Europe | - Part 5

Ukraine Crisis Escalates

This item at the new and improved Vox website depicts the situation in Ukraine where protests and the takeover of government buildings in the country’s eastern region have reignited the crisis that began over the winter and has been on simmer so far in the spring.

As noted in the report, this is how things started in Crimea before that region was annexed by Russia, so, in the words of Jesse Pinkman and Walter Williams, “There’s that.”

Here’s the latest via CNN:

I wouldn’t mess with that guy in the white ski mask.

Europe’s Shifting Borders

Since Russia annexed Crimea there have been a number of videos such as the one below about how European and Eastern Asia borders have changed over time, but this is one of the very best of them ( at tip of the hat to Marc to Market).

Of course, what’s interesting about this is that Crimea has been part of Russia for the vast majority of the last 300 years. That’s pretty much the case for Ukraine as well, but aside from Russia, there are few (if any) other regions that are quite as Russian as Crimea.

Lord Turner Warns on U.K. Housing

They continue to talk about how unbalanced the economic recovery is over in the U.K. and how a lot of people seem to be fine with that, this Telegraph story following on the heels of Jeremy Warner lamenting “This Guilty Return to Pre-Crisis Norms” yesterday.

Today, it’s former Financial Services Authority Chairman Lord Adair Turner.

Britain’s property obsession has left the country at risk of another major financial shock, the former head of the City watchdog has warned.

“We have made it incredibly favourable to buy houses,” Lord Turner told The Telegraph. “The supply issue is very important and we’ve got to increase the supply of housing because otherwise we are just piling up very strong incentives to buy housing, very strong incentives to borrow money to buy housing but against a fixed supply.”

If you do that the only thing that can give is the price.”

Lord Turner also said he was “worried” that the UK was “developing a recovery which is simply returning to the very issues that led us to this problem in the first place.

“Even the Office for Budget Responsibility has said the only way we’re going to get growth back in the next five years is for the [debt to income ratio] to go all the way back to 170pc again. If in five years time debt has gone back up to 170pc, and if interest rates have returned to 3pc, 4pc or 5pc, then a lot of people are going to be struggling.”

As noted here recently, it really does seem to be a case of policymakers in Anglo-Saxon countries almost admitting that “financial bubbles are about all we have left”.

It’s as if they say, “Let’s get a really good asset bubble going again – stocks, housing, whatever – and we should have a few good years of economic growth before it blows up.”

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In his commentary A depressingly familiar reality lies behind the UK’s economic miracle in the U.K. Telegraph, Jeremy Warner laments how the economic recovery engineered by Chancellor George Osborne and Prime Minister David Cameron looks a lot like the last economic recovery a few years back that ended in, well, you know, tears.

True enough, the economy is recovering fast, with a growth spurt which ought, absent of external shocks, to last well beyond the next election.

Unfortunately, it’s the wrong kind of growth again. What is more, Office for Budget Responsibility forecasts give little reason to suppose it’s about to change into something more lasting. The hoped-for revival in exports remains almost entirely absent from the feast of more upbeat OBR forecasts.

For at least the next five years, growth is predicted to depend entirely on rising household spending, a recovering housing market, and the questionable assumption of a trampoline-like bounce in business investment. Net trade is not expected to make any contribution at all.

More worrying still for those who think of the pre-crisis economy as a debt-fuelled ponzi scheme, rising private consumption looks as if it will again be bought with a return to very high levels of household debt and a pitifully inadequate savings rate.

This guilty return to pre-crisis norms is compounded by another surge in household indebtedness, which because of low mortgage market activity since the start of the crisis, had been mercifully moving back to tolerable levels.

Not any longer, according to the OBR. With a pronounced shove from government, mortgage lending is storming back. So too is double-digit house price inflation, necessitating larger average mortgages and rising household indebtedness.

Growth in unsecured credit, too, has picked up sharply, boosted by loans for car purchases, which have been flying off the books as if the recent banking crisis never really happened.

On both sides of the Atlantic, poicymakers are saying, “Hey, bubbles are all we got”.

Also, the question of the sustainability of the U.K. economic recovery notwithstanding, there’s not been much from Nobel Laureate economist and NY Times author Paul Krugman on the recent success of the austerity measures in the U.K. that were once thought to be doomed to fail. If there has been and I missed it, leave a comment…

Putin, the Arsonist

Along with some stern words from German Chancellor Angela Merkel both last week and again today, Der Spiegel came out with a number of reports and commentaries on Russia’s foray into Southern Ukraine that was accompanied by the cover image shown below.

Translation: The Arsonist: Who will stop Putin?

See also:

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