The Great Debate UK
Having just got back from a couple of days in Hannover, I couldn’t help but be struck by the dominance of the local news agenda by two topics – and the almost complete absence of a third. Taking the British media at face value, I might have expected a city in near-panic, with people nervously scanning menus for safe dishes to order and maybe antiseptic handwashing facilities being hurriedly installed in public places. In fact, the town looked exactly as I remembered it from my last visit a few years ago, with E.coli rarely mentioned either in conversation or on the 24-hour TV news channels.
In fact, apart from endless replays of the goals from Tuesday night’s football (Germany versus Azerbaijan, a real clash of the Titans that must have been!), the news was all about the remote risk of a meltdown in the country’s nuclear power plants, and the anything-but-remote risk of meltdown in what is left of the Greek economy.
As far as the first is concerned, it seems that the sight of one of the reactors at Fukushima succumbing to a tsunami generated by the second biggest earthquake ever recorded has convinced Germans that they are better off counting on their neighbours in France and Czechoslovakia for their nuclear power than on generating their own. As the Americans say: go figure.
If there were ever any doubt, Frau Merkel has made it clear that, after all the tough talk, Germany is going to cough up for Greece. The arguments are simply about how to package the donation so as to make it look as penny-pinching as possible, and accompanied by the maximum pain that can be inflicted on the recipients – after all, the Bundeskanzlerin is elected by Germans, not Greeks. But there are clearly limits to how much austerity can be imposed on a country where standards of governance have been sliding for 2,500 years, and when Greece’s debts are finally restructured/reprofiled/rolled over or whatever euphemism for default is finally chosen, German voters are bound to overestimate the cost to themselves and underestimate the pain for the Greeks.
-Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own.-
The Governor of the ECB, Jean-Claude Trichet has raised interest rates by 0.25 percentage points – and quite right too. For us in the UK, blaming rising prices on temporary disturbances in the world’s commodity markets is a figleaf to hide the fact that we are actually embarking on a partial default-by-inflation. For Europe, it is a different story. For one thing, the Germany-Austria-Netherlands bloc is, if not booming, at least chugging along at a highly respectable rate, and as the ECB Governor said today in response to a question about the impact of the rate rise on Portugal, his job is to set interest rates for the Eurozone as a whole, not just for the benefit of one of its smallest and weakest members.
from Global News Journal:
The consensus view in Germany is that Angela Merkel's abrupt reversal on nuclear energy after Fukushima was a transparent ploy to shore up support in an important state election in Baden-Wuerttemberg. If indeed that was her intention (she denies any political motive) then she miscalculated horribly. Her party was ousted from government in B-W on Sunday after running the prosperous southern region for 58 straight years. But what if Merkel was really thinking longer-term -- ie beyond the state vote to the next federal election in 2013? After the Japan catastrophe she may well have realised that her chances of getting elected to a third term were next-to-nil if she didn't pivot quickly on nuclear. There are two good reasons why that is probably a safe assumption. First is the extent of anti-nuclear sentiment in Germany. A recent poll for Stern magazine showed nearly two in three Germans would like to see the country's 17 nuclear power plants shut down within 5 years. The nuclear issue was the decisive factor in the B-W election. And you can bet it will play an important role in the next national vote -- even if it is 2-1/2 years away. The second reason why the reversal looks like a good strategic decision from a political point of view is the dire state of Merkel's junior partner in government -- the Free Democrats. It was the strength of the FDP which vaulted her to a second term in September 2009. But now it looks like their weakness could be her undoing in 2013. Merkel probably needs the FDP to score at least 10 percent in the next vote to give her a chance of renewing her "black-yellow" coalition. Right now the FDP is hovering at a meagre 5 percent and it is difficult to see how they double that anytime soon. The nuclear shift widens Merkel's options in one fell swoop. Suddenly the issue that made a coalition between Merkel's Christian Democrats and the Greens unthinkable at the federal level has vanished. Her party set a precedent by hooking up with the Greens in the city-state of Hamburg in 2008. Now she has more than two years to lay the foundations for a similar partnership in Berlin. By then voters may see Merkel's nuclear U-turn in a different light. And only then will it be truly clear if it was a huge political mistake, as the Baden-Wuerttemberg vote suggests, or a prescient strategic coup.
– Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own. –
Supporting Ireland to the tune of a few billion quid must look like a no-brainer to the British Government. We should not make the same mistake as the Germans, who managed to get the worst of both worlds over Greece – forced by the scale of their bank exposure to support Greece, but providing the money with ill will, causing bitterness rather than gratitude – and now repeating the error in the Irish case.
Ireland’s banking crisis reached boiling point this week. The Irish authorities are still adamant the country doesn’t need a bailout and are trying to draw a distinction between a sovereign bailout (which Irish Prime Minister Brian Cowen, Finance Minister Brian Lenihan et al claim they don’t need) and banking sector support (which they most definitely do).
The following is a guest contribution. Reuters is not responsible for the content and the views expressed are the authors’ alone. Ibrahim Kalin is senior advisor to Turkish Prime Minister Tayyip Erdogan. This article first appeared in Today's Zaman in Istanbul and is reprinted with its permission.
By Ibrahim Kalin
Has multiculturalism run its course in Europe? If one takes a picture of certain European countries today and freezes it, that would be the logical conclusion.
Joschka Fischer was never one to mince words when he was Germany's foreign minister in the late '90s and early noughts. So it is not overly surprising that he has painted a picture in a new post of a world with only two powers -- the United States and China -- and an ineffective and divided Europe on the sidelines.
More controversial, however, is his view that China will not only grow into the world's most important market over the coming years, but will determine what the world produces and consumes -- and that that will be green.
from The Great Debate:
How do you reconcile the traditions of many Muslim immigrants with the freedoms and values of 21st century Western Europe?
It's a question that has led to periodic outbursts of vigorous debate from France to Holland and Switzerland. In Germany, the discussion has been relatively subdued. Until now.
It is fairly commonplace at the moment for U.S. and UK financial analysts -- what continental Europeans call the Anglo-Saxons -- to predict the collapse of the euro zone, a project they were mostly sceptical about in the first place. MacroScope touched on this on two occasions in March.
The latest foray into this area comes from Alan Brown, global chief investment officer at the large UK fund firm Schroders. But he does it with twist, blaming what he sees as the eventual collapse of the euro zone not on the structure itself nor on the profligacy of peripheral economies, but on Germany's response to the crisis.
France's plan to ban full face veils, which comes up for a vote in the National Assembly on Tuesday, enjoys 82% popular support in the country, according to a new poll by the Pew Research Center’s Global Attitudes Project. Its neighbours also approve -- 71% of those polled in Germany, 62% in Britain and 59% in Spain agreed that there should be laws prohibiting the Muslim veils known as niqabs and burqas in public. (Photo: French woman fined for wearing a niqab while driving outside court in Nantes June 28, 2010/Stephane Mahe)
The poll, conducted from April 7 to May 8, did not range further afield, but reports from other countries show support there as well. The lower house of the Belgian parliament has voted for a ban, which should be approved by the Senate after the summer. In the Netherlands, several bills to ban full veils in certain sectors such as schools and public service are in preparation. Switzerland's justice minister has suggested the cantons there should pass partial bans but make exceptions for visiting Muslim tourists (the wives of rich sheikhs visiting their bankers in Zurich or Geneva?)