Daily Archives: 26 November 2011

One Failed European Intervention Leads to Another

From Open Europe‘s news summary of November 22nd:

Commission wants right to intervene directly in member states’ budgets;
German government: Eurobonds no “panacea” for eurozone crisis
In an interview with FTD, EU Commissioner for Economic and Monetary Affairs Olli Rehn argues for “the functioning of the eurozone to be improved through better coordination and tighter fiscal surveillance”, which would include having to clear national budgets in Brussels in order to ensure that rules on budgetary stability are adhered to. According to a draft copy of the Commission’s legislative package seen by Süddeutsche Zeitung, member states would have to submit their draft budgets to Brussels by April 15 in order for the Commission to provide comments and suggestions. The budget would then be discussed nationally and resubmitted by October 15 in order to get the Commission’s final approval. Rehn argues that the Treaty changes urged by Germany would not be necessary to achieve this, although he added that the Commission did not exclude this possibility. Handelsblatt reports that a source close to German Chancellor Angela Merkel has said that her goal is a Treaty amendment which allows for similar budgetary intervention and an enforcement role for the European Court of Justice, and according to experts, such a change can be achieved through a protocol added to the EU Treaties.

Commentary by Patrick Barron:

The crisis in Europe is a textbook example (Austrian economics textbook, that is…) of how the adverse consequence of one failed market intervention leads to another and another until the state, or in this case the European Union super state, controls all economic life at the expense of personal liberty.

The failed attempt at establishing a common currency has created a tragedy of the commons (see Philipp Bagus’ excellent book The Tragedy of the Euro), whereby the most irresponsible nations are rewarded for their irresponsibility. Now, instead of simply abandoning the failed project and considering something with a real track record–dare I say “gold standard” or money freely chosen by the market?–the elitists of Europe plan to move to the next step of trying to run the supposedly independent and sovereign countries that comprise the European Monetary Union from their cushy desks in Brussels.

Massive “Green” corruption

open quoteTUSCALOOSA, Ala. – Energy Secretary Steven Chu should resign as a result of the disastrous decision to guarantee $537 million in loans to failed solar panel manufacturer Solyndra.

The federal government’s rush to guarantee the loans despite numerous warning signs threatens to cost taxpayers more than $500 million. Career government employees repeatedly warned that this “investment” was flawed from the beginning. Not only was Solyndra betting on an unproven “thin film” technology, but it was trying to compete with a cost structure that was uneconomical even under optimistic assumptions.

Regardless of your position on the merits of government investments in green energy, you should insist on Chu’s resignation.
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As a skeptic, I’m horrified but not surprised at a massive loss of public money in a badly managed firm. But if you think green energy investments are a good idea in general, you should be furious over Solyndra.

Not only did the company hand out $37,000 to $60,000 bonuses to its managers as it spiraled into bankruptcy this summer. Solyndra built a brand-new facility in one of the highest cost locations in America rather than recycling an existing building in a cheaper location, ordered expensive robots that whistled Disney tunes rather than focusing its spending on production, and paid investors dividends even as the company ran short of cash.

As Rep. Brian Bilbray, R-Calif., noted, putting taxpayer money in such a firm was “felony dumb.”

Worse, there is little doubt that the decision to guarantee the loans was politicized. The email trail uncovered by congressional investigators demonstrates considerable political pressure from the White House to approve the guarantees, leading some to speculate it was due to the Solyndra connections of Obama donor George Kaiser and his George Kaiser Family Foundation.

Kaiser was a key fundraiser for Obama’s presidential campaign, hosting a 2007 fundraiser at his home that raised more than $250,000. Kaiser’s foundation (which had nearly $4 billion in assets in 2009) was a key investor in Solyndra.

. . . .

Again, Solyndra appears to be just the tip of the iceberg as we learn of more green energy firms with political connections that have received federal loan guarantees and other subsidies.

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No, Congress did not declare pizza a vegetable

What is really amazing to me is not this debacle, but the fact that so many seemingly intelligent people really believe that government keeps our food safe.

How did we get to the point that bureaucrats in Washington DC are telling the rest of us what is or is not a vegetable?

open quoteCongress passed a revised agriculture appropriations bill last week, essentially making it easier to count pizza sauce as a serving of vegetables. The move has drawn widespread outrage from consumer advocates and pundits, who see “pizza is a vegetable.” as outlandish.

There’s just one little misperception: Congress didn’t declare pizza to be a vegetable. And, from a strictly nutritional standpoint, there’s decent evidence that lawmakers didn’t exactly bungle this decision.

Let’s revisit the facts: Despite what one might expect from the headlines, if you scour the agriculture appropriations bill, referenced in numerous stories, you won’t find a single mention of the word “pizza,” or even “vegetable,” for that matter.

This is not a fight over pizza. It is, instead, a fight about tomato paste. Specifically, it’s a fight about how much of the product counts as one serving of vegetables.

Right now, tomato paste gets a sort of special treatment under school lunch regulations. Just “an eighth of a cup of tomato paste is credited with as much nutritional value as half a cup of vegetables,” my colleague Dina ElBoghdady explained last week. close quote (Read more)