Posts Tagged ‘European Union’

EU begins “repatriation of climate policy”?

April 16, 2013

It is probably the best thing that has happened for German electricity consumers for some time as German power prices fell by 3% as a reaction to the vote in the European Parliament. Even the EU Parliament – which has long been known as a “politically correct” follower of global warming orthodoxy – today balked at the  prospect of “backloading” and postponing the introduction of 900 million “carbon allowances”. This had been proposed by the climate fanatics in an effort to increase the declining price of these allowances and the possible collapse of the entire carbon trading market.

It is to be hoped that it really is the “beginning of the “repatriation of EU climate policy” which has been so wrong and so stubborn and so stupid for so long. But the religious environmentalism is still pretty fanatic and they will not give up their cherished dogma and their entrenched positions and their carbon scams so easily.

The Parliament:

Controversial ‘backloading’ proposal rejected by MEPs

The European parliament has rejected proposals for ‘backloading’ to postpone the auctioning of 900 million carbon allowances for 2013-2015, in a bid to help boost the price of ‘polluters permits’.

The proposals have been much debated, with some believing that any interference in the EU’s carbon market – the biggest in the world – could undermine confidence in the emissions trading scheme (ETS).

However, others feel that the temporary backloading solution would give the ETS, which is considered to be a flagship policy in the EU’s climate change agenda, a much needed boost, increasing carbon prices and in turn stimulating investment and innovation.

On Tuesday, parliament rejected the proposals by a narrow margin, 334 MEPs voted in favour, 315 against, and 63 abstained. Carbon prices immediately fell by 44 per cent to a record low of €2.63 following the vote.

Matthias Groote, parliament’s rapporteur on the timing of auctions, said “I deeply regret today’s vote. It is the beginning of the repatriation of climate policy.”

Reuters reports: 

Traders took the lack of political support as a signal to sell, driving the market down to its lowest yet. Immediately after the vote, carbon prices dropped by around 40 percent to 2.63 euros a tonne. They were trading at 3.15 euros, down 33.4 percent, by 1423 GMT.

“The carbon market is now in a coma, until a clear intervention takes place,” an emissions trader said. 

The Commission’s backloading proposal was meant to be a quick fix that could be agreed by the end of last year.

But it exposed deep divisions, with interest groups intensively lobbying members of the European Parliament.

Hedegaard, together with analysts and some in the energy sector have warned that failure to agree on EU steps would spur fragmentation in environmental policy as member nations move to safeguard their own green targets. Britain, for instance, already has a carbon price floor.

Of course the “loony left” were appalled:

“This kind of politics plays into the hands of climate sceptics. The rejection of the backloading proposal weakens the EU emissions trading system and puts our climate goals at risk.”

S&D deputy Linda McAvan said that the UK Tory party played an instrumental part in rejecting support for the EU’s carbon market. 
She said, “In a tight vote in the full session of the parliament in Strasbourg, most Tory MEPs chose to side with climate sceptics once again and undermine their own government’s climate strategy.” 
She continued, “They put their fanatic euro-scepticism ahead of British jobs and our environment,” adding, “This vote is a catastrophe for the environment.”
Greens MEP Keith Taylor also condemned the UK’s Tory party, as well as UKIP, saying, “Some MEPs want to leave the EU carbon market to sort itself out, but this simply won’t work.
“The ETS is flawed and leaving it alone won’t get us anywhere towards improving it. By opposing necessary steps to fix these problems Tory and UKIP MEPs are effectively signalling their desire to destroy the EU’s flagship climate change policy.”
Climate action commissioner Connie Hedegaard also expressed “regret” about the decision by parliament, and said that the proposal will now go back to the environment committee for “further consideration”. 
She added, “The commission remains convinced that backloading would help restore confidence in the EU ETS in the short term until we decide on more structural measures.
“We will now reflect on the next steps to ensure that Europe has a strong EU ETS.”
Josche Muth, secretary general of the European renewable energy council, said that the decision “renders the ETS impotent as a tool for shifting investments into less polluting generation technologies”.

But at least some sanity is returning

However, it wasn’t just the 315 MEPs who voted against the proposals that disagree with the proposals. 
BusinessEurope also welcomed the decision, with the director general Markus J. Beyrer saying that, “The European parliament expressed its support for a market-based instrument and rejected political interference. 
“It is time to move past the divisive and unhelpful debate around backloading and focus on the real priorities for the EU: how to secure a cost-competitive, secure and climate-friendly energy policy for 2030.”

Portugal moves closer to a Red Euro

April 7, 2013

The common thread running through the countries which are now in or entering the Red Euro zone  is that they have reached their current positions because they have all been incredibly profligate in their public sector while being incredibly lax in controlling the excesses of a rampant private banking sector. Of course the private sector “cowboys” have made obscene amounts of money and ridden off into the sunset. But a large number of public sector employees also made economically unjustified gains in the form of increased salaries and inflated pensions and reduced working hours. Now the piper has to be paid and of course those doing the paying are not necessarily those who gained the benefits. There is a pervading sense of the unfairness of it all.

It is only to be expected that those bearing the brunt of the consequences will fight to retain what they have. Portugal has been teetering on the brink of falling into the Red Euro zone and has been struggling to implement the austerity measures that are deemed necessary. Most of the austerity measures in Greece and Italy and Portugal postpone the day of reckoning but don’t really correct for the previous profligacy. Now Portugal’s Constitutional Court has rejected some of the measures for public sector salary and pension reductions as being “unfair”. Portugal continues “muddling through”  and Government sources are playing down the impact of the Court’s rejections but Portugal is one step closer to the Red Euro. There is an argument that formally establishing the Red Euro zone with a lower value than the Blue Euro rather than “muddling through” with all the Euro constraints, would be a better way to go.

(Reuters) Portugal’s constitutional court on Friday rejected four out of nine contested austerity measures in this year’s budget in a ruling that deals a blow to government finances but is unlikely to derail reforms two years after the country’s bailout.

The measures rejected by the court should deprive the country of at least 900 million euros ($1.17 billion) in net revenues and savings, according to preliminary estimates by economists.

…  Debt-ridden Portugal agreed to a 78 billion euro bailout in 2011 from the European Union and International Monetary Fund. The entire package of austerity measures introduced by the 2013 budget is worth about 5 billion euros and includes the largest tax hikes in living memory, which were mostly upheld.

“It’s a lesser evil. … Putting it into perspective, a good manager and leader should not have difficulty finding room in a budget to accommodate this cut,” said Joao Cantiga Esteves, economist at the Lisbon Technical University.

…. The government has called a Cabinet meeting on Saturday, and would not provide any immediate comment. It has to cut the budget deficit to 5.5 percent of GDP this year from 6.4 percent in 2012, when it missed the goal but was still lauded by its EU and IMF lenders for its austerity efforts.

Analysts consider the outcome manageable and say the government should be able to cover the shortfall with additional spending cuts it has been working on at the request of lenders. Analysts say the lenders could also give Portugal more leeway in terms of budget targets. 

…… On Wednesday, the government easily defeated a motion of no confidence, but the move united all the opposition in parliament against it. Socialist opposition leader Antonio Seguro said on Friday the court’s ruling “reinforces our position in d..emanding the government’s resignation.”

…… The 13 constitutional court judges have been scrutinizing articles of the 2013 budget since January when opposition parties argued that cuts to pensions and welfare benefits undermined workers’ basic rights.

The court rejected cuts in pensioners’ and public servants’ holiday bonuses, as well as reductions to sickness leave and unemployment benefits. They upheld tougher measures such as a reduction in the number of tax brackets, which alone brings in an estimated revenue of more than 2 billion euros.

Last year, the court also dealt a blow to government plans for more public-sector wage cuts, forcing it to resort to tax hikes instead. The austerity has provoked mass protests, but rallies in Portugal have been much more peaceful than in countries like Greece or Italy.

Cyprus could be the straw that breaks the Euro’s back

March 26, 2013

The wunderkind of the EU have just established a two-currency Europe and have undermined the trust any depositor can have in a Eurozone bank. The Cyprus solution has effectively created a Cypriot Euro which is – in practice – worth a lot less than a normal Euro. And every depositor holding more than €100,000 will be taking a very large risk if he puts his money in a weak Eurozone bank or in a weak Eurozone country. The depositor will need to demand a risk premium to cover the risk that his money could be stolen by the bank or by the State.

A Cypriot Euro (Κ€) is now worth less than a “normal” Euro (€). What that value is is a little difficult to judge but it lies somewhere between 60% and 90% of a normal Euro. All K€ which are outside of the deposit guarantee are now only worth 80% of a normal €. Moreover currency restrictions apply which are not so different to exchange control regulations for movement outside the country but which apply – in addition – to movement of money within Cyprus. A K€ still has the same buying power as a normal Euro but, on the other hand, it will no longer be possible to get any “outside Euros” to move into Cyprus and risk confiscation!

Jeroen Dijsselbloem, the Dutch chairman of the Eurozone announced (rather idiotically) yesterday that the Cyprus solution was the template to be used in the future.  Cyprus itself does not have an economy large enought to be so significant. But effectively  he was confirming that “Savings accounts in Spain, Italy and other European countries will be raided if needed to preserve Europe’s single currency by propping up failing banks”. But the resulting, ostensibly “single currency” will , de facto, have to distinguish between the currency held in different countries and just calling it a “single” currency will not hide the reality.  Mr. Dijsselbloem later tried to back-pedal on his statement but the truth was out by then. No amount of denials will change the fact that the Cyprus solution now sets the precedent and every weak bank will now be required to try and protect its shareholders by attacking its depositors.

I think the damage has been done and it is already too late for the EU to try and soften the message. I heard today that financial advisers in India and China were already suggesting to clients with Euro holdings to make sure it was in a strong country. This eliminates Greece, Italy, Spain, Ireland and even Hollande’s France. This only leaves Germany. The Russians are probably already shifting their legitimate Euro funds to Germany or the Netherlands and their not-so-legitimate money to the Bahamas or Mauritius or the Seychelles. In the short term Germany is the main beneficiary. Not only are their exports being helped by a weak Euro (kept weak because of the weak countries persisting within the Euro) but their banks are likely to see Euro deposits from the weak countries moving their way. But in the long term a flight from the Euro will not help anyone in Europe. The ideological – and almost dogmatic – attachment to the single Euro is now damaging all of Europe and delaying the recovery. Every single one of the bailed-out countries would recover faster if only they had a currency which could have been devalued.

The Cyprus solution is also a more general attack on Europe’s middle class (admittedly the richer part of the middle class). The population of the EU is about 500 million. With an average of about 2.5 individuals per household this represents about 200 million households. Probably 15-20 million households have a net worth exceeding  €200,000 which implies financial assets (as opposed to property and other non-liquid assets) of about €100,000. So an attack on European deposits of greater than €100,000 could affect some 40 – 50 million individuals.

Cyprus could be the straw that breaks the Euro’s back.

Stealing by the state from depositors in Cyprus is a dangerous precedent for all weak banks in the Euro zone

March 23, 2013

A one off tax is not a regular tax but just confiscation. When done by a State it is Grand Theft. It is some kind of nationalisation where some selected private assets are appropriated. Whatever it is called, it is just plain stealing from bank depositors. When banks are weak or badly managed it is the owners of the bank who should be held both responsible and accountable. But to blatantly and arbitrarily just “confiscate” a part of some of the depositors holdings  is a dangerous precedent.

If this is what happens in Cyprus and seemingly with the acquiescence –  if not the encouragement – of the Euro zone then it bodes ill for all depositors in weak Euro zone banks or banks in weak Euro zone countries. Cyprus can set a precedent of what is acceptable behaviour in the Euro zone. Certainly the banks and the owners will like this. After all it shifts risk from the bank’s equity to the bank’s depositors. And for profligate countries it provides a cover for stealing the money of large depositors.

For depositors having more than €100,000 in Cyprus it is already too late. Robbery by the State has been sanctioned by the European Union including Germany. Rationalising such a move by saying it is to get at black Russian money is disingenuous. If this is acceptable in Cyprus today then it may well be acceptable for banks – and not just the State – to confiscate their customer’s savings whenever an “emergency” arises.

For those with substantial deposits  – and not just over €100,000 – in Greece or Spain or Italy or Ireland it is probably high time to get out.

European Court of Auditors finds misuse of €5 billion subsidies for energy efficiency

January 14, 2013

Hot on the heels of  the criticism in the UK by the Public Accounts Committee of the over-generous licencing of wind-farms comes this criticism by the European Court of Auditors of the €5 billion wasted in the EU ostensibly on energy efficiency projects. (pdf report here).

Subsidies encourage cheating and corruption and green subsidies rarely achieve their objectives and are proving to be an utter waste.

European Court of Auditors:

“The Member States were essentially using this money to refurbish public buildings while energy efficiency was, at best, a secondary concern,” said ECA Member Harald Wögerbauer (AT). Since 2000, the European Union, through its Cohesion Policy funds, spent almost €5 billion for co-financing energy efficiency measures in the Member States. The Court found that the projects selected by Member State authorities for financing did not have rational objectives in terms of cost-effectiveness, i.e. cost per unit of energy saved. The planned payback period for the investments was 50 years on average, and up to 150 years in certain cases.

BBC:  The projects examined by the Court of Auditors were in the Czech Republic, Italy and Lithuania. Those countries received the most EU funding for such projects in 2007-2013.

National authorities used the funds to refurbish buildings, but the spending would not be recouped for 50 years on average, the report said. ….  The auditors looked at a sample of 24 energy efficiency projects co-financed by the Cohesion Fund and European Regional Development Fund. Under co-financing, the national governments contribute a percentage of the investment themselves.

The auditors say the European Commission, which allocates EU budget funds, should ensure that such projects undergo a thorough needs assessment first, and that proper monitoring for cost-effectiveness is done.

The report complained of a lack of necessary data, because energy audits are not mandatory in Italy and Lithuania. In the Czech Republic, where they are required, the recommended investment options were far too costly.

European Parliament defeats alarmist scare-mongering that shale gas will “destroy the future of mankind”

November 22, 2012

Rational thinking still can prevail over alarmist hyperbole.

It is heartening to see that the European Parliament – which is not my favourite institution – has rejected a moratorium on the exploitation of shale gas and has approved the right of each member state to decide for itself on shale gas exploitation. It has been “green” fanaticism and the environmentalists propensity for myopic adhesion to ideology which has caused Europe to forget the simple reality that “the lower the cost of energy the greater the growth”.

On 20th November the EU Parliament debated reports


Thessaloniki: One Greek city running a budget surplus and showing how it can be done

November 17, 2012
Thessaloniki Map


If anything proves that he Greek crisis is essentially due to past profligacy it is the current improvement in the status of the finances of the city of Thessaloniki. And I have no doubt that it it was the entry into the European Union and the mirage which the EU creates of getting something for nothing which lay behind much of the public employees “jobs for life” attitude and the spendthrift behaviour that any self-respecting household would have eschewed. But of course the Greek crisis has been caused by just a small minority of Greeks. I suppose the analogy would be of a household where the husband was spending the family jewels on drink and a good time while his wife and family made do with whatever that was left. But what Thessaloniki is apparently showing is how to get out of the pit. And if Greece could have devalued their drachma and did not have the high value of the Euro as a millstone around their necks, the return of tourists and an escape from the depths would probably be faster.

Reuters reports:

With his craggy face, diamond earring and tattooed wrist, Thessaloniki mayor Yannis Boutaris looks an unlikely candidate to turn around the finances of Greece’s second biggest city.

But the 70-year old, who stands apart from the political mainstream, is pulling off reforms that have so far evaded the national government in a three-year-old debt crisis that has sucked in some 150 billion euros of international aid.

In contrast to the rest of Greece, this sea-front city of one million is shrinking debt, cutting business taxes to help firms and paying city employees and contractors on time.


EU backs down on its stupid carbon tax for airlines

November 12, 2012

It was inevitable of course, but the real problem is that the EU is only backing down as a political necessity but continues to maintain its self-righteous, religiously fanatic and quite unintelligent attitude. In any event the tax on airlines for carbon dioxide emissions was doomed to failure after the US, China and India expressed their clear opposition and banned their airlines from complying with the arrogant and grandiose EU directive. To save some face for the EU it’s so-called Climate Commissioner,  Connie Hedegaard, (a modern day King Canute) has only suspended the measure for one year but I see no possibility of it ever coming back in the foreseeable future. She does tend to see herself as a pious knight in shining armour holding back the evil forces of climate change but she would be better occupied in tilting against the plague of windmills disfiguring most of Europe.


The European Union has agreed to suspend its rules that require airlines flying to and from airports in the EU to pay for their carbon emissions. The rules had been unpopular with countries outside Europe such as the US, China and India.

Climate commissioner Connie Hedegaard said she had proposed “stopping the clock for one year”.

Snuff case is just the tip of the EU corruption iceberg

October 17, 2012

Over the last 30+ years of doing business around the world the one certain indicator for me that corruption is rife and that a bribe is being solicited is when unforeseen delays occur in a permitting or licencing process and/or  when an “approval” is conditional or restricted. Politicians and bureaucrats everywhere use the bidding, procurement and regulatory machinery as their opportunity to line their pockets. And the appearance of sand in bureaucratic machinery is a sure sign that a politician or a bureaucrat is available to remove the sand or to oil the machinery – for a consideration.

The EU is probably the most sophisticated and successful corruptocracy in the world.

Yahoo (Reuters) reports on the latest case of EU corruption to come to light:

 The European Union’s top health official resigned on Tuesday after an anti-fraud investigation connected him to an attempt to influence EU tobacco legislation, the European Commission said.

The EU’s anti-fraud office OLAF found that a Maltese businessman had tried to use his contacts withCommissioner John Dalli, who is Maltese, for financial gain by offering to influence future EU legislation on tobacco products.

“The OLAF report did not find any conclusive evidence of the direct participation of Mr Dalli but did consider that he was aware of these events,” the Commission said in a statement, saying that Dalli had resigned with immediate effect.

Dalli has rejected the OLAF’s findings, the statement said. 

The statement said it was up to Maltese judicial authorities to decide if they wanted to pursue the case.

The OLAF investigation followed a complaint by snuff-and- cigar-maker Swedish Match in May 2012, saying that the businessman – who was not named – sought financial advantages in return for influencing Commission proposals, particularly on the EU’s current export ban on snus, a Swedish-style moist snuff.

“It’s unpleasant that these things happen. We can only hope that the process going forward to create a new directive is transparent and honest,” Swedish Match spokesman Fredrik Peyron said.

“We don’t know all the details that have emerged in this report. But if he has been involved in this it is reasonable (that Dalli resign).”

Snus, which is Swedish Match’s main cash cow, is banned in the EU for health reasons, except in Sweden which negotiated a permanent exemption in its EU accession talks in the 1990s.

Swedish Match hopes the European Commission will lift its ban on snus, which is put under the lip, mostly in pouches. The Swedish government has been pushing for a lifting of the ban, saying the health risks are not proportionate to the ban.

Nobel Peace Prize committee has become ridiculous

October 12, 2012

The European Union has been awarded the Nobel Peace Prize for 2012 and the choice only confirms that the Peace Prize has become ridiculous and irrelevant and has little to do with Peace in the World. The brand value of the Nobel prize is only damaged by the bizarre choices of the Norwegian committee which chooses the recipients.

Present Norwegian Nobel Committee

The present Norwegian Nobel Committee (from left): Geir Lundestad (secretary), Gunnar Stålsett, Berit Reiss-Andersen, Inger-Marie Ytterhorn, Kaci Kullmann Five and Thorbjørn Jagland (leader) © Photo: Odd-Steinar Tøllefsen / Norwegian Nobel Institute

The recipient is selected by the Norwegian Nobel Committee, a 5-member committee appointed by the Parliament of Norway and which is now becoming a laughing-stock. The laureates chosen in this century demonstrate that the Committee is living in some dream world of its own. That the choice is a political choice is inevitable. But in this century the choices have all represented a “political correctness” which has bordered on the cowardly. The recipients have had very little – by way of achievements – to do with the furthering of peace in the world. Liu Xiaobo  may be a very worthy individual but what on earth has he done for world peace? Barrack Obama was chosen on hope and not for anything achieved. The three winners in 2011 were chosen from a politically correct desire just to prove that developing countries and women  were not being ignored. Al Gore & Co. were a sop  to politically correct alarmism and not for any achievement. The choice of the United Nations was because nobody else could be thought of. Muhammad Yunus and the Grameen Bank may well have contributed to the development of rural areas (though not without controversy) but they did nothing for world peace. Martti Ahtisaari – for one – had actually been an effective mediator and he was at least active in the right field. But his achievements were not something so very extraordinary in the world context. The International Atomic Energy Agency made a complete hash of Iraq and its WMD. And what on earth did Wangari Maathai or  Jimmy Carter or Shirin Ebadi or Kim Dae Jung actually achieve for world peace?

This year’s choice of the European Union is about as ridiculous as they come. NATO would be a more relevant choice – but politically incorrect.

Alfred Nobel would not be pleased.

2012 The European Union (EU)
2011 Ellen Johnson Sirleaf, Leymah Gbowee and Tawakkol Karman
2010 Liu Xiaobo
2009 Barack H. Obama
2008 Martti Ahtisaari
2007 Intergovernmental Panel on Climate Change (IPCC) and Albert Arnold (Al) Gore Jr.
2006 Muhammad Yunus and Grameen Bank
2005 International Atomic Energy Agency (IAEA) and Mohamed ElBaradei
2004 Wangari Maathai
2003 Shirin Ebadi
2002 Jimmy Carter
2001 The United Nations ( U.N.) and Kofi Annan
2000 Kim Dae Jung

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