Schwarzenegger and Barroso congratulate themselves in Vienna

Arnold Schwarzenegger saves the world :
"I still drive my Hummers but now they are all on hydrogen and biofuel ..."

Arnold Schwarzenegger has taken his climate change/global warming road show to his former home country. On Thursday he opened the Regions of Climate Action (R-20) conference in Vienna: 

Arnold Schwarzenegger called Thursday for an end to "doom and gloom" environmentalism as he hosted the first conference of his new green movement fostering action by local governments and individuals.

"If we want to inspire the world, it is time for us to forget about the old way of talking about climate change, where we crush people, where we overwhelm people with data," the former California governor, bodybuilder and film star said.

"I mean I still drive my Hummers but now they are all on hydrogen and biofuel ... We need to send a message that we can live the same life, just with cleaner technology." Following his success implementing environmental legislation in California ahead of federal US action, Schwarzenegger's created the R20 Regions of Climate Action movement in 2010.

Reality check: 

California, once the most attractive business environment in the nation, is today caught in a downward economic spiral while Texas is on the upswing.

Between 1960 and 1990, more than four million people moved to California, attracted by the state’s beauty, weather and booming economy. However, a 2012 study by the Manhattan Institute found, that since 1990, California has lost most of that gain as millions moved out of the state.

Many of those who left were business owners driven out by California’s high income taxes, oppressive regulations, high energy costs, property taxes and labor costs. As employers relocated to Texas, Nevada and Arizona, workers followed, taking their money with them -- a total of $18.55 billion in lost wages from 2000-2010.

Once a magnet for job creators, California’s unemployment rate has been higher than the national average for the last 22 years.

In 2012, 650 business leaders surveyed by Chief Executive Magazine rated California the worst state in the nation for business -- for the eighth consecutive year. That same survey rated Texas #1 for the eighth year in a row.

The "keynote" speaker, European Commission president José Manuel Barroso was full of praise for the "succesful" European Union working method: 

"Regions20 is a shining example of this new mind-set in business and in government at the regional level, because it draws on so many stakeholders and their expertise. In many respects the work of R20 is similar to that of the European Union, as it connects different actors on all levels to cooperate on common challenges - to be stronger together.

Within the European Union this has been our successful working method of more than half a century"

Reality check:

Unemployment in the euro zone hit a record high of 11.8 percent in November, according to a new Eurostat report. In Spain, Greece, and Portugal, joblessness has never been higher during this crisis.

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Unemployment for workers under 25 is now closer to 60 percent than 50 percent in Spain and Greece, and youth joblessness is rising in France, Italy, and Portugal.

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Optimistically, Europe will grow about 0.0% this year. The last time Spanish growth was this weak was during the Spanish Civil War. Greece's GDP decline is the worst of any peaceful, non-communist post-WWII economy.

(image by wikipedia)

Czech president Klaus´s global forecast

Czech president Václav Klaus is one the very few politicians, who´s speeches and articles always are interesting to read. In his recent speech at the Com.Sult congress in Vienna Klaus offers the following forecast for the next two years:

1. the European single currency, the Euro, will survive its current acute crisis but we will pay a very high price for it in long-term economic slowdown if not stagnation, in a heavy burden of inter-country fiscal transfers, in the further loss of sovereignty of the EU member states, in increasing centralization of decision-making in Brussels, in a growing democratic deficit;
2. eurodebt crisis à la Greece or Ireland will reach other eurozone countries. The costs of helping them will be increasing but these costs will be – reluctantly and unwillingly – paid by the tax-payers in the rest of the EU;
3. economic growth in Central and Eastern European countries, including the Czech Republic, will be faster than in Western Europe. The gap in the level of economic development between the European East and West will keep diminishing;
4. economic growth in the U.S. will continue to be weak. It will be taken as a disappointment and Obama’s administration will have more and more problems. It becomes clear that – because of structural deficiencies – Obama’s fiscal stimulus cannot rescue the U.S. economy. It stimulates employment more in China and India than in America;
5. global economic growth will continue to depend on new dynamic economies in Asia and Latin America. The BRIC countries will grow fast and their catching-up process will continue. The BRIC economies as a group are practically as important to the global economy as the United States economy already now and their role in the world economy will grow.

Read the entire speech here. The analysis in the first part of the speech is strongly recommended reading.

The climate in Europe is deinitively changing.. which is proved by the fact that at the Vienna Congress the whole audience (700 participants) applauded loudly and were shouting "bravo" after President Klaus said the following sentense: "As someone who spent almost fifty years living in an oppressive, visibly irrational and hopelessly inefficient communist system, I hope I can afford to say that I see more similarities between communism and the current EU than it is considered politically correct to admit".


My comment to Klaus´s points:

"Mrs. Merkel and I will never, never allow the Euro to fail"
 Nicolas Sarkozy

"Let me say this very clearly again. The euro is our currency. And it is much more than just a currency. It is the embodiment of Europe today. Should the euro fail, Europe will fail"
Angela Merkel  

If one considers what Merkel and Sarkozy said a couple of days ago in Davos, Klaus´s (from a eurorealist point of view) rather pessimistic forecast looks very plausible, but I think there is another scenario that may lead to an accelerated demise of the euro in its current form. This scenario takes a more pessimistic view of the development in China as its point of departure:

It now seems very likely that the Chinese property bubble will burst in the near future, causing huge problems for countries now relying on exports to China.

The present strong economic growth in Germany - the euro paymaster - is very dependent on exports to China. A crisis in the Chinese economy would thus have major repercussions for Germany (and of course many other countries). In that kind of a situation Germany will - despite Merkel´s and Sarkozy´s fine words in Davos - not hesitate to change its attitude towards the common currency. An entirely new ballgame would follow. It could lead to the formation of e.g. a "Northern euro" consisting of those countries that are capable of playing on the same level as Germany, or some other similar arrangement.