An EU-US trade war in the making? March 31, 2009
Posted by Sverre in : Political economy, World politics , comments closedI was listening to an LSE podcast of a lecture by French Minister of State for European Affairs Bruno Le Maire, when I heard some surprising statements made. He was talking about how it was important for European nations not to resort to protectionism in the face of the current crisis when he happened to make some interesting, possibly disturbing, statements. He talks about the difference between protecting your industries and protectionism. I can’t spot the difference, can you? (from approiximate 1h10min into the speech):
[…]so I am not in favour of protectionism, as I just said, I am just in favour of European measures – measures decided at the European level – that would prove to our citizens that we are taking into account their fears and worries and that we are trying to protect our European economy, that we are trying to protect our industries. This is a very difficult balance we have to find, but this is not protectionism. Protectionism means today that the UK would take some very concrete measures just to protect one of its plants, in New Hampshire for example, or London. Or that France would take some very national measures just to protect one of its industries or one of its plants in Normandie or the south of France without taking into account the interest of the UK and Germany and Spain and Italy. That’s the difference between the two ways of protectin industries and protecting our economies[…] (more…)
Trade protectionism rising March 18, 2009
Posted by Sverre in : Political economy , comments closedThe World Bank reports today that protectionism in the world is rising as a result of the current crisis. 17 of the G20 nations have enacted protectionist policies despite their pledge in the Washington action plan as recently as November 15 last year. Article 13 of the action plan states:
We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty. In this regard, within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organization (WTO) inconsistent measures to stimulate exports.
EU fails to help its eastern members? March 3, 2009
Posted by Sverre in : Political economy, World politics , comments closedEastern Europe has been hit hard by the financial crisis, and were hoping that the EU would be able to help them over the worst of it. Figures presented by Eastern European government claimed that 5 million jobs were in imminent danger of being lost, something that would seriously hit the entire EU and potentially drop a new iron curtaion over Europe. At a summit this Sunday, the EU rejected a bailout plan designed to help Eastern European nations, mostly outside the Euro area. Was it a sign that Western Europe doesn’t want to help their eastern neighbours, or was it just the rejection of a bad plan? If the former, the entire EU project might be about to fail one of its toughest tests yet. (more…)
The finance crisis animated February 23, 2009
Posted by Sverre in : Political economy , comments closedArt student Jonathan Jarvis has made a brilliant graphic animation explaining the credit crisis in detail in the most simple and easy to understand way I have yet to see. This 11 minute video really nails the important basics and is just what you need for someone who struggles with understanding the who’s and why’s of the crisis. You can watch the YouTube version (in 2 parts) below, or go to http://crisisofcredit.com for the nicer HD version.
[youtube=http://www.youtube.com/watch?v=Q0zEXdDO5JU]
The crisis game – poker or chicken? February 1, 2009
Posted by Sverre in : Norwegian politics, Political economy , comments closed
Norwegian newspaper Aftenposten had an interesting report before the weekend about the games surrounding the Norwegian government relief packages. They compare the gam
e now played between the government and the banks. On one side of the table we have Prime Minister Jens Stoltenberg (Labour), and on the other we have the major bank managers, represented by Nordea CEO Gunn Wærsted. Each has three visible cards: a 7, Jack and Ace. The analogy might not be brilliant and ingenious, but it describes the game in a simillar manner to the game theories of Political Economy. (more…)
The sinister conspiracy behind the finance crisis January 28, 2009
Posted by Sverre in : Malaysia, Political economy, World politics , comments closedThe conspiracy has been found. As always we can rely on Malaysia’s perceptive grand old man, Mahathir Mohamad to see through the smoke screen of western economics and discover the hidden threads that are being pulled. And this time he has returned to a good old classic:
The jews did it
8. The current financial crisis which is destroying the economies of the U.S. Britain and in fact all the countries of the world is due to manipulations of banks, financial institutions and the monetary system by Jewish supporters of Israel. (chedet.co.cc)
And why is this interesting? Because this isn’t just some random crackpot blogger. This is the man who led Malaysia for just about three decades and has been seen as one of the more prominent moderate voices of the Muslim world. This is the man who crossed the IMF and handled the previous finance crisis in ’98 in his own way. This is a man many still listen to.
How the financial crisis helps Israel is still somewhat unclear to me.
Norway goes Keynesian January 26, 2009
Posted by Sverre in : Norwegian politics, Political economy , comments closed
The ongoing finance crisis has certainly given classic Keynesianism a new boost. And few countries have embraced this as clearly as Norway did today. The center-left government under Prime Minister Jens Stoltenberg from Labour (Arbeiderpartiet) and Finance Minister Kristin Halvorsen from the Socialist Left Party (Sosialistisk Venstreparti) introduced a massive expansion package aimed at combating unemployment.
The package expands the national budget directly with about 2o billion NOK (roughly 2.2 billion € or 2.86 b$), with nearly 17 billions increased expenditure and over 3 billion worth of tax cuts. With secondary effects, the government estimates a total expansive effect of 27 billion NOK, reducing the substantial oil-boosted government surplus. When correcting for petroleum-based offshore income, the government now estimates a government deficit of 119 billion NOK for 2009. This sums up to an expansion of the oil-corrected government budget of 2.3%, substantially higher than the 1.5% goal set by the EU. (more…)
The finance crisis: How can the US Congress do nothing? September 30, 2008
Posted by Sverre in : Political economy, World politics , comments closed
The finance crisis certainly took a turn for the unexpected today when the US House of Representatives turned down the $700 billion rescue package proposed by president Bush. Of course it was controversial for USA to consider this in the first place, given that they have been the largest driving force in pushing the International Monetary Fund to try and discourage other governments from doing the same in times of crisis. Wall Street seems to have expected them to go through with it this time though, as the news brought the biggest plummet in stock prices in American history. So how could they possibly risk the crisis getting even worse?
There are a lot of different reasons, possibly as many as the 227 congressmen that voted against. Here are a few. Off the top of my head I’ll try to point to a few. (more…)