Tag Archives: EUropean Union

Booze for Solar Panels!

China is NOT happy – especially as over there the European Union’s decision to impose duties on Chinese solar panel imports, looks like no more than the twitch of a desperate and dying economy whose economic clout has long dissipated.

This is how it works on Planet EU:  Countries such as France receive heavy EU agricultural subsidies which enable it to “dump” vast quantities of cheap wine in China. Chinese solar panel manufacturers receive subsidies from heir own government which allow it to dump cheap solar panels in Europe. So what does Europe do? It objects and then imposes import duties on the solar panels. But why?

The EU says that it is to safeguard jobs. Quite right too! Until you realise that the vast majority of EU solar panel manufacturers are in…..Germany!

Not surprisingly, China has retaliated and just announced its own anti-dumping and anti-subsidy investigation into imports of European wine. It is NOT Germany but France and Italy who will suffer.

EU Job protection? Yes – but mostly in Germany.

This is what the Chinese Communist Party’s official mouthpiece, the China People’s Daily says: “Times change and power rises and falls. Still this has not changed the deep-rooted, haughty attitudes of certain Europeans.” ………Bitchy!

China knows that a EU in trouble is a dangerous  EU but it is also acutely aware that the EU is punching way above its weight.

The EU-imposed import duties will be a severe  blow to Chinese companies such as Trina Solar Ltd, Suntech Power Holdings Co. Ltd. and Yingli Green Energy Holding Co. Ltd.  The upshot for Europe will be inflationary with a big increase in solar panel prices.

China’s next likely target ? Probably French-based Airbus manufacturer EADS. That will mean even more headaches for President Hollande because the potential losses to France could be astronomical.

Never mind, as long as the EU continues to protect Germany’s interests.

Economic ruin: The Root (Banking) Cause.

Here is some simple high-level analysis which always helps to crystallise issues:

The 2008 mortgage-driven banking industry meltdown was directly responsible for the Eurozone debt crisis, political chaos, austerity, recession (in some cases – depression) and mass unemployment.

The  multi-billion bank and government bailout costs were borne by the surviving taxpayers through increased taxes, constantly inflating prices as well as erosion of their capital and their pensions.

The ROOT CAUSE of this catastrophe was the design and distribution by the banks of technically ill-conceived products which were designed for no other purpose than to optimise bank profits.

Mortgage Securitisation, Default Swaps, PPI, Interest Rate Swaps etc were (are) all bad products.

Against this background, the British Chancellor, on behalf of the Coalition Government wishes to do everything he can to preserve the banking status quo. An “industry” which continues to grind the economy into the ground whilst sucking more cash out of the economy than it is putting in.

Meanwhile, it declares largely illusory profits upon which to base eye-watering bonuses.

The argument that the financial services industry represents a substantial percentage of the United Kingdom’s Gross Domestic Product used to be a good one!

But if the economic collateral damage being inflicted by the banking industry continues, its contribution to GDP will soon tend towards 100% – once everything else disappears!

(On the subject of Root Causes – the NHS is failing to deliver because it is TOO BIG and over-populated by over-promoted Administrators rather than Managers!)

Eurozone: Decisions Decisions

LONDON: Global stocks and the euro dipped yesterday as investors cashed in some of last week’s sharp gains ahead of a German ruling on the euro zone’s new bailout fund, Dutch elections and potential new stimulus from the US Federal Reserve.

The European Central Bank’s statement last week, indicating that it was prepared to buy an unlimited amount of strained euro zone government bonds pushed European shares to a 13-month high and the euro to a four-month peak on hopes it could mark a turning point in the bloc’s 2-1/2 year crisis.

Investors started the week by taking some of that profit off the table. The MSCI index of top global shares was down 0.1 ahead of the opening bell on Wall Street, with the euro and stock markets in London, Paris and Frankfurt all slightly lower.

US stock index futures also pointed to a lower open on Wall Street, with futures for the S&P 500, Dow Jones and Nasdaq 100 all down just over 0.2 percent.

Europe faces another testing week, with Dutch voters going to the polls and Germany’s constitutional court set to rule on new powers for the European Stability Mechanism, the euro zone’s new bailout fund, both on Wednesday.

Since ECB President Mario Draghi first mooted the ECB’s new crisis plan on July 26, world stocks have rallied more than 8 percent, euro zone blue chips have jumped almost 20 percent and the euro has risen more than 4 percent. Analysts are wondering whether the gains can continue.

“The Draghi effect obviously helped the markets hugely, so people are likely to be a bit more hesitant this week,” said Hans Peterson, global head of investment strategy at SEB private banking.

“Risk appetite is likely to be on the way up, but we have to clear some hurdles, and the things in Europe have to go according to plan. The key issue this week is the approval of the ESM by the German constitutional court.”

Strategists at Goldman Sachs also issued an upbeat note on equities, saying that while there were worries over China’s wobbling growth, the brighter European news and signs of gradual improvement in the US were both positives.

There is still room for market rallying,” they said, citing their target for the Eurostoxx 50 to hit 2,700 points in the next 12 months. “From current levels, however, we expect further gains through to year-end, but at a slower pace,” they added.

BOND FOCUS

The euro followed the downward trend, easing against the dollar, but stayed close to a near four-month high hit on Friday after below-forecast US jobs data fanned speculation the Federal Reserve may launch more monetary stimulus this week.

Hopes that powerful ECB intervention in Italian and Spanish bond markets could finally draw an end to the seemingly endless euro crisis has seen massive upward shifts across global markets, from European stocks and treasuries to commodity-reliant economies.

Spanish 10-year yields have tumbled more than two percentage points from an unsustainably high 7.8 percent to around 5.6 percent, while the reduced demand for safe-haven German debt has pushed equivalent yields up 36 bps from their record lows to stand at 1.48 percent.

Spain’s borrowing costs hit a fresh five-month low on Monday while German Bund futures bounced around in choppy conditions, supported initially by worries over Greece’s fiscal repair plans and Fed aid hopes before going into negative territory around midday.

U.S markets are waiting eagerly to see whether the latest data have convinced the Federal Reserve that more stimulus is required.

The benchmark S&P 500 index rose 2.3 percent last week, its biggest weekly gain in three months.

SEB’s Peterson said it was still uncertain whether the US central bank would act and cautioned that any new support was likely to provide a temporary rather than a long-term lift.

“What is really important here is the wider macro picture, whether the euro zone sorts itself out and what happens in China and Asia,” he added.

Fresh data from China on Monday showed exports grew at a slower pace than forecast last month while imports surprisingly fell, underlining weak domestic demand as the global economic outlook dims.

Oil markets are riding high, underpinned both by hopes that economic stimulus around the world will fuel growth and geo-political tensions in parts of the Middle East, the world’s most important oil-producing region.

Brent crude futures for October delivery were trading 46 cents higher at $114.71 per barrel by 1248 GMT, after settling up 76 cents on Friday. US crude was trading up 7 cents at $96.49 per barrel.

“Chinese data had been expected to be weak, so to some extent it has been taken into account in oil prices, but having said that, it basically caps the upside,” said Masaki Suematsu, energy team sales manager at Newedge Japan.

Copyright spygun/Reuters, 2012

Today’s EU letter to Van Rompuy & Barroso

The letter reproduced below is signed by 11 European leaders. It is addressed to Herman van Rompuy and José Manuel Barroso, although the real audience is the entire European Union.

As I’ve pointed out before, in Euroland, there has been a noticeable increase in the use of  a very strange new language . It has been used by European leaders during their various pronouncements over the last couple of years.

The rhetoric adopted by current Euroean Commissars is frighteningly similar to the Soviet-style nonsense spouted by dead-eyed Party apparatchiks of the 1960s. It is the empty “old-school”  Party-designed exhortatory language of the  now-extinct Soviet official.

In common with the good old Berlin Wall days, these pre-written Euro-statements appear to promise much but actually, say nothing.

It is a very long statement of the obvious and in keeping with EU tradition , there is overuse of the word “must” rather than the word “will”.

This looks very much like a preamble to many , many meetings but it is noticeable that neither Germany nor France has signed it.


To:

Herman van Rompuy

President of the European Council

José Manuel Barroso

President of the European Commission

20 February 2012

A PLAN FOR GROWTH IN EUROPE

We meet in Brussels at a perilous moment for economies across Europe. Growth has stalled. Unemployment is rising. Citizens and businesses are facing their toughest conditions for years. As many of our major competitor economies grow steadily out of the gloom of the recent global crisis, financial market turbulence and the burden of debt renders the path to recovery in Europe much harder to climb.

Europe has many fundamental economic assets. But the crisis we are facing is also a crisis of growth. The efforts that each of us are taking to put our national finances on a sustainable footing are essential. Without them, we will not lay the foundations for strong and lasting economic recovery. But action is also needed to modernise our economies, build greater competitiveness and correct macroeconomic imbalances. We need to restore confidence, among citizens, businesses and financial markets, in Europe’s ability to grow strongly and sustainably in the future and to maintain its share of global prosperity.

We discussed these issues when we last met. It is right that we discuss them again. Building on the conclusions we have previously reached, it is now time to show leadership and take bold decisions which will deliver the results that our people are demanding. We welcome the steps being taken, nationally and at the European level, to address this challenge and look forward to agreeing further concrete steps at our next meeting, with action focused on eight clear priorities to strengthen growth.

First, we must bring the single market to its next stage of development, by reinforcing governance and raising standards of implementation. The Commission’s report to the June European Council should set out clear and detailed actions needed to enhance implementation and strengthen enforcement.

Action should start in the services sector. Services now account for almost four fifths of our economy and yet there is much that needs to be done to open up services markets on the scale that is needed. We must act with urgency, nationally and at the European level, to remove the restrictions that hinder access and competition and to raise standards of implementation and enforcement to achieve mutual recognition across the single market. We look forward to the Commission report on the outcome of sectoral performance checks and call on the Commission to fulfil its obligation under the services directive to report comprehensively on efforts to open up services markets and to make recommendations for additional measures, if necessary in legislation, to fulfil the internal market in services.

Second, we must step up our efforts to create a truly digital single market by 2015. The digital economy is expanding rapidly but cross-border trade remains low and creativity is stifled by a complex web of differing national copyright regimes. Action is needed at the EU level to provide businesses and consumers with the means and the confidence to trade on-line, by simplifying licensing, building an efficient framework for copyright, providing a secure and affordable system for cross-border on-line payments, establishing on-line dispute resolution mechanisms for cross-border on-line transactions and amending the EU framework for digital signatures. We should build on the recent proposals of the Commission, without reopening the e-commerce directive, to create a system that balances the interests of consumers, businesses and rights holders, and spurs innovation, creative activity and growth. We must also continue our efforts to build modern infrastructure to provide better broadband coverage and take-up and extend and promote e-government services to simplify the start up and running of businesses and aid the mobility of workers.

Third, we must deliver on our commitment to establish a genuine, efficient and effective internal market in energy by 2014. All member States should implement fully the Third Energy Package, swiftly and in recognition of agreed deadlines. Energy interconnection should be enhanced to help underpin security of supply. Urgent action is also needed, nationally and where appropriate collectively, to remove planning and regulatory barriers to investment in infrastructure to release the potential of the single market and support green growth and a low-emissions economy. We look forward to the Commission’s forthcoming communication on the functioning of the internal market, which should include an assessment of the degree of liberalisation and energy market opening in member States. We also commit to making concrete progress towards the development of a Single European Transport Area and establishing the Connecting Europe Facility.

Fourth, we must redouble our commitment to innovation by establishing the European Research Area, creating the best possible environment for entrepreneurs and innovators to commercialise their ideas and create jobs, and putting demand-led innovation at the heart of Europe’s research and development strategy. We must also act decisively to improve investment opportunities for innovative start-ups, fast-growing companies and small businesses, by creating an effective EU-wide venture capital regime which allows venture capital funds to operate on a pan-European basis, assessing a proposal for an EU venture capital scheme building on the EIF and other financial institutions in cooperation with national operators, and agreeing a new EU-wide programme, modelled on the Small Business Innovation Research scheme, to promote more effective use of pre-commercial public procurement to support innovative and high tech businesses. Reforms to create an effective and business-friendly system of intellectual property protection remain a very high priority.

Fifth, we need decisive action to deliver open global markets. This year we should conclude free trade agreements with India, Canada, countries of the Eastern neighbourhood and a number of ASEAN partners. We should also reinforce trade relations with countries in the southern neighbourhood. Fresh impetus should be given to trade negotiations with strategic partners such as Mercosur and Japan, with negotiations with Japan launched before the summer, provided there is progress on the scope and ambition of a free trade agreement. The deals that are currently on the table could add €90 billion to EU GDP.

But we must go further too. We need to inject political momentum into deepening economic integration with the US, examining all options including that of a free trade agreement; seek to deepen trade and investment relations with Russia, following its accession to the WTO; and launch a strategic consideration of our trade and investment relationship with China, with a view to strengthening our economic ties and reinforcing commitment to rules-based trade. Recognising the benefits that open markets bring, we should continue our efforts to strengthen the multilateral system, including through the Doha Development Agenda, strive for multilateral and plurilateral agreements in priority areas and sectors, and resist protectionism and seek greater market access for our businesses in third countries. Above all, we must reject the temptation to seek self-defeating protectionism in our trade relations.

Sixth, we need to sustain and make more ambitious our programme to reduce the burden of EU regulation. We welcome the commitments made by the institutions to reduce burdens on small businesses but urge further and faster progress across the EU institutions while maintaining the integrity of the single market and the Union’s wider objectives. We should assess the scope for ambitious new EU sectoral targets and agree new steps to bring tangible benefits to industry. We should also make a very clear and visible statement of our intention to support micro-enterprises and ask the Commission to present detailed proposals to achieve this, including possible amendments to existing legislation. We also ask the Commission to publish an annual statement identifying and explaining the total net cost to business of regulatory proposals issued in the preceding year.

Seventh, we must act nationally and, respecting national competences, collectively to promote well functioning labour markets which deliver employment opportunities and, crucially, promote higher levels of labour market participation among young people, women and older workers. Special attention should also be given to vulnerable groups that have been absent from the labour market for long periods. We should foster labour mobility to create a more integrated and open European labour market, for example by advancing the acquisition and preservation of supplementary pension rights for migrating workers, while respecting the role of the social partners. We should also take further action to reduce the number of regulated professions in Europe, through the introduction of a tough new proportionality test set out in legislation. In this context, we ask the Commission to convene without delay a new forum for the mutual evaluation of national practices to help identify and bring down unjustified regulatory barriers, examine alternatives to regulation which ensure high professional standards and assess the scope for further alignment of standards to facilitate mutual recognition of professional qualifications.

Finally, we must take steps to build a robust, dynamic and competitive financial services sector that creates jobs and provides vital support to citizens and businesses. Implicit guarantees to always rescue banks, which distort the single market, should be reduced. Banks, not taxpayers, should be responsible for bearing the costs of the risks they take. While pursuing a level playing field globally, we should commit irrevocably to international binding standards for capital, liquidity and leverage with no dilution, ensuring that EU legislation adheres to Basel 3 standards to ensure financial stability and meet the financing needs of our economies. Banks should be required to hold appropriate levels and forms of capital in line with international criteria, without discrimination between private and public equities. We also call for rigorous implementation of the G20 principles on banking sector remuneration in line with existing EU legislation.

Each of us recognises that the plan we propose requires leadership and tough political decisions. But the stakes are high and action in many of these areas is long overdue. With bold and effective action and strong political will we can recover Europe’s dynamism and put our economies back on the path to economic recovery. We urge you and the European Council to answer our peoples’ call for reform and to help restore their confidence in Europe’s ability to deliver strong and sustainable growth.

We are copying this letter to colleagues on the European Council.

David Cameron, Prime Minister of the United Kingdom

Mark Rutte, Prime Minister of the Netherlands

Mario Monti, Prime Minister of Italy

Andrus Ansip, Prime Minister of Estonia

Valdis Dombrovskis, Prime Minister of Latvia

Jyrki Katainen, Prime Minister of Finland

Enda Kenny, Taoiseach, Republic of Ireland

Petr Nečas, Prime Minister of the Czech Republic

Iveta Radičová, Prime Minister of Slovakia

Mariano Rajoy, Prime Minister of Spain

Fredrik Reinfeldt, Prime Minister of Sweden

Donald Tusk, Prime Minister of Poland