The Complexity of Islamic Movements

Beware of the Islamist trap

By Monte Palmer 

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing. Islamists, judging by the use of the term in the global press, is a simplified way of referring to all Muslim groups seeking some form of Islamic rule in the Middle East. 

Like most simplistic expressions, "Islamist," is laden with hidden traps. The first Islamist trap is believing that all Muslim groups seeking some form of Islamic rule in the Middle East are of one mind and body. They are not. The second Islamist trap is assuming that all groups seeking some form of Islamist rule are inherently hostile to the interests of the United States and its allies. Some are, and some are not. The third Islamist trap is thinking that the US and its allies can stop the Islamist surge now sweeping the Middle East by diplomacy, sanctions, and covert action. The verdict on this supposition has yet to be rendered, but the outlook is not promising. The fourth and most lethal Islamist trap is the belief that force alone can stop the Islamists. Iraq and Afghanistan suggest otherwise. 

The dangers of assuming that all Islamists are the same is easily illustrated by a brief review of the four main Sunni Islamist currents competing for control of the Middle East. 

Islam lite 
The most liberal of the four main Islamist currents is Islam Lite, the sarcastic Turkish nickname for the Justice and Development Party that has ruled Turkey within a secular framework for more than a decade. Islam Lite, the most forward looking of the four Islamic currents, has built Turkey into the world's seventeenth largest economy, consolidated Turkish democracy, brought Turkey to the doorstep of membership in the European Union, reaffirmed Turkey membership in the North Atlantic Treaty Organization and established Turkey as the dominant Muslim power in the Middle East and beyond. 

The Doctrine of "Unequal Exchange"

The Last Refuge of Modern Socialism?

By Anthony de Jasay

Socialist intellectuals squirm when reminded of such basic tenets of Marxist economics as surplus value, the iron law of wages and the declining rate of profit, tenets that were sacred in the glory days of advancing socialism but that are now kept under glass in the museum of strange ideas.

While the old stuffing of Marxist economics has been knocked out of socialism, two major attempts have been made to replace it with some alternative intellectual content. One was to upgrade the vague and emotional notion of "social justice", and underpin it with the idea that since "veils" of ignorance or uncertainty hide the future, the rational individual must opt for an egalitarian social order for his own safety ("society as mutual insurance").

It was then the obvious move to infiltrate the redistributive demands of "social justice" into the capitalist system which may in other respects remain intact. Germs of this attempt can be traced back to mid-19th century English thought. It came to full flowering after World War II in the American brand of liberalism and in European social democracy. However, as a positive theory it is feeble. It needs bolstering by normative judgments condemning inequalities except if morally justified. But if we accept these judgments anyway, then we can safely throw away the theory. It is redundant and cannot salvage socialism's intellectual respectability.

Are We Doomed No Matter Who Wins?

At first glance it certainly appears that way

By Michael M. Rosen

With Friday’s jobs report confirming the weakness of our economic recovery, the fiscal cliff rapidly coming into view, and American influence abroad continuing to erode, someone has to ask: is America doomed no matter who wins the presidential election?

At first glance it certainly appears that way.

Let’s begin by assuming that Mitt Romney ekes out a victory, winning the national popular vote by a point or two and capturing 275 electoral votes or thereabout. If Romney prevails — and I fervently hope he does — it will most likely be by slim margins such as these.

Let’s also assume that Republicans pick up a few seats in the Senate, probably not enough to retake the majority — even with a Vice President Paul Ryan casting a decisive 51st vote — but enough of a gain to render the upper chamber evenly divided, or nearly so. This, too, is the most plausible outcome, as GOP hopes to win the chamber outright have foundered on the shoals of ill-considered remarks by candidates in Missouri and Indiana, among other misfortunes.

And finally, let’s assume the House remains in Republican hands, with slightly diminished numbers, on the order of five seats lost to Democratic challengers. This, too, seems like the most likely result, as recent wild swings in congressional control appear to have calmed this cycle.

America Gone Wild

The are good news and bad news

By JIM STERBA

This year, Princeton, N.J., has hired sharpshooters to cull 250 deer from the town's herd of 550 over the winter. The cost: $58,700. Columbia, S.C., is spending $1 million to rid its drainage systems of beavers and their dams. The 2009 "miracle on the Hudson," when US Airways flight 1549 had to make an emergency landing after its engines ingested Canada geese, saved 155 passengers and crew, but the $60 million A320 Airbus was a complete loss. In the U.S., the total cost of wildlife damage to crops, landscaping and infrastructure now exceeds $28 billion a year ($1.5 billion from deer-vehicle crashes alone), according to Michael Conover of Utah State University, who monitors conflicts between people and wildlife.

Those conflicts often pit neighbor against neighbor. After a small dog in Wheaton, Ill., was mauled by a coyote and had to be euthanized, officials hired a nuisance wildlife mitigation company. Its operator killed four coyotes and got voice-mail death threats. A brick was tossed through a city official's window, city-council members were peppered with threatening emails and letters, and the FBI was called in. After Princeton began culling deer 12 years ago, someone splattered the mayor's car with deer innards.

Welcome to the nature wars, in which Americans fight each other over too much of a good thing—expanding wildlife populations produced by our conservation and environmental successes. We now routinely encounter wild birds and animals that our parents and grandparents rarely saw. As their numbers have grown, wild creatures have spread far beyond their historic ranges into new habitats, including ours. It is very likely that in the eastern United States today more people live in closer proximity to more wildlife than anywhere on Earth at any time in history.

Social engineering trumps aesthetics

Ancient and/or Modern

by Theodore Dalrymple 

To believe or trust in the wisdom of crowds just because crowds are composed of many people and two heads are better than one seems to me absurd; but equally it is wrong to reject an opinion merely because it is held by a crowd. We are condemned, or privileged, or both, constantly to have to make up our own minds about things: to be nonjudgmental, as the cant word has it, means not to participate fully in or of human life. And what most people probably mean when they describe themselves (almost always in a self-congratulatory way) as being nonjudgmental is that they are uncensorious – other than about people who are censorious, of course. An inadequate vocabulary can be pregnant with consequences.

An article in the French leftish-liberal newspaper, Le Monde, for 15 September, drew attention with evident unease or even mild disapproval to the results of a poll conducted in France by the fine arts magazine, Beaux Arts. To the question of whether it is more important to safeguard the treasures of the past or to promote creativity, the respondents replied by a very large majority that the former is the more important. The article implied that, pacethe advertisement, forty million Frenchman can be wrong.

Of course, France is in a slightly unusual position by comparison with many other countries. It is by far the most visited country in the world, with 70 million tourists annually; more than twice as many Frenchmen now live by tourism as by agriculture. And it isn’t French modernity that people come to see: it is the French past (together, of course, with the pleasures, comforts and conveniences of the present, in which the country is by no means deficient).     

But I doubt very much that those who answered the poll were thinking of their pocketbooks or economic interests as they answered. They were thinking of their country; and if I had been asked I would have answered in the same way.

Who Needs a President?

The Founders’ greatest error

By BILL KAUFFMAN

No matter which hollow man occupies the bunker at 1600 Pennsylvania Avenue, the evidence from 225 years points to an inescapable conclusion: the Founders erred horribly in creating the presidency. To invest in one man quasi-kingly powers over the 13 states then, 300 million people and half a continent today, is madness. And it didn’t have to be this way.

Many Anti-Federalists proposed, as an alternative to what they called the “president-general,” either a plural executive—two or more men sharing the office, a recipe for what a sage once called a wise and masterly inactivity—or they wanted no executive at all. Federal affairs would be so limited in scope that they could be performed competently and without aggrandizement by a unicameral legislature—that is, one house of Congress—as well as various administrative departments and perhaps a federal judiciary.

The New Jersey Plan, fathered by William Paterson of the Springsteen State, was the small-f federal option at the Constitutional Convention. It is the great decentralist what-might-have-been. The New Jersey Plan provided for a unicameral Congress with an equal vote for each state, and copresidents chosen by Congress for a single fixed term and removable by Congress if so directed by a majority of state governors.

This would have saved us from the cult of the presidency, the imperial presidency, the president as the world’s celebrity-in-chief—the whole gargantuan mess.

One reason for the disastrous engorgement of presidential powers was that all parties at the Convention tacitly agreed that the first president would be George Washington, whom even the most suspicious Anti-Federalists admired. How much more protective of our liberties would the Framers have been, one wonders, if the putative first president was a man less universally respected than Washington: say, John Hancock?

The Kindest Cuts

Shrinking spending reduces deficits without harming the economy - unlike tax hikes

BY ALBERTO ALESINA

Should debt-ridden and economically struggling Western governments be doing everything possible to reduce their deficits? The debate over that question has become increasingly confusing—not only in Europe, where the matter is particularly urgent, but in the United States, too. Those in favor of immediate deficit reduction argue that it is a necessary precondition of economic growth. Today’s deficits become tomorrow’s debt, they say, and too much debt can bring fiscal crises, including government defaults. Markets, worried about solvency, will require high interest rates on government bonds, making it more costly for countries to service their debts. Defaults could cause banks holding government bonds to collapse, possibly leading to another financial meltdown. There can be no sustained growth, say the deficit hawks, unless we start balancing our books.

Their opponents agree that we should eventually rein in deficits—but right now, when economies worldwide are weak, is the wrong time. To shrink a deficit, this argument goes, you need to raise taxes or to cut spending. Taking either of those steps reduces aggregate demand, making an already faltering economy sputter and sink into serious recession. The all-important debt-to-GDP ratio swells because GDP growth slows more than the measures taken reduce debt. Therefore the approach is self-defeating. Governments should instead continue to run deficits and paper them over with borrowed money, waiting to balance their budgets until economies get stronger.

The Argentina Scenario

The Obama administration’s familiar economic mistakes

By JAY HALLEN

The opening decade of the twenty-first century has seen a slow but distinct decline in American capitalism. Economic policy has become increasingly overrun by central planning, redistribution, and government picking of industrial winners and losers. Beginning about half a century ago, those elements helped sink another free-market powerhouse—Argentina. While Barack Obama is no Juan Perón, the president’s misguided policies threaten to squander our economic advantages, just as Perón’s did in Argentina.

Government intervention in the housing market, caused by low interest rates; direct subsidies, such as the home-mortgage interest-tax deduction; and the market distortion caused by Fannie Mae and Freddie Mac—the two state-backed entities that make virtually all home loans now—has helped throw the American economy into a tailspin. A rerun threatens to occur in the student loan market and perhaps also health care, two areas where the government now plays an outsize role in financing and subsidies. Subsidies and bailouts to favored sectors have come at substantial cost to the taxpayer. The notion of “too big to fail” removes banks’ incentives for responsible risk-taking, while the Fed’s continued “quantitative easing” plays to the American consumer’s worst instincts: the over-leveraging that brought about the current crisis in the first place. Meanwhile, the U.S. Treasury retains a 27 percent stake in General Motors and refuses to sell its shares lest it realize a multibillion-dollar loss. But with government-subsidized Chevy Volts losing $49,000 per car, any increase in GM’s share price seems a long way off.

The Turn Away From Europe

21st century’s central arenas will be the Middle East and the Western Pacific

By Josef Joffe

It almost goes unnoticed that the United States is closing a long chapter in its Atlantic history. For 70 years, since the landing in Normandy, America was literally a power-in-Europe, with a vast military presence stretching from Naples to Narvik and from Portugal to Germany. At its peak, the entire force, Navy and Air Force included, numbered 300,000. The Army topped out at 217,000. At the end of this year, the ground troops will have dwindled to 30,000. A massive support structure of American grand strategy is being dismantled. Why is no one weeping or gnashing teeth?

That would have been the response in decades past. From the Korean War onward, when the United States deployed hundreds of thousands to the peninsula, Europeans perpetually nourished a nightmare that the United States, abutting both the Atlantic and Pacific, would abandon them in favor of Asia. To reassure them, the Eisenhower administration dispatched six divisions to the Continent after 1950, promising to keep them there for as long as it took to build up NATO and win the Cold War. This permanent expeditionary force, fortified by thousands of tactical nuclear weapons, held steady for a half century, and even grew when the Soviets ratcheted up the pressure. Yet the angst was ever-simmering, stoked by perennial Senate resolutions demanding a drawdown. And it would roil whenever America’s attention shifted to other locales.

The Coming Global Disorder

How does global order come undone?

By Bret Stephens

Woody Island is a speck of land in the middle of the South China Sea, not quite a square mile in size. Over the past 80 years it has been occupied by French Indochina, Imperial Japan, the Republic of China, the People’s Republic of China, South Vietnam, and, after a brief war in 1974, the People’s Republic again. Now known as Yongxing to the Chinese (or Phu Lam to the Vietnamese, who still lay claim to it), the island has an airstrip, a harbor, and a few hundred Chinese residents, none native-born, many of whom make their living as fishermen.

An obscure tropical island may seem an odd starting point for an essay on the coming global disorder. Yet great conflicts have been known to flare over little things in faraway places. “On the morning of July 1, [1911,] without more ado, it was announced that His Imperial Majesty the German Emperor had sent his gunboat the Panther to Agadir to maintain and protect German interests,” wrote Winston Churchill in his history of the First World War. The proximate causes of the German foray to this deserted Moroccan bay “were complicated and intrinsically extremely unimportant.” But the real purpose of the kaiser’s move was to test—and, he hoped, to break—Britain’s alliance with France and, perhaps, scope out the possibility of establishing a German naval base in the north Atlantic. “All the alarm bells throughout Europe,” Churchill recalled, “began immediately to quiver.”

The Tremendous Economic Benefits of Superstorm Sandy

The storm clouds continue to swirl and a bad moon is rising

BY JAMES QUINN

The public relations propaganda campaign to convince the ignorant masses that Sandy’s impact on our economy will be minor and ultimately positive, as rebuilding boosts GDP, has begun. I’ve been hearing it on the corporate radio, seeing it on corporate TV and reading it in the corporate newspapers. There are stories in the press that this storm won’t hurt the earnings of insurers. The only way this can be true is if the insurance companies figure out a way to not pay claims. They wouldn’t do that. Would they?

It seems all the stories use unnamed economists as the background experts for their contention that this storm will not cause any big problems for the country. These are the same economists who never see a recession coming, never see a housing collapse, and are indoctrinated in Keynesian claptrap theory.

Bastiat understood the ridiculousness of Kenesianism and the foolishness of believing that a disaster leads to economic growth.

Bastiat’s original parable of the broken window from Ce qu’on voit et ce qu’on ne voit pas (1850):

Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—”It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”

Money laundering fears may hamper Cyprus aid

A German report may doom Cyprus aid

by Bloomberg

Cyprus's request for a bailout has created a political headache for German Chancellor Angela Merkel on concerns wealthy Russians could be the chief beneficiaries, the weekly magazine Der Spiegel said on Sunday, citing an intelligence agency report.
Cyprus is in talks with international lenders on the terms of a bailout expected to total 10 billion euros after its two largest banks incurred huge losses due to the Greek debt writedown earlier this year.
The scale of the aid is tiny compared to Greece and other struggling euro zone countries.
But a report prepared by Germany's intelligence agency (BND) on money laundering in Cyprus has laid bare the political risks involved, Spiegel said.
"The report of the BND shows who will profit most of all from the billions in European taxpayer funds - Russian oligarchs, businesspeople and mafiosi who have parked their illegal earnings in Cyprus," the magazine said.
Cyprus is a popular offshore tax haven for Russian businesses seeking protection from their country's unpredictable investment climate.
But Cyprus, which joined the European Union in 2004, says it has strengthened its regulations over the past decade against money laundering and is in full conformity with international rules.

Picking The Public Pocket

Does wind energy represent 'the greatest public subsidy bonanza of modern times'?

by Owen Spottiswoode

This week's surprise announcement from Energy Minister John Hayes, reported in the Daily Mail and the Telegraph, that the Government wouldn't give the green light to any more onshore wind farms certainly caused a stir, with Labour Leader Ed Miliband accusing the Prime Minister of having an'uncertain' energy policy.

Elsewhere the move was more warmly welcomed, with the supposedly high cost of producing wind power a popular target for its detractors. In the Daily Mail, columnist Christopher Booker claimed that Mr Hayes's announcment marked the end of "the greatest public subsidy bonanza of modern times."

So just how large is the taxpayer's subsidy to the wind energy sector, and how does it compare to other public subsidies?

What is a subsidy?

This isn't necessarily easy to pin down. A 2004 report from the Office of Fair Trading (OFT) noted that:

"At the simplest level, any intervention by government that provides assistance to a firm or group of firms is a subsidy. However, this is a very broad definition that would include government actions that would not be expected to affect competition, such as the provision of public education and general infrastructure."

Big Government, Big Business, Big Rip-off

If you want to whack big corporations, aim at Washington first

By MICHAEL BRENDAN DOUGHERTY

The Right has gone mad, it’s true. The conservative head, already suffering traumatic brain injury after insisting that pre-emptive war, waterboarding, and debt are enduring Western values, finally went blank when Barack Obama ascended the federal throne. Tea-party activists say that a Kenyan Nazi is readying a death panel for Sarah Palin. Fascism is liberal nowadays; communism, too. It’s all connected. Glenn Beck is chalking lines between Keith Olberman, Levi Johnston, and Leon Trotsky. How can the Right fight an enemy that will not release its birth certificate?

Fortunately, Timothy P. Carney has a cure for such dementia: muckraking journalism, of the sort he ably exhibits in Obamanomics: How Barack Obama Is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists, and Union Bosses. Don’t let the Fox-appearance-fetching title throw you: George W. Bush comes in for nearly as much abuse as Obama. A reporter for the Washington Examiner and a protégé of the late Robert Novak, Carney has carved out a career of picking apart Washington’s latest regulations on industry and exposing the lobbyists and corporations getting rich in the name of public interest.

China 'Addicted To Credit'

Just everybody else

by James Parker

Whilst the economic data shows at least some signs of an anaemic turnaround, China’s corporate results are demonstrating just how difficult things have been.   China’s companies are busy reporting their 3^rd quarter 2012 results and there have already been some disappointing results – pretty much explained by the general slowdown. Connected to this however, a worrying trend is developing on many companies’ balance sheets.

Some big names have already seen disappointing profit growth. State owned-Sinopec,  China’s (and Asia’s) largest oil refiner, saw its 3^rd quarter profit fall 9.4% and January-September profits slump by 30%. Sinopec is trapped between high crude costs and government mandated price ceilings on sales to consumers.  Oil giant PetroChina also suffered, with its 3^rd quarter net profit down 33% compared to last year, driven in part by a $6 billion refining loss over the year-to-date (YTD), and part by a similar squeeze on its natural gas import business (in which its YTD profits have fallen 93% compared to 2011).

China Southern Airlines saw third quarter (3Q) net profit fall 29%, whilst China Life, the largest Chinese insurer measured by premiums, swung to an outright loss in the July-Sept. period.  Meanwhile Sany Heavy Industry Co. Ltd, China’s largest maker of heavy machinery and construction equipment, was hit by 59% fall in 3Q net profit.  Baosteel, one of the largest producers of the metal, saw net profit down 4.88% from a year earlier.

To Infinity and Beyond

Is the Fed Too Big to Fail?

BY JOHN R ING

America is more bankrupt, leveraged and vulnerable than Europe. And to finance its debt, one branch of the state (Treasury) borrows money from another branch of the state (the Federal Reserve) and everybody thinks this is the norm – they call it quantitative easing (QE) as the Fed embarks on a third round which could eclipse the first one’s trillion dollar cost pushing America closer to the fiscal cliff on their mountain of debt. America’s debt as a share of GDP excluding the debt of Fannie Mae and Freddie Mac is already over 100 percent. Although the cost of servicing that debt is only 1.4 percent of GDP because of low interest rates, half of America’s debt is in foreign hands and so interest rate levels around the world are important. If America had to pay the rate of comparable sick countries, say six percent, the debt burden alone would exceed the spending on Social Security, Medicare or national defense.

Central banks around the world have also flooded an already flush financial system with more cash presumably to give their respective politicians more time to sort out our problems. The world has gone on a “liquidity binge” heading towards an economic cliff. Yet each time substantive issues are glossed over, they return to petty infighting. Real issues? Later. Simply there is a lack of leadership. And worse, the blanket monetisation of government debt debases currency, distorts capital markets and calls into question the viability of sovereign debt. As a consequence, currencies have weakened so much that a tide of offshore money seeking higher returns are taking bigger and bigger risks, similar to what happened in the Great Depression when a currency war was a prelude to hyperinflation. Too much money simply chased too few goods. Our central banks have created a new bubble. What ballasts the world’s monetary system is debt. The problem is that we simply live in a debt-laden world with fiat currencies propping up failing economies and central bankers continue to believe that the debt crisis of today can be solved with more debt. The financial system is broke.

Ancient Spartan Communism

A state that is at war, or that is perpetually organized for war, dare not tolerate individual liberties

by Alexander Gray, 1945

At what point a history of socialism should begin is a question which might give occasion to high argument. There are some who hold that we merely becloud our judgment if we allow ourselves to speak of socialism before the middle of the 18th century, or perhaps even somewhat later. On this view socialism is essentially a manifestation of the proletarian spirit; or, if socialism is not necessarily proletarian in character and origin, it at least postulates a society which tends to be comprehensive in its membership. Accordingly, it is suggested that a society which assumes for its efficient working the existence of a slave population, denied all rights, may at times speak a language suggestive of socialism, but it can know nothing of socialism as that word has been understood in the 19th and 20th centuries. The existence of a serf or slave population may in certain respects add a complication to life; but in other directions it quite obviously enormously simplifies the social and political problems of existence, as these are presented to that section of the population who are not slaves. On this view, a history of socialism should probably begin among these first ripples and disturbances which presaged the deluge of the French Revolution.

As against this view, which looks on socialism as something which cannot be dissociated from the social and political conditions of the last century and a half, there are some who carry their excavations for the roots of socialism not merely to ancient Greece, but to ancient China and to the early days of the children of Israel, and who accord a place in the socialist temple to Moses, in virtue of certain provisions in the Mosaic Law; and to Isaiah, in virtue of his poetic sensitiveness to the wrongs of this world.

Exposing the Elites

Promoting a politics of social pity, today’s super-elites revive an old strategy of coercion

BY MICHAEL KNOX BERAN

In 1997 George Soros, writing in The Atlantic, declared: “The main enemy of the open society, I believe, is no longer the communist but the capitalist threat.”

The words marked the beginning of a decade and a half of plutocratic progressivism. In July 2003, AFL-CIO political director Steven Rosenthal conferred with some of America’s richest tycoons at El Mirador, Soros’s estate in Southampton, to figure out how to defeat George W. Bush. In August 2004, the president of the Service Employees International Union, Andy Stern—the “most important labor boss in America”—traveled to Aspen to plot strategy in a moneyed conclave that included savings and loan moguls Herbert and Marion Sandler, Progressive Insurance founder Peter Lewis, and businessman John Sperling. Warren Buffett, de facto chairman of the country’s billionaires’ club, endorsed the candidacy of presidential aspirant Barack Obama, while the Democracy Alliance, which Matthew Vadum and James Dellinger dub “Billionaires for Big Government,” bankrolled progressive groups like ACORN and the Center for American Progress.

Is there something novel in these alliances which, Demos scholar David Callahan observes, have brought some of the nation’s most notable elites together during the last decade to make common cause with some of the country’s most progressive leaders? Hardly: pacts between munificent plutocrats and progressive reformers are one of the oldest tricks in oligarchy’s playbook.

More than a century and a half ago, Benjamin Disraeli, affecting to believe that Britain’s Tory elite was “the really democratic party of England,” showed that the well-to-do could more easily maintain their ascendancy if they became paternalist champions of working people. By adopting socially progressive policies, they could “dish the Whigs” and stave off free-market reformers like Richard Cobden and John Bright. In a no less duplicitous spirit, Otto von Bismarck invited Ferdinand Lassalle, founder of the General Union of German Workers, to the Wilhelmstrasse, where the two explored an alliance between Bismarck’s Junker ministry and the working classes. Bismarck did not “promote social reform out of love for the German workers,” historian A. J. P. Taylor wrote. Following, by turns, Marx and Metternich, Bismarck sought to make workers “more subservient” to the Junker-dominated state.

Renewable Energy - Part 2

The Global Clean Tech Bubble 

By Nicole Foss

Those who advocate for a complete shift to renewables often state that it would be possible if only the political will to fund the transition were available. In fact, funding programmes have been introduced in many jurisdictions, often on a very large scale. Capital grants and long term Feed-In Tariff (FIT) contracts have been introduced in many European countries and in other regions. Feed-In Tariffs, which typically offer a twenty year guaranteed income stream in order to overcome the investment risk, have often been the economic tool of choice. Some of these have been very generous, and the subsidy regimes have driven large investments in renewables for many years. The costs have been in the hundreds of billions of dollars, with projections for many times that much in the future, both for generation capacity and for the necessary infrastructure to service it:

In 2005, VC investment in clean tech measured in the hundreds of millions of dollars. The following year, it ballooned to $1.75 billion, according to the National Venture Capital Association. By 2008….it had leaped to $4.1 billion. And the [US] federal government followed. Through a mix of loans, subsidies, and tax breaks, it directed roughly $44.5 billion into the sector between late 2009 and late 2011. Avarice, altruism, and policy had aligned to fuel a spectacular boom….

I….Investors were drawn to clean tech by the same factors that had led them to the web, says Ricardo Reyes, vice president of communications at Tesla Motors. "You look at all disruptive technology in general, and there are some things that are common across the board," Reyes says. "A new technology is introduced in a staid industry where things are being done in a sort of cookie-cutter way." Just as the Internet transformed the media landscape and iTunes killed the record store, Silicon Valley electric car factories and solar companies were going to remake the energy sector. That was the theory, anyway.

Renewable Energy Part 1

The Vision And A Dose Of Reality 

By Nicole Foss

In recent years, there has been more and more talk of a transition to renewable energy on the grounds of climate change, and an increasing range of public policies designed to move in this direction. Not only do advocates envisage, and suggest to custodians of the public purse, a future of 100% renewable energy, but they suggest that this can be achieved very rapidly, in perhaps a decade or two, if sufficient political will can be summoned. See for instance this 2009 Plan to Power 100 Percent of the Planet with Renewables:

A year ago former vice president Al Gore threw down a gauntlet: to repower America with 100 percent carbon-free electricity within 10 years. As the two of us started to evaluate the feasibility of such a change, we took on an even larger challenge: to determine how 100 percent of the world’s energy, for all purposes, could be supplied by wind, water and solar resources, by as early as 2030.

See also, as an example, the Zero Carbon Australia Stationary Energy Plan proposed by Beyond Zero Emissions:

The world stands on the precipice of significant change. Climate scientists predict severe impacts from even the lowest estimates of global warming. Atmospheric CO2 already exceeds safe levels. A rational response to the problem demands a rapid shift to a zero-fossil-fuel, zero-emissions future. The Zero Carbon Australia 2020 Stationary Energy Plan (the ZCA 2020 Plan) outlines a technically feasible and economically attractive way for Australia to transition to a 100% renewable energy within ten years. Social and political leadership are now required in order for the transition to begin.

The Vision and a Dose of Reality

These plans amount to a complete fantasy. For a start, the timescale for such a monumental shift is utterly unrealistic:

Perhaps the most misunderstood aspect of energy transitions is their speed. Substituting one form of energy for another takes a long time….The comparison to a giant oil tanker, uncomfortable as it is, fits perfectly: Turning it around takes lots of time.

Socialism is by now part of the French DNA

Denial as a national sport

By Wolf Richter

In France, socialism isn’t a political movement that swept the elections this year, and it isn’t an economic philosophy that moved once again to the forefront, but it’s part of the DNA of much of the population. And it produces classic knee-jerk reactions to the current economic morass—such as the nationalization of tottering automaker Peugeot.

French automakers are in a death spiral, within a market that is morose. In October, auto sales fell 7.8% from prior year, and a breath-taking 15.8% once the two extra selling days this October (23 instead 21) are taken into account. Year to date, sales are down 13.3%.

PSA Peugeot Citroën dropped 5% for the month and 17.2% for the year. Its captive finance subsidiary, Banque PSA Finance, was bailed out by the taxpayer last week to the tune of €5 to €7 billion. More bailouts are on the horizon. Layoffs loom, but political resistance is enormous, and it might be impossible to shrink PSA’s capacity down to reality.

Renault crashed. October sales were down a catastrophic 26.4%, for a decline of 20.5% so far this year. All hopes rest on the arrival of its miracle car, the new Clio 4, which would not only stimulate Renault’s sales but goose the entire market. Good luck. In a few days, the company will start discussions with unions on how to improve its “competitiveness”—and everyone knows what that means for the hapless workers.

The killer? In October, the French brands together plunged 15.2% ... but foreign brands rose 2.5%. For the year, the market is down 13.3%, a horrid figure, but PSA is down 17.2% and Renault 20.5%. They’re getting killed at home! You can blame the decomposing market on the government or on the debt crisis or on the weather, but if your market share is plummeting, you can only blame yourself—and if you don’t fix the problem, you become irrelevant.

The German bloc will have to take its bitter medicine in Greece

A Plan Gone Horribly Wrong

By Ambrose Evans-Pritchard

Every detail of the Greek economy is worse than officially forecast just weeks ago.

1. The budget unveiled this morning estimates that public debt will reach 189pc of GDP next year (not 179pc).

2. The budget deficit will be 5.2pc (not 4.2pc).

3. The economy will shrink 4.5pc next year (not 3.8pc). 

4. Unemployment is already 25.1pc and 55.6pc for youth.

Just for the record:

The EU-IMF Troika originally said that the economy would contract by just 2.6pc in 2010, before growing by 1.1pc in 2011, and 2.1pc in 2012.

In fact Greek GDP contracted by 4.5pc in 2010, 6.9pc in 2011, and will shrink 6.5pc this year, and now 4.5pc next year.
The cumulative error is colossal.

The IMF's former deputy chief John Lipsky told an HSBC forum in London earlier this month that it was impossible for the Fund to make any accurate forecast, given the crazy circumstances in Greece.

I don't wish to be unduly harsh on the IMF – a superb organisation – but actually the Greek Labour Institute and the think-tank IOVE did predict this level of contraction.