Tag: Angela Merkel

You don’t have to be mad …

… to live here, but it helps!

This was a guest post sent to me by regular contributor, Chris Snuggs, back in May.  It somehow slipped between the cracks, so to speak, and only came to light when I was trawling through a pile of draft posts.

Despite, or even because of, Madam Merkel’s re-election it still seemed a valuable post to publish.  Chris lives in Germany and has a very good perspective on things.

It may also serve as an interesting reflection on the IPCC’s report when it is published later this week.

Over to Chris.


“Angela Merkel would seem to want it both ways.” (“Der Spiegel”)

The above comment caught my eye as I browsed through “Der Spiegel” this morning. Frau Merkel is delaying difficult decisions on energy production and “carbon backloading” until after the September elections in Germany.

Nothing earth-shattering in itself, of course. It is human nature to want it both ways, and examples do not lack.

One does somehow feel, however, that it has got worse in recent years. Kids want a highly-paid job without working their way up through the company hierarchy. Spain et al want to enjoy German prosperity by using EU “structural funds” without actually doing the boring hard work over decades. And politicians of course want growth and prosperity and a vast state apparatus plus a voter-bribing welfare system but without debt – or indeed troublesome whinging from the voters. However, as the proverb goes: “You can’t have your cake AND eat it.”

However, this article quoted is about something more serious than mere short-term greed, which is not exactly new in the history of Mankind. No, we are now applying the illusion that we can have it both ways in an area that threatens life on the planet – Global Warming of course.

As a concerned member of the “We don’t want to die from Global Warming Brigade”, I am more worried than ever about what is going on, and Germany is a symbol. Whatever the Germans do, they tend to do thoroughly and efficiently. They have a fairly large Green Party, a large investment in solar power and until recently seemed to be setting an example to Europe and the world. However, …..

•    Germany will this year start up more coal-fired power stations than at any time in the past 20 years as the country advances a plan to exit nuclear energy by 2022. Two coal-fired plants opened in 2012 and six more will open this year, adding up to 7 percent of Germany’s capacity. A dozen more are on track to open before 2020.  Greenhouse gas emissions in Germany, Europe’s biggest economy, rose 1.6 percent last year as more coal was burned to generate power, the Environment Ministry said two days ago.

•    With the current carbon price, utility companies that have invested in low-carbon electricity generation such as wind and nuclear are losing market share to companies that produce energy using coal. Some companies are already acting on the low price of carbon in Europe. E.ON, for example, one of Germany’s largest utilities, announced recently that clean-energy investments will be cut to less than €1 billion in 2015 from €1.79 billion last year.

The thing is, if serious and efficient Germany is backsliding on emissions what are the chances for the rest of the world, with standards of living far below Germany and desperate to catch up?

An understanding of the problem of CO2 emissions is hardly new, yet it seems to me true to say that nothing serious is being done about it. There is lots of talk, noble efforts by Al Gore et al, international conferences, carbon-trading schemes and so on, but all the time CO2 emissions are increasing. Last week we learned that atmospheric CO2 has now reached 400 parts per million, a level not seen for 4 million years.

Despite this (and the consequences predicted seem to range from merely uncomfortable to threatening to life on Earth), the search for, exploitation and use of fossil fuels are all increasing. A student of logic would surely say that this is irrational; we are lowering ourselves to the level of lemmings, except that they can’t help it but we could.

We are completely hooked on fossil fuels; that is the problem. We have one minister ranting on about “saving the planet” and another proudly announcing new oil-wells, new areas earmarked for shale-fracking, developing countries opening new coal-fired power-stations. Industry in the west is making some efforts to clean up its act but these are being predictably swamped by growth in the developing economies.

It would be funny if it weren’t so serious. A few years ago “experts” talked about the end of oil as resources ran out but as we get cleverer at extracting it from more and more difficult places the availability of fossil fuels is actually going up! On top of this the melting poles (and Greenland) are opening up new areas for exploitation by the oil companies.

“Oil companies”. Yes, the Big, Bad and Ugly Culprits … and yet the last time I checked oil companies do not actually run the country they are based in. (Conspiracy and “Plutocrats run the World” theorists will certainly disagree with this, but that is another story!)

No, governments rule their countries, and while some are dictatorships and plenty of others are totally corrupt, there are a good number of democracies involved in this headlong rush to disaster. Worse, we are in a massive generalised recession and yet emissions are still creeping up. What will happen once “growth” takes off once more – as it will, these things going in cycles.

Living in Germany, I have personally been horrified by the decision to phase-out nuclear power. The Green movement is politically significant here and the government reacted rapidly and negatively to the Fukushima incident. This was indeed terrible, but does not change the facts:

– Nuclear is totally free of CO2 emissions.
– There has never been a serious accident in Western Europe.
– France still today derives over 70% of its electricity from nuclear.
– Nuclear designs are far safer than they were years ago.
– Nobody in their right mind would build a nuclear power station in an earthquake zone as the Japanese did – though if they want nuclear (and they have few natural resources) they don’t have a lot of choice
– Europe of course is an earthquake-free zone, except for Southern Italy.
– Nobody either would build one where the cooling pumps could be flooded by a tsunami – as the Japanese (usually so clever) ALSO did.

There are nonetheless dangers in nuclear of course, but:

– ONLY nuclear can currently provide enough power to satisfy our needs without CO2 emissions. Solar and wind are feeble pinpricks in comparison.
– There is no sign of a Deux ex Machina on the horizon that will solve the emission problems associated with fossil fuels.

My personal conclusion is that without nuclear we are doomed, since we seem totally incapable of reducing CO2 without it. On the contrary, now that shale-fracking has come on stream the emissions seem likely to rocket, with a presumable corresponding increase in Global Warming. And as far as that is concerned, it does seem to me – as a layman, like most of us – that we are involved in a vicious circle: the more the poles and Greenland melt, the more radiation is absorbed by the oceans and the more CO2 is released. People have talked about a “tipping point”, but it could just as easily be an “explosion point” – after which a geometrically increasing temperature in an unstoppable feedback cycle takes us to a Venusian scenario.

Not wishing to be to gloomy, but Frau Merkel’s procrastination is worrying. Politicians do things with such short-term considerations. She seems to be waiting till after the elections, but excuse me Frau Merkel, saving the planet can’t be put on hold.

Yes, whatever Europe does is pointless if India, China and South America are going to steam ahead, but someone has to set an example, and at the moment, Germany is burning much more coal AND opening new coal-fired power stations just as we should be cuttting back.

What is the solution? Nobody seems to know. If they do, they aren’t acting up on it. It is rather depressing. All Europe’s politicians are talking about at the moment is increasing growth = burning more fossil fuels. Even France is cutting back on nuclear ….


Finally, a few facts about emissions:

•    The world emitted 31.8bn tonnes of carbon dioxide from the consumption of energy in 2010 – up 6.7% on the year before.
•     The world emits 48% more carbon dioxide from the consumption of energy now than it did in 1992 when the first Rio summit took place.
•    China and India together are building four new coal-fired power stations per week
•    China – which only went into first place in 2006 – is racing ahead of the US, too. It emitted 8.3bn tonnes of CO2 in 2010 – up 240% on 1992, 15.5% on the previous year.
•    China now emits 48% more CO2 than the USA – and is responsible for a quarter of the world’s emissions. Chinese per capita emissions, however, are still around 60% lower than in the USA (now involved in extensive shale-fracking)
•    Global coal consumption grew by over 5% in 2010; gas by over 2%.
•    Renewable energy accounted for only 2.2% of global energy output in 2011, despite all the fanfare over wind turbines and solar panels.



I tried to get a handle on some of these statistics. 31.8 billion tons of CO2! I went into the garden yesterday and tried to imagine the volume of gas that would weigh one ton. Impossible of course, so I looked it up: it is apparently 556.2m3 or a cube with sides of 8.3m.

Another amazing stat from this site (http://www.icbe.com/carbondatabase/CO2volumecalculation.asp) is that every year the United States emits a 33.14cm high blanket of carbon dioxide over its entire land area.




The end of an era, part one.

A review of David Kauder’s recently published book, The Greatest Crash.

Details of the availability of the book are included at the end of both parts of my review, part two is published tomorrow.

Extracts from the book included are with grateful thanks to Sparkling Books.

Personal introduction.

Back in the late 90s, when I was living in England, I attempted to bolster my self-employed income by investing and trading in equities. It was a frustrating game, game being the right word! One day I was lamenting this to a close friend and he gave me the name of David Kauders at Kauders Portfolio Management and suggested I might like to contact him.

I followed my friend’s recommendation and met with David. What he outlined at that meeting all those years ago was mind-blowing, no other way of putting it. Essentially, David predicted a financial and economic crisis of huge proportions. He convinced me of the likelihood of that crisis and in November 2001 I became a fee-paying client. As the world now knows that prediction came to fruition. My anticipated residency in the USA meant continuing to be a client was not possible, and I ceased being a client of Kauders Portfolio Management in June 2010.

Thus not only am I deeply indebted to my friend for referring me to David but also unable to write this review from an unprejudiced point of view.

The Greatest Crash

The book, released in paperback in England in October 2011, published by Sparkling Books, is subtitled ‘How contradictory policies are sinking the global economy‘. Frankly, that subtitle doesn’t do much for me. A clearer message that comes from the book is this: the economic world has reached a ‘systems limit’. Indeed, the term systems limit is used widely throughout the book.

In his introduction to the book, Professor D. R. Myddelton, Chairman of the Institute of Economic Affairs, writes,

Adam Smith said ‘There’s a deal of ruin in a nation’, and it would be a mistake to despair. But one of the things we need now is new thinking on the fundamentals. That is what David Kauders provides in his book ‘The Greatest Crash’.

Without doubt, David achieves that.

Starting with the first sentence, David sets out the core problem;

This book argues that it is impossible to expand the financial system much further.

expanding this a few paragraphs later,

This is the financial system limit: lack of new borrowing plus excessive weight of debt obligations from past borrowing combine to slow economies down. This is the barrier whichever way policy makers turn. It is like the lid on a boiling kettle. Enough steam can lift it for a while but it always snaps back into place. The financial system limit is a roadblock preventing growth.

A few pages later in this opening chapter ‘The roadblock preventing growth‘ this limit is explained thus,

Policy contradictions also show us that the financial system has reached a roadblock. The glaring conflict between bailout and austerity is at the core. Each bailout or stimulus requires creation of more credit, leading to false financial speculation, and for a short while markets recover their poise. The threat of inflation returns. Later, bad debts rise, the markets tumble again and a new crisis emerges. Austerity, the alternative policy, cuts spending thereby cutting the immediate level of economic activity and bringing economic decline more quickly than the stimulus alternative. Whichever way they turn, the authorities are damned.

In the next chapter, ‘Evolution by trial and error‘, David writes about economic cycles and reminds his readers that the long economic cycle is often “beyond the practical experiences of our working lifetimes“.  Then later suggesting that because we have seen the greatest period of inflation ever since the end of World War Two, ergo “the unwelcome lesson from history is that the greatest deflation should follow.

In Chapter 4, ‘An Era of Wishful Thinking‘, the spotlight is put on the horrific policy errors that have been made for decades, try these three examples (there is a longer list in the book),

  • Policy makers believed that debt could expand indefinitely, at no cost.
  • Nobody realised that interest rate rises would make existing borrowing unaffordable and cause a wave of defaults.
  • The world was swamped with so many detailed requirements and standards that nobody could understand how they all fitted together. It was assumed that ‘transparency’, i.e. extensive detail, would solve the inability to comprehend how the parts made the whole.

Part Two of the review, continuing with Chapter 5 is tomorrow.

Want to buy The Greatest Crash?  The ebook was published in October worldwide, the  paperback published in the UK on the 1st November UK, the hardcover being released any day now in the UK.  For North America both the paperback and hardcover versions are being published on 1st February, 2012.

Full details from the Sparkling Books webpage here.

Copyright © 2011 Paul Handover

And a reply to Patrice Ayme

This is a guest post from an old regular (as in frequency, not age!) contributor to Learning from Dogs, Chris Snuggs.  He has written in response to the guest post from Patrice himself that was published on the 31st October.

Patrice AYME – WOW!

First, an amazing post – lots to talk about. Secondly, (get the bad news out of the way first) the fact that you warmed to Brown when he became Prime Minister worries me, principally because the man was at best totally incompetent and at worst a moron, having totally messed up almost every aspect of British life one can think of but in particular the economy. It is only the fact that we started out from a better position that prevented (or prevents) us from “doing a Greece”. The waste and delusions were humungous; the basic management skills non-existent. I note that Mr Brown is going to make a speech in the House of Commons soon; I wonder if he is going to apologize for the appalling shambles he left behind or whether he is going to accuse the new government of not spending enough. His finest hour came when “saving the world” by encouraging governments everywhere to borrow vast amounts of money to save money. Had the overall consequences of his previous policies not been so disastrous this could almost have been funny. Well, it was funny for the banks, who of course were laughing all the way not only to the bank but at it.

CHINA: I’ve been to China – (wonderful people) the problem (if there is one) is not their economy per se but the fact that it is a dictatorship. There have been and indeed are worse dictatorships, but it is one nonetheless. As their economic power increases so does their sabre-rattling. Have there ever been any cases where mighty economic power has not been followed by territorial expansion? Patrice will know this; his overview of history in these matters is extraordinary. N° 1 Satan the USA may be, but without their umbrella free, democratic Taiwan would most likely already have been invaded by mainland China.

The YANKS? Humans are – in my humble opinion – often extremely conservative. Americans have been used for decades if not centuries to believing that their country is “the greatest in the world”. (they are not the only guilty ones, the French and Chinese run them close). It is going to take them some time to realize the junk value of that particular belief. While they are slowly internalising it we should be patient, remembering that they did save us from Hitler and/or Stalin. No doubt of course for their own selfish reasons, they did the same in Kosovo, too, (the Europeans – except those anti-European, Anglo-Saxon Brits of course – having done SFA) though I’m still trying to work out why – perhaps EXXON had geological surveys indicating vast oilfields around Pristina?

To save the US it will take someone with a lot more steel than Obama; that is the problem, and WHERE is this person coming from?

FRANCE: If there is any country mired in self-delusion apart from the USA it seems to me to be France ….. I am NOT anti-French – far from it. I lived and worked there for ten years ….. however, Patrice’s observation that most French people understand the need for change but most also support the strikes is revealing. This is the crux – they cannot make up their minds what they want – for too many in positions of power the status quo is too good – a bit like in the USA with the plutocrats. Thus they stagger about getting into a worse and worse situation, much like Britain did under Gordon Brownosaurus.  The STATE in France is TOO BIG and SELF-IMPORTANT. Sarko realizes this, but his attempts to rein it in (forced by budget constraints) have been feeble and in any case the inertial resistance is stupendous. The phrase “reality-check” comes to mind.

THE EU: As for “STATE TOO BIG”, the EU is overreaching itself, having just committed to spending over €5 BILLION on a fatuous new diplomatic service run by a nonentity earning TWICE as much as the British and French leaders and which will give the EU FORTY-SIX “diplomats” on the island of Barbados. Nothing against the Barbadians – jolly good chaps and chapesses – but are they REALLY that important to the EU taxpayer? We’ll also have over 50 in that economic colossus of the universe, Madagascar. Meanwhile in Brussels, a new building is to be leased at a cost of a piffling £10,000,000 a year. It is said by the great and good in Brussels that this new diplomatic service is needed to “compete with the Chinese and Indians”.  Absolute rubbish of course. The idea that a black-African country will trade with the EU and not the Chinese just because we have fifty odd “diplomats” in a spanking new building downtown is ludicrous. What the Africans want is good value (i.e. cheap) and reliability. Europe is getting past the stage of being able to offer much of those, bogged down as it is by 100,000 pages of European Law and mindless regulations designed à la française to improve the lot of “workers” but which in fact gradually destroy all their jobs.

I personally think the EU is doomed; destroyed by greed, arrogance and self-delusion. The British are already very anti-EU, NOT because we are anti-European; we are just anti venality, greed and overweeing self-delusion. However, in true EU spirit, we are denied the referendum we were promised on the Lisbon Treaty. Anyway, in the EU if you vote “No” in a referendum you just keep getting referenda over and over again until you say “Yes”, so what is the point?

EU TREATIES? A tremendous FARCE of course. Did you know that it is ILLEGAL for members states to bail each other out? But what happened with Greece? And now they have a NEW cunning plot to bail out the next failing economies: Spain, Italy, Portugal and Ireland must already be licking their lips at the thought of getting free German money. So, bailouts are ILLEGAL, but not apparently if we actually want to do it. So they are only illegal in THEORY then? So it seems. Now Frau Merkel and the usual stitch-up-the-rest suspects (France) have worked out their plan there remains the niggling little detail about it being ILLEGAL. So what is the solution? The humungously-overpaid and fatuous EU President (has he got his presidential jet yet?) has been asked to look at the problem and “see if he can find a way to bail the countries out legally.”

Of course, despite spending thousands of man-hours on the problem he won’t find a way that will stand up in court so the increasingly-fragile and erratic Frau Merkel is talking about “amendments to the Lisbon Treaty”. More hilarity – this took ten years to thrash out, agree and pass and yet she wants to muck about with it already. I find all this both hilarious and criminally venal, treating the European taxpayer with contempt. How do they get away with it? VOTER INERTIA – the same problem as in the USA, where they have a POOR choice of parties and lurch from one dinosaur to the other without ever seeming to explore alternatives. EUROPE? Do YOU know who your MEP is? Does he or she LISTEN to what you say? With Europe in the midst of the biggest financial crisis since WWII when EVERYONE in the real world (not Wayne Rooney of course) is cutting back, jobs are going, projects abandoned the MEPs voted for a 6% INCREASE in their budget. One wonders who their PR people are, but in truth they don’t have to bother much about PR since their accountability is about zero.

The EU initiatives are INSANE – power-mad. It is so transparent as to be laughable. As the British learned from “Yes Minister”, the bigger your budget the more important you must be and therefore the more you must pay yourself. This is the rational for EU top-brass being paid double what NATIONAL LEADERS get.  (Oh, and for the “inconvenience” of living abroad of course, even though they get a whole raft of vast expenses including free schooling for their kids). Cameron knows it, but the Brits are so used to being slagged off by the Continent (especially statist France, which is always very glad to get its bills paid by someone else  – will the Germans bail out France when their economy collapses?) that Cameron has to tread a tricky line. At heart, the Brits are FREE MARKETERS and NOT willing to be an outpost of The United States of Europe, which is of course what they want over the Channel. France wants that because it believes it can control it;, they could be deluding themselves – monsters one creates often become uncontrollable. And the Germans of course are kept on a leash because France still plays on German guilt for WWII, but is that ploy now looking a bit sick? It certainly can’t last for ever so milk it while you can, eh?

THE EURO: The recent EU jolly came up with a plan to “save the euro”; they were all happy as sandboys about this, but do they REALLY believe that Greece can EVER repay its debt without MORE vast donations from Germany? Do they think Germany will continue to bail out the feckless Mediterranean countries (plus Ireland …)? Some of these countries shouldn’t BE in the euro, unless of course the EU can control their economies. AHA, THERE WE HAVE IT! That is the agenda of course … more central control = more power and in particular more “harmonisation” of taxation. Don’t you just love that word; it sounds so PC. ‘harmony’ = balance, peace, contentment ….. all the right marketing vibes … but what it means of course is “harmonisation” UPWARDS to match the preposterous tax levels in Germany and France. The Germans are so efficient that they seem to get by with such high taxes, but they are crippling France. Despite their fatuous 35 hour week  – introduced to create more employment (why didn’t they make it 10 hours per week – surely that would have created even MORE employment?) – their unemployment rate is still way above the average, and this for DECADES.

Well Patrice, I agree with much of your analysis of the USA, but I suspect Yanks will be up in arms. (the “greatest country in the world” syndrome). I am reminded of the importance of education; is it SO difficult to learn from the past? Apparently so – humans are so deep-rooted in the immediate present and so few take a long-term view, especially in our “democratic” systems of government where Obama has only been going for two years yet is effectively starting the next election campaign. And as we know, British politicians will do and say anything to gain power and having done so very often ignore much of what they promised. I myself do not remember the British Labour Party promising to ruin the country in 1997, yet that is what they have done in many areas.

Where I disagree is with the impression I have from your post that Europe is doing much better than the USA. I don’t think we are. I think we are in a tremendous mess and have NOT yet understood what faces us – see strikes in France for a start. One bright light? the economic performance of Germany, the only “serious country in Europe – apart from those magnificent Scandinavians of course. Another bright light? The performance so far of the British Coalition, at least having the courage not to take the easy but long-term catastrophic path of “Spend, spend, spend” so honed and perfected by the previous bunch of charlatans.

By Chris Snuggs

Tax, Law, Crime and Morality in Banking

More holes than in a Swiss Cheese!

There is currently a merry old ding-dong spat going on between the German and Swiss governments. Basically, someone has got hold of information about German citizens with bank accounts in Switzerland where they are hiding large sums on which they should pay German taxes.

This or these enterprising whistleblower(s) are offering to sell this data to the German government for a hefty fee. The German government is on the point of accepting to buy this “illegally-obtained” information from the (from the Swiss point of view) criminals who have stolen their secret bank data.

This story raises a large number of fascinating questions. It has long been common knowledge that Switzerland offers banking facilities with few questions asked. Any self-respecting criminal or tax evader has or had a secret, numbered Swiss account.

What has always amazed me is how they have got away with this for so long, stuck as they are in the centre of Europe. How is it possible that other countries have allowed Switzerland to become a haven for money obtained illegally in other countries?

For it is clearly immoral to profit from the illegal activities of foreign nationals, isn’t it? What exactly is the difference between this behaviour and “receiving stolen goods”? Worse, we have to remember that the largest sums come from drugs. Anyone willing to look after (or launder) drug  money is complicit in the misery and deaths of millions of drug addicts worldwide. Yet the Swiss have pulled off this trick for decades. The Swiss banking (and government) fraternity has never shied away from shady dealings, being until the end of WWII covert supporters of the Nazis.

Well, Angela Merkel is going to do a deal with presumably Swiss “criminals” (according to the Swiss government) in order to recoup money it is owed by German criminals (according to Germany). What a merry old moral maze we have here. But in truth, the world is now too small and inter-connected to allow either tax evasion on a vast scale  or the safeguarding of criminal funds.

Switzerland has to decide whether to remain as a supporter of tax evaders and gangsters (including of course African Presidents who have ripped their countries off in a big way) OR to join the real, civil, honest and inter-connected world.

The rest of us should stop tolerating this connivance with crime. “Client secrecy” is no excuse for condoning and profiting from crime.

More on the whole  Nazi gold in Switzerland story is here.

By Chris Snuggs