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7 october 2011, not yet at peace

It's kol nidrei (see the great jazz singer) tonight, and I'll be there, as slowly we integrate onto our community here. I'll be asking for peace, and so it's appropriate that it's also the day the most famous peace roll call is added to, as this year ellen johnson sirleaf, leymah gbowee and tawakkul karman are awarded the nobel peace prize. I do try in my own way to bring joy to those I know and a better basis of happiness to those I don't, but how can we but gasp at the laureates' incredible feats, as they show themselves ready to sacrifice their very lives, let alone wellbeing and happiness, for the vast good of millions of others. They rightly join aung san suu kyi, nelson mandela, mother theresa, martin luther king, mikhail gorbachev, the dalia lama, lech walensa, kofi annan and, er, barack obama (10 oct 2009) and al gore. I still love the story of why nobel founded the prize, having read his own obituary in a newspaper and realised he'd be remembered forever as the inventor of what was then the most destructive force known to man, dynamite. A rather better legacy, and a good exercise for us all.

4 october 2011, politicos in town

The conservative party conference is here, so as part of the manchester team I've been hobnobbing with the government of the day and their various hangers-on, to sample the atmosphere, listen to the ideas getting worked up, and most importantly do what we can to get what we want. Even the (labour party) leader of the council has a very pragmatic view, and popped up at a fringe event on the future of the tories in the north chaired by graham brady, whom I know from my ecb days when he came over twice as part of the treasury select committee to write run on the rock. Funnily enough, richard was the most optimistic person in the room, seeing the sharing of the spoils of the demise of the liberal democrats. The talk was all about how the party could not win an outright majority next time round without transforming the situation "up here", when the point was made that "it's not about how we need to do things for people up north so we can win the general election, but how we need to win the general election so we can do things for people up north". Yesterday I spoke, on a smith institute platform, at a good event where all the speakers pretty much rubbished a recent report on pumping money into the north and forming a new "northern council". I thought andrew lansley both confident and competent, on a stellar platform with mathew taylor and stephen bubb, and our very own tom bloxham did a good turn this morning, though bob neill and mark prisk were less impressive. It's hard to deny the excitement of such a major event on the doorstep, and good to bump into journalists and talking heads that I see on the screen every night. The freebies are good too, best so far is a politicos top trumps.

1 october 2011, the missing e

It's been a year since from what was then the deepest moment of euro crisis came agreement to go back to building the "e" of economic and monetary union that was dropped in 1992. Progress however has been extremely slow, and the supposed milestone now reached is hardly worth the paper it is written on. The ecb has got little for losing its virginity in lending a hand to fiscal policy. Even the minimal steps agreed show little has been learned from the stability and growth pact, with powers to be given to the commission to fine euro area member states that a majority of them can block. This is all just the slightest of steps in economic integration, with little of any real value (like the consolidated tax base, 19 march 2011) even on the agenda. At least though the 17 can be seen marching together, rather than waiting for the laggards, and indeed one by one the parliaments have agreed to establish the european financial stability facility; london is not being asked. As predicted (p38), this is something that the lisbon treaty facilitated. Events, as everyone notes, are very far ahead of any such plans though, and if more "e" is indeed the solution, then its nowhere yet even on the horizon.

24 september 2011, rabbits, headlights, action

Two things have created the precipice of economic meltdown we find ourselves overlooking. One is powder keg, the other is sparks. The keg is the huge global imbalances that built up in our years of plenty, when china and the emerging world were very happy to lend us an endless amount of money to buy their goods, as anyway they had little faith in their own governance to manage it. The first spark was three years ago, with the implosion of the american sub-prime market, which took every fiscal policy lever we had to stabilise. The second was greece, which became the whole euro area, as inept leadership allowed the problem to fester and grow enormously. It is clear to everyone that there is deep global uncertainty about what to do, with fundamental misgivings somewhere over any particular strong course of action, making for total stalemate as to be effective any policy at this point needs everyone to be strongly rowing the same boat. We stand like rabbits, frozen in the headlights of the oncoming recessionary juggernaut. The markets are intensely volatile, as they struggle to read the runes of every move and statement, and desperately cut their losses when things momentarily subside. Though the bigger eu rescue package agreed before the summer will surely now finally come into being, it already looks too little, too late; though expect some rabbit out the hat tricks to make the number much bigger. The ecb too must surely both chip in and also find some way, at least temporarily, of underwriting the big european banks, where, just as in 2008, the fear that they are sitting on massive potential bad debts (this time sovereign) is utterly undermining confidence. These are the sorts of measures that will need to be in place to create the ring of steel within which greek debt can finally be restructured properly, something the markets have long since priced in (although that need not at all mean leaving the euro, see no way out, 16 january 2010, nor should they want to, as they're not the uk in 1992. The hope must be that default by another name will finally lance the boil, amongst other things allowing the eu's monetary and fiscal sides, which have been fundamentally at odds over the issue throughout the crisis, to lace together their actions better, hopefully beginning to restore confidence. All this is unlikely to be enough to stop the slide into recession, nor will it alter the movement of tectonic plates between east and west that is really driving the crisis. However, it may at least mark the end of a particularly chaotic phase and enable some stability of sorts to be once again established, on which the foundations for moving forward can then be built.

19 september 2011, a time of plenty ?

At a private lunch today with robert chote, the charming and excellent poacher-turned-gamekeeper who now provides the authoritative analysis of the uk's public finances from his semi-autonomous seat as head of the office of budget responsibility. As a former economist at the imf (before his stellar stint at the ifs) we had much to talk about, taking on all comers talking of a euro collapse. Just as independent central banks spread in the 1990s, so now independent budget offices (like that of the us congress) now seem to be becoming international best practice, and for all the brickbats about having no teeth (which it doesn't), this new institution is shaping up well as a marginally important piece of the macroeconomic policymaking jigsaw. It's headline publication, the fiscal sustainability report, is a surprisingly easy read that broaches the important long-term issues beyond immediate policy, such as pensions, oil and healthcare. Their ultimate conclusion is delivered deadpan but bears reading twice, "on current policy we would expect the budget deficit to widen sufficiently over the long-term to put public sector net debt on a continuously rising trajectory as a share of national income. This is clearly unsustainable." Both long-term then, and short (according to today's financial times), we may yet look back at today as a time of plenty rather than the opposite.

14 september 2011, build them and it might come

Nick clegg (5 february 2011), who I had the pleasure of debating with at close quarters a few months ago, tried to make a landmark speech this morning, on the theme of the moment, growth. Henry overmans was not impressed, being rather sniffy about the value of one of the main drivers the deputy prime minister identified, infrastructure. In fact, the literature is rather more ambivalent, or even supportive, provided of course its the right infrastructure, in the right place, which tends very much towards where an economy is growing already and where there is potential for more. Aschauer, gramlich, the british treasury, lau and munnell may all argue about the exact quantification of the multiplier effects of infrastructure investment, but it is clear that in the right circumstances, the effect is a positive one, with significant returns and increased output. It's an important point, as there does seem rather little a little place can do in the face of the current economic squalls, but building for the long-term does evidently seem something.

11 september 2011, where were you...

For the last generation, it was when kennedy was shot; for us it's 9/11. I was interviewing for my job at the european central bank in frankfurt. As I walked into the office of my future boss, his secretary was bouncing up and down, saying that a plane had crashed into the world trade centre. I thought her slightly eccentric. When I came out half an hour later, she was semi-hysterical, saying another plane had crashed into the world trade centre. I said my goodbyes and that I hoped I'd see her again. When my taxi arrived at the airport I still had no inkling, and even when a huge slew of planes were showing up delayed or cancelled, it took a while. There were televisions dotted around though, and each had crowds in front of them, so that was the clue. Fighting my way to a payphone, I called my other half, who was sat in london with our then 3-week old child, blissfully unaware of everything; amazing how slow news travelled before proper mobile phones. I told her to turn on the tv and she asked me what film it was. When she got her head around it, she thought it was the start of the third world war. It was the thirtieth birthday of one of my friends, and last night was her 40th party, so that's where we were reminiscing, me having spent the morning accompanying that 3-week old to his first secondary school entrance exam, which was even more scary than 9/11. It was also my own birthday: 21 again, in my mind anyway, which is what counts, or so I tell myself.

8 september 2011, will they or won’t they

The days are ticking now towards the palestinians' declaration of independence at the united nations, and half the diplomatic world waits to see if they will back down. There is of course the longest history to this (see signing palestine's birth certificate) and it is something of a rerun of 2000, when then-chairman yasser arafat did indeed back down, only to bitterly regret it later. Although america would veto an outright membership attempt, opposition seems to retreating for the so-called "vatican" option, which is palestine being accepted by the general assembly (as opposed to the security council) as an orwellian-termed "non-member state". This allows america to have it both ways: not needing to block it, and saying that technically it couldn't anyway. If ready to try his luck, there is a way to turn it into applying pressure on israel to restart negotiations, an issue on obama, whatever the rhetoric, has so far followed the rather spineless bush playbook on. "We have to give them something" seems the general mood both in europe and the world at large, and the palestinians have painstakingly built up to this and would lose huge face by backing down - and so just such a half-way house, which would represent a significant step forward towards palestinian statehood, is not an outlandish scenario. A happy new year for some.

3 september 2011, the clock keeps ticking

The debt clock was, I think, an invention of the reagan era, laid to rest when clinton balanced the budget, but now as relevant as ever, as it continues to tick rather wildly up. Today, every us citizen owes almost fifty thousand dollars each, and as the leeway that the dollar being the world's reserve currency provides finally begins to run out, that is forcing america down the now well-trodden road of fiscal contraction that the rest of us have already been following for some time. Many think this is not the right path, but it is that debt, and its echoes in other parts of the western world, that make it inevitable. As growth slows, so will tax revenues, compounding the already deep and deeply-unsolved problem of paying for pensions (and benefits in europe) and now the absorbed banking and financial debts and guarantees that have loaded up these governments. When these problems hit america, home of the world's flight to safety assets, we've really got problems. It is american borrowing that has kept the world afloat for many years. When it can no longer borrow on such a scale, someone else needs to pick up the baton, just as america itself did, replacing britain and sterling as the world's supreme financial power early in the last century. We are living through history.


american national debt at this moment

30 august 2011, that was the wedding that was

The seventh of seven cousins, my brother's on sunday was the last wedding of a generation for us, and quite a long time coming, and quite wonderful. A rare but memorable meeting of so many different strands of family and friends, old and new. Meticulously planned by the bride and groom, it so clearly reflected their own styles and selves, from the lastminute.comness, to the all going swimminglywellness, to the mix of humour and melancholy of the speeches, to the more original events of the day, to the guests, to the everyone pitching in, to the amazing but so them venue, to the kids and the babysitting, to the drinks, to the afterparty, to the day after, as they left with the smoke alarm going off but with all ending well, to their very well deserved honeymoon. She looked amazing, he said all the right things, and everyone played their part in the richest mosaic of a day and indeed of the new life that together they now share, having got over the too much schmaltz part. The determination to hold the chuppah outside in glorious sunshine, despite the dark clouds earlier overhead, paid off marvellously, as we all revelled in what was probably the very last day of summer, and the start of something else, hopefully even sunnier.

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