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 ...

by Edward Hugh: Barcelonabr /br /br /pa href="http://3.bp.blogspot.com/_ngczZkrw340/SlmdGD2bh-I/AAAAAAAAOoo/P8vnyB3RTno/s1600-h/bulgaria+population.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 258px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5357485959172294626" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SlmdGD2bh-I/AAAAAAAAOoo/P8vnyB3RTno/s400/bulgaria+population.png" //abr /br /br /The International Monetary Fund this week forecast the recession in Bulgaria would be deeper than it previously predicted. Such a decision should come as no surprise to anyone, since the country's economic dynamics in both the short and long term look extremely unstable, and Bulgaria is now almost certainly headed towards a series of more or less hair-raising roller-coaster rides. Even the briefest of glances at the population chart above should lead even the most sceptical among us to stop and think a little about the possible economic implications of such an appauling demographic outlook. As can be seen, the opening to the west brought a sharp outflow of people in the late 1980s (mainly ethnic Turks), but the important thing ...

Even when liars tell the truth, they are never believed. The liar will lie once, twice, and then perish when he tells the truth.

One thing which is certain at the moment is that the rumour mill is grinding hard and that it is very difficult to get a clear picture of what is going on. It is too cumbersome for me to go into the entire background here (I assume most of you are familiar with the Baltic and CEE situation), but if you want some background try this or this which will give you the opportunity to browse a myriad of articles. The situation is however pretty simple. Ever since it became clear that the Baltics was going to suffer not only a hard landing, but a veritable collapse on the back of the financial crisis one obvious question always was whether these economies could maintain the

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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 ...

One 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.

The 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 always going to be much more interesting at this meeting would be whether the

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Last time I had Japan under the loop I asked whether there was no end in sight for Japan's economy and as I wind up for another close look, I must say that it is still very difficult to find good news if any at all. However, and for the sake of argument I thought that we might begin with some recent arguments in the context of the global economy which suggest that we may be past the worst of our travails. The first observation comes from the Economist's ever eloquent financial markets pundit, Buttonwood, who recently made the neat point that while we are still stuck in the mire, the second derivative might be turning positive. This suggests that while indicators are still on the decline they are now declining less rapidly. In Tokyo, Cassandra voices a similar sentiment

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As my readers may have noticed I am pretty much letting my colleague Edward running the show at the moment in terms of detailing the fall from grace of European economies. It is funny to think about how it is under a year ago that the notion of decoupling was fiercely debated. What a difference a couple of bust economies and banks make eh? In any case, what follows will be some semi-random observations on last week’s and the coming ditto’s events. As a common theme I think it is safe to say that in the context of the European economy as well as in a more wonkish theoretical perspective on the global economy push, as it were, looks very close to becoming shove. 

 

Towards a Common European Answer?

As I mentioned last week, Q4 was an absolute horror story in terms of European data with an aggregate Eurozone contraction of

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... is getting increasingly difficult at the moment. Take Hungary for example. I take it that most economic commentators and analyst know that it is bad in Hungary and together with Ukraine I would submit that these two face the largest risk of sporting the next global macro blowout (assuming that Russia does not suddenly collapse prematurely).

Hungary's biggest problem at the moment is how on earth to stay worried about a dropping Forint while at the same time realizing that the country is headed towards the worst recession in several decades. As some readers will remember the reason that the Forint today is subjected to full force of currency punters is to be found one year ago. Back in February, Hungary as well as other emerging markets opted to loosen their pegs towards the USD, the Euro or both in an attempt to "allow" the currency to

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In the currency market, the dollar advanced against the euro. Late Friday, the euro was trading at $1.2696 vs. $1.2801 on Thursday.

Traders cavalierly ignored disastrous employment data, as the Labor Department reported that U.S. nonfarm payrolls plunged by 533,000 in November, the worst job loss in 34 years. Economists expectations were for a loss of only around 350,000.

In addition, the unemployment rate rose from 6.5% in October to 6.7% in November, the highest jobless rate since October 1993, near the end of the last recession.

Only in this topsy-turvy world could that be taken as a positive. “What’s happened recently is that weak U.S. data — and this is certainly weak — have raised concerns about the U.S. and global economy and that’s actually benefited the U.S. dollar,” said Meg Browne, currency strategist at Brown Brothers Harriman.

“With jobs so weak, it’s a negative outlook and it means that the

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The Estonian recession continues to deepen, month by month. The most recent evidence comes to us in the form of a decline in both Estonian retail sales and industrial production, which fell in each case for the fifth consecutive month in September, leading us to expect the rate of GDP contraction to accelerate further in Q3.

Retail Sales Fall An Annual 8%Retail sales, excluding cars and fuel, fell by an annual 8 percent in August, the largest such decline registered since at least 2001. This follows a 6 percent in August. The year on year chart (see below) couldn't be clearer.Sales were also down month on month (ie with respect to August), this time by a non seasonally adjusted 7%. In fact, on a seasonally adjusted basis retail sales peaked in February 2008, and have been trending down

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