Monday, 14 December 2009

We should all get free hand free phone devises from our car insurance provider.

Yesterday i saw four accidents in Nicosia. Three of them had the markings of a "i was not looking because i was on the mobile phone". We have all seen those drivers who have their one hand on the phone while speeding in very narrow streets. Heck if we are honest we have all done it, at least once. Maybe it is your boss or it might be the school of your child - you feel like you do not have any other choice than to answer your phone even when driving.

The cost of such accidents is very large. Since they are resolved with the help of the police, the minimum cost of an accident is the cost to repair the cars as well as the wages of at least two policemen for two hours. If the insurance premium is 130 euro, then the cost of an accident, even if they are just bumps on both cars far exceeds it. There is also the cost of getting caught by a policeman talking on the phone while driving: 84 Euro and 3 points on your licence.

So what i am suggesting is for car insurance companies to provide free wireless earpieces to all its insured drivers but ask an additional excess in the event of a crash while on the phone. It is a win win scenario for all and particularly for the insurance companies. The drivers get something that they might not consider as necessary until after they crash; the police can use the saved man hours to resolve other issues; and the insurance companies get free promotion, smaller payouts and safer drivers.

Yet sadly i do not think this will take place - it is an obvious choice for an economist who looks at dynamic benefits for the insurance company, but anathema to an accountant who only sees the static costs of insurance companies rise.

Friday, 11 December 2009

The economics of cutting carbon emmisions

A very good friend of mine does not believe we should cut carbon emissions. His argument is that either there is no climate change or if there is we are too late since we have ruined the world already - we just can't cut emission enough to revert the process. I disagree and have used rational (but very economic thinking) to explain why this can not be so. He does not understand me - so i thought i will but it in an economic blog and you can tell me there is a flaw in my thinking.

We can not calculate the true cost of climate change - its actual repercussion are not revealed to us in full. We do know the worst case scenario though: that within a span of some generations we will totally ruin our environment and our civilization, perhaps even destroying life. This is by far the most extreme case: in this case the cost of climate change is infinite - to quote REM "its the end of the world as we know it". Since the true cost is not revealed to us we have to assign a cost in terms of probabilities. Lets assign a probability of 0.000000000000000001% chance of this extreme scenario to take place - a pretty slim chance.

At the same time we are not sure if we can reverse climate change- maybe my friend is right: we are too late. Yet we do not know this - once again the possibility of reverting climate change is not revealed to us. Lets say that there is a 0.0001% chance of reversing climate change by reducing the emissions of the Kyoto protocols.

Yet the true cost is infinite! thus the 0.0000000001% of infinite is infinitely costly. Since the future is infinite, it is worth spending any amount of money to try and stop it, even if it even has a 0.0001% of success.

Thus the argument is clear to me: the whole point of whether or not climate change is man made and reversible is pointless right now - it will be revealed to us in the Long Run. What is more important is start cutting emissions now, irrespective of costs and of the possibility of success; the cost of not doing so is too high.

Have a nice weekend

Monday, 7 December 2009

The Parking spot of the Government Spokesman

I had to go to 2 government agencies yesterday - and as always the experience was gruelling enough to knock me out for the rest of the day. First up was the Cypriot archive - the only government service that counts 2 working days not counting the one you are in (i.e monday) and not counting Friday. Apparently they go to work on Friday but since that day the archives are closed for the public (lord knows what they do) then it their logic Friday does not count as a working day.

I then went to the Press Information Office (PIO). I loved the new organisation of the newspaper archive and Mr. Demetris there was very helpful. However on my way out i was dismayed to see the scene below. There was not enough space for the cars of the government spokesman, the principal of the PIO and the attorney general right outside the common government building they share. So the solution was simple make one of only two handicapped parking spaces into the parking space of the government spokesperson.

This works perfectly: the government spokesman, the principal of the PIO and the attorney general are almost equidistant to the door. The poor handicapped driver or carer could of course park on the remaining handicapped space.

What happens to the remaining space? Since the press does not have dedicated parking places in the PIO parking lot the remaining handicapped space was swamped with 2 cars and 3 bikes bearing the "Press" sign... the handicapped could of course park in field below the PIO, then push themselves up the steep hill, avoid the park cars, and then ask someone to lift them up the stairs; the ramp was closed by the cars of the press.

Wednesday, 2 December 2009

Well done on Malta wining the race for a European Immigration asylumn centre

Well done Malta! I have mentioned before that Malta is much more competent in the cloak and dagger policies of the European Union. Despite previous dreadful incidents relating Malta and immigrants from Africa, Malta has won the unofficial race to host the new European asylum office. The office will be placed in a pretty derelict area of the Grand harbour, which lost part of its purpose with the replacement of the port with a Freeport in Marsaxlokk.

Do not be fooled - this took some hard lobbying, and i am guessing that it helped when the decision was made to place it to a new member state since immigration is an issue of Cyprus a Malta - with the other "new" states being emigrate countries. Cyprus was not consistent enough to win it and we were focused on the December deadline for the Turkish entry...

Monday, 30 November 2009

Why i think the new "Eleutheria" square will be a dissaster

I was in the library of the university of Cyprus when by chance i saw a very glossy book on Zaha Hadid. It was 50 pages of fawning praise on her work the "Car Park and Terminus Hoenheim North". It won quite a prestigious award.

There is no doubt that the terminal is pretty in a hard, concrete, kind of way. In the green expanse in the Hoenheim suburbs, this brings a Teutonic beauty. (OK you guessed it i do not really like it!).
What scares me is that Ms. Hadid's work is all like this - impersonal and concrete. In a city choked full of concrete and in dire need of greenery, baked silly during the summer months by the sun, the last thing we need is more granite, concrete and steel. I worry that we will miss the old "Elutheria square", with its tall trees on the side and the petty vendors in the middle.

Thursday, 26 November 2009


Three to four years ago I was having a conversation with a bunch of business analysts and financial investors. They were raving about Dubai and the money attached to it, and how happy they were that Marfin did a double take on Laiki using Dubai funds. I tried to point out to them that if one correlated the price of oil with GDP of Dubai (with a lag of one or two years), the correlation is very high - a first indication that Dubai's rise was all about oil. My father pointed the same in his newspaper articles in the Weekly but to no avail. You could see that Dubai was a huge bubble waiting to burst: at one point a quarter of all cranes were in Dubai, with one outladish project chasing another.

Now Dubai is not going to go away - a significant part of its growth was in construction which created capital (even if it devalued) and some of the assets bought across the globe are worthwhile. But people who invested in it will lose a substantial amount of money, and that is what my business analysts and financial investors worry most about.

Another friend of mine who is an investment analyst agreed with me about the bubble in Dubai. After all i was not the only one who saw the bubble coming and its link to the high price of oil. That friend is now in charge of a significant investment fund; his employers could not have picked a better man through these turbulent times.

Friday, 20 November 2009

For Blondie: A posthimus goodbye

Πριν οκτώ περίπου χρόνια ένας μπαγάσας φίλος με ξεγέλασε. Με πήρε τηλέφωνο καθώς κατέβαινα από τη σκοπιά και μου είπε ότι θα ερχόταν σε δέκα λεπτά με μια έκπληξη.
Εκείνη την χρονική στιγμή στη ζωή μου ένιωθα μόνος, αποξενωμένος από τους συνάνθρωπους μου λόγο της βαρεμάρας του Στράτου. Δεν μου ταίριαζε το χακί, με έπνιγε και είχα ακόμα ένα χρονάκι και κάτι... ψιλά να υπηρετήσω.

Ο Ευαγόρας ήρθε στο φυλάκιο με ένα κουταβάκι κούκλα. Ήξερε καλά τι έκανε, γιατί ήταν στολισμένο και καθαρό, και η ξανθή του χαίτη γυάλιζε στον ήλιο. Μου είπε ότι το είχε βρει προ ημερών, άγριο και εγκαταλελημμένο στην πράσινη γραμμή, και με την πρώτη του έξοδο το πήρε σπίτι του. Ο τεράστιος του σκύλος προσπάθησε να το κάνει μια μπουκιά..

Εμείς είχαμε χάσει τον σκύλο μας μόλις μετά της τελευταίες μου σχολικές εξετάσεις. Η μητέρα μου ήταν άρρωστη τότε, ο πατέρας δούλευε πολύ σκληρά και εγώ δεν είχα κρατήσει την υπόσχεση να την φροντίζω. Μετά από αυτό ο πατέρας μου ορκίστηκε ότι δεν θα ξαναπαίρναμε σκυλάκι, και έστησε την πίσω μας αυλή σαν την δική του όαση καλοκαιρινής ξεκούρασης.

Με την πίεση του Ευαγόρα πήρα τηλέφωνο τη μητέρα μου και της εξήγησα για το σκυλάκι. Έδωσα και πάλι μια υπόσχεση που δεν έμελλε να την τηρήσω. Η μητέρα μου ήξερε ότι δεν θα μπορούσα να την κρατήσω αφού θα έφευγα για σπουδές στην Αγγλία, αλλά δεν μου είπε τίποτα. Μόλις κοίταξε το κουταβάκι, φρεσκοπλυμένο και περιποιημένο, το δεκτηκε αμέσως.

Τα χρόνια περνούσαν και εγώ έφυγα για σπουδές στην Αγγλία. Το κουταβάκι ονομάστηκε Blondie λόγο του χρώματος τον μαλλιών της και επειδή εκείνο το καιρό είχε ξανακυκλοφόρησε δίσκο η ομώνυμη τραγουδίστρια με ένα φοβερό καλοκαιρινό σουξεδακι. Το κουταβάκι δεν μεγάλωσε και πολύ. Παράμεινε λίγο τρελούτσικο, αφού ποτέ δεν έμαθε πως να συμπεριφέρεται στους ενήλικες. Όταν έπαιζες μαζί του σε δάγκωνε δυνατά και μετά δεν καταλάβαινε γιατί το μάλωνες. Η μητέρα με δυσκολία έβγαζε τα ρούχα για στέγνωμα με το σκυλάκι να τη γρατσουνάει στα πόδια από την χαρά του. Ιδιότροπο με το φαγητό του, το σκυλάκι έτρωγε μπούτι κοτόπουλο και χώριζε τον κιμά από το ρύζι στο πιάτο της. Εγώ το εγκατέληψα εντελώς. Όποτε ερχόμουνα πίσω από τις σπουδές μου ένιωθα ότι το παραμελούσα και δεν μου άρεσε. Προσπάθησα να την αγνοώ γιατί μου υπενθύμιζε η παρουσία της την άδεια υπόσχεση μου. Την Blondie δεν την πείραζε καθόλου. Με αναγνώριζε αμέσως και τρελαινότανε με από την χαρά της.

Το σκυλάκι είχε παρά πολύ αγάπη μέσα του και την έδινε απεριορίστως. Το ήξερε ότι ήτανε λίγο τρελό και στις σπάνιες στιγμές που την αφήναμε μέσα στο σπίτι προσπαθούσε ανεπιτυχώς να είναι φρόνιμη. Ο πατέρας μου δεν το πολυσυμπαθούσε γιατί έχασε και πάλι το καλοκαιρινό του καταφύγιο. Η αυλή γέμισε κόκκαλα και η Blondie δεν σε αφηνε στιγμή ήσυχο . Ποτέ δεν άλλαξε γνώμη για τον σκύλο, αλλά έκτισε μια ιδιαίτερη σχέση αγάπης μέσα από νυχτερινούς περίπατους. Ο σκύλος δεν τον ‘κάρφωσε’ ποτέ για την παράνομη (λόγω υγείας) σχέση με το γειτονικό φούρνο και τις κολοκοτές του. Η Blondie έδινε την περσότερη αγάπη στα παιδία. Πέρασε τα χειρότερα βασανιστήρια από την ανιψιά μου και χωρίς ποτέ να αντιδράσει.
Εγώ πάντα πίστευα ότι ήτανε πανέξυπνος σκύλος, αλλά η μητέρα μου και οι αδελφές μου διαφωνούσαν. Η αλήθεια είναι ότι έκανε ανόητα πράγματα. Έσκαβε κάτω από τον φράχτη και μετά ερχότανε και γάβγιζε να τις ανοίξουμε από την μπροστινή πόρτα. Εγώ καταλάβαινα το λόγο. Ήθελε να περάσει κι άλλη ώρα μαζί μας . Η αλήθεια είναι με την είσοδο δύο καταπληκτικών εγγονών η Blondie δεν έπαιρνε την σημασία που έπρεπε αν και ποτέ δεν έλειψαν οι περίπατοι από τον πατέρα μου και γκουρμέ φαγητό από τη μητέρα.

Έπρεπε να το είχαμε υποψιαστεί ότι κάτι δεν πήγαινε καλά όταν άρχισε να δέχεται να την ταΐζουμε σκυλοτροφή. Δεν περιμέναμε ότι το θετό μας σκυλάκι θα υπέφερε τον καρκίνο τόσο στωικά, σαν μια αληθινή Αποστολίδου. Την τελευταία φορά που την είδα της είπα αντίο, και με κοίταξε με συγχισμένα μάτια . Α ρε μπαγάσα Blondie.

Friday, 23 October 2009

How to filter news stories in a Recession

AS some may know my thesis is effectively on the short term and long term effects of the great depression that occurred in the 1930s. This gives me a very nice “BS filter” to filter all the economic about the global resession. For example the British economy continuing recession is the biggest non-news story. I thought I would share it with you why that is:
1) Recessions are non linear- i.e. there is no decline of output then rise of output, then out of the recession. There are some signs of recovery that might be unsustainable, there might be decisions or bank closures that through the economy in new lows. This is because the recession does not affect all the economic sectors in the same way or at the same time casing different lags in the economic system.
2) When we are talking about recessions the quarterly GDP figures are next to useless. Firstly the margin of error for quarterly accounts is more than +/- 2%, meaning that it could well fool you into thinking the recession is over. This is due to the fact that you do not count everything in a quarterly GDP – you count some things and then assume the rest is equal. However in a recession most things can change – relative prices, inventories and even intermediate consumption (i.e. production methods and their cost) are altered as people take account of the changed economic circumstances.
3) A recession is not just an decrease in total output of the economy – it is also a state of mind. Malta did not experience a recession during the period of the great depression. The effect of the depression in the whole of Europe, including Malta was the alteration of spending habits towards savings and away from consumption, condemning Malta to slower GDP growth rates for the rest of the 1930s. Likewise the economy can fell like it is a recession long after its GDP has stopped falling. In the words of a T/C economist “The recession has not affected how people live here because we have been in a permanent state of recession for the past 10 years” i.e. people feeling insecure about their future and reluctant to spend or invest.
4) Projects such as the car scrappage scheme that is in place in Greece and Germany are a wonderful way to boost output in the short term. If car sales are 10% of the economy and the scheme allows it a recovery of 5%, then the GDP output will increase by-0.5%, enough to turn the recession of the UK into a “recovery”. The project is a good idea since it understands that the recession affects consumers unequally: those who losses their jobs and bonuses might be worse off, but those on fixed salaries and safe jobs are actually better off, and they need to get over their fear and start spending.
Hope you have a nice weekend,

Sunday, 11 October 2009

Why Greece is so distrusted right now - Thank Mr. Christos Votsis for briing this to my attension.

A quick pull of news relating to Greece public debt from Reuters. The central banker lives in two parallel universes, he says optimistic things on Tursday from Friday.

13:32 08Oct09 -Greek deficit not seen over 10pct of GDP- cenbanker
ATHENS, Oct 8 (Reuters) - Greece's central banker said on Thursday he does not see the country's budget deficit topping 10 percent of gross domestic product (GDP) this year.
"I am optimistic that it (2009 budget deficit) will not exceed 10 percent," Bank of Greece Governor George Provopoulos told reporters after meeting with new Prime Minister George Papandreou.

Thursday, 08 October 2009 13:27:25RTRS [nATH004752] {C}E
16:38 09Oct09 -Greek 2009 deficit may reach 12 pct of GDP- cenbanker
ATHENS, Oct 9 (Reuters) - Greece's central banker said on Friday that Greece's budget deficit may reach 12 percent of gross domestic product (GDP) this year.
"Based on data we have for the first nine months, the budget deficit reached 10 percent and with the prevailing dynamics it will reach if not exceed 12 percent," Bank of Greece Governor George Provopoulos told reporters after meeting with new Finance Minister George Papaconstantinou.

Tuesday, 6 October 2009

Two issues of concern: Cypriot unemployment and the new greek government

Just a quick note for topics of discussion today:
1) Cypriot unemployment is slowly creeping up to the European norm. Although the level of unemployment is still lower than the advanced countries of Europe. However the rate of growth of unemployment in alarmingly fast, even faster than most European countries that we would like to emulate. What concerns me is that the government is thinking of measures of how to stop it growing (which it can do very little about), but is not focusing in preventing this unemployment becoming structural and long terms (which it can do a lot to prevent. Any ideas / suggestions of what the plan should be?
2) I was surprised and disappointed at the choices of Mr. Papandreou, whose victory pleased me. Ignoring the usual rubbish about "αρώμα γυναίκας" (why not aftershave of men?) it is very worrying that Premier Papandreou chose the foreign ministry for himself. This is a brief that is very taxing on time - there are more meeting for foreign ministers in Brussels than there are for premiers - is he supposed to drop the day to day running of the country to represent Greece in a harmonisation negation on the size of the future European foreign mission?
Even more worrying for the negotiations of Cyprus - such an exhausting process needs people to be working on just that issue when the final phase arrives. We all remember that during the second Clerides administration, Mr. Clerides, as well as Mr. Papandreou as foreign minister, surrendered all other briefs to other people to concentrate on the negotiations. Yet as Premier of Greece, such a policy will be impossible. what are you thoughts on this issue?

Tuesday, 22 September 2009

The economic aspects of a solution in Cyprus

Yesterday i attended a series of talks on the economic aspects of the Cyprus problem. The speakers were Mr. Basilliou, the chief G/C negotiator on European maters, Mr. Sarris, the chief G/C negotiator on Economic maters and A person form the European Commission (finance section) whom i unfortunately do not remember his name.
I left highly troubled due to three things – i do stress that below are my own conclusions of the speeches, and not the positions of the speakers themselves.
1) The EU has a Schizophrenic approach to the solution. One the one hand it does not want to get involved at all, despite the fact that a solution needs to fit (or even alter) the laws and regulations of the European Union. So it is left on the G/C side to argue that there can not be an prevention of people and capital crossing the borders of the constituent republics of a future federal Cyprus, despite the fact it is actually the EU than demands such a rule. Most worrying is the fact that the EU is thinking that Cyprus could finance rebuilding and a solution by just breaking the growth and stability pact for a maximum of 4 years. That is sheer lunacy – the construction of roads and a common electricity network, let alone making Famagusta fit for human habitation, will lead to prolonged and sustained budget deficits that could not and should not be restricted.
2) The Turkish Cypriot negotiation seems to suffer from the fact that the T/C have only the faintest idea on how the EU works. The lack of entry negotiations by the T/C mean that some demands are quite simply not realistic within an EU framework. Thus it is a fact that the EU will not accept constituent states to make any representation directly to the EU – it opens up an very ugly precedent. Thus the federal state needs to work correctly as the EU will only interloculate with federal instruments. Like wise arguing for two financial regulatory authorities, or for separate rules for Turkish institutions, goes contrary to the basic tenants of the EU and it is futile and destructive to argue for them since they will not be accepted by the EU.
3) In game theory terms, the negotiations are difficult because the actors have completely different aims: The EU, Turkey and G/C + T/C find it difficult to find common ground since their aims are parallel to each other – they simply do not connect.
I expect a long and frustrating negotiation process, that can only be aided with the EU actually becoming an actor and explaining to all what can and cannot be accepted.

Monday, 7 September 2009

Bad news, but better than what we where expecting

The statistical office of Cyprus has just released the 2nd quarter GDP estimate for 2009. The results are better than the flash (i.e. incomplete) estimate, with the fall in constant terms being less than expected at -0.7%. The positive news is that the "new powerhouse industries" of international finance and services sector is still growing, albeit at a slower rate.

Although the results could be worse they are still bad:
1) Q3 is traditionally the strongest in terms of output growth containing the majority of the summer tourist season - indication show that it will be much worse than q2.
2) this is estimates in constant price terms - yet prices fell by -1.1%. Thus in constant prices (i.e. in the way it affects people's lives) the drop is much more significant.
3) It is clear that the sector hit (Tourism, Construction, Transport, restaurants) have a much higher share of total employment that the sectors that are still growing - thus further lay-offs will be expected.

Sunday, 6 September 2009

New paper just out: Economic history of Cyprus 1921-1938

Just thought you might be interested in a paper i presented in the Central Bank of Cyprus. It focuses on some of the key findings of my research.
My research is on the Economic history of Cyprus.Here i estimated income of Cyprus for the period 1921-1938.
The main focal points are:
1) The Great Depression was a catastrophe for Cyprus - the lack of protective tariff barriers and the incidence of serious drought meant that the Depression wiped out 10 years of growth. The recovery was also slow and only possible due to the emergence of the mining sector
2) The depression hurt the farmers particularly hard, causing a credit crunch, breaking the traditional source of credit to the farmer: this was not restored until the re-establishment of the co-op sector on a correct basis.
3) The Great depression was the greatest catalyst for the breakdown of communication between the British colonialists and the Greek-Cypriots. They were political tensions before, but they were brought to the head by the government's inability to alleviate the effect of the depression.

Wednesday, 26 August 2009

The need for a tourism consumer price index?

I was reading the Independent today when i was struck with the recommended prices for the newspaper outside the UK.
Cyprus 4.20 Euro
Greece 3.5 Euro
Austria 3 Euro
Germany 3 Euro
Italy 3 Euro
Luxembourg 3 Euro
Spain 3 Euro
Malta 2.95 Euro

Now if one ranks these countries in terms of how rich is the average citizen (i.e. per capita GNP in purchasing power parity terms) the ranking is vastly different. With the EU-27 as 100 the richest per capita countries are:

Luxembourg 252.8
Austria 123
Germany 116
Spain 103.9
Italy 100.5
Greece 95.3
Cyprus 94.6
Malta 76.4

I think this shows that the implicit feeling in Cyprus is a very expensive tourist destination can be seen by such articles such as a foreign newspaper. Many tourist oriented products that are not included in the basket of products that is used to estimate the consumer price index. Yet prices of tourist friendly products in Cyprus are prices in complete disregard of income or transport costs. And once again this implicitly shows that Malta is doing something right when it comes to tourism - cost does not come up as worry nearly as much in tourist surveys as it does in the case of Cyprus.

Monday, 24 August 2009

Τα λογία και πάλι περιπτά

Ο Ρομπέν των καμένων δασών
Περίδης Ορφέας
Μουσική/Στίχοι: Περίδης Ορφέας/Περίδης Ορφέας

Γεννήθηκα μεσ’ την κοιλιά του τσιμεντένιου δράκου
Που απ’ το στόμα του ξερνάει τις φλόγες του θανάτου
Στένεψε ο κόσμος στένεψε, στένεψε το μυαλό μου
Η πολιτεία πιο μικρή απ’ το δωμάτιο μου
Σπίτι τους φίλους στη δουλειά όλους θα τους αφήσω
Δίχως βοήθεια καμιά μόνος θα πολεμήσω

Θα πάρω κράνος διχτυωτό απ’ το Μοναστηράκι
Θα βάλω πάνω ένα φτερό μαύρο από κοράκι
Θα πάρω φτυάρι και κασμά και πετσετέ φουλάρι
Θα πάρω δρόμους και βουνά πάνω σ’ ένα μουλάρι
Είμαι ο Ρομπέν των καμένων δασών και των πολυκατοικιών
Είμαι ο Ρομπέν των καμένων δασών και των πολυκατοικιών
Γεννήθηκα μέσα στη γη μια ντάλα μεσημέρι
Και σε πλατεία φύτρωσα σ’ ένα μικρό παρτέρι
Στένεψε ο κόσμος στένεψε στέρεψε η έμπνευση μου
Ο αέρας μου λιγότερος απ’ την αναπνοή μου
Είμαι ένα φαλακρό βουνό, γη καταπατημένη
Μπουλντόζα ακυβέρνητη από κλωστή δεμένη
Είμαι εδώ δεν είμαι εδώ δεν ξέρω δεν κρατιέμαι
Θηρίο είμαι ακέφαλο θηρίο που καταριέμαι
Φτάνει ως εδώ βγάλτε για μένα ένα νόμο
Βάλτε με να περνάω γέρους απ’ το δρόμο
Είμαι ο Ρομπέν των καμένων δασών και των πολυκατοικιών
Είμαι ο Ρομπέν των καμένων δασών και των πολυκατοικιών
Είμαι ο Ρομπέν...
Είμαι ο Ρομπέν...

Wednesday, 19 August 2009

The horrors of nationalism

Gurgen Margaryan died a brutal death in 19th of Febuary 2004. While attending a NATO training class in Budapest, Gurgen was brutally murdered in his sleep by classmate by his Azerbaijani classmate. The post mortem indicated that the murderer did not stop until he severed his victim's head from his body.

The murderer claimed that the murder was justified due to the defeat of Azerbaijan in the Nagorno-Karabach war in 1994, and that he was suffering from post traumatic stress disorder because of it. He was condemned to life imprisonment in Budapest in 2006.

The brutal murder is sadly the least disturbing aspect of this case. What is more disturbing is the reaction of the press in Azerbaijan. The murderer is celebrated in sections of the political elite of Azerbaijan. The Permanent Representative of Azerbaijan to the Council of Europe warned that he "does not advise Armenians to sleep safely until the Karabakh conflict is settled. The ombudsman of Azerbaijan stated that R. Safarov [the murderer] must become an example of patriotism for the Azerbaijani youth."

Sadly 2 years on the Azerbaijan elite are still doing this. The authorities are set to prosecute everybody who voted for Armenia in last years Eurovision. Such hatred seems surreal to us in Western Europe, but someone must put their foot down and tell Azerbaijan that this behaviour will not get them into Europe.

Another poor but nessesary descision?

Another bad decision by the government in terms of economics. Phileleitheros reports today that the government is suspending all major investment works until after the crisis. This is undoubtedly due to the fact that the projection for GDP this year will be negative.

The problem is that at a time that the revenues from tax are shrinking and the expenditure on unemployment benefits is rising, the government deficit needs to remain within 3% of GDP. Thus when GDP is shrinking the government is in trouble even if it does not increase expenditure in the economy. This will put into trouble with the European central bank, with the possibility of a huge fine.

However the problem is that recessions are exactly the time when large infrastructure project should take place. The construction industry is alleviated from its crisis by government funding, while the government can get a good price because of the distress of the building companies.
Large investment projects also help the country move out of recession since investment is the basis of continued economic growth. It is true that Cyprus has investment bottlenecks that can only be solved by the government: the harbour is in a dreadful condition with outdated technology, and the ICT depth of the government bureaucracy is woeful. Stopping such projects in order to stay within the Maastrict limits not only prevent a faster recovery but also compromises economic growth in the future.

Thursday, 13 August 2009

Abandoned Towns

There was an article in politis yesterday about a family who managed to see pictures of its house in Famagusta through pictures taken by a UN member who entered their house to clear a large nest.

I could find the article on politis but i found this amazing site which collects pictures of the 10 most famous ghost towns of the world. Truly hair raising stuff.

Tuesday, 11 August 2009

Interesting History – How the victory of the Fascists in the Spanish civil war saved Cyprus from invasion during the Second World War.

On 17th of July, 1936 the nationalist generals attempted to wrest control from the democratic socialist government in Spain. The result was one of the bloodiest civil wars in modern Europe, seen by many as a proxy war to the sides that would eventually fight in the Second World War. The war dragged on until the 1st of April in 1939, after much bloodshed. The reprisals of the Franco against its former enemies were awful, representing some of the most notorious crimes against humanity. As a result of the war Spain was ruled by the iron hand of dictatorship until 1975, and only became a democracy in 1978; it is noteworthy to see how far Spain managed to progress in economic, artistic and cultural spheres after decades of repression and state sponsored violence.

The nationalist side took an increasingly fascist ideology during the war. This was partly because of the increasing power of the falangist movement within the ranks of the nationalist army but mostly due to the fact that the generals were aided (in terms of men, materiel, tanks and air force) by Hitler and Mussolini, making a mockery of international agreements that prevented military aid to the combatants. Without the aid the generals attempt to wrest control from the government would have surely failed. However the aid came at a price: companies such as HISMA, ROWAK and SOFINDUS plundered Spain for raw materials both before and during the Second War World. Spain had to provide ore at bargain prices during the duration of the Second World War.

In the words of the historian Charles E. Harvey the Nazi regime of Germany was desperately trying to achieve autarky in raw materials, in order to be able to wage a sustained military campaign without facing the shortages of raw materials faced in the First World War. Out of most raw materials, Germany could not be self sufficient in four key materials: Oil, iron, copper, and sulphur (used in explosives production), as Germany simply did not have these elements in its territory.

Spain delivered over 9.4% of iron ore, 50% of copper pyrites and 85% of sulphur prior to the civil war, and the establishment of a friendly regime ensured that the supplies of these crucial raw materials would continue until well after d-day in 1944.

This undoubtedly saved Cyprus in 1941. With the start of the Spanish civil war, Spanish supplies to German chemical producers and smelters was halted; Cyprus, with the energetic American company, the Cyprus Mining Corporation at the forefront, filled the gap. The amounts of ore sent to Germany were tremendous, with up to 80% of all ore being sent to maintain Hitler’s drive to re-arm. Thus the copper sulfate ore from Cyprus ensured that the German re-militarization could continue at breakneck speed.

The invasion of Crete in May 1941 a costly success for Hitler. Since Germany could not control the seas, but controlled the skies in the Agean. Hitler launched the largest airdrop operation to that date; although the Germans took control of Crete, Hitler saw his crack paratroopers decimated. This put him off plans to invade Cyprus and Malta by air.

However if the Spanish civil war was won by the republicans, the situation might have been different. An invasion of Cyprus in order to gain crucial deposits iron, copper and sulfur ore might have been more tempting that an invasion of a militarized and victorious republican Spain. It was not unusual for Germany to invade territories for its resources: Polesti in Romania was occupied by the Germans to secure their oil supply, while vital manpower was diverted away from the attempt to capture Moscow in an attempt to wrest control of the oil and ore producing are of Baku in the Soviet Union.

For me this example shows that the history of one country can have a profound effect on the history of another, and that history can be taught to be a interesting and dynamic subject.

Monday, 10 August 2009

NY TIMES OP-ed misses the point about GDP.

Every two years there is somebody who claims the death of GDP as a tool in understanding wellbeing and measuring performance. Now even the New York Times has joined the band wagon.

As a person who has spent the last 4 year reconstructing the GDP I can tell you that a lot of what this article is saying is bull. One of the biggest criticisms is that DIY and household work is not included in the GDP. Yet that is a political decision and a decision of national accountants: household chores can be included if politicians agree that it is a worthwhile activity and Sweden has already included it in its GDP (and i agree with Sweden).

The author goes on and moans that drying your clothes does not increase GDP, while taking it to the dry cleaners increases output - failing to see that the difference is that in the first case there no increase in income, while in the other someone gets paid for the services thus creating a multiplier effect that makes the income of the country just a tiny bit better off.

The author then goes on to argue that an increase in GDP does nessesarily make people better off and argues the aftermath of Katerina shows that. That is simply a misunderstanding of GDP- since the income of individual in based how the income is divided among the people. Thus in the US case GDP has been rising but only the income of the top 1% has been rising due to increasing income inequality and the lack of redistribution of income by the government.

Basically the author is annoyed that despite prediction of a recovery, the GDP data showed a continuing downturn. People forget that long recessions (or day i say it depressions) are not an up / down process - there a is lot weak recovery and sudden reversals. The author also does not tell us that there are alternatives to GDP, such as the Human development index, that take a persons welfare into account - the author does not mention them since they show the problems of the USA, which falls from first to the 20th country in the world when education and life expectancy is added to the income per capita indicator.

New instruments such using advanced econometrical analysis that are capable in identifying weaknesses in the economy much more quickly are needed, but that is not what the author is demanding. Sadly I expected more from the NY times in terms of leading the global discussion about the need to change economic thought.

Tuesday, 7 July 2009

A medal for 1974?

I was watching a documentary waiting for a taxi to take me for the airport this morning. It was called “Victoria Cross Heroes”. The documentary honored the recipients of the Commonwealth’s highest military award. The historian argued that by 1919 the award became as much a indication of popular sympathy than just an award for bravery.

What was touching is how many awards were given in defeat and in saving fellow soldiers. One of three men that won the award twice was a medical officer who in the Battle of the Somme (where 60,000 British soldiers were casualties) he crawled through no mans land to save as many men he could. Another is for a man who kept his position against the entire German army in Belgium to enable his unit to escape. A third was given for a man who jumped on a crate of grenades that were about to explode in a trench, killing him self but saving over 100 lives.

I wonder if it is time to give some awards in Cyprus for the 1974 war. Sure it was a war where brother killed brother, were atrocities were committed by all sides. But we should celebrate the acts of humanity in that war – instances of soldiers saving persons of other communities, or of officers walking into certain death to save soldiers who were scarcely more than boys. The shame was the coup and the atrocities (institutionalized by the Turkish army) and the fact that those who committed such acts were not brought to justice, and a first step of reconciliation is to highlight those who acted for the good of humanity at heart.

Wednesday, 10 June 2009

Summers in England

The most cruel practical joke was played on the residents of England. After a week of heavenly weather, the rain and clouds have returned to ruin our mood. It is difficult to work this week as i keep hoping for a better weather - i work better if i know that at the end of the day i can enjoy the sun.

Saturday, 4 April 2009

British Economic History Society Conference

I have been having a fantastic time at the economic history association conference – so many ideas and great names being so accessible. As usual however, there were no economists in attendance (other those who are traditionally involved in economic history). We have so much to give to each other’s disciplines – Bernankie and Romer are both very central to Obama’s administration, and have both been very active in economic history in the past.

And yet when reporters call up to ask if we are facing the great depression, economists, especially theoretical economists, do not seem to re-discover an interest in economic history. Instead the answers given are driven from outdated research. Such a shame that such a great opportunity to re-ignite a mutually fruitful relationship has been missed.

Wednesday, 1 April 2009

A very good article on Obama's Economic Plan

A great article by pro-globalisation nobel price winner and former world bank peresident, Jospeph Stiglitz.Stiglitz argues that the taxpayer is the great looser from the current economic policy in the US.
In the article Stiglitz attacks the presidents economic policy, causing quite a controversy since it is comming from an economist that has great relations whith the Clinton white house.

Friday, 27 March 2009

Are MBA's worth it?

A great article has appeared in the Times over the link between MBA's from Harvard and the current crisis, particularly in relation to RBS and Sir Goodwin. What is particularly striking when reading the article is the fact that the RBS success was hailed as am management success rather than investments in high risk assets.

One is worried that as MBA'a have become a commodity, the emphasis is now to place the art of management above and beyond the art of financial account and good business sense.

Tuesday, 24 March 2009

Action against farsical Justice - Alert group!

It took a while to find it but here it is - this is an independent action group ALERT. A great organisation using non-violent methods to show our concern on the repeated injustices. If you can go and take a Banana with you. For those who don’t know why this case is referred to as reminded of a Banana republic see here.

On the funnier side there is a song by the Boomtown Rats (whose singer, Bob Geldof, is of LIVE AID fame) called “Banana Republic” the lyrics are below:

Banana Republic
Septic Isle
Screaming in the Suffering sea
It sounds like crying (crying, crying)
Everywhere I go, oh yeah
Everywhere I see
The black and blue uniforms
Police and priests

And I wonder do you wonder
While you're sleeping with your whore
That sharing beds with history
Is like a-licking running sores
Forty shades of green yeah
Sixty shades of red
Heroes going cheap these days
Price; a bullet in the head

Banana Republic
Septic Isle
Suffer in the Screaming sea
It sounds like dying (dying, dying)
Everywhere I go, oh yeah
Everywhere I see
The black and blue uniforms
Police and priests

Take your hand and lead you
Up a garden path
Let me stand aside here
And watch you pass
Striking up a soldier's song
I know that tune
It begs too many questions
And answers too

Banana Republic
Septic Isle
Suffer in the Screaming sea
It sounds like dying (dying, dying)
Everywhere I go, oh yeah
Everywhere I see
The black and blue uniforms
Police and priests

The purple and the pinstripe
Mutely shake their heads
A silence shrieking volumes
A violence worse than they condemn
Stab you in the back yeah
Laughing in your face
Glad to see the place again
It's a pity nothing's changed

Banana Republic
Septic Isle
Suffer in the Screaming sea
It sounds like dying
Everywhere I go
Everywhere I see
The black and blue uniforms
Police and priests

Friday, 20 March 2009

Etravisan tzie ton sxini kai to paloutzi!

After the ridiculous mess of the "Al Capone" affair the aquital of the police men beating up students was really the final straw.

Similar events have created riots in other countries - and it is no good pointing at the judges; in the end ultimate reponsibility lies with the elected representatives of the people.

Its is now or never - if President Christofias does not seize the chance to radically alter the way the police and justice system works then he will find it hard to convice people that he is any different from the politicians of an older, more compromised, generation.

President Christofias has avoided any real reform up until now, possibly keep parties more strongly represented in the police force happy. Although the above statement would seem ridiculous to a non-cypriot, anyone who knows about Georkatzis and his enduring influence over the police and the National Guard will understand that upseting the police and the judiciary will tearing further the President's relationship with Disy, Diko and other "central forces".

Thursday, 19 March 2009

Malta copes so much better with the EU than Cyprus

The fact that the Maltese government has managed to retain its stipends in terms of VAT on food and medicine exceptions is just one more example on how much better Malta is maximising its possibilities. The university and companies are capitalising the Leonardo and Da Vinci programs, as well as funds for innovation.
This is not a coincidence – there is a much better co-operation of government and the non-for-profit sector than in Cyprus. Cyprus has failed to make the most of the possibility of the EU and is incurring fines due to its failure to capitalise developmental funds. In many ways the issue in Cyprus is partially due to the inflexibility of government contract procedures and the instinct of the government to be a central factor in coordinating funds and the economy. Although government in Cyprus now is perhaps less open to clientalism than in Malta, the resulting procedures set in place make government mechanism inflexible – just look at slow progress on the marinas and desalination plants.
There is much we can learn from each other in terms of governance.

Saturday, 7 March 2009

Dr. Orphanides vs Deutche Bundesbank? - not really.

I thought they were rumors but it seems Bloomberg also hints at a rift within the ECB. According to the article the Fed trained Dr. Orphanides, president of the central bank of Cyprus, is pushing the ECB to drop interest rates even further.

What the article seems to ignore here is that the ideological division within the ECB is taking place between people who accept the same principles of economics, i.e. this is not a rift between Catholicism and Protestantism but a debate over the proper reading of the scriptures within the Catholic orthodoxy.

All in the ECB believe in the basic monetarist tenets: the money market has a direct impact on the real economy and peoples incomes, and thus interest rate reductions stimulate the economy (or increasing inflation) even in the current economic climate.

Thus this so called "battle" is not battle of ideas but more a disagreement of versions of history. Dr. Orphanides is evidently a believer of the Bernanke (Head of the US Federal Reserve) / C. Romer (Chair of the US Council of of Economic Advisers) view of the Great Depression. The Romer / Bernanke synthesis argues that the recovery from the Great depression was due to an expansionary monetary policy and the restructuring of the banking sector. Others in the ECB, possibly led by Professor Axel Weber, president of the Deutche Bundesbank, have the horrors of stagflation of the 1970s and the hyperinflation of the 1920s firmly entrenched in their mind. In their interpretation of the same monetarist tenement, inflation is dynamic and comes after a lag of 6 months to a year after a interest rate cut; it is simply not worth having future inflation in order to prevent a possible reduction of output today as the cost of inflation in terms of future lost productivity far outweighs the effects of a current downturn. Both schools see the restructuring of the banking sector as crucial, and i am sure they feel hampered by the diverse responses of the EURO-area countries in terms of bank restructuring, where the ECB has no direct input.

However the issue facing the world is that economics are not united in providing responses to the current crisis. Rather than accepting any one school of thought, a collection of different policies drawn from all schools would surely provide a better outcome, due to the fact the objectives of each school are as diverse as the needs of the policymakers.

It is not clear if the monetarism has the answer to the needs of politicians in increasing output and providing employment; some economists argue that interest rates are so low that we have fallen below the threshold where monetary policy ceases to be effective, thus falling in a "liquidity trap". According to Neo-Keynisian economists (who also sit in the council of economic advisers) what is needed is direct investment in the real economy by the government (more schools, roads, ect) in order to safeguard jobs and increase output - interest rates cuts simply will not work anymore.

While there might be a definite disagreement on what the monetarist solution is for Europe, both parties within the ECB accept that the ECB holds the answer and fiscal policies of the respective European countries are at best complimentary but at worst unhelpful. However, the debate for the way out of the current global mess needs to take place by taking all schools of economic thought into account in order to have a correct policy response. Yet strangely enough the focus has been on global action without having a global discussion on what is the way froward in terms of economic theory.

Thursday, 26 February 2009

The crazy world of a ressesion: Ford, Jeep and AMEX

A dealer in Cyprus for Ford has recently announced that for every saloon car of approximately Euro 17,000 it will be providing a smaller car of Euro 5,000 for free.
Meanwhile the Jeep distributor of Greece has radio commercials: they promise that with the purchase of every new jeep, they guarantee they will buy it back in two years time at the price that you have purchased it.
Both deals are insane there are just there possible reasons for doing these deals:
1) the companies are so starved of cash they are placing a huge amount of premium on cash - in Ford's case the premium is close to 30% and of Jeep's is equal to the rate of inflation in the next two years (predicted to be low - about 5%).
2) The American loan to car companies might have a stipulation to increase sales - ergo the incentive to effective give cars away- I am not sure if this is true but it is worth investigating
3) The real price of the stock (including the expenses for its upkeep) is less than the sale price.
Any of the three is bad news for the car dealers in Cyprus and Greece- you can not run this sort of deal without becoming bankrupt. None of these deals will increase demand since the banks are not giving any loans to buy cars, while companies are postponing their investment decisions in order to hoard reserves. The Deal with ford is better than the Jeep by the way – if jeep does not go bankrupt in two years then it will when people take up its offer and give in their old car (assuming this deal stays in place).

Meanwhile, AMEX in the US is paying some of its customers up to $300 to close their accounts – another insane idea. Why does American express does this? Because it is afraid that its customers will use their card as a to keep their spending habits after they lost their jobs and then become bankrupt – thus increasing the amount of unserviceable loans for Amex, and increasing its statutory need to keep reserves (thus reducing the ability to make good loans). Unlike the offers above this is a very smart move due to the link between band loans and amounts necessary in reserve.

All of the above shows that all companies need to re-invent themselves to go through the crisis – and ideas that sounded whacky in 2007 (a credit card company giving you money to stop being a customer, and a car company wanting to buy back your car) are now acted upon. Its is crazy world for business right now

Thursday, 29 January 2009

Yasmin Khan "The Great Partition"

I have been reading the Great book by Yasmin Khan and a passage struck me as a repeat of the lessons that took place in the 2004 referendum in Cyprus.
When discussing the elections prior that would lead to the indipendence of india in 1946, Khan stated that
"The vital importance of the elections as a means of deciding the nature of free india, the speed with which the contests were called and the lack of clarification over what freedom was going to deliver meant that a great many politicians fell back on expedient populism."
Anyone who lived through the referendum in Cyprus knows that replacing the world freedom with the word "peace" then this sentence perfectly describes the mess before the annan plan referendum in 2004.

Thursday, 15 January 2009

1943 Warsaw Ghetto, 2009 Gaza

An article published in the daily star -Bangladesh's largest english speaking newspaper. It is about the dangers of using force when the combatants and civilians mix.