Saturday, April 25, 2009

Taxing Carbon Imports


It was only meant to be sarcasm. I never thought anyone would take it seriously when I wrote:

The EPA, with the strong leadership of the Obama administration and the Democratic Party controlled Congress, are about to impose a vast new panoply of regulations and economic burdens on the United States in the name of climate control. The U.S., however, is only a minority producer of human-generated CO2. The two fastest growing economies have become the largest producers of CO2, China already is the world's biggest man-made CO2 producer (2007) and India is coming up fast, and are also becoming the largest suppliers of goods consumed in the United States. They will have no comparable restrictions on producing CO2.


It was sarcasm because the EPA is on a fool's errand regarding CO2 regulation in the U.S. and because the obviously stupid bureaucracy enforcing taxes and fees on products produced elsewhere based on some theoretical CO2 pollution confounds human reason and intelligence.

Little did I realize that Henry Waxman had already taken it upon himself to promote such stupidity. H/T Dr. John Ray

From Financial Times:

Chinese official warns US on protectionism

By Alan Rappeport in New York

Published: April 21 2009 19:29 | Last updated: April 21 2009 19:29

A top adviser to the Chinese government on Tuesday warned that a proposed US border tax on carbon sensitive materials “smells of protectionism” and could spark retaliation from developing countries.

During a speech at New York University about how the US and China can forge a closer partnership, Tung Chee-hwa, vice-chairman of the Chinese People’s Political Consultative Conference (CPPCC), the Chinese government’s official advisory, said that a proposed “border adjustment” programme could be challenged through the World Trade Organisation and that he was “distressed” by the new bill introduced to Congress.

The programme in question was introduced earlier this month by two powerful Democrats in the House of Representatives. The bill includes aggressive climate targets to be met through a green house gas emissions cap and trade programme, where companies would be eligible for rebates to compensate for cost they incur. More controversially, the US government would be able to levy import taxes on foreign manufacturers to cover carbon contained in US-bound products.

“This is particularly unfair to China,” Mr Tung, who was chief executive of Hong Kong from 1997 until 2005, said.

In March, Steven Chu, US energy secretary, told Congress that a carbon border tax would help “level the playing field” with countries with looser carbon standards.

The legislation, introduced by Henry Waxman, California Democrat and chairman of the Energy and Commerce Committee and Edward Markey, Democrat from Massachusetts and Chairman of the Energy and Environment Subcommittee, aims to cut green house gas emissions by 20 per cent by 2020 and by more than 80 per cent by 2050, from 2005 levels.

The draft proposal would require electricity suppliers to get 25 per cent of their power from renewable sources, such as wind and solar, by 2025. It would establish a national renewable energy standard and an energy efficiency standard aimed at cutting power demand by 15 per cent by 2020 and natural gas demand by 10 per cent.

On Tuesday Mr Tung said that China was taking its own aggressive measures to combat climate change but that he was concerned about the US taking a more protectionist stance.

“The lesson from 1929 was that we went to protectionism and the whole world collapsed,” he said. “China and America are on the same boat.”

A vote could on the border tax bill could come as early as June, with the Senate expected to make its proposal in the autumn.

This guy is dumber than he looks. Only Californians could love him.

Henry Waxman via Moonbattery.

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It was a bright cold day in April, and the clocks were striking thirteen.
George Orwell, "1984", first sentence

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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
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Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)