Putin´s Russia summarized in 12 seconds

The Telegraph:

"Russian rouble shaken in biggest one-day fall against dollar since 1998

The currency of Vladimir Putin's Russia has been left shaken by falling oil prices and sanctions related to ongoing tensions in Ukraine" 

An brief summary of Putin´s Russia:

 

Dashcam footage shows a car upside down after it has

been driven into a huge hole in a road in Russia

 

The European Union continues on its path to economic self-destruction: Agrees on "World´s most ambitious climate energy policy"

The grim reality for the European Union:

Now that German growth has stumbled, the euro area is on the verge of tipping into its third recession in six years. Its leaders have squandered two years of respite, granted by the pledge of Mario Draghi, the European Central Bank’s president, to do “whatever it takes” to save the single currency. The French and the Italians have dodged structural reforms, while the Germans have insisted on too much austerity. Prices are falling in eight European countries. The zone’s overall inflation rate has slipped to 0.3% and may well go into outright decline next year. A region that makes up almost a fifth of world output is marching towards stagnation and deflation.

Surely the leaders of the European Union should be more than worried. However, instead of taking the necessary measures to create growth, those leaders have chosen to reinforce the only really "succesful" EU project, the self-destruction of the European economy:

in the early hours of Friday, Mr Van Rompuy, wrote in a tweet: "Deal! At least 40% emissions cut by 2030. World's most ambitious, cost-effective, fair #EU2030 climate energy policy agreed ."

The EU Commissioner for Climate Action, Connie Hedegaard, said she was "very proud" that the leaders "were able to get their act together on this pressing climate challenge".

Meanwhile, German Chancellor Angela Merkel said: "We made a decisive step forward."

The EU is already on target to cut its CO2 emissions by 20% by 2020, compared with 1990 emission levels.

EU officials earlier said they wanted the EU to have an "ambitious position" in the run up to the UN climate change conference in Paris in December 2015.

They must be smiling in the US, China and India ...

Alan Greenspan on the never ending euro failure

There is no end to the ongoing euro crisis. Former Fed Chairman Alan Greenspan explains why the euro is - and will stay - a huge failure:

"At the outset of the creation of the euro in 1999, it was expected that the southern eurozone economies would behave like those in the north; the Italians would behave like Germans. They didn’t," Greenspan said. "Instead, northern Europe fell into subsidizing southern Europe’s excess consumption, that is, its current account deficits."
Greenspan predicts that as the south's fiscal crisis deepens, the flow of goods from the north will stop altogether and southern Europe's standard of living will go down.
"The effect of the divergent cultures in the eurozone has been grossly underestimated," he added. "The only way to have several currencies from divergent nations lumped together is if they are culturally close, such as Germany, the Netherlands and Austria. If they aren’t, it simply can’t continue to work."

Tim Worstall also has a good piece on the same subject in Forbes:

While these very different economies are locked into the one currency, one interest rate, system there’s really not a lot anyone can do about it. Some talk of fiscal union, which is in essence the rich areas sending money to the poor ones. But absolutely no one at all thinks that those rich areas have the desire nor capacity to ship enough money: we’re not talking about a few billions here or there, but substantial percentages of GDP being necessary.

All of which is what made me conclude long ago that the failure of the euro is inevitable. Please note, I don’t mean that collapse of it is: political finagling can hold it together for decades if people really try. What I mean is failure in an economic sense. Interest rates will always be set for the core economies, meaning that they will always be wrong for the peripheral ones. Which means that those peripheral economies are condemned to a cycle of huge boom and bust as interest rates are either way too low or way too high for their circumstances.
Yes, I do think it fair to say that wild gyrations are a sign of failure in an economic policy or system. And in this sense, I think it inevitable that the euro will fail. For it already has.

Congratulations EU!: The man who led Finland to economic catastrophe, will now be in charge of jobs and growth!

The fact that former Finnish PM Jyrki Katainen will be in charge of jobs, growth, investment and competitiveness in Juncker´s new European Commission illustrates what is wrong with the European Union.

Judge yourselves whether the new Vice-President for Jobs, Growth, Investment and Competitiveness is the right man for his job after reading what Björn Wahlroos, former economics professor and probably the most influential Finnish business executive and investor right now, has to say about the government Katainen led:

Finland is in a “catastrophic” and “murderous” economic situation, facing a challenge greater than in the doldrums of 1991, estimates Björn Wahlroos.
The outspoken tycoon refers to a recent interview in which Anders Borg, the Swedish Minister of Finance, suggested that Finland is a cautionary example of how a country can destroy its competitiveness.
“We messed up a couple of labour market agreements and tried to rectify that with measures that further increased labour market rigidity. Costs crept up. The results are evident: jobs keep on disappearing,” states Wahlroos.

A traditional measure of the competitiveness of an economy is to examine its terms of trade – the value of its exports relative to that of its imports. “In Finland, it has deteriorated by 30 per cent, which is unusual. In the meantime, wages have increased by 40 per cent,” lists Wahlroos.
“Wages have crept up by 20 per cent over the past six years alone – during a period when the gross domestic product has failed to grow one bit. In fact, it has dropped. If you're asking whether this is a problem, the answer would be yes!”
Industries, in turn, have refrained from making major investments after the financial crisis swept over Finland in 2008. “A substantial amount of jobs has disappeared. And here's the regrettable part: more will disappear,” predicts Wahlroos. --

In effect, the Government of Stubb continues to carry out the government programme hammered out by the Government of Prime Minister Jyrki Katainen (NCP) in 2011. “It's founded on as bad a premise as possible. What's regrettable in terms of political history is that it was founded on a bad premise partly knowingly,” Wahlroos states.

PS

Katainen resigned as captain of the sinking Finnish ship in June in the knowledge that he would be rewarded for his failure with one of the exorbitantly well-paid EU top jobs. You´ll never walk alone, if you belong to the "club" ....

The Econonomist: "The euro may yet be doomed"

The Economist is spot on about the euro:

"If Germany, France and Italy cannot find a way to refloat Europe’s economy, the euro may yet be doomed." --

 "In recent weeks the countries of the euro zone have begun to take in water once again. Their collective GDP stagnated in the second quarter: Italy fell back into outright recession, French GDP was flat and even mighty Germany saw an unexpectedly large fall in output (see article). The third quarter looks pretty unhealthy, partly because the euro zone will suffer an extra drag from Western sanctions on Russia. Meanwhile, inflation has fallen perilously low, to around 0.4%, far below the near-2% target of the European Central Bank, raising fears that the zone as a whole could fall prey to entrenched deflation. German bond yields are hovering below 1%, another harbinger of falling prices. The euro zone stands (or wobbles) in stark contrast with America and Britain, whose economies are enjoying sustained growth."--

"(But) without a new push from the continent’s leaders, growth will not revive and deflation could take hold. Japan suffered a decade of lost growth in the 1990s, and is still struggling. But, unlike Japan, Europe is not a single cohesive country. If the currency union brings nothing but stagnation, joblessness and deflation, then some people will eventually vote to leave the euro. Thanks to Mr Draghi’s promise to put a floor under government debt, the market risk that financial pressures could trigger a break-up has receded. But the political risk that one or more countries decide to storm out of the single currency is rising all the time. The euro crisis has not gone away; it is just waiting over the horizon."

The euro in its present form is bound to fail. The sooner it happens, the better. Unfortunately the present European politicians will do their utmost in order to deny the failure, thus seriously delaying the much needed economic revival in Europe.

Die Welt: Germany says goodbye to the market economy

Make no mistake: This lady is a de facto social democrat!

Already in September last year I wrote about the "social democratization" of Angela Merkel's Germany. This process is happening even faster than anticipated. There is less and less room for the market economy. Germans should be worried:

The GroKo (Merkel's "great coalition") redefines the social market economy: The adjective becomes the main word, while leaving less and less room for the market economy.

The massive government intervention in wage setting means a turning point for the local economy. Further regulation of the labor market will follow. And the rents are also in the focus of the coalition. Here a "rental brake" is to dampen the supposedly anti-social effects of the real estate boom. In the energy sector, market forces are already overridden, and the government has no convincing plan for how they want to deal with the consequences of these interventionist policies. --

If the social politicians of the SPD and Union continues so rigorously to shrink the market economy, Germany's best times will soon be behind us.

Germany and the UK would benefit from a euro break up

In the long run Germany and the UK would benefit from a break up of the euro, according to the leading British research group the Centre for Economics and Business Research (CEBR):

"Germany is forecast to lose its position as the largest Western European economy to the UK around 2030 because of the UK's faster population growth and lesser dependence on the other European economies," the report said.
"If the euro were to break up, Germany's outlook would be much better," it added. "A Deutsche Mark-based Germany certainly would not be overtaken by the UK for many years if ever."
The think-tank's chief executive claimed that Britain's economy would grow even faster if it left the European Union.
"My instinct is that in the short term, the impact of leaving the EU would undoubtedly be negative," Douglas McWilliams told the Daily Telegraph. “My suspicion is that over a 15-year period, it would probably be positive."

The Norway Report

The next time you meet a Norwegian in a pub, ask him to pay for the beer. He should be able to afford it:

The Norwegian Government Pension Fund Global, also known as the National Oil Fund has now reached the value of NOK 5000 billion, or USD 818 billion. This was announced Monday, 17 years after the Finance Department deposited the first NOK two billion in the Fund in 1996.

But don't wait for too long - even the owners of  the world’s largest sovereign wealth fund have their problems:

In only 12 years, the oil production in Norway will slow down, and so will the growth of the oil fund. Today's youth will have to pick up the bill.

"When the oil age is over we may have to cut down on our benefits. That could be painful, but it will most likely have to be done sooner or later. The rest of Europe, including our neighboring countries, are already cutting their spending, whereas we simply continue to expand systems that are not sustainable in the long run," says Chief Economist in Handelsbanken Knut Anton Mork.

The Economist has more on why wealth has its problems also in the land of the Arctic Arabs:

The oil boom led to a boom in public spending: since the 1970s the number of people employed in education has doubled and that in health and social services has quadrupled. The public sector continues to account for 52% of Norway’s GDP.
Oil wealth is bringing its own problems. The oil sector is monopolising the nation’s technical talent, with more than 50,000 engineers currently being employed offshore. Property prices are rising by nearly 7% a year. McDonalds charges $7.69 for a Big Mac, against $4.37 in America.

The fund is not without its problems, such as its size (it now accounts for 1% of all the world’s stocks), its leisurely approach (it was slow to exploit the opportunities offered by the 2007-08 financial crisis) and its penchant for blacklisting offending companies. But it is nevertheless one of the best-run in the world. The Norwegians have established a clear division between the finance ministry as owner and the central bank as manager. They are now trying to improve returns and diversify risks.

Norway's new conservative PM Erna Solberg is trying to manage the riches, but it's not easy:

ERNA SOLBERG, Norway’s conservative prime minister, is nothing if not ambitious. After defeating her popular Social Democratic rival, Jens Stoltenberg, in a general election in September, she beat the odds to cobble together a minority coalition at the end of that month. On November 15th she successfully negotiated an agreement on the budget for 2014.
Now she says she wants to wean Norway off its dependence on oil revenue and ease it towards a more balanced economy in which budget shortfalls are not plugged by the wealth flowing from the North Sea. It will be no easy task. The gap between Ms Solberg’s ambitions and actions was highlighted in the budget deal, which saw her depend a bit more on the country’s oil coffers than originally proposed—an extra 3.9 billion kroner ($640m). --

 It got a temporary fillip this week when new data showed the economy had grown by 0.5% in the third quarter instead of an expected 0.4%, but the currency has still dropped by about 10% against the dollar this year. Long gone seem the days during the financial crisis when the krone was regarded as a safe-haven currency.

The country’s weak economic fundamentals are the main reason for the krone’s fall, but there is growing concern that Norway could soon experience a big property crash. Property prices, particularly in Oslo and chichi ski resorts such as Hemsedal, have risen rapidly in the last decade. Peter Hermanrud, chief strategist at Swedbank First Securities, told a conference in Oslo recently that the property bubble could soon burst and that the government’s most likely response would be to cut interest rates and increase its spending from the oil fund—exactly the opposite of Ms Solberg’s stated ambition.

The dark clouds on the horizon do not seem to worry the locals too much, at least not this time of the year:

For the first time since the 1980s, the Norwegian Christmas shopping declined last year. This year, the trend has turned. Talking to TV2, trade organization Virke’s CEO Vibeke Hammer Madsen said that their forecasts for this year indicate an increase of 2.5% to 50.5 billion.
Virke also mapped the areas where most money is spent on holiday shopping. The shops in the Oslo area will sell for 10.900 NOK per capita, providing the highest average in the country. On the other end of the scale, one person in Østfold will spend 8350 NOK on average.

Merry Christmas (shopping) to you all up there in Norway! Enjoy your wealth as long as it lasts, but prepare for a time when you are not able to afford a Swedish butler anymore!

The house that Putin built: Decades of low growth in store for Russia

Even Vladimir Putin's own government now admits that the future for the Russian economy is anything but rosy:

Russia's failure to significantly change its energy-dependent economic model under President Vladimir Putin is consigning the country to potentially decades of low growth and eroding its status as a top emerging economy.
The Russian economy ministry on Thursday dramatically confirmed what was obvious to many, by downgrading its estimate of Russia's average growth to 2030 to a paltry 2.5 percent, a far cry from over seven percent rates in the early Putin years.
"The pace of Russia's economic growth will fall behind the global average in the forecast period," admitted Economy Minister Alexei Ulyukayev.
This year even Russia's official forecast puts 2013 growth at just 1.8 percent. But most worrying for the Kremlin is that the weakness cannot just be blamed on external factors but stems from domestic shortcomings.
The Russian economy faces a daunting list of troubles –- a declining population, the re-emergence of the United States as a rival energy superpower due to shale gas, and the government's colossal spending on defence that stretches the budget.
These factors are compounded by Russia's failure to stimulate private enterprise, reform the judicial system, improve labour productivity and turn the Russian economy into more than a lumbering energy producer.
Russia's weakness this year alone can be linked to this failure, which has damaged the investment climate, economists say.
The revisions by the economy ministry were the "clearest signal yet that Moscow believes that economic weakness over the past year has been structural rather than cyclical in nature," said Neil Shearing, Chief Emerging Markets Economist at Capital Economics.
"Without a major shift in policy we suspect that Russia will go from being one of the world's fastest growing economies to one of its biggest underperformers."
The forecasts by his own ministry made Putin's aim of Russia becoming one of the world's top five economies by 2020 look almost laughable and also undermined its credibility as a member of the BRICS groups of supposedly fast-growing emerging markets.

Read the entire article here

Wind and solar power put German net stability at risk - cost of a 60 minute blackout: 600 million euro!

Germans are beginning to see the reality of Angela Merkel's hastily undertaken energy transition policy. The huge subsidies for wind and solar power have led to ever increasing utility bills both for households and businesses in Germany, and - what is really worrying - the stability of Germany's electricity generation is at risk.

The German think tank Hamburger Weltwirtschaftsinstitut (HWWI) has now published a study, according to which the cost of even a short energy blackout - one hour - would be close to 600 million euro - no small amount, even in rich Germany.

Particularly Germany's industrial engine in the south should be worried, according to the study:

In the light of past experiences in Germany, the scenario of a county-wide blackout underlying our analysis may seem unlikely. However, recent studies point to considerable dangers for network security resulting from the shift in German power supply towards renewable energies (Dena, 2010). In this regard, a major drawback of electricity generation through wind and solar energy is its dependence on current weather conditions. An ongoing expansion of these energy sources will thus cause overall power supply to become more volatile and less predictable. In general, this renders the task of balancing feed-in and consumption volumes at each point in time more difficult for network operators. This is aggravated by a spatial shift of generation capacities. Due to climate conditions, the installation of wind turbines tends to be more profitable in the northern part of Germany, especially when considering the potentials of offshore wind parks. Already today, the result is a gap in the supply potential of electricity between North and South. At the same time, high-demand areas are still concentrated in West and South.---

A North-South divide is apparent, where the north appears more saturated in terms of electricity. In the South, only a few counties have high levels of electricity saturation, which are the locations of larger conventional power plants. Considering the fact that several of the nuclear power plants, primarily located in the South, have been terminated in 2011 and the remaining are set to be shut down in 2022, the level of electricity autarky in southern Germany will further be on the decline. The consequential need for long-distance power transmission will put further pressure on transmission capacities.

No wonder then that the CEOs of Europe's four largest energy companies recently called for an end to subsidies for wind and solar power:

The stability of Europe’s electricity generation is at risk from the warped market structure caused by skyrocketing renewable energy subsidies that have swarmed across the continent over the last decade.
This sentiment was echoed a week ago by the CEOs of Europe’s largest energy companies, who produce almost half of Europe’s electricity. This group joined voices calling for an end to subsidies for wind and solar power, saying the subsidies have led to unacceptably high utility bills for residences and businesses, and even risk causing continent-wide blackouts

Swedish Foreign Minister: Putin's Russia engaged in "brutal pressure" against Eastern European countries

Most European leaders understand that Vladimir Putin is the dictator of the kleptocracy called Russia. But as long as there are "leaders", like EU "president" Herman Van Rompuy, who in their official speeches still describe Putin's mafia state in this way, there is not much hope for a more truthful approach:

 

Russia and Europe belong to the European family and want the same things, Van Rompuy underscored. “We want our citizens to be prosperous and safe; and we want peace and security between countries in Europe and in the world.” --

“I believe our societies will grow closer to one another, and that our economic systems, our political institutions will do so too – each of us following our own path,” said Van Rompuy.

Fortunately there are also political leaders, like Swedish Foreign Minister Carl Bildt, who have a deeper understanding of  the Putin regime:

Sweden's Foreign Minister Carl Bildt warned of Russia pressuring Eastern European countries like Armenia, Georgia and Moldova to cut negotiations with the European Union, urging the EU to develop a strategy to resist Moscow.

 "What we have seen during the past few weeks is brutal Russian pressure against the partnership countries of a sort that we haven't seen in Europe for a very long time," Bildt told reporters during a meeting of EU foreign ministers in Lithuania's capital Vilnius on Saturday.

He was referring to the post-soviet states Ukraine, Belarus, Moldova, Azerbaijan, Armenia and Georgia, in which the EU supports democratic reforms under the so-called program "Eastern Partnership".

"I see they have been threatening Moldova with a cut-off in gas supplies as well as a cut-off in wine exports," Bildt said. "This is economic warfare."

He claims that Russia takes advantage of the international focus being on Syria, quietly pressuring the post-soviet states.

Last week, Russia warned Moldova that its pro-Europe stance could lead to a more costly energy relationship to its biggest gas supplier, Russia. Dimitry Rogozin, the Russian deputy prime minister, said on a visit to Moldova: "Energy supplies are important in the run-up to winter. I hope you won't freeze."

Moldova's leaders declared that they won't change their course towards more trade with the European Union.

In November, the EU will hold a summit in Vilnius, discussing new free trade agreements with the former soviet countries.

Of course Putin and his servile underlings have never liked truthsayers like Bildt, but if things go well from a European perspective, there will be more "Bildts", and fewer "Van Rompuys" in the future ....

Another empty letter by Barroso and Van Rompuy

During the warm summer weeks the EU bureaucracy has been busy putting together a joint letter to the 28 EU Heads of State and Government by the EU presidents Barroso and Van Rompuy about the "key issues coming up for discussion at the G20 summit in Saint Petersburg on 5-6 September", hosted by Russian dictator Vladimir Putin. 

The Barroso-Van Rompuy letter is full of the usual phrases lauding the various (empty) "plans", "roadmaps" and "compacts", which the EU is so good at producing: 

"Saint Petersburg Action Plan", Compact for Growth and Jobs, Youth Employment Initiative

Single Resolution Mechanism, EMU roadmap, "Youth Guarantee". "Investment Plan" 

No doubt all those beautiful plans and roadmaps will once again be discussed in St. Petersburg, but one thing is clear; they will not in any way alter this reality:

Unemployment across the 17 European Union countries that use the euro hit another all-time high in May, official data showed Monday.

Across the eurozone, there were 19.22 million people unemployed, 67,000 higher than the previous month — a closer look at the figures show that Italy was largely behind the increase.

Even though the monthly rises outside of Italy were relatively modest, analysts still expect unemployment in the eurozone to continue to rise as the region remains stuck in recession that started in late 2011.

The demise of Gazprom has a silver lining: It will also be the end of Vladimir Putin's corrupt regime

Many sad stories have a silver lining. The silver lining in the more and more likely demise of Gazprom, the world's most corrupt and mismanaged energy company, is that it also will be the end of the corrupt Putin regime. 

The Swedish Economist Anders Åslund, probably the leading western expert on Gazprom, does not have much positive to say about the company that has helped to finance Putin's mafia state:

No large company in the world has been so spectacularly mismanaged as Russia’s state-dominated natural-gas corporation Gazprom OAO. (GAZP) In the last decade, its management has made every conceivable mistake.

Even so, Russian President Vladimir Putin denies the very existence of a crisis and maintains his support for Alexei Miller, the chief executive officer since 2001. Gazprom’s situation is serious not only because it is Russia’s biggest company by market value, but because Putin is its real chairman. Where Gazprom goes, so does Russia and the Putin government.

In May 2008, Gazprom was one of the world’s most valuable companies with a market capitalization of $369 billion. Miller boasted that it would be the first global company to reach $1 trillion. Today, its market value has plummeted to $83 billion and the decline continues. Although it claimed the largest net income of any global company in 2011 at $44.5 billion and still at $38 billion in 2012, its price-earnings ratio has dropped to a fatally low 2.4 for 2013. It has no credibility with shareholders.

At the heart of Gazprom’s mismanagement lies extreme inertia; reluctance to absorb new information; corruption and outlandish arrogance. Its managers are used to exercising Soviet-style monopoly over consumers, not having realized that the market has taken over. The company has traditionally varied prices by countries for opaque reasons. For example,Lithuania pays 15 percent more for Gazprom gas than neighboring Latvia. --

Analysts at the state-controlled Sberbank (SBER) assess that Gazprom would need $11 billion a year for its gas production, but in 2011 its capital expenditure soared from an originally planned level of $27 billion to $53 billion. It stopped at $43.2 billion last year.

The analysts call this excess expenditure “value destruction,” which is their euphemism for waste and corruption, amounting to $30 billion to $40 billion a year. Investment analysts in Moscow suggest privately that two-thirds of this might be sheer corruption, while the rest is wasteful overinvestment. Corruption at that level may explain the poor management of the company’s official business.

Rather than reducing capital investment, however, Putin comes up with ever more expensive projects. Last October, he decided that Gazprom should develop the giant virgin Chayadinsk field in Yakutia in eastern Siberia, building a pipeline to Vladivostok on the Pacific Coast and an LNG plant there for export to China.

Officially, this project is supposed to be completed by 2017 and cost $40 billion, but Sberbank analysts assessed it at $65 billion. This production would be too expensive for it ever to be profitable, and Russia has no supply contract with China. This is as white an elephant as there ever was.

Last December, Gazprom went ahead with its South Stream pipeline through the Black Sea to the Balkans. It was supposed to cost $21 billion, but in February Gazprom announced it would cost $39 billion. In April, Putin and Miller decided to build a second pipeline from the Yamal field in northwestern Siberia to Europe. (The project, which was supposed to go through Poland, was immediately repudiated by Polish Prime Minister Donald Tusk.)

In addition, Gazprom has plans to build two more superfluous Nord Stream pipes through the Baltic Sea at a cost of probably $20 billion. They have the single purpose of replacing the existing pipeline through Ukraine that Putin wants to abandon. None adds any value. --

Read the entire article here

Oregon Governor John Kitzhaber wants to"fundamentally rethink" the economy because of global warming

People who live in this Jakarta slum will have to stay put, because "unlimited economic growth on a finite planet is beginning to bump up against the physical limits of our planet” 
(image wikipedia)

Oregon Governor John Kitzhaber has jumped on the doomsday bandwagon and wants to "fundamentally rethink" the economy: 

Governor Kitzhaber said one of the problems we face is “the assumption that consumption can go on forever and at an increasing rate.”

“Global climate change, the decimation of our rainforest, the collapse of fisheries – a whole host of things suggest that unlimited economic growth on a finite planet is beginning to bump up against the physical limits of our planet,” said the governor. “More people are impoverished, their kids are hungry, fewer and fewer people are being lifted up by that economy.”

Here is a suggestion to the Governor: Why don't you go to the poorest regions of Africa and other continents and tell the people there, that they cannot have any economic growth or increased consumption, because "unlimited economic growth on a finite planet" bumps up "against the physical limits of our planet". Your message might not go down as well there as in the leafy suburbs of Portland or Salem.

Governor Kitzhaber also has a rather peculiar way of describing what is considered to be "great for the economy":

Another problem is that “we measure the wrong things,” said Kitzhaber.

The Gross National Product measures all the economic activity of the country and anything that produces a profit counts as a plus. The Deepwater Horizon oil spill was “great for the economy,” he said, “carnage on the highways, crime, the prison system, the war in Afghanistan – all count as positive in our current way of measuring,” the governor explained. 

Really, oil spill, war and "carnage on the highways" considered "great for the economy"? 

And, of course, the Governor believes we need to put a price on carbon "so carbon dioxide emissions can be limited":

“Most people know in their hearts that we will sooner or later be putting a price on carbon. It’s happened in California, it’s happened in British Columbia with the carbon tax, which is a much simpler more direct way,” he said. “The point is, we’re going to get there. We need to be much more explicit about having this conversation. It’s beginning to surface in this state, I’m sure it will surface in Washington under Governor [Jay] Inslee’s jurisdiction. If the West Coast were to move in that direction together, it’s the sixth largest economy in the world.”

“Fundamentally rethinking the economy is the long-term solution,” he said.

Read the entire article here

Greenpeace set on destroying the Australian coal industry

The envirofundamentalist Greenpeace is now set on destroying the Australian coal industry, one of the backbones of the country's economy: 

Greenpeace activists boarded a coal ship heading out of Australian waters in an effort to curb coal exports.

Using inflatable boats from Greenpeace’s ship the Rainbow Warrior, six activists boarded the Korean-owned coal ship MV Meister at dawn on Wednesday and presented a letter to the ship’s captain explaining why they were there. The activists set up camp on the ship’s bow.

“Our leaders are failing us so it’s up to us to take civil disobedience and to slow down and stop these coal ships. We are set to stay here as long as it takes,” she added.

“We are calling on the rest of Australia to take whatever action is possible to ensure that we do not double our coal exports. We cannot deal with the climate change that will result from that,” said a Greenpeace spokesman on the Rainbow Warrior.

What the Greenpeace people are engaged in is nothing but a criminal activity, that should be dealt with accordingly. It goes without saying that people unlawfully boarding a ship and setting up camp on it should be arrested and prosecuted. 

And, as economists Sinclair Davidson and Ashton de Silva point out in an article in The Australian, the meddling by Greenpeace and people like American anti-coal activist  Bill McKibben in the Australian coal economy could have a massive negative impact in Australia: 

The new Rainbow Warrior is on an Australian tour campaigning against the coal industry and its "reckless" expansion. Writing in these pages Greenpeace activist David Ritter would have us believe that Australia faces a stark choice between coalmining and tourism or agriculture.

Mining creates upstream and downstream economic activity. Mining itself generated about 11.5 per cent of gross value added in 2011-12 and the spillovers created another 6.5 per cent of economic activity. So nearly one-fifth of our economy is reliant on mining. But the Reserve Bank looked only at the supply side of the economy. When you add the demand side, mining makes up nearly a quarter of our economy. We shouldn't give that up lightly.

Using the same method as the Reserve Bank we estimated the size of the coal economy -- coalmining plus the spillovers from coal into the broader economy -- to be about 3.1 per cent of gross value added in 2011-12, about $43 billion. Including the demand side, that increases to 4.2 per cent of gross value added, and nearly $60bn. The coal economy provides 181,000 jobs. For every coalmining job 3.7 jobs are created in the broader economy.

It is highly likely that the benefits and spillovers of those jobs are concentrated in the coal-mining states of NSW, Queensland and Victoria. . The challenge for critics of the coal industry is to articulate alternative economic activity for those engaged in mining and mining-related activity, which can be as diverse as construction services and wholesale trade.

Most important, coal keeps our electricity generators going. Phasing out coalmining means turning off the lights, while phasing out coal exports means turning off other people's lights and economic growth.

That is probably not the message Greenpeace wishes to promote but it highlights the paucity of its argument.

Australian coal doesn't just benefit the Australian economy, it benefits the world economy. Despite that, the Australian coalmining industry recently was labelled a "rogue industry" that must be phased out by American anti-coal activist Bill McKibben from non-governmental organisation 350.org who is coming to Australia in June to campaign against coal exports.

The consequences of ill-informed meddling in the coal economy would have a massive negative impact in Australia, especially in the most populous states along the east coast.

Foreigners coming to Australia to campaign against our national economy can do a lot of damage if their claims go unchallenged. So too will "uncivil" disobedience campaigns designed to sabotage local economies and cause property destruction. Coalmining and exports provide benefits to Australia and the world well beyond mining itself.

The economic failure of the European Union: Barroso blames member countries and citizens

"Prejudiced" European citizens do not understand the "problems", according to J.M. Barroso

The facts: 

• Over 26 million people are unemployed in the EU countries
• Eurozone unemployment rate is 12%, a record since the single currency was created in 1999
• Youth unemployment in Greece is 58%
• Youth unemployment in Spain is 56%
• The eurozone economy has contracted for five consecutive quarters in 2011-2012
• Forecasts for the first quarter of this year, to be released in May, are not expected to show any improvement

How does European Commission president José Manuel Barroso react to these dismal figures (which are a direct result of the EU's failed policies)?

Although faking some self-criticism, Barroso in reality blames the citizens for not understanding the "problems", due to "prejudices and reinforced stereotypes". And the other culprits are member state governments, who according to the former maoist "oversimplify debates":

"A policy to be successful not only has to be properly designed, it has to have the minimum of public support,” Barroso said. “We have not been able collectively to explain the problems.”

Addressing the lack of coherent discourse around the crisis, the EU executive chief slammed member states for over-simplifying debates, which led to prejudices and reinforced stereotypes, backfiring on the countries themselves, giving rise to nationalism and populism.

And how is Barroso going to solve the "problems"?

Surprise, surprise, by MORE integration!:

“More integration is simply indispensable for our economy, to shield us from international rough weather to face strong completion and maintain the trust of markets and investors”

Source

A real political leader gave a proper reply to this madness already in 1990:

"No. No. No."

China's red capitalists cashing in on the economic mess created by Europe's failed political leaders

The owners of Volvo Car Corporation are nowadays Chinese.

"First they took our jobs by inundating Europe with cheap plagiarized products made by slave workers. Now they are buying up what is left of formerly profitable companies." 
NNoN

The economic mess - a deadly cocktail of a failed common currency, insane climate change policies and disastrous tax payer subsidized wind and solar energy programs - created by Europe's political leaders is an open invitation for China's ruling red elite to come and take over what is left of once profitable industries in the European Union: 

Europe has become the world's largest recipient of foreign investment by Chinese firms. While North America largely views them with suspicion, China's state-owned corporations have been largely welcomed in a continent plagued by recession and in desperate need of cash.

Chinese state-owned companies are expanding their influence in Europe, investing more than $12.6 billion (€9.6 billion) in the Continent last year, according to a study by the Hong Kong-based private equity firm A Capital.

The amount represented an increase of about one-fifth in comparison to 2011, and was all together larger than investments in North America and Asia combined. About 86 percent of the investments were in the service and industrial sectors.

"Many Chinese investors regard Europe's current weakness as an opportunity to jump in," said A Capital CEO André Loesekrug-Pietri. "They're looking for technology, know-how, high-value brands -- and they find them here." Many European firms are world leaders in sectors like industrial manufacturing, auto manufacturing, the environment and health care.

The Chinese leadership is setting these key sectors as a top priority in their newest five-year plan. The State Council is supporting companies' expansions abroad with cheap credit and tax breaks, with 93 percent of Chinese investments in Europe coming from state-owned corporations.

"In Europe, the resistance to these kinds of investments is lower than in other places," Loesekrug-Pietri said. Reservations about the opaque interests of Chinese state companies are greater in the United States, where the government Committee on Foreign Investment in the United States (CFIUS) essentially blocked the sale of US aircraft manufacturer Hawker Beechcraft to a Chinese buyer for national security reasons. In 2008, the committee blocked the now-defunct electronics maker 3Com from being partially sold to Chinese state corporation Huawei.

In contrast, Europe has been a largely welcoming place for Chinese buyers. State fund CIC acquired a 10-percent stake in London's Heathrow Airport late last year, and a 7-percent stake in the French satellite provider Eutelsat. And Portugal's government negotiated its largest-ever privatization in late 2011, agreeing to sell its 21-percent stake in the massive power company Energias de Portugal to China's Three Gorges. The sale was Lisbon's first privatization mandated under its bailout program earlier that year.

The man interviewed by German Der Spiegel, A Capital CEO André Loesekrug-Pietri, must be a rather naive person, or - more probably - have a personal interest in Chinese foreign investment activities:

"The Europeans see things more pragmatically than the Americans," said Loesekrug-Pietri. The economies of recession-plagued Southern Europe are particularly in need of fresh capital. In addition, many small and mid-sized companies -- the so-called Mittelstand that are the backbone of the German economy -- are hoping their new shareholders will provide easier access to the booming Chinese market.
"What we're seeing with these deals is just the beginning," Loesekrug-Pietri said, adding that the coming years show tremendous potential.

Read the entire article here

If there really are German and other European business leaders, who believe that Chinese government investors will save Europe from the failures created by the political leaders, they will soon be in for a huge disappointment. 

While the Chinese are buying European companies and technology, the European Union - in spite of being in the middle of a seemingly endless recession -  continues to pour European taxpayers' hard earned money into dubious climate change projects in China:

The EU will help China in meeting its environmental, energy- and carbon-intensity targets and in the long run, contribute towards achieving a global reduction of greenhouse gas emissions. The EU support will result - through pilot projects - in providing technical assistance, training and fostering exchanges of experience, best practice and know-how in areas like the low-carbon economy and the green economy. The three projects -for which the EU contribution amounts to €25 million- will be implemented over a period of 4 years and focus on areas like water, waste and heavy metal pollution, emission trading system (ETS) and sustainable urbanisation. 

China's ruling communist autocrats of course accept the EU development aid with a polite smile. But behind Barroso's and Hedegaard's backs, they must be laughing. 


PS

It took less than five seconds to find out about Loesekrug-Pietri:

André Loesekrug-Pietri is the founder of A Capital, the first private equity group focused on Chinese outbound investments, and has fifteen years of private equity, automotive and aerospace industry experience. The most recent transaction conducted by A Capital was China's largest private conglomerate Fosun's strategic investment into Club Méditerranée.

(image by wiki)

British Chambers of Commerce survey: EU is putting burdens on British businesses and making them uncompetitive

The few remaining British EU enthusiasts - including the BBC - have traditionally been eager to stress how much UK businesses benefit from EU membership. However, a new survey by the British Chambers of Commerce shows that a majority of British companies believe that EU is putting burdens on them and making them uncompetitive:

British businesses are largely in favour of a re-negotiation of the UK's relationship with the European Union, the the British Chambers of Commerce (BCC) believes.

An 'EU Business Barometer' from the BCC gathered responses from more than 4,000 businesses of all sizes and sectors across the UK.

Its main finding was that most companies believe that re-negotiation - rather than further integration or outright withdrawal - is most likely to deliver business and economic benefit to the UK. Only 15% see the current situation as positive.

John Longworth, director general of the BCC, told the Today programme: "Businesses are looking to have the best outcome for themselves and for the UK.

"They definitely believe that the EU is putting burdens on them that make them uncompetitive in the world market."

Read the entire article here

The shale gas and oil revolution is paving the way for the great American railroad revival

The great steam engines will not return, but the American  railroad  revival is in full bloom.

The American shale gas and oil revolution is spreading its beneficial influence on a great number of industrial activities. The great American railroad revival is a case in point: 

According to data from Union Pacific (UP), the shale industry accounted for 133,000 extra UP carloads in 2012 – that’s an 84% increase from 2011. Indeed, even in the face of a coal shipment fallout, the rail industry is doing better than ever.

And the US Today reports that the railroad oil sector grew from 10,000 shipments a year to an estimated 200,000 a year in 2012.

The future for the once beleaguered U.S. and Canadian railroads is looking good:

Plus, another added benefit from America’s booming energy industry is that new manufacturing and chemical plants will also need to get their goods from landlocked states to the coast – I’m looking at you Ohio.

From a market standpoint all of the big names in rail are up double digits year over year. – Union Pacific (UNP) up 29%, Norfolk Southern (NSC) up 15% and CSX (CSX) up 10%. Each also pays near a 2% dividend.

Feeding off the same trends, the smaller U.S. rail players have done even better.

Kansas City Southern (KSU) is up 48% year over year. And one company that falls short of the top-5 by revenue, Genessee & Wyoming Inc (GWR), jumped 64% year over year.

Importantly for today’s discussion, the gains for these rail companies are just the beginning…

According to a recent report from the U.S. Department of Transportation, by 2040 demand for rail hauling is expected to increase 50% — to $27.5 billion. Indeed, rising demand for a low-cost industry like rail can lead to some solid long-term gains.

And the rail industry will benefit from the shale boom also in another way: 

Speaking of low-cost, the costs for rail providers may be getting even lower with the advent of natural gas-powered locomotives. Recently Buffett’s BNSF along with other major railways (including CSX and our neighbor to the north, Canadian National Railway) have begun testing natural gas powered locomotives.

These engines can run on liquefied natural gas (LNG), which provides an amazing cost break. In particular, while a gallon of diesel will run you about $4 the equivalent of natural gas costs about 50 cents.

So while it’s costing more and more to ship via truck or plane, the rail industry could be set for even more cost breaks. That’s a solid long-term trend if I ever saw one.

Read the entire article here

A map of the US railroad network in 1922. 

"The EU growth and jobs strategy is beginning to bear fruit": Eurozone unemployment rose to a record high in February

The European Union internet bookshop offers the publication "Jobs and growth in the EU" free of charge to anybody who is interested:

"Economic growth and job creation are vital to safeguarding our way of life and our standard of living. Faced with the challenges of globalisation, ageing populations and climate change, EU leaders have agreed a comprehensive strategy for creating jobs and growth, and sharing the benefits equitably across the EU and all groups in society. The EU growth and jobs strategy is beginning to bear fruit. It works to unlock the knowledge and innovation potential of the EU, to translate ideas into competitive business opportunities, to invest in people, and to create a greener economy in the interests of job creation now and tomorrow."

Like so much else coming from Brussels, this "roadmap to a sustainable tomorrow" is a document devoid of all meaning and substance. The reality of today's eurozone and EU is this: 

Unemployment rose to a record high of 12 percent in February in the Eurozone, according to the latest data released by the EU's official statistics agency.

The Belgium-based Eurostat said on Tuesday that some 19.07 million people in the 17-member currency bloc are looking for jobs, up by 1.01 percent from the same month last year.

"Such unacceptably high levels of unemployment are a tragedy for Europe,"said a spokeswoman for EU Employment Commissioner Laszlo Andor. "The EU has to mobilise all available resources to create jobs...young people in particular need help," she said.

The figures and a weak manufacturing sector report added to the gloom after data earlier this year had encouraged some hope the European economy might finally have touched bottom.

Analysts suggested Tuesday's reports pointed instead to worse to come, with the jobless queues likely to grow as the debt crisis continues to sap the economy.

Youth unemployment

The highest unemployment rates in February were found in Spain with 26.3 percent and neighbour Portugal, on 17.5 percent.

Greece was put at it 26.4 percent but this figure is for December, the latest available.

The lowest rates were 4.8 percent in Austria and 5.4 percent in Germany, Europe's biggest economy.

With youth unemployment a huge cause of concern, Eurostat said that the jobless rate for under-25s ran at 23.9 percent in the Eurozone and 23.5 percent in the EU.

Among the countries with the highest youth jobless levels, Spain was on 55.7 percent, followed by Portugal on 38.2 percent and Italy with 37.8 percent.

Greece was the highest with 58.4 percent but this was also for December.

Howard Archer of IHS Global Insight said the figures marked a "dismal landmark" at 12 percent -- already very close to the official EU 2013 forecast of 12.2 percent.

Fortunately more and more people are beginning see the reality behind the propaganda. The European "leaders" who have created this mess deserve to be thrown out of office as soon as possible. Their place is in a new European institution, hopefully soon to be created - the European Hall of Shame.