This Draghi piece is a quiet indictment on the @EUCommission's failrue on its core Treaty mandate: "establishing the internal market" & ensuring "free movement of goods, persons, services and capital."
A thread with the facts adn saying the quiet part out loud
1/ PRICES:
IMF shows EU internal barriers =
- 45% tariff on manufacturing,
- 110% on services.

As services become more important in the economy, barriers on service trade create an even bigger drag on growth.

2/
ft.com/content/13a830…

The Italian SuperBonus: How a badly designed fiscal "stimulus" ballooned to 6 times its budget to cost 12% of Italy's GDP, and what it tells us about the fiscal governance of Europe.

A thread on my Silicon Continent post.
(1/11) In 2020, Italy launched a program to subsidize 110% of home renovation costs. The objective was to improve energy efficiency and stimulate an economy.

Initially budgeted at €35B, it will end up costing €220B.
(2/11)
siliconcontinent.com/p/how-to-incin…

The Netherlands is Europe’s best-governed country. Unfortunately, it is paralyzed. Construction is freezing up, and Europe’s most valuable tech company (ASML) is threatening to leave. What happened should be a warning for every other EU member state. THREAD (1/11) 2/ The EU's Habitats Directive required protected nature areas with strict nitrogen thresholds. The Netherlands spread these areas out.

Emissions limits are now breached across the country. Link to today’s post by @pietergaricano:
siliconcontinent.com/p/target-price…

🧵While Brussels dreams up new billion-euro funds, businesses suffocate under red tape. Draghi's report maps our regulatory labyrinth, yet prescribes more debt as the cure. France now pays higher rates than Greece. Here's the story.
(From my Silicon Continent post today)
1/10 Over the last decade, we've witnessed an unprecedented debt explosion. Just energy crisis measures cost €651bn in 16 months.

Yet EU growth remains anemic. Our supposedly "neoliberal" era has paradoxically increased business regulations and constraints.
siliconcontinent.com/p/focus-on-the…

1/10 Europe just got a brutal wake-up call about green energy math. When wind & sun disappeared in December, electricity prices shot up 20X. Our current plans for batteries and storage won't solve this for decades. Here's the real numbers 🧵 2/10 Case in point: December 2023's "dunkelflaute" in Europe. No wind, no sun. Result? Electricity prices spiked 20x in Norway, hit record highs in Netherlands, and led Spain's authorities to cut power to factories 🌑
Link to the post by @pietergaricano

siliconcontinent.com/p/intermittenc…

The ECB is handicapping its digital euro project (strict holding limits, no interest payments, and mandatory bank account links) in order to protect the current broken, inefficient, subsidized banking system.

Do we need banks?

My post today in Silicon Continent
🧵 The ECB wants to give Europeans direct central bank accounts for payments. Their goal? Compete with Bitcoin and lower transaction costs by cutting out Visa/Mastercard fees. Sounds great... until you see the restrictions.
2/10
siliconcontinent.com/p/do-we-need-b…

Europe had an effective tool for climate action: the Emissions Trading System (ETS). Instead of expanding this market-based solution, we've built a byzantine regulatory framework that goes far beyond emissions reduction.
THREAD on my post today on the "Compliance Doom Loop"
1/10 Costs are staggering: Corporate Sustainability Reporting Directive (CSRD) requires 42,000 companies report 1,052 data points (783 mandatory). Cost: €150K-1M per company annually.
CSRD compliance costs of 12.5% of investment of mid sized firms (EIB).

2/ siliconcontinent.com/p/the-complian…

Wake-up Europe! Enough of the de-growth agenda!
There is no strategic autonomy while we spend our every waking hour erecting barriers to growth!
THREAD on the post today in Silicon Continent by @pietergaricano.
1/8 Today's Trump victory makes Europe's strategic autonomy urgent. But Europe has lived beyond its means through "luxury rules" - virtuous but growth-hurting policies that were only possible due to US protection and innovation.
2/
siliconcontinent.com/p/the-end-of-l…

The EU AI Act seems designed to allow AI only for routine tasks while hindering its use in high-level problem-solving.

This will endanger European AI startups and significantly damage EU productivity.

THREAD on our post today in Silicon Continent.
1/9 An AI bank teller in the EU would need two humans to oversee it. A startup building an AI tutor faces countless hurdles before launching. The is the reality under the EU AI Act—a well-meaning but flawed attempt to regulate AI.
2/
siliconcontinent.com/p/the-strange-…

We keep hearing how solving Europe’s innovation stagnation requires more public spending. But the numbers show otherwise: the EU falls behind in private R&D investment, not public.
A thread based on this week’s blog.
1/10
siliconcontinent.com/p/the-problem-… As a share of GDP, Europe spends 0.74% on public sector R&D, compared to the U.S. 0.69%.

The actual R&D gap is in private sector spending, where Europe spends 1.3% of GDP compared to the United States' 2.4%!
That gap is worth 341 billion in R&D spending in 2021. /2

New data shows that the EU Commission has blown the chance the NextGen gave it to get the EU on a growth path. Two key elements.
1. Pensions in Spain.
2. Reforms in italy.

The new data is from the ageing report of the EU Commission on the budgetary impact of the pension "reforms"- more below

( h/t @rdomenechv @fernandosols with official data from the Spanish government.)

Small THREAD (1/7)economy-finance.ec.europa.eu/publications/2… The EU NextGen plans gave an unprecedented and powerful stick to the EU Commission to demand reforms and investments in exchange of money. Never has the Commission had the chance to get states to get some reforms going.

In Spain, the EU Commission has been complicit (in spite of numerous warnings) in setting Spain on an unsustainable Fiscal path
(2/7)

Some reactions to the (wonderful) Levitt interview.
1) On the @uchicago PhD program and the atmosphere in the department in the 90s (toxic?).
2) On Price Theory and its future at @uchicago and beyond.
3) On the "technification" of economics and the blurring of the "theory-empirics" boundaries.
(link to interview: )
(Thread)
1/npodcasts.apple.com/us/podcast/ste… 1) On the Econ PhD Program. I went in 1992, graduated in 1998. I did not feel the ambiance was toxic. It was tough work, almost brutal, not toxic. I was given a chance I would not have gotten elsewhere. There was nothing personal about the standards. We were getting trained by the best and that was intellectually invaluable -we got the chance of a lifetime. Here are some profs of my first two years (note 5 nobels):
Macro: Sargent, Lucas, Cochrane, Woodford, Stokey, Townsend.
Micro: Becker, Rosen, Murphy, Scheinkman
Metrics: Hansen, Heckman, Zellner.
It was extremely hard, by far the hardest thing I have ever done. But it should be hard. They were trying to put a bunch of kids at the frontier of knowledge.
It was not for everyone, but we knew what we were getting into. My admired supervisor, Sherwin Rosen, then department chair, gave us a "superstar" (he wrote THE paper after all) talk on the first day. He told us half of us would fail in the first year Core (and exit with an MA, is that so bad?), half of the rest would not make the prelims. Of the 50 we were there, maybe 10 would finish the PhD, most of those would never get any citation.
And yet we persisted. We wanted to learn, and were grateful for the hance.
2/n

Prometí hacer un pequeño hilo con datos sobre el estancamiento de la economía española, al hilo de mi entrevista en @elmundoes.
Aquí van 4 gráficos. Al final del hilo, el texto de la entrevista completo.

https://twitter.com/lugaricano/status/1708464341991686584

La economía crece por demografía o por productividad.
Demografía: somos 47 millones.

La ONU estima que a finales de siglo seremos 30.8 millones, con una orquilla entre 21m y 43m: en el mejor caso (con mucha inmigración) estancamiento de la población.

data.un.org/Data.aspx?q=Sp…

We have seen much about Bob Lucas' macro contributions these days, but he also had a highly influential contribution to the theory of the firm: the "assigment theory of the firm", which explains, for instance, why Musk earns so much (and controls so many resources).
THREAD Before Lucas 1978, we had Marshall-Viner: individual firms have U-shaped long-run average cost functions. In equilibrium, each firm produces at the minimum point of this curve, with firm entry or exit adapting to get aggregate production. Resonable for plants, but not for firms!

🚨Stunning document, leaked today supposedly from GOOGLE, on whether there is a "moat" (Barrier to entry) in the LLM space.
The author argues neither Google nor OpenAI have a moat, and open source wins. Thread with critical comment at end:
semianalysis.com/p/google-we-ha… The question of whether one-three players dominate the industry (like Operating Systems or Search) or it is perfectly competitive is hugely important:
1) For consumer welfare: more competition is better.
2) For control of direction/ethics: more competition makes it harder.

Where are we on Climate Change?

Mike Greenstone @UChi_Economics gave a great talk @ChicagoBooth. I will post a few of his charts.

1. Including battery back-up, cost of electricity from renewables is 3x/4x more expensive than from fossil fuels. 2. Same for cars. Oil prices need to be quite high for EVs to be less costly: you need oil price at €129 for battery powered car to be more economical.

We should all be doing all we can to make @Twitter thrive (@elonmusk or no Musk)- it is a stunning information source.

If you experience Twitter as a swamp, you only have youself to blame. You choose who you follow, block and mute.

A thread in praise of Twitter.
(1/7) In each of the recent unprecedented events, Twitter has allowed anyone to get news far in advance of the mass media, straight from primary sources.
I show key examples on:
- Covid
- Ukraine
- Inflation
- Energy
In each case I quote one RT of mine to show it is not just hindsight

¿Por qué el mejor octubre del milenio, incluida la burbuja?

La maravillosa contabilidad del gobierno: los fijos discontinuos no aparecen como parados cuando dejan de trabajar.
(¡Tampoco como temporales cuando trabajan!) ¿Ha aumentando la cantidad de trabajo (medido en horas trabajadas) que se hace en nuestra economía desde que entró este gobierno en mayo del 2018?
No (línea roja). Fuente: INE, contabilidad nacional.

Al Presidente del Gobierno le gusta acusar a los demás de ser como Truss.

Desgraciadamente, es él y su gobierno quien se acerca peligrosamente al popuismo de las cuentas falsas que tanto le costó al RU. Sin el BCE detrás, España tendría problemas graves. (Hilo) Empecemos por el diagnóstico intelectual.
Muchos (e.g. Sánchez) aplican las lecciones de la crisis anterior a esta.
En aquel momento había deflación y había espacio fiscal. Podíamos y debíamos hacer una expansión a nivel europeo fiscal y /o monetaria

Six months into this War, for all the good wishes of our leaders, the West is still "helping" Russia.

The economic prospects for Ukraine are dire, with:
i) Ukrainian state finances collapsing
ii) Russian economy resisting
iii) Europe facing a Winter of discontent

THREAD The Ukrainian economy is in a perilous state. GDP is projected to collapse by 45% in 2022.

With revenue collapsing and military spending skyrocketing, the government faces a monthly (!) budget deficit of $5bn out of $100bn GDP.

politico.eu/article/financ…

Orban is expected to veto today's EU leaders' discussion on the Russian oil ban. But Europe does not need him to agree. As I explain in Politico, a simple majority of 🇪🇺 governments can ban Russia's oil and stop hiding behind Orban's veto.

Thread👇
politico.eu/newsletter/bru… Europe is contributing to prolong Putin´s war. Oil and gas payments account for over half of Russia’s state budget and a lot of it comes from our pockets. 🇪🇺 has sent over €50bn to 🇷🇺 since the war broke out. and one €12bn in aid to Kyiv.
crea.shinyapps.io/russia_counter…