Monday 13 August 2012 Sunday 12 August 2012 Sunday 12 August 2012
Eurocrash: it's the politics, stupid!
These three dimensions, he says, must all be taken into account in judging whether the single currency will survive. Systemically this is an economic crisis of banking, refinancing and institutional deficits, he adds. But that it will be resolved politically is often underestimated in economic comment.
I've forgotten how many times I've written this, so it's nice to have someone else say it as well – particularly the bit about the politics very often being underestimated in economic comment.
Never were truer words spoken – much of the comment from that source is beyond useless, to the point of being completely misleading, especially in the British (and US) media, where economics correspondents so often have no feel for European politics.
Speaking of politics, el Mondo is telling us that Spain finally looks set to make a formal application for a bailout. "The bailout is inevitable and the only question is how", says Victor Alvargonzález, the CEO of Profim. "The solution is no longer in the hands of Spain, which has completely lost the confidence of creditors.
But, reinforcing Gillespie's view, any application by Spain will be made on political rather than economic grounds. And those political fault-lines run all the way back to Berlin, where a technical recession combined with the general election next year make for a toxic mix.
Klaus-Peter Schoeppner, head of the Emnid polling group, describes the bailouts as the government's Achilles heel. He predicts that it: "will only get bigger as the government's ability to dole out new money comes under strain" from a weakening economy. Then he warns: "They will have to be very careful going forward".
Thus, concludes Gillespie, "this autumn will see a determined effort to put politics back in the foreground of the crisis, even while the ECB takes most of the economic strain".
He is right, but only after a fashion - the politics have always been there.
COMMENT THREAD
Richard North 13/08/2012 Eurocrash: German politics far from settled
In a typical tabloid stunt, Bild am Sonntag herds together six German holidaymakers in Majorca, asking them to set aside their towels and put questions to their foreign minister, Guido Westerwelle, for an article in today's paper.
Westerwelle we met most recently in June with his provisional plan for a United States of Europe, subsequently endorsed by Merkel. And now, we learn that the man is rooting for a referendum on a new EU constitution, before any transfer of more powers to Brussels.
In yesterday's piece, I gave the impression that the entire German political corps was coalescing behind the idea of a referendum, with a reference to Horst Seehofer, the head of the Bavarian Christian Social Union.
However, as we see from today's Welt am Sonntag, his stance is a little more nuanced. In an interview with this paper, he talks of seeing next year's federal election as a referendum on the euro and the future of Europe.
Seehofer reiterates his opposition to eurobonds, and rejects the idea of a debt union. We must not allow Germany to expand its capabilities, he goes on to say, adding that a withdrawal of Greece from the euro would be acceptable.
For Germany, liability for all the debts in Europe could be costly. While Germany is ready to show solidarity, it should not transfer financial powers to the EU. With the CSU, Seehofer says, there will be no United States of Europe. Without the consent of the population that would be impossible anyway. And the people do not want a European superstate.
Meanwhile, group vice-chairman of the CDU/CSU, Michael Fuchs has gone into print in Handelsblatt, rejecting more emergency loans to the ECB and warning the bank not to resort to the covert printing of money. Fiscal union does not seem to be on his agenda.
The political issues, therefore, are very far from settled. But then, they have not been for a very long time. Back in 2004, for instance, in the days when the Sunday Telegraph was a newspaper with double the circulation instead of an extended sports page, it was then reporting on the controversy over whether there should be a referendum.
Interestingly, one of the main protagonists, arguing for a referendum was Guido Westerwelle, then the leader of the country's liberal Free Democrats. Against the proposition was Wolfgang Schäuble, who warned that: "There is a danger that a referendum on the EU constitution would lead to a vote that has nothing to do with the EU at all".
Predictably, though, Green MEP Franziska Brantner sees things a little differently. Writing in Die Zeit, she claims that "we are not honest". If the élites finally admitted it, Germany must support the debt of others.
The fate of Europe, she says, hangs on Germany, putting us in a role that we have not chosen. After the Second World War, Konrad Adenauer's integration was not only integration but a deliberate subordination of Germany. Even after reunification, the Germans have always avoided using its economic power for wider leverage.
But now Germany is the only country in the monetary union which could solve its economic power crisis. We thus need, says Brantner, to stand in a joint liability for the debts of the other euro countries. Otherwise, the collapse of the entire eurozone, and an economic and political disaster in the whole of Europe, is inevitable.
But Germany will only take the leadership role only when the political, intellectual and economic élites in the country recognise the need for joint responsibility, and decide to accept it.
Some things, however, do not change - the arrogance of politicians. Those eight years ago, we were reporting on Michael Muller, deputy head of the Social Democrats' parliamentary party. Rejecting the idea of a referendum, he had loftily declared, "Sometimes the electorate has to be protected from making the wrong decisions".
The start date is set for 15 September, when Spanish trade unions, along with myriad social organisations, are calling for a "March on Madrid". Hundreds of thousands of people are expected to attend. Then, ten days later, they want a broad alliance to surround the parliament building in Madrid, standing down only when the government has resigned.
It isn't only in Germany, therefore, that the politics aren't settled. Just that, in Spain, they do things differently.
COMMENT THREAD
Richard North 12/08/2012 Booker: the great wind delusion
We were, of course, not supposed to notice that, at one point last week, Britain’s 3,500 turbines were contributing 12 megawatts (MW) to the 38,000MW of electricity we were using. (The Neta website, which carries official electricity statistics, registered this as "0.0 percent").
And, although the utter fatuity of the "dash for wind" is well known now, it is some ten years since Booker first pointed out craziness of it all. It was pure wishful thinking then and is even more obviously so now, when the Government in its latest energy statement talks of providing, on average, 12,300MW of power from "renewables" by 2020.
What can't be emphasised enough is that this is utterly delusional. We have a government which, as a matter of policy, is declaring that cannot be done. There is no way it could hope to build more than a fraction of the 30,000 turbines required to meet that insane target.
And then, as the windless days last week showed, we would also have to build dozens of gas-fired power stations just to provide back-up for all the times when the wind is not blowing at the right speed.
But, says Booker, as more and more informed observers have been pointing out, the ministers and officials of the Department of Energy and Climate Change (DECC) seem to live in a bubble of unreality, without any practical grasp of how electricity is made, impervious to rational argument and driven by an obsession that can only end in our computer-dependent economy grinding to a halt.
The latest attempt to get them to face reality is by Prof Gordon Hughes, a former senior adviser on energy to the World Bank, now a professor of economics at Edinburgh, who recently gave evidence to the Commons committee on energy and climate change.
His most shocking finding is that the pursuit of our Climate Change Act target – to reduce Britain’s CO2 emissions by 80 percent by 2050 – would cost us all £124 billion by 2020, or £5,000 for every household in the land: not just to build tens of thousands of absurdly subsidised wind turbines, but also for the open-cycle gas-fired power stations needed to provide back-up.
Yet, to guarantee the same amount of power from combined-cycle gas-fired plants would cost £13 billion, barely a tenth as much.
Furthermore, as Prof Hughes explains, ramping the back-up gas plants up and down would mean running them very inefficiently, and give off so much CO2 that we could end up increasing our overall emissions rather than reducing them. And who is expected to build them or pay for them?
Now, though, for the "killer". The likelihood that any of this will be understood by those in charge of our national policy can be measured by the fact that the chairman of that Commons committee is Tim Yeo, whose business interests show that last year he earned, on top of his MP’s wages, more than £100,000 by working – at up to £800 an hour – for firms which make money out of renewables.
When Peter Lilley MP raised Prof Hughes's figures in the Commons, he was contemptuously put down by the DECC minister Charles Hendry, saying that he did not agree with Prof Hughes (on grounds which showed he hadn't understood the points at issue at all) – and, he added, "neither does the Committee on Climate Change".
The new chairman of this committee, set up under the Climate Change Act, is Lord Deben (formerly John Gummer), whose various lucrative activities relating to the environment include his chairmanship of Forewind, an international consortium planning the world’s largest offshore wind farm, with thousands of turbines, on the Dogger Bank.
Thus, the promoters of the wind industry have managed to occupy all the commanding heights of our energy policy, and the only way it might conceivably be brought back into any contact with reality would be through a massive and well-informed counter-attack by a large number of those elected to represent us in Parliament.
But as we learn from the letters on the Climate Change Act recently sent to Booker by his readers by more than 70 MPs, they seem to be just as firmly locked into the bubble of make-believe as those who framed these delusional policies in the first place.
Interestingly, Booker has now been asked by an Oxford academic, specialising in the interface between science and politics, whether she could undertake a detailed analysis of these letters, to see what they tell us about the degree to which our MPs grasp one of the most critical issues confronting our country.
In due course, Booker hopes to report on the results but, already, we fear they will not be very encouraging. We already know that parliament has completely failed to do its job here, making this one of the reasons why we can no longer trust MPs. If they can't be trusted on this crazy issue, how they be trusted on anything else?
COMMENT THREAD
Richard North 12/08/2012
Monday, 13 August 2012
There speaks the archetypal politician - they are the same the whole world over. The Spanish, though, seem to have had enough of their politicians. According to Juge Welt, less than a year after the last election, and despite a comfortable majority in parliament, the government of Prime Minister Mariano Rajoy is to fall.
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