Wednesday, January 29, 2014

California Water Synopsis: Water Woes Just Beginning or About to End? Good News for California?

Leaving aside religious debates on global warming, UC Berkeley professor B. Lynn Ingram says California water woes could be just beginning.
As 2013 came to a close, the media dutifully reported that the year had been the driest in California since records began to be kept in the 1840s. UC Berkeley paleoclimatologist B. Lynn Ingram didn’t think the news stories captured the seriousness of the situation.

“This could potentially be the driest water year in 500 years,” says Ingram, a professor of earth and planetary science and geography.

“These extremely dry years are very rare,” she says.

But soon, perhaps, they won’t be as rare as they used to be. The state is facing its third drought year in a row, and Ingram wouldn’t be surprised if that dry stretch continues.

The NewsCenter spoke to Ingram about the lessons to be drawn from her research as California heads into what could be its worst drought in half a millennium.

Q: California is in its third dry year in a row. How long could that continue?

A: If you go back thousands of years, you see that droughts can go on for years if not decades, and there were some dry periods that lasted over a century, like during the Medieval period and the middle Holocene. The 20th century was unusually mild here, in the sense that the droughts weren’t as severe as in the past. It was a wetter century, and a lot of our development has been based on that.

The late 1930s to the early 1950s were when a lot of our dams and aqueducts were built, and those were wetter decades. I think there’s an assumption that we’ll go back to that, and that’s not necessarily the case. We might be heading into a drier period now. It’s hard for us to predict, but that’s a possibility, especially with global warming.
Magic Words

With that, Ingram, just mentioned the unmagic words "global warming". Is that a contrary indicator?

Perhaps.

Here is another one: Ingram is the author of The West without Water What Past Floods, Droughts, and Other Climatic Clues Tell Us about Tomorrow.

Typically, such books mark extreme sentiment and the end of such trends. 

Hundred Years of Dry

Want a third contrary indicator?

If so, I have one: Ecocentric, "all things green from capital hill" reports Hundred Years of Dry: How California’s Drought Could Get Much, Much Worse.

Good News Coming?

I delayed commenting on the California water crisis recently, rather expecting something like this January 28, 2014 report: El Nino May Return as Models Signal Warming of Pacific Ocean.
An El Nino weather pattern, which can parch Australia and parts of Asia while bringing rains to South America, may occur in the coming months as the Pacific Ocean warms, according to Australia’s Bureau of Meteorology.

Most climate models suggest the tropical Pacific will warm through the southern autumn and winter, the bureau said in a statement today. Some models predict this warming may approach El Nino thresholds by early winter, it said. Australia’s autumn runs from March to May and winter is from June to August.

El Ninos, which are caused by the warming of the Pacific, affect weather worldwide and can roil agricultural markets as farmers contend with drought or too much rain. An El Nino trend is likely to develop this year, Gavin Schmidt, deputy director of NASA’s Goddard Institute for Space Studies in New York, said this month. It’s been almost five years since the last event, which typically occurs every two to seven years, according to Indonesia’s Meteorological, Climatology and Geophysics Agency.

“Less spring rainfall for the east coast would be the major concern” for Australia, said Paul Deane, an analyst at Australia & New Zealand Banking Group Ltd. in Melbourne. “It increases the chance that we’re not going to get trend wheat yields, that would be one of the risks. The other one would be on livestock, where you’d have lower pasture growth.”
OK But What About California?

That's a good question.

Wikipedia has this to say about El Niño conditions in North America.

"Winters, during the El Niño effect, are warmer and drier than average in the Northwest, northern Midwest, and northern Mideast United States, so those regions experience reduced snowfalls. Meanwhile, significantly wetter winters are present in northwest Mexico and the southwest United States, including central and southern California, while both cooler and wetter than average winters in northeast Mexico and the southeast United States."

Personally Speaking

Living in Illinois, Northwest of Chicago, I certainly can use less snow and less cold. We have had numerous days of negative temperatures this month, coupled with plenty of snow.

Enough!

Global Warning

My global "warning" about global "warming" follows.

Cyclically-speaking, I tend to believe another El Niño effect is on the way. If so, it will bring relief to Southern California.

Thus, short-term I suspect Lynn Ingram is off the mark. Books and hysteria mark tops and bottoms. Besides, we have strongly presented viewpoints about pending cyclical changes.

However, Ingram could easily be correct on a long-term basis.

Either way, none of this has anything to do with global warming. For a detailed explanation, please see Europe Dumps Global Warming Efforts; Good Idea?

Addendum:

The California Weather Blog has an interesting article some inquiring minds may wish to read: Ridiculously Resilient Ridge continues to shatter records, but pattern shift may be approaching

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Tuesday, January 28, 2014

Give America a Raise: Fire Obama, Eliminate the Fed; State of the Union Sap

In one of the sappiest, platitude-ridden state of the union addresses in history, president Obama said "Give America a Raise".

I agree with the idea, not the implementation. President Obama pledged an Executive Order requiring federal contractors to pay their federally-funded employees a fair wage of at least $10.10 an hour "because if you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty."

Obama stated "Today, the federal minimum wage is worth about twenty percent less than it was when Ronald Reagan first stood here."

While true, not once did Obama even hint at the source of the problem: Real wages have declined because government spends more than it takes in, and the Fed is happy to oblige by forcing interest rates lower, allowing just that.

Rather than fight the real problem, Obama wants to attack the symptom: falling real wages. Mathematically his proposed solution cannot possibly work.

The president even wants to expand on what clearly doesn't work, dragging Senator Mario Rubio into the picture.

"I agree with Republicans like Senator Rubio that it doesn’t do enough for single workers who don’t have kids. So let’s work together to strengthen the credit, reward work, and help more Americans get ahead," said Obama.

Regarding the right to vote, Obama stated, "It should be the power of our vote, not the size of our bank account, that drives our democracy."

On that, I could hardly agree more. So let's have genuine campaign finance reform, for both parties, including union sponsorship of candidates.

Given that no one in either party wants that, it won't happen. Is it any wonder that for the first time in history, a majority of people in congress are millionaires!

Regarding terrorist activities, Obama stated "We are clear-eyed about Iran’s support for terrorist organizations like Hezbollah."

OK so where the hell are the prosecutions for Money Laundering, and Outright Criminal Activity by major banks?

In the sappiest part of his speech, president Obama referred to Sergeant First Class Cory Remsburg, who on his tenth deployment, was nearly killed by a massive roadside bomb in Afghanistan.

I have nothing against those serving this country. However, I do have something against those who put our armed forces in harm's way for no good reason at all.

Instead of praising Cory Remsburg, president Obama should have admitted he personally, and needlessly, put Remsburg's life in jeopardy on a fool's mission.

Sap and Platitudes

As sappy as all that was (and it was the sappiest state of the union address ever), the official republican response was even worse. Here is full text of the Republican response to State of the Union.

Not only did Representative Cathy McMorris Rodgers praise Cory Remsburg, she offered the same tired, far-right platitudes bound to please the extreme-right, religious-wrong voters, while offending the crucial political independents.

Republicans desperately need to throw warmongering and right-to-life policies in the gutter for more pragmatic approaches.

Instead, Cathy McMorris Rodgers waved them in our face with subtleties regarding her child's Down Syndrome.

If this was in response to Obama's platitude "women make up about half our workforce, but they still make 77 cents for every dollar a man earns". It was a serious mistake.

Four Key Hints

  1. The conservative political base will never vote Democratic, so there is no need to appease them.
  2. The critical battleground is moderates and independents
  3. The middle and independents support abortion
  4. The middle and independents want to reduce military spending

I commend Rodgers for her care, but not everyone has the means to do anything other than dump their kids into the system or choose an abortion upfront.

As an independent ready and willing to criticize both political parties, Rodgers response was far worse than Obama's sap and platitudes delivery.

The saving grace is few bothered to watch it. At least I hope so.

Addendum:

My friend Adam Taggart at Peak Prosperity wrote an equally scathing, yet widely different attack on Obama's state of the union speech. I highly recommend "The Government Comes Up With The Money" A mindset that's killing our economy.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Hollande Plays "Mother May I"; Mish's 5 Giant Scissor Steps Proposal; Foreign Investment in France Falls 77%

With bloated labor costs, pension requirements, labor rules, strikes, CEOs held hostage (literally), and overall union inefficiencies, it's no wonder Foreign Investment in France Fell 77% in 2013.
Releasing its first estimates for 2013 Tuesday, the United Nations Conference on Trade and Development said that while foreign investment in the European Union increased from 2012, inflows to France fell by 77% to $5.7 billion, extending a decline that began with the 2008 financial crisis and was briefly interrupted in 2011. Foreign investment was last lower in 1987, and as recently as 2007, it peaked at $96 billion.

By contrast, foreign investment in Germany almost quadrupled to $32.3 billion, while in Spain it rose by 37% to $37.1 billion. Foreign investment in Italy, Belgium, the Netherlands and Ireland also rose.

Seeking to revive growth, Mr. Hollande earlier this month launched a "responsibility pact," which includes cuts to chronically high payroll taxes, seeking to repair relations with France's business community, which has voiced anger about climbing costs and alarm that it is losing ground to Germany.
Responsibility Pact Short Synopsis

  • Corporations need to hire more workers
  • If corporations hire more workers, Hollande will consider cutting taxes
  • Hollande will monitor companies that add workers
  • Hollande will pressure companies that don't

Mother May I?

No business in its right mind would accept that proposal.

In the "Mother May I" game that Hollande appears to be playing, the best one can say is Hollande granted corporations a baby step in the right direction (yet coupled with "no you may not" restrictions).

What's really needed is a vast array of giant scissor steps.

Mish's Five Giant Scissor Steps Proposal

  1. Eliminate rules that prohibit firing
  2. Raise the pension age
  3. Lower corporate taxes
  4. Lower individual taxes
  5. Eliminate union work rules

Unfortunately, that's just a start of the scissor actions needed.

Please recall French government spending accounts for 56% of French GDP, highest in the EU. Unfortunately, France Minister of Industrial renewal has pledged to make matters worse (see France Minister of Industrial Renewal has New Target in his Sights).

Regarding my opening comment on CEOs held hostage (literally), here's something from earlier this month that I have not commented on: French workers hold Goodyear execs hostage. A day later, Bloomberg commented In France, Kidnapping the Boss Usually Pays Off.

I see these kinds of stories every day. It is difficult if not impossible to keep up with economic idiocies in France. I even have my own personal stories to report.


Looking for a roundup of economic ineptitude in France?

I just happen to have 24 examples from 2013 alone: France in Review: Perfect Track Record of Economic Ineptitude.

Rest assured the above 24-point list is woefully incomplete. Apologies offered.

Hollande Off and Running

Hollande has a fresh start in 2014. How is he doing? Please consider France Unemployment Hits New Record High; Hollande's November Pledge Reviewed.

Finally, France is a major focus of my European deflation thesis as described in Deflation Will Return: Europe First, Then US; Global Supply Arbitrage.

Looking for a global economic outlook? If so, please read the above link.

All things considered, France was lucky foreign direct investment only declined 77%.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Tactical Rabbit, Money Laundering, and Outright Criminal Activity by Major Banks

An interesting Video Interview With Whistleblower Everett Stern just came my way.

In case you don't recognize the name, Stern disclosed the money laundering activities of HSBC, for which the bank was fined $1.9 billion. Chump change says Stern, who claims he was placed in the fraud detection unit (along with everyone else) precisely because they knew nothing about money laundering.

So how did Stern catch the activity? He read a couple of books and a few weeks later discovered money laundering activity, lots of it.

Moreover, Stern had proof it was purposeful, organized fraud as opposed to transactions just slipping through the cracks.

Partial Transcript

Here is a key snip of the transcript and interview of Everett Stern by Sophie Shevardnadze.

SS: But, technically, how did you detect it technically? How does it happen? How did you detect suspicious transaction that could be linked to terrorism or drug cartels?

ES: It was so obvious. It’s because I have two brain cells in my brain and can do simple internet Google searches. This was not rocket science. For instance OFEC has a list of companies that the US cannot do business with, an OFEC sanction list, and so, for instance, Caribe Supermarkets, Tajco, the Tajideen Brothers, which were all linked to Hezbollah. Caribe Supermarkets is a supermarket chain based out in Gambia, and they are owned by Tajco, which is owned by Tajideen Brothers, which are based out in Beirut, and are financiers of Hezbollah. There were transactions going through HSBC and I saw it.

ES: What’s interesting is that it’s not that it was hard to find the transactions, it was very easy. The real disturbing part is how they were doing it because these transactions, that were supposed to be stopped in the wire filter, were actually going through. They were going through because what HSBC employees were doing was adding dots and dashes and different numeric codings to the actual payments. The FBI later called it “stripping the payments”. So the computer system…there wasn’t a match with the transactions and they would go through. It was just blatantly obvious what they were doing, it just took me I guess just little extra effort to see how they were criminally allowing the terrorist funds to go through.

Mish Comment: No one went to jail over this. I am not even aware that anyone was criminally charged. Here is another snip to consider. Subsequent emphasis in italics is mine.

SS: If we abstract from the HSBC case, who is ultimately in charge of preventing money laundering in the US? Are they doing their job or does it have to be individuals like you who would actually step up?

ES: The Department of Justice is not doing their job. Eric Holder specifically said during Senate hearings that prosecuting these banks criminally could cause a financial crisis. My argument to Eric Holder is that if we allow this terrorist financing to continue, and then the next 9/11 gets financed, I guarantee the next 9/11 will cause a financial crisis. What’s happening now is that these bankers and management of large banks such as JP Morgan, HSBC – they’re not being criminally accountable, so they can do whatever they want and they’ll just be fined. HSBC was fined $1.9 billion, which seems like a lot of money, but that’s actually only five weeks’ profit for them and their stock actually went up when the announcement came out. It’s really disgusting that the Department of Justice is not doing their job. If I were to donate $1 to Hamas or Hezbollah I would go to jail for life, and yet they’re donating billions and that’s okay. It doesn’t make any sense.

SS: You’re saying that no one was held responsible or criminally charged, the FBI and the CIA didn’t really follow up this case that you presented to them, governments are afraid to criminally prosecute banks like HSBC because of reasons linked to economic crisis – so could it be that they are complicit?

ES: Yeah. Believe me, I’m banging my head against the wall with this one. I have risked everything and tried my hardest to get these people in jail. Right now the former managers that were my bosses who were subsequently fired from HSBC are now the heads. One of them is the head of compliance for TD bank, the other one is the head for the Chinese bank. There’s no consequence there, these people are still doing the same thing in multiple organizations and that’s not what America is about and that’s not what justice is about.  

SS: So it seems like a country that’s fighting a War on Terror is also financing it at the same time.

ES: Yes.

SS: I’ve read that this whole case with HSBC left you emotionally drained, financially devastated. How are you now? How are you doing?

ES: I’m doing great; I’ve started my own company, Tactical Rabbit, which is an intelligence company. We became profitable five months ago, but it was extremely hard. I was working at PF Chang’s restaurant as a waiter after I left HSBC, because I had no money, I had nothing left, and I literately walked into PF Chang’s with the Rolling Stone article when I was featured in Rolling Stone, and I said to them “Look, I’m a whistleblower and I can’t get work. I need a job, I never waited tables before. I’ll do a good job for you guys,” and they hired me. They said “Look, we’ll give you a chance,” and I took all of that PF Chang’s money and I put it into Tactical Rabbit and that’s how I launched this very, very successful company now. We’re going to be a multimillion dollar company.

Mish Thoughts

Congratulations to Everett Stern who ought to sue HSBC and the justice department as well for his share of the money laundering fine collected.

More importantly, the justice department ought to start criminal prosecution of anyone adding dots and dashes i.e. “stripping the payments”.

How high up would this go if those at the bottom of the rung were given reduced sentences for implicating those above them? I suspect nearly to the top, if not the top.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Credit Equals Gold No.1

Interesting details have emerged regarding the Chinese trust fund that was on the verge of default a few days ago. In fitting irony, the name of the fund is Credit Equals Gold No.1.

On January 15, Reuters reported China's ICBC says won't compensate investors in troubled shadow bank product.
"Industrial and Commercial Bank of China, the world's largest bank by assets, said on Thursday that it has no plans to use its own money to repay investors in a troubled off-balance-sheet investment product that it helped to market."
Investors should have taken a hit. Certainly the promised 10% yield was too good to be true. Heck, the name of the product itself was a likely indication of trouble.

Tough Luck?

Yesterday morning, the South China Morning Post commented It's tough, but China must let trust company products fail.


The 700 investors in China's "Credit Equals Gold No1 Trust" are hoping that Industrial and Commercial Bank of China will bail them out.

Unfortunately, what would be good for individual investors would be very bad for China's financial system as a whole. It's harsh, but the troubled 3 billion yuan (HK$3.85 billion) investment scheme should be allowed to fail.

Come the end of the month, the Credit Equals Gold1 product was supposed to mature, returning investors their capital plus a 10 per cent yield.

That's not now going to happen. China Credit Trust, which structured the product, has warned it will have difficulty making its payout.

Meanwhile, the coal miner whose loans underpinned the scheme has ceased production after its vice-chairman was arrested for taking deposits without a banking license.
Failed Trusts
 
Did you catch the error in the headline "China must let trust products fail"?

It's not a question of "letting the trust fail". The trust did fail. The assets backing the trust failed. The question at hand is not failure of the trust, but whether or not losses would be recognized.

Without a bailout investors would have taken huge losses, and most likely totally wiped out.

Moral Hazard Bailout in Progress

Later yesterday a decision to do the wrong thing was made. Where the money came from is uncertain, but the bottom line isn't ICBC Offers Clients Option to Recoup Funds From Trust.
Industrial & Commercial Bank of China Ltd. said investors in a troubled high-yield trust can recoup their funds, averting a threatened default that underscored concern over the shadow-banking system and helped spur a selloff in emerging-market currencies and stocks.

Rights in the 3 billion-yuan ($496 million) product issued by China Credit Trust Co. can be sold to unidentified buyers at a price equal to the value of the principal invested, according to one investor who cited an offer presented by ICBC and asked to be identified only by his surname Chen. China Credit Trust earlier said it reached an agreement for a potential investment and asked clients of ICBC, China’s biggest bank, to contact their financial advisers.
Getting it Wrong
“A default was bound to lead to systemic risks that China is unable to cope with, so in that sense a bailout is a positive step to stabilize the market,” said Xu Gao, the Beijing-based chief economist at Everbright Securities Co. Still, implicit guarantees distort the market and “delaying the first default means risks are snowballing,” he said.
Bubblicious Questions

Bailouts and guarantees (implicit or explicit), coupled with loose money and manipulated interest rates are what causes these credit bubbles in the first place.

Bailouts do nothing but encourage more of the same moral hazard investment behavior, all but ensuring still bigger bailouts down the road.

There is an enormous credit bubble in China, guaranteed to come crashing down.

Mystery Money

The Financial Times reports China trust deal raises thorny questions.
For global markets, the troubled product became emblematic of the risks that have built up in China’s growing shadow banking sector. Non-bank institutions such as trusts now play a crucial role in providing funds to companies deemed too risky by regulators to borrow from the country’s banks. Financing outside the formal banking system accounted for more than a third of the Rmb17tn total new credit issued in 2013.

With roughly Rmb4tn ($661bn) in trusts maturing this year amid tight monetary conditions, many expect more repayment problems. “The market already perceives a higher risk and is in the process of pricing higher risk,” says Wang Tao, an economist with UBS.

In the case of Credit Equals Gold No. 1, ICBC clients invested a total of Rmb3bn in a product sold by China Credit Trust, one of the country’s biggest “shadow banks”. The product, a mere sliver of China’s $1.2tn trust market, was underpinned entirely by loans to and equity in coal miner Shanxi Zhenfu Energy Group. It was a rotten investment: the price of coal plummeted and Zhenfu collapsed under the weight of heavy debts.

Nevertheless, on Monday, four days before the product matured, ICBC told investors a deal had been reached that would allow them to recoup their full principal, although they would miss out on about a quarter of the interest they had expected to earn.

There was little detail about where the money came from, but Chinese media have reported in recent days that a bailout was likely to involve ICBC, China Credit and the local government.

The last-minute rescue raises a thorny question for the future of the Chinese economy. Has the deal confirmed the widespread belief that the government will do whatever it can to stave off trouble, hence fuelling more risk-taking? Or has the near-default taught investors that high yields come with high risks?
Bubblicious Refresher Course

Shen Jianguang, an analyst with Mizuho Securities commented "This will help regulators push through these rules. It teaches everyone a lesson about the expansion of shadow banking"

Shen is completely wrong.

It's not the lack of regulations that caused this mess. It is central bank manipulation of money and interest rates that fostered shadow banking schemes.

Indeed there is little difference between the credit bubble in China, and the housing and credit bubbles in the US that blew sky high in 2008 and 2009.

Shen Jianguang seriously needs a Bubblicious Refresher Course: What Causes Economic Bubbles? When Do Bubbles Burst? Can the Fed Prevent Bubbles?

Credit is Never Gold

The Financial Times noted that investors were not happy to get their money back. "This is a war of attrition. We have gained the biggest mountain and now we must attack and seize the smaller hills," says one Shanghai-based investor who declined to give his name.

Good grief.

Investors in a coal mine that does not even exist (and won't due to plunging price of coal) ought to lose everything.

Credit implies risk. There is no such thing as a 10% risk-free investment. The higher the promise, the greater the risk.

Don't Want Credit Risk?

Looking for something with no credit risk? Then buy physical gold and hold it.

There is a risk of decline in the purchasing power of gold as the plunge from over $1900 an ounce to under $1200 an ounce shows, but there is no risk of default.

Start of a Global Currency Crisis?

With every passing day, odds of global currency crisis increase. Emerging markets, Latin America, Japan, Europe, and China are all in the mix.

For further discussion, please see Start of a Global Currency Crisis?

Looking for something that's not in the mix? Buy gold. 

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Monday, January 27, 2014

China's Fake Export Numbers Under Close Scrutiny

China's export numbers are so unbelievable that even mainstream media doesn't believe them. Bloomberg has the story correct, but its title could use a bit more punch.

Please consider China Trade Puzzle Revived as Hong Kong Data Diverge
China’s trade numbers, distorted by fake exports last year, are set to come under renewed scrutiny after a discrepancy between Hong Kong and Chinese figures for bilateral trade widened to the largest in eight months.

Hong Kong’s December imports from China fell 1.9 percent from a year earlier to HK$176 billion ($22.7 billion), the city’s statistics department said yesterday. That compares with $38.5 billion in exports to Hong Kong reported earlier this month by China’s customs administration, up 2.3 percent, based on data compiled by Bloomberg.

Economists split on how to interpret the latest numbers, which follow reports earlier last year that invoices for fake exports were used to disguise capital inflows, inflating China’s trade data before regulators in May cracked down on the practice. Exaggerated overseas shipments would mean that global demand is weaker than China’s statistics indicate.

“From the last few months’ data, we have seen hints that some Chinese exports are fake and in fact that reflects hot money inflows,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong.

China’s exports to Hong Kong in December exceeded the city’s reported imports from the mainland by about 70 percent, the biggest difference since April.

Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong, said the gap between China’s reported increase in exports to Hong Kong and the city’s reported decline in imports isn’t big enough to raise any red flags when compared to the difference earlier in 2013.

That’s because China records exports when goods leave, while Hong Kong waits 14 days after items arrive in port to record them as imports, Shen said.

Round Tripping

Another possible explanation for the discrepancy is “round tripping” of goods that are exported from China to Hong Kong and then back to the mainland, Australia & New Zealand Banking Group Ltd. said in a report yesterday.

“The round-tripping trade has become an avenue to fuel China’s capital inflows,” as the current account may have been “improperly used as an alternative way of liquidity injection,” economists Liu Li-Gang and Raymond Yeung wrote. The gap in interest rates fuels the practice and policy makers in China and Hong Kong “need to closely watch the potential risks such activities present to the financial system.”
Place your bets. But I suggest no data from China is likely to be very reliable, especially export and GDP numbers.

Moreover, if export numbers are inflated, then GDP numbers are inflated by definition.

Of course, GDP is already overinflated for two other reasons:

  1. GDP is not adjusted for various shadow banking schemes and other malinvestments that will eventually be written off.
  2. GDP is not adjusted for massive amounts of air and water pollution that will at some point have to be cleaned up. 

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com 

Europe Dumps Global Warming Efforts; Good Idea?

Regarding the religious debate over global warming, I am pleased to report Green Fade-Out: Europe to Ditch Climate Protection Goals.
The EU's reputation as a model of environmental responsibility may soon be history. The European Commission wants to forgo ambitious climate protection goals and pave the way for fracking -- jeopardizing Germany's touted energy revolution in the process.

The climate between Brussels and Berlin is polluted, something European Commission officials attribute, among other things, to the "reckless" way German Chancellor Angela Merkel blocked stricter exhaust emissions during her re-election campaign to placate domestic automotive manufacturers like Daimler and BMW. This kind of blatant self-interest, officials complained at the time, is poisoning the climate.

At the request of Commission President José Manuel Barroso, EU member states are no longer to receive specific guidelines for the development of renewable energy. The stated aim of increasing the share of green energy across the EU to up to 27 percent will hold. But how seriously countries tackle this project will no longer be regulated within the plan. As of 2020 at the latest -- when the current commitment to further increase the share of green energy expires -- climate protection in the EU will apparently be pursued on a voluntary basis.
Global Warming Hysteria

I am certainly not against improving the quality of the air we breathe.

Without a doubt, China needs a massive breath of fresh air and a flood of unpolluted water as well. So do emerging market countries in general.

Rather, I am against carbon trading schemes, taxpayer funding of green energy, and other silliness based on global warming hysteria.


Does any of that matter? Realistically, not one bit. More importantly, it does not matter one bit if the earth has been warming for the previous 100 years.

The simple facts of the matter are as follows:

  1. The earth has gone through periods of cooling and warming that have lasted tens of thousands of years.
  2. Random fluctuations in nature, lasting decades or longer happen all the time.
  3. It is preposterous to make any kind of realistic assessment regarding the last 100 years or even the last 1000 years.
  4. Even if it was possible to make a realistic assessment as to what is happening and why, carbon trading schemes and taxpayer subsidies are a ridiculous way to solve the problem.

Gratefully, Europe appears to be abandoning the mass hysteria. It's probably the only smart thing European Commission president José Manuel Barroso has ever done while in that role.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com