Whoever would have thought that some people once called economics the most dismal of sciences? Certainly, as the current crisis goes on and on, those of us who consider ourselves to be economists scarcely are able to find the time to squeeze in a dull moment, even here and there. But even at a broader level, interest in that most dismal of dismal topics - the theory and practice of central banking - seems now to fire up levels of enthusiasm here in Spain that make even the appetising prospect of a forthcoming Real Madrid-Barça football match pale in intensity. Even if it is the case, I have to admit, that the everyday Johnny (or Jill) come lately sitting in the bar still - truth be told - prefers the sports columns of the daily newspapers, or the lacivious details of the latest romantic adventure of one of the rich ...

by Edward Hugh: : L'Escala de Empordàbr /br /According to a once-upon-a-time post on the Economist's a href="http://www.economist.com/blogs/certainideasofeurope/2007/07/a_fistful_of_reply.cfm#list-comments"Certain Ideas of Europe Blog/a Edward Hugh “was very cross” about some of the journalism they were serving up over at that prestigious journal. Well, not to worry, since this time he is hopping mad. And the issue which lies behind his wrath is essentially the same one, how to interpret and understand the demographic processes which are currently so evidently affecting our societies. In what is simply the latest episode in a long and sorry saga (if you want documentation, please see the comments Claus Vistesen and I nailed to their "Wall" in the above linked post) this week's print issue contains a href="http://www.economist.com/sciencetechnology/displaystory.cfm?story_id=14164483"a research review from their science and technology correspondent/a who is evidently not backward in coming forward with headline grabbing claims. According to the said corresponedent the demographic transition ...

p style="text-align: left;"By Claus Vistesen: Copenhagenbr /emspan/span/em/pp style="text-align: center;"emspanbr //span/em/pp style="text-align: center;"emspanChina! China! burning bright /span/em/p p style="text-align: center;"emspanIn a bubble, Day and Night /span/em/p p style="text-align: center;"emspanIs it Bust or is it Boom/span/em/p p style="text-align: center;"emspanThat frames thy fearful asymmetry?* /span/em/p pbr //p pspanbr //span/ppspanCan you feel it? That calm and soothing feeling of low volatility and heaven bound risky assets driven by green shoots and second derivatives. Well, if you can't you are excused since neither can yours truly, or more precisely; he has a distinctly difficult time seeing from where people get the idea that we are headed for a broad based global recovery. However, beauty as always lies in the eye of the beholder and whichever way you look at it would be difficult to completely deny that the three key ingredients for a global recovery (and a resurgence of carry trade) in the form of ...

by Edward Hugh: Barcelonabr /br /This post accompanies my recent piece on Sweden. I have been scratching my head and trying to see what could be learnt from making a comparison between Finland and Sweden. Some of the differences are obvious - one is in the euro, and the other isn't, once can adjust monetary policy and currency values, and the other can't. Others are less so. Finland's goods trade surplus has been declining steadily since joining EMU while Sweden's has remained relatively constant. And Swedish males live on average three years longer than their Finnish counterparts. So what is important here, and why? And if convergence theory has anything positive to be said for it, shouldn't we be able to observe so sort of convergence going on here.br /br /br /First, and just to remind ourselves, here is the chart from Claus Vistesen which shows what the relation ...

p style="text-align: left;"By Claus Vistesen: Copenhagenbr //pp style="text-align: left;"(please click on pictures for better viewing)br //pp style="text-align: left;"br //pp style="text-align: center;""Being a Keynesian means being a Keynesian in emboth/em the good and bad times."/p p style="text-align: center;"emAndres Velasco (Finance Minister in Chile) [1]/em/p pbr //ppIt has been a while since I last had a thorough look at Chile (a href="http://chileeconomy.blogspot.com/2008/10/chiles-economy-in-perspective-october.html"here/a and a href="http://chileeconomy.blogspot.com/2008/08/economic-growth-in-chile.html"here/a); more specifically, the last time I had Chile under the loop was in October 2008 and thus around the time when the global economy was about to enter two quarters (Q4-08 and Q1-09) of absolute horror. Whether we are past the worst at this point in time is debatable and I am, personally, skeptical with regards the narrative of second derivatives and green shoots, but it is hard to deny that it does represent a narrative and a fairly strong one too. In this context I thought ...

by Edward Hugh: Barcelonabr /br /span style="font-family:arial;font-size:78%;"/spana href="http://3.bp.blogspot.com/_ngczZkrw340/SgiAR06lzrI/AAAAAAAAN1E/-NbHseEOV1Q/s1600-h/ecb+one.png"img id="BLOGGER_PHOTO_ID_5334654802370875058" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 399px; CURSOR: hand; HEIGHT: 264px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SgiAR06lzrI/AAAAAAAAN1E/-NbHseEOV1Q/s400/ecb+one.png" border="0" //abr /br /blockquote“The 60 billion euros they announced is peanuts for an economy the size of the euro zone,” economics professor and former Bank of England policy maker Willem Buiter said at a conference in Dublin yesterday. “I expect they will announce more or that the recession in the euro zone will be longer and deeper than would otherwise be necessary. They have a record of being somewhat behind the curve.” /blockquoteblockquoteEuropean car sales dropped 12 percent in April.... Bayerische Motoren Werke AG’s registrations dropped by almost one-third to 55,633 even as the German market expanded 19 percent, helped by the government’s 2,500 euro ($3,400) sales bonus .........Spain extended its auto-sales slump with a 46 percent plunge in registrations, the largest among the continent’s ...

div class="body" pBy Claus Vistesen: Copenhagenbr //ppOne cannot fault the good journalists for trying, one really can't. Yet, as hard as they tried they could not get President Trichet to concede that the ECB has now entered some form or state of quantitative easing as well as they could not wring an answer as to whether the 1% interest stance would constitute an intermediate floor for the ECB policy rate. Before, however, we get ahead of ourselves let us begin with the beginning./p pThe almost trivial outcome of today's council meeting in Frankfurt was actually the decision to push the main nominal interest rates down 25 basis points to 1%. If anything, risks to this decision seemed to come from the upside in the sense that all the talk of impending green shoots and second derivatives would make the ECB pause. What was ...

div class="body" pBy Claus Vistesen: Copenhagenbr //ppIt is not secret that the author of this space, at times, has been rather critical towards the ECB. The reason has not been so much for its de-facto inability to amend the situation in the sense that this is an inbuilt characteristic of the system, but more so because of the seeming complacency with which ECB policy makers (with notable exceptions) have viewed the crisis./p pHowever, and with the recent rate meeting one is tempted to conclude that the ECB is now seriously committed to considering alternative measures and also, as it were, drastic measures along the lines of its peers at the Fed, the BOE and the BOJ who have all in their distinct way been engaged in QE for quite some time. In the recent print edition, the Economist provides a href="http://www.economist.com/displaystory.cfm?story_id=13527329"a fine overview ...

By Claus Vistesen: CopenhagenEven though the big news of last week undoubtedly is represented by the one trillion session in London, the smaller than expected nudge from the gents at Kaiserstrasse and the emerging talk of a market bottom and impending recovery, I am going to wonkishly stay on the topic with respect to my latest long piece on the land of the rising sun and its economic woes. One issue which I dealt with was the skewed nature of Japan's growth path dependent on exports as well as the derivative issue of how to raise consumption in Japan or put more broadly; how to spur domestic demand in a sustainable way? My answer to this question is more or less implicit in the analysis linked above, but before we get to that let me present ...

by Edward Hugh: Barcelona br /br /Well reading the press this morning it would be fairly easy to reach the conclusion that nothing really happened yesterday in Brussels, and that a great opportunity was lost. The latter may finally be true, but the former most certainly is not. br /br /Let's look first at what was not decided on Sunday. The leaders of the 27 member countries in the European Union most certainly did not vote to back a proposal from Hungarian Prime Minister Ferenc Gyurcsany for a 180-billion-euro ($228 billion) aid package for central and eastern Europe. They did not back it because it was not even seriously on the agenda at this point. These people move slowly and we need to talk them throught one step at a time. So what was on the agenda. EU bonds for one, and a href="http://edwardhughtoo.blogspot.com/2009/02/let-east-into-eurozone-now.html"accelerated euro membership for the East for ...