Economics, Politics

A resurrection of European political extremism

N.B.: The following article was originally published by Brown Political Review:

I had the privilege of editing for a section titled “Political Extremism in Europe”, which was featured in the Spring/Summer 2013 edition of the Brown Journal of World Affairs . The premise of the section was quite simple: Europe’s sovereign debt crisis, poorly-assimilated immigrants (particularly Arabs), and several other social and political fault lines had caused a rise in political extremism (mostly on the right) in several EU nations. Parties across the Union were calling for what many saw as deep neo-Nazi and anti-immigrant sentiment, and none of it was pretty.

Greece’s Golden Dawn had just fared surprisingly well at the polls, and France’s National Front (FN) had just—for the first time—won two seats in the National Assembly under Marine Le Pen. Both parties were prime evidence at the time.

But not long after, all the hype about neo-Facism faded. Francois Hollande’s much tamer Socialist government reasserted dominance in France, and Greece’s deepening economic woes led most of its media attention away from fringe politics and toward Mario Draghi’s presidency over the ECB.

Well, it’s happening again (sort of).

People are certainly flocking to these same eurofringe parties, but for different reasons. Immigration and other social issues have taken a backseat to Europe’s crushingly high debt, unemployment rates (roughly 27% in Spain and Greece), and anemic growth this year that underperformed expectations. I should note that the EU as a whole actually didn’t do too badly in 2013, but that’s mostly thanks to a surprising amount of growth in Eastern Europe. (The Czech economy expanded faster than it has in the last six years.) But Western Europe, where things are much, much worse than they have been in decades, truly isn’t doing so well economically.

How have people responded? Take a look (à la Quartz):


The candidates of these parties, by and large, are running to overthrow the EU. Yes, social issues like immigration are still on their minds, but what’s truly different and somewhat grandiose this time around is that many of these parties are working together, across national borders and restrictions, to muster support and political power at the super-national level—the European Parliament itself.

I find this quite scary for a few reasons: (1) regardless of your stance on the EU as a financial institution, the social planks upon which many of these parties were founded are frankly horrendous (see, for example, a leading Golden Dawn member calling Hitler at “great social reformer” and “military genius”); and (2) as somewhat of a corollary, very few economists expect Europe to suddenly explode with growth and FDI and spending in the next few years, and what that means is that the conditions the average Western European must face—think of the 56.1% youth unemployment in Spain—are not going to improve anytime soon. I wouldn’t claim that correlation implies causation, but it’s easy to frame an argument that support for these ultranationalist, neo-facist parties will probably continue to rise.

That doesn’t bode well for Europe politically. And economically, frankly.

Economics, Sundries
Chinese Vice-President Xi holds a glass of red wine as he toasts a dinner to mark the 40th anniversary of President Richard Nixon's historic visit to China in Beijing

Reuters/David Gray (click for link)

An interesting article from Quartz on China’s wine consumption. Interestingly enough, it looks like the US, China, and Brazil are the only economic powerhouses where wine consumption has increased since 2008. Of course, China’s increase is unlike any other nation’s, perhaps due to a rapid rise in the number of HNWIs and a growing class of elite business owners.

Economics, Politics

Global money matters entering 2014

Welcome, 2014?

Welcome, 2014?


  • Real government spending has been increasing steadily since Q4 2012. Back then it was at -6% (annualized rate), and by Q3 2013 it had reached roughly +0.25%. Q4′s numbers should be up from Q3 since Congress managed to agree on a comfortable budget deal for the first time in years.
  • While QE3 will end shortly, interest rates will stay where they are at near zero until “sometime in 2015″, when the Federal Funds Rate should rise to 1% if all remains well (William Strauss, Senior Economist & Economic Advisor at Chicago’s Federal Reserve Bank).
  • Unemployment has been falling quite nicely since Q1 2010 and should hit 6.5% at the start of 2014 (Morgan Stanley US).
  • Spending was up each month of 2013 in core retail sales, and beyond that, growth from equities and real estate has put nominal household net worth above $75 trillion. That’s roughly $10 trillion above its high point in 2007 before the crisis.
  • Trade imbalance numbers look promising—the gap is at its lowest point in 3 years (roughly $-35 billion). More on that from the BEA.

Black swans aside (China?), 2014 should be a year of growth. Most economists think that increased household spending thanks to the falling unemployment rate is enough to keep the economy growing above trend. And with financials looking healthier than they have in a long time, it’s hard to bet against them.


  • George Soros wrote an awesome Op-Ed for Project Syndicate in which he painted a grim picture of China’s future. In his own words:

“The major uncertainty facing the world today is not the euro but the future direction of China. The growth model responsible for its rapid rise has run out of steam.”

  • I say this is grim because it’s a bit at odds with current macroeconomic discourse. Yes, we know there’s a debt issue in China. No one is doubting that. But what people are doubting is the notion that it’s going to affect China’s growth in a serious way. (Namely, that their GDP numbers and infrastructure projects will suffer.) It’s only fair to note, however, that the past few times the government has rolled back lending to push companies, cash shortages have occurred. So maybe Soros and others are right about China; maybe Xi Jinping has more work cut out for him than he thought, especially when you consider how little the CPC has been able to do so far.
  • Of course, the one good headline out of China is the central government’s plan to allow the creation of new, privately held banks. A strong private banking sector should give private firms easier access to credit, something they’ve struggled to secure for years now as state-owned firms have dominated industry. Some perspective: Loans to small businesses from China’s largest bank in terms of assets (and customers), the Industrial and Commercial Bank of China, accounted for just under 21% of total lending. That’s not a whole lot, but with a rising industry of privatized banks, those numbers—as well as small business numbers—should be on their way up.

Quick notes on Japan and the Eurozone

  • Abenonmics seems to be working. Klaus Baader, chief Asia Pacific economist for Société Générale, expects the Japanese trade balance to shrink in Q2 2014 even as the Yen stays on track to reach ¥110/$1. That’s good stuff, especially when you consider that national demand grew at an annualized rate of 2.7% from Q1-Q3 2013. Great news for Japan, a nation that has battled stagflation for a few decades now.
  • In December 2013, Core inflation hit its lowest point since the creation of the Euro (0.7%). In fact, inflation has been falling quite steadily since July 2013, but many fear that such a trend will lead the Eurozone into a long period of deflation (just like what happened in Japan). The ECB seems to be quite aware of those implications, but analysts at Nordea don’t think they’ll act just yet.


Economics, Politics, Technology

Solar is actually viable

One of my favorite websites these days is

It’s not an artfully crafted news aggregator, and it doesn’t feature new thought or commentary either. Rather, it features a collection of maps, charts, infographics, and other data representations that the site’s admins painstakingly add each day from all corners of the web.

The most moving addition so far, at least in my eyes, doesn’t even fit the criteria of what they usually post. It’s just a picture from Wikipedia that estimates the area of solar panels needed to power the entire world as per current energy consumption levels, and you’d be surprised just how little land is necessary. Fullneed(On a side note, I recently took ExxonMobil’s Energy Quiz and was surprised to learn that US power consumption is actually expected to fall over the next 30 years or so. During that period, global demand for wind, solar, and biofuels is expected to rise fivefold.)

Anyway, back to the image. It’s quite a telling sight because it illustrates how viable it is for solar to accomplish what many claim solar can never. It’s a moving sight that certainly gives me hope for alternative energy’s place in the future of production and consumption. But it’s also quite frustrating to see when considering the political gridlock that has plagued our renewable energy policies.

It doesn’t take long after a look at that picture to start extrapolating in your head a rectangle of similar size over the US. There are dozens of options here that could work, and many of those incidentally get almost as much sunlight as the Sahara Desert does (and also are completely uninhabited).

I realize the cost of setting up such a system is quite enormous, but I also believe that anyone who ventures into such a colossal project is bound to be rewarded. And by rewarded I mean paid, big time. India and China, for all the growth that they’ve seen over the past decade or so, have each faced several energy crises in recent years. Think of all the energy we could export eastward, and at rates that they’d have no choice but to accept. Additionally, it’s well documented that solar hardware prices have been falling in recent years due to technological innovation and the Chinese getting involved in production. So who knows how expensive inexpensive such a project will be in a few years.

Solar certainly has a future, and this image is a good means of proving that.