Jacob Christensen

No, no real link between the two. Or perhaps?

Matthew Yglesias considers the outcome of Chrysler filing for Chapter 11:

Looks like Chrysler will wind up in a pre-packaged bankruptcy before becoming a firm jointly owned by Fiat, the United Auto Workers, the United States of America, and Canada.

Robert Reich is skeptical of the idea of bailing out US companies, because – well, what is a US company these days:

Besides, as I’ve said before, the “American auto industry” shouldn’t be defined as auto companies whose headquarters are in the United States. The true “American auto industry” is Americans who make automobiles. At the rate the Big Three are shrinking even as they’re bailed out, foreign automakers with American plants may soon employ more Americans than the Big Three do. The Big Three have gone global anyway.

And just by accident those links appeared along with a link to a lecture at the LSE about Friedrich Engels. You know, the guy with the really big beard who played Chris Lowe to Marx’ Neil Tennant.

With capitalism in crisis, the shadow of Karl Marx is looming large. But what about the co-author of The Communist Manifesto? In advance of a major new biography, The Frock-Coated Communist, Tristram Hunt explores the life and work, the personal contradictions and ideological breakthroughs, of Friedrich Engels. Cotton-lord and communist, Engels was the man who turned Marxism into a political force – and whose vision was then brutally betrayed in the 20th century. Tristram Hunt is an historian, broadcaster and a lecturer in British history at Queen Mary, University of London.

Right-click on the link to download the lecture.

Update: Tristram Hunt also has a column on Mr. E for May Day.

Willem Buiter:

[China] badly needs an unfunded pay-as-you go social security retirement scheme to boost consumption by the old. China’s fiscal position is such that the country could introduce the benefit (pension) part of the social security scheme for a number of years without having the social security tax in place!

The rest of his blog post isn’t for the faint-hearted. And that’s without mentioning the swine flu.

Barry Eichengreen and Kevin O’Rourke looks at the present situation compared with the post-1929 crisis:

To summarize: the world is currently undergoing an economic shock every bit as big as the Great Depression shock of 1929-30. Looking just at the US leads one to overlook how alarming the current situation is even in comparison with 1929-30.

The good news, of course, is that the policy response is very different. The question now is whether that policy response will work.

The response of Danish voters? In short: Let’s repeat the mistakes of the 1930s.

There are explanations for this self-defeating position, but it still means that politicians have a big task ahead of them if they don’t want to wreck the global economy.

As the FAZ notes:

[Die schwedische Krona] durchbrach ihren langjährigen Aufwärtstrend gegen den Dollar und wertete inzwischen 35 Prozent gegen den Dollar ab. Inzwischen sind 9,05 Kronen nötig, um einen Dollar erwerben zu können. Noch im April des vergangenen Jahres waren dafür gerade einmal 5,85 Kronen nötig gewesen.

[...]

Gegen den Euro ist der Kurs in den vergangenen Monaten von 9,28 auf zuletzt 11,47 Kronen je Euro gestiegen.

According to the Danish Central Bank, the SEK – DKK exchange rate today is 65,06 DKK – 100 SEK. I’m just noting this because I still have stocks and bonds locked in Swedish pesetas, so besides the crash on the stock exchanges, my savings are also taking a hit due to the massive effective devaluation of the Krona. The good news is that a) I – unlike a lot of Danes – have received my wages for February, and b) my Danish bank account is 4000 DKK up compared with last month (yes, I know that I should allow for the 28 days of February compared with 3 days in January), even though the HR office forgot that I’m working 100% and not 80%.

Holy cows! The SEK was between 0,80 and 0,75 DKK during my time in Sweden. Needless to say, we Danes are heading east in huge numbers.

Yahoo Currency Converter.

“This sector” is the US auto industry and the warning comes from James Hamilton.

What are the chances of Volvo PV and SAAB Automobile surviving 2010? And what about the long-term effects on Swedish manufacturing? Västra Götaland is likely to be in for a very bumpy ride in the coming years.

The latest VoxEU column by Willem Buiter and Anne Sibert on the rotten state of Iceland:

Early in 2008 we were asked by the Icelandic bank Landsbanki (now in receivership) to write a paper on the causes of the financial problems faced by Iceland and its banks, and on the available policy options for the banks and the Icelandic authorities.

The OUCH! part comes at the end:

Iceland’s circumstances were extreme, but there are other countries suffering from milder versions of the same fundamental inconsistent – or at least vulnerable – quartet:

(1) A small country with (2) a large, internationally exposed banking sector, (3) its own currency and (4) limited fiscal spare capacity relative to the possible size of the banking sector solvency gap.

Countries that come to mind are:

* Switzerland,
* Denmark,
* Sweden

and even to some extent the UK, although it is significantly larger than the others and has a minor-league legacy reserve currency.

Or something. Here is a snapshot of the queue outside of Merlin’s store on Vestergade in Odense yesterday. Needless to say, local media reported this as “chaos on the high street”. Today, Sterling Airways ceased operations.

It is always interesting to watch the effects of an international crisis close up. In my case, I had the opportunity to see the massive (well, 150 persons according to media) queue waiting outside of the Merlin branch on Vestergade here in Odense. Merlin – a consumer electronics chain owned by … you’ve guessed it … an Icelandic investment group – stopped its payments due to insolvency on Monday but was taken over by a Danish chain. So today saw a fire sale in the Merlin shops.

Meanwhile, Iceland is now being helped by the other Nordic countries in a working group led by Sweden.

PS: I have a picture of the queue but my internet connections are a bit erratic.

Out of pure spite, I just did a check on my earlier mentioned savings scheme. As you may recall, I originally placed 75.000 SEK in early 2002 and after peaking at 90.000-something, its value had fallen to 63.000 SEK on 6 October and 57.000 SEK on 10 October. The latest reading was 54.775 SEK – I suspect that Friday’s bloodbath isn’t included in this – to which we should add that the Swedish krona has taken a bit of a hammering because the krona, unlike the Danish krone, isn’t pegged to the Euro.

Anyway, if a serious economist reads this, I have a question: I’m not an economic historian, but I recall reading somewhere – Galbaith’s “The Great Crash”? – that dramatic fluctuations (including big rises in stock indexes) are part of the kind of crisis we are in – this was why I didn’t put too big an interest in the triumphant reports of stock market resurgences in later weeks. Am I right? And: What exactly causes these bust-and-boom-and-bust movements?

Okay, that was two questions.

PS: Just for the record: These are not my only savings. Besides pensions schemes, I have some 100.000s tucked away in other schemes. And I live in a rented apartment.