Mass migration

Agence France-Presse/Getty Images

One things that perhaps distinguishes Europe's current migration crisis from prior waves of migration is technology.

Stinkingly, many of the migrants have smartphones; that enables them to navigate unfamiliar geographies, making alternative plans when their original routes are closed. And it provide instant messaging from other migrants as to the current situation, political trends, places to head for, and places to avoid. This has lead to unexpected developments.

For example, while Europe tried hard to ignore the situation in the hope that it would either go away or at least not get much worse, the steady drip of distressing images and the lack of resources to regions having to deal with the newly arrived immigrants, eventually prodded Angela Merkel into making public statements welcoming refugees to Germany's metaphorical shores. At the speed of light, the change in mood was disseminated around the world, triggering new waves of migration and completely overwhelming those European governments in the front line. The situation hasn't been helped by the fact that most are relatively poor by European standards (Greece, southern Italy, Serbia, Croatia) and others are led by right wing xenophobic governments (Hungary and Austria both fairly reactionary polities).

Unable to cope, peripheral European states are putting up fences and closing their borders, leaving thousands of migrants stranded. Despite the worsening  problem, Europe bickers, the rest of the world treats it as someone else's problem and Ban Ki Moon pontificates while the UN does nothing.  Not a moment we will be able to look back on with admiration as notable for its compassion, statesmanship and leadership. 

VolksWagen

VW is alleged to have fitted emission-test-cheating software to 11 million cars, worldwide. Supposing the average selling price of those cars is €18k, Were it to have to refund what customers had paid, it will face a bill for roughly  €200b. It has current assets of €131b of which €31m are tied up in inventory, but it doesn’t have enough cash to settle the likely claims.

Based on its debt and interest expense, VW's current cost of capital it might be as low as 2% but whether it could borrow that cheaply again seems questionable. Were it to borrow the €200b at 3%, it would cost the company about €6b in additional interest payments, which would take a big chunk out of its €15b before-tax earnings. That would be about a 40% reduction, not inconsistent with the 30% fall in the company's share price after the scandal broke this week.

However, it may face fines which could run into billions, and  that assumes sales remain at their 2014 levels which is unlikely.  Already Switzerland has banned sales of VW cars; granted Switzerland isn't a huge market but if other counties follow suit, that combined with the loss of brand image, worldwide sales might easily fall 15%. That would reduce its pre-tax profit to €11.5b. After the additional interest burden, that leaves €5.5b, or 37% of current EBT. While VW will probably survive, I expect the shares to fall much further, probably halving in value from there they are now (€128 per share) to around €70. 

As I recall, diesel cars are a fairly recent phenomenon in the US. In Europe they were more popular, and become more main-stream in Britain in the 1980s and the US in the 2000s. Their popularity was fuelled in part by rising petrol prices  which made their low fuel consumption an attractive feature. But they had to overcome significant barriers including higher noise levels, and the perception as being much more polluting than gas engines. While noise levels, particularly in the cabin, have been fixed with engineering improvements, the emission of pollutants, it appears, had not.

"The Donald"

First, to be quite clear, I find Donald Trump an odious, over-bearing, misogynistic, blow-hard with puerile "solutions" to tough problems. So it came as a bit of a shock to find that he believes in several of the things I do.

For example, on Face The Nation today he said he thinks hedge-fund managers aren't paying enough tax, that CEOs are overpaid, that corporate governance is plagued by boards packed with insider cronies, and that the middle class has been eviscerated by off-shoring.

Here are some of his comments: "They [hedge-fund managers] are all supporting Jeb Bush and Hilary Clinton. ...Hilary and Jeb are totally controlled by the hedge-fund guys". That should be music to Larry Lessig's ears.

"We're going to be reducing tax for the middle class but for the hedge-fund guys - they're going to be paying up".

On high CEO pay and corporate governance: "It does bug me, but it's very hard if you have a free enterprise system to do anything about that; you know the boards of companies are supposed to do it, but I know companies very well and the CEO puts in all his friends... ...and you they get whatever they want because the friends love sitting on the board. So, that's the system that we have and it's a shame and it's disgraceful and sometimes the boards rule but I would way it's less than 10% and you see these guys making these enormous amounts of money; it's a total and complete joke".

And as NPR noted last week, he's come out in favour of a single payer health care! Given the Republican's stance on ACA, this is worse than heresy.

He might have more in common, at least as far as issues go (probably less so in terms of solutions), with Bernie Sanders than he does with Jeb!

The risk, of course, is that he is fickle and inconstant and in the (hopefully) unlikely event of his being nominated, still less elected, he would discard these positions as he "makes an unbelievably great deal for America"...

What I think we are seeing this year is a maturing manifestation of the anger and frustration that fuelled the tea party 7 years ago. The sense that Washington works only for those with great wealth and doesn't represent the majority of the electorate is a common theme in Sander's, Lessig's, and Trump's rhetoric. It's in the Warren Wing. That, combined with the now evident failure of the Thatcher-Ragan revolution that put blind faith in free markets and "trickle-down" and the sense that a government controlled economy (China's) is doing demonstrably better than ours for it's citizenry, at least economically, is leading to a resurgence of left-wing ideas.

Identifying the problems is one thing; fixing them, however, is quite another.

Election Coverage

I've just watched "Face The Nation" on CBS; it was notable for several things but in particular the fact that in 46 minutes of interviews and panel discussion there was no serious discussion of issues and policies. None.

After the ritual providing of an uncritical public platform to the two guests (Donald Trump and Ben Carson), CBS News Elections Director Anthony Salvanto talked exclusively about the electoral process and campaign dynamics. That's about as inside baseball as you could want and frankly of no particular interest to anyone other than die-hard political junkies.

Next came the consummate political operative, David Axelrod, diagnosing Hilary's campaign problems. Talking about Obama's 2008 campaign, he recalled what happens when campaigns falter: "what happens is every donor in America becomes an amateur political consultant and very generous with their advice. I remember a donor summoning Obama and telling he had to fire his team". That tells you all you need to know about who is pulling the strings, and that advice is almost certainly not limited to operational campaigning issues.

Also of interest was Axelrod's reaction to Joe Biden's interview with Stephen Colbert: "I don't think he's playing a game when he says he doesn't know what he has the emotional reserves to run a presidential race". Axelrod's initial assumption is that this was a calculated political stratagem; which gives you an insight into political campaign management.

Peter Baker noted "the Clintons have been through this so many times, scandal, recovery, scandal, recovery, setback of some sort, and they're good at it. They're the leading re-bounders in American politics of the last two decades". Paraphrasing Oscar Wilde, "to be embroiled in one scandal is misfortune; to be embroiled in several looks like carelessness".

The one clip from Stephen Colbert's interview with Joe Biden the media are playing again and again is the one in which he talks about having the emotional energy to run for president. The far more moving moments for me was when he  talked about his son. A measure of his humility is that he really did think the son had outgrown the father, and as someone whose father though he was a perpetual disappointment, for me that was particularly poignant.

Biden's struggle

Whether or not Stephen Colbert's decision to focus on Joe Biden's son's death was a calculated decision to make Biden appear likeable we'll probably never know. Yet what followed was perhaps the most insightful political interview in years.

As distressing as it was to watch, you felt you were privileged to be party to a rare sharing of private sentiment, Biden's grief and vulnerability, something that in my experience is a critical component to building trust. Arguably, that did more for his possible candidacy than tens of millions of dollars-worth of campaign advertising.

If he does decide to run, and my money is that he will for reasons I'll return to later, Hilary's race will be all but run. As experienced and as competent as she may be (Peggy Noonan of the Wall Street Journal noted that she has been and the pinnacle of American politics for a quarter of a century), she comes across as entitled, privileged, patronising, and out of touch. Her support depends largely on the assumption of her inevitability; once that goes all bets are off. Those of her supporter who were there only because there was no other option are now seeing two; in Bernie Sanders and (perhaps) in Joe Biden. The only thing keeping them in the Hilary camp is the notion that Sanders is too left-leaning to be electable in the presidential race. But that restraint goes away if Biden declares; Hilary supporters my trample one another in a rush for the exit and the campaign will implode much faster, I think, than anyone imagines.    

Aside from struggling with his most recent loss, Biden may be held back knowing that his entry will likely severely wound Hilary's campaign and divide Democratic voters (and donors). Whether he feels any loyalty to Hilary is unclear, but given his apparent decency as a human being, it's quite possible that he may feel reluctant to torpedo Hilary. But my guess is that ultimately as her campaign numbers continue to slide while Bernie Sander's rises, he will feel a sense of duty compelling him to step in as a more electable establishment candidate. We'll know one way or another by mid-November 1, when the first states' filing deadlines fall due for campaigns to register their candidate.

2 dimenisional politics

Hilary Clinton epitomises the Washington insider; cosy with Wall Street and the moneyed power brokers, "moderate" enough not to alienate wealthy donors, with a coterie of advisers, opinion pollsters, PR and political consultants.

Bernie Sanders, by contrast, speaks not from a carefully tested and polished script but from a set of passionately held beliefs. Unlike Clinton, who comes across as calculating, instrumental ultimately inscrutable and inauthentic, there is never any doubt about Sanders' views. But absent a sea-change in American politics, he may do for the Democrats what Michael Foot did for Labour 33 years ago. That's the fear bolstering Hilary's nevertheless wilting campaign.

Enter Joe Biden. He's still a completely establishment insider. But like Sanders, you have the feeling that he speaks from the heart. His many 'gaffs' show how unscripted he is. Unlike Hilary, who oddly reminded me of Queen Elizabeth II, with her carefully masked disdain for, and completely lack of comprehension of, the lives of common folk (she noted last year than its been more than 30  years since she has driven herself anywhere), Biden used to take the train from Delaware to Washington, and is at easy with ordinary people in a way that Bill may have been able to fake but Hilary clearly can't.

If he does decide to run, Joe Biden may be the 'compromise' candidate that the Democrats are looking for.

Europe in crisis

The Hungarian government has made a catastrophic pig's ear in its handling of the refugee crisis. It's actions are incoherent; it is insisting on registering the refugees which would mean they would stay in Hungary, yet repeatedly sends xenophobic signals inconsistent with allowing them to remain.  

Shutting the main railway station in Budapest and leaving refugees, who'd already bought tickets to German, stranded for days was a terrible start; then allowing a train into the station, letting them board, only to be stopped a few miles down he road where a reception committee of riot police was waiting to escort them to a camp. While the comparison is clearly inaccurate, the spectre of a right-wing regime putting people onto trains that ended up in camps was hovering in the background. Today saw hundreds of refugees beginning to walk from Budapest towards Germany, a journey of over 700km, half though Austria, which is likely to about as welcoming as Hungary. 

Of course Europe as a whole has not really covered itself in glory either.  Jordan has taken between 600k and 1.4 million depending on your source, the higher figure being 20% of Jordan’s pre-crisis population. Lebanon has taken 1.2 million. These are small countries. The UK has so far taken 25k.