Eurozone Swot

Standard and Poors, finally having hit "Publish" on that ratings downgrade that was ready 2 months ago --


WHY WAS IRELAND THE ONLY SOVEREIGN AMONG THE SO-CALLED "PERIPHERY" NOT 
DOWNGRADED?


We have not adjusted our political score backing the rating on Ireland. This reflects our view that the Irish government's response to the significant deterioration in its public finances and the recent crisis in the Irish financial sector has been proactive and substantive. This offsets our view that the effectiveness, stability, and predictability of European policymaking as a whole remains insufficient in addressing the deepening financial crisis in the eurozone. ... All other things being equal, we view the government's fiscal consolidation plan as sufficient to achieve a general government deficit of about 3% of GDP in 2015. In our view, there is currently a strong political consensus behind the fiscal consolidation program and policy implementation so far has been extremely strong. 


In our view, Ireland has the most flexible and open economy among the "periphery" sovereigns. We believe that Ireland's economic adjustment process is further advanced than in the other sovereigns currently experiencing market pressures. This is illustrated by the 25% depreciation in the trade-weighted exchange rate since May 2008 and Irish exports growth contributed positively to the muted Irish economic recovery in 2011. However, in our view this also leaves the Irish economy and, ultimately, the Irish government's fiscal consolidation program susceptible to worsening external economic conditions, which is reflected in our negative outlook on the rating. 


Poster from Wikipedia.

Needs Man-Bag

These high-level meeting photographs are always a little stilted, and the good digital quality doesn't do anyone any favours, but what on earth does David Cameron have rammed into his right breast pocket as he strolls with Saudi Crown Prince Nayef during their meeting in Riyadh yesterday?

Photo: Saudi Press Agency.

Heritage Foundation allows domestic politics to affect index of economic freedom

According to the Heritage Foundation annual Index of Economic Freedom (WSJ summary), the USA became less free last year. Now one general problem with this index is that it because it uses government spending and deficits as one component of the index, just about any country is bound to become less free during a recession, as once-favoured Ireland found out before. But anyway, why exactly did the US become less free in 2011? It had a lot to do with the "Rule of Law" rating --

Property rights are guaranteed, and the judiciary functions independently and predictably. Serious constitutional questions related to government-mandated health insurance have been under consideration in the courts. Corruption is a growing concern as the cronyism and economic rent-seeking associated with the growth of government have undermined institutional integrity.

In other words, none of the institutions associated with rule of law have changed at all, but there's a legal challenge to health care reform, and, er, Solyndra! In fact, they can't produce a shred of evidence that cronyism has gotten any worse over the last few years: does anyone remember the contracting for the Iraq war? Not at Heritage, apparently. So what's supposed to be a quantification based on some rigorous underlying methodology is just a year of Fox News fulminations turned into a downward adjustment of last year's number. The final irony: that government mandated health insurance that has reduced freedom simply by virtue of being challenged in the courts was originally the idea of the ... Heritage Foundation!

By the way, in Ireland (#9) according to Heritage, "corruption is not regarded as a serious problem." They just can't give up on the Tiger.

For future reference

That's US House Majority Leader and fire-breathing Republican hawk Eric Cantor with Saudi King Abdullah's son Abdulaziz in his capacity as Saudi Arabia's Deputy Minister for Foreign Affairs. Just to have handy the next time an "outrage" is being manufactured about connections to Saudi Arabia.

Coming soon to the pages of the Daily Mail

Media Matters for America: Right-wing media figures are distorting a passage in the just-released book, The Obamas, by New York Times correspondent Jodi Kantor, to suggest Michelle Obama harbors antipathy toward "white Irish Catholics."


All the official photos from their great visit to Ireland.

America not a big college town

It's bizarre that not only does Rick Santorum keep saying abrasive and offensive things, but that there's a pool of willing defenders available when he gets criticized for it. Here we have National Review's Patrick Brennan doubling down on Santorum's explanation of why the Catholic Church child sex abuse scandals happened in Boston:


[Santorum] On the Catholic Church’s abuse scandals: ‘Priests, like all of us, are affected by culture. When the culture is sick, every element in it becomes infected. While it is no excuse for this scandal, it is no surprise that Boston, a seat of academic, political, and cultural liberalism in America, lies at the center of the storm.’


[Brennan] It is hardly “terrible” to say that a culture that produces pedophiles, and the priests who themselves become pedophiles, must be somehow “infected.” That explanation does not provide, as Santorum notes, any excuse for the horrific crimes committed, but his statement isn’t only unobjectionable, the best evidence suggests that it’s actually accurate. Though Santorum’s comment on Boston is unsubstantiated, it isn’t offensive, and the only significant study of the causes of the Catholic Church’s sexual-abuse crisis so far, released in May 2011 by the John Jay College of Criminal Justice, indicates that he was roughly correct otherwise. To quote:


Social and cultural changes in the 1960s and 1970s manifested in increased levels of deviant behavior in the general society and also among priests of the Catholic Church in the United States. Organizational, psychological, and situational factors contributed to the vulnerability of individual priests in this period of normative change.

So Brennan refudiates Santorum's specific reference to Boston's culture with a quote that makes no reference whatsoever to Boston; the issue is not Brennan's acknowledgement that the Boston segment is unsubstantiated: it was Santorum's core thesis about why the abuse happened  --proof that liberal culture corrupts: the scandal is centered in the most liberal city..

The fact is, the Santorum quote is an embarrassment left over from an already abandoned battlefield, as the evidence has mounted over the years that cases of abuse long pre-date the 1960s.  And regarding culture, it was the hierarchical and insular culture of the Church, and codes of silence in  the urban Irish and Italian neighbourhoods that were once its base, which formed the toxic brew of the scandals. But if you want to talk about Boston culture, how about a mention for Harvard Law's Mary Ann Glendon, who defended the Mexican child abusing priest and fraudster Marcial Maciel Degollado when scandals surfaced around him in 2002?

Of course, one way to avoid the contaminating effects of an academic culture like Boston is to go to university in a small rural college town with real American steel and mining community values, e.g. State College, Pa. Nothing bad could ever happen there, right?

Moment of clarity

The repressive Syrian Baathist regime -- with 5000 deaths to its name during the recent protests, and counting -- finds out who its friends are when the Russian Navy pops in for a visit.

Photo issued by Syrian News Agency.

Nought's had, All's spent

A few lines from the Swiss National Bank document dump today which precipitated the resignation of the chairman, Philipp Hildebrand; they concern the financial dealings of his wife Kashya with the initial focus having been on her speculative transactions in dollars when the SNB was about to cap the franc rate against the dollar:

[notes of their private banker] Kashya mentioned that she may look at buying put options on gold soon i.e. when the time is right ... unfortunately Kashya won't be around on that date (dinner invitation) as she will be in Dubai attending some art business of her own ... 


[email from her to the private banker] "Dear Felix, as discussed we would like to get our dollar FX exposure up to 50 percent in our account ... kind regards, Kashya" ...


[philipp finds out about the currency trade and blocks it] "PS Kashya sorry about that but currencies really are a special case here"

Sunrise, Sunset

The New York Times reports on Denis O'Brien and, separately, Sean Quinn. You wouldn't guess from the NYT articles that if you did a popularity poll in Ireland with just the two men in it, Quinn would still win.

People are too expensive

A Wall Street Journal editorial organized around the theme that pesky "entitlements" (pensions and health care for old people) are squeezing the military budget --

Part of the problem is that military personnel costs are exploding on pace to exceed the entire defense budget by 2030, according to Andrew Krepinevich of the Center for Strategic and Budgetary Assessments. It's hard to make the political and moral case to reduce benefits for veterans and soldiers, but here's where Mr. Panetta could show mettle on Capitol Hill, especially by reforming military health care. The bulk of any defense budget is better spent on equipment, training and research.

Note that the current military healthcare system -- the base hospitals and Veterans Administration -- is actually a model of efficient government-provided free healthcare.  So what they mean by "reform" is dumping soldiers into the free-for-all of the private insurance system. Maybe as a concession, being in a war will not count as a pre-existing condition. Until the robot army ("equipment") renders actual people unnecessary.

Image: Robocop poster via Wikipedia

Also in the Suddenly More Accountable Europe file

It may be only in Germany that you'd get saturation coverage of a somewhat convoluted scandal involving the federal President and of the Brand-Perry breakup in the same newspaper, but that's Bild for you. Three cheers for Bild.

Gnomes

Among the news stories that should be getting more attention is the case of Swiss Central Bank governor Philipp Hildebrand and the currency trades of him and his art-dealer wife. It's a tough case in which to pick sides because on the one hand, Mr Hildebrand has been extremely vigorous in reining in Swiss banks, but on the other hand, there's been a culture of impunity at central banks worldwide: the institutions that were supposed to be in charge of financial stability in the run-up to 2008 and yet which have seen the least change in personnel since then despite their massive failing in that regard. So if a sacking has to come due to dodgy personal deals of an otherwise good central banker rather than for incompetence of all the others still in their jobs, it's rough justice.

We'll also be following up to see whether the Swiss media view this as a homegrown failing or rather as due to bad habits picked up from working for New York hedge funds and marrying foreigners -- both of which apply to Mr Hildebrand.

Frankfurt Follies

From Irish Department of Finance, the 2011 and 2010 budget outcomes with and without the "banking measures" i.e. the Eurocrat requirement that Ireland make payments to bondholders in insolvent banks. 9 billion euro here and 9 billion euro there, and pretty soon you're talking about real money.

Snippets from the UK 30 year paper release

There really was a time when telecommunications could be a problem:

Memo from Number 10 (Clive Whitmore) to the Foreign Office (Brian Fall) 2 July 1981 begins: Dr. Garret Fitzgerald, the new Taoiseach, telephoned the Prime Minister at 1800 yesterday evening. The line over which the conversation took place was particularly bad, and I am afraid that there are periods when Dr. Fitzgerald was inaudible, but I think that have pieced together the essentials of what we had to say.

A United States of Ireland?
Memo from RL Wade-Gery to Sir Robert Armstrong about meetings of the Anglo-Irish Joint Studies Groups 12 March 1981: There were two occasions on which the Irish had to be firmly slapped down, but these were clearly try-ons, and their failure was accepted with good grade and without protest. The first occurred early. The Irish explained frankly that their eventual objective was a Federal Ireland, achieved on the basis of majority consent both in the Republic and in the North.

This was when Charlie Haughey was Taoiseach but the federal idea at the time only existed in a Fine Gael document. As another section of the papers notes, Fianna Fail at the time had no actual policy paper setting out their views on Northern Ireland. Was it widely known at the time that Charlie had told his senior staff that the ultimate goal was federation?

[The relevant papers are here; file size is huge]

That could be anybody's keyboard

AFP:

A political row festered in Iraq on Friday, as a top Sunni leader denied he penned a commentary criticising the Shiite-led government, the latest in a crisis that has stoked sectarian tensions.


Since the departure of US troops less than two weeks ago, Iraq has plummeted into a political standoff, with authorities having charged Sunni Vice President Tareq al-Hashemi with running a death squad and premier Nuri al-Maliki calling for his Sunni deputy Saleh al-Mutlak to be sacked.


Mutlak and Hashemi's Sunni-backed Iraqiya party has boycotted parliament and cabinet, and on Wednesday, the New York Times ran a piece by three Iraqiya leaders -- Finance Minister Rafa al-Essawi, parliament speaker Osama al-Nujaifi and Iraqiya leader Iyad Allawi -- sharply critical of Maliki's administration.


Nujaifi, however, has since said his name was added to the piece without his knowledge.
"The article published in the New York Times... has been written without the knowledge of speaker Nujaifi," said a statement issued by his office late on Thursday.

Already on the rollercoaster

Wall Street Journal editorial on the public-private pay differential in Europe, drawing on an ECB paper also discussed on the Irish Economy blog --

Despite all this, the public-private wage gap in Europe wasn't always so large, and really began to widen after 1999. That has at least something to do with the introduction of the euro, which allowed employees to compare their pay with peers in other countries. One result was that government workers in particular were able to negotiate better contracts. 

It's an interesting point, but the big wave of Irish public sector pay increases didn't spring from comparisons with other European countries. It sprang from alleged comparisons within Ireland. And these comparisons, post-1999, themselves reflected the damaging effect of the convergence of interest rates due to the Euro: house prices were increasing rapidly, leaving public sector workers feeling priced out, and the anecdotal accounts of big money being made in real estate and banking -- in an easily dazzled media -- were growing. Add to that the relative power of public sector unions in Ireland, and you have a story. The epigraph could come from comparing the resulting pay scales with those in other Eurozone countries.

The other Bring 'em on

Andrew Roberts in the opinion pages of the Wall Street Journal praising David Cameron's decision to have the UK step outside the negotiations for the Eurozone's fiscal compact --

King George VI actually rejoiced after the fall of France, writing in his diary 1940: "Personally, I feel happier that we have no allies to be polite to and pamper." That is the true voice of Britons, and one that David Cameron has articulated superbly.

Er, was 1940 a good time to be optimistic?

Arab Spring takes turn for the worse

Kuwait News Agency:

Minister of Public Works and Minister of State for Municipal Affairs Dr. Fadhil Safar stressd here on Monday the need to take the necessary requirements and regulations to prohibit smoking and the hubbly bubbly, known as "shisha," in public places, restaurants and cafes.

This is likely to provoke much greater outrage than another statement from the government via Kuwait News Agency today:


Interior Ministry announced on Monday that it has asked the Ministry of Communications to suspend all anonymous accounts on the social networking site (Twitter). The ministry said in a press statement that such measure comes in order to preserve the rights of citizens and residents of people who were used to slander them and their families under fake names, saying that such is a crime punishable by law. It confirmed that all public have the freedom of expression guaranteed to them by the Constitution as long as those practices are going according to the law, especially with regard to using the (Twitter) site.

Occupation dead-enders

Wall Street Journal editorial, July 9, 2008:

A year ago, the conventional Beltway wisdom had it that Iraq was a failed state. Today, the same wisdom holds that it is less chaotic but still fragile, dependent entirely on a U.S. presence to survive. But judging by recent comments from Nouri al-Maliki, even this view may be out of date.

Wall Street Journal editorial on the political and sectarian chaos in Iraq, December 23, 2011:

Inevitably we'll hear this is all the fault of the Bush Administration and the original sin of invasion. Some facts are inconvenient. In the last four years, Iraq put together a workable if imperfect political process. Major violence ceased and a 600,000-man military was formed. Oil revenues are flowing. What changed? The U.S. decided to leave.

Incidentally, the former Wall Street Journal editorial was arguing against Barack Obama's proposal as a candidate for a US withdrawal from Iraq in 2009 and in favour of an agreement-based withdrawal with a few extra years after 2008 to assure stability: the exact approach that President Obama implemented.

And she's such a phoney baloney

Meryl Streep gets the big parts for insights like this that she recalls from 1979 for a New York Times article about Iron Lady:

Ms. Streep nodded and said: “I did the same thing. We all thought if it can happen in England, class bound, socially rigid, homophobic — if they can elect a female leader  over there, then it’s just seconds away in America.”

Futile boosting to the end

Wall Street Journal editorial 16 December --

Iraq may be the country most Americans would prefer to forget, even if its remarkable quiescence during this season of Arab revolt is a testament to how much the U.S. achieved there. Yet U.S. interests in consolidating an alliance with Iraq have never been greater.

There wasn't much "quiescence" even in the months prior to that sentence, and there certainly isn't now.

He also thought he was near the end of a war

Republicans express outrage that conservative politicians with presidential aspirations compare themselves to historical figures:

Mr. Gingrich was “a disaster” as speaker and most likely would be as a nominee, Mr. King said, given his “compulsion to exaggerate,” erratically changing ideas, intellectual arrogance and the grandiosity of his self-comparisons to the likes of Winston Churchill and others.

Above, George W. Bush using careful White House advance team staging to compare himself to Churchill and FDR, during an event in Halifax, Nova Scotia, in 2004.

Photo: Larry Downing, Reuters

Nothing to do with me, sorry

Goldman Sachs. The Cayman Islands.  A complex structured investment vehicle.  The Irish Stock Exchange.  What could possibly go wrong?

The Financial Times (subs. req'd) explains, the gist being the attempt to market the thing with all the above features while still having it as an Islamic security:

Lawyers who structure products to comply with Islamic law warn that, whatever the merits to the scholarly debate, investors may be deterred by the doubts. “Goldman can list this programme on the Irish Stock Exchange, but that does not mean they will get the buyers,” said one lawyer who specialises in the field. “They may well find there is not much demand because of the widespread doubts over the issue in the market.” ... He added that Goldman would make use of the commodities and was not just flipping them to the original seller to create the illusion of a sale. And he said that the listing on the Irish Stock Exchange was for regulatory and tax purposes – scholars and potential investors did not anticipate a secondary market.

More than he meant to say

David Cameron this morning: "Britain is out of it and will remain out of it."

He was referring to the Euro but it serves rather unfortunately as a description of Britain's current position in the overall restructuring of the European Union that is now happening.

Incidentally, his remarks about the new deal surrendering more sovereignty and/or being outside the framework of the EU are not doing the Irish government any favours in terms of its own legal rationale for how to ratify the agreement.

Birds of a feather

David Brooks in his New York Times column

In the two main Republican contenders, we have one man, Romney, who seems to have walked straight out of the 1950s, and another, Gingrich, who seems to have walked straight out of the 1960s. He has every negative character trait that conservatives associate with ’60s excess: narcissism, self-righteousness, self-indulgence and intemperance. He just has those traits in Republican form.

What has the last 30 years of Republican dominated politics in the US been about if not narcissism, self-righteousness, self-indulgence, and intemperance?  That's the simplest explanation for why free tax cuts, free wars are so central to the project.

The official computer of the Eurozone debacle

Iveta Radicova, the Slovak Prime Minister, entering the Brussels summit this evening with a fancy Apple.  The Portuguese PM was also clutching one on the way in.  The others stick with the large piles of paper. It makes them look busier.

The Eurozone's loose change

IMF website 5 December 2011.  Loan disbursements to African countries on the order of 1/1000 of what Greece is getting.

Of course the Eurozone is a big crisis, not least if you're in the middle of it.

But is this the right attention ranking relative to where the really poor people actually are?

When calendars collide

Statement from official news agency of United Arab Emirates --

WAM Abu Dhabi, Dec 04th, 2011 (WAM) -- The Fatwa and Legislation Section of the Department of Judiciary- Abu Dhabi, announced that the first day of Muharram falls on Sunday November 27.

A statement issued by the Fatwa and Legislation Department, said that after a meeting of the three committees in charge of moon sighting, on Friday evening, November 25, the crescent was not sighted by any of the committees within the state.

Therefore, Saturday (Nov. 26) was the last day of Dhul Hijjah, and Sunday is the first of Muharram. Hence, the 10th of Muharram corresponds with Tuesday (Dec. 6).

This matters for dating the Ashura festival.  

That means that today, Sunday 4 December, is 8 Muharram.  In Saudi Arabia, today is 9 Muharram.

You'll never beat the Irish*

* Offer not applicable during June 2012.

Morally bankrupt as well

Associated Press report --

French Foreign Minister Alain Juppe said that Greece, which relies on Iranian oil, had objected to a ban on buying it. But he said work toward an embargo would continue.  "Greece has put forward a number of reservations," Juppe said. "We have to take that into account. We have to see with our partners that the cuts can be compensated by the increase of production in other countries. It is very possible."

This is Iran we're talking about, which was suppressing pro-democracy movements with violence before it was cool, and now is backstopping the Assad regime in Syria as it kills children for fun.  And Greece is complaining about oil sourcing?