Wednesday, May 23, 2012

I know it's just a sign of increased national wealth but I still can't get over how many (fee-paying) students have cars around here. Indeed, there's one street near my daughter's flat which says it all - during term time you couldn't get a uni-cycle between the cars which line both sides of the street; but during the vacations there's not a single car there. The other thing that amazes me is the sight of students laden with shopping bags piling into taxis outside the high street supermarket. As someone who can't stop thinking of taxis as a luxury and students as (relatively) poor, I find I can scarcely believe the evidence of my own eyes.

Talking of taxis . . . There's an awful lot of them around here. And every company seems to be Asian-owned and manned. Like all taxi drivers, they're prone to giving you their opinions. Which, coming from a different perspective, can be quite interesting. If wrong. I got an insight into the question of why so many cars on the road are taxis when I overheard an Australian saying that, in contrast to back home in Oz, the buses here are expensive, whereas the taxis are cheap. So if there's two, three or four of you, it can be a no-brainer

There are, of course, several reasons why the Spanish government can't achieve either the deficit or growth levels demanded by Brussels/Berlin. Off the top of my (non-economist) head, these include:-
- You can't just stop the vanity projects initiated during the (phoney) boom years, either centrally (e.g. the AVE to Galicia) or regionally (e.g. the vast City of Culture complex outside Santiago de Compostela).
- It's tough to get rid of the extra layers of bureaucracy that were installed when people worried even less than usual about whether the jobs were justified. There's nothing more successful at resisting retrenchment than a bureaucracy. Witness the 7% growth in the EU budget for this year.
- You can talk all you like about merging the town halls of tiny councils but it's a tad harder to achieve this in practice. It's not just salaries at stake.
- It's impossible to change the ridiculous Spanish working schedule which means that many people don't start working until 9 or even 10, then take a long lunch break and come back at 4.30 or 5 to work until 9 or even 10 at night. Everyone knows this is a low-productivity pattern but no one seems interested in - never mind committed to - changing it.
- Madrid may shout at the (17!) regional governments and even issue instructions - e.g. to lower debt levels - but it's another thing to get them to respond, even if they're from the same party. And impossible if they're not. Or if they're of a secessionist stamp, like Cataluña or Pais Vasco. And
- It's impossible to do anything about the black economy which is estimated at 20-30% of the economy and which denies tax revenue to the regional and central governments. In fact, the evidence is that it's growing, as people do everything they can to reduce outgoings.

There aren't many activities for which one can boast a hundred per cent record. But I can lay claim to one of these. Every single time I put, say, a glass of wine or a mug of coffee on the floor and say to myself "You shouldn't do that; you're bound to step on it or knock it over" I subsequently do. As I just have with a mug of coffee. Good job my daughter has a wooden floor, otherwise I'd be in serious trouble now.

Of course, if she had a carpet . .

The other thing I'm great at doing is fulfilling the threat that I will decorate myself with 'dinner medals' whenever I take a dish of, say, curry (or even porridge) into the lounge to watch the News or Family Guy on TV. I managed it with some curry today and was a bit concerned to see that, when I tried to wash yellow stains out of my shirt, they turned purple.

Some readers will know that I'm not Damien Hirst's biggest fan. So I was pleased to read two perspicacious reviews of his latest exhibition, in which art critics aimed such barbs as "The paintings are an abomination." And - "Stop now. You have become a disgrace to your generation." As if he was ever anything but an untalented conman. Click here and here to enjoy more of these truly critical opinions.

Finally . . . I noticed this afternoon that the 12 year-old schoolgirls in the supermarket were in full make-up. For some reason, the phrase 'scouse brow' leaped into my mind and, on getting home, I went on the internet to find out what it was. I should first say that scouse is the adjective for folk who live on Merseyside. Thought to be of Scandinavian origin. Anyway, here's what I found - Scouse brow is the monstrous make-up movement gripping D-lebrity land - the most terrifying beauty trend to hit the high street since the 'vajazzle'. Yes, but what exactly is it? Well, here's a beginner's guide. And here are some pix. Now you know.

Finally, finally . . . . The euro and the EU: Here's a few paragraphs from an article from an American commentator.

Some two decades ago, when Europe’s leaders worked out the details of their grand vision to connect the European Union with a single currency, virtually every economist on this side of the Atlantic — and most of those on the other — figured out that the euro would be fatally flawed. What took economists some time to understand was that Europe’s leaders didn’t much care what they thought

The single currency served an overriding political objective. Like the single market before, it was conceived primarily as glue to bind Europe more closely together, tie Germany’s prosperity to that of its neighbors and prevent a third world war from the Continent which had brought us two. A few engineering flaws wouldn’t be allowed to get in the way of such an important project.
A little over a decade since the first euro bills hit the shops in Madrid and Berlin, the euro’s design flaws have pushed much of the European Union into a deep economic pit. And political imperative is again being deployed as a major reason to stick to the common currency.
Yet for a project intended to draw Europe together, the euro did surprisingly little to build solidarity. German voters endured a recession two decades ago after bringing in their brethren from the Soviet bloc. They now appear unwilling to spend a pfennig to help the Greeks, Spaniards, Portuguese, Irish or Italians. Conceived as a tool for integration, the euro could, instead, tear Europe apart.
Europe would be in much better shape if the euro didn’t exist and each member country had its own currency.
The main problem is that while leaders eagerly embraced the monetary bond, they rejected its necessary complement: a central budget that would transfer money from successful regions to under-performing ones.
Despite its flaws, there is one powerful reason to stick to the euro that even some of the most skeptical economists accept: the prospect of breaking away from the euro is very scary. It’s difficult to forecast how such a dissolution would unfold. There is, in fact, no legal way to leave. And it would be searingly painful for many countries.
Still, the risks of unscrambling the monetary union omelette must be evaluated alongside the risks of leaving it scrambled.
For the sake of European unity, letting go of the euro may be the better option.
Says it all, really. Click here for the few paragraphs I haven't pasted above.

5 comments:

moscow said...

Colin,

I am surprised American economists think anyone should listen to them. After all the American economy is just one big horrendous mess. From my own vantage point, what this crisis has achieved is put an end to the belief that western management is somehow better. Anyhow, not all American economists think like the guy in your post. Ever heard of Jeffrey Sachs?

Colin said...

I don't tend to remember names of the various economist but I have read his stuff because he writes in the Guardian.

Of course there will be (US) economists who differ from the writer of the article I cited. It is the most factious discipline in the world. Remember Truman's famous dictum about one-handed economists?

The question is - Who's right?

Indeed - Is anyone right?

The problem is - No one knows. Not you. Not me. Not anyone.

Too many imponderables and uncertainties. One can only guess.

That said about the future, one can certainly look back and take a view on whether the EU and the eurozone were wise developments or not.

Has Sachs opined on this? Does he believe, like the writer of the article, that even if they were well-meant but lunatic developments, it's now better to keep it going rather than smash it up?

Colin said...

Forgot to say that not all US economists will agree on the current management of the USA. So some of them will be entitled to comment on Europe and the consequences of its problems for the rest of the world.

PS Hard to disagree with Sachs that the real problem is the banks.

moscow said...

Colin,

The thing JS is not amongst those who think it was a lunacy in the first place. Neither do I. Nor do many other people, even if that is hard to believe inside the UK mental cocoon.

Colin said...

Moscow,

I guess 'UK' should be 'Anglo'.

So, more importantly, after reading reports this morning of what did and didn't happen yesterday, I'd be interested to know what you think will happen vis a vis Greece and how the EU will emerge stronger from this crisis?

Is it time to move my money from Spain to Germany, on the grounds that, whatever the underlying realities, markets move on sentiment and people will be increasingly scared until the Greece problem (and its sequelae) are wisely dealt with. Which may be the 12th of Never.

Who was it who said, the EU would develop from crisis to crisis? Delors? D'estaing? This seems like an aphorism that's about to be tested. Perhaps to destruction.

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