In September the European Union announced, for a second time, that it has delayed the launch of its anti-deforestation law. In case you came in late ... this is a law that bans the importation of commodities into any of the member nations if the production of those commodities is deemed conducive to the destruction of the world's forests. One flashpoint in debate on the subject is palm oil. Indonesia and Malaysia together produce nearly 88% of the global supple of the stuff. They do it by converting their pristine forests into palm plantations. The heavy machinery involved in clearing the land itself emits hydrocarbons. But, more damningly, it causes soil erosion and water contamination. Beyond either of those points there is the main one. Forests are major carbon sinks. They absorb carbon from the atmosphere into the biomass of the vegetation. When we speak of "net carbon zero" as a goal we mean creating a world in which as much carbon comes out of t...
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Viktor Orban of Hungary has become paradigmatic of a sort of soft dictatorship, maintaining at least some of the mechanisms of an open society, a republic, with one hand but subverting those mechanisms in favor of an illiberal authoritarianism on the other. When did Orban and his regime earn this paradigmatic status? The key years were 2011-2012. That is when his regime drafted a new constitution behind closed doors, rushed it through parliament in nine days and passed it on a party line. This tailor-made constitution saw a reduction in the number of seats in parliament from 386 to 199. Orban maintains tight control over this shrunken body. A few years later (2020) he had that parliament vote for a bill that created a state of emergency without a time limit, essentially giving Orban the power to rule without them. Now, though, there are signs of life in resistance, forming around the figure of a former disciple of Orban, now on the outs largely over the issue of...
Today and tomorrow I will present a timeline of the last 38 years. Just one event per year. With little organization. Just think of this as a lot of stuff that happened. If we try to think of them as the "most important events" of their respective years, some of the choices will seem a tad eccentric. 1984, The Sino-British Joint Declaration sets out plans for a transition of Hong Kong to PRC sovereignty. 1985, Microsoft releases Window 1.0 1986, The launch of the Fox Broadcasting Co. 1987. The US FDA approves the marketing of Prozac. 1988. This was the year of the peak of the insider trading scandal that made Rudolph Giuliani a person of importance. Drexel Burnham pleaded guilty this year. 1989. This was the year of the SATANIC VERSES controversy involving the Ayatollah Khomeini and Salman Rushdie. 1990. East and West Germany re-unite after decades of separation. 1991. The Soviet Union dissolves itself. 1992. The European Union comes into being, as a stronger an...
The headline of this post is the title of a new book by David Buchan and Malcolm Keay. The subtitle is "Toward an Energy Union?". The general theme of the book is that the EU's reforms on energy related issues have so far been inadequate. They have been too optimistic about the consequences of market liberalization and have underestimated the costs that would be associated with cuts in emissions. The authors spend a fair amount of time on the issue of feed-in tariffs (FIT). These are the deals that member states are willing to offer alternative electricity generators, including for example homeowners who might simply have solar panels on their roof. The payments are determined by technology, and in essence by politics, so kilowatts are not treated as fungible. Though of course once it gets into the grid, a kilowatt is a kilowatt and is indifferent to where it came from. Feed-in tariffs have proven very popular. Every nation state that creates them finds that it ha...
I have to say right up front: I haven't read Grob-Fitzgibbon's book. Nor do I plan to. Nonetheless, his is a really cool hyphenated surname, and that at least makes him and by extension his new book worth some mention here. The book, Continental Drift, is apparently about the drift of Great Britain's political self-image away from the continent of Europe. Chronologically, the sweep seems to be from Ernest Bevin to the present. Bevin was the Secretary of State for Foreign Affairs under Prime Minister Attlee from 1945 to 1951. That is his photo, above. Bevin accepted the loss of India, but thought the British Empire had to compensate by holding more tightly onto its possessions in Africa and the Middle East. Bevin also hoped to encourage a united new political structure in Europe, with Britain of course to play the leading role. This would enable Britain to retain Big Three status alongside the US and USSR. Britain's self-image as a member of this Big Three club...
In our Mother Country, Nigel Farage has been debating Nick Clegg of late. The most recent, the one that has me paying attention now, was the one on Wednesday, April 2, 2014. For my fellow Americans, who only rarely tune into matters on the other sides of oceans -- it is worth your while paying attention to this. Talking myself through it now ... Farange (that's his picture above) is the leader of the UKIP, or the Independence Party, which wants to quit the EU altogether and reduce immigration. Clegg is head of the Liberal Democratic party, which is in coalition with the (larger) Conservative Party in the present government. Clegg also has the title Deputy Prime Minister. The aforesaid CP hasn't been taking part in these exchanges. Neither has the other Major Party, Labour. Its a little bit as if, in 1912, Theodore Roosevelt had debated Eugene Debs, leaving both the incumbent president (Taft) and the major party challenger (Wilson) out of the e...
On December 4, 2013, the Russian gas company Gazprom agreed to a delay proposed by the Ukrainian gas company, Nagtogaz, in the repayment of certain debt. This was a small development within a sensitive context. The relationship between these two companies, and by extension between their respective governments, is critical to the energy security of central and western Europe. Indeed, in 2009 Gazprom was less flexible. That year, also a time when winter was coming on and it was faced with an outstanding debt, it cut supplies to the Ukraine for three weeks. This was an is not a bilateral matter. Most of that gas continues its way westward through the Ukraine. The European Union gets one-fifth of its nat gas supplies through that route. But this year there is a complicating factor. The tug-of-war for Ukraine's affiliation between the Eurozone to one side and Russia to the other has become more intense: has, in fact, taken to the streets.
To our earlier discussions in this blog of the various items on a balance sheet we must add this: many important liabilities and assets – important, that is, for the future of the company – never get on the balance sheet at all. The rules governing what may be kept “off book” generated a good deal of controversy associated with the demise of Enron at the turn of the millennium. Enron, you may remember, created special purpose entities (SPEs) and supplied these off-book entities with Enron stock. Then it dealt with those entities in ways that spruced up its own books. The SPEs could be kept off book, under then extant rules, so long as 3 percent of their equity belonged to someone who was neither Enron nor an Enron “related entity.” The 3 percent figure may seem modest under the circumstances. But the point of it was that someone else had to be willing to put their own investment at risk. Indeed, as a matter of corporate law throughout the English speaking world, a ...
I left off this chronology/linkfarm on Friday morning (eastern time) March 22, mentioning tough talk from Germany at that time. So we resume there. That was also the morning when Greek banks swooped in to buy the units of Cypriot banks that operated in Greece. For some reason this seemed to calm world markets. A bit later Friday, an EC spokesman, Simon O'Connor, announced "an improved spirit of cooperation on the part of the Cypriot authorities." Its parliament passed a law allowing it to restructure the failed Laiki Bank , separating some of its assets into a so-called "bad bank." Under this plan, uninsured depositors would lose up to 40 percent o their savings, though the insured deposits would remain protected within the "good" bank. But this still left the question of raising the bail-in money that the Troika demanded . And by this time the crisis in Cyprus had analysts wondering about the next domino. One emerging markets researcher, ...
The Cyprus/bank/bailout story is big. Really big . Too much for me to handle in my own voice just now. So I'll just provide a few links, following chronological order, in this post and the next. The above photo is Cyprus' finance minister, Michael Sarris. By February 28, Cyprus was clearly 'next up,' the new center of the ever-shifting limelight in Europe's traveling crisis over banks and sovereign debts. The new president of Cyprus, Nicos Anastasiades, said that day that though Cyprus would have to negotiate terms of a bail-out, "no reference to a haircut on public debt or deposits will be tolerated." A big EU meeting in Brussels began on March 3d, and involved a good deal of discussion of the matters that Anastasiades had tried to wish off the table. Skipping ahead a bit ... by March 14th, EU officials, as well as those from the IMF, were in round-the-clock talks on a bail-out of Cyprus that would include a depositor sacrifice, known politel...
A couple of quotes from the book Greekonomics by Vicky Pryce. Speaking of the countries other than Germany that agreed to the initial deal creating the exchange rate mechanism and later the single currency, she writes, ""[T]his was a political project sold as an economic one to the electorates across Europe. In the rush to bind Germany into a union covering most of the countries in Europe, very little thought was given to whether the result might bear any resemblance to an optimal currency area." A little later, speaking specifically of Greece and why it joined, she writes: "Interestingly, when the Greek nation expressed a real desire to join the EEC and then the euro, they were in reality secretly hoping that the Brussels bureaucrats would take over and free them from the control of their politicians, who they regarded as corrupt. Educated Greeks longed for a 'technocratic' government that would move them away from a rather Soviet-style economy su...
I generally ask myself at this time of year what were the biggest stories of the past twelve months, in business/financial news. Of course, I choose the ones I do largely because they illustrate an important theme, and in the list below I'll spell out and italicize the theme. Yet the theme itself isn't the story. Further, I don't rank them, as in a top ten list. I assign one top story to each of the twelve months. All that said, here is this year's list. January: Continuing Recession. Iconic chemicals-and-photography company Kodak files for bankruptcy. February: Eurozone tensions . Europe manages a restructuring of Greek debt -- private bondholders take a deep haircut. [Speaking more broadly, there has been a change in tone over the course of 2012. The year began with a lot of talk about the breakup of the common currency zone. Greece might have withdrawn and started printing drachmas. For better or worse, there is much less of such talk now.] March...
Allow me to get in my own two cents (and yes, I realize I'm rather late to this party) about the EU's receipt of the Peace Prize. The Peace Prize is awarded by a committee that is selected by Norway's Parliament. Follow that link for some particulars. It is fitting, then (nay, it is pragmatically compelling) to observe that Norway isn't a member of the EU. Norway has twice held referenda to determine whether it would join, and in both cases the go-it-alone faction prevailed: 1972 and 1994. The Peace Prize is apparently justified this year by a simple and seemingly pragmatic tie: Europe hasn't gone to war since the nations thereof became a single economic unit. That is pretty clearly a post hoc ergo propter hoc argument, and thus a fallacy. Heck, the US hasn't had a civil war since the EU was created either, but even the Nobel Committee doesn't seem to draw that connection. I'll only note as a counter that Norway itself has managed to s...