Friday, December 15, 2006

REACH for the sky (and it will cost the earth)

This is an imperfect world in which we live and, in a reflection of this reality, the blogosphere also has its fair share of ridiculous, preening amateurs who make me knash my teeth in frustration. Few embody this principle, along with a monumental inability to see reason and a mind corrupted by socialism, as The Ever Blessed And Frangrant* Margot Wallstrom.

Today, TEBAF Margot has seen fit to communicate, to we poor serfs, her lofty thoughts upon a subject on monumental importance.

A deal is REACHed!

Good god! What can it be? Have we just discovered how to manipulate an Einstein-Rosen Bridge? Discovered a fail-safe cure for cancer? No, nothing so beneficial. Naturally.
Finally we will have new European legislation on chemicals, replacing around 40 existing directives. It has been a long, winding road with intensive lobbying, tough negotiations and strong reactions also from other parts of the world. It is a compromise, for sure (see my previous post on this). But the most important is: COMPARED WITH TODAY‘S SITUATION
  • it will improve our knowledge about the thousands of chemicals that we use every day,

  • we reverse the burden of proof : from public authorities having to prove that a chemical is dangerous to producers having to provide information, test and hopefully prove that it is NOT dangerous or that we can manage the risks

  • we raise the level of protection for human health and the environment

  • we have created incentives and signals to industry to gather more information and test their chemical products

  • substitution of the most hazardous substances will start.

It should come as no surprise to anyone that I think that Wallstrom is one of the stupidest and most vacuous people on the planet; it is typical of the woman's almost coy idiocy that she should not actually detail what the REACH Directive actually comprises. Margot is, after all, only the Commissioner in charge of communicating the EU's benefits to we serfs: one can hardly expect her to explain REACH in any concrete terms.

Never mind, for our very own Tim Worstall spelt out the implications some time ago.
Two chemicals, in a formulation, yes, pretty sure this would be covered under REACH. Value? $80,000 or so. Cost of testing? $100,000 or so. It’s difficult to see how doubling the cost of experimenting with alloys moves us closer to the goals of the Lisbon Agenda, the creation of the most innovative economy in the world.

Quite. But it gets worse.
It does, of course, as with everything in this nightmare being built for us, get worse. At various times over the research program we have shipped slightly different formulations, 1% scandium, 10% scandium and are toying with the idea of a 5% scandium product. Different combinations of chemicals there, so Kachingg! another $100,000 each to be spent under the new, upcoming system, for which of course we have to thank Ms. Wallstrom.

More. We are also part of a group (including again Airbus, also QinetiQ, UMIST, Oxford University and others) looking at whether these scandium containing alloys will help make aluminium easier to weld. It’s an area where the research being done in Europe is well ahead of that in other regions. The end aim is to be able to weld aircraft fuselages, saving some 10% of the weight of each aircraft. A huge benefit not just for manufacturers but also reducing fuel consumption immensely.

Now, the kicker here is that there are many more variations of the welding rods possible, desired. There are formulations with 2.2% scandium, 1.8%, others with 1% copper, 0.5% magnesium, all with slightly different properties and thus all likely to be used in future. In fact, at least 10 likely variations. Oops! that’s a cool million $ just for the welding rods, for of course all of these are different formulations of chemicals and so all need to be tested under REACH.

This is a stunning amount of money and if TEBAF Margot thinks that this is, in some way, going to benefit EU consumers, then she is even stupider than I thought (and this would be something of an achievement).
The cost of the testing of new chemicals and formulations, combinations of them, is what has been added up. What has not been even noticed is the costs of all the new formulations that will not be made, as the costs of testing them are vastly greater than the resources available to do so. It is small companies that drive economies, create most of the new jobs, do most of the innovating, people setting up with a bright idea on a string and a prayer, and imposing a cost of $100,000 on each and every one of these will mean that tens of thousands, hundreds of thousands of ideas, are never pursued, not really quite the way in which we should be striving towards the goals of the Lisbon Agenda now is it?

Exactly so. You see, the way that we have generally regulated chemicals is by the simple expedient of the market: if a company poisons its customers, it is not going to keep those customers very long. We have also relied on some government regulation but it is important to realise that we have, generally speaking, allowed chemicals to go to market unless they are proven to be dangerous.

What REACH does is to assume that all chemicals are dangerous (and, by extension, that all companies are keen on harming their customers) unless proven otherwise.

This is, of course, an interesting reflection of the differing legal systems employed on the continent. Generally speaking, under British Common Law code, people are allowed to do anything as long as it is not specifically forbidden; under the Roman legal system (employed by, for instance, France), you are not allowed to do anything unless it is officially sanctioned by the law.

And the effect of this legislation? Well, job losses are inevitable, of course.
Research conducted by the UEAMPE, which represents SME's in Europe, suggest as many as 150 000 jobs could be lost to the German chemicals industry with a knock-on effect on the livelihoods of 1.25 million workers in related industries.

And don't forget all of those beneficial chemicals that will not now be developed (or, at least, not in the EU); and, of course, REACH applies to any imported goods too.

Thank you, Margot; really good work on that one.

Naturally, it almost goes without saying that our spineless, useless media have not bothered to consider the implications.

* © Tim Worstall, for which we give thanks.

Thursday, December 14, 2006

Hedging your bets

From The Sprout, 2006

It has been a few weeks now since I packed up my belongings, tidied the office and hired the help of a very cheap removal company (my dad) to bring my shoes and I away from the mother ship and back to the motherland. Whilst I may have saved myself from ever attending another Economic and Monetary Affairs Committee meeting, I still find myself surrounded by people who talk much, but know very little it seems, about economics. Maybe that was inevitable, though, with the new office being so close to the UK Treasury, and that prize buffoon, Gordon Brown.

Aforementioned removal company was very happy back in May, having invested a fair bit in gold. Maybe that’s why he was feeling benevolent enough to drive over 200 miles with a stiletto heel sticking in his ear and limited vision. Come to think of it, quite a few people I knew had taken the time to invest in the shiny haven of last resort, sometime around early part of this millennium, and combined this with the intelligence to hang on to it for a while. Odd, then, that whilst these normal folk can grasp supply and demand, our Chancellor of the Exchequer is still learning from the Fisher PriceTM easy learning guide to buying and selling.

Just in case you’re a little short of time, Gordon, let me summarise the basics for you. Firstly, gold, however much politicians like it or not, will always be purchased, especially in times of uncertainty and instability. Secondly, the price of gold goes up and down depending on demand and supply. The idea is to buy when cheap and sell when the price is high. This is one way of getting some cash in your coffers and it doesn’t include taxing people to buggery.

Thirdly, if you announce when the price of gold is already low that you are going to sell 60% of the United Kingdom’s gold reserves, it’s going to mean yet more people will sell ahead of the inevitable drop in price once a large amount of gold is sold back onto the market. Once they’ve sold theirs, the price drops even more! And here’s the golden (excuse the pun) rule: once you’ve announced you’re going to sell, don’t then wait a few weeks and sell gold which essentially belongs to more people than just you at a 20-year-low. But hey, you’re the Chancellor of the Exchequer, I’m just a girl with a few letters after her name: there’s no way you’d ever make that mistake! I mean, if you had waited just a few years, then you could have raised ₤4bn which would have gone down nicely at a time when the tax burden has risen from 39.3% of income in 1997 to 42.4% right now.

Drifting my mind back across The Channel, I am reminded of yet another economic retard. Step forward Mr Jo Leinen MEP: socialist and German so we can probably guess he’s not well up there with the liberal market economy. Mr Leinen, who studied half an economics degree during the 1970s, when people were convinced that Keynesian demand management actually works, happens to think that people in Europe shouldn’t have anything to do with hedge funds, because they are an ‘alien concept in Europe.’ That’s not strictly true, actually, Mr Leinen, any more than the IS-LM curve is.

Assets under management of the hedge fund industry totalled $1.13 trillion at the end of 2005. This was up 13% on 2004 and almost 50% on three years ago. Between 2006 and 2008 assets are expected to grow by 15%. So for a new idea, it’s doing pretty well. About 2/3 of hedge funds are managed offshore in the Caymen Islands, British Virgin Islands or Bermuda. The biggest onshore collection is in the USA, with 34% of funds and 24% of assets. London is Europe’s leading centre for hedge fund management, with three quarters of European hedge fund investment, ₤300bn, managed within the UK.

So whilst we may be lagging behind the USA, the UK at least is doing pretty well at hedge funds. It’s actually making money, which is more than can be said for the eurozone which is once again trailing behind not only the other EU countries in terms of economic growth, but also behind the English speaking world. In a time of economic uncertainty, do we really need MEPs who cannot differentiate between a continent of countries and a political union to be giving us money-making tips?

That they are lightly regulated makes them an alien concept to the European Union, but not to all countries in Europe. That they make money, instead of grasping it out of the hands of people who won’t waste it makes them an alien concept to the EU, but not Europe – the Continent which threw the world into the industrial revolution and thus global development. That Herr Leinen is not worth listening to is an alien concept to the EU, but not Europe, whose electorate chose to send him to the European Parliament where at least he won’t have any actual power.

Tuesday, December 12, 2006

Capital Inadequacy Requirements

From The Sprout, 25th May 2006

This month has seen my desk covered in even more paper than usual: not just a symbol of my inability to tidy up, but the consequences of the Economics and Monetary Affairs committee having a legislative equivalent of diaorrhea. I have been hiding away in fear from one particular report, but even my chronic messiness has been unable to stop the corners of the document peeking out, teasing me with its terminal bulkiness.

Even if I did have the inclination to read and digest all these reports, how would it help? Whilst I did manage to graduate with an economics degree, attending lectures places irritatingly in the way of my social life, am I really qualified to pass judgement on the Directive for Markets in Financial Instruments? And if I am struggling to get to grips with it, assisted ably by people who work in the industry, then surely people who have never studied or worked in the financial industry must be having an even harder time of it?

Unless, of course, it is not them making the decisions: Never underestimate the vanity of a politician, after all. I heard word that the author of the Capital Adequacy Requirement, when questioned about who the Commission had stipulated to be the lender of last resort, answered that the questioner just 'didn't understand it'. Maybe not, but at least they understood enough to see the fundamental flaw in the intended legislation, and even more so, they had realised that the European Parliament should not be having an input into such complicated and important decisions.

Why and how, then, are MEPs going to make a fully informed decision with no experience? The answer, I suspect, is that they are not. Rather like 'pork pie' syndrome in the North of England and 'hat stand syndrome' in the South, they will vote for it because it is there, because it supports more powers to the Commission, and further harmonisation of the European Financial Markets.

Is this creep towards a single European Financial Regulator necessarily a 'bad thing'? In such complicated markets, shouldn't there be some kind of consumer protection? Someone to make sure that the money men don't screw little old ladies into investing all of their pension funds into projects that are never going to work: the Lisbon Agenda, for example?

Except that the FSA in the UK already does that, along with similar bodies worldwide in different countries. However complicated and diverse financial markets are, from Fund managements to Futures, Banking to Bonds, what we are really seeing is politics in action: using the compliant European Parliament to shoe horn in legislation which doesn't have anything in mind except to force together the countries of Europe into a political unit.

And what better way to do it than with the purse strings? If the Parliament can reject amendments reminding them that the French and Dutch voted 'no' to the defeated European Constitution then they can have no scruples in voting in legislation which will over regulate and over burden one of the only European industries which is still competitive. Clearly, they are risk averse.

The Lisbon Agenda seeks to promote 'more and better jobs' in Europe: MiFID will certainly produce more jobs, but does the world need more compliance officers? These bureaucrats in our midst, appointed to board positions in companies so the decision makers can concentrate on the real task of more and better jobs by making money, exist because of the unnecessary complications of regulation. This additional, strangling regulation is not necessary to the proper function of financial markets. The Euroelite burrowing away in the many buildings in Brussels cannot contemplate that their work is not needed.

The Commission, as with the new breed of career politicians, finds this a bitter pill to swallow.

Unsupported Economics in the Eurozone

From The Sprout, 15th April 2006

We are used to hearing about the hypocrisy of the EU: Glenys Kinnock and the Development committee cantering in on their white horses, promising to eradicate global poverty by next Thursday if we all attend their cheese-dip reception for 'lesbian equality officers in Africa'.

Yet when it comes to a real issue of development we all seem to follow Lady G's despondency: spending 43% of the EU budget on the CAP is just 'one of those things', like being Welsh.

But it's the shallow, token gestures which makes me reach for the puke bucket, which eclipses any prejudice I can harbour against MEPs who use 'poverty' as a stage for self promotion.

The parliament itself has now found one way of combating this imbalance by selling Oxfam 'fair trade' juice in its subsidised cafeteria. If I was a dairy farmer in the developing world, trying to survive when EU and US dairy subsidies keep world prices 34% lower than they should be, I would be grateful that three people a week were buying my products rather than getting to the crux of the issue.

We saw in Hong Kong how little the EU is prepared to give when it comes to its protectionist trade policies, so when will people realise that the EU is all talk and no action, and that if we really want to help development, countries like the UK and Germany need to claim back their own trade policy?

Another astounding report crossed my desk today in the form of the preparatory report on the broad economic policy guidelines for 2006. The summit in Brussels at the end of March had on the top of its agenda the Lisbon strategy to promote growth and jobs.

This is a good issue to be concerned about, when unemployment in the EU averages about 9%, a figure covering a multitude of sins from countries like Poland, with unemployment rates of 17.8% in 2005, and Slovakia at 15.5%. Growth forecasts are no better, with the French economy limping along at 1.4% and the whole of the eurozone weighing in at a retarded 1.9% for 2005.

So what is the conclusion of the European Parliament in trying to solve these issues? Are they going to realise that the Lisbon Agenda is in fact the 'Washington Consensus' in Europe?

Are they ever.

They are pinning their hopes to a ratification of the Constitution so they can fully harmonise the economies of the EU and, in their eyes, eradicate the competition which they see as causing the problems.

But the Parliament almost has a sexual obsession with tax competition, with grey-suited Christian Democrats and socialists alike all too happy to gang-bang the free-market model. They drone on like sullen lovers, pleading for the EU to adopt a 'competence' in tax matters, a uniform definition of tax residence, the harmonised base rate and of course, a new Euro tax to help stop the squabbles over the EU budget.

I wonder how Ireland feels about this: its low rates of corporation tax it has seen a huge increase in the presence of multinational companies and has predicted growth rates of 5% in 2006 and 4.9% in 2007. The Baltic tigers who embraced the flat tax model after their escape from the jaws of Communism have seen their economies soar and major corporations shift their investments away from Western Europe to these young, more streamlined economies. How is that an illustration that tax competition is such a repulsive notion?

My conclusion is that it highlights the utter failure of the European Social Model, of protectionism and of the endless pursuit of the 'level playing field': it illustrates that EU countries governing themselves succeed much more than countries forced together in this European Union that we have today. The subsidised juice is merely a symptom of our own short-coming, a fantasy - not unlike banks and bourses being able to compete in a market laden by the technocrats tinkering.

Lisbon agenda? What a squeeze!

Friday, December 8, 2006

Günter Verheugen: get your spheres out for the lads!

Trixy is enjoying her double entendres this morning!

The German Commissioner, Günter Verheugen, has been snapped frolicking on a nudist beach with his newly promoted aide.

[W]hat really got me and made me laugh until my colleague had to hit me over the head with a copy of Vacher's quarterly were the comments by José Manuel Barroso, President of the European Soviet:
José Manuel Barroso, President of the European Commission, rushed to the aid of his German Vice-President yesterday, saying that he expected “people’s private spheres” to be respected.

And which 'spheres' might they be, Mr Barroso?

Get 'em out, lads! The surf's up and the secretaries amenable!

It must be lovely working for the EU, eh?

Thursday, December 7, 2006

Dave makes it up

I just posted a coment over at Tory diary, it appears they all fell for the hype created by CCO's press office.
Talking to people who were a the meeting he said few of those things that were flagged up. No "culture of hopelessness" no going on about how the Tory MEPs were going to become an engine of change. And no row about EPP membership, despite the prescence of Helmer, Hannan etc. Indeed from what I understand the meeting was hijacked by the more pro-EPP members going on about how enormously influential they were.
"I got this rapporteurship because of our links with the EPP". "I served on that Committee because of my alliance with a big group".
One comment I heard was, "All you could see of Timothy was the soles of his feet", so sycophantic he was to Dave.

After an hour of this Cameron left fast and got out of the Parliament, having made it clear that he did not want any photographs in the Parliament.

He went straight to the European Eco House where he hob-nobbed with Prince Laurent of the Belgians, no doubt discussung the right way to fix a windmill to his roof. Then on to the Commission where he held short metings with a few Commissioners. Mandleson, Trade (entirely EU competence) Dimas, Environment (also EU competence, maybe he boasted about how the New Tories were going to support the Reach chemical directive) and Barroso for a courtesy call.

My favourite snippet from the day was his press conference. In fact it was a brief meeting with a selected group of British hacks for 15 minutes in a hotel coffee shop by the Commission building. As one of them put it to me, "that'll be 3 questions, with no follow up - not sure if I can be bothered, I can always get the story from somebody else".

Wednesday, December 6, 2006

So why on earth do you mention it then?

"2.8.2. The law of succession and wills in Romano-Germanic legal systems has long been marked by attitudes towards inheritance that are extremely outdated in many respects. The deceased's1 estate was considered to represent a form of continuity through one’s heirs".

This little peach can be found here, the European Economic and Social Committee's responseto moves towards creating a single system of inheritance. And where is my problem. Well apart from the philosophical issue about what inheritance actually is, and I have to say that I believe that the idea that an estate does indeed provide continuity through one's heirs, particularly if one is fortunate to inherit an estate that is indeed an estate, nothing.

Well until you read the footnote referred to,
"1 Footnote not necessary in English text".

Some poor blighter had to type that in.

Welcome to The EU-Nihilist

Here at The EU-Nihilist, we hope to bring together as much information about the mendacity of the European Union as possible into one place. More importantly, we hope to solicit essays and posts from as many EUnihilist and EUsceptic bloggers as possible.

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