take early retirement, my salary continues to be paid until I am old enough to claim a state pension. During that time, I have to submit a tax card which filled out by my employer annually.� Tax cards are only issued by the local government to a person having an address in their geographic area. There is no central office that issues them to people not living in the country.Which means we have to be registered at an address in Germany, a “second place of residence”, to receive the tax card� by post at that address each year.

According to our tax advisor, this situation will continue even when I reach retirement age.To get my state pension, I have to have a correspondence address registered in Germany for the bureaucrats to send their correspondence to. And I have to be able to receive post there.

Just imagine if other EU countries have a similar rule – you’d need to maintain pro-forma addresses all over the place, if you had worked in several countries and wanted to claim a pension from each country!

It’s about time major corporations and government departments got their act together handling international differences in address formats.

The British postal address format requires the information in the order:
- name
- house number, street
- town
- postcode (which must be on a line of its own).
- country
Try to print a parcel label using the German post office’s on-line international label printing service (it prints a pre-printed franked label for the parcel). Although any decent address book program can format foreign addresses more or less correctly, the German postal service insists on printing address fields in the order:
- name
- street and house number (in that order)
- postcode and town
- country
A British address printed in the German order of fields and lines looks distinctly weird to British eyes. Actually, international address formatting is probably complicated enough to devote a PhD study to. If you want a good summary of the different (conflicting) national requirements on addressing international post, the best reference I know is Frank’s Compulsive Guide to Postal Addresses.

Are you going to get wet feet?

John — Sat, 05 Sep 2009 20:41:59 +0000

Valencia and La Albufera if the sea level rises just one meter
Flood Map, a Google mashup, shows which land will be under water when Global Warming raises the sea level.

(Via Boing Boing)

Keep your hands out of our pockets

John — Sun, 03 May 2009 14:50:41 +0000

It annoys me that governments in many countries charge you an involuntary license fee for public service TV, whether you actually watch it or not. This might have been a good idea many decades ago, when the infrastructure for TV broadcasting needed to be built up. But these days, when public TV largely duplicates programming provided by private channels, which are quite capable of producing and marketing high quality cultural offerings, it seems as archaic as subsidizing dying industries such as coal mining in Wales or Germany.

So you can imagine my reaction when I read this article in today’s Daily Mail:

Search engines, download giants and broadband users could face levies as ministers seek to fund public service TV and the roll-out of broadband…

…Insiders say that the tax on search engines would be the most politcally ‘tenable’ of the three ideas as it would less directly hit consumers in the pocket.

It is suggested as well as Google and Yahoo, a search engine tax could also be extended to things like YouTube, which people use to find information…

Yes – if anything is successful, tax it to subsidize services which are no longer relevant or which are not able to compete with commercial offerings. Why not allow them independence and the possibility to sink or swim like any private enterprise?

The NIC report

John — Sat, 22 Nov 2008 15:28:22 +0000

The US National Intelligence Council (NIC) published a report this week assessing how the relationship between the USA and other parts of the World will probably develop by 2025. The report is written every four years for the incoming government and is thus relatively easy non-technical reading.

It predicts that US influence will wane and that India and China will exert more influence on world politics.

The EU is likely to remain hobbled by the conflicting power politics played out between the various member nations. I find this rather sad. Having lived about 28 years in Britain and the same number in Germany, I can’t say I feel either “British” or “German” and we don’t plan to retire to either country when the time comes; but I do feel “European” and we certainly plan to retire within Europe.

I would like to see the European national governments work towards a federal European government which takes political and military decisions on behalf of all member nations. But that clearly won’t happen any time soon. Just look at how Germany has tried to push purely national policies for supporting the financial institutions in the last few weeks. Clearly, other than in the USA, where it is acceptable to provide federal support to specific states, there is no willingness to let German money be used to support Italian or French banks. I don’t see the mindset changing as long as the popular press – papers like the Sun or the Daily Mail in the UK, Bild in Germany – regularly whip up jingoism as a way of increasing their circulation.

If you would like to read the whole (120 page) NIC report, and look in more detail at how our world is likely to develop, the BBC provides a link to the report Global Trends 2025: A Transformed World (pdf, 33 MB).

Remember, however, the US intelligence services have in the past made some pretty spectacular blunders – things may develop completely differently!