OFF TO THE U.K.
I am off to the U.K. for a couple of days, so no blogging for a while.
Back on Monday.
Walter Blotscher
Tuesday 27 September 2011
Monday 26 September 2011
A BIG NUMBER (2)
Some eighteen months ago, I wrote a post mentioning the word trillion, and pointing out how that rather large number was beginning to sneak its way, not into everyday parlance as such, but at least into the appendices of budget documents issued by the British Treasury.
Since then, we have had the debate about raising the U.S. federal debt ceiling, which is over US$14 trillion, and lots of plans for raising or cutting trillions from federal revenues or spending programmes.
The latest people to get in on the act are European finance ministers and officials, who are apparently putting together a plan to increase the size of the bail-out fund, the European Financial Stability Facility, from Euro440 billion to Euro2 trillion.
As I said earlier, a trillion, or 1,000,000,000,000, is a very large number indeed. My prediction is that by the end of this decade, it will have become commonplace.
Walter Blotscher
Some eighteen months ago, I wrote a post mentioning the word trillion, and pointing out how that rather large number was beginning to sneak its way, not into everyday parlance as such, but at least into the appendices of budget documents issued by the British Treasury.
Since then, we have had the debate about raising the U.S. federal debt ceiling, which is over US$14 trillion, and lots of plans for raising or cutting trillions from federal revenues or spending programmes.
The latest people to get in on the act are European finance ministers and officials, who are apparently putting together a plan to increase the size of the bail-out fund, the European Financial Stability Facility, from Euro440 billion to Euro2 trillion.
As I said earlier, a trillion, or 1,000,000,000,000, is a very large number indeed. My prediction is that by the end of this decade, it will have become commonplace.
Walter Blotscher
Sunday 25 September 2011
TEENAGE BOYS (2)
Since my two sons have left home, I can notice the difference in the houshold bills. Food bills are way down; but so too are the electricity bills and the amount of rubbish put out every week. Even the septic tank manages to last the year before it is emptied by the local authority.
I use the savings to visit them in their current big city domiciles. Today I was with my elder son and some 250,000 other people in Copenhagen, watching the world cycling championships live in one of the northern suburbs. In brilliant late summer sunshine, Mark Cavendish confounded the pundits who said he couldn't win an uphill sprint to give Great Britain its first world champion since Tom Simpson in 1965.
Walter Blotscher
Since my two sons have left home, I can notice the difference in the houshold bills. Food bills are way down; but so too are the electricity bills and the amount of rubbish put out every week. Even the septic tank manages to last the year before it is emptied by the local authority.
I use the savings to visit them in their current big city domiciles. Today I was with my elder son and some 250,000 other people in Copenhagen, watching the world cycling championships live in one of the northern suburbs. In brilliant late summer sunshine, Mark Cavendish confounded the pundits who said he couldn't win an uphill sprint to give Great Britain its first world champion since Tom Simpson in 1965.
Walter Blotscher
Saturday 24 September 2011
THE RUGBY WORLD CUP
The rugby world cup is currently taking place in New Zealand. Rugby is the country's passion, and the All Blacks are expected to win virtually every time they take to the field. However, since they won the inaugural World Cup on home turf in 1987, they have in fact been the tournament's big chokers. Despite never having lost a pool game, they have lost twice in the knockout stages to France and twice to Australia. The only defeat that perhaps could be defended was the narrow loss - after extra time - in the 1995 final to South Africa in South Africa, shortly after the latter's emergence from the shadow of apartheid (the subject of the film Invictus).
Now the All Blacks are playing at home again, and are again the favourites to win. This morning I watched their pool game against France, a match that some had feared could provide a repeat upset. However, apart from a ferocious opening 10 minutes, where France had all the pressure, yet failed to score, New Zealand picked them apart to win convincingly. The cup is definitely theirs to lose.
Walter Blotscher
The rugby world cup is currently taking place in New Zealand. Rugby is the country's passion, and the All Blacks are expected to win virtually every time they take to the field. However, since they won the inaugural World Cup on home turf in 1987, they have in fact been the tournament's big chokers. Despite never having lost a pool game, they have lost twice in the knockout stages to France and twice to Australia. The only defeat that perhaps could be defended was the narrow loss - after extra time - in the 1995 final to South Africa in South Africa, shortly after the latter's emergence from the shadow of apartheid (the subject of the film Invictus).
Now the All Blacks are playing at home again, and are again the favourites to win. This morning I watched their pool game against France, a match that some had feared could provide a repeat upset. However, apart from a ferocious opening 10 minutes, where France had all the pressure, yet failed to score, New Zealand picked them apart to win convincingly. The cup is definitely theirs to lose.
Walter Blotscher
Friday 23 September 2011
FOOTBALL SHIRT NUMBERS
Is it just me who is irritated by the trend in football shirt numbers? In the old days it was simple; there were eleven people on each side, and they had the numbers 1 to 11, starting with the goalie and ending up with the left wing. The one substitute allowed had the number 12. Now however there are "squads", so numbers go from one to perhaps 40. It's all very confusing.
Other sports don't do this. Both forms of rugby have numbers from 1 to 13 or 15 (though, somewhat oddly, rugby league starts with the fullback, whereas rugby union ends with him). Cricket doesn't have any numbers at all, at least in the test match version. The exception seems to be American sports, where everybody has personalised numbers anywhere between 1 and 100. Some numbers, belonging to particularly famous players, even get "retired". It is this trend that is moving across to European football.
The reason, as with most things American, is money. It's much more difficult to market a Cristiano Ronaldo number 7 Real Madrid shirt to hundreds of thousands of football-mad kids, if he keeps changing his shirt number. That never seemed to be a problem with (say) George Best, who always wore a number 7 shirt. But I suppose the stakes are higher today.
Anyway, as I say, I find it irritating when a football player has the number 32 on his back. I must be getting old.
Walter Blotscher
Is it just me who is irritated by the trend in football shirt numbers? In the old days it was simple; there were eleven people on each side, and they had the numbers 1 to 11, starting with the goalie and ending up with the left wing. The one substitute allowed had the number 12. Now however there are "squads", so numbers go from one to perhaps 40. It's all very confusing.
Other sports don't do this. Both forms of rugby have numbers from 1 to 13 or 15 (though, somewhat oddly, rugby league starts with the fullback, whereas rugby union ends with him). Cricket doesn't have any numbers at all, at least in the test match version. The exception seems to be American sports, where everybody has personalised numbers anywhere between 1 and 100. Some numbers, belonging to particularly famous players, even get "retired". It is this trend that is moving across to European football.
The reason, as with most things American, is money. It's much more difficult to market a Cristiano Ronaldo number 7 Real Madrid shirt to hundreds of thousands of football-mad kids, if he keeps changing his shirt number. That never seemed to be a problem with (say) George Best, who always wore a number 7 shirt. But I suppose the stakes are higher today.
Anyway, as I say, I find it irritating when a football player has the number 32 on his back. I must be getting old.
Walter Blotscher
Thursday 22 September 2011
THE DEATH PENALTY
Last night a man named Troy Davis was put to death by lethal injection by the State of Georgia. He had sat on Death Row since 1991, when he was convicted of killing an off-duty policeman. He had always maintained his innocence, and did so again in his final speech.
The policeman was shot dead in 1989, when he tried to help a homeless man being attacked in a burger restaurant car park. The prosecution case was that Davis was beating the man with a gun, after demanding a beer from him. However, no gun (i.e. no murder weapon) was ever found, and there was no conclusive DNA evidence linking Davis to the murder. Furthermore, seven of the nine witnesses who testified against Davis subsequently either recanted or changed their evidence. It should also be said that Davis was black (research shows that blacks and other minorities are disproprotionately represented on Death Row).
Because of these facts, thousands of people, ranging from ex-President Jimmy Carter to the current Pope, called for the case to be reopened; Davis had been subject to a miscarriage of justice. At a minimum, the death sentence should be commuted. However, the whole U.S. appeals system, including at the very end a review by the Supreme Court, the nation's highest judicial body, refused to overturn the original judgment. Sentence was carried out immediately after the Supreme Court's decision.
The United States' practice of putting its own citizens to death is one of the major differences between it and other rich-world countries. Although support for the death penalty exists in other countries (notably the U.K.) amongst the general population, their Governments have abolished it, not least because of well-publicised miscarriages of justice. Similar miscarriages of justice, brought to light because of the more widespread use of DNA testing, have caused rethinks and abandonment of the death penalty in some U.S. states. But it is still a long way from the position in the E.U., where it is illegal under E.U. law for a Member State to impose the death penalty.
Taking a long view of history, there have been very few developments, which indubitably show that the human race has improved over time. The only one that I can think of is a gradual downward trend - ending in zero - in the number of situations where authorities (whether kings, Parliaments or courts) can legally put one of their subjects to death. Against that background, I have to say that the U.S. position is barbaric, uncivilised even. It's a great country to visit, but I could never live there.
Walter Blotscher
Last night a man named Troy Davis was put to death by lethal injection by the State of Georgia. He had sat on Death Row since 1991, when he was convicted of killing an off-duty policeman. He had always maintained his innocence, and did so again in his final speech.
The policeman was shot dead in 1989, when he tried to help a homeless man being attacked in a burger restaurant car park. The prosecution case was that Davis was beating the man with a gun, after demanding a beer from him. However, no gun (i.e. no murder weapon) was ever found, and there was no conclusive DNA evidence linking Davis to the murder. Furthermore, seven of the nine witnesses who testified against Davis subsequently either recanted or changed their evidence. It should also be said that Davis was black (research shows that blacks and other minorities are disproprotionately represented on Death Row).
Because of these facts, thousands of people, ranging from ex-President Jimmy Carter to the current Pope, called for the case to be reopened; Davis had been subject to a miscarriage of justice. At a minimum, the death sentence should be commuted. However, the whole U.S. appeals system, including at the very end a review by the Supreme Court, the nation's highest judicial body, refused to overturn the original judgment. Sentence was carried out immediately after the Supreme Court's decision.
The United States' practice of putting its own citizens to death is one of the major differences between it and other rich-world countries. Although support for the death penalty exists in other countries (notably the U.K.) amongst the general population, their Governments have abolished it, not least because of well-publicised miscarriages of justice. Similar miscarriages of justice, brought to light because of the more widespread use of DNA testing, have caused rethinks and abandonment of the death penalty in some U.S. states. But it is still a long way from the position in the E.U., where it is illegal under E.U. law for a Member State to impose the death penalty.
Taking a long view of history, there have been very few developments, which indubitably show that the human race has improved over time. The only one that I can think of is a gradual downward trend - ending in zero - in the number of situations where authorities (whether kings, Parliaments or courts) can legally put one of their subjects to death. Against that background, I have to say that the U.S. position is barbaric, uncivilised even. It's a great country to visit, but I could never live there.
Walter Blotscher
Wednesday 21 September 2011
FINANCIAL CRISIS II
A string of recent snippets of bad economic news (debt downgrades, falling share prices, budget cuts, low growth) are leading a number of commentators to suggest that we are about to enter a repeat of the financial crisis of 2008.
I disagree with this view. For the simple reason that I don't think the earlier crisis has ever stopped. That crisis was caused by a lot of private banks making a lot of very, very silly decisions. Such as selling mortgages to people with no income. After Lehmann Brothers went bust, Governments were forced to step in and rescue financial institutions deemed too big to fail.
But that did not "solve" the problem, it merely transfered it from the private to the public sector. For at the heart of the current worries is the one that these Governments can't now service the debts they have taken on. Greece certainly, Portugal and Ireland almost certainly, Spain, Italy, even the U.S. possibly.
This is not Financial Crisis II, but the final reel of Financial Crisis I.
Walter Blotscher
A string of recent snippets of bad economic news (debt downgrades, falling share prices, budget cuts, low growth) are leading a number of commentators to suggest that we are about to enter a repeat of the financial crisis of 2008.
I disagree with this view. For the simple reason that I don't think the earlier crisis has ever stopped. That crisis was caused by a lot of private banks making a lot of very, very silly decisions. Such as selling mortgages to people with no income. After Lehmann Brothers went bust, Governments were forced to step in and rescue financial institutions deemed too big to fail.
But that did not "solve" the problem, it merely transfered it from the private to the public sector. For at the heart of the current worries is the one that these Governments can't now service the debts they have taken on. Greece certainly, Portugal and Ireland almost certainly, Spain, Italy, even the U.S. possibly.
This is not Financial Crisis II, but the final reel of Financial Crisis I.
Walter Blotscher
Tuesday 20 September 2011
LATE NIGHT BLOG
The news is all gloom and doom at the moment. So here is something to cheer you up. Christiania, the "free place" in the middle of Copenhagen, has been given a reprieve by the Government. Its inhabitants can buy out the state for a mere kr.76 million, which is a fraction of its true property value.
The people who run Christiania are offering shares to the public in order to raise this money. Presumably the dividends will be paid in cannabis.
Walter Blotscher
The news is all gloom and doom at the moment. So here is something to cheer you up. Christiania, the "free place" in the middle of Copenhagen, has been given a reprieve by the Government. Its inhabitants can buy out the state for a mere kr.76 million, which is a fraction of its true property value.
The people who run Christiania are offering shares to the public in order to raise this money. Presumably the dividends will be paid in cannabis.
Walter Blotscher
Monday 19 September 2011
ETHNIC PROBLEMS IN EUROPE
Europeans are used to looking (rather smugly, it must be said) at states in Africa and Asia, and bemoaning the incidence of ethnic and tribal problems. Why can't these guys just get along, as we do? Forget the fact that many of those states were artificially created by Victorian mapdrawers that ignored realities on the ground. To take but one example, Tanzania had roughly 120 different tribes and languages at Independence, more than the whole of Europe. Forging a common identity from such a disparate population would have taxed anybody.
But the elephant in the room is that Europe is not ethnic problem-free either. And I don't just mean in the sense that some countries' citizens are hostile to immigrants from other continents. The Yugoslav wars of the early 1990's ought to have been a huge wake-up call. Cyprus remains a divided country. The Basques have long considered themselves to be very different from the rest of Spain. Greece is squabbling with Macedonia about the latter's name. Belgium is barely a state. The Scots may end up cutting ties with the rest of the United Kingdom. There are disaffected ethnic Hungarians stuck in Slovakia and Romania. And so on.
I was reminded of this issue again this weekend. In Latvia's recent election, an ethnic Russian party called the Harmony Centre ended up with the most votes, 29% of the total. Latvia is unusual amongst the countries of the ex-Soviet Union in that it has a sizeable ethnic Russian minority that makes up about a quarter of the population. Clearly, in voting for an ethnic political party, that minority has demonstrated its discontent with the existing political system.
The other parties will probably gang together in order to keep the Harmony Centre out of power. But that will just store up trouble for the future. Ethnicity is not yet dead in Europe.
Walter Blotscher
Europeans are used to looking (rather smugly, it must be said) at states in Africa and Asia, and bemoaning the incidence of ethnic and tribal problems. Why can't these guys just get along, as we do? Forget the fact that many of those states were artificially created by Victorian mapdrawers that ignored realities on the ground. To take but one example, Tanzania had roughly 120 different tribes and languages at Independence, more than the whole of Europe. Forging a common identity from such a disparate population would have taxed anybody.
But the elephant in the room is that Europe is not ethnic problem-free either. And I don't just mean in the sense that some countries' citizens are hostile to immigrants from other continents. The Yugoslav wars of the early 1990's ought to have been a huge wake-up call. Cyprus remains a divided country. The Basques have long considered themselves to be very different from the rest of Spain. Greece is squabbling with Macedonia about the latter's name. Belgium is barely a state. The Scots may end up cutting ties with the rest of the United Kingdom. There are disaffected ethnic Hungarians stuck in Slovakia and Romania. And so on.
I was reminded of this issue again this weekend. In Latvia's recent election, an ethnic Russian party called the Harmony Centre ended up with the most votes, 29% of the total. Latvia is unusual amongst the countries of the ex-Soviet Union in that it has a sizeable ethnic Russian minority that makes up about a quarter of the population. Clearly, in voting for an ethnic political party, that minority has demonstrated its discontent with the existing political system.
The other parties will probably gang together in order to keep the Harmony Centre out of power. But that will just store up trouble for the future. Ethnicity is not yet dead in Europe.
Walter Blotscher
Sunday 18 September 2011
FISCAL POLICY AND THE EURO
That fiscal policy is considered off-limits is one of the few things all of the E.U.'s Member States can agree on. If a national government can't make its own decisions on how to tax its citizens and residents, and on how to spend the proceeds, then what is it good for? That is the main reason why even today (and despite forests of populist newsprint suggesting otherwise) the E.U.'s budget still represents only a tiny part of E.U.-wide GDP.
That consensus meant that when the Euro was established at the beginning of the noughties, it included a centralised monetary authority, the European Central Bank, but not a concomitant centralised fiscal authority. The ECB could set Euro-wide interest rates, but there would be no European Revenue Authority to levy taxes.
Unfortunately, those decisions ignored history. In the Middle Ages, few people used money; or, if they did, they used various forms of money. Over time, emerging states gradually adopted a single currency. However, in doing so, they also built up fiscal authorities that could accept payment in that single currency. Monetary and fiscal institutions grew together.
The technocratic architects of the single currency knew that there was a gaping hole in its structures. However, given the political opposition of Member States to fiscal coordination at the time (the 1990's), they judged that half a loaf was better than none. Besides, at first it didn't seem to matter. The early years of the Euro took place against a background of the growth and rising prosperity of the noughties. Strong countries like Germany ended up issuing bonds with virtually the same interest rate as laggards like Greece and Portugal. Fiscal coordination remained off-limits.
That idea has been blown out of the water by the financial crisis of the past three years. People now realise that the obligations of laggards are in no way the same as the obligations of the strong. True, the means to bridge the gap are called borrowing or a European Stability Mechanism or something similar. But since all borrowing by Governments ultimately has to be paid for by some form of taxation, we are now in the world of fiscal policy.
Indeed, so great is the gap between the weak and the strong of the Euro area that it stands at a crossroads; go back to national currencies or plough ahead with ever greater fiscal coordination. And since the former would be almost impossible, the only real option is the latter. Nowhere is this change of heart more noticeable than in that most Eurosceptic of countries, the United Kingdom. In a speech given at a business conference before Friday's meeting of E.U. Finance Ministers in Poland, Chancellor George Osborne said that "my European colleagues need to accept the remorseless logic of monetary union that leads from a single currency to greater fiscal integration".
What is startling about this quote is that the U.K. is not in fact a member of the Euro, but retains its own currency, the pound. People on the wilder fringes of the Conservative Party believe that the crisis in the Euro area is a once-in-a-lifetime opportunity to redefine the country's relationship with the rest of Europe. However, Mr. Osborne is advised by the clever folk in the Treasury, who know that Britain needs the Euro to survive if it is to survive itself. To take but one fact, Britain exports more to small, wobbly, property-devastated, Euro-member Ireland than to Brazil, Russia, India and China combined.
So, the emergence of a crisis looks like leading to the very result that everybody swore that they wouldn't accept, namely greater fiscal coordination. Perhaps, therefore, I should withdraw my comment about ignoring history. Because history also shows that that is the way the E.U. has always developed. Those technocratic architects were cleverer than we thought.
Walter Blotscher
That fiscal policy is considered off-limits is one of the few things all of the E.U.'s Member States can agree on. If a national government can't make its own decisions on how to tax its citizens and residents, and on how to spend the proceeds, then what is it good for? That is the main reason why even today (and despite forests of populist newsprint suggesting otherwise) the E.U.'s budget still represents only a tiny part of E.U.-wide GDP.
That consensus meant that when the Euro was established at the beginning of the noughties, it included a centralised monetary authority, the European Central Bank, but not a concomitant centralised fiscal authority. The ECB could set Euro-wide interest rates, but there would be no European Revenue Authority to levy taxes.
Unfortunately, those decisions ignored history. In the Middle Ages, few people used money; or, if they did, they used various forms of money. Over time, emerging states gradually adopted a single currency. However, in doing so, they also built up fiscal authorities that could accept payment in that single currency. Monetary and fiscal institutions grew together.
The technocratic architects of the single currency knew that there was a gaping hole in its structures. However, given the political opposition of Member States to fiscal coordination at the time (the 1990's), they judged that half a loaf was better than none. Besides, at first it didn't seem to matter. The early years of the Euro took place against a background of the growth and rising prosperity of the noughties. Strong countries like Germany ended up issuing bonds with virtually the same interest rate as laggards like Greece and Portugal. Fiscal coordination remained off-limits.
That idea has been blown out of the water by the financial crisis of the past three years. People now realise that the obligations of laggards are in no way the same as the obligations of the strong. True, the means to bridge the gap are called borrowing or a European Stability Mechanism or something similar. But since all borrowing by Governments ultimately has to be paid for by some form of taxation, we are now in the world of fiscal policy.
Indeed, so great is the gap between the weak and the strong of the Euro area that it stands at a crossroads; go back to national currencies or plough ahead with ever greater fiscal coordination. And since the former would be almost impossible, the only real option is the latter. Nowhere is this change of heart more noticeable than in that most Eurosceptic of countries, the United Kingdom. In a speech given at a business conference before Friday's meeting of E.U. Finance Ministers in Poland, Chancellor George Osborne said that "my European colleagues need to accept the remorseless logic of monetary union that leads from a single currency to greater fiscal integration".
What is startling about this quote is that the U.K. is not in fact a member of the Euro, but retains its own currency, the pound. People on the wilder fringes of the Conservative Party believe that the crisis in the Euro area is a once-in-a-lifetime opportunity to redefine the country's relationship with the rest of Europe. However, Mr. Osborne is advised by the clever folk in the Treasury, who know that Britain needs the Euro to survive if it is to survive itself. To take but one fact, Britain exports more to small, wobbly, property-devastated, Euro-member Ireland than to Brazil, Russia, India and China combined.
So, the emergence of a crisis looks like leading to the very result that everybody swore that they wouldn't accept, namely greater fiscal coordination. Perhaps, therefore, I should withdraw my comment about ignoring history. Because history also shows that that is the way the E.U. has always developed. Those technocratic architects were cleverer than we thought.
Walter Blotscher
Friday 16 September 2011
THE DANISH GENERAL ELECTION (5)
With an impressive turnout of almost 88%, Denmark's 4.3 million voters yesterday elected a new Parliament. The bare bones of the result were that the Opposition red block beat the Government blue block by 89 to 86; and with 3 of the 4 North Atlantic seats, thereby crossed the magic 90-seat threshold for a majority in the 179-seat Folketing. Furthermore, the Social Democrats' Helle Thorning-Schmidt made history by becoming the country's first ever woman Prime Minister.
Yet the overall result masks a much more complicated picture. Within the red block, the Social Democrats, for most of the last century the "natural" party of Government, lost one seat to 44, to give them their worst electoral result for more than 100 years. And their prospective coalition partners, the Socialists, lost almost a third of their 23 seats to end up on 16. Against that background, how did the red block win? The answer lies in the rise of the two stars of the campaign, the centrist Radikale Venstre, who went from 9 to 17 seats, and the very left-wing Enhedslisten, who tripled their representation from 4 to 12. The latter in particular stole votes from the Socialists, whom many left-leaning voters considered had become Social Democrat-lite.
On the blue side, ex-Prime Minister Lars Løkke Rasmussen's Venstre, big brother in the outgoing minority Government, held up surprisingly well, and with 47 seats are the biggest party in Parliament. The problem was the catastrophic performance of little brother, the Conservatives, whose representation collapsed from 18 seats to 8, to make them the smallest party in Parliament. The Conservatives have for some years been a party in trouble, and they need a period in Opposition to work out what they stand for. One would have expected that the main beneficiary of their collapse would be the far-right Danish People's Party, the eminence grise of the last 10 years of right-of-centre minority Governments. Yet they lost 3 seats, to 22, the party's first ever reduction, suggesting that voters have had enough of relentless attacks on immigrants, and believe that Denmark's already restrictive immigration laws are restrictive enough. More importantly, the DPP has lost its position as kingmaker for the Government, since all of the four parties in the red block hate it. The real winner on the right was the Liberal Alliance, which went up from 5 seats to 9. Formed in 2007 by disgruntled centrists unhappy with the DPP's disproportionate influence, the LA spent its early years in chaos. However, under the leadership of the cerebral Anders Samuelsen (a name to watch), it has pulled itself together as a proponent of classical liberal - in the Continental sense - policies such as lower taxes and less regulation. In particular, they seem to have garnered votes from businesspeople at the coalface of trying to improve Denmark's economy (as opposed to politicians talking about it), notably the self-employed.
Putting all that together, it seems that the Danish electorate liked Lars Løkke Rasmussen, particularly on economic matters, but for various reasons were fed up with his partners in and around Government, and so turfed that Government out. However, they were not totally convinced by the details of the S/SF economic alternative on offer (during the 3-week campaign, opinion polls reduced the red block lead from 94-81 to 89-86), and so gave many of their votes to other parties in the red block at the expense of its core.
Ms. Thorning-Schmidt will now try to form a minority Government made up of the Social Democrats, Socialists and the Radikale Venstre, supported from the sidelines by Enhedslisten (the party which doesn't do leaders doesn't do Government either). But finding a programme which spans the political spectrum from Enhedslisten to Radikale Venstre will not be easy, as one issue already shows. Earlier this year, the Government, together with the DPP and the Radikale Venstre, came to an agreement about reducing the ruinous costs of the early retirement efterløn programme, and raising the state pension age. That agreement has not yet been enacted; but the combination of parties supporting it has in fact a majority in the Folketing and can enact it, notwithstanding opposition from the rest of the red block (unlike in some other countries, Danish political agreements in one Parliament carry on into the next, if the numbers are there). This means that a new S/SF Government, with or without the Radikale Venstre, could start life by finding itself being defeated on a key economic reform, opposition to which was a major plank of their election campaign. It would be great to be a fly on the wall in the Government negotiations over the next few days between S/SF and the Radikale Venstre.
All of which explains why Mr. Rasmussen was looking surprisingly bubbly last night. He may have lost the premiership; but he still leads the biggest party, and will be able to enact his treasured flagship economic reform despite not being in office. Meanwhile, he can look across at the former Opposition, and watch Ms. Thorning-Schmidt struggle to keep an unwieldy 4-party coalition in line, against a backdrop of potentially dreadful economic and financial news. No wonder he said on election night that Ms. Thorning-Schmidt only had the keys to the Prime Minister's office "on loan".
Ms. Thorning-Schmidt may have become Denmark's first woman Prime Minister, but it will not be easy. In particular, if she is now queen, it is Margrethe Vestager, leader of the Radikale Venstre, who now sits firmly in the queenmaker's chair.
Walter Blotscher
With an impressive turnout of almost 88%, Denmark's 4.3 million voters yesterday elected a new Parliament. The bare bones of the result were that the Opposition red block beat the Government blue block by 89 to 86; and with 3 of the 4 North Atlantic seats, thereby crossed the magic 90-seat threshold for a majority in the 179-seat Folketing. Furthermore, the Social Democrats' Helle Thorning-Schmidt made history by becoming the country's first ever woman Prime Minister.
Yet the overall result masks a much more complicated picture. Within the red block, the Social Democrats, for most of the last century the "natural" party of Government, lost one seat to 44, to give them their worst electoral result for more than 100 years. And their prospective coalition partners, the Socialists, lost almost a third of their 23 seats to end up on 16. Against that background, how did the red block win? The answer lies in the rise of the two stars of the campaign, the centrist Radikale Venstre, who went from 9 to 17 seats, and the very left-wing Enhedslisten, who tripled their representation from 4 to 12. The latter in particular stole votes from the Socialists, whom many left-leaning voters considered had become Social Democrat-lite.
On the blue side, ex-Prime Minister Lars Løkke Rasmussen's Venstre, big brother in the outgoing minority Government, held up surprisingly well, and with 47 seats are the biggest party in Parliament. The problem was the catastrophic performance of little brother, the Conservatives, whose representation collapsed from 18 seats to 8, to make them the smallest party in Parliament. The Conservatives have for some years been a party in trouble, and they need a period in Opposition to work out what they stand for. One would have expected that the main beneficiary of their collapse would be the far-right Danish People's Party, the eminence grise of the last 10 years of right-of-centre minority Governments. Yet they lost 3 seats, to 22, the party's first ever reduction, suggesting that voters have had enough of relentless attacks on immigrants, and believe that Denmark's already restrictive immigration laws are restrictive enough. More importantly, the DPP has lost its position as kingmaker for the Government, since all of the four parties in the red block hate it. The real winner on the right was the Liberal Alliance, which went up from 5 seats to 9. Formed in 2007 by disgruntled centrists unhappy with the DPP's disproportionate influence, the LA spent its early years in chaos. However, under the leadership of the cerebral Anders Samuelsen (a name to watch), it has pulled itself together as a proponent of classical liberal - in the Continental sense - policies such as lower taxes and less regulation. In particular, they seem to have garnered votes from businesspeople at the coalface of trying to improve Denmark's economy (as opposed to politicians talking about it), notably the self-employed.
Putting all that together, it seems that the Danish electorate liked Lars Løkke Rasmussen, particularly on economic matters, but for various reasons were fed up with his partners in and around Government, and so turfed that Government out. However, they were not totally convinced by the details of the S/SF economic alternative on offer (during the 3-week campaign, opinion polls reduced the red block lead from 94-81 to 89-86), and so gave many of their votes to other parties in the red block at the expense of its core.
Ms. Thorning-Schmidt will now try to form a minority Government made up of the Social Democrats, Socialists and the Radikale Venstre, supported from the sidelines by Enhedslisten (the party which doesn't do leaders doesn't do Government either). But finding a programme which spans the political spectrum from Enhedslisten to Radikale Venstre will not be easy, as one issue already shows. Earlier this year, the Government, together with the DPP and the Radikale Venstre, came to an agreement about reducing the ruinous costs of the early retirement efterløn programme, and raising the state pension age. That agreement has not yet been enacted; but the combination of parties supporting it has in fact a majority in the Folketing and can enact it, notwithstanding opposition from the rest of the red block (unlike in some other countries, Danish political agreements in one Parliament carry on into the next, if the numbers are there). This means that a new S/SF Government, with or without the Radikale Venstre, could start life by finding itself being defeated on a key economic reform, opposition to which was a major plank of their election campaign. It would be great to be a fly on the wall in the Government negotiations over the next few days between S/SF and the Radikale Venstre.
All of which explains why Mr. Rasmussen was looking surprisingly bubbly last night. He may have lost the premiership; but he still leads the biggest party, and will be able to enact his treasured flagship economic reform despite not being in office. Meanwhile, he can look across at the former Opposition, and watch Ms. Thorning-Schmidt struggle to keep an unwieldy 4-party coalition in line, against a backdrop of potentially dreadful economic and financial news. No wonder he said on election night that Ms. Thorning-Schmidt only had the keys to the Prime Minister's office "on loan".
Ms. Thorning-Schmidt may have become Denmark's first woman Prime Minister, but it will not be easy. In particular, if she is now queen, it is Margrethe Vestager, leader of the Radikale Venstre, who now sits firmly in the queenmaker's chair.
Walter Blotscher
Thursday 15 September 2011
ROSA MORENA
Rosa Morena, the film I showed this evening as the projectionist at the local cinema, is very much a modern story. Thomas, a middle-aged and wealthy Danish homosexual, wishes to adopt a child; but finds it almost impossible since he is gay, male and single. While visiting his friend in Brazil, he learns that there is an illegal market for buying children born in the slums. He quickly finds a potential baby, since Maria is poor, already has two children and doesn't know the father of the one she is expecting. The film charts the trials and tribulations of Thomas' quest, his relationship with Maria, and the conflict between money and parental love.
It's a low-key film, which doesn't make judgements. But the real winner is Sao Paolo, the city where it was shot on location. It teems with people, slums, rubbish, poverty and - above all - life.
Walter Blotscher
Rosa Morena, the film I showed this evening as the projectionist at the local cinema, is very much a modern story. Thomas, a middle-aged and wealthy Danish homosexual, wishes to adopt a child; but finds it almost impossible since he is gay, male and single. While visiting his friend in Brazil, he learns that there is an illegal market for buying children born in the slums. He quickly finds a potential baby, since Maria is poor, already has two children and doesn't know the father of the one she is expecting. The film charts the trials and tribulations of Thomas' quest, his relationship with Maria, and the conflict between money and parental love.
It's a low-key film, which doesn't make judgements. But the real winner is Sao Paolo, the city where it was shot on location. It teems with people, slums, rubbish, poverty and - above all - life.
Walter Blotscher
Tuesday 13 September 2011
BANKING REFORM
Yesterday came the publication of the report of the U.K.'s Independent Commission on Banking, headed by Sir John Vickers, a former chief economist at the Bank of England. Although there is lots of other stuff in there, the main proposal is that U.K. banks ring-fence their retail operations (deposit-taking and lending) from their investment banking operations.
It is a measure of how wacky the world of finance became in the noughties that this is widely seen as a very radical proposal. But in many ways it is blindingly obvious. The banking system exists to provide payment mechanisms, and to channel savings (in the form of deposits) into investment (in the form of loans to consumers and businesses). It is - or should be - inherently conservative, since banks have to deal with the fundamental problem that deposits can be (and are) withdrawn on demand, whereas loans cannot be realised so quickly.
Investment banking, on the other hand, doesn't really have anything to do with banking. Its three main elements are consultancy (in the form of advice on mergers and acquisitions, and other forms of finance); broking (in the form of helping companies access the long-term capital markets); and trading (not order-driven trading by their customers, but trading for their own account). The common feature of these activities is that they are not inherently conservative, but very risky. Either risky in terms of obtaining business (companies don't choose to buy another company or issue a Eurobond every day), or in terms of execution (prices can go up or down).
They are however much more exciting than boring traditional banking, particularly if one is working in London and dealing with companies with world-wide operations. Which would you rather do; advise General Electric on a major acquisition and get paid a fortune, or provide an overdraft to a 5-man garage in Sunderland and get a modest salary? Horses for courses, you might say. The problem is that during the noughties, more and more of British banks' capital was being used in the investment banking part of their businesses, with two adverse consequences. With the exception of commercial property, which was viewed as sexy, it was difficult for British companies to get credit (a problem heard a lot today, but one which in fact existed before the financial crisis); and the risk profile of the individual bank got higher and higher. When the crisis struck, it caused massive problems. As my 85-year old mother succinctly pointed out, Lloyds Bank used to be rather a good business until it lost its head and decided after a drinks party at Number 10 that it ought to go and buy HBOS.
Vickers is in effect recommending that the U.K. unwind this nonsense and go back to the time when banking and investment banking were very different and separate things. Not by decree (as the U.S. Glass-Steagal Act did); but through the allocation of capital. In other words, it's OK if you want to do risky things, but those risky things require additional capital requirements, and they should not be allowed to impinge on ordinary banking business.
So far, so good; sorting out structures is a good start. But it is only a start, because it leaves the problem that the flipside of London's world-beating position in international finance is its neglect of its domestic economy. This is not a new problem; there were commissions in both the 1930's and the 1970's to try to address it. Despite that, it remains the case that it is very difficult to change bank in the U.K., it is almost impossible to get a 30-year fixed rate mortgage, current accounts have charges and pay no interest, it is difficult to talk to a human in a bank branch, and many payments are still made by paper cheque rather than electronic transfer. All of these things are different in Denmark, even in my rural bank with seven branches. But that is because my local bank manager is not trying to be a Master of the Universe. Until that changes, U.K. bank reform will remain an uncompleted project.
Walter Blotscher
Yesterday came the publication of the report of the U.K.'s Independent Commission on Banking, headed by Sir John Vickers, a former chief economist at the Bank of England. Although there is lots of other stuff in there, the main proposal is that U.K. banks ring-fence their retail operations (deposit-taking and lending) from their investment banking operations.
It is a measure of how wacky the world of finance became in the noughties that this is widely seen as a very radical proposal. But in many ways it is blindingly obvious. The banking system exists to provide payment mechanisms, and to channel savings (in the form of deposits) into investment (in the form of loans to consumers and businesses). It is - or should be - inherently conservative, since banks have to deal with the fundamental problem that deposits can be (and are) withdrawn on demand, whereas loans cannot be realised so quickly.
Investment banking, on the other hand, doesn't really have anything to do with banking. Its three main elements are consultancy (in the form of advice on mergers and acquisitions, and other forms of finance); broking (in the form of helping companies access the long-term capital markets); and trading (not order-driven trading by their customers, but trading for their own account). The common feature of these activities is that they are not inherently conservative, but very risky. Either risky in terms of obtaining business (companies don't choose to buy another company or issue a Eurobond every day), or in terms of execution (prices can go up or down).
They are however much more exciting than boring traditional banking, particularly if one is working in London and dealing with companies with world-wide operations. Which would you rather do; advise General Electric on a major acquisition and get paid a fortune, or provide an overdraft to a 5-man garage in Sunderland and get a modest salary? Horses for courses, you might say. The problem is that during the noughties, more and more of British banks' capital was being used in the investment banking part of their businesses, with two adverse consequences. With the exception of commercial property, which was viewed as sexy, it was difficult for British companies to get credit (a problem heard a lot today, but one which in fact existed before the financial crisis); and the risk profile of the individual bank got higher and higher. When the crisis struck, it caused massive problems. As my 85-year old mother succinctly pointed out, Lloyds Bank used to be rather a good business until it lost its head and decided after a drinks party at Number 10 that it ought to go and buy HBOS.
Vickers is in effect recommending that the U.K. unwind this nonsense and go back to the time when banking and investment banking were very different and separate things. Not by decree (as the U.S. Glass-Steagal Act did); but through the allocation of capital. In other words, it's OK if you want to do risky things, but those risky things require additional capital requirements, and they should not be allowed to impinge on ordinary banking business.
So far, so good; sorting out structures is a good start. But it is only a start, because it leaves the problem that the flipside of London's world-beating position in international finance is its neglect of its domestic economy. This is not a new problem; there were commissions in both the 1930's and the 1970's to try to address it. Despite that, it remains the case that it is very difficult to change bank in the U.K., it is almost impossible to get a 30-year fixed rate mortgage, current accounts have charges and pay no interest, it is difficult to talk to a human in a bank branch, and many payments are still made by paper cheque rather than electronic transfer. All of these things are different in Denmark, even in my rural bank with seven branches. But that is because my local bank manager is not trying to be a Master of the Universe. Until that changes, U.K. bank reform will remain an uncompleted project.
Walter Blotscher
Monday 12 September 2011
THE U.S. OPEN
In a pulsating final held this evening following rain delays last week, Novak Djokovic beat Rafael Nadal in four sets to win his first U.S. Open title. In doing so, he cemented his position as the world number one, and extended his incredible 2011 match record to 64-2. He now holds three of the four Grand Slam titles; only a semi-final defeat in Paris ruined his chances of winning all four.
The final was a repeat of last year's, when Nadal won his tenth Grand Slam title to complete a full house. However, something has happened to Djokovic's game since then, as his record this year demonstrates. Although Nadal ran and ran, made some incredible gets and played some incredible shots, Djokovic always looked the more likely winner; he was the aggressor, Nadal the defender.
Having said that, it was still a close-run thing. Last year, Djokovic had to save two match points in the semi-final against Roger Federer before coming through. In an epic repeat semi-final, which went to five sets, exactly the same thing happened, with Federer serving for the match at 5-3, 40-15. Djokovic saved the first with a service return which hit the line, and the second when a Federer forehand hit the net tape and bobbled back. When Federer went on to double fault and lose the game, the air seemed to go out of the balloon, and Djokovic went on to win it 7-5.
If the rise of Djokovic has been predictable, the revival of Federer has not. Now 30, the 16-time Grand Slam champion (to put it in perspective, Djokovic still only has four) was widely considered to be over the hill. Yet he demonstrated that he can still play with the best in the world, and was within a point of beating the world number one; indeed, it was Federer who ended Djokovic's unbeaten run in Paris. With his simple style, which minimises physical wear and tear, Federer could easily play for two or three more years, and it would not surprise me if he won yet another Grand Slam title before he retires.
On the women's side, things were more predictable. Caroline Wozniacki yet again failed to live up to both over-inflated Danish expectations and her world number one ranking, while Serena Williams, coming back from a life-threatening illness, powered her way through the draw, demolishing Wozniacki in the semi-finals. However, in a final where she was the overwhelming favourite, Williams was surgically unpicked by Australian Samantha Stosur, one of the few women on tour who can match Williams' power. Stosur won 6-2, 6-3 to win, at the relatively advanced age of 27, her first ever Grand Slam title.
Walter Blotscher
In a pulsating final held this evening following rain delays last week, Novak Djokovic beat Rafael Nadal in four sets to win his first U.S. Open title. In doing so, he cemented his position as the world number one, and extended his incredible 2011 match record to 64-2. He now holds three of the four Grand Slam titles; only a semi-final defeat in Paris ruined his chances of winning all four.
The final was a repeat of last year's, when Nadal won his tenth Grand Slam title to complete a full house. However, something has happened to Djokovic's game since then, as his record this year demonstrates. Although Nadal ran and ran, made some incredible gets and played some incredible shots, Djokovic always looked the more likely winner; he was the aggressor, Nadal the defender.
Having said that, it was still a close-run thing. Last year, Djokovic had to save two match points in the semi-final against Roger Federer before coming through. In an epic repeat semi-final, which went to five sets, exactly the same thing happened, with Federer serving for the match at 5-3, 40-15. Djokovic saved the first with a service return which hit the line, and the second when a Federer forehand hit the net tape and bobbled back. When Federer went on to double fault and lose the game, the air seemed to go out of the balloon, and Djokovic went on to win it 7-5.
If the rise of Djokovic has been predictable, the revival of Federer has not. Now 30, the 16-time Grand Slam champion (to put it in perspective, Djokovic still only has four) was widely considered to be over the hill. Yet he demonstrated that he can still play with the best in the world, and was within a point of beating the world number one; indeed, it was Federer who ended Djokovic's unbeaten run in Paris. With his simple style, which minimises physical wear and tear, Federer could easily play for two or three more years, and it would not surprise me if he won yet another Grand Slam title before he retires.
On the women's side, things were more predictable. Caroline Wozniacki yet again failed to live up to both over-inflated Danish expectations and her world number one ranking, while Serena Williams, coming back from a life-threatening illness, powered her way through the draw, demolishing Wozniacki in the semi-finals. However, in a final where she was the overwhelming favourite, Williams was surgically unpicked by Australian Samantha Stosur, one of the few women on tour who can match Williams' power. Stosur won 6-2, 6-3 to win, at the relatively advanced age of 27, her first ever Grand Slam title.
Walter Blotscher
Sunday 11 September 2011
LA VUELTA A ESPAÑA
La Vuelta (the Tour of Spain) has always been seen as baby brother in relation to the other two three-week Grand Tours, the Giro d'Italia and the Tour de France. In part, this was due to Spanish isolation during the Franco era; but it was also because it took place during the Spring, thereby clashing with the Spring Classics in Belgium and the Giro in May. However, since its switch in 1995 to an August slot, it has grown in importance, with many riders using it to build up form ahead of the end-of-season World Championships (to be held in Copenhagen this year).
La Vuelta is characterised by hot weather and brutal climbs, and this year's edition was no different. Going into the second weekend, there were five riders within 20 seconds of the lead, and 20 within 3 minutes, easy to lose on a bad day in the mountains. Leading the pack was Britain's Bradley Wiggins, a former track star who has successfully made the switch to road racing. However, it all went wrong on last Sunday's finishing climb up the Angliru, just south of Oviedo. This is one of the steepest road climbs in Europe, with the last 6.5 kms averaging 13%. A couple of kilometers before the top, there is a patch where it ramps up to an average of 20%, and in some places almost 24%. Wiggins' bicycle almost stopped moving at this point, and he lost the leader's red jersey to the stage winner, journeyman Juan Jose Cobo of the Geox team. Wiggins' Sky team piled on the pressure in the final week in order to claw back the time, but Cobo hung on to win today in Madrid.
Team tactics undoubtedly played a part in Cobo's victory. The winning margin after 3,300 kms of racing was a mere 13 seconds; but not to Wiggins (who lost more than a minute and a half), but to Wiggins' Sky teammate Chris Froome. Froome, the revelation of the race, was undoubtedly the strongest man on the Sky team. But Wiggins was the designated team leader, and Froome on a number of occasions dropped back on the climbs in order to help him. Only when it was clear on the Angliru that Wiggins wasn't moving was Froome allowed to go on ahead. If he had been allowed to do so earlier, then he might well have won the race.
This was in stark contrast to Geox. The new Spanish second division team was formed around former Giro, and two-time Vuelta, winner Dennis Menchov, and former Tour de France winner Carlos Sastre. After failing to get a wildcard invitation to this year's Tour, they banked everything on a good performance at the Vuelta. However, both Menchov and Sastre are past their best, and it was clear early on that Cobo was doing much better when the road began to go upwards. By backing the in-form rider, even if it meant ditching the overall aspirations of the team's stars, Geox secured a memorable triumph in their first year of operations.
That's it for the big stage races for this year. Just the World Championships and the Autumn Classics before the cycling season ends. Plus my training rides, of course.
Walter Blotscher
La Vuelta (the Tour of Spain) has always been seen as baby brother in relation to the other two three-week Grand Tours, the Giro d'Italia and the Tour de France. In part, this was due to Spanish isolation during the Franco era; but it was also because it took place during the Spring, thereby clashing with the Spring Classics in Belgium and the Giro in May. However, since its switch in 1995 to an August slot, it has grown in importance, with many riders using it to build up form ahead of the end-of-season World Championships (to be held in Copenhagen this year).
La Vuelta is characterised by hot weather and brutal climbs, and this year's edition was no different. Going into the second weekend, there were five riders within 20 seconds of the lead, and 20 within 3 minutes, easy to lose on a bad day in the mountains. Leading the pack was Britain's Bradley Wiggins, a former track star who has successfully made the switch to road racing. However, it all went wrong on last Sunday's finishing climb up the Angliru, just south of Oviedo. This is one of the steepest road climbs in Europe, with the last 6.5 kms averaging 13%. A couple of kilometers before the top, there is a patch where it ramps up to an average of 20%, and in some places almost 24%. Wiggins' bicycle almost stopped moving at this point, and he lost the leader's red jersey to the stage winner, journeyman Juan Jose Cobo of the Geox team. Wiggins' Sky team piled on the pressure in the final week in order to claw back the time, but Cobo hung on to win today in Madrid.
Team tactics undoubtedly played a part in Cobo's victory. The winning margin after 3,300 kms of racing was a mere 13 seconds; but not to Wiggins (who lost more than a minute and a half), but to Wiggins' Sky teammate Chris Froome. Froome, the revelation of the race, was undoubtedly the strongest man on the Sky team. But Wiggins was the designated team leader, and Froome on a number of occasions dropped back on the climbs in order to help him. Only when it was clear on the Angliru that Wiggins wasn't moving was Froome allowed to go on ahead. If he had been allowed to do so earlier, then he might well have won the race.
This was in stark contrast to Geox. The new Spanish second division team was formed around former Giro, and two-time Vuelta, winner Dennis Menchov, and former Tour de France winner Carlos Sastre. After failing to get a wildcard invitation to this year's Tour, they banked everything on a good performance at the Vuelta. However, both Menchov and Sastre are past their best, and it was clear early on that Cobo was doing much better when the road began to go upwards. By backing the in-form rider, even if it meant ditching the overall aspirations of the team's stars, Geox secured a memorable triumph in their first year of operations.
That's it for the big stage races for this year. Just the World Championships and the Autumn Classics before the cycling season ends. Plus my training rides, of course.
Walter Blotscher
Saturday 10 September 2011
THE ZANZIBAR FERRY DISASTER
An overloaded ferry has capsized off Zanzibar. Having lived in Tanzania for eight years, I have to say that I am not surprised.
There is a chronic shortage of transport in Africa, whether ships, planes, railways, buses or lorries. That means that virtually everything is overloaded with goods and people. Furthermore, the equipment tends to be in extremely poor condition (it is worth noting that there is no word for "maintenance" in swahili, the local language). That combination makes African roads and sealanes a disaster waiting to happen.
When I lived in Tanzania in the 1990's, a ferry capsized on Lake Victoria, just off Mwanza. It was overloaded with people coming from Bukoba and vast quantities of heavy bananas (plantains) destined for the Mwanza market. It was so overcrowded, that when it stopped off at a second port, people refused to board. The ship's manifest said that there were 443 on the ferry; but it is estimated that more than 800 people died. Nothing much seems to have changed since then. In July and August this year alone, there have been at least three capsizings on the lake, the last costing 17 children their lives.
The Zanzibar disaster seems to have followed exactly the same pattern. The ferry was heavily overloaded with both people and goods purchased in the commercial capital Dar es Salaam as part of the festivities to mark the end of Ramadan. Registered to carry 600 passengers, there were at least 200 more on board. Indeed, there were so many that some people refused to get on in Dar because the boat was tilting. The sea was not particularly rough; but when the engine failed, the ship was defenceless against all that weight.
One slightly surprising fact was the relatively large number of survivors, 620 or so. Many Africans don't learn to swim, so if a boat capsizes, they drown. It would appear that in this case, many of the goods (eg fridges and mattresses) could float, and people were able to hang onto them until they were rescued.
There will of course be an investigation, and fingers may even be pointed. But it won't change much. There will be another, similar, disaster in Tanzania before long.
Walter Blotscher
An overloaded ferry has capsized off Zanzibar. Having lived in Tanzania for eight years, I have to say that I am not surprised.
There is a chronic shortage of transport in Africa, whether ships, planes, railways, buses or lorries. That means that virtually everything is overloaded with goods and people. Furthermore, the equipment tends to be in extremely poor condition (it is worth noting that there is no word for "maintenance" in swahili, the local language). That combination makes African roads and sealanes a disaster waiting to happen.
When I lived in Tanzania in the 1990's, a ferry capsized on Lake Victoria, just off Mwanza. It was overloaded with people coming from Bukoba and vast quantities of heavy bananas (plantains) destined for the Mwanza market. It was so overcrowded, that when it stopped off at a second port, people refused to board. The ship's manifest said that there were 443 on the ferry; but it is estimated that more than 800 people died. Nothing much seems to have changed since then. In July and August this year alone, there have been at least three capsizings on the lake, the last costing 17 children their lives.
The Zanzibar disaster seems to have followed exactly the same pattern. The ferry was heavily overloaded with both people and goods purchased in the commercial capital Dar es Salaam as part of the festivities to mark the end of Ramadan. Registered to carry 600 passengers, there were at least 200 more on board. Indeed, there were so many that some people refused to get on in Dar because the boat was tilting. The sea was not particularly rough; but when the engine failed, the ship was defenceless against all that weight.
One slightly surprising fact was the relatively large number of survivors, 620 or so. Many Africans don't learn to swim, so if a boat capsizes, they drown. It would appear that in this case, many of the goods (eg fridges and mattresses) could float, and people were able to hang onto them until they were rescued.
There will of course be an investigation, and fingers may even be pointed. But it won't change much. There will be another, similar, disaster in Tanzania before long.
Walter Blotscher
Friday 9 September 2011
FREE SCHOOLS
Free schools are all the rage at the moment in England. The Department for Education received 323 applications, and 24 will start the new academic year this month. Free schools are touted as a Swedish idea, but they also exist here in Denmark. What exactly are they?
Free in Denmark does not mean "without cost", but "without restrictions". Although they have to adhere to national curriculum standards, they do not have to adhere to other educational rules. They can, for instance, employ people as teachers who have not been to teacher training college. In general (and unusually in Denmark), they charge fees; but these fees are heavily subsidised by the state. There is no rule against their making a profit, but the profits are generally ploughed back into the school rather than being distributed to shareholders or similar.
That is because of the two most common situations for establishing a free school. The first is in rural areas, where the school would otherwise have to close or merge because of a lack of pupils. A couple of free schools have sprung up in the local area where I live for exactly that reason. Small numbers are not a problem, since classes can be merged (eg a first, second and third year class are run together). What matters most to parents is the opportunity to send their children - particularly younger children - to a local school that they can walk or bicycle to. The second situation is in large inner city areas, where are there lots of immigrants. Here, the driving force appears to be a concern for parents that a large proportion of their children's classmates don't speak Danish properly.
In contrast, the prime motivation for free schools in England seems to be the ability to avoid local authority control, since funding will come direct from Central Government. LEA's have long been viewed by the Conservatives as the root of most of the problems with the state education sector; and free schools are seen as the thin end of a thickening wedge that will eventually break meddling LEA control for good.
It is here that the wholesale importation of the Scandinavian model breaks down, in my view. Most people in Denmark are perfectly happy sending their child to the local, kommune-controlled school. Only a minority, for whatever reason, are not, so free schools will never come to dominate. In England, on the other hand, many parents are not happy with state education. Expensive independent schools are a solution for families with means, but are not open to the majority. Free schools will increase the proportion of pupils who are not subject to LEA control, but will not do anything for those who are. Making the system better for the large majority will never be easy in a country which is highly centralised and gives very few powers to local authorities. Free schools will not change this, however much the Government says otherwise.
Walter Blotscher
Free schools are all the rage at the moment in England. The Department for Education received 323 applications, and 24 will start the new academic year this month. Free schools are touted as a Swedish idea, but they also exist here in Denmark. What exactly are they?
Free in Denmark does not mean "without cost", but "without restrictions". Although they have to adhere to national curriculum standards, they do not have to adhere to other educational rules. They can, for instance, employ people as teachers who have not been to teacher training college. In general (and unusually in Denmark), they charge fees; but these fees are heavily subsidised by the state. There is no rule against their making a profit, but the profits are generally ploughed back into the school rather than being distributed to shareholders or similar.
That is because of the two most common situations for establishing a free school. The first is in rural areas, where the school would otherwise have to close or merge because of a lack of pupils. A couple of free schools have sprung up in the local area where I live for exactly that reason. Small numbers are not a problem, since classes can be merged (eg a first, second and third year class are run together). What matters most to parents is the opportunity to send their children - particularly younger children - to a local school that they can walk or bicycle to. The second situation is in large inner city areas, where are there lots of immigrants. Here, the driving force appears to be a concern for parents that a large proportion of their children's classmates don't speak Danish properly.
In contrast, the prime motivation for free schools in England seems to be the ability to avoid local authority control, since funding will come direct from Central Government. LEA's have long been viewed by the Conservatives as the root of most of the problems with the state education sector; and free schools are seen as the thin end of a thickening wedge that will eventually break meddling LEA control for good.
It is here that the wholesale importation of the Scandinavian model breaks down, in my view. Most people in Denmark are perfectly happy sending their child to the local, kommune-controlled school. Only a minority, for whatever reason, are not, so free schools will never come to dominate. In England, on the other hand, many parents are not happy with state education. Expensive independent schools are a solution for families with means, but are not open to the majority. Free schools will increase the proportion of pupils who are not subject to LEA control, but will not do anything for those who are. Making the system better for the large majority will never be easy in a country which is highly centralised and gives very few powers to local authorities. Free schools will not change this, however much the Government says otherwise.
Walter Blotscher
Thursday 8 September 2011
THE GERMAN CONSTITUTIONAL COURT
Constitutional judges take themselves seriously. Governments may come and go, but the judges (or, at least, their decisions) do not bend to the political winds. Many of them (eg those of the U.S. Supreme Court) are appointed for life, and literally die in office.
The German Constitutional Court, based in Karlsruhe, is of this ilk. Germany's post-war society (and, many would say, its economic success) is founded on its Grundgesetz or Basic Law, and the court is its diligent guardian. In no area is this demonstrated more clearly than in Germany's dealings with the E.U., of which Germany is a founder member and the main locomotive. The European Court of Justice has always claimed that E.U. law takes precedence over national law (not least on the grounds that anything less would lead to possible inconsistencies across Member States), but this can give problems for national constitutional courts. In its famous "Solange" (as long as) decisions, the GCC accepted the primacy of E.U. law only "as long as" the E.U. upheld the fundamental principles enshrined in the Basic Law. A cop-out, fumed Eurosceptics; a nuanced judgment, that took account of political realities, in the view of Europhiles.
The GCC had recently been asked to rule on another crucial E.U. issue, namely whether the bail-outs of Euro-zone countries are legal (in German terms). Yesterday, the judges gave their answer. Yes, they are; but only if the Budget Committee of the German Bundestag gives its approval in advance, thereby preserving Parliament's right to control the spending of taxpayers' money. The positive decision was widely expected, but the Solange-type twist in the tail was not. Indeed, it may cause problems in practice. Financial bail-outs, almost by definition, have to be arranged in a hurry, often over a weekend before the markets open on Monday morning. If Chancellor Angela Merkel has to get a committee's approval on Friday evening before flying off to Brussels to bargain with her fellow Heads of Government, then Europe-wide financial policy may well end up hostage to the petty domestic considerations of one or two national legislators. Speedy decision-making could well go out the window.
One way out of that dilemna would be to get on with integrating fiscal policy amongst Member States, so that the E.U. could issue Eurobonds backed jointly and severally by all Member States. Not surprisingly, some of the weaker members rather like that idea, but again not surprisingly, Germany (including Ms. Merkel) does not. However, that issue is unlikely to crop up in the near future, since the GCC also said that there could be no deal, which involved a pooling of national debts. This has been interpreted as ruling out such Eurobonds.
The E.U. has survived a major test of its proposed route out of the financial black hole it currently sits in. But there is still a long way to go. And the GCC will be peering over its shoulder as it moves forward.
Walter Blotscher
Constitutional judges take themselves seriously. Governments may come and go, but the judges (or, at least, their decisions) do not bend to the political winds. Many of them (eg those of the U.S. Supreme Court) are appointed for life, and literally die in office.
The German Constitutional Court, based in Karlsruhe, is of this ilk. Germany's post-war society (and, many would say, its economic success) is founded on its Grundgesetz or Basic Law, and the court is its diligent guardian. In no area is this demonstrated more clearly than in Germany's dealings with the E.U., of which Germany is a founder member and the main locomotive. The European Court of Justice has always claimed that E.U. law takes precedence over national law (not least on the grounds that anything less would lead to possible inconsistencies across Member States), but this can give problems for national constitutional courts. In its famous "Solange" (as long as) decisions, the GCC accepted the primacy of E.U. law only "as long as" the E.U. upheld the fundamental principles enshrined in the Basic Law. A cop-out, fumed Eurosceptics; a nuanced judgment, that took account of political realities, in the view of Europhiles.
The GCC had recently been asked to rule on another crucial E.U. issue, namely whether the bail-outs of Euro-zone countries are legal (in German terms). Yesterday, the judges gave their answer. Yes, they are; but only if the Budget Committee of the German Bundestag gives its approval in advance, thereby preserving Parliament's right to control the spending of taxpayers' money. The positive decision was widely expected, but the Solange-type twist in the tail was not. Indeed, it may cause problems in practice. Financial bail-outs, almost by definition, have to be arranged in a hurry, often over a weekend before the markets open on Monday morning. If Chancellor Angela Merkel has to get a committee's approval on Friday evening before flying off to Brussels to bargain with her fellow Heads of Government, then Europe-wide financial policy may well end up hostage to the petty domestic considerations of one or two national legislators. Speedy decision-making could well go out the window.
One way out of that dilemna would be to get on with integrating fiscal policy amongst Member States, so that the E.U. could issue Eurobonds backed jointly and severally by all Member States. Not surprisingly, some of the weaker members rather like that idea, but again not surprisingly, Germany (including Ms. Merkel) does not. However, that issue is unlikely to crop up in the near future, since the GCC also said that there could be no deal, which involved a pooling of national debts. This has been interpreted as ruling out such Eurobonds.
The E.U. has survived a major test of its proposed route out of the financial black hole it currently sits in. But there is still a long way to go. And the GCC will be peering over its shoulder as it moves forward.
Walter Blotscher
Wednesday 7 September 2011
THE DANISH GENERAL ELECTION (4)
TV2 have a website, where you can test your political views against those of politicians currently trying to get elected. You answer 20 questions on (eg) whether Denmark should join the euro, whether citizens should pay for minor healthcare etc etc. The programme then tells you which politicians are most like you.
I was pleased to discover that two of the three politicians most like me are from the Radikale Venstre, the centrist party led by Margrethe Vestager. I am pleased because I have always thought of myself as politically pragmatic, rather than markedly left-wing or right-wing; and because although I can't vote in this general election, I have always said that I would vote for Ms. Vestager and her party, if I could.
Walter Blotscher
TV2 have a website, where you can test your political views against those of politicians currently trying to get elected. You answer 20 questions on (eg) whether Denmark should join the euro, whether citizens should pay for minor healthcare etc etc. The programme then tells you which politicians are most like you.
I was pleased to discover that two of the three politicians most like me are from the Radikale Venstre, the centrist party led by Margrethe Vestager. I am pleased because I have always thought of myself as politically pragmatic, rather than markedly left-wing or right-wing; and because although I can't vote in this general election, I have always said that I would vote for Ms. Vestager and her party, if I could.
Walter Blotscher
Monday 5 September 2011
PRESIDENTIAL TRIALS
Two Presidential trials got going again today. In Paris, former President Jacques Chirac is accused of paying members of his political party for non-existent municipal jobs when he was mayor of the city before he became president. The accusations have been around for a long time, but Mr. Chirac claimed immunity from prosecution while in the Presidential office from 1995 to 2007. Meanwhile, in Cairo former President Hosni Mubarak is accused of ordering the killing of protesters during the demonstrations earlier this year that ultimately forced his resignation.
What is interesting about these processes is that - whatever the merits of the respective cases against them - both men may escape a full trial because of their health. Mr. Chirac has produced medical testimony saying that he is losing his memory, and can't remember the events in question. While Mr. Mubarak has such serious health problems that in earlier sessions, he was brought into court on a hospital bed.
This seems to be the norm when it is a matter of heads of state. Immunity from prosecution, statutes of limitations, the difficulties of obtaining evidence, and the sheer power of obstruction available to a sitting President all combine to make it virtually impossible to bring one to trial. Bill Clinton was an exception; but that prosecution got nowhere, and, if anything, brought the impeachment process into disrepute.
Against that background, the ex-Prime Minister of Iceland, Geir Haarde, must feel a little bit hard done by. Mr. Haarde is no longer in office; but he is a sprightly 60-year old and in rude good health. He was also on trial today, for "failures of ministerial responsibility" (he was PM when Iceland's economy collapsed in 2008). Although he, like the others, has denied the charges, he must be wishing that the Icelandic judicial system wasn't quite so efficient.
Walter Blotscher
Two Presidential trials got going again today. In Paris, former President Jacques Chirac is accused of paying members of his political party for non-existent municipal jobs when he was mayor of the city before he became president. The accusations have been around for a long time, but Mr. Chirac claimed immunity from prosecution while in the Presidential office from 1995 to 2007. Meanwhile, in Cairo former President Hosni Mubarak is accused of ordering the killing of protesters during the demonstrations earlier this year that ultimately forced his resignation.
What is interesting about these processes is that - whatever the merits of the respective cases against them - both men may escape a full trial because of their health. Mr. Chirac has produced medical testimony saying that he is losing his memory, and can't remember the events in question. While Mr. Mubarak has such serious health problems that in earlier sessions, he was brought into court on a hospital bed.
This seems to be the norm when it is a matter of heads of state. Immunity from prosecution, statutes of limitations, the difficulties of obtaining evidence, and the sheer power of obstruction available to a sitting President all combine to make it virtually impossible to bring one to trial. Bill Clinton was an exception; but that prosecution got nowhere, and, if anything, brought the impeachment process into disrepute.
Against that background, the ex-Prime Minister of Iceland, Geir Haarde, must feel a little bit hard done by. Mr. Haarde is no longer in office; but he is a sprightly 60-year old and in rude good health. He was also on trial today, for "failures of ministerial responsibility" (he was PM when Iceland's economy collapsed in 2008). Although he, like the others, has denied the charges, he must be wishing that the Icelandic judicial system wasn't quite so efficient.
Walter Blotscher
Sunday 4 September 2011
POLITICAL MEMOIRS
Enoch Powell, a British classicist and Conservative politician, most famous for his "rivers of blood" speech about the dangers of immigration, once said that all political careers end in failure. The word "failure" was meant, I think, on more than one level. Failure to change the world in the way one had hoped; failure because the electorate had chosen to boot them out; and, not least, failure to maintain personal relationships through the trials and tribulations of political life.
All Governments seem to go through the same process. A close group of like-thinking, dynamic, people take hold of a political party in opposition, make it attractive, and eventually get it elected to Government. Then the fun starts. Tensions arise, as individuals with power pull in different directions. Ambitions cross other ambitions. Back-sniping starts. People resign or get sacked. There are leaks and smears. A fin de siecle air begins to hang over the Government. It loses office. A year or two later, the memoirs start to arrive, giving "the" version of events, settling scores, shafting former friends. Meanwhile, the cycle is already well underway on the other side of the political spectrum.
I was reminded of all this by the current serialisation of the memoirs of Alistair Darling, the British Chancellor of the Exchequer (Finance Minister) in Gordon Brown's last Labour Government. Mr. Brown and Mr. Darling, both Scottish MP's, go way back as friends and colleagues. But it was clear that their final working relationship was fraught with difficulties, not least because Mr. Brown had been Chancellor in the decade before he became Prime Minister, and so was unwilling to accept his leading Minister's advice, particularly when it came to dealing with the recent financial crisis. When in office, Mr. Darling was bound by Cabinet collective responsibility and the difficulty of getting rid of Mr. Brown as his boss. Now, however, he is free to get his revenge in print. And he has done so.
Because everything political involves money, the relationship between a Prime Minister and his or her Finance Minister is the most important in any Government. Unfortunately, Britain has been more than a tad unlucky in this regard in recent decades. Margaret Thatcher and Nigel Lawson; John Major and Norman Lamont; Tony Blair and Gordon Brown; Gordon Brown and Alistair Darling; they all ended in tears. I don't have any solution to the problem, but I think that Enoch Powell was probably right.
Walter Blotscher
Enoch Powell, a British classicist and Conservative politician, most famous for his "rivers of blood" speech about the dangers of immigration, once said that all political careers end in failure. The word "failure" was meant, I think, on more than one level. Failure to change the world in the way one had hoped; failure because the electorate had chosen to boot them out; and, not least, failure to maintain personal relationships through the trials and tribulations of political life.
All Governments seem to go through the same process. A close group of like-thinking, dynamic, people take hold of a political party in opposition, make it attractive, and eventually get it elected to Government. Then the fun starts. Tensions arise, as individuals with power pull in different directions. Ambitions cross other ambitions. Back-sniping starts. People resign or get sacked. There are leaks and smears. A fin de siecle air begins to hang over the Government. It loses office. A year or two later, the memoirs start to arrive, giving "the" version of events, settling scores, shafting former friends. Meanwhile, the cycle is already well underway on the other side of the political spectrum.
I was reminded of all this by the current serialisation of the memoirs of Alistair Darling, the British Chancellor of the Exchequer (Finance Minister) in Gordon Brown's last Labour Government. Mr. Brown and Mr. Darling, both Scottish MP's, go way back as friends and colleagues. But it was clear that their final working relationship was fraught with difficulties, not least because Mr. Brown had been Chancellor in the decade before he became Prime Minister, and so was unwilling to accept his leading Minister's advice, particularly when it came to dealing with the recent financial crisis. When in office, Mr. Darling was bound by Cabinet collective responsibility and the difficulty of getting rid of Mr. Brown as his boss. Now, however, he is free to get his revenge in print. And he has done so.
Because everything political involves money, the relationship between a Prime Minister and his or her Finance Minister is the most important in any Government. Unfortunately, Britain has been more than a tad unlucky in this regard in recent decades. Margaret Thatcher and Nigel Lawson; John Major and Norman Lamont; Tony Blair and Gordon Brown; Gordon Brown and Alistair Darling; they all ended in tears. I don't have any solution to the problem, but I think that Enoch Powell was probably right.
Walter Blotscher
Saturday 3 September 2011
THE END OF SUMMER
At least three combine harvesters were out in the fields around our house with their lights on last night; and again this morning from just after breakfast. They are taking advantage of some late summer dry weather in order - belatedly - to get the last of the harvest in. Although Danish farmers tend to harvest later than their more southerly peers, it is usually all over by the end of July, or perhaps the first week of August. But here we are in the first week of September, and it is still not all done.
The main reason is the fact that the summer has been the second wettest since 1874, the amount of rain being only 2mm less than the record average of 323mm measured in 1980. Moreover, Fünen (where I live) is the part of the country that has had the most, some 372mm. The fields have been so waterlogged, that it has been impossible to get heavy machinery into them.
I had a good view of all the activity going on around me, since I was up a ladder for most of the morning, cleaning out the guttering. I have to get rid all of the detritus, before the autumn winds fill the gutters up again with the leaves, seeds and twigs from the big beech tree behind the house. The work went quickly this time, since my daughter sat at the bottom of the ladder, holding it steady (I have a fear of heights), while reading a book. A good division of labour all round.
Walter Blotscher
At least three combine harvesters were out in the fields around our house with their lights on last night; and again this morning from just after breakfast. They are taking advantage of some late summer dry weather in order - belatedly - to get the last of the harvest in. Although Danish farmers tend to harvest later than their more southerly peers, it is usually all over by the end of July, or perhaps the first week of August. But here we are in the first week of September, and it is still not all done.
The main reason is the fact that the summer has been the second wettest since 1874, the amount of rain being only 2mm less than the record average of 323mm measured in 1980. Moreover, Fünen (where I live) is the part of the country that has had the most, some 372mm. The fields have been so waterlogged, that it has been impossible to get heavy machinery into them.
I had a good view of all the activity going on around me, since I was up a ladder for most of the morning, cleaning out the guttering. I have to get rid all of the detritus, before the autumn winds fill the gutters up again with the leaves, seeds and twigs from the big beech tree behind the house. The work went quickly this time, since my daughter sat at the bottom of the ladder, holding it steady (I have a fear of heights), while reading a book. A good division of labour all round.
Walter Blotscher
Thursday 1 September 2011
THE DANISH GENERAL ELECTION (3)
The campaign for the general election on 15 September is in 24/7 mode, and is being dominated - unsurprisingly - by discussion of the economy.
Yesterday's announcement that Danish GDP grew slightly in the second quarter of 2011 brought sighs of relief from the Government block, and lots of talk about how this was a result of their careful stewardship of the nation's finances, blah, blah, blah. Forget about the fact that the recent jitters in the stockmarket and other things mean it is quite possible that the third quarter figures could be negative.
That euphoric bubble was duly punctured this morning, when it was announced that unemployment in July had risen for the third month in a row, by almost 1,000 to 163,000, with the increase hitting young people under 30 particularly hard. Cue lots of stuff from the Opposition block about how the Government's stewardship of the economy had been totally useless, blah, blah, blah. Forget about the fact that Denmark's unemployment rate of 6.1% is still markedly lower than in most other rich countries.
I said in a recent tweet that after less than a week out of three, I was already totally bored by the campaign. The fact of the matter is that a small country such as Denmark is economically dependent on decisions made elsewhere, notably the European Central Bank and the German Cabinet. Danish Governments can trim and adjust here and there. But they can't pull the country out of recession and back into a growth path, unless the German locomotive is pulling first.
With the main blocks simply parrotting slogans, I think the electorate is rapidly becoming bored as well. Opinion polls show a steady 94-81 or thereabouts lead for the Opposition in the 179-seat Folketing (there are 4 independents from Greenland and the Faroe Islands), a lead which probably has more to do with kicking the Government out after 10 years than anything else. However, what is changing are the fortunes of individual parties within the blocks. The two clear winners so far are both led by telegenic women, who manage to say something more substantial than tired old soundbites. They are the centrist Radikale Venstre, under Margrethe Vestager; and (the surprise of the campaign) the far-left Enhedslisten, whose spokesperson (they don't have a single leader) is the 27-year old Johanne Schmidt-Nielsen.
Walter Blotscher
The campaign for the general election on 15 September is in 24/7 mode, and is being dominated - unsurprisingly - by discussion of the economy.
Yesterday's announcement that Danish GDP grew slightly in the second quarter of 2011 brought sighs of relief from the Government block, and lots of talk about how this was a result of their careful stewardship of the nation's finances, blah, blah, blah. Forget about the fact that the recent jitters in the stockmarket and other things mean it is quite possible that the third quarter figures could be negative.
That euphoric bubble was duly punctured this morning, when it was announced that unemployment in July had risen for the third month in a row, by almost 1,000 to 163,000, with the increase hitting young people under 30 particularly hard. Cue lots of stuff from the Opposition block about how the Government's stewardship of the economy had been totally useless, blah, blah, blah. Forget about the fact that Denmark's unemployment rate of 6.1% is still markedly lower than in most other rich countries.
I said in a recent tweet that after less than a week out of three, I was already totally bored by the campaign. The fact of the matter is that a small country such as Denmark is economically dependent on decisions made elsewhere, notably the European Central Bank and the German Cabinet. Danish Governments can trim and adjust here and there. But they can't pull the country out of recession and back into a growth path, unless the German locomotive is pulling first.
With the main blocks simply parrotting slogans, I think the electorate is rapidly becoming bored as well. Opinion polls show a steady 94-81 or thereabouts lead for the Opposition in the 179-seat Folketing (there are 4 independents from Greenland and the Faroe Islands), a lead which probably has more to do with kicking the Government out after 10 years than anything else. However, what is changing are the fortunes of individual parties within the blocks. The two clear winners so far are both led by telegenic women, who manage to say something more substantial than tired old soundbites. They are the centrist Radikale Venstre, under Margrethe Vestager; and (the surprise of the campaign) the far-left Enhedslisten, whose spokesperson (they don't have a single leader) is the 27-year old Johanne Schmidt-Nielsen.
Walter Blotscher
Subscribe to:
Posts (Atom)
