Blogger calls the euro crisis and becomes an unlikely sage

LoadingFavourite

This topic contains 12 replies, has 8 voices, and was last updated by Profile photo of Anonymous Anonymous 6 years, 5 months ago.

  • Author
    Posts
  • #55668
    Profile photo of peterhun
    peterhun
    Participant

    London, England (CNN) — A blogger who left Britain 20 years ago for rural bliss in Spain has become an unlikely economic sage whose advice has been sought by the International Monetary Fund.

    Edward Hugh counts Nobel Prize winner and American economist Paul Krugman among his avid followers. In fact, Krugman told CNN, “I wish he posted more.”

    Hugh attended the London School of Economics in the late 1960s but says he “wasn’t learning a lot” and his interest in the subject waned until Japan’s economic woes captured his attention, decades later.

    “Suddenly I got interested in economics again, because I found a problem,” Hugh told CNN. “I can only get interested in problems.”

    Now 61 and living in one of Europe’s struggling economies, Spain, Hugh’s thoughts on the region’s economic problems are attracting attention worldwide.

    An appearance on regional television in Catalonia last October led to a call from the IMF in March.

    A spokesman for the IMF said Hugh had no “official or unofficial role” with the organization and said it casts a “wide net” in terms of collecting information, adding it appreciated his input over coffee in Spain.

    y May, Hugh was speaking at the Círculo de Economía, a respected annual meeting of business minds in Barcelona. And just this week a profile in the New York Times pushed his Facebook page to the limit of 5,000 friends. Around 1,000 people tried to “add him” as a friend in one day.

    “I use Facebook as an online community. And I use it as a kind of blog which has automatically 5,000 readers which is O.K.,” he said.

    As followers of his blog would know, Hugh advocates a radical approach to solving the problems of eurozone members burdened by staggering debt levels while being tied to the single euro currency.

    From his vantage point in Spain, he has seen fierce resistance to the government’s attempts to cut public sector wages. A strike this week was seen as a dress rehearsal for a wider general strike ahead.

    “Just talking about it — Spain reducing civil servants salaries by five percent — is causing all fury to be unleashed. I don’t think they are going to do it. So I put forward this idea is that maybe the simplest and quickest solution is for Germany to go back to the mark,” he said.

    Germany abandoned the Deutschemark in 2002 when it joined the single currency.

    The theory is that Germany’s exit would prompt a steep fall in the euro, which would go some way to restoring the competitiveness of Germany’s debt-strapped neighbors including Spain, Portugal, Greece and Ireland. Exports would rise, allowing them to put money aside to pay their debts and to service the future needs of their ageing populations.

    In time, he said, Germany could consider rejoining the euro after a correction in the region’s economic imbalance.

    Hugh believes Europe’s problems are rooted in demographics; countries with a high proportion of young people have amassed debt which those with aging populations are now under pressure to service.

    “If you look at the countries that have housing booms, the United States, Britain, Ireland, Spain — they are all young societies. And the societies that have been paying for these booms like Germany, Japan, Sweden are much older societies who generate surpluses because of the dynamics of saving and borrowing,” he said.

    “This money is then lent to the societies that are still with sufficient proportions of people in the younger age groups who have been doing a hell of a lot of borrowing.”

    Hugh said demographics do not explain everything. “Having a good central bank and a sound monetary policy is useful. And structural reforms and high quality institutions also help a lot. It’s not a one-sided thing,” he said

    He predicted that if Germany didn’t leave the euro, pressure one day would be so intense that the country’s political leaders would be forced to break free of the union by a population tired of bailing out its debt-stricken neighbors.

    “If these countries — like Spain, Portugal, Greece, Ireland — can’t find a way to get back to growth then the debt is just going to mount and mount and mount on them.

    “There’s no future for any country that is in the sort of mess that these countries are in — they need the protection of the eurozone,” he said.

    “It is much more feasible for Germany to say, ‘Hey guys 28 percent of our GDP — and it is growing as a percentage now – is in exports that go outside Europe or outside of the eurozone. So what do we have to lose by coming out?'”

    And remember that German debt is in euros so if the Germans went back to the mark it would be much cheaper for them to pay,” he added.

    Hugh told CNN that his rising popularity as an economic commentator had led to job offers of which he had no intention of taking.

    “God no,” he said almost incredulously when asked he could be tempted to leave his rural idyll in Spain.

    “I moved here to get way from the office. All these offers I’m getting really, they can go and jump in the lake as far as I’m concerned,” he said, before adding, “but I am certainly willing to help the IMF sort Spain out.”

    He knows they know where to find him.

    http://edition.cnn.com/2010/BUSINESS/06/09/spain.hugh.blogger/index.html?hpt=C1

    (Edit: CNN changed the title)

  • #99011
    Profile photo of Anonymous
    Anonymous
    Participant

    We meet for lunch once a month.

  • #99012
    Profile photo of Anonymous
    Anonymous
    Participant

    Interesting thoughts – Germany going back to the Deutsche Mark and leave the Euro to the PIGS.

    I think most of the germans would like this idea -beside our politicians, as we were never asked to give up our “Deutsche Mark”

  • #99013
    Profile photo of Anonymous
    Anonymous
    Participant

    I’m in Switzerland today, where my highly-educated cousin hasn’t had a pay rise in 10 years. In Spain, on the other hand, salaries have risen automatically every year for the past 10 years, often above inflation. Is it any surprise, then, that Spain has become so uncompetitive compared to places like Switzerland and Germany? My Swiss cousins don’t go to Spain on holiday any more because it is so expensive. They now holiday in Switzerland (which ain’t half bad, by the way).

  • #99014
    Profile photo of Anonymous
    Anonymous
    Participant

    Mark, bring this to the attention of the tourism minister/department. Until very recently they were & I dare say even today thinks that sun only shines in Spain. Being an Ostrich is very much ingrained in Spanish thinking.

  • #99015
    Profile photo of Anonymous
    Anonymous
    Participant

    @sunwind wrote:

    ……as we were never asked to give up our “Deutsche Mark”

    Find that ironic as it was Germany’s politicians who were instrument in coming up with the bl***y Euro idea in the first place.

    Incidentally, if it’s any consolation, we never asked Gordon Brown to sneak over to Portugal and sign us up to the Lisbon Treaty either.

    Unfortunately most of Europe now lives under a totally-undemocratic dictatorship, no matter who we vote for in our individual countries. Our so-called leaders’ hands are tied like a trussed-up cow, to be branded with a big fat EU logo. Personally I hope the whole experiment falls down the pan so one day we can all get back to running our own countries. America and Canada happily trade together despite having their own laws, currencies and borders – the EU only serves to keep the elite running the whole thing in silk suits and an expensive lifestyle.

    If they genuinely wanted to save money they could, for a start, let their insanely-expensive offices in Strasbourg become a ‘European University’. Bouncing around once a month between there and Brussels (and their ‘expenses’ involved in this farce) just about epitomises how ridiculous these people are.

    It’s no coincidence that the currencies of countries like Norway and Switzerland are doing well, the EU are not able to stick their nose in their business. Between the Spanish politicians, the corruption mind-set and being tied to the Euro experiment I can’t see Spain getting back on its feet anytime soon.

  • #99017
    Profile photo of katy
    katy
    Spectator

    @mark wrote:

    I’m in Switzerland today, where my highly-educated cousin hasn’t had a pay rise in 10 years. In Spain, on the other hand, salaries have risen automatically every year for the past 10 years, often above inflation. Is it any surprise, then, that Spain has become so uncompetitive compared to places like Switzerland and Germany? My Swiss cousins don’t go to Spain on holiday any more because it is so expensive. They now holiday in Switzerland (which ain’t half bad, by the way).

    I lived (and worked) for 2 years in Geneva, loved it! A little village by the lake called Versoix…magic 😀 and the winters were much drier than Spain.

    Read this morning that Zapatero has failed to obtain agreement with the Trade Unions re. working practices.

  • #99018
    Profile photo of peterhun
    peterhun
    Participant

    @shakeel wrote:

    Mark, bring this to the attention of the tourism minister/department. Until very recently they were & I dare say even today thinks that sun only shines in Spain. Being an Ostrich is very much ingrained in Spanish thinking.

    Whats interesting is how Edwards opinion have gone from being completely ignored (and he discussed it about a year ago) to being on top of the agenda.

    I’d say that what he suggests has a 70% chance (at this time) of actually happening becuase the Germans would have everything to gain from it and are capable of making the decision themselves.

  • #99019
    Profile photo of Anonymous
    Anonymous
    Participant

    I have been following Edward’s blogs for quite some time now. His arguments have always made sense to me.

    It is good to see him get such recognition at last although I’m not so sure about his thesis that Germany will leave the euro rather than the weaker countries. The ECB is, after all, founded on the principals of he Bundesbank and based in Frankfurt. I can’t imagine the Germans wanting to cede control of this. The question re. the survival or not of the euro is indeed a valid one but I just don’t see Germany unilaterally walking away from it.

  • #99020
    Profile photo of peterhun
    peterhun
    Participant

    @brianc_li wrote:

    I have been following Edward’s blogs for quite some time now. His arguments have always made sense to me.

    It is good to see him get such recognition at last although I’m not so sure about his thesis that Germany will leave the euro rather than the weaker countries. The ECB is, after all, founded on the principals of he Bundesbank and based in Frankfurt. I can’t imagine the Germans wanting to cede control of this. The question re. the survival or not of the euro is indeed a valid one but I just don’t see Germany unilaterally walking away from it.

    I think that the beauty of it, Germany can do what it likes as the strength of its currency would be dearly wanted by the southern euro nations (Suro? Piggo?). It could leave and return in a controlled manner and on its terms. If German abandoned the Euro it would be far far easier than if Spain or Greece left as neither would ever be allowed back in. Although Greece should never of been allowed entry in the first place.

  • #99022
    Profile photo of Anonymous
    Anonymous
    Participant

    While we may bash the EU and how our great & wise sign up to all and sundry. How many of us note that all that screws citizens or fleece higher taxes the British government implements with zest. How many of us know that EU allows to amend practises according to the needs of the Country or its regions.

    How many of us know that the car scrapping scheme has been in practise in EU for a number of years. Britain did not act on it while the motor industry got decimated.

  • #99025
    Profile photo of peterhun
    peterhun
    Participant

    So we are left looking for “doable” alternatives. From a purely technical point of view it could be very constructive to have an organized exit by Germany, allowing the euro to drift downwards for a time, while growth returns to the periphery.

    If a new German Mark was trading at around 140 to the dollar, while the euro was at 80 or 90, all the peripheral economies would be rapidly kick-started back to life.

    http://edition.cnn.com/2010/OPINION/06/10/edward.hugh.blogger.eurozone/index.html?hpt=C2

  • #99033
    Profile photo of Anonymous
    Anonymous
    Participant

    A German referendum on staying in the Euro would produce the same result as a UK referendum on joining it. The Euro could only work in a politically united Europe, which has panicked the US for years, and they have done everything within their considerable power to prevent it. Old Europe frightens them, it’s where they came from and they don’t like to be reminded.

    Thus, the federal states of Europe are now dead in the water and the nationalists can rejoice. It will be left to Germany to challenge the American Dollar when they return to their Deutschmarks and they are too small to succeed.

    And the peripherals? They’ll go back to what they’re good at. Spain is for holidays, ain’t it? Same as Greece and Portugal.

    And the Big One? World-wide banking services, that’s what we’re good at. The Arabs and Russians need somewhere to trade their oil, and if it’s got the Royal seal of approval, so much the better. The recession was an American induced blip, we’ll bounce back. We might have lost the empire, but the foreigners still fear the sound of the bagpipes and resolute redcoats, even if they’re red-coloured braces worn by the city traders.

You must be logged in to reply to this topic.