Check out Stratfor’s funky interactive graphic of power politics in the Niger Delta.
It has a graph showing the relationships between all the big players in the region. They all seem to hate each other. Maybe someone should do something like this for the Brown government…
There looks likely to be another acrimonious debate in the US over President Obama’s plan to auction 100% of the carbon permits generated if the US signs up to a cap on its emissions at the Copenhagen summit.
Big US utilities, particularly coal-powered ones, say they want the permits to be given them for free, otherwise, they say, the cost will be handed on to consumers:
Some cap-and-trade corporate allies and lawmakers from both parties say the plan would amount to a tax increase falling most heavily on consumers whose power comes from coal, the most polluting power source.
“It was wrong-headed thinking,” said Michael Morris, chief executive officer of American Electric Power Co, the biggest U.S. electricity producer from coal. “Don’t call it cap-and-trade when it’s really a tax,” he said in an interview.
The Columbus, Ohio-based utility wants no-cost permits at the outset. Congress faces “an awfully long debate” if a bill imposes all those costs on companies, he said.
Speaking last week with a group of CEOs in Washington, Obama indicated he may budge from his 100 percent auction stance. He said he will work with companies to “find a structure that arrives at that right balance” between giving permits away and selling them. “We are not going to be able to move this in an effective way without partnership with the business community.”
Come again?
Phase One of the EU carbon trading system handed out free permits to European utilities, who still passed on the cost to their consumers, and pocketed the record profits. It was punishing consumers, and rewarding pollutors with a multi-billion-euro windfall.
That’s why the EU has moved to an auction system in Phase 2 – indeed, it’s holding an auction tomorrow.
Obama should stick to his guns.
Meanwhile, the EU is debating whether to set a reserve price for carbon permits, after the price of carbon collapsed from Eu30 per tonne in the middle of last year, to Eu10 now.
PWC is the latest to call for governments to set a floor price below which they won’t sell.
More opposition from Barclays Capital, which is by far the biggest trader in the carbon market, and a good reply from John Hawksworth, the author of PWC’s report:
Trevor Sikorski, a director in Barclays Capital’s carbon trading division, said that any attempt to impose a floor price would represent “a market distortion that is unneeded”. He added that even a floor price would not guarantee investment in low-carbon technologies, arguing that the role of prices was not to assign capital expenditure but instead “equilibrate markets by putting a price on the scarcity of the commodity… if the market needs investment to equilibrate, then it will signal this.”
However, Hawksworth said that while imposing price floors and ceilings would serve to distort conventional markets, the artificial nature of the carbon market meant that it represents an exception to the rule.
“Normally you would say that if a price is low, it is low for a reason,” he admitted. “But in this instance the market has been created for the specific reason of bringing down emissions and that is difficult to achieve if the price gets too low, so governments need the flexibility to address excessive price volatility.”
I am watching a video clip of Jacqui Smith, the Home Secretary on the Politics Show . It is one of the worst interviews the Home Secretary has ever done. I am hoping that if the Home Secretary is on Radio 4 tomorrow it is 110 per cent better. The BBC’s Jon Sopel asked basic questions which left the Home Secretary floundering. None of her answers were articulated in a way that allowed her to get her key messages across.
One of the most simple (but important) lines I would suggest the Home Secretary begins with is to contrast the first CONTEST strategy with the new one. Specifically, the Home Secretary should point out that in the past the Government had had to focus resources on the Pursue and Protect strands (because it needed to) while the new CONTEST strategy focuses on the Prevent and Prepare strands (obviously explaining the 4Ps in the process) – by tackling the causes of violent extremism by working together with communities across the UK.
I am assuming that the ‘60,000 people being trained to deal with an incident’ that the Home Secretary and the Prime Minister refer to, are the fruits of Project ARGUS:
Project ARGUS is a National Counter Terrorism Security Office initiative, exploring ways to aid you in preventing, handling and recovering from a terrorist attack. It achieves this by taking businesses through a simulated terrorist attack. The simulation (on a DVD) identifies the measures to take for preventing, handling and recovering from a terrorist attack. This simulation provides you with a unique opportunity to both learn from and contribute to valuable lessons helping to protect you, your business and your community, whether you are a national chain or a small business.
The second CONTEST strategy has taken months of hard work and reflects input from Government departments, the police, communities, and organisations across the UK. Let’s hope the Home Office and No.10 communicate it in such a way that the new strategy neither alerts or alarms but instead describes the Government’s approach and direction of travel. At least the Home Office is without Tony (three 9/11s) McNulty – this is a good thing.
[youtube]http://www.youtube.com/watch?v=XOYAuk809fY&feature=player_embedded[/youtube]
Yesterday’s FT front cover was a beautiful moment-in-time snapshot of the meme war now underway in the credit crunch arena. The banner headline was “Banker fury over tax ‘witch-hunt'”; the first paragraph explained that “Bankers on Wall Street and in Europe have struck back against moves by US lawmakers to slap punitive taxes on bonuses paid to high earners at bailed out institutions”. But the real treat was the quotes in the sidebar:
“Introducing this 90 per cent tax is like taking the finance industry out the back and shooting it” – Bank executive in London
“What good does it do to be demonising an industry that you need to revive to fix the economy?” – Senior executive at US bank
“The tax measures will send the US back to the stone age” – Banker in Frankfurt
“This is like Russia 15 years ago. It’s like a McCarthy witch-hunt.” – Wall Street banker
“This is the most profoundly anti-American thing I have ever seen” – US investment banker
In other words, the view among bankers (irrespective of whether they’re on Wall Street, in London or in Europe) is: the US government just doesn’t get it. To which the obvious rejoinder is: no, you don’t get it.
I’ve thought for a while that the issue of bankers’ pay is a sideshow, and that all of us frankly have bigger fish to fry right now than trying to claw back Fred Goodwin’s RBS pension, the AIG bonuses or whatever. AIG’s bonus payments amount to $165m, for heaven’s sake – a drop in the ocean compared to the recovery plan, the toxic assets pool, or the contraction in GDP that America is looking at.
I think there’s also growing public understanding – in the UK, the US and elsewhere – of the argument that the rest of us need bankers to stick around in bailed-out institutions and fix the mess they created, on the basis that no-one else has a chance of understanding their asset portfolios.
But public understanding is by no means the same as public acceptance, of course – and it may well be the case that right now, publics’ need for durable solutions to the problems of toxic assets are dwarfed by their need to go out and clobber someone.
And in this regard, the size of bankers’ bonuses, or pensions, or whatever, may matter a lot less than the tone that they’re taking in public – which may yet prove to have the potential to be a political game changer. As Simon Johnson observes,
…the underlying issues are deeper still and laid bare by this week’s latest round with AIG. We have moved far beyond financial policy and into the kind of scandal that really gets taxpayers’ backs up. The greed of bankers slaps you in the face while the hubris of their leadership remains unchecked.
It’s a classic case of publics exercising a ratification veto on a deal cooked up between elites not because they necessarily disagree violently with the policy, but because the communication strategy was all wrong.
This is exactly what happened with the Irish no to the Lisbon treaty, it’s exactly what went wrong with the French and Dutch referenda on the European Constitution in 2005, and it’s exactly what could happen to a global climate deal at Copenhagen at the end of this year if policymakers don’t have their act together.
Here in the banking context, it’s the bankers (and their regulators) who don’t get it. Obama – in contrast to Geithner – does get it: and told Geither to find a way of getting the AIG bonuses back (even though Geithner had just said publicly that he couldn’t) because he gets that even though this is (a) a sideshow and (b) irrational, it’s not intelligent politics to attempt to head off an emergent mob with a cost-benefit analysis.