Entangled Alliances

The run up to Copenhagen has begun and by all accounts it was a little more fiery than expected. I’m not referring to the Climate Camp in London, whose location was kept so secret, nor am I referring to Sen. Chuck Grassley’s remarkable comments that there are an increasing number of scientists who have doubts about Climate Change…really? This sounds a little like Sen Inhofe’s infamous list, many of whom were horrified to learn they were including on his list ( yes, he basically made it up). All of these are mere broadsides in the contemporary Climate Change debate.  The fire in this debate, which we’ve only seen glimmers on touches on the elephant in the room for environmentalists and even governments, Population control. India’s Environmental Minister Jairam Ramesh issued a response to efforts by the US to bring India’s population into the debate:

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photo credit: Gernot Poetsch

Not too much closer union

In a wide-ranging and fascinating judgement, the highly activist German Constitutional Court has ruled that the Treaty of Lisbon is compatible with its Basic Law. There are, however, certain provisos that significantly affect the force of some of the parts of the Treaty that could lead to deeper integration without an amending treaty. It also has a lot to say on the future scope of European integration.

The press release is certainly worth reading in full, and it’s only seven pages if you copy and paste into Word – useful for highlighting. If you have time to read the judgement in full it’s more like 119 pages, but I think for those geeks of European integration and judicial philosophy out there it will be well worth a look.

I was going to wait to comment on this before I’d seen what the highly-recommended German Law Journal had to say about it (its discussion of a 2006 ruling is a great example). Then I noticed this evening that Nosemonkey had come out with some very interesting analysis into the ruling, and thought I’d try and get my initial thoughts down before seeing what any more people had to say on the matter.

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It’s crunch time on capital hill as the Obama administration puts its political capital on the line for the House to pass the Waxman-Markey bill. For those of you who don’t know, the Waxman-Markey bill is the first Climate Change bill to be introduced in the US ( on a federal level).

So what does it promise? (See here for a more comprehensive overview)

• To reduce US emissions on 2005 levels by 17% by 2020
• To bring US emissions down by 80% by 2050
• 25% of US energy by 2025 must be renewable
• A Cap and Trade system, 85% of permits will be auctioned off
• 2 Billion tons worth of carbon offsets
• A whole host of other measures from building efficiency, fuel standards and even a new technology bank!

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by TfUnQ

Is the European Union at a decisive point?

The Constitutional Treaty was savagely beaten by the Dutch and by the French.  Awkwardly righting itself ike an overweight middle aged boxer, convinced that its younger and sprightlier opponent ( the citizens of each European country) will fall victim to its experience, it crafted a new treaty. The Lisbon treaty, cunningly devised to make things like flags non-binding ( and yes it was a little paired down in other areas).  The leaders of the EU sent this one flying back at its citizens and this time avoided those awkward referendums by letting parliaments vote. After all, nothing says democracy like keeping out the people – not burdening their minds with issues or even giving them the chance.

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Is this the next FiveThirtyEight.com?  Let’s wait and see, but some interesting stuff nonetheless from predict09.eu:

Predict09.eu is a prediction of the outcome of the June 2009 European Parliament elections and the resulting make-up of the next European Parliament. The prediction is based on a statistical model of the performance of national parties in European Parliament elections, developed by three leading political scientists: Simon Hix (London School of Economics), Michael Marsh (Trinity College Dublin), and Nick Vivyan (London School of Economics).

The prediction will be updated each week until the elections on 4-7 June.

Their model analyses the expected make-up of the next Parliament by bloc and by member-state.  Some highlights and analysis below the fold:

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Oslo Fjord

I know what you’re thinking. In the midst of all this talk of an economic crisis, the G20 and accompanying protests and police brutality, and Brown’s recent trip to the US (for which he received a DVD box set, not even the correct region – poor Gordon), we’ve lost sight of our priorities. The crucial question that everyone’s dying to have answered is this: how’s Norway getting on?

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You’re a model of social democracy, fairness, an economic miracle that proves free markets and globalisation don’t have to be another excuse for unbridled growth of economic inequality.  Thirty per cent of your energy is from windpower and you’re due to host COP-15,  possibly the most critical Climate Change summit, (after all Bush is out now, so anything post-Bush would be pivotal) but you have an embarrassing problem.

photo credit: John Carleton

That’s right, Danes emit 5 tonnes of CO2 per person.  That’s not that terrible, but for a model country in the fight against Climate Change, it’s at least tantamount to having smelly armpits.  So what are the Danes doing?

Well that they are doing something is a start, but Denmark always seems to be able to do the right thing with ease, so they’ve decided to reform their transport structure to more Climate friendly cars, but I don’t mean a weak transition that will take 10 years to show any impact:

Currently there are only about 200 climate-friendly autos on the nation’s streets, but that should grow to 100,000 within two years.

That is incredible and not an insignificant number in a country the size of Denmark.

18:45 BST: Well, the time has come for me to quit this epic live-blog, given that I’ll soon be entering my twelfth hour of continuous live-blogging.  I know; I know – Obama’s about to give his press conference. But I’m about to collapse; so that’s that. I hope you enjoyed the  random, disparate, often unhelpful observations from yours truly. I know I did – live-blogging’s great! There’ll be some more analysis tomorrow from Entangled Alliances, looking in more detail at the exact provisions of the groundbreaking G20 agreement: what they are, whether they’re good and whether they’ll actually change anything, as well as a look at how the G20 will benefit its main players. But for now, I’ll leave you with a fitting quote from BBC business correspondent Robert Peston:

There are no surprises in the deal announced today to reform the banking system, to prevent banks making the kind of risky loans and investments that precipitated the worst global economic crisis since the 1930s.

But it’s nonetheless a historic event that the world’s 20 most powerful economies have signed up for these reforms – because they represent the death knell for the Anglo-American doctrine that economies flourish when financial firms are left alone to do as they please.

Indeed.

18:32 BST: Buried under all the G20 news has been the potentially groundbreaking meeting between Barack Obama and Russian President Dmitry Medvedev, which resulted in an agreement to reduce the nuclear arms of both sides much further than the current agreement demands. This could be very important…

18:30 BST: A wise comment from the Guardian’s Andrew Sparrow (whose live-blog was probably better than mine but nowhere near as epic!):

I’ve been busy updating our main story, having sat through the opening of Brown’s statement. First reaction: I found myself sitting there thinking ‘David Cameron could not pull off an event like this’. That’s not because I think Cameron’s a lightweight. I don’t. It’s because the most important summit conclusions involve international finance, global trade and the inner workings of organisations like the IMF and there are probably very few prime ministers or presidents in the world who understand this stuff as well as Brown.

18:20 BST: Lest I be judged  by my comments below to have been a bit too harsh on the protests, I want to stress that I have great respect for most of them. I say most of them, because the anarchists were just so annoying. Proper anarchism is really cool. It’s an extremely sophisticated ideology . These guys, however, were just pathetic. Bad anarchists!  The majority of protests, however, made some good points.The fact remains, though, that they surely made no difference on the summit at all. If you want to get something changed, you focus on it like a laser and you don’t go off message. But the protests were never on message to begin with – from homelessness to climate change to ending the war to the death of capitalism; only a minority were  actually focused on the topics of the summit! The question becomes then – did they really want to influence the summit? Or did they just want to get their message out there in a sort of vague picture of defiance?  In their defence, however, you could respond that they never stood a chance anyway: governments don’t respond to the people anymore. No-one listened to Iraq protests, for example and they were very focused. So it’s an interesting debate. But I do think that they could have maybe stood a chance at getting some traction if they focused on one message and, you know, stuck to it.

18:13 BST: Here’s the full text of the communique, courtesy of the Guardian. There’s tonnes of details here…

18:10 BST: Oh and I forgot to add that hedge funds and other non-banking institutions will come under the aegis of this new Financial Stability board. Since the mysterious financing of hedge funds helped to exacerbate the mess, this is also good news; but again it all depends on how strong the regulation is…

18:05 BST: The headlines are focusing on the issues of tax havens and that $1 trillion figure, but there’s tonnes of other stuff that’s just as interesting. For example, there’s going to be a new Financial Stability Board that will work with the IMF to monitor the risk of banking transactions and impose limits on things like capital reserves and leverage requirements (not to mention executive bonuses.) This is absolutely crucial in getting the banks back on track and preventing such a crisis happening again, since it was an inherent failure in the banks’s ability to evaluate “systemic risk” that made the crisis so bad. This is pretty complicated and I’ll come back to this another time, but suffice to say it’s a good move – that is, as long as this new regulatory body actually has proper regulatory oversight.

17:54 BST: A timely article over at Foreign Policy discussing whether protests ever work. I agree with its basic conclusion: protests have to be unified and targeted; and focused on changing the system not overthrowing it. The G20 protests were none of these things and so I’m afraid that they’ve had absolutely no effect whatsoever.

17:46 BST: Did Sarkozy and Merkel get their victory? Or was there never any “victory” to begin with? Everyone was in agreement over the basic regulatory provisions. and had been for weeks. The real controversy-  over the possibility of national stimulus packages – was won by Merkel and Sarkozy weeks ago, and so it was no surprise to see no such provisions today. However, Sarkozy must be feeling pleased that the language on tax havens was quite fierce. In the big picture, it’s not really much of an issue, but he’ll make a big deal of it, which is fair enough…

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Check out this FT articleby Richard Milne in the FT’s “Future of Capitalism segment: Nordic model is ‘future of capitalism’

photo credit: Today is a good day

“The world should consider adopting the Nordic approach to capitalism and learn from the region’s response to its financial and economic crisis in the 1990s in the attempt to stave off recession, according to the chairman of two of Europe’s biggest companies.

Jorma Ollila, chairman of Nokia, the mobile phone maker, and oil major Royal Dutch Shell, said the Nordic style of capitalism was characterised by openness to globalisation balanced by strong government programmes to protect people from its excesses and an egalitarian education system.”

I’m a huge fan of the nordic model for Government, economics and to some extent even society.  The Scandinavian economies and even their welfare system have proved remakrably resilient in recent years, despite being targets for right-wing attacks (particulalrly in the US) and bizarrely O’Reilly feels Sweden is a nightmare communist state.

They’ve shown that globalisation need not be a negative as long as the state acts as a levelling tool, of course such engineering would be far harder in more economically diverse countries such as the UK and France, but in principles the direction is a positive one.

photo credit: JFabra

If you Read Ed’s article on the need for stimulus packages in Europe you may have come across a debate Ed and I had over the nature and merits of a stimulus. Regardless of which side you fell on, there were further issues at stake than just economics. Economists like to see their subject as a science: numerical and evidence based, rational and objective. No doubt,  many of their research tools are scientific but economics is also the backbone of the modern world and often not an end in itself, more a vehicle for achieving other ends.

As James Surowiecki argues in the Financial Page of the New Yorker, economics is by no means a science and as the recession draws on, we’re able to examine the cultural memories that can and do direct economic courses of action. From recessions and inflations, each country will have its own preferences and fears that alter the importance attached to different parts of the economy.

In the US, the focus has fallen on the stimulus package and Paul Krugman has made the case that europe should follow suite. He makes a convincing case for a European stimulus package, but is it correct to lampoon European economic policy and decision making as woefully inadequate or to equate US economic policy so readily with Europe? Well in some sense yes, it’ s perfectly fair, the rationale for the stimulus is not so difficult,  it could even lead to greater gains if correctly invested in infrastructure which could grow economies in the future, from transport to broadband aswell as tiding Europe over during a recession. In fact, many economists, (despite what many think) advocate deficit spending. They argue that if done correctly it will more than pay itself back through the higher tax-receipts of the economic growth it will yield.

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