The rains, the rains … Friday 6 July 2012  After the wettest June on record, though, never let it be forgotten that the warmists forecast that we would have warm, wet winters and hot, dry summers. And, as Booker pointed out, the "numerical models" used by the Met Office, which failed to forecast this wet weather, are exactly the same as those used for climate prediction work. As always, though, getting it wrong is no bar to advancement. The Met Office continues to prosper on the proceeds of our money, while we get wetter and more gloomy by the day. COMMENT THREAD Richard North 06/07/2012 |
Eurocrash: slugfest over euro rescue policy Friday 6 July 2012  Leading the way is the Frankfurter Allgemeine Zeitung, reporting an "open exchange of blows" (slugfest) over the euro rescue policy. This is followed up by Handelsblatt recording that politicians of the CDU and FDP and the Taxpayers' Association, and individual business organisations, have all piled in to support the initiative. The spat has even been picked up by AP, which tells of the economists denouncing decisions made during last week's European Council, arguing that they risk increasing the exposure of taxpayers, retirees and savers to the debts of struggling banks. The particular concern of the 172, expressed in their letter is that they see in the idea of a banking union the "collective liability" for the debts of the banks of the euro system. If Germany and the other solvent states were forced to extend their liability to cover the others, they warn, "strife and discord with our neighbours are inevitable". Neither the euro nor the European idea as such, will be saved by the extension of liability to banks. Initiator of the protest letter is the Dortmund economic statistician Walter Kramer. He was joined by Ifo President Hans-Werner Sinn, a long-time critic of the euro rescue policy. Among the signatories are Kai Konrad, the chairman of the scientific advisory board for finance minister, Wolfgang Schäuble, the Freiburg finance expert Bernd Raffelhüschen, former DIW president Klaus Zimmermann, the former Saxonian Prime Minister and Finance Professor Georg Milbradt, and the Austrian business consultant Bernhard Felderer. The economists want to alert the people and the politicians to the danger. Bank debts, they say, are almost three times as large as the national debt. "It is absolutely impossible", they add, "for the taxpayers, pensioners and savers of still solvent European countries to take the responsibility for this debt, especially as huge losses are predicted from the financing the inflationary economic bubbles of the southern countries". Amongst those welcoming the intervention is CDU MP Klaus-Peter Willsch, who says: "It is good that the combined economic competence of the German-speaking countries has raised its voice in warning", adding that: "Politicians must now listen to it". Federal Reserve Chairman Jens Weidmann, who has previously voiced his scepticism about the rapid introduction of a banking union, also supports the initiative. But the initiative has also triggered heated debate among German economists. Manfred JM Neumann had refused to sign the letter. "Aside from its tone, the letter has clear weaknesses in its arguments", he wrote. Former chairman of the Advisory Council Rürup, Michael Huether, complained that the letter did not offer alternatives and Dennis Snower, head of the Kiel Institute for World Economics, criticised the letter for stirring up fear and for lacking constructive suggestions. In its leader, however, FAZ showed no sympathy for these naysayers, describing the economists' letter as a "wake-up call". "Thank you", the paper says, expressing hope that Karlsruhe will pull the emergency brake. All of a sudden, things have just got a little more complicated for Merkel. As with Cameron, the last thing she needs just now is the euro to take high profile in the publicity stakes, although the controversy now shows no signs of abating. The German people are awakening. COMMENT THREAD Richard North 06/07/2012 |
How to win an economics prize Friday 6 July 2012  If member states leave the Economic and Monetary Union, what is the best way for the economic process to be managed to provide the soundest foundation for the future growth and prosperity of the current membership?The irony of this is that there isn't a sensible answer to the question. The "colleagues" are determined not to allow a managed process. If any eurozone member drops out – other than, possibly, Greece – it will be a chaotic event with huge and unpredictable political consequences. Economics will take second place to the political issues. In 156 pages, however, Bootle answers the unanswerable, making the classic mistake which has dogged this entire crisis. He is offering economic solutions to a political event. Nevertheless, Bootle's great labour is summarised in the Failygraph, whence we are told that his brilliant insight is for the eurozone to split, north and south, with Germany forming its own currency bloc. France, he says, should to stay out of this "northern monetary union". There would be attractions, he avers, in it leading a grouping of former euro members. This would split the former eurozone into two roughly equal parts, with the French-led bloc slightly larger. Yet, says Bootle, "this would amount to a complete overturning of post-war French economic and political strategy". And this is his great plan? I suspect, Bootle continues, that the French establishment would choose to stick with Germany without even thinking about it. He then concedes that, however attractive a German exit might be, this also looks unlikely. "Germany and other core countries are not (yet) prepared to make this leap". Thus, if the euro is to be reconfigured, says Bootle, it looks as though it will be through the departure of the weaker southern members, one by one. In that case, we would end up with a set of independent floating currencies for the peripheral countries while the euro continued as the currency of the German-dominated northern core. In my view, Bootle concludes, this cannot happen soon enough – both for their sakes and for ours. So there you go. That is how to win an economics prize. Postulate the impossible, and then suggest a scenario so vague that it could very well happen in one form or another, without having to be specific. Then call yourself Roger Bootle, line up and collect your money. Simples. COMMENT THREAD Richard North 06/07/2012 |
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