Tuesday, March 31, 2009

Industry views: Climate Bill Envisions Future with Less Energy, Fewer Jobs, Worse Economy

Road to Serfdom: Climate Bill Envisions Future with Less Energy, Fewer Jobs, Worse Economy
Institute for Energy Research, Mar 31, 2009

WASHINGTON, D.C. – Institute for Energy Research president Thomas J. Pyle issued the following statement today after the chairman of the House Energy and Commerce Committee formally released a draft of legislation that seeks to affect the world’s climate by rationing Americans’ use of carbon dioxide:

“Those who would characterize this draft as a blueprint for higher energy prices, fewer jobs, and reduced economic output are unfortunately missing the whole truth. In reality, the bill introduced today is part of an agenda whose mandate extends well beyond utility bills and unemployment rolls. Quite simply, this bill envisions the wholesale reordering of American society, where those who produce are punished, those who remain idle are rewarded, and those who require affordable energy to live are forced to subsidize those who require political pull to survive.

“Today, Americans were granted a sneak peak at what that future might look like. It’s future where grids are judged ‘smart’ not by their ability to deliver low-cost, reliable electricity to consumers, but by their inability to do so; where fuels are deemed ‘acceptable’ only insofar as they don’t fuel anything; and where a company is considered a ‘success’ not by any objective standard of economic output, but by arbitrary standards of carbon output.

“The draft bill introduced today not only portends that future, it provides the tools and timetables politicians will need to deliver it. Thankfully, for the rest of us, it also advances this debate to a new stage of dialogue – one where supporters of government-imposed energy rationing are forced to account for and defend that position in terms of dollars and cents, not polar bears and butterflies. It’s a debate, frankly, that’s been a long time coming. And it’s one in which we plan to make a significant and substantive contribution as the year goes on.”

Key elements of the Waxman-Markey draft carbon legislation:
  • Cap-and-Raid: Seeks to implement a “market-based program for reducing global warming pollution” – carbon – that will force hundreds of thousands of American businesses to obtain federal permission (via carbon credit) before creating a new job or manufacturing a new product. Although the draft is silent on how the federal permit procurement process would work, analysts predict the final version will require businesses to purchase those credits directly from the federal government, resulting in the expropriation of potentially trillions of dollars from the productive sectors of the economy.
  • Low-Carbon Fuel Standard: Also known as the “Weak Fuel Mandate” or “Fuel Dillution Standards,” LCFS seeks to impose new rules on the carbon-content of fuels produced by American refiners. The upshot is the creation of a weaker fuel, with less energy content, at a higher price – both in absolute terms, and on a per/BTU basis.
  • Renewable Electricity Mandate: Less than a year removed from Congress’s rejection of a national mandate seeking to force utilities to generate 15 percent of their electricity from politically preferred sources, the Waxman bill seeks to add an additional 10 percent to that charge – envisioning a final mandate of 25 percent, and setting in motion a massive redistribution of wealth from the southeast United States to the regions along the coast.
  • Green Jobs: Requires the secretary of Education to create a grant program specifically to award colleges and universities who get their students to enroll in “green jobs” training courses. The section of the text focused on what services the government will provide to the millions of American workers who will lose their jobs as a result of this policy “remains to be provided,” according to the draft.

State Sec Clinton Remarks at The International Conference on Afghanistan

Remarks at The International Conference on Afghanistan. By Hillary Rodham Clinton, US Secretary of State
The Hague, Netherlands, March 31, 2009

Thank you very much, Minister Verhagen, and Secretary-General Ban Ki-moon, Special Representative Kai Eide, President Karzai, Minister Spanta, friends and colleagues, I want to thank all of you, and especially the United Nations and the Government of the Netherlands for hosting us. I also want to acknowledge the extraordinary contribution of the government and people of the Netherlands to the mission in Afghanistan.

And I want to also acknowledge President Karzai, who fills a critical leadership role in his nation, and whose government helped to shape the shared comprehensive and workable strategy that we are discussing today.

We are here to help the people of Afghanistan prevail against a ruthless enemy who poses a common threat to us all. Afghanistan has always been a crossroads of civilization, and today we find our fate converging in those plains and mountains that are so far and yet so near in this interconnected world to all of us.

Thanks to the efforts of the international community, the perpetrators of the horrific terrorist attacks of 9/11 – attacks which killed citizens from more than 90 countries – were driven from Afghanistan, and the Afghan people made a promising start toward a more secure future. But since those first hopeful moments, our collective inability to implement a clear and sustained strategy has allowed violent extremists to regain a foothold in Afghanistan and in Pakistan, and to make the area a nerve center for efforts to spread violence from London to Mumbai.

The range of countries and institutions represented here is a universal recognition that what happens in Afghanistan matters to us all. Our failure to bring peace and progress would be a setback not only to the people of Afghanistan, but to the entire enterprise of collective action in the interest of collective security. Our success, on the other hand, will not only benefit Afghanistan, Pakistan and the region, but also the blueprint for a new diplomacy powered by partnership and premised on shared interests.

So as we recommit ourselves to meet our common challenge with a new strategy, new energy, and new resources, let us be guided by an ancient Afghan proverb, “patience is bitter, but its fruit is sweet.”

The plan I outline today is the product of intensive consultations with nations that have donated troops and support; Afghanistan’s neighbors and international institutions that play a vital role in Afghanistan’s future. The results of these consultations are clear: Our strategy must address the challenge in Afghanistan and Pakistan; it must integrate military and civilian activities and support them with vigorous international diplomacy; and it must rest on the simple premise that while we can and will help, Afghanistan’s future ultimately rests with the Afghan people and their elected government. Security is the essential first step; without it, all else fails. Afghanistan’s army and police will have to take the lead, supported by the International Security Assistance Force.

President Obama has announced that the United States will deploy 17,000 more soldiers and 4,000 additional military trainers to help build up Afghan security forces. The international community will also have to help. We should provide every army and police unit in Afghanistan with an international partner that can provide training and help build capacity. Our collective goal should be standing up an army of at least 134,000 soldiers and a police force of at least 82,000 officers by 2011. These steps will provide the people of Afghanistan with an opportunity to fight and win their own battle for their nation’s future.

We must also help Afghans strengthen their economy and institutions. They know how to rebuild their country, but they need the raw material of progress – roads, public institutions, schools, hospitals, irrigation, and agriculture. The United States is supporting the Government of Afghanistan’s National Development Strategy, the National Solidarity Program, and other initiatives that help Afghans improve their lives and strengthen their own communities.

In consultation with the Afghan Government, we have also identified agriculture – which comprises 70 percent of Afghanistan’s economy – as the key for development. In the 1970s, Afghans exported food to their neighbors. They were often called the garden of Central Asia. Today, this sector lags far behind, and its problems feed the deadly malignancy of the narcotics trade. The United States is focusing its efforts on rural development in provinces near the Afghan-Pakistan border, and we hope that others gathered here will heed the United Nations’ and Afghan Government’s call for help throughout the country with job creation, technical expertise, vocational training, and investments in roads, electrical transmission lines, education, healthcare, and so much else.

As we work with the Afghan people to supply these building blocks of development, we must demand accountability from ourselves and from the Afghan Government. Corruption is a cancer as dangerous to long-term success as the Taliban or al-Qaida. A government that cannot deliver accountable services for its people is a terrorist’s best recruiting tool.

So we must work with bodies such as Afghanistan’s Independent Directorate of Local Governance to ensure that the government at all levels is responsible and transparent. The international community, gathered here, can help by providing auditors and governance experts and training a new generation of civil servants and administrators.

To earn the trust of the Afghan people, the Afghan Government must be legitimate and respected. This requires a successful election in August – one that is open, free, and fair. That can only happen with strong support from the international community. I am, therefore, pleased to announce today that to advance that goal, the United States is committing $40 million to help fund Afghanistan’s upcoming elections.

We must also support efforts by the Government of Afghanistan to separate the extremists of al-Qaida and the Taliban from those who joined their ranks not out of conviction, but out of desperation. This is, in fact, the case for a majority of those fighting with the Taliban. They should be offered an honorable form of reconciliation and reintegration into a peaceful society if they are willing to abandon violence, break with al-Qaida, and support the constitution.

Just as these problems cannot be solved without the Afghan people, they cannot be solved without the help of Afghanistan’s neighbors. Trafficking in narcotics, the spread of violent extremism, economic stagnation, water management, electrification, and irrigation are regional challenges that require regional solutions.

The United Nations has a central role in this effort to coordinate with the Government of Afghanistan and neighbors in the region to make sure that programs are properly prioritized and well focused. We are committed to working with Secretary-General Ban Ki-moon and UN Special Representative Kai Eide to achieve that goal. The United States Special Representative for Afghanistan and Pakistan, Ambassador Richard Holbrooke, will lead American efforts as we move forward, and we welcome the appointment of special representatives by other countries.

If we are to succeed, we will need the help of all the nations present here. As President Obama has pointed out, “the world cannot afford the price that will come due if Afghanistan slides back into chaos.” While there is great temptation to retreat inward in these difficult economic times, it is precisely at such moments that we must redouble our effort. And as we make commitments and contributions, we must ensure they are flexible enough to respond to immediate needs and evolving opportunities. And we all must be willing to coordinate those efforts together.

The challenge we face is difficult, but the opportunity is clear if we move away from the past. All too often in the past seven years, our efforts have been undermanned, under-resourced and underfunded. This goal is achievable. We know we have made progress where we have made adequate investment and worked together.

The status of Afghanistan’s army, the lives of women and girls, the country’s education and health systems are far better today than they were in 2001. So if all of us represented here work with the government and people of Afghanistan, we will help not only to secure their future, but ours as well.

Now the principal focus of our discussions today is on Afghanistan, but we cannot hope to succeed if those who seek to reestablish a haven for violence and extremism operate from sanctuaries just across the border. For this reason, our partnership with Pakistan is critical. Together, we all must give Pakistan the tools it needs to fight extremists within its borders.

The Obama Administration has made a strong commitment through our support for legislation called the Kerry-Lugar assistance program. And in a few weeks, we will have a chance to join together in Tokyo for a meeting of the Friends of Democratic Pakistan to provide the support that the Pakistani Government and people need. I urge the nations here today in support of Afghanistan to join us in Tokyo on April 17th to help the people of Pakistan.

This effort has already required great sacrifice and it will require more. But in Afghanistan and Pakistan, we face a common threat, a common enemy, and a common task. So let us use today, this conference, to renew and reinvigorate our commitment and our involvement, and to lay a firm foundation for a safer region and a safer world. It is in the interests of all of the people who we represent as we sit around this conference table here in The Hague, and for the kind of world that we wish to help create.

Thank you very much.

PRN: 2009/T5-2

The Implications of the European Contribution to the Global Financial Crisis for the G-20 Summit

The Implications of the European Contribution to the Global Financial Crisis for the G-20 Summit. By Ted R. Bromund and Daniella Markheim
Heritage WebMemo #2369
March 30, 2009

The story that Europe is telling about the global financial crisis is untrue: The crisis is not simply the fault of the United States. European policies, on both the national and the EU levels, contributed to the buildup of systemic risk that led to the crisis. These policies reduced European competitiveness, led to high levels of leverage at European banks, helped to create property bubbles across Europe, and--through both the Euro and the broader policy of European integration--introduced moral hazard into European markets.

The basic fallacies of European policies are their emphasis on top-down control and their advocacy of a one-size-fits-all model. The policies the EU is advancing for the G-20 summit repeat these errors on a larger scale. Instead of blaming the U.S., Europe should address its lack of competitiveness and growing entitlements burden. Doubling down on centralized control will result in lower growth and a less stable world economy at a time when Europe needs to promote a sustained recovery.

The European Myth

Europe is telling a story about the origins of the global financial crisis. The story is simple: It is America's fault. The BBC reports that the European resistance to stimulus spending derives from its reluctance to go deeper into debt "to rescue the US economy, which they argue was the country that caused the crisis in the first place."[1] The Economist concluded in October that the European approach to the crisis was based in part on the "flawed" assumption that the financial system is chiefly suffering from "transatlantic contagion."

The first signs of the current global financial crisis did appear in the U.S. But the collapse of the U.S. real estate market, though important, was merely the first stone in an avalanche. As the Economist pointed out, the view that only the U.S. is to blame "fails to take account of ... slowing [European] economies ... the slumping housing markets in countries such as Spain and Ireland ... [and] European banks' dependence on wholesale funding."[2]

The origins of the global financial crash, not surprisingly, are global. Some factors affected some countries more than others, but no country has cause to claim that it was damaged solely by the actions of others. Yet it is those actions that must now face scrutiny. If there is a common theme in the crisis, it can be found in the interaction between politics and economics that created perverse and ultimately dangerous incentives.

The European Reality

In spite of the desire of the EU to pretend otherwise, the European states are very different. Thus, at the national level, the problems these states must confront are not identical. Nevertheless, four features that are present in more than one European state deserve to be highlighted:
  1. A loss of competitiveness. European states such as Ireland and Italy have lost competitiveness. In these states, public expenditure has grown faster than private sector pay and productivity. In Ireland, for instance, public spending doubled between 1997 and 2003. This caused inflation to rise two-and-a-half times faster than in the Euro zone as a whole.[3] The loss of competitiveness was the result of government policies that placed excessive burdens on productive employment.
  2. The level of leverage in European banks. Leverage is the ratio of a bank's total liabilities to shareholder equity. Higher leverage means the bank is doing more business on a relatively narrower base. Leverage can be excessive, but it is not evil--on the contrary, it is necessary for the functioning of the banking system. There is wide debate on the best way to measure leverage. But it is clear that many European banks were more highly leveraged than their American counterparts. A survey by the Centre for European Policy Studies found that the average leverage ratio of Europe's twelve largest banks as of September 2008 was 35 to 1, compared to less than 20 to 1 in the U.S. The survey described Europe's ratios as "a disaster in waiting."[4] Higher levels of leverage do make more credit available and thus reduce its cost. This was appealing in Europe, because cheaper credit fueled growth in its generally sluggish economies.
  3. The European property bubbles. But this rapid expansion of credit in Europe played an important role in the creation of European real estate bubbles. The IMF has pointed out that, in the run-up to the crisis, "credit aggregates grew extremely fast in the United Kingdom, Spain, Iceland, and several Eastern European countries. As in the U.S., these credit expansions fueled real estate booms. House prices rose rapidly in most of the Eastern and Western European countries now caught in the financial turmoil."[5] The bubbles in Europe were as unsustainable as those in the U.S.
  4. The moral hazards of the Euro and the EU. These factors speak to the same underlying cause. The years after the Cold War saw high global growth and benign conditions that "fed the build up of systemic risk." As the IMF puts it, "[l]ow interest rates, together with increasing and excessive optimism about the future, pushed up asset prices ... [in] a broad range of ... advanced countries and emerging markets." The result was a search for yield and the creation of ever-riskier assets.[6]
In Europe, the creation of the Euro was both consequence and cause of that excessive optimism. The case for the currency was always fundamentally political: that it would weld Europe closer together. But the Euro zone is not an optimal currency area. The Euro represents the triumph of politics over economics. It is a one-size-fits-all model for a continent where, in fact, one size does not fit all.

Moreover, the Euro was, in essence, a seal of approval on countries such as Spain, Portugal, and Greece. This encouraged investors to regard these markets as less risky than they in fact were. The admission of many of the now-troubled Eastern European states into the EU also created moral hazard in the market by encouraging investors to treat these states as if they ranked with the established economies of the West. This approach did not accord with reality.

The False European Solutions

In short, a series of policies--some national, some European--created a framework that encouraged risky decisions by investors and weakened the national foundations on which the resulting bubbles grew. The irony is that Europe is now proposing to double down on these failed policies in response to the crisis.

Europe's call for a global regulator with a mandate to ensure the stability and balance of the world economy would be a tremendous step toward forcing its slow growth model on the rest of the world. Its campaign against "tax havens" is another part of this effort to force other nations to adopt Europe's own anti-growth, anti-competitive tax regime.[7]

These policies are a return to the concept of one size fits all and to the belief that politicians and unelected bureaucrats on the global level can effectively manage the world's economy. Europeans should ask why, if this model works so well, it failed to stop the build-up of systemic risk in Europe. The campaign to blame the U.S. is a form of denial: By refusing to look in the mirror, Europe seeks to avoid facing the unpleasant reality of failure.

This reality includes the fact that the European states are not all alike. Nothing underlines this more effectively that the fact that Germany, having been one of the cheerleaders of European integration, is now reluctant to bear a disproportionate share of the Europe-wide costs of stabilizing that system.[8] From the national point of view, this reluctance makes sense. But it is a sign of the incoherence of European integration that its leading advocate is not willing to pay the bills for the policies it claims to wholeheartedly back.

The True Solutions

It is legitimate to discuss measures that should be taken in immediate response to the crisis. But neither these measures nor the crisis itself should divert Europe from addressing its underlying problems. These begin with its lack of competitiveness and the entitlements burden that, as in the U.S., poses what will in the long term be an unbearable burden.[9] Instead of turning--as it and its trading partners are now doing--to protectionism, Europe needs to move away from the faith in centralized control and the ability of governments to manipulate markets that has brought turmoil to the U.S. and Europe alike.[10]

Ted R. Bromund, Ph.D., is Senior Research Fellow in the Margaret Thatcher Center for Freedom, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, and Daniella Markheim is Jay Van Andel Senior Trade Policy Analyst in the Center for International Trade and Economics at The Heritage Foundation.

Full text w/notes here.

Activism in the Time of Cholera: Anti-GMO groups keep the poor from getting help

Activism in the Time of Cholera: Anti-GMO groups keep the poor from getting help. By Henry I. Miller
Wall Street Journal, March 29, 2009

The cholera epidemic in Zimbabwe has sickened more than 100,000 and killed at least 4,500, with more cases reported daily. The disease remains all too lethal elsewhere, too, having killed about 120,000 people in 2007, according to the World Health Organization. But thanks to a simple innovation, those kinds of statistics could soon be a relic of the past, like deaths from smallpox and polio -- if not for the interference of a few influential politicians and activist groups.

Cholera is a diarrheal disease caused by contamination of food and water by feces. For those of us who live in industrialized countries, diarrhea is little more than a nuisance, most often involving some discomfort and bloating. But in sub-Saharan Africa and parts of Latin America and Asia with poor access to health care, clean water and other resources, diarrhea is the No. 2 infectious killer of children under the age of five, accounting for two million deaths a year.

Since the 1960s, the standard of care for childhood diarrhea in the developing world has been a glucose-based, high-sodium liquid that is administered orally and is known as a "rehydration solution." This low-tech product was revolutionary. It has saved millions of lives and reduced the need for costly -- and often unavailable -- hospital stays and sterile intravenous fluids. However, this product has done nothing to lessen the severity or duration of the condition, which over time leads to malnutrition, anemia and other chronic health risks.

The answer may be an affordable innovation that combines high and low technology. It consists of adding two human proteins, lactoferrin and lysozyme, which are produced inexpensively in genetically modified (GM) rice plants, to rice-based oral rehydration solution. Studies performed in Peru show that when this is done, the duration of children's illness is cut from more than five days to three and two-thirds. The rate of recurrence also falls. This advance could save many of those who are dying in Zimbabwe and elsewhere.

What made this approach feasible was a private company's invention of a method to produce human lactoferrin and lysozyme in gene-spliced rice, a process dubbed "biopharming." This is an inexpensive way to create the proteins necessary to fortify millions of liters of rehydration solution.

Sounds like a great success, right? Not yet; maybe not ever. The company has been trying for more than six years to get the product approved by the U.S. Food and Drug Administration, which has raised no real safety concerns but has dithered over the appropriate regulatory route for approving the product. Because a panel of experts has already deemed the proteins safe, the best guess is that internal FDA politics and lobbying by NGOs and the company's competitors are causing the delays.

Virtually every biotech breakthrough brings the antitechnology, antibusiness fabulists out of the woodwork, and this one is no exception. One radical biotech opponent, Hope Shand, remonstrated, "The chance this will contaminate traditionally grown crops is great. This is a very risky business."

Nonsense. Rice is self-pollinating, so interbreeding with other rice varieties is virtually impossible. But even in the worst case, "contaminate traditionally grown crops" with what? With two human proteins normally present in tears, breast milk and saliva? The only contamination here is of public discourse, from the lies and misrepresentations of antibiotech activists.

Another miraculous product made with gene-splicing techniques, and which has also had to endure the slings and arrows of wrong-headed activists and regulators, is "Golden Rice." This collection of new rice varieties is enriched by the introduction of genes that produce beta-carotene, which the body can convert into vitamin A.

Vitamin A deficiency is epidemic among poor people in the tropics whose diet is dominated by rice (which contains neither beta-carotene nor vitamin A) or similar foods. World-wide, 200 million to 300 million children of preschool age are at risk of vitamin A deficiency, which increases susceptibility to infections such as measles and diarrheal diseases and is the leading cause of childhood blindness in developing countries. About 500,000 children become blind due to vitamin A deficiency each year, and 70% of them die within a year.

The concept is simple: Although beta-carotene is not normally found in the seeds of rice plants because of the absence of two enzymes needed to make the substance, rice plants do make it in the green portions of the plant. When GM techniques are used to introduce the two missing genes, the rice grains become capable of producing and accumulating large amounts of beta-carotene.
Like the protein additives to the rehydration solution, Golden Rice is being blocked from the market by regulatory delays -- both by unscientific, draconian requirements concocted by United Nations agencies and by regulators in several Asian countries.

Despite their vast potential to benefit humanity, and negligible likelihood of harm to human health or the environment, the gene-spliced rice varieties remain in regulatory limbo with no end in sight. Activists have spread wild tales of gene-spliced crops causing illness and baldness, and of giving rise to antibiotic-resistant bacteria. There is absolutely no evidence for such claims.

In contrast to GM plants, those constructed with older, less precise techniques for genetic improvement are subject to no government scrutiny or requirements -- or opposition from activists. As a result, companies are systematically discouraged from adopting the best technologies, and when feasible prefer to use older, inferior techniques to achieve the desired result.

In an April 2008 editorial in the journal Science, Nina Fedoroff, a plant geneticist who serves as senior scientific adviser to the U.S. secretary of state, wrote: "A new green revolution demands a global commitment to creating a modern agricultural infrastructure everywhere, adequate investment in training and modern laboratory facilities, and progress toward simplified regulatory approaches that are responsive to accumulating evidence of safety." The story of GM rice makes it clear that we do not yet have the will and the wisdom to make that happen.

Dr. Miller, a physician and fellow at Stanford University's Hoover Institution and the Competitive Enterprise Institute, headed the FDA's Office of Biotechnology from 1989 to 1993.

Daiichi Sankyo R&D Head Confident About New Blood Clot Drug

Daiichi Sankyo R&D Head Confident About New Blood Clot Drug. By Kazuhiro Shimamura
Dow Jones, Mar 31, 2009

TOKYO -(Dow Jones)- Daiichi Sankyo Co.'s (4568.TO) research and development chief said Tuesday the Tokyo-based pharmaceutical company is confident about the competitiveness of its new blood clot prevention drug currently in clinical studies.

By comparing its clinical data so far with those of rival products by Bayer HealthCare of Bayer AG and Bristol-Myers Squibb Co., Daiichi Sankyo's edoxaban, previously known as DU-176b, has shown a very favorable profile of safety as well as efficacy in a dose-dependent manner, Kazunori Hirokawa, the head of the company's R&D division said at a news conference.

Edoxaban is for preventing potentially fatal blood clots in people suffering from atrial fibrillation, a type of irregular heartbeat, and venous thromboembolism, which causes blood clotting in veins.

It is one of Daiichi Sankyo's promising new drug candidates which have a potential to become a blockbuster drug with annual sales topping $1 billion.

Edoxaban, Bayer's rivaroxaban and apixaban jointly developed by Bristol-Myers and Pfizer Inc. work by inhibiting so-called factor Xa enzime involved in the blood coagulation process.

While the two rival drugs are closer to commercialization as an atrial fibrillation treatment as long as no serious problems occur in their clinical trials, edoxaban's safety profile has been proven in a longer phase of studies in which no serious side effect is observed, he said.

Other advantages of edoxaban include the precise amount of doses already set for final use in patients, Hirokawa said.