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Wednesday, September 23, 2009

Business and finances in Europe, August, 2009

Today (sorry for being irregular, I'm just so busy) :
  1. EU unveils microfinance fund to tackle unemployment
  2. Big pharma expresses relief over EU inquiry
  3. EU to tighten bank lending to offset risks
  4. G8 leaders pledge €14 billion for food security
  5. Carbon tariffs falling out of favour as trade war looms

Quote of the day: One thing I completely don't understand is why they always focus on agriculture. It simply doesn't make sense to me. In Europe and Americas, the famine was defeated by technology, not by agriculture in terms of more farms. The key moments were the use of fertilizers,machines and so on. They don't subsidize this! They give money to keep them poor! And that's so sad!

EU unveils microfinance fund to tackle unemployment

2 July 2009

Newly unemployed people in need of loans to start their own businesses will be able to avail of up to €25,000 in the form of loans and credit guarantees from the European Union. The scheme, especially targeted at young people, will make €100 million available over a four-year period.

The funds, unveiled on Thursday (2 July), could be used to leverage more than €500 million and will be dispersed through banks and non-profit trusts as part of a scheme run in partnership with the European Investment Bank (EIB), the Commission said.

The scheme will begin in 2010 for four years and will be operated as a pan-European initiative with funds drawn down on demand. Specific portions of funds will not be allocated to each of the 27 EU countries, the Commission said.

The €100 million made available for the microfinance facility has been drawn from other budgets and represents a reallocation of existing funds rather than an injection of new money.

The move is designed to help people who have lost their jobs, those who wish to start a small business, and people who have difficulty securing finance from traditional banking sources. Young people and microenterprises in particular face severe problems getting loans, a Commission official indicated.

According to Employment and Social Affairs Commissioner Vladimír Špidla, the EU will take the "first risk" in providing funding and guarantees for entrepreneurs in order to attract additional credit. The EIB will accept the "second risk," with other investors benefiting from a degree of protection thanks to the availability of European funds.

In addition, the European Social Fund may offer interest rate rebates on the loans and is also expected to offer guidance and mentoring to entrepreneurs benefiting from the scheme. source
My comment: Click here for the Swedish version of Lisbon Strategy on employment. Nothing new there . But this article reminds me of Zeitgeist. I'm not some kind of paranoia/conspiracy person, I do believe in logic, but when banks right after a crises that sucked down global finances start offering credit - note - in situations that are not applicable for other banks- that looks kind of suspicious. Yes, it's hard to guess what the conditions would be, but still, I get little bit mad when the guys with the money, start offering money to anyone, just to produce. If your system doesn't stimulate production, if your money doesn't mean anything without that production, then why don't we change the system? I think that crisis should have told us that our system is bad, but instead, just as in Nature, nothing was lost, only changed its owner. Well, I don't get it, why if I'm without work I should be stimulated to start a business. I don't want to start a business. I'm not interested into producing stuff that only the middle man benefits from. I want to sustain my life and eventually create something valuable for the others. But I simply don't see why I should start a business, employ people and get under even more pressure than I'm right now. Oh, now, thank you very much. I'll play it solo.

Big pharma expresses relief over EU inquiry

9 July 2009

The European pharmaceutical industry has expressed satisfaction with the publication of a long-awaited investigation into alleged anti-competitive practices in the sector, saying the final report is softer than a preliminary version released in November 2008.

EFPIA, the trade group representing large pharmaceutical companies, highlighted a shift in tone in the EU executive's final report on the sector and welcomed the "constructive policy recommendations".

At a briefing yesterday (8 July), EU Competition Commissioner Neelie Kroes pressed for greater use of cheaper generic medicines in caring for an ageing population, and was critical of what she described as "rotten" agreements between some firms which hold up the release of new drugs.

However, the report puts considerable emphasis on the need for patent reforms and well-flagged plans for a single patent court system. This was welcomed by EFPIA, which said streamlining the European patent system would cut costs and reduce current legal uncertainties.

The pharma group also said the final report "failed to substantiate" earlier allegations that patenting strategies dampen innovation and illegitimately delay generic entry. It welcomed the acknowledgment in the report of the importance of Europe's research-based pharmaceutical industry.

EFPIA board member Thomas Cueni said the EU has also accepted that not all "settlement agreements" between patent-holding pharma firms and generic manufacturers are necessarily improper.

The industry expressed concern that the push towards greater use of generics, coupled with the rising costs of conducting R&D in Europe, would damage the European pharmaceutical sector.

The European Commission is to probe agreements between Les Laboratoires Servier and a number of generic companies over "possibly restrictive" practices which may have delayed the availability of a generic heart medication.

EU officials suggested further cases could follow, saying the new report would pave the way for increased regulatory scrutiny of settlement agreements in which brand-name companies pay generics manufacturers for not competing with them.

The generic medicines industry also welcomed the publication of the report and called for the swift implementation of its findings.

However, consumer groups were less impressed. BEUC, the European consumers organisation, said questions remain over anti-competitive practices in the pharma sector and patients are getting a raw deal.

Key findings of the pharmaceutical sector inquiry:

  • A Community patent and unified specialised patent litigation system in Europe would reduce administrative burdens and uncertainty for companies.
  • Recent initiatives of the European Patent Office (EPO) to ensure a high quality standard of patents granted and to accelerate procedures are welcome.

The Commission is also urging member states to:

  • Ensure that third party submissions do not occur and in any event do not lead to delays for generic approvals, and;
  • Significantly accelerate approval procedures for generic medicines - for example, the Commission believes that generic products should automatically/immediately receive pricing and reimbursement status where the originator drug already benefits from such status, which would allow for a faster product launch in certain cases;
  • Take action if misleading information campaigns questioning the quality of generic medicines are detected in their territory, and;
  • Streamline trials that test the added value of novel medicines. source
My comment:All very nice, but this looks little bit like soc-communiquee. The things they "found" are absolutely obvious, just as stuff they urge the member states are completely logical. So, good work, you spent my tax-payers money very well, thank you. Now, on patents, this is so hard subject. I so wish I had the solution, but I doubt it. In any case, I think that it's fair that any product should be protected with a patent, maybe for say 5 years (short, but we live in dynamical world) or until someone finds out another way of production. But after this, there's no point in keeping a patent for something that isn't already unique. I think people simply forgot what is the idea behind the patents - to stimulate innovation. Sure, a new drug is a great investment, it's expensive to develop it, to go trough all the tests and then to manufacture it and market it. That's why they must get say 5 years patent rights, but after that, come on. Let's be real, the investments probable pay off in a year if the drug was such a good idea. If it wasn't and they cheated on the trials, oh well, next time be honest. But my point is that the investments should pay off in a less than 5 years. Everything beyond that is simply too much. It's not like they pay a lot of money to the scientists that developed the thing for them...

EU to tighten bank lending to offset risks

8 July 2009

European Union finance ministers agreed yesterday (7 July) to tighten bank loans during periods of economic growth in order to boost liquidity and make funds available for when recession hits. The agreement came as national regulators proposed to build a bank liquidity buffer to guarantee a "survival period of at least one month".

Under the agreed plan on long-term rules, which the European Commission will use to draft legislation in October, banks would be required to build sizeable reserves of capital in good times so that they can act as a buffer during downturns.

This would prevent financial institutions from ruthlessly opening the credit market during periods of economic boom, while easing lending during difficult times.

The scheme is intended to ensure the 27-nation EU is better prepared for any repeat of the global financial crisis, which was triggered by bad loans in the United States which spread quickly throughout the world's economies.

"The Council agrees that further work is necessary to mitigate pro-cyclicality by creating counter-cyclical capital buffers, i.e. to be raised in good times and to be drawn in downturns," the ministers said in a statementPdf external after their monthly meeting in Brussels. Pro-cyclicality is an aspect of economic policy that could magnify economic or financial fluctuations.

"We need to see stronger buffers in banks in good times. It is important that we mend the banking system so that credit gets running again. We need stronger regulation, more efficient regulation," said Swedish Finance Minister Anders Borg, whose country holds the EU's rotating presidency.

The Council statement was echoed by draft guidelines on liquidity buffers published yesterday by EU banking regulators brought together in the Committee of European Banking Supervisors (CEBS).

"A survival period of at least one month should be applied to determine the overall size of the liquidity buffer under the chosen stress scenarios. Within this period, a shorter time horizon of at least one week should also be considered to reflect the need for a higher degree of confidence over the very short term," CEBS said.

The committee also described the type of assets that could be accepted in a liquidity buffer: they must be money or assets that can be turned into cash quickly with a predictable value. Over-reliance on one type of asset, whose rapid sale to raise cash could disrupt the broader market and trigger problems for other banks, should also be avoided, CEBS said. The committee carefully avoided spelling out an absolute figure for the reserve, as this will vary from bank to bank.

Countries rejected Germany's proposal to relax the Basel II rules on capital requirements for a limited period so that credit supply does not dry up to such an extent that firms are put at risk. But the plan gave rise to little enthusiasm.

source

My comment: Of course, I have no idea what they are talking about, I'm not an economist. But I think it makes sense that when you see certain type of money-management can lead to problems, you should regulate it in away that would minimize that risk. That's all I can say. And that, of course, I don't like the idea of big credits, if you are an entrepreneur and you need a credit to start off a business - ok. But credits for everything - no!

G8 leaders pledge €14 billion for food security

10 July 2009

Leaders from the Group of Eight (G8) industrialised nations agreed today (10 July) to commit around €14 billion over the next three years to helping the world's poorest countries develop their agricultural sectors.

"We welcome the commitments made by countries represented at L'Aquila [the summit host town in Italy] toward a goal of mobilising at least $20 billion [€14.3 billion] over three years," reads the declarationPdf external .

"We are committed to increasing investments in short, medium and long-term agriculture development that directly benefits the poorest and makes best use of international institutions," it adds.

The declaration does not make clear whether it is all new funds, nor does it give details of individual countries' contributions. It also makes no mention of a trust fund for the contributions to be managed by the World Bank, a proposal put forward by Washington in previous drafts but opposed by the EU.

José Manuel Barroso, President of the European Commission said "the EU will be contributing with around €3 billion within this Initiative." The EU contribution comes on top of the bloc's €1 billion food facility announced last year (EurActiv 05/12/08).

The declaration underlines that the combined effect of long-standing underinvestment in agriculture, price volatility and the economic crisis had led to increased poverty and hunger in developing countries.

According to the United Nations, the number of malnourished people has risen over the past two years and is expected to top 1.02 billion this year, reversing a four-decade trend of declines.

The G8 summit kept a strong commitment to ensure adequate emergency food assistance, but its focus on agricultural investments reflects a US-led shift toward longer-term strategies to fight hunger.

The United States is the world's largest aid donor of food - mostly grown domestically and bought from US farmers.

G8 leaders said their approach would target increased agricultural productivity, stimuli for harvest interventions, emphasise private-sector growth, women and smallholders, preserve natural resources, and prioritise job expansion, training and increased trade flows.

The announced funding over three years compares with $13.4 billion [€9.6 billion] which the G8 says it disbursed between January 2008 and July 2009 for global food security.

source

My comment: One thing I completely don't understand is why they always focus on agriculture. It simply doesn't make sense to me. In Europe and Americas, the famine was defeated by technology, not by agriculture in terms of more farms. The key moments were the use of fertilizers, machines and so on. They don't subsidize this! They give money to keep them poor! And that's so sad! I'm not some type of techno-freak and certainly I don't believe that genetically modified crops can save the planet from starvation, that's nonsense (and a well sold lie). But if we really want to help the hungry people, we have to educate them and give them the technology we have adapted to their environment. What's even more, we must stimulate them to discover what works well for their life-style and to help them turn it into technology. I'm in no way for the increased use of chemicals and the deforestation of Africa - I think it's clear for everyone by now, that we have to go sustainability and for all kinds of efficiency. But that is doable if there is a political and financial will. As long as we keep treating them like pets, they will continue counting on us to provide food. That's wrong, bad and ugly!

Carbon tariffs falling out of favour as trade war looms

28 July 2009

A majority of European countries are reluctant to pick up on current debates in France and the United States about carbon tariffs designed to fend off competition from countries which have not committed to reducing emissions, for fear of triggering a green trade war.

So far, France has been the only member state to openly rally for the introduction of border measures to secure the competitiveness of European industry against emerging economies. It put the measure on the table in 2008 when the EU was immersed in discussions on a revision of its emissions trading scheme (EU ETS).

Since agreement was reached on the revised directive in December 2008, carbon tariffs largely disappeared from debates until the US floated the idea in a draft climate bill. In the EU, meanwhile, France is having difficulty finding allies to rally around the cause.

As EU environment ministers met informally last week to discuss Europe's position for international negotiations, the Swedish EU Presidency warned that hints of protective measures would block progress towards a global deal, which it said was already too slow.

"The threat of taxes to harm developing countries would seriously make negotiations more difficult," said Swedish Environment Minister Andreas Carlgren.

German State Secretary Matthias Machnig reportedly echoed Swedish views that carbon tariffs would send the wrong message ahead of December's UN climate conference in Copenhagen, calling them "a new form of eco-imperialism".

Moreover, carbon-related border taxes could potentially conflict with WTO rules, which aim to provide for free competition (EurActiv 01/07/09).

The EU is dealing with competitiveness issues by granting free emisssion permits to industries which it deems vulnerable to relocating in areas with less stringent environmental laws, dubbed 'carbon leakage' (EurActiv 26/05/09).

The prevailing view among member states and the European Commission is that these internal measures should be the first-aid solution, while border adjustments would come as a last resort.

The US House of Representatives inserted a provision in its draft climate bill that allows the country to impose a 'border adjustment' after 2020 on certain products from countries which do not limit their global warming emissions.

But President Barack Obama spoke strongly against such measures after the House had passed the bill.

Rajendra Pachauri, chair of the UN's Intergovernmental Panel on Climate Change (IPCC), also criticised the draft legislation, warning that it would allow developing countries to tax US exports in return.

China and India immediately interpreted the pending legislation as an offensive against their industries. The US admnistration is attempting to allay their fears during the two-day UN-China Strategic and Economic Dialogue ending today (28 July). source

My comment: I must say, I am absolutely for "emissions border control". Why? Because it is the only way to protect the developing countries from the big companies that will go there and pollute as much as they can. Like taking all their resources and using the cheap workers isn't enough. And in the end, China reduces the export of raw minerals - this is also against free market. Free market cannot exist in a world that isn't free. So, let's move on from the populism and to admit that imposing taxes for countries that are not obeying the emissions regulations is the best thing to do in the moment. And after all, why what France wants to do - to impose CO2 taxes on french citizens - is good and ok, and to impose taxes on China isn't? I don't understand at what point countries became more important than the citizens in them...


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