Tag Archive for 'Johnson'

How much trouble is Europe in?

The 2008:Q4 figures for the EU-countries came out recently.  It’s not pretty.  But a regular recession is nothing compared to what might be coming.

In the understatement of the day, Tyler Cowen writes:

It’s a little scary:

Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region’s GDP. Good luck. The credit window has slammed shut….

“This is the largest run on a currency in history,” said Mr Jen.

The naked capitalism entry that Tyler points us to is itself a wrapper for this article in the Telegraph.  It’s a little hyperbolic, but if the facts it’s listing are correct, not overly.  Here are a couple of paragraphs from it:

Whether it takes months, or just weeks, the world is going to discover that Europe’s financial system is sunk, and that there is no EU Federal Reserve yet ready to act as a lender of last resort or to flood the markets with emergency stimulus.

Under a “Taylor Rule” analysis, the European Central Bank already needs to cut rates to zero and then purchase bonds and Pfandbriefe on a huge scale. It is constrained by geopolitics – a German-Dutch veto – and the Maastricht Treaty.

To this mess we can add the case of Ireland.  Simon Johnson, writing at The Baseline Scenario, observes:

Look at the latest Credit Default Swap spreads for European sovereigns (these are the data from yesterday’s close).  As we’ve discussed here before, CDS are not a perfect measure of default probability but they tell you where things are going – and changes within an asset class (like European sovereigns) are often informative.

European CDS have been relatively stable – albeit at dangerously high levels – for the past month or so.  But now Ireland has moved up sharply (the green line in the chart).  We’ve covered Ireland’s problems here before (banking, fiscal and – big time – real estate); type “Ireland” into our Search box for more.

Interesting times …

Ken Livingstone to work for Hugo Chavez

This piece in The Independent is short enough to quote in full:

Former London mayor Ken Livingstone has agreed to help Venezuelan President Hugo Chavez improve urban planning.

While he was in office Mr Livingstone made a deal with Mr Chavez to exchange cheap Venezuelan fuel for British buses for London’s advice to mayoral candidates in Caracas.

But the current mayor Boris Johnson cancelled the deal when he came to office.

Mr Livingstone said he will personally advise officials and candidates to ensure that the country gets the “advice that we promised”.

A spokesman for the Mayor of London, said: “Boris Johnson made it clear during his election campaign that he did not want to be on the payroll of Hugo Chavez and did not believe a poor South American country should be subsidising one of the wealthiest cities in the world.

“He has kept that promise to the people of London. Ken Livingstone is free, as a private individual, to offer his advice and services to whomever he wants.”

Of course, the last time Mr Livingstone made the news was only a couple of weeks ago, that time on the generosity of the Chinese government:

When Livingstone and his Trotskyist cronies were given a multi-million pound payoff from city hall I wondered how much they would be giving away to good causes. As it happens it’s Livingstone and his aide John Ross who have been reviving charity – from the Chinese government.

As Andrew Gilligan reports in today’s Evening Standard these champions of the working person stayed at a £1,100 a night hotel in Beijing and were given VIP seats for the opening ceremony. No wonder he told the Today programme that the Chinese regime was not a police state and was going in the right direction on human rights. Tell that to HIV Aids campiagner Hu Jia.

Apparently, the Chinese invited Livingstone because they saw him as someone “who might have some influence in the future”. Senior Labour figures closely involved with the ill-fated Livingstone campaign are now tearing out their hair out at the former mayor’s increasingly unpredictable behaviour since he lost the election. The sooner the Labour Party finds a decent candidate for 2012 the better.