Media peddling of received wisdom likes to dwell on the Economy to Emulate du jour. Seeriouss People™ are reported or filmed saying they've crunched the numbers or just returned from a visit to such and such a place, and my word they're impressed. Journalists repeat the puffwords "successful, vibrant, surging, stellar, GDP growth, full employment..." In the 1980s, in the French media at least, it was Japan. Then Japan hit a rock and has since gone off the radar. In the Blair years, it was the UK England London. No more now. For long it was the "insolent good health" of the American economy, just when that economy was rotten to the core. Don't hear that any more. These days it's Germany.

So Nicolas Sarkozy went on six French TV channels last Sunday, with much pomp and obsequious journalists asking predetermined questions, to say he was going to make France imitate Germany. Raise VAT, reduce employers' payroll contributions, put an end to the 35-hour working week, weaken collective bargaining even more than in Germany with enterprise-by-enterprise renegotiation of hours and pay (more of one and less of the other). As usual with Sarko, it was smoke and mirrors, since he was announcing as decisions on his part measures that would be applied after the presidential elections... when he stands a good chance of being an ex-president, and the measures of not being applied. But, through the smoke, it's an image that he wants to project of the tough guy telling it like it is, and "like it is" is TINA - Germany is right, we have no choice but to copy the Germans.

If anyone wonders why any other eurozone country, France in this case, should want to copy Germany, Sarkozian smoke billows. Too much emphasis on German exports might sail close to the dangerous waters of the effect of those exports on the eurozone. So it's the success of the German economy - GDP growth, full employment - that is touted.

This year's main Paris meet-up will be on Saturday, April 28.

ET was contacted a week ago by Stronger Europe  for feedback on their upcoming campaign for the direct election of the president of the European Commission. There was discussion of this here.

Their main page now shows a video ad for this campaign, followed by this text:

Stronger Europe

We believe the President of the European Commission who holds significant powers in the European Union should be directly elected by the people of Europe.

A directly elected president would make the EU more accountable to ordinary Europeans and allow us to choose the direction policies take. At the moment, aside from decisions originated by the European Parliament, we have policies forced on us by Brussels. Shouldn't we choose who makes those policies?

Electing a President of the EU Commission does not mean giving more power to Brussels. It means the opposite: making Europe more accountable, transparent and forcing bureaucrats in Brussels to go to the people.

Electing a President of the EU Commission would also mean that European citizens take the time to decide together on what direction they want Europe to follow.

At its most basic, it is the ability to take our own decisions. We passionately believe this would be a victory for democracy and that a legitimate President would give Europe the leadership it needs.

Well, yeah... There's no doubt there's a huge democracy gap in the EU, and electing the EC president would be one move towards filling it. But I can't help feeling there are a couple of misconceptions here.

As this open-thread discussion is sliding into oblivion, here's a diary to keep the topic alive.

April-May have been suggested as a better time of year for the main Paris meet-up. Here again is a comment I made listing the possible weekends:

OK, practically, weekends in:

April 2012

• 7-8 is Easter (Monday = Bank holiday)
• 14-15 looks quiet
• 21-22 first round, presidential election
• 28-29 probably quiet but the Tuesday is 1st May (BH)

May 2012

• 5-6 second round of elections, the Tuesday is 1945 Armistice BH
• 12-13 looks quiet
• 19-20 part of Ascension Thursday (BH) long weekend
• 26-27 Whit, the Monday is BH

The fact of being part of a long weekend (ie tied on to a Bank holiday) could mean more French visitors to Paris, though the last two weekends there are probably the biggest. Elections are not really an obstacle.

I don't think we should count on these dates being out of the tourist season, this now seems much longer than it used to be, as looking for hotel rooms in October showed us.

I'm going to suggest the 12-13 May weekend, which means the main meet-up on Saturday 12th.

Over to you.

UPDATE If we want this to happen in April-May, we should perhaps get ahead with a decision. May 12 fits for a number of people, but not all - April 28 is another possibility. Please pile back in with your thinking on dates.

RE-UPDATE 15 Jan 2012 Even split down there in the poll, and we should reach a decision soon if we want to get reasonable travel and accommodation prices. Migeru has given a good reason for his choice (a long weekend over the April 28 date, which makes it easier for him to attend), so, though I voted "No preference" I'm going to come down on that side. Whadda you say?

re-re-bumped - afew

So you really want to understand the seemingly endless flow of scandals, affairs, accusations, prosecutions, libel suits, counter-accusations and yet more scandals currently to be seen in French politics? You want to know what Bourgi has to do with Bettencourt has to do with Villepin has to do with Takieddine has to do with senile Chirac has to do with Karachi has to do with Juppé has to do with Clearstream has to do with Prévost-Desprez has to do with Helen of Yugoslavia has to do with Bazire the Bizare has to do with Tibéri, Sarkozy, Pasqua, Copé, Courroye (continue ad lib)..?

You do?

<sigh> Well... The presidential elections, around which French politics revolves, are coming up, so there are lots of stink bombs, banana skins, smoke screens, and firecrackers vying for media attention.

Not enough?

But it happens to be true. Just as it's true this is mostly about election campaign funding sleaze and a brown envelope / document case tradition on the right, for whom the constitution of the Sith Republic was written ("Sith" (sic), should be 5th) in 1958, and who therefore consider they're at home in power and can do as they like.

That's all very well, I hear some of you (no names) grumble, but we want the skinny, the lowdown, the dirt. OK, but don't blame me if you understand even less of it at the end than before you started. So now let's go back to the 1960s. (You asked for it).

Quiz: In what year was this said by the boss of a major tobacco company in testimony under oath before a US House of Representatives committee?

I believe that nicotine is not addictive... Nicotine is a very important constituent in the cigarette smoke for taste.

I'd have thought this was the kind of line cigarette manufacturors were pushing in the 1960s, maybe into the 1970s, when people's ideas on the subject were still hazy (pun intended). But - to my surprise - it's a statement from just seventeen years ago, in 1994 (at the "Waxman Hearings" on tobacco and public health).

Six other tobacco CEOs made similar statements that day. It was probably a bridge too far, because public awareness had gone beyond being taken in. And the following year a whistle-blower, Jeffrey Wigand, former head of R&D at Brown & Williamson (then a wholly-owned subsidiary of British American Tobacco), made the industry's game plain in an astonishing deposition (harassed by a flock of tobacco lawyers). Tobacco companies knew that nicotine was addictive and made deliberate use of the fact to sell the product. Tar was reduced (permitting marketing of a low-tar cigarette) while maintaining nicotine levels that ensured addiction, by blending different tobacco types, adding ammonia to "free up" nicotine molecules, and using an impact booster:

I was visiting In Wales in Wales last week. Time to see places I haven't seen in a long time, like considerably-changed Cardiff, greatly-changed Valleys (last time I was there the pits were still open and the slag-heaps were black), or relatively unchanged popular beach resort Porthcawl.





The weather was typically Welsh, sun every day (with just a shower on the Brecon Beacons, duh).






                                Time machine in the mountain rain

OK, losers, don't you think people have had enough of hearing this obsessive fearmongering news talk about Fukushima? There's a general feeling that it's time to move on. Let's get back to normal and deal with life's real everyday problems. Another blonde white girl was kidnapped. And you still haven't worked your butt off to get that car that exactly expresses your personality and your precise status slot on the social ladder (take our poll).

Leave the isotopes to the experts. Sheesh.

Eurointelligence tells us this morning:

as Reuters reports, Ireland's government says it is now considering imposing haircuts on senior bondholders to reduce the pressure from the Irish tax payer. The total amount held by senior creditors in Irish banks is some €16bn. The Irish government is nervously awaiting this week's results of the stress of its banks, which are likely to show a recapitalisation requirement of around €25bn, according to Reuters. The FT puts the recapitalisation requirement at between €15bn and €25bn, with an additional €90bn in asset sales to reduce the loan-to-deposit ratio from 170% to 120-125%. There is a widespread acceptance in the markets that the government will impose bondholder haircuts on Anglo-Irish and Irish Nationwide, but to bail in bond holders at the other banks might be more controversial.

Towards a new medium liquidity facility by the ECB?

The ECB has on previous occasions voiced strong opposition to a bondholder bail-in, and the Irish threat to bail in bondholders may only be part of a wider negotiating strategy, especially in view of the following. The ECB is preparing a new liquidity facility that will give troubled euro zone banks access to liquidity over a longer time frame, Reuters learned from an anonymous central bank source on Saturday. The plan will initially be "tailor made for Irish banks" the source said and is likely to be announced next week after the stress test results of Irish banks. This is meant to replace the Emergency Liquidity Assistance (ELA) currently being provided by the Irish central bank. The programme would be similar to the ECB's securities market programme (SMP) in the sense there will be no fixed time frame on it. He added that although it would initially be tailored for Irish banks, it would subsequently be available eurozone wide. It would be under the control of the ECB's Governing Council who would set the conditions attached to the loans on a case by case basis.

This is from an e-mail newsletter, so no direct link. The Reuters report, from Saturday, follows.

Some fresh space for ongoing news and discussion of the earthquake and its consequences.

Early on Day Two, this is what awaits:

(Day One is here).

[Disclaimer 1: No offence is meant to those who don't eat pork, or any meat at all, for whatever reason.]

[Disclaimer 2: this description is from memories of days gone by, using old photographs. Nowadays the law obliges you to have the animal slaughtered at the abattoir, which of course everyone does.]

It begins on a cold morning, with death. That of a large hog, followed some time later by that of a second. Death by a bullet in the brain (entrance point, the intersection of two lines from the base of each ear to the opposite eye) is instantaneous. The animal is quickly hoisted by its hind legs (this involves the use of a tractor with a forklift) and bled. The knife must go in just above the sternum at a precise spot that they call the buttonhole. At least part of the blood is collected in a basin and whipped with vinegar to prevent it from clotting. All this might in some gruesome way suggest the Crucifixion and form the basis for an artistic concept coining more money than the use of the pig for food, but in fact it's tense, there's a lot to be done, and it's too ugly to show here even if I'd been able to take photos.

The hog is weighed with a steelyard. 205 kg (the second weighs in at slightly less). Then - no time to waste - it is lowered into a large trough and soused in very hot water, from 82°C to the upper eighties, depending on how cold the weather is. It has to be turned in the water, or parts will get cooked while others stay cold. This calls for muscle and a particular knack:

Again, quickly, as soon as it has soused enough, it is scraped. As many people as can without getting in each other's way scrape off the epidermis and the bristles, using scrapers made from pieces of an old scythe (blunted, they mustn't be razor-sharp).

Piggies look much cleaner after a haircut. "Have you seen the little piggies..?"

We get mail:

Last year, your organisation has participated in a consultation of the European Commission on the European Citizens' Initiative, which will soon enter into force.
A research team from the University of Technology of Compiègne [Paris region] is currently running a study on the consultation tools of the Commission. In this context, we would like to receive the participants' feedbacks on this experience, and it would be a great help if you would take a few minutes to answer the following questionnaire. It is short (only 10 questions), and you can answer by returning this e-mail to etc
Thank you very much for your participation

German economic growth is rocketing ahead while most of the eurozone is in difficulty, says Eurointelligence this morning:

Germany, like China, is hitting the speed limits

The interesting question about Germany is not so much whether the economic recovery is for real (it is), but it is whether it is sustainable. On Monday, the Ifo index reached a post-unification record, and yesterday, the eurozone PMI also raced ahead, based on good performances by Germany and France, but also showing a widening gap between core and periphery.

Eurointelligence refers to a report in the Financial Times that shows the divergence in this chart:

And the further question (that underlines the lack of labour mobility within the single-currency area) is whether the ugly spectre of (gasp!) wage inflation will strike the speeding mercantilist economy:

FT.com / Europe - Germany powers eurozone services growth

Underscoring Germany's revival, Ernst & Young, the financial services firm, reported that almost three-quarters of the small and medium-sized companies in the country's industrial Mittelstand were having difficulties finding enough qualified workers.

Its survey of 3,000 enterprises put the cost of skill shortages in terms of lost revenues at almost €30bn ($41bn) a year. German business organisations have called for easier immigration rules for skilled workers to tackle the shortage.

Are the limits of German competitive deflation in sight?

Below is a comment meant for Jerome's Neo-feudalism and neo-nihilism, that turned into a diary:

I've said before that I disagree (and so agree with Migel Sanchez) with this loose use of "feudalism" as an analogy for the socio-economic order most of us see coming into being. Feudalism was a highly-coded system of mutual obligations, sanctioned by religion, in which membership of a particular class was strictly regulated and clearly visible. You can rush in with parallels, and there are many suggested in Jerome's diary and the discussion on it, but all of them are too approximate or strained. What's emerging is something new, in which those at the top don't even need to offer guarantees in return for their power (one thing that died the death in the latest financial crisis was already-sick old Fordism), or engage in struggle with the regalian power of the State, since by various means they possess inordinate influence over it.

I've no idea what to call it, and it might be argued that "feudalism" is as good a catchword as another since most people make a face when they hear it. But I'd suggest that accepting it may simply obfuscate and delay a more accurate description of what's going on.

A petition launched by Avaaz and Greenpeace calling for a moratorium on GM crops within the EU reached a million signatures.

EUobserver / EU receives anti-GMO petition amid raging legal battle

EUOBSERVER / BRUSSELS - Environmental groups Greenpeace and Avaaz have handed the European Commission a petition with the signatures of over one million EU citizens, calling for a ban on GMO crops until a new scientific body is set up to assess their impact. Behind the scenes however, a battle is raging over the document's eligibility under the EU's new citizens' initiative procedure (ECI).

Barroso wouldn't receive it, shifting it off to the Health Commissioner.

European Commission President Jose Manuel Barroso refused to receive the document on Thursday (9 December), sending the EU's health commissioner John Dalli instead. Mr Dalli welcomed the petition, but warned that the ECI had not been fully set up yet, drawing a question mark over the anti-GMO document.

"We have agreed to receive the petition today but at this point I can't commit on action taken by the commission," said Mr Dalli.

Greenpeace Europe chief Jorgo Riss said the commission could ill afford to ignore the document, born out of the commission's decision in March to grant the first EU GM cultivation approval in 12 years for the 'Amflora' potato.

Nicolas Sarkozy underwent a serious blowout last Friday during a debriefing for French journalists at the NATO summit in Lisbon, if different reports in the French media are to be believed (and it's hard to imagine this stuff being made up).

The background is an affaire d'Etat concerning alleged illicit campaign financing via back-payments on bribes involved in the sale of submarines to Pakistan (more on this below). But on Friday:

Arrêt sur images - Lisbonne : la colère de Sarkozy restera "off"
Interrogé à Lisbonne sur l'affaire Karachi, Nicolas Sarkozy s'en prend aux journalistes: "Vous dites n'importe quoi, vous ne vérifiez rien". Le président s'emporte au point que l'Elysée demande aux journalistes d'effacer les bandes. L'information est rapportée dans Mediapart (article payant) et L'Express.fr.		Questioned in Lisbon about the Karachi affair, Nicolas Sarkozy attacked the journalists: "You say just anything, you check nothing". The president lost his temper to the extent that the Elysee asked journalists to delete their tapes. Reports are in Médiapart and Express.
Vendredi 19 novembre, en marge du sommet de l'OTAN à Lisbonne, Nicolas Sarkozy s'est énervé contre des journalistes. Un journaliste l'interroge sur l'affaire Karachi, lorsqu'il "pète les plombs", rapporte Mediapart.		On Friday 19 November, on the fringes of the NATO summit in Lisbon, Sarkozy blew up against a group of journalists. A journalist was questioning him about the Karachi affair, when he "blew a fuse", according to Médiapart.
Un journaliste précise que son nom figure dans des documents montrant qu'il a donné son aval à la création d'une société-écran luxembourgeoise par laquelle transitaient les commissions. C'est alors que Nicolas Sarkozy s'emporte « Qui vous a dit ça? Vous avez eu accès au dossier? Charles Millon a une intime conviction. Et si moi j'ai l'intime conviction que vous êtes pédophile? Et que je le dis en m'appuyant sur des documents que je n'ai pas vus...». Pour L'Express.fr qui rapporte la même anecdote, le président voulait dénoncer les journalistes qui parlent sans preuve.		A journalist pointed out that his name features in documents that show he gave his agreement to the creation of a Luxembourg screen company through which the commissions were conveyed. At that moment Sarkozy lost his temper: "Who told you that? Did you see the file? Charles Millon speaks from personal conviction. And what if I say from personal conviction that you are a pedophile? And I say it on the authority of documents I haven't seen..." According to l'Express which reports the same incident, the president meant to criticise journalists who speak without proof.
Les journalistes présents racontent que Nicolas Sarkozy était "survolté" et "hors contrôle".		The journalists present say that Sarkozy was "worked up" and "out of control".
Hélas, on ne pourra pas écouter la longue diatribe du président qui se termine par "Amis pédophiles, à demain". En effet, après le debriefing, l'Elysée a insisté pour que la conversation reste off. La conversation, enregistrée sur le circuit interrne du sommet selon L'Express, a été effacée.		Alas, we can't listen to the president's long harangue that ended with: "Pedophile friends, see you tomorrow". After the debriefing, the Elysee insisted that the conversation should stay off the record. Recorded on the internal circuit of the summit, says l'Express, the exchange was deleted.

Libération has a little more detail that tends to set the attack in a less crude and frontal light:

«Amis pédophiles, à demain!» - Libération
«On est dans un monde de fous», a déclaré le président. «Il n'y a pas un seul parmi vous qui croit que je vais organiser des commissions et des rétrocommissions sur des sous-marins au Pakistan, c'est incroyable.» Puis il s'adresse à un journaliste, dans une démonstration par l'absurde: «Et vous, j'ai rien du tout contre vous. Il semblerait que vous soyez pédophile... Qui me l'a dit? J'en ai l'intime conviction (...) Pouvez-vous vous justifier?».		"This is a crazy world," said the president. "There isn't a single one of you who believes I am going to organize commissions and back-commissions on submarines for Pakistan, it's incredible." Then he turned to a journalist and used a reductio ad absurdum argument: "And you, I've got nothing at all against you. It seems you're a pedophile... Who told me? It's my personal conviction (...) Can you get off the hook?"

Jean Quatremer reveals an interesting French dream:

DSK à Francfort? - Coulisses de Bruxelles, UE		DSK in Frankfurt? - Backstage Brussels, EU
Et si Dominique Strauss-Kahn succédait à Jean-Claude Trichet à la présidence de la Banque centrale européenne ? C'est une hypothèse caressée au plus haut niveau du gouvernement français. En effet, Paris semble désormais déterminé à s'opposer à la nomination du président de la Bundesbank, Axel Weber, jusque-là candidat « naturel » à la succession de l'ancien gouverneur de la banque de France en novembre 2011, celui-ci s'affichant un peu trop comme un « faucon » monétariste un tantinet psychorigide. On préfèrerait même à Paris Jürgen Stark, le pourtant très orthodoxe économiste en chef de la BCE, c'est dire...		What if Dominique Strauss-Kahn were the successor to Jean-Claude Trichet as chair of the ECB? This hypothesis is fondly envisaged at the highest level of French government. Paris seems determined from now on to oppose the nomination of Bundesbank chairman Axel Weber, till now seen as the "natural" candidate to follow the former governor of the Bank of France in November 2011 -- Weber making too much of a show of being a rather psycho-rigid monetarist hawk. A measure of the rejection of Weber is that Paris would even prefer Jürgen Stark, chief economist of the ECB and all the same very orthodox...

Here are some excerpts from the Executive Summary of a report by RMF on the eurozone crisis:

1. The turmoil in the Eurozone is due to the global crisis of financialisation that broke out in 2007. But it is also due to the biased nature of the European Monetary Union (EMU). Systematic pressure on labour has intensified the disparities of competitiveness among Eurozone members, splitting the Eurozone into core and periphery.

2. ... The periphery has been unable to compete against the core, while being constrained by uniform monetary policy and rigid fiscal discipline. Thus it has registered current account deficits, mirroring the current account surpluses of the core, above all, Germany.

3. Current account deficits in general must be financed by capital flows from abroad. The latter can be either debt-creating, e.g., bank loans or portfolio flows, or non-debt-creating, e.g., foreign direct investment. Furthermore, current account deficits correspond to financial deficits by the public and the private sector.

4. In the periphery, the Stability and Growth Pact has prevented the public sector from registering systematic financial deficits. Consequently, current account deficits have corresponded largely to private sector financial deficits. Furthermore, current account deficits were financed overwhelmingly by bank lending from the core.

5. In short, peripheral country indebtedness is largely due to the behaviour of the private sector in the course of EMU. Unable to compete against the core, peripheral private sectors have generated large financial deficits. Consumption was boosted in all three countries, while a real estate bubble emerged in Spain. Capital flows from abroad - typically lending by core banks - provided finance. Furthermore, the domestic financial system found the opportunity to expand, thus increasing domestic financialisation and indebtedness. The result has been the accumulation of vast debts, partly external (and owed to the core), partly domestic (reflecting internal financialisation).

RMF has requested ET's thoughts on the report (Download here, PDF). UPDATE below...

bumped by Nomad rebumped afew

In the Wind series

Jérôme and I wrote an opinion piece on the economics of wind power for New Scientist, and it has now been published.

All power to the wind - it cuts your electricity bills - opinion - 26 July 2010 - New Scientist

ATTEMPTS to discredit wind power often claim that wind turbines need to be subsidised. A piece in British newspaper The Daily Telegraph last month asserted that each wind turbine in the UK receives, on average, £138,000 in subsidies a year, and that as a result wind-power investors are coining it hand over fist at the taxpayer's expense.

So are wind farms subsidised? In the sense of direct government support, very rarely. What they do enjoy in most countries, though, is a guaranteed right of access to the grid, and minimum prices for the electricity they produce.

The article explains marginal pricing and the merit order effect that lowers average electricity prices, going on to suggest that established producers are hostile to further penetration of wind in electricity generation because it deprives them of windfall gains on high spot prices.

Imagine you run a utility company with coal-fired or nuclear plants. From your perspective, wind power is causing you to lose out on the windfall cash previously provided by high spot prices at times of peak demand. Will you be inclined to look favourably on plans to increase the share of wind power in total electricity generation?