A country in the Eurozone is required to pay a high interest rate to borrow money from another country in the Eurozone. This is the first attempt to make all the Eurozone countries to be responsible for helping each other without claiming any help from the outside European Union (EU). As long as Maastricht treaty restrict the rate of national debt balance to GDP, Eurozone countries are not able to incur their national debt enough to stimulate their economy. Therefore, the relatively well-off countries joining the European Monetary Union (EMU) are expected to subsidise the stagnating countries.
However, lending money to individuals with a high risk premium requires charging a high interest rate enough to cover the risk premium because the lender should not make a fatal loss on a budget, which causes the lending country to fall in to another recession.
This Eurozone macroeconomic policy is very unstable!
Mr. Jean Claude Trichet(Read about his articule in this blog!) also highly criticised this unstable fiscal rule, charging high interest rate for countries borrowing from another country inside the Eurozone.
Mr. Trichet is remarkably intelligent enough to realise the current Eurozone economic system is notoriously unstable.
The Eurozone should install the European federalism with the ECB bond by relinquishing the right to incur national debt in all the Eurozone nations! Otherwise, the EMU should be dissolved (i.e. abolish Euro, the common currency), and remove the restriction on incurring national debt stated by Maastrict treatyin order to enable them to set their own interest rate for their own monetary policy to adjust their own money supply and their liquidity to their economic stimulus.
If the ECB bond is incurred, the value of national debt traded in the international market is determined by the economic performance of the Eurozone economy. Instead of penalising a relatively well-off Eurozone country, the Eurozone economy should incur the bond with their collective responsiblity. If the debt is incurred by the collective responsibility, the risk and the interest rate is spread out to all the Eurozone nation. Therefore, one country doesn't have to pay an excessively high interest rate meanwhile a relatively well-off country does not need to be penalised (Although they might need to contribute to pay the interest rate of the ECB bond, but the cost and the risk are still obviously lower than the cost and the risk of lending money to a country in a terminal recession).
In addition, if the entire Eurozone economy is expected to recover by the fiscal stimulus financed by the debt, the value of the ECB bond will continue increasing so that more traders will purchase it. A high volume of finance flow from both private companise, individual citizens, and the government outside the Eurozone will be expected as the ECB bond is introduced. This is the golden rule of the national debt. As the credit rating of the ECB increases, the limitation of incurring the debt will be less restricted unlike the current Eurozone system.
The current Eurozone system will stagnate the Eurozone economy further. In order to avoid this situation, the Eurozone economy "has to" either dissolve the EMU or establish the common treasury under the Euro-Federalism. Nevertheless, in order to establish the more stable system than now by keeping the common currency, a furthermore efficient fiscal policy (spending on the government expenditure with a lower cost of taking tax) needs to be put into practice. On the top of it, the fiscal policy in all the Eurozone country has to be strictly counter-cyclical to their own business cycle relative to the one of the entire Eurozone in order to adjust their economy to be harmonised with the entire Eurozone economic environment. One country will no longer be able to diviate their fiscal policy rule from the other Eurozone countries.
Tuesday, November 02, 2010
Friday, August 13, 2010
Analysis of the UK labour market and the immigration
I agree with the statement that "Britain has an oasis of talent only problem is they recruit all the crap." Great Britain has educated so many talented people, especially in Scotland, but they tend to leave this country because of this fact.
My point is that the UK and the Western EU countries tend to prefer the EU imigrant to the non-EU altough the one from the EU has a lower class qualification than the one from the non-EU. I have seen the fact. Furthurmore, they prefer Japaenese citizens who have already got the UK permanent residencial VISA to the Japanese persons who do not like me. It is mainly because of the bureaucracy. The companies tend to want to avoid the extra bureaucracy. This is the statement that the recruit agencies told me as well!
In 1990s in Britain, there was a notorious wage inflation. I am sympathetic to the fact that the UK Labour government wanted the cheap manual labour force imigrants from the EU Eastern European countries to calm the wage inflation down.
But, my concern is that the "intermediate class" job which I have been trying to get. When there is an obvious a world class achievement indicated in the CV, it does not matter. But, such indivdiuals with this sort of CV are not majority. Majority of the applicants of skilled non-manual jobs are highly discriminated between the EU and the non-EU. Because this sort of job is difficult to access propery.
For the manual labour jobs, it is irrelevant to measure the specific skills apart from the efficiency to work under the cheap wage.
But, my situation is not entirely fair condition. I have spent 6 years for the education overhere, and obtained MSc and Honours in Bachelor with a good grade.
As I also studied in microeconomics in MSc, the information on the labour market tends to be assymetric so that the insurrance and the personal connection exist there to avoid the unseen risk.
Of course, people recognise if there is a world class achievement. But, as a matter of fact, this kind of labour force is such limitted.
My point is that the UK and the Western EU countries tend to prefer the EU imigrant to the non-EU altough the one from the EU has a lower class qualification than the one from the non-EU. I have seen the fact. Furthurmore, they prefer Japaenese citizens who have already got the UK permanent residencial VISA to the Japanese persons who do not like me. It is mainly because of the bureaucracy. The companies tend to want to avoid the extra bureaucracy. This is the statement that the recruit agencies told me as well!
In 1990s in Britain, there was a notorious wage inflation. I am sympathetic to the fact that the UK Labour government wanted the cheap manual labour force imigrants from the EU Eastern European countries to calm the wage inflation down.
But, my concern is that the "intermediate class" job which I have been trying to get. When there is an obvious a world class achievement indicated in the CV, it does not matter. But, such indivdiuals with this sort of CV are not majority. Majority of the applicants of skilled non-manual jobs are highly discriminated between the EU and the non-EU. Because this sort of job is difficult to access propery.
For the manual labour jobs, it is irrelevant to measure the specific skills apart from the efficiency to work under the cheap wage.
But, my situation is not entirely fair condition. I have spent 6 years for the education overhere, and obtained MSc and Honours in Bachelor with a good grade.
As I also studied in microeconomics in MSc, the information on the labour market tends to be assymetric so that the insurrance and the personal connection exist there to avoid the unseen risk.
Of course, people recognise if there is a world class achievement. But, as a matter of fact, this kind of labour force is such limitted.
Thursday, August 12, 2010
My favourite quote of Max Stirner
“He who must expend his life to prolong life cannot enjoy it, and he who is still seeking for his life does not have it and can as little enjoy it.” --- Max Stirner (Anarchist)
Japan will be far more isolated from the global community...!
Wednesday, Aug. 11, 2010
Budget cutters target JET
'Amakudari' excess or 23-year success in soft foreign policy?
Who want to go to Japan to friendly communicate with Japanese? Only those paid by them do! Any people from the advanced Western countries coming for business would not have much time to communicate in the local community.
This has been the only way the ordinary Western people (North American, Western European, Australian, and New Zealander) come to Japan, and Japanese could know their civilisation and culture! I was highly benefited by this JET programme! If there had not been this programme, I would not be successful like now! Japanese government should cut the other "Amakudari"; not the JET one!!
Friday, August 06, 2010
I rescpet Jean Claude Trichet
Although I am highly sceptical about the currently ongoing system of the European Monetary Union, I really respect Mr Trichet! This is the "good example of monetalism" i.e. not a nihilistic and normative monetalism: Trichetian monetalism is realistic and functional! I really think, among the advanced nations, the US Federal Researve and the European Central Bank are respectable central banks: I seriously despice the other central banks in the advanced countries such as Bank of Japan and Bank of England! All in all, Mr. Jean Claude Trichet is a great governer! He is from Nancy in the north east of France where I visited once and is famous for Art Nouveau and Jeanne d'Arc. This proves a civilised place nurtures and educates such a civilised person
Yep, as long as the EU is willing to amend the current unstable structure of the EMU, the Eurozone economy will develop further and take an initiative in the global economy.
I am totally apathetic about the ideological issue, but I strongly concern about how the newly invented common currency system and the evolution of European unionism go on in the future!
I would say, the Euro is short in the short term, but long in the long (probably and the midium) term!
Mr. Trichet had a right choice to keep a certain level of interest rate unlike BoJ and BoE having setting sizeably low! Furthermore, as the interest rate goes up (what Mr Trichet has done) , the demand of purchasing national debts goes up, and the positive inflation will be encouraged due to repressing unnecessary supply of capital and encouraging a strong capital fonded by the increased saving. As the positive inflation occurs, the nominal wage starts going up by wage burgaining because the price of goods and services eventually goes up so that people have to burgain for their income. But, as the export demand increases the employment won't decrease as the overall productivity goes up in this economic region by rise in the interest rate. Good courage!
Yep, as long as the EU is willing to amend the current unstable structure of the EMU, the Eurozone economy will develop further and take an initiative in the global economy.
I am totally apathetic about the ideological issue, but I strongly concern about how the newly invented common currency system and the evolution of European unionism go on in the future!
I would say, the Euro is short in the short term, but long in the long (probably and the midium) term!
Mr. Trichet had a right choice to keep a certain level of interest rate unlike BoJ and BoE having setting sizeably low! Furthermore, as the interest rate goes up (what Mr Trichet has done) , the demand of purchasing national debts goes up, and the positive inflation will be encouraged due to repressing unnecessary supply of capital and encouraging a strong capital fonded by the increased saving. As the positive inflation occurs, the nominal wage starts going up by wage burgaining because the price of goods and services eventually goes up so that people have to burgain for their income. But, as the export demand increases the employment won't decrease as the overall productivity goes up in this economic region by rise in the interest rate. Good courage!
Saturday, July 10, 2010
The 5 conditions to join the European Monetary Union
There are the 5 conditions:
1. High trade frequency with the Eurozone
2. Flexible Labour Mobility
3. Harmonised Business cycle with the Eurozone's
4. Sophisticated fiscal policy and a long history of the tight monetary policy
5. Political integration.
The score for the UK:
1. Tick!
2. Tick! But, conditional. The UK should stop the unfair welfair distribution system! The way to select the individuals to gain the benefit much more carefully...
3. No. The financial regulation system has to be more centralised and controlled by the mainland EU.
4. Not too bad compared to Mediterraneans.
5. Conditionally tick. Depends on how the USA reacts, and how the EU performs in the diplomacy. In addition, the nuclear issue is a big matter! The UK nuclear technology sharing must shift from with the USA to with France. All the nuclear plants should be owned by the EU gov't!
The biggest challenge for the UK to join the EMU is the question No. 3. The UK has a strong trade tie with outside the EU, and the UK industry has been sustained by her remarkably famous very liberalised financial market. It'll be a big challenge for the UK citizens to abandon their tradition as the centre of internationan financial market... In addition, the problem of the question No. 5 is France.
France has to abandon her nationalism! France has to make the nuclear technology shared with the EU gov't!
>I'd be keeping an eye on German politics. They are paying for the Greeks and others.
I think (and feel) the continental Europe will survive with the EMU. In fact, meanwhile the EMU needs to enforce transformation (It will be oppressive) to the European Federalism, the economy eventually will be stabilised and face an economic recovery in 2014.
Creation of the "Eurobond" is better than enforcing one country or a few countries to transfer their tax revenue.
If I were the EU governor, I would have made all the Eurozone countries to DEFAULT in order to abolish all the national debt of these member countries. Then, all the fiscal stimulus packages should be paid off by the "Eurobond" i.e. collective responsiblity among the all Eurozone countries. This way will give much better prospect for the economic growth inside the Eurozone so that the Golden Role will be encouraged. In this way, the Eurobond will be more popular to be purchased so that the EU finance will be much lucrative.
In addition, I wonder how the USA reacts, and how France is willing to share the nuclear issue with the UK.
* The advantange for the UK to join the EMU:
1. Becomes easier to establish a branch of Europe in the UK and of the UK in Europe.
2. Financial market is more integrated with the EMU countries so that the risk of shock in the financial market is shared among the EMU countries
3. If the Euro-bond is created (This is the final condition to support joining the EMU!), the UK will take an advantage of the credibility of the Euro and the Euro-bonds (Creating the common currency also requires the common bond i.e. abolishing the national debt system)
But, whereas there are various advantages, I am a wee bit still sceptical about this integration...
1. The power of trade unions need to be diminished (Which is good, but the wage bargaining power of labourer in the entire EMU needs to be 10% or below so that the riot of labourers may occur)
2. The fiscal policy should be dictated by the EU central gov't, and weaken the dicision making power of the national gov't (especially during the first step of the estabilishment: It can allow more decentralisation after the status-quo of the EU federation is stabilised)
3. Immigration law for non-EU skilled labour force will be much stricter than now so that I am wondering if """I""" may have a disadvantage :( (This is the statement the UKIP put emphasis on)
Subscribe to:
Posts (Atom)