Mish's Global Economic Trend Analysis

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• Battle Over EU Airline Tax Risks "Carbon Trade War"; US Congressman Equates Tax to " Barbary Pirates for Safe Passage"; Insanity of Cap-and-Trade Revisited
• German President Resigns; Major Embarrassment to Chancellor Merkel
• Gallup Reports Unemployment in February Increases to 9%, Up From 8.6%; Underemployment Increases to 19%

Battle Over EU Airline Tax Risks "Carbon Trade War"; US Congressman Equates Tax to " Barbary Pirates for Safe Passage"; Insanity of Cap-and-Trade Revisited Posted: 17 Feb 2012 09:40 AM PST Led by the US and China, 26 nations are now protesting the EU's airline carbon tax, and a outright Carbon Trade War Edges Nearer. An alliance of countries opposed to a carbon tax on airlines is threatening to tear up trade deals with the European Union and impose new taxes on EU carriers, in a sign the world's first carbon trade war is edging closer. A meeting has been called for next week by the 26 countries that have been fighting to stop Brussels' charging airlines flying in or out of the EU for their carbon emissions. China has already told its carriers to ignore the EU legislation which took effect from January 1 and US legislators are attempting to push a similar measure through Congress. Retaliatory Measures Considered Re-open existing trade agreements in sectors other than aviation to put "pressure on EU industries". Impose new charges on European airlines flying into non-EU countries. Suspend current and future negotiations about EU airline requests for new routes or airport destinations. Review important bilateral aviation agreements with individual EU states. Enact legislation banning their airlines from complying with the EU law. Airline Tax Background For background on the airline carbon tax, please consider Emissions: Rivals dig in over EU carbon trading scheme The European Union has decided that from January 1 2012, any airline flying into or out of the EU will be charged for its carbon pollution. That is due to aviation being brought into the EU's six-year-old emissions trading scheme (ETS), a system that obliges companies to pay for permits (or allowances), each equal to one tonne of carbon dioxide, to cover their annual emissions. The decision to extend it to companies outside the bloc – foreign airlines – is the EU's most ambitious move yet to force the rest of the world to comply with its environmental rules. The ATA [American Transport Association] estimates the scheme would cost US airlines more than $3.1bn between 2012 and 2020, though some analysts say the costs will be lower. Barbary Pirates for Safe Passage China told its airlines to ignore the tax, and Republicans in Congress seek to pass similar legislation. "The ETS scheme is equivalent to the paying of ransom to the Barbary pirates for safe passage" said Chip Cravaack, the first Republican since 1947 to win Minnesota's 8th congressional district. Insanity of Cap-and-Trade Revisited For further discussion of the absurdities of carbon tax trading and credits for renewable energy, please see ... Solar Energy Madness in Europe Walmart, Costco, US Bank Profit From Energy Credits in US; Carbon Tax Thrown Out By French Court Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

German President Resigns; Major Embarrassment to Chancellor Merkel Posted: 17 Feb 2012 07:28 AM PST The German presidency is little more than a symbolic position, nonetheless, the announcement by German President Christian Wulff that he will resign is a major embarrassment to German Chancellor Angela Merkel who hand-picked Wulff as president. Spiegel Online reports Wulff Announces He Will Step Down German President Christian Wulff resigned from office after prosecutors stated a day earlier they would seek to have parliament lift his immunity. Prosecutors wanted his immunity revoked so they could formally investigate allegations he accepted favors during his tenure as governor of the state of Lower Saxony. At the center of the probe are allegations that a film producer had paid for a vacation in a luxury hotel for Wulff during his time in office in the state. Speaking nearly a half hour after Wulff's resignation, German Chancellor Angela Merkel appeared before reporters to say she had received Wulff's resignation with "great respect and deep regret." The chancellor also noted that the development underscored the strength of the German legal system because it showed that all people are treated equally, regardless of their position. Merkel said her coalition government would approach all political parties in an effort to find a "joint candidate" to replace Wulff. The development is likely to cause embarrassment because Wulff is the second president after Horst Köhler to step down during her term. The chancellor handpicked Wulff to run as Köhler's successor after his sudden resignation in 2010. Even after his selection, Wulff was weakened going into the presidency because it took three rounds of voting in the Federal Assembly before he was ultimately elected. Financial Times reports that Merkel cancelled a meeting scheduled with prime minister Mario Monti in Rome on Friday in the wake of the announcement by Wulff. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Gallup Reports Unemployment in February Increases to 9%, Up From 8.6%; Underemployment Increases to 19% Posted: 17 Feb 2012 06:54 AM PST The latest Gallup survey finds U.S. Unemployment Increases in Mid-February The U.S. unemployment rate, as measured by Gallup without seasonal adjustment, is 9.0% in mid-February, up from 8.6% for January. The mid-month reading normally reflects what the U.S. government reports for the entire month, and is up from 8.3% in mid-January. US Unemployment Rate, Monthly Averages Gallup also finds 10.0% of U.S. employees in mid-February are working part time but want full-time work, essentially the same as in January. The mid-February reading means the percentage of Americans who can only find part-time work remains close to its high since Gallup began measuring employment status in January 2010. Percentage of Workers, Working Part Time but Want Full Time Employment Seasonal forces typically cause unadjusted unemployment rates to increase at this time of year. In this regard, some of the sharp increase Gallup finds in unemployment and underemployment may result from seasonal factors. Although the government seasonally adjusts the U.S. unemployment rate, and the workforce participation rate could decline, it still seems likely that the BLS will report an increase in the seasonally adjusted U.S. unemployment rate for February. Regardless of what the government reports, Gallup's unemployment and underemployment measures show a sharp deterioration in job market conditions since mid-January. BLS Numbers Not Realistic Gallup only polls those 18 and above while the BLS includes 16 and above. Given teenage unemployment, this would (or at least should) artificially lower unemployment numbers for Gallup. Yet, Gallup is higher, way higher when one considers underemployment. Fundamental and Mathematical Case for Structurally High Unemployment for a Decade As I have said many times, the BLS numbers are simply not realistic for many reasons. For further discussion please see ... Fewer Nonfarm Employees Now Than December 2000; Unemployment Rate: Some Things Still Don't Add Up; Obamanomics?   Fundamental and Mathematical Case for Structurally High Unemployment for a Decade; Shrinking Job Opportunities and the Jobs Gap; The Real Employment Situation Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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