From the BBC:
But the focus now is on finding a European solution. And not a few EU figures, French President Emmanuel Macron included, have said they'd love the UK to be part of a plan. More on that later.
The drive for the common EU approach is manifold. In part, it comes from the same post-Covid crisis realisation that as part of a single market, when the economies of some member states suffer, it pulls everyone down.
There's also an appreciation that there's strength in numbers. Countries such as Italy and Germany have been busy trying to find alternative energy suppliers - in Algeria and the UAE, for example. But if the EU as a whole, with its economic clout, makes the energy deal, the conditions are likely to be more favourable.
"We have to achieve that we only pay the world market price, rather than a higher price," said Mr Scholz on Wednesday. His Belgian counterpart, Alexander De Croo, pointed out that gas prices in Europe are currently double those in Asia and 10 times as much as in the US.
EU purchasing power would also avoid one member state trying to outbid another in their scramble for energy. Not a good look when it comes to EU unity.
I said years ago that European countries (all of them, not just EU Member States) should use their bulk-buying or oligopsony power to drive down the 'world' price we pay for oil and gas, preferably to extraction cost plus profit margin. This is not an exact science and there is no right answer. Maybe they could buy it up centrally and then auction off oil and gas between themselves, with centralised profits (or losses) being shared per capita or something?
It can't possibly be much worse that the current set-up with wild price fluctuations and windfall profits (and occasional 'windfall losses') arising to exporting countries). If that subsidises European countries who are struggling economically, it sure as heck is better than subsidising Saudis, Putin etc. Again, if we stopped kow-towing to the Yanks where Venezuela or Iran are concerned, so much the better, it's about diversity of supply, playing off Iran against Saudis and so on.
Import the Third World
1 hour ago
15 comments:
I quite like all the bickering and bidding that goes on. Out of that a 'price' arises. And as Germany is likely to manipulate an EU central buying cartel to suit itself I am not wholly sold on the 'MW Plan'.
L, the MW plan just shifts the bickering elsewhere. Germany uses the EU to its own advantage, but in a covert way. At least with my plan, the cards are on the table.
The current setup is designed so that the maximum number of middlemen can rake off the maximum amount of cash in the buying and selling of what is an essential commodity. Since most EU governments, and ours are under the direct or indirect control of the US and the US is run by said middlemen, nothing is going to change any time soon, sensible plan though this is. It wouldn't be the producers that we would be stopping subsidising, it would be the middlemen and they sure as shit wouldn't like that.
Come on. Let's be serious.
We all know that the solution that the bunch of wise unelected governors switching between overheated / overcooled premises in Brussels, Strasbourg and Luxembourg will come up with will be more windmills and fewer cows.
You know it makes sense.
B: "the middlemen and they sure as shit wouldn't like that"
That's part of the plan.
Dh, for once, these countries seem to have realised that electricity is vitally important, regardless of how it is generated. Power cuts are electoral poison! Replacing cows with windmills has been side lined for now.
Middlemen have been enabled by bad money. In general 'commodity speculators' take the slack out of markets. Grain Merchants for example. Been around for donkeys years and enable farmers to get a fixed forward price. A type of insurance.But once you have oodles of bank credit etc you can start to pay the speculation game. And that's not good. As ever all the rot returns to bad money.
L, private speculators taking positions on freely traded commodities and doing arbitrage with their own money are fine, I've no problem with that. As you say, type of insurance.
Soros might have made a few £billion for himself when GBP crashed out of ERM, but in the medium term, he did us a huge favour. If he'd been wrong and made a massive loss, who cares?
What is not fine is middlemen who somehow have a monopoly on imposing themselves between supplier and customer.
In the case of location values, the supplier is government/society and the customer is the person who lives there. Landlords collecting rent are a huge cost to govenment/society.
In my line of work, it's auditors - there is a legal obligation (also imposed by stock exchanges) to have accounts 'audited' which enables 'auditors' to charge vast amounts of money for a service which serves no useful purpose and for which there would be no demand (in the absence of the legal obligation).
Far better for companies to have the option of getting an insurer to underwrite their liabilities if they wish. With their own money at stake, you can bet that such insurers would be far better at rooting out fraud and error.
If a business doesn't want to pay insurance, then act in a trustworthy way, or just don't have any (big) liabilities in the first place.
L,M, I've heard that EU governments are talking about bailing out brokers' margin calls. Is this just more shovelling money at middlemen?
B, if true, that is an outrage. EU is 60% bad, 40% good. Now we're out, I like to highlight some of the 40% good bits, in the spirit of fairness and being a good winner.
MW Agreed. In my line of work substitute 'pensions specialists' for 'auditors'.
B. Really? That is astonishing. Are they German or French brokers?
L, oh god, don't start me on 'actuaries'. It's a spreadsheet nowadays. Garbage in, garbage out. With a huge price tag.
M, L, https://oilprice.com/Latest-Energy-News/World-News/How-European-Utilities-Can-Survive-1-Trillion-In-Margin-Calls.html
B, not enough info.
Who sold or bought what forward to whom? Who is asking for the margin payments?
(When I used to dabble in this stuff, I would e.g. buy JPY forward, if it went against me (i.e. JPY fell), the broker would ask me to bump up my deposit to cover the potential loss from that contract. I know the basics. Golden rule, if they ask for a margin payment, make the payment and cut your losses by closing the contract.)
"Who sold or bought what forward to whom? Who is asking for the margin payments?"
Don't ask me, that article and others like it is all I have to go on. I know nothing about margin payments except what you have told me above. The subject just had the stench of corruption about it.
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