Blogs : 8th December

Power and. Doug Merrill, A Fistful of Euros (en)
" ... Roughly speaking, power is the ability to make people do things (or suffer the consequences); influence is the ability to get people to do things on their own (to gain the benefits). NATO has lots of power (and a good bit of influence), while the EU has an enormous amount of influence, but less power. Pointy-haired bosses use their power; good businesspeople use their influence ..."

Too flexible. P O Neill, A Fistful of Euros (en)
" ... Ukraine ... the program emphasized a flexible exchange rate, to avoid blowing reserves on a futile defence of a peg (something on which the Fund’s reputation took a hammering during past crises in Russia and Argentina). But the effect seems to have been a worst of both worlds situation where the failure to establish a credible range for the hryvnia led to a severe loss of confidence in it, with the result that the IMF loan is essentially covering a dollarization of the economy ..."

Read Martin Wolf on Global Imbalances ... Alpha Sources.CV (en)
" ... Enter Wolf's first paragraph. The world has run out of willing and creditworthy private borrowers. The spectacular collapse of the western financial system is a symptom of this big fact. In the short run, governments will replace private sectors as borrowers. But that cannot last for ever. In the long run, the global economy will have to rebalance. If the surplus countries do not expand domestic demand relative to potential output, the open world economy may even break down. As in the 1930s, this is now a real danger.

Domestic China in a global crisis. Stanley Crossick, Blogactiv.eu (en)

The EU takes on defence procurement. Clara Marina O'Donnell, Centre for European Reform (en)
" ... The EU is in the middle of a little noticed – but potentially important – debate about defence markets. For the first time, the European Commission could be authorised to help reduce barriers amongst the EU’s segmented national defence markets ...
... As Europe's paltry defence budgets are barely adequate to maintain today’s spending programmes, the current system makes little sense. So the Commission has proposed two new directives. The first is designed to open a substantial amount of defence procurement to EU competition ... The second proposed law aims to simplify procedures to move goods around the EU ...
... The two draft directives have the potential to bring about significant improvements. Defence companies would get access to previously closed markets, while ministries of defence, and European taxpayers, would benefit from cheaper defence goods. Easier transfer of goods across the EU would make life a lot easier for defence companies. And delays in importing new kit needed by national militaries would be reduced ..."

Beijing turns up the heat (again) on Sarkozy. Certain Ideas of Europe (en)
" ... Having already pulled out of a bilateral summit with the European Union last weekend, a move that the Economist labels "a rare breach of diplomatic manners", Beijing has apparently failed to dissuade Mr Sarkozy from his plans. In Brussels the Dalai Lama, seemingly bouyed by the support he has received in Europe, reportedly ..."

Does Europe matter enough to China? Certain Ideas of Europe (en)
" ... China's decision to cancel a planned bilateral summit with the European Union this week is raising questions about just how much Beijing cares about Europe...
... Even with its own financial problems, the move seems to suggest it feels in a better position than Europe to cope with the global economic crunch. But the action looks puzzling to those who note that Europe is a key trading partner with China. Mr Fox argues that Beijing can thumb its nose at Europe precisely because we are not a strategic threat and because there is little Europe can do to China in return for its outrageous actions. Our market is open (and anti-dumping actions represent a minuscule amount of China's trade with Europe). China's industrial policies mean it can strong-arm European companies into handing over key technologies they wouldn't do elsewhere. And it is not like we have the best reputation in recent years for reigning in US unilateralism ...

Er, Britain may not actually qualify for the euro. Certain Ideas of Europe (en)
"... Your correspondent hates to spoil a party, but surely one slight problem has been overlooked. Last week, the British chancellor, Alastair Darling, announced that government borrowing was to soar, to pay for a stimulus package for the economy: taking the budget deficit over 8% of GDP in the next couple of years, according to Treasury projections, with a return to balanced books in 2015 (a date backed to some pretty optimistic growth forecasts).
That means something rather simple about British membership of the euro: even if the British decided to join any time soon, Europe could not allow it. The British economy, as it peers into the abyss, looks set to break the strict "Maastricht criteria" for joining, one of which sets 3% of GDP as the reference value for a country's budget deficit, for some years to come ..."

Instead of turkey in November, how about coq au vin in June? Certain Ideas of Europe (en)
" ... So why don't Americans celebrate over coq au vin washed down with a nice French red every year? Mr Davis points the finger at the Spanish and the British who, respectively, massacred the French in Florida (admittedly they had been attacking Spanish treasure ships) and then demoted them to "second-class status" in the history books, behind English settlers at colonies such as Jamestown and Plymouth.
So rather than feeling guilty about their turkey feast today, perhaps Americans should consider the addition of a second thanksgiving celebration next summer. Depending upon one's individual point of view, they could either mark the occasion with good food and wine on a beach somewhere, or simply give thanks that they aren't speaking French today ..."