Friday, December 30, 2011

The muffled sound of clothes rubbing against each other


Quick Love
By Yoani Sánchez


“To the warm shelter of 214…” began a song by Silvio Rodriguez which — in my adolescent naivete — I listened to as if it were a riddle. So it was until a friend, who’d lived a little more than I had, unblushingly clarified the phrase. It was simply the address of a well-known Havana motel, where couples could find a place for quick love in a country already gripped by housing limitations. Waiting outside those places were women who covered their faces with scarves and sunglasses, while the men paid the desk clerk and got the key to the room. An insistent knock on the door would warn them that their time was over and others were waiting to enter.

Havana’s inns, scenes of so many infidelities, sudden passions, and even innumerable passions that led to formal matrimony with several children. These places, once flourishing, faced a long period of stigma and then a precipitous decline. They passed from sites of ardor to become cramped housing for victims of building collapses. Put like that, it sounds fair: substituting necessity for pleasure, the rapture of the flesh for the pressing needs of a family. One after the other, the city’s motels were closed to the public and their small rooms were taken up by people who lost their homes to the winds of a hurricane or the ravages of a fire. Informal love began to move to the bushes, dark corners, or, quietly, to the same room where Grandma was sleeping. Those with hard currency could, in turn, seek out private homes that rented rooms for 5 convertible pesos for several hours.

Now, passing through Fraternity Park late at night, it’s not uncommon to hear to a groan in the shadows, the muffled sound of clothes rubbing against each other. The majority of people my age and younger have never had their own roof under which to caress their partner, or a private bed where they can lie wrapped in each other’s arms. People who haven’t known what it is to live in a city where there are motels with neon signs and tiny rooms where you can make love for at least an hour. Nor do they understand the song — outdated now — of that singer-songwriter, and names such as Hotel Venus, 11th and 24th, The Countryside, or Ayestaran Cottages do not awaken any pleasant memories.

The numbers will make you speechless.

The End of the Euro
By Ilargy
Oh, sure, don't get me wrong, there may still be a Euro a year from now. And there’ll certainly be some investors left.
But the Euro, if it manages to survive, will have to do so in what can only be characterized as a radically different form and shape. At the same time, small mom and pop stock investors will be few and far between; there's no money in the "traditional" stock markets, as they've found out - once more - in 2011. Many will also need what money they still have in stocks to pay down various kinds of other obligations.

As for the stock markets, it is greatly ironic that on December 23, the S&P 500 was up for the year. Yesterday’s markets plunge did away with that irony, but given the psychological importance, I wouldn't be surprised if, in the slim trading volume between Christmas and New Year's, one party or another will make sure the number comes in positive anyway.

What strikes me in all this is the disparity between the S&P and financial stocks. It’s unreal. If mom and pop hold bank stocks, they're not very likely to have turned a profit. If pension funds are anything to go by (they lost big time this year), mom and pop had lean turkey at their holiday family parties.

Here's a little overview of the year-to-date performance of some of the major global banking stocks on December 29, 2011, before the opening bell:
  • BofA: -60.38%
  • Citi: -44.76% 
  • Goldman Sachs: -46.41% 
  • JPMorgan: -23.03% 
  • Morgan Stanley: -45.24% 
  • RBS: -50% 
  • Barclays: -34.32% 
  • Lloyds: -63.02% 
  • UBS: -29.33% 
  • Deutsche Bank: -28,55% 
  • Crédit Agricole: -56.04% 
  • BNP Paribas: -37.67% 
  • Société Générale: -59.57%
These are just some of the Too Big To Fail institutions. And while your governments have enough faith in them - or so they want you to believe - to prop them up with trillions of dollars of your money, investors are fleeing them, even if they can expect them to be propped up further. 

That doesn't just say something about confidence in the individual banks; it shouts loud and clear from the rooftops on confidence in the banking system as a whole, and indeed on governments' ability to continue bailing them out. In other words: bailouts don’t build confidence, they are taken as a sign that trouble's on the way.

Mom and pop will finally clue in to this in 2012, and get -their money- out of harm's way. Well, either that or lose it. Their money, that is. Perhaps their minds too. And their homes. Their jobs. 

Of the banks above, the European ones are in even deeper doodoo than their US counterparts. Gordon T. Long, in a report called 
Collateral Contagion, lifts a hitherto little known part of the veil:
There are approximately $55 trillion of banking assets in the EU. This compares to only $13 trillion in the US. Bank assets in the EU are 4 times as large as in the US.
In the US, debt held by the bank is smaller because retail deposits are a primary source of funds. EU banks use wholesale lending and, as a consequence, the debt held by banks is close to 80% versus less than 20% by US banks.
Wholesale bank lending in the EU approximates $30 trillion versus only $3 trillion in the US, a 10 X differential.
Wholesale lending is fundamentally borrowing from money market funds and other very short term, unsecured instruments. The banks borrow short and lend long. It all works until short term money gets scarce or expensive. 
Both have occurred in the EU and this recently placed Dexia into bankruptcy, forcing it to be taken over by the Belgian and French governments. The unsecured bond market fundamentally closed in the EU in Q3 2011, as fears mounted that an EU solution was not forthcoming.
Assuming $30 trillion of loans is spread over three years, EU banks have a requirement for $800 billion a month of rollover financing for wholesale lending outstanding.
If those numbers don't render you speechless, please read them again. $800 billion a month of rollover financing, every single month for three years.
The ECB recently passed out €489 in three-year loans at 1%. Nobody was impressed for more than a few hours. Gordon T. Long's report reveals at least a part of the reason why. Moreover, the ECB is now accepting the proverbial toilet paper as collateral for the loans, but guess what, banks are running out of toilet paper! David Enrich and Sara Schaefer Muñoz touch on the same topic for the Wall Street Journal:

Europe's Banks Face Pressure on Collateral
Even after the European Central Bank doled out nearly half a trillion euros of loans to cash-strapped banks last week, fears about potential financial problems are still stalking the sector. One big reason: concerns about collateral.
The only way European banks can now convince anyone—institutional investors, fellow banks or the ECB—to lend them money is if they pledge high-quality assets as collateral.
Now some regulators and bankers are becoming nervous that some lenders' supplies of such assets, which include European government bonds and investment-grade non-government debt, are running low.
 
If banks exhaust their stockpiles of assets that are eligible to serve as collateral, they could encounter liquidity problems. That is what happened this past fall to Franco-Belgian lender Dexia SA, which ran out of money and required a government bailout.
"Over time it is certainly a risk," said Graham Neilson, chief investment strategist for Cairn Capital Ltd. in London. "If banks don't have assets good enough to pledge as collateral, they will not be able to tap as much liquidity...and this could be the end-game path for a weaker bank."
The market for unsecured bonds issued by banks is dead. And they no longer have any collateral left to issue secured bonds. So what will they do? 
Saw this Guardian headline yesterday: Liquidity crunch fears stalk markets. I’d say that should have read Solvency crunch fears stalk markets. The ECB has taken care of short term liquidity. But to no avail. 
Collateral equals solvency. The ECB loans equal liquidity. And liquidity means nothing if you're insolvent. Inevitably, banks will start to fall by the wayside. Even some of the Too-Big-To-Fail ones.

As will countries. There is no chance - well, I’ll give you 1% or 2% - that Greece will still be part of an unchanged Eurozone a year from now. Chances for Portugal, Ireland, Italy and Spain may be a bit higher, but certainly not by much. France will face huge market pressure. And presidential elections.

The road going forward has become completely unpredictable. For you and me, and also for our "leaders". They don’t like that, even less than we do. That's why we saw this report from Philip Aldrick in the Telegraph a few days ago:

UK treasury plans for euro failure
The Government is considering plans to restrict the flow of money in and out of Britain to protect the economy in the event of a full-blown euro break-up.[..]
Officials fear that if one member state left the euro, investors in both that country and other vulnerable eurozone nations would transfer their funds to safe havens abroad. [..]
Under European Union rules, capital controls can only be used in an emergency to impose "quantitative restrictions" on inflows, [..]
Capital controls form just one part of a broader response to a euro break-up, however. Borders are expected to be closed and the Foreign Office is preparing to evacuate thousands of British expatriates and holidaymakers from stricken countries.
The Ministry of Defence has been consulted about organising a mass evacuation if Britons are trapped in countries which close their borders, prevent bank withdrawals and ground flights.
Every government, in Europe and in the US, is busy working on contagion plans, just like this one, over the holidays. Bank holidays are considered, capital controls, travel restrictions. 

In order to keep the basics of their economies going in case of financial disaster, governments will need to make sure they have the means to cover basic necessities. In a world where most of the energy and food is imported, that is a herculean task. 

Who's going to issue the letters of credit that make imports possible? And what will they be covered with? Will Saudi Arabia, Russia, China and the US still accept euros when the defection of Greece and/or others makes the future of the Eurozone and the entire EU highly uncertain? No, they will probably want guarantees in US dollars. 

As we speak, the euro is getting hammered, as is sterling, as is gold. Or are they? Or is it perhaps that the USD is rocking, in anticipation of near-future demand?

The risks for Europe come from all sides now, and at some point, which I think could be very close, one of these risks will not be -fully- covered. Because of the close interconnectedness between EU countries, as well as that between European and global financial institutions, one single domino may set in play a chain of events that will be beyond governments' control. 

And, as I said, they don't like that. They may opt to pre-empt any such possible events. In the Eurozone alone, we're looking at 17 different governments who may decide to do so, in whatever way. Leave the Eurozone, leave the EU, stall decision making, refuse to pay debt. 17 different governments, many of whom will change during the course of the year, have multiple options that would derail the entire EU project as it was intended to be.

While sovereign and private debt is certain to keep on rising, and willingness to lend in order to stave off defaults is disappearing. 

No, I don't know what the euro will look like next Christmas, but it won't be what it looks like today. It could be the return of the drachma and lira, or the return of the mark and guilder, or all of the above.
But not a 17 countries' Eurozone.

Europe is rotten at the core too, not just the periphery

Another one down the drain
Holland has already officially confirmed it is in recession. And this at a point in time when its gigantic housing bubble hasn't even started popping yet. With mortgage debt at anywhere between €650 billion (official government number) and €1 trillion (Ernst & Young, unconfirmed by me) for its 16.7 million citizens, and taking into account that only an estimated 50% of Dutch are homeowners to begin with, it should be obvious that a "mere" 10% or 20% drop in prices would be devastating. 
If 9 million (well over that 50%) Dutch men, women and children bear that €650 billion debt, each and everyone of them carries over €72,000. A typical family of 4 is then €288,000 ($375,000) in debt. On average! The huge popularity of interest-only mortgages has undoubtedly contributed strongly to this debt proliferation. And most will still feel fine, because the inevitable fall in prices hasn't materialized yet. And, admittedly, there are substantial savings.

Any drop in prices beyond 20% would mean unmitigated disaster. A huge part of private savings would be wiped out, and the banks that hold the mortgages would be pushed further into their already bankrupt status. Given the near inevitability of one or more countries leaving the Eurozone, even after trillions of euros were spent to prevent just this from happening, it's hard to see what the government could do to stave off widespread financial mayhem.

That same government did launch one idea last week: it seeks to force the country's "home-building corporations", a left-over from post-WWII state building projects aimed at offering affordable rental homes to everyone, to sell 75% of their rental homes to present occupants (at "reasonable" prices...). That’s a lot more potential debt slaves in one fell swoop. Whether or not a government, any government, should aim for just that is quite another matter. 

This is one of Europe's richest countries. Or so everyone seems to think. Europe is rotten at the core too, not just the periphery.

Living for today

If Tomorrow Comes
By Richard Fernandez
Der Spiegel tells the story of a man who sells of pews and furniture from dying churches.  And he is doing a land-office business. “Some 4,400 church buildings remain in the Netherlands. But each week, around two close their doors forever. This mainly affects the Catholics, who will be forced to offload half of their churches in the coming years. ‘And that’s just the beginning,’ says de Beyer.”
For years the number of faithful has been declining. The trend has swept across all of Western Europe, with churches forced to close in France and Belgium too. But in the Netherlands, Christianity’s retreat from society has been particularly drastic.
The Protestant Church alone loses some 60,000 members each year. At this rate, it will cease to exist there by 2050, church officials say.de Beyer thinks of himself as a rescuer of temples. He wants to preserve their value. His instructions are meant to help distinguish between the valuable and the worthless.
He often personally shows up to the churches to provide guidance and support. Pews and Bibles are usually sold to members of the congregation.
“Altars often find new places in Eastern Europe,” says de Beyer. “There’s a big demand there because new churches are always being built.”
But it isn’t just the churches that are dying. Mark Steyn writes that Europe itself is racing its old churches to the graveyard. It isn’t just the churches that boarding up the windows. It’s the factories, the schools and the families.
The problem with the advanced West is not that it’s broke but that it’s old and barren. Which explains why it’s broke. Take Greece, which has now become the most convenient shorthand for sovereign insolvency — “America’s heading for the same fate as Greece if we don’t change course,” etc. So Greece has a spending problem, a revenue problem, something along those lines, right? At a superficial level, yes. But the underlying issue is more primal: It has one of the lowest fertility rates on the planet. In Greece, 100 grandparents have 42 grandchildren — i.e., the family tree is upside down. In a social-democratic state where workers in “hazardous” professions (such as, er, hairdressing) retire at 50, there aren’t enough young people around to pay for your three-decade retirement. And there are unlikely ever to be again.
The New York Times featured the town of Laviano in Italy.  Only half its houses were occupied.  But any closures of its churches were the least of its problems.  It’s problem was even worse: it didn’t have enough kids to keep the schools open. The newly elected mayor “racked his brain and came up with a desperate idea: pay women to have babies.”
Laviano is not unique in Italy, or in Europe. In fact, it may be a harbinger. In the 1990s, European demographers began noticing a downward trend in population across the Continent and behind it a sharply falling birthrate. …For the first time on record, birthrates in southern and Eastern Europe had dropped below 1.3.
For the demographers, this number had a special mathematical portent. At that rate, a country’s population would be cut in half in 45 years, creating a falling-off-a-cliff effect from which it would be nearly impossible to recover. Kohler and his colleagues invented an ominous new term for the phenomenon: “lowest-low fertility.”
What happened? The problem as Steyn succinctly puts it, is that socialism not only “runs out of other people’s money”, as Margaret Thatcher once put it. It simply runs out of people. Future historians, if there are any left, will puzzle over how this came about. The economists will have an easier time explaining it. Through some process, socialism has apparently increased the discount rate to the point where the future is consumed for the sake of the present. Not only is investment taxed to feed consumption, tomorrow is hocked to pay for today.
If the fiscal deficit is the direct monetary expression of this high discount rate, the collapsing population is its equivalent demographic expression. Both are saying the same thing, in different terms. In incentives terms, the future is no longer real; so people don’t save up for it nor do they have any incentive to sacrifice for it.
Steyn points out that one feeds into the other. By failing to provide for the next generation to feed present consumption, the present West has also reduced its capacity to service the debt when tomorrow rolls around.
As Angela Merkel pointed out in 2009, for Germany an Obama-sized stimulus was out of the question simply because its foreign creditors know there are not enough young Germans around ever to repay it. The Continent’s economic “powerhouse” has the highest proportion of childless women in Europe: One in three fräulein have checked out of the motherhood business entirely. “Germany’s working-age population is likely to decrease 30 percent over the next few decades,” says Steffen Kröhnert of the Berlin Institute for Population Development. “Rural areas will see a massive population decline and some villages will simply disappear.”
If the problem with socialism is, as Mrs. Thatcher says, that eventually you run out of other people’s money, much of the West has advanced to the next stage: It’s run out of other people, period. Greece is a land of ever fewer customers and fewer workers but ever more retirees and more government.
Ironically this outcome was baked into socialism from the beginning. It was suspicious of “tomorrow”– that place where the worker would enjoy his benefits — and preferred to consume things today. The most hated tomorrow in socialist opinion was the Christian heaven. It was the “opiate of the people”; the object to which they lifted their eyes the better not to see the miseries of the present. The sooner man was rid of heaven and its earthly equivalents, the nation or the country, the better the new man would be. As John Lennon knew, the best way to understand socialism is to imagine a world without tomorrow.
Imagine there’s no heaven. It’s easy if you try. No hell below us, above us only sky. Imagine all the people living for today.
And that is precisely what the welfare state consisted of. Living for today. Social security is a perfect example. It was never a “fund”; it was never anything more than a payroll tax moving money from young workers to old workers. For it while it seemed to work, but only because the West was running on the legacy of a generation that believed in tomorrow and had sacrificed its life and youth in World War 2 to secure it. The “living for today” lifestyle resulted in the spectacular party some may remember at the end of the 20th century: an era that valued unlimited sex, unlimited welfare, and sacrifice for God and country not at all.
Imagine there’s no countries.
It isn’t hard to do.
Nothing to kill or die for.
And no religion too.
And then the music stopped.  This was the silent scene where we came in at the beginning of the screening: the churches closing at the rate of two a week; the factories closing even faster. What Lennon failed to grasp was that any society that had nothing it would sacrifice for would find nothing worth investing in. And so here we are, dragging on the end of our smokes, tipping over any bottles that still might contain some wine. Because the vineyards are barren and will stay that way. The ultimate problem with “living for today” is that tomorrow eventually comes.

Thursday, December 29, 2011

The world is aging in an unprecedented way


The World by Numbers
“Here lies Europe, overwhelmed by Muslim immigrants and emptied of native-born Europeans,” goes the standard pundit line, but neither the immigrants nor the Europeans are playing their assigned roles.
by Martin Walker
Something dramatic has happened to the world’s birthrates. Defying predictions of demographic decline, northern Europeans have started having more babies. Britain and France are now projecting steady population growth through the middle of the century. In North America, the trends are similar. In 2050, according to United Nations projections, it is possible that nearly as many babies will be born in the United States as in China. Indeed, the population of the world’s current demographic colossus will be shrinking. And China is but one particularly sharp example of a widespread fall in birthrates that is occurring across most of the developing world, including much of Asia, Latin America, and the Middle East. The one glaring exception to this trend is sub-Saharan Africa, which by the end of this century may be home to one-third of the human race.
The human habit is simply to project current trends into the future. Demographic realities are seldom kind to the predictions that result. The decision to have a child depends on innumerable personal considerations and larger, unaccountable societal factors that are in constant flux. Yet even knowing this, demographers themselves are often flummoxed. Projections of birthrates and population totals are often embarrassingly at odds with eventual reality.
In 1998, the UN’s “best guess” for 2050 was that there would be 8.9 billion humans on the planet. Two years later, the figure was revised to 9.3 billion—in effect, adding two Brazils to the world. The number subsequently fell and rose again. Modest changes in birthrates can have bigger consequences over a couple of generations: The recent rise in U.S. and European birthrates is among the developments factored into the UN’s latest “middle” projection that world population in 2050 will be just over 9.1 billion.
In a society in which an average woman bears 2.1 children in her lifetime—what’s called “replacement-level” fertility—the population remains stable. When demographers make tiny adjustments to estimates of future fertility rates, population projections can fluctuate wildly. Plausible scenarios for the next 40 years show world population shrinking to eight billion or growing to 10.5 billion. A recent UN projection rather daringly assumes a decline of the global fertility rate to 2.02 by 2050, and eventually to 1.85, with total world population starting to decrease by the end of this century.
Despite their many uncertainties, demographic projections have become an essential tool. Governments, international agencies, and private corporations depend on them in planning strategy and making long-term investments. They seek to estimate such things as the number of pensioners, the cost of health care, and the size of the labor force many years into the future. But the detailed statistical work of demographers tends to seep out to the general public in crude form, and sensationalist headlines soon become common wisdom.
Because of this bastardization of knowledge, three deeply misleading assumptions about demographic trends have become lodged in the public mind. The first is that mass migration into Europe, legal and illegal, combined with an eroding native population base, is transforming the ethnic, cultural, and religious identity of the continent. The second assumption, which is related to the first, is that Europe’s native population is in steady and serious decline from a falling birthrate, and that the aging population will place intolerable demands on governments to maintain public pension and health systems. The third is that population growth in the developing world will continue at a high rate. Allowing for the uncertainty of all population projections, the most recent data indicate that all of these assumptions are highly questionable and that they are not a reliable basis for serious policy decisions.
In 2007, The Times of London reported that in the previous year Muhammad had edged out Thomas as the second most popular name for newborn boys in Britain, trailing only Jack. This development had been masked in the official statistics because the name’s many variants—such as Mohammed, Mahmoud, and Muhamed—had all been counted separately. The Times compiled all the variants and established that 5,991 Muhammads of one spelling or another were born in 2006, trailing 6,928 Jacks, but ahead of 5,921 Thomases, 5,808 Joshuas, and 5,208 Olivers. The Times went on to predict that Muhammad would soon take the top spot.
On the face of it, this seemed to bear out the thesis—something of a rallying cry among anti-immigration activists—that high birthrates among immigrant Muslims presage a fundamental shift in British demography. Similar developments in other European countries, where birthrates among native-born women have long fallen below replacement level, have provoked considerable anxiety about the future of Europe’s traditionally Christian culture. Princeton professor emeritus Bernard Lewis, a leading authority on Islamic history, suggested in 2004 that the combination of low European birthrates and increasing Muslim immigration means that by this century’s end, Europe will be “part of the Arabic west, of the Maghreb.” If non-Muslims then flee Europe, as Middle East specialist Daniel Pipes predicted in The New York Sun, “grand cathedrals will appear as vestiges of a prior civilization—at least until a Saudi-style regime transforms them into mosques or a Taliban-like regime blows them up.”
The reality, however, looks rather different from such dire scenarios. Upon closer inspection, it turns out that while Muhammad topped Thomas in 2006, it was something of a Pyrrhic victory: Fewer than two percent of Britain’s male babies bore the prophet’s name. One fact that gets lost among distractions such as the Timesstory is that the birthrates of Muslim women in Europe—and around the world—have been falling significantly for some time. Data on birthrates among different religious groups in Europe are scarce, but they point in a clear direction. Between 1990 and 2005, for example, the fertility rate in the Netherlands for Moroccan-born women fell from 4.9 to 2.9, and for Turkish-born women from 3.2 to 1.9. In 1970, Turkish-born women in Germany had on average two children more than German-born women. By 1996, the difference had fallen to one child, and it has now dropped to half that number.
These sharp reductions in fertility among Muslim immigrants reflect important cultural shifts, which include universal female education, rising living standards, the inculcation of local mores, and widespread availability of contraception. Broadly speaking, birthrates among immigrants tend to rise or fall to the local statistical norm within two generations.
The decline of Muslim birthrates is a global phenomenon. Most analysts have focused on the remarkably high proportion of people under age 25 in the Arab countries, which has inspired some crude forecasts about what this implies for the future. Yet recent UN data suggest that Arab birthrates are falling fast, and that the number of births among women under the age of 20 is dropping even more sharply. Only two Arab countries still have high fertility rates: Yemen and the Palestinian territories.
In some Muslim countries—Tunisia, the United Arab Emirates, Bahrain, Kuwait, and Lebanon—fertility rates have already fallen to near-European levels. Algeria and Morocco, each with a fertility rate of 2.4, are both dropping fast toward such levels. Turkey is experiencing a similar trend.
Revisions made in the 2008 version of the UN’s World Population Prospects Report make it clear that this decline is not simply a Middle Eastern phenomenon. The report suggests that in Indonesia, the country with the world’s largest Muslim population, the fertility rate for the years 2010–15 will drop to 2.02, a shade below replacement level. The same UN assessment sees declines in Bangladesh (to 2.2) and Malaysia (2.35) in the same period. By 2050, even Pakistan is expected to reach a replacement-level fertility rate.
Iran is experiencing what may be one of the most dramatic demographic shifts in human history. Thirty years ago, after the shah had been driven into exile and the Islamic Republic was being established, the fertility rate was 6.5. By the turn of the century, it had dropped to 2.2. Today, at 1.7, it has collapsed to European levels. The implications are profound for the politics and power games of the Middle East and the Persian Gulf, putting into doubt Iran’s dreams of being the regional superpower and altering the tense dynamics between the Sunni and Shiite wings of Islam. Equally important are the implications for the economic future of Iran, which by midcentury may have consumed all of its oil and will confront the challenge of organizing a society with few people of working age and many pensioners.
The falling fertility rates in large segments of the Islamic world have been matched by another significant shift: Across northern and western Europe, women have suddenly started having more babies. Germany’s minister for the family, Ursula von der Leyen, announced in February that the country had recorded its second straight year of increased births. Sweden’s fertility rate jumped eight percent in 2004 and stayed put. Both Britain and France now project that their populations will rise from the current 60 million each to more than 75 million by midcentury. Germany, despite its recent uptick in births, still seems likely to drop to 70 million or less by 2050 and lose its status as Europe’s most populous country.
In Britain, the number of births rose in 2007 for the sixth year in a row. Britain’s fertility rate has increased from 1.6 to 1.9 in just six years, with a striking contribution from women in their thirties and forties—just the kind of hard-to-predict behavioral change that drives demographers wild. The fertility rate is at its highest level since 1980. The National Health Service has started an emergency recruitment drive to hire more midwives, tempting early retirees from the profession back to work with a bonus of up to $6,000. In Scotland, where births have been increasing by five percent a year, Glasgow’s Herald has reported “a mini baby boom.”
Immigrant mothers account for part of the fertility increase throughout Europe, but only part. And, significantly, many of the immigrants are arrivals from elsewhere in Europe, especially the eastern European countries admitted to the European Union in recent years. Children born to eastern European immigrants accounted for a third of Scotland’s “mini baby boom,” for example.
In 2007, France’s national statistical authority announced that the country had overtaken Ireland to boast the highest birthrate in Europe. In France, the fertility rate has risen from 1.7 in 1993 to 2.1 in 2007, its highest level since before 1980, despite a steady fall in birthrates among women not born in France. France’s National Institute of Demographic Studies reports that the immigrant population is responsible for only five percent of the rise in the birthrate.
A similar upturn is under way in the United States, where the fertility rate has climbed to its highest level since 1971, reaching 2.1 in 2006, according to the National Center for Health Statistics. New projections by the Pew Research Center suggest that if current trends continue, the population of the United States will rise from today’s total of some 300 million to 438 million in 2050. Eighty-two percent of that increase will be produced by new immigrants and their U.S.-born descendants.
By contrast, the downward population trends for southern and eastern Europe show little sign of reversal. Ukraine, for example, now has a population of 46 million; if maintained, its low fertility rate will whittle its population down by nearly 50 percent by mid-century. The Czech Republic, Italy, and Poland face declines almost as drastic.
In Russia, the effects of declining fertility are amplified by a phenomenon so extreme that it has given rise to an ominous new term—hypermortality. As a result of the rampant spread of maladies such as HIV/AIDS and alcoholism and the deterioration of the Russian health care system, says a 2008 report by the UN Development Program, “mortality in Russia is 3–5 times higher for men and twice as high for women” than in other countries at a comparable stage of development. The report—which echoes earlier findings by demographers such as the Woodrow Wilson Center’s Murray Feshbach—predicts that within little more than a decade the working-age population will be shrinking by up to one million people annually. Russia is suffering a demographic decline on a scale that is normally associated with the effects of a major war.