The European Commission put a cost on its Green deal estimate. It’s €620 billion. The EC has allocated €82.5 billion. Guess what.
Unfunded Green New Deal
Hooray! the EU finally has an agreement on a Green New Deal. However, Eurointelligence reports the deal is largely unfunded.
If we had to pinpoint a single tragic error in the modern history of European integration, it is the moment sometime during the euro crisis when pro-Europeans gave up on eurobonds and a fiscal union. Instead, they adopted Angela Merkel as their new role model, the pragmatist-in-chief. What made their plight even more tragic was the mistaken idea that they were in possession of a clever and legally watertight funding mechanism, which gave rise to the Sure unemployment reinsurance programme, and later the recovery fund.
FAZ tells us this morning why this strategy is not working. The Commission has put a figure on the annual costs of the Green deal, a whopping €620bn. The Commission itself has only allocated €82.5bn towards this, via the social climate fund. You can add a few euros here and there from various other pots, but this is not going to come close. Thierry Breton wanted a debt-financed €350bn funds for green investments, to match the size of the US inflation reduction act. That would have done the heavy lifting. But this was killed off by member states.
When the EU launched the recovery fund in 2020 we expressed scepticism about whether it could form a blueprint for future lending. There is simply no consensus in the EU for a perpetuation of a financial instrument that is ultimately secured by the member states themselves. What is also not helping is that the financial markets are not bestowing top-notch valuations to EU-issued debt for the simple reason that it is not sovereign. You can package a bunch of mortgages into a collateral debt obligation. But you can’t repackage or reclassify sovereign debt. What characterises a sovereign borrower is the power to raise funds through taxes. For as long as the EU is reliant on the kindness of member states, it is not in a position to fund some of these giant programmes. What the EU needs, dare we say it, is the real thing: a eurobond. Or else, it has to admit that it cannot do as much as it wants, for lack of funds.
The Green deal is not the only unfunded programme. The project for a greater geopolitical role for the EU is in the same category. In addition, there is the cost of the reconstruction of Ukraine, which the Commission puts at €384bn a year.
Since there is no way they can fund this out of their own resources, we believe that more smoke-and-mirror tricks are on the way. No prizes for guessing where this will leave the substance of the Green deal.
The EU’s climate deal is 13 percent funded. How’s that going to work?
The Eurobond Idea Surfaces Again
Eurointelligence founder Wolfgang Münchau comments “What the EU needs, dare we say it, is the real thing: a eurobond.”
I disagree with most of Münchau’s ideas. He wants commingled budgets and a United States of Europe. Nonetheless, I like Münchau. He is very straight shooter. He also sees the issues and does not sugarcoat them.
The Euro is fatally flawed, and other than freedom of movement, the EU is mostly a failure. There are too many cultural differences, work rule discrepancies, productivity differences etc., for the Euro to ever smoothly work. The Italian banking system is insolvent and the Northern states led by Germany do not want to bail out Italy or Greece, neither of which belonged in the EU under budget rules anyway.
French president Emmanuel Macron wants a European army. Germany doesn’t. Why bother when the US is stupidly willing to pay for Europe’s defense with massive injections of cash and equipment to Ukraine while Germany did not lift a finger.
Germany does not fund NATO, will not fund an army, and will not pony up its share of €384 billion a year to reconstruct Ukraine. Germany will not lift a finger to help Southern Europe.
Attitudes Must Change First
EMU, the European Monetary Union, is an alliance of the 20 European states that belong to the European Union and have introduced a common currency, the euro.
Every one of those nations would have to agree to a eurobond. The unanimous agreement to change much of anything is in and of itself a fatal flaw in the construction of the Euro.
Meanwhile, one size does not fit all when it comes to interest rate policy, and it never will, until Italy, Germany, France, and Spain have similar work rules, legal systems, property rights, productivity, and tax structures.
The Euro founders thought that once the Euro was in place, attitudes would converge. They didn’t and won’t. France has veto power over agricultural policy and that won’t change either.
Curiously, this idea came up yesterday regrading a BRIC alliance. I bet most failed to spot it. Let’s take a look.
More Gold Backed BRIC Currency Silliness on Dethroning the Dollar
Please consider, or reconsider my post yesterday, More Gold Backed BRIC Currency Silliness on Dethroning the Dollar
Thorsten Polleit, chief economist at Degussa, told Kitco, “For making the new currency as good as gold, a truly sound currency, it must be convertible into gold on demand. I am not sure whether this is what Brazil, Russia, India, China and South Africa have in mind.”
Marc Chandler, managing director of Bannockburn Global Forex, told Kitco “Talk of BRICS gold backed currency seems like an echo chamber. They do not have the gold to back a currency meaningfully. Have we not learned anything from the EMU experience of monetary union without fiscal union. Color me profoundly skeptical.“
What precisely do Brazil, Russia, India, and China have in common other than a desire to escape the dollar?
BRIC Expansion List
Bloomberg reports the BRIC Expansion List is now up to 19.
South Africa joined in 2010. That was sure meaningful, wasn’t it?
Saudi Arabia and Iran have formally asked to join. Other nations expressing interest include Argentina, the United Arab Emirates, Algeria, Egypt, Bahrain and Indonesia, along with two undisclosed nations from East Africa and one from West Africa.
Perhaps they can concoct a way to avoid SWIFT, a dollar payment construct that makes it difficult to avoid US sanctions. If so, I will cheer, and that will be useful. But the EU announced such plans and failed.
US dollar use will decline naturally if and when emerging markets finally emerge, and BRICs won’t have much to do with it. It will simply be more cross border trading.
As for dethroning the dollar, I have to laugh. Egypt and undisclosed nations in Africa do not matter. How many times has Argentina defaulted?
How much do any of these nations trade with each other?
That’s a trick question because nations don’t trade, individuals do.
Yet, the recent announcement from Russia mentioned a “trading currency“. What does that even mean?
Let’s see the details on how this will work in practice, whether the currency is convertible on demand, how much gold backing there is, and who gets to use it.
Expect to be underwhelmed, but expect more hype anyway. Hype is sexy. So is predicting the collapse of the dollar.
With that, let’s return to the headline theme.
The Ever Growing Trillions of Dollars Per Year Demands to Fight Climate Change
Please note the The Ever Growing Trillions of Dollars Per Year Demands to Fight Climate Change
- An expert group under the auspice of the UN estimates that investments have to reach the order of $1 trillion per year until 2030 to respond to the climate and biodiversity crisis.
- Oxfam estimated that $3.9 trillion per year will be needed over the same time period to fight poverty, inequality and climate change.
- The World bank estimated that it takes $4 trillion per year to build the infrastructure for this.
That’s a mere $8.9 trillion per per year until 2030, a 7-year cost of $62.3 trillion. Who will fund that?
Germany Turns Against Green New Deal
Also recall my May 23, Germany is Turning Against the EU’s Green New Deal, Common Sense to the Forefront
Absent a Eurobond, don’t expect 20 nations that have little in common other than proximity to do much of anything in a united way.
The same applies to the BRICs who do not even have proximity in common other than Russia, India, and China.
RIC anyone? RIC bonds? Gold-backed RIC bonds when the yuan doesn’t even float and none of the countries have much of any bond market? What a hoot.
“That’s a mere $8.9 trillion per per year until 2030, a 7-year cost of $62.3 trillion. Who will fund that?”
You are correct that the chances that it will get funded don’t look good. Which means, it’s worthwhile to operate under the assumption that it won’t, crops will fail due to climate change, and international trade will fall into the abyss because people will have some rather strong opinions about the fair price of food. Which may be exactly why BRICS want to create an alternative currency. That doesn’t mean that they are planning a monetary union, though. What I read is that they plan a currency for international transactions, separate from national currencies. I suppose that would allow each country to choose how much international trade they think it’s in their interests to engage in. I don’t know an awful lot about international trade, but it seems to me that something backed by some sort of basket of commodities has some realistic chances of working.
Thank God for the Atlantic Ocean, the Pacific Ocean and the US NAVY.
10 yrs Germany green energy fail !
Now you know what Ukraine war is about .
Get Putin out … replace with green globalist .. cheap oil and gas for EU and German manufacturers ( nation building in grand fashion )
link to energy-charts.info
It’s no different from the story of AI, of “self driving cars”, of battery cars “taking over”, of “boring companies”, of……….
There’s not enough real resources available; by an multiple-orders-of-magnitude long shot; for any of them to be any more than just childish pipe dreams sold to gullible idiots too dumb to know better.
Think of it as a second moment of money printing and financalization: Once you hand all wealth and resources to idiots dumb enough to believe one can “make money” off a decaying shack, or a stack of randomly priced paper: You by definition also hand all wealth and money; hence influence over “policy” as well as (public and private) resource allocation/”investment”; to idiots liable to blindly believe in any other trivially obvious idiocy as well.
Hence, trivially obvious idiocies are where all scarce resources are directed. which is another way of saying: All resources are simply wasted. Such that less and less of them are available, year in, year out. All while the idiots keep mindlessly regurgitating ever more of the ever more crazy pie-in-the-sky nonsense harebrained hucksters keep telling them. “Cause, like, the retarded three year old over there, who is, like, a trillionaire and, like stuff, is, like, inveeesting money the Fed handed him in it and, like, stuff!!!”
All while in the real world, cars were perfected by 1990, there are about 8 billion of even just human intelligences (plus about a quadrillion quadrillion other species….) vastly more intelligent, in any general sense, than any computer coming out over the next ten milennia will be. And lighter clothing, and/or moving some miles further away from the Equator, solves any possible problematic “warming” just fine. Of course, in the real world, people, nor animals nor plants, still aren’t leaving Florida for Maine in any large numbers…. It no doubt takes a genuine “I made money from all the value the fungi in my ‘home’s’ wall created” level third rater, to observe a planet where near all lifeforms are hugging the warmest band around the equator, and then conclude that a few degrees of warming would be some sort of systemic “problem.” But hey: #Dumbage.
ha ha ha. great and proper rant. hat tip. pax amerika is an empire of douche baggery and dumbfuckery.
of course nations trade. weapons for starters. also commodities. off topic a bit, but study how herbert hoover saved millions from famine in russia and ukraine.
“That’s a trick question because nations don’t trade, individuals do.”
That’s a silly answer because when individuals trade, they have to do it while following the trade rules of one or more countries.
of course nations trade. weapons for starters. also commodities. off topic a bit, but study how herbert hoover saved millions from famine in russia and ukraine.
Test
“…. There are too many cultural differences, work rule discrepancies, productivity differences etc., for the Euro to ever smoothly work….”
LMAO. I gave this ‘lecture’ way back in the early 90s, citing exactly those differences. The reaction verged on ridicule, which really didn’t surprise me–it was the dark ages of critical thinking–the hardest values/beliefs to change are those pertaining to nationalism and religion, and Europe was loaded with both. If I remember correctly, I think I gave the EU 10 years. I was off by a decade or so–it should’ve failed with Greece.
People have been predicting the end of the EU for as long as I remember. They have also been predicting and end to the Euro since the beginning yet both are still there. How do you explain that?
Um,well, see… that the US Fed had to bail out European banks in ’08 pretty answers that, I think.
No it doesn’t answer it at all. The Fed above all bailed out US banks and insurance companies . Those same banks were the origin of the subprime loans that caused the problems in the first place so you can’t say they “saved” European banks. The ECB opened lines of credit to the European banks to keep them going under also.
You didn’t answer the question.
poppy cock. EU has been wildly successful. those savages in europe have had the greatest amount of peace and cross border trading of people and goods and services on their continent in their enitire couple of thousand year history. EU is a success. i vote there and usa. it’s like USA was originally. an confederation of states. the smartest ones were the italians and greeks who got to throw their trash money into the euro. the greatest financial swindle of 20th century. but alas the EU still worked. the french and germans in particular did not want another century of of total warfare. us europeans are savages. the EU has calmed the savages for now. let’s pray to the Roman God Jupiter it lasts another 50 to 500 years.
I agree. It is a great success. The fact that we all find reasons to complain about it doesn’t take away from its accomplishments.
no world wars since UN and EU. just pax amerika bombing poorest lands from indochina to libya………..
Good news. The whole green new deal is a scam. Believers are mostly brain dead.
to say that Italian banks are insolvent does not seem correct to me
correct. all banks are insolvent when they have runs. this is economics 101.
The Us pours resources into Ukraine because it guaranteed Ukrainian sovereignty in exchange for the surrender of Ukrainian nuclear weapons
Then Vlad the impaler invaded sovereign Ukraine.
Not that difficult; really
In 2014 Putin invaded Ukrainian Crimea and got away scot free. It worked so well he tried it again. The difference is USA special forces began training the Army of Ukraine in the art of war in 2014. By February 2022 Ukraine had the biggest baddest army in all of Europe. So Russia with a GNP of $1.5 trillion entered existential war with the civilized world’s $30 trillion GNP. This existential war will be the end of Russia.
Wrong. This will be the end of Europe. Germany is already in a bad recession. And the other European countries are slipping into it.
Longer term, this will be the death knell of everything good that western European countries have, in terms of health care, transportation infrastructure, civic services, social programs and on and on.
You have sipped too deeply of the koolaid my friend. IF you want the straight truth, check out Col Douglas MacGregor as well as Scott Ritter on YT. Despite western propaganda which is needed in order to continue funding the military industrial complex sending weapons into the proxy war, Russia is snuffing Ukraine. Russian economy is in full steam and the ruble is stronger than before Brandon tried to kill Russia with sanctions. These are the truths. What you are spewing is liberal fantasy. Don’t shoot the messenger. We told you not to vax as well.
That’s what it comes down to. Nuclear proliferation. Ukraine and the other ex-provinces of the Soviet Union gave up by treaty with Russia, the US and the UK their nuclear weapons in exchange of a guarantee of their borders. It was saying that by giving these very dangerous weapons we are trusting Russia not to invade us and if they do then the US and UK as signatories would come to Ukraine’s aid. If Russia wins then you can bet every country that can will build nuclear weapons to protect themselves. Nuclear weapons are easy to make and getting easier by the day with modern techniques. We now have eight countries with nuclear weapons. How would you like a world with twenty more nuclear powers? If North Korea can build them a lot of countries can.
Technically if we gave every country nuclear weapons there would be no more war 🙂
Who really cares how many countries have them. You can do just as much damage with conventional weapons as you can with nukes. It’s only nukes on ICBMs that really worries everyone.
What about non-state actors? You trust them too?
i like actors. i’m a thespian, amateur of course. actors are peaceful. the real idiots go to war.
There may be a bit more to it than that simplistic neocon view the politburo feeds to their good little trusting sheep. link to lewrockwell.com
“Vlad” and the US are both turning Eastern Ukraine into a wasteland for exactly the same reason: Neither posess anything else of relevance to anyone anymore, than an overgrown military and weapons industry, left over from back in the Cold War, when the two of them mattered.
Desperately seeking to stay in the limelight and retain some illusion of importance: They both do the only thing they have the ability to do anymore: Invade and bomb other other places, in order to fool their illiterate homegrown indoctrinati, into believing they are still some sort of useful countries. Both of them doing so under one silly pretext of “saving” someone from “terrorists” and “Nazis”, or another.
100% correct assessment. pax amerika is crumbling empire. just like USSR crumbled and rebuilt to old russia with a new Czar. pax amerika is a democracy. democracies work. for past 2500 years since greeks invented it. warmongering nihilists elect themselves. biden and trump both war mongering nihilists. it’s really not any more complicated than that. crumbling nasty empire 101. anthropology 101. now they are just stealing the money live on youtube.
The only purpose of allocating $82B when 8x more is needed is corruption.
The UN says it needs $8.9T a year.
8.9 trillion a year. Is that some kind of a record for a financial fraud?
And alcoholics need one more bottle. The quality of judgement is roughly the same, but not every alcoholic is a sociopath.
I sense that people will soon begin building the gallows.