Japan is reeling between economic and nuclear crises

By LUIS MIRANDA | THE REAL AGENDA | OCTOBER 23, 2012

The earthquake that shook Japan last year is not the only origin of the shock waves the country is now experiencing. The economic crisis has also shaken the Asian nation. During the first semester of the current fiscal year, the Japanese had a historic fall in exports, which in turn resulted in the largest fiscal deficit.

The financial crisis in the Euro zone and North America, greatly decreased the amount of products that Japan was able to send abroad which together with the costly imports of crude oil gave the island’s economy a double punch right on the face. The explosion and collapse of the nuclear reactors at the Fukushima complex not only caused the contamination of most of the food and water on the island, but also meant that Japan had to increase imports of oil to satisfy its energy needs.

In the period from April to September, the trade deficit in what is considered the third world economy, surged 90.1 percent year on year and stood at 3.22 trillion yen (31,200 million euros), the highest since 1979, when the Ministry of Finance began compiling the results of this indicator.

Behind this decline was the drop in exports, a pillar that supports about 40% of Japan’s gross domestic product and has been handicapped primarily by lower demand due to the global economic crisis. Japanese exports fell sharply especially in Europe, where they were down 16.1%, with significant losses in countries like the UK (-26.3%), Italy (-31.4%) and Germany (-11, 7%), and Japanese traditional sectors such as semiconductors, electronic devices or vehicles.

Japan posted its first trade deficit in this period with the European Union, which registered at 92,100 million yen (890 million euros), according to preliminary data released Tuesday. In the case of Spain, in the spotlight because of its debt crisis, Japan closed the fiscal semester with a trade deficit of 59.259 million yen (573 million euros), the result of a fall in exports of 19.3%, while imports increased by 13.7%.

To this scenario, Japan had to add the difficult situation with China, which is Japan’s largest trading partner. The two countries began a  territorial dispute that resulted in the worst bilateral tension in years and is reflected in the decline in demand for Japanese products in the Chinese mainland.

In the first six months of the current fiscal year, exports from Japan to the second largest economy contracted by 8.2% over the same period last year, while imports rose 2%. The consequence was a growing deficit of 1, 53 trillion yen (14,800 million euros). The drop was even more pronounced in the month of September, when the conflict with China escalated and there was a wave of demonstrations against Japan all over China. Some protestors even attacked Japanese-owned companies.

Sales for that month, which originated in Japan, suffered a setback of 14.1%, while imports increased by 3.8% over the same month of 2011. The general decline in Japanese exports was also influenced by the strengthening of the yen, which is seen by many investors as a refuge in times of economic uncertainty. The value of the Yen caused Japanese manufacturers to get a smaller return for their products.

The slowdown in exports stopped Japan’s economic recovery after the setback at the devastating tsunami and nuclear accident in March 2011. Imports from Japan increased between April and September by 2.6% year on year to 35.38 trillion yen (EUR 342.537 million), largely due to an increase of almost 10% on the purchase of energy resources.

Japan used to get around 30% of its power from nuclear plants, but after the Fukushima explosion, and with nearly all of its nuclear plants out of service, the country had to buy more oil to power up its thermal power plants. Crude oil imports increased by 8.3% in the first half of the fiscal year, while purchases of liquefied natural went to 24.3%.

Unfortunately, the crisis is all but ending for Japan. New reports as recent as last week, state that Unit 4 from the Fukushima Nuclear Complex, which currently holds more than 1,500 nuclear fuel rods, is near complete collapse. If the total decimation of the nuclear reactor is completed, the deadly radiation would make it imperative to evacuate the whole island. The amount of radiation could be so serious, that it could make much of the world completely uninhabitable.

As reported on NaturalNews.com:

“According to the Secretary of former Japanese Prime Minister Naoto Kan, the ground beneath Unit 4 has already sunk by about 31.5 inches since the disaster, and this sinking has taken place unevenly. If the ground continues to sink, which it is expected to, or if another earthquake of even as low as a magnitude six occurs in the region, the entire structure could collapse, which would fully drain the cooling pool and cause a catastrophic meltdown.”

As it turns out, Japan’s economic problems are not necessarily what is attracting the attention of the country and the rest of the world.

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As the Euro zone Drowns, Countries prepare for Deeper Depression

Even the best banker forecasts warn about an imminent economic Depression

By LUIS MIRANDA | THE REAL AGENDA | AUGUST 15, 2012

The latest outlook issued by the European Central Bank (ECB) and the International Monetary Fund (IMF) provide a clear picture that shows how the euro area will fall into an economic depression. The question then is, how will the countries deal with the Depression and whether the banks will be more powerful or have collapsed too.

The risk of recession in the eurozone, after the economy of the region shrank by two tenths of a percent between April and June, threatens to slow the progression of the only growing component of the Spanish economy, that is the export of goods to the rest of the Euro nations. Today, more than half of Spain’s exports are sold in the Euro zone, but the threat of a deeper depression may affect what those nations buy from Spain in the coming months.

According to recent data published by the European statistical office (Eurostat), both the EU and the eurozone, whose member countries are major importers of goods manufactured by Spain, saw its economy falls 0.2% in the second quarter of the year.

The calculations of the European Central Bank (ECB) and International Monetary Fund (IMF) indicate that the recession will get worse in the euro area, as both agencies forecast a contraction of between 0.1% and 0.3 %, for the rest of 2012.

In the second quarter of 2012, the Spanish economy contracted 0.4%, according to the data advanced by the National Statistics Institute (INE), a fall that was not toned down by the positive contribution of the exports sector.

The latest data from the Spanish trade balance reflects an export growth of 3% until May, mainly by increased sales to emerging countries, although these markets still account for only a small part compared to Spanish business partners in Europe.

In fact, the primary client is still the European Union, which purchases 65% of Spanish exports, although sales to Spanish business partners remained stagnant in the first five months of the year. The euro zone receives more than half of Spanish goods, that is why the slow down of 1.1% in sales to these countries during the first five months of the year following the crisis have raised awareness about the difficult times ahead.

The economic developments in the euro countries has been mixed, with Germany so far resisting the crisis and, according to government numbers, growing by 0.3% in the second quarter, while France has not completely collapsed, but is experiencing a crippled economy. Both countries are major markets for Spain, with France buying some 17.4% of Spanish exports and Germany, the second most important partner getting 10.8%.

The best selling goods to these countries belong to sectors such as industrial technology and mechanical auxiliary industry and construction, chemicals, horticultural and fashion.

However, while the Germany has continued to increase the purchase of Spanish goods (6.5%), France has begun to cut its imports, which has resulted in a fall of 0.4% in sales to the neighboring country.

In the case of Germany it is important to mention the fact that the country is a major commercial creditor of Spain, although in the first five months the trade deficit has been shortened in half with Angela Merkel’s country. This has been the result of Spain not importing as many goods from Germany as it did previous to the crisis, for example.

The balance both the euro area and with the twenty seven EU countries is positive, since in both cases Spain sells more than it buys. However, the Spanish foreign balance with the rest of the world is in deficit, which is due to high energy costs arising from oil imports mainly, but also gas, coal and electricity.

The main creditors of Spain as far as energy is concerned are Russia and Nigeria, while the third is China, a country which buys mainly textiles from the Spanish manufacturing industry.

Meanwhile, Greece is trying to meet its commitments to investors. August 20 represented a key date, as it marked the date when the country had to pay off the  debt of 3,200 million euros in the hands of the European Central Bank. The mathematical impossibility to pay such debt, as it was explained in previous articles, obligated Greece to issue even more debt to finance the money owed to the ECB. With this, this country will continue the well known death cycle which in most cases concludes with the complete collapse of debtor nations.

Greece has now placed 4.063 million euros in treasury bills with maturities of three months at an interest rate of 4.43%, slightly above the 4.28% offered in July, as reported by the Greek Authority Management Public Debt (PDMA). The Greek government attempts to achieve a deferral of repayment of that debt or an advance of a new loan of 31,000 million from the second rescue package, which has been rejected by their European partners.

The disbursement of bailout money will be transferred only once the troika submits its report on the progress of the country and gives the approval for the new cuts for 2013 and 2014. Most buyers of the monthly auctions are Greek state banks themselves, which means that the entire financial system is in a downhill fall of self-financing in which the government issues securities to finance the maturities of bonds held by banks in the country, which, in turn, buy debt from the State to use it as proof of liquidity. Do you see the insanity here?

Manipulated Markets Make a Come Back

Does it make sense that during the deepest depression since 1929, the U.S. Stock Market comes back up from a 6oo+ point decline? Only a manipulated system where speculators have complete control could recover from a rout that showed how little confidence investors have in the market today.

by Luis R. Miranda
The Real Agenda
August 9, 2011

While countries are in dire straits to make payments on mostly illegally acquired debts and the price of oil continues to fall; while little to nothing is produced or manufactured in the industrialized world and no ingenuity makes it big anywhere in the world; while the most important currencies continue to tumble and other financial markets turn more sour; while unemployment continues to grow from the low 20’s and more people make use of food stamps and unemployment benefits; while more jobs are exported to third world nations that support slave work for their populations and inflation is only tamed by artificial manipulation of the currencies; while numerous people look to gold and silver as their salvation, surprisingly the stock market came back from the pantheon and surged to recover from the slide seen just a few hours ago.

There is very little that can't be done when someone or something controls fiat currencies, rating agencies, and financial markets.

But not only did the stocks came back strong; they had the largest gains in more than two years. Along with this “come back” the U.S. dollar got weaker and the Swiss franc rose the most since 1971. Even the very same Standard & Poor Index managed to recover almost 5 percent, the most significant gains since 2009. In the meantime, the origin of the financial disaster, the privately owned banks headed by the Federal Reserve announced their intent to print more worthless money into the economy as a way to “boost” confidence. Even though QE1 and QE2 failed to provide any confidence, or for that matter failed to provide anything positive, the FED believes it is appropriate to bring up QE3. With this, the FED shows its interest to purchase more government bonds, which will consolidate its position as the largest holder of U.S. government debt.

“The Fed is clearly setting up a situation that could offer them the potential to do something significant, if necessary,” Bruce McCain, who helps oversee $22 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a telephone interview. “That could be viewed as a positive,” added McCain. “People are starting to realize that what we’ve had in the market was an overreaction.” Really? Positive? How so?

Artificial Surge after the Decline

How can a stock market come back from a 600+ point decline in just a few hours if one considers that the cause of such loss -the downgrade of the U.S. debt rating- has not been dealt with? It simply boggles the mind, doesn’t it? The United States credit rating was lowered from AAA to AA+ by Standard & Poors, a rating agency that is paid by the banks to evaluate financial products and which is in part responsible for the current financial catastrophe. Together with Moody’s, S&P was created the by the banking system to carry out “independent” evaluations of financial products as well as credit confidence on institutions, state and local governments and of course whole nations.

According to Bloomberg, Stocks came back from a loss of $ 1 trillion after S&P downgraded the U.S. credit rating last Friday evening. The results of the downgrade were not felt until Monday, when the Markets opened all over the world. The S&P index sank about 11 percent and the stock market lost 648 points or more than 6 percent. But just 24 hours later, everything was different. “The MSCI All-Country World Index rose 2.1 percent for its biggest gain of the year”, says Bloomberg. “The index started the U.S. session valued at about 12.1 times profits, down from 21 in 1995..The MSCI Emerging Markets Index pared today’s drop to 2.2 percent after tumbling as much as 4.4 percent.”

Stocks Rally? What Rally?

In the Stock Market, the Dow Jones climbed almost 430 or 4 percent, failing to completely recover from the recent loss. The stocks experienced the 1oth more significant gain in its history. Can you believe it? In the middle of a Depression, the stocks rally the much?

Meanwhile, in the S&P, shares got to the front of the line due to the numerically significant gains. In total, they accumulated some 8.2 percent all together. This is the biggest rally since May 2009, which meant a complete recovery from Monday’s low. Bank of America Corp., which is now being sued by AIG for fraud, managed to gain 17 percent while other players like Hartford Financial Services got back 16 percent.

Of course the main stream media is giving all credit to the Federal Reserve, due to its announcement that it intends to “boost” the economy by injecting worthless cash into it. The FED’s head, Ben Bernanke and his aides came out to try to calm the demise a bit, although not everyone at the FED agreed with the move to bring along a new quantitative easing move. Three members from the policy committee dissented and instead called for maintaining interest rates low for a longer period of time.

As the docu-film “The Inside Job” impeccably exposes, there is very little that can’t be done when someone or something has the power to create money out of thin air, create rating agencies, control those agencies to give AAA ratings to whatever they choose and electronically manipulate the financial stock and bond markets whenever it’s convenient in order to perpetuate the fraudulent debt-based system the world has worked under since 1913.

False Policy Changes

The best way to perpetuate the above cited financial system is to have the available tool continuously reinforce the falsehood of the Central Bank sponsored plans. So, Moody’s has come out to praise the FED’s move to maintain the interest rates at a quarter of a percent in order to bolster the downturn. It’s a  “major policy change,” said Augustine Faucher, director of macroeconomics at Moody’s. “By providing a more explicit time line for raising rates, the Fed is telling markets it is concerned about recent economic weakness and the potential for a near-term contraction, and is dedicated to spurring stronger economic growth,” Faucher added.

Just as this statement by Faucher is baseless, so is the belief that because the U.S. dollar is the world’s reserve currency, it can stand more beating than any other one. In fact, one of the reasons why the U.S. has not been downgraded further is that its currency is still consider valuable. Ironically, the dollar has lost 98 percent of its value since it became the subject of manipulation by the bankers. Moody’s has stated that the U.S. dollar can support larger levels of debt than other currencies. How do they figure that with a currency that is so devalued. They can’t figure it out. They just make it up.

The one world reserve currency scheme is only beneficial to those who control it, because the rest of the nations need to do business while devaluing their own. In sound economics, the value of paper money is based on a country’s production or manufacturing, therefore, the U.S. dollar can no longer be such reserve currency. U.S. manufacturing has eroded so badly, that it has cost the jobs of some 18 million people in the last few years.

If the U.S. dollar is still the world’s reserve currency, why are there other currencies that have better exchange rates than the dollar itself? I am no economic expert, but if the Swiss Frank rates higher than the dollar in currency exchange markets, shouldn’t the Frank be the reserve currency? Or even better, shouldn’t a commodity like gold be the reserve currency given its capacity to withstand recessions, depressions and financial market manipulations? It should. The reason why gold is not the reserve currency or at least the commodity over which a paper money currency is supported is that bankers cannot monopolize it, “hug” it or manipulate it.

High Market but Low Results: The World Economy in Shambles

While the banks try to extend the suffering period for the middle and low classes, countries in Europe are scrambling for a life boat to jump on. Although France and Germany are said to be negotiating an agreement to buy Spain’s and Italy’s debt in order to avoid a deeper economic collapse, some sources claim that the rescuers believe the Italian debt is too large to save. Both Nicolas Sarkozy and Angela Merkel began to hear opposition voices that are calling for a different position from the German and French governments. The reason for this is that an eventual bailout of Italy and Spain could cost the rescuers their AAA rating. This is seen as a possible trigger to drag the world’s economy further into the precipice.

Although U.S. markets artificially revived themselves on Tuesday, other countries were not as lucky. In Italy, the bond market saw a loss of 11 percent on its 10 year note. Just as the FED has done in the United States, the European Central Bank kept Italy and Spain afloat through the purchase of their bonds for a second day in a row. That was not enough to save the Spanish 10 year notes, as they collapsed eight basis points to 5.08 percent on Tuesday.

Meanwhile, oil prices hit some of the lowest levels for the year by getting down to $79.30 a barrel. Conversely, gold prices soared and added 4.1 percent to get to a record price of $1,782.50 an ounce.

Globalism Pushing Middle Class Standard of Living Down…

…to Third World Levels

The Economic Collapse
February 28, 2011

From now on, whenever you hear the term “the global economy” you should immediately equate it with the destruction of the U.S. middle class.  Over the past several decades, the American economy has been slowly but surely merged into the emerging one world economic system.  Unfortunately for the middle class, much of the rest of the world does not have the same minimum wage laws and worker protections that we do.

Therefore, the massive global corporations that now dominate our economy are able to pay workers in other countries slave labor wages and import the products that they make into the United States to compete with products made by “expensive” American workers.  This has resulted in a mass exodus of manufacturing facilities and jobs from the United States.

But without good, high paying jobs the U.S. middle class cannot continue to be the U.S middle class.  The only thing that the vast majority of Americans have to offer in the economic marketplace is their labor.  Sadly, that labor has now been dramatically devalued.  American workers now must directly compete for jobs with millions upon millions of workers on the other side of the world that toil away for 15 hours a day at slave labor wages.  This is causing jobs to leave the United States at an almost unbelievable rate, and it is putting tremendous downward pressure on the wages of millions of jobs that are still in the United States.

So when you hear terms such as “globalization” and “the global economy”, it is important to keep in mind that those are code words for the emerging one world economic system that is systematically wiping out the U.S. middle class.

A one world labor pool means that the standard of living for the U.S. middle class will continue falling toward the standard of living in the third world.

We keep hearing about how the U.S. economy is being transformed from a “manufacturing economy” into a “service economy”.  But “service jobs” are generally much lower paying than “manufacturing jobs”.  The number of good paying “middle class jobs” in the United States is rapidly decreasing.  So how can the U.S. middle class survive in such an environment?

What makes things even worse for manufacturers in the United States is that other nations often impose a “value-added tax” of 20 percent or more on U.S. goods entering their shores and yet most of the time we do not reciprocate with similar taxes.

But whenever someone mentions how incredibly unfair and unbalanced our trade agreements with other nations are, they are immediately labeled as a “protectionist”.

Well, someone should be looking out for U.S. interests when it comes to trade, because the current state of the global economy is ripping the U.S. middle class to shreds.

Right now, the United States consumes far more wealth than it produces.  This nation buys much, much more from the rest of the world than they buy from us.  This is called a “trade deficit”, and it is one of the most important economic statistics.  The U.S. runs a massive trade deficit every single year, and it is wiping out our national wealth, it is destroying our surviving industries and it is absolutely shredding middle class America.

We cannot allow tens of thousands of factories to continue to leave the United States.  We cannot allow millions of jobs to continue to be “outsourced” and “offshored”.  We cannot allow tens of billions of dollars of our national wealth to continue to be transferred into foreign hands every single month.

The truth is that the global economy is bad for America.  The following are 23 facts which prove that globalism is pushing the standard of living of the middle class down to third world levels….

#1 From December 2000 to December 2010, the U.S. ran a total trade deficit of 6.1 trillion dollars.

#2 The U.S. trade deficit was about 33 percent larger in 2010 than it was in 2009.

#3 The U.S. trade deficit with China in 2010 was 27 times larger than it was back in 1990.

#4 The U.S. economy is rapidly trading high wage jobs for low wage jobs.  According to a new report from the National Employment Law Project, higher wage industries accounted for 40 percent of the job losses over the past 12 months but only 14 percent of the job growth.  Lower wage industries accounted for just 23 percent of the job losses over the past 12 months and a whopping 49 percent of the job growth.

#5 Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

#6 In Germany, exports account for approximately 40 percent of GDP.  In China, exports account for approximately 30 percent of GDP.  In the United States, exports account for approximately 13 percent of GDP.

#7 Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe?  Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts of $110 billion.

#8 In 2010, South Korea exported 12 times as many automobiles, trucks and parts to us as we exported to them.

#9 The U.S. economy now has 10 percent fewer “middle class jobs” than it did just ten years ago.

#10 The United States currently has 7.7 million fewer payroll jobs than it did back in December 2007.

#11 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.

#12 In 2002, the United States had a trade deficit in “advanced technology products” of $16 billion with the rest of the world.  In 2010, that number skyrocketed to $82 billion.

#13 The United States now spends more than 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#14 In China, working conditions are so bad that large numbers of “employees” regularly try to commit suicide.  One major employer, Foxconn, has even gone so far as to install “anti-suicide nets” in an attempt to keep their employees from jumping off of their buildings.

#15 Wages for workers in China are incredibly low.  For example, one facility in the city of Longhua that makes iPods employs approximately 200,000 workers.  These workers put in endless 15-hour days but they only make about $50 per month.

#16 In Bangladesh, manufacturing workers toil in absolutely horrific conditions and make an average of about $38 per month.

#17 In Vietnam, teenage workers often work seven days a week for as little as 6 cents an hour making promotional Disney toys for McDonald’s.

#18 Since 2001, over 42,000 manufacturing facilities in the United States have been closed.

#19 Half of all American workers now earn $505 or less per week.

#20 In the United States today, 6.2 million Americans have been out of work for 6 months of longer.

#21 8.4 million Americans are currently working part-time jobs for “economic reasons”.  These jobs are mostly very low paying service jobs.

#22 When you adjust wages for inflation, middle class workers in the United States make less money today than they did back in 1971.

#23 According to Willem Buiter, the chief economist at Citigroup, China will be the largest economy in the world by the year 2020, and India will surpass China by the year 2050.

Those that promote “free trade” can never explain how the U.S. middle class is going to continue to have plenty of jobs in the new global economy.

By merging our labor pool with the rest of the world, we have also merged our standard of living with the rest of the world.  High unemployment is rapidly becoming “the new normal” in America, and wages are going to continue to decline in many, many industries.

Already, there are quite a few formerly great U.S. cities (such as Detroit) that are beginning to resemble third world hellholes.  If something is not done about our massive trade imbalance, even more cities are going to follow Detroit into oblivion.

Unfortunately, most of our politicians continue to insist that globalism is good for our society.  They continue to insist that we should not be worried that jobs formerly done by middle class American workers are now being done by slave laborers on the other side of the globe.  They continue to insist that having 43 million Americans on food stamps is a temporary thing and that soon our economy will be better than ever.

Well, it is time to stop listening to the politicians that are promoting “the global economy”.  They are lying to us.

Globalism is great for nations such as China and it is helping multinational corporations make huge profits, but for the U.S. middle class it is an economic death sentence.

If you want an America where there are less jobs, where more Americans are on food stamps and other anti-poverty programs and where our cities continue to be transformed into deindustrialized hellholes, then you should strongly support the emerging global economy.

But if you care about the standard of living of the U.S. middle class and you want for there to be some kind of viable economic future for your children and your grandchildren then you had better start caring about these issues and doing something about them.

Please wake up America.

Green Policies in Spain are a Total Failure

By Luis R. Miranda
The Real Agenda
May 19, 2010

Pajamas Media has received a leaked internal assessment produced by Spain’s Zapatero administration. The assessment confirms thspain's green economye key charges previously made by non-governmental Spanish experts in a damning report exposing the catastrophic economic failure of Spain’s “green economy” initiatives.

On eight separate occasions, President Barack Obama has referred to the “green economy” policies enacted by Spain as being the model for what he envisioned for America.

Later came the revelation that Obama administration senior Energy Department official Cathy Zoi — someone with serious publicized conflict of interest issues — demanded an urgent U.S. response to the damaging report from the non-governmental Spanish experts so as to protect the Obama administration’s plans.

Most recently, U.S. senators have introduced the vehicle for replicating Spain’s unfolding economic meltdown here, in the form of the “American Power Act.” For reasons that are obvious upon scrutiny, it should instead be called the American Power Grab Act.

But today’s leaked document reveals that even the socialist Spanish government now acknowledges the ruinous effects of green economic policy.

Unsurprisingly for a governmental take on a flagship program, the report takes pains to minimize the extent of the economic harm. Yet despite the soft-pedaling, the document reveals exactly why electricity rates “necessarily skyrocketed” in Spain, as did the public debt needed to underwrite the disaster. This internal assessment preceded the Zapatero administration’s recent acknowledgement that the “green economy” stunt must be abandoned, lest the experiment risk Spain becoming Greece.

The government report does not expressly confirm the highest-profile finding of the non-governmental report: that Spain’s “green economy” program cost the country 2.2 jobs for every job “created” by the state. However, the figures published in the government document indicate they arrived at a job-loss number even worse than the 2.2 figure from the independent study.

This document is not a public report. Spanish media has referred to its existence in recent weeks though, while Bloomberg and the Washington Examiner have noted the impact: Spain is now forced to jettison its plans — Obama’s model — for a “green economy.”

Remarkably, these items have received virtually no media attention.

An item which has been covered widely, however, is that President Obama is now pressuring Spain to turn off its spigot of public debt in the name of averting a situation similar to that of Greece.

Also covered widely is Obama’s promotion of the American Power Act — the legislation which would replicate Spain’s current situation in the United States.

Put simply, Obama is currently promoting a policy in the U.S. which is based on a policy that he wishes to see Spain abandon. Welcome to Obamaland, the particulars of which are explained in a fashion grandly more illuminating than this Obama-Zapatero dance in Power Grab: How Obama’s Green Policies Will Steal Your Freedom and Bankrupt America.

A translation of the leaked Zapatero government internal slide presentation: “Renewable Energy: Situation and Objectives April 2010”

1) Renewable Energy: Situation and Objectives April 2010

2) Renewable Energy Situation: The price of electricity affects household welfare

According to EuroStat data, the cost of electricity for households in Spain moved from below the European average to slightly above the average (+5% higher)

3) Renewable Energy Situation: The price of electricity determines the competitiveness of Spanish industry

Energy is a key input in industrial production processes. In basic industries (cement, industrial gases, metals, basic chemicals and steel), energy costs are three times the labor cost. The electrical cost for the Spanish industry is well above the European average (+17% higher).

4) Renewable Energy Situation: The price increase is mainly due to additional costs of renewables

The price of electricity determines the competitiveness of Spanish industry

Historical evolution of the prices of light and pool price [Appears above a graph showing a 77% price spike in industry’s price for electricity]

A price increase cannot be explained by the evolution of electricity market price (pool), which has even fallen since 2005

5) Renewable Energy Situation: The price increase is mainly due to additional costs of renewables

The increase in the over-cost paid for renewable energy explains more than 120% of the variation of the electric bill, and has offset the reduction in production costs of conventional electricity (25%)

To these direct costs of renewables must be added indirect costs, as the need for additional investment in networks to integrate renewables (about 10% of planned investment in the planning) and capacity payments to the modular backup facilities (coal and gas) that are running a smaller number of hours

6) Situation of renewable energy: renewable energy has had a positive impact …

Thanks to the increase of renewable energies in the mix:

The rate of energy supply has increased by 3 points since 2005, to 23%, and the import of energy products has been reduced 5.500M Euro (including hydraulics).

Emissions have been reduced significantly, thanks primarily to the mix of electric generation being much cleaner (less than 120 tons of CO2 emissions per GWh of oil produced).

7) Situation of renewable energy: but its evolution in recent years has been too fast

From 2004-2010 the amount of premiums [over-cost paid for renewable energy; the subsidy] has increased fivefold. Only in 2009 it doubled over the previous year to reach 5.045M€, equivalent in amount to the entire public investment in R + D + i in Spain. [The renewables subsidy equaled the entire cost of producing electricity in Spain]. The forecast for 2010 is 6.300M€ (although 5.800M€ budgeted in January). This should add 1.000M€ for cogeneration.

With operational facilities, the renewable sector will receive in the next 25 years more than 126.000M€. In this factor, it adds a commitment to continue providing input to the renewable energies in the mix to meet the European objectives, which will increase this figure significantly.

8 ) Situation of renewable energy: Heterogeneity of renewables: costs

In 2009, the solar photovoltaic technology accounted for 53% of the extra cost of renewables, while they contributed only 11% of energy generated from these sources.

9) Situation of renewable energy: Heterogeneity of renewables: Impact on the external sector

Exports: Net exports of Spanish wind industry 1.300M€ contributed to the trade balance in 2008 and, besides, wind generation avoids fossil imports of 3.6M€.

Imports: By contrast, the PV industry growth was not gradual, hampering the formation of an auxiliary Spanish industry. In 2008 imports of photovoltaic cells and modules in Spain amounted to 5.182M€ (28.6% of net imports of crude and derivatives) as long around the 62% were imported.

10) Situation of renewable energy: Heterogeneity of renewables: Technical problems

Network Management. The proliferation of small plants and fluctuations in the availability of technologies hinder the management of the network.

11) Situation of renewable energy:

Regulatory mechanisms to support renewables have been:

– Pioneers in the world, which has allowed us to stay ahead of the industry, learn from the experience and finding some excesses.
There are numerous examples of these high returns: analyst reports, premiums accepted in other countries, over-subscription in the pre-records, facilities willing to accept lower premiums, “paper market” …

– Overly cautious about the ability of cost reduction technologies

– Inflexible, thereby preventing adjust remuneration to market signals and technological advancement

– Hardly told them by the administration in setting prices initially and have no control over the amounts … Which has caused a “bubble effect,” such as seen with photovoltaics in 2008 and the emergence of the thermal bubble (which would have continued in 2010 and successively had it not been for the pre-registration requirement imposed), as well as a sharp increase the over-costs [subsidies] paid to renewables in the form of a feed-in tariff.

12) Situation of renewable energy: Heterogeneity of renewables: International comparison

In wind power, our rates are in line with Europe. However, solar photovoltaics, Spanish retribution has been the most high, despite the higher number of hours of sun and more solar radiation.

Spain Wind € 75-84/MWh Solar €265/295/350/450/MWh

China Wind € 56-67 Solar € 121/MWh

Japan Wind € 73-89/MWh

Germany Wind € 92/MWh Solar € 287-395/MWh

France Wind € 82/MWh Solar €310-380

Italy Wind € 85/MWh Solar € 350-390

Poland Wind € 90/MWh

13) Situation of renewable energy: Recent technological developments

The investment costs of renewable energies mainly depend on its technological learning curve

The plots have experienced tremendous technological development in recent years, reducing their investment costs

Not being mature technologies, have much future room for improvement, which informs a decision to slow its current expansion

14) Situation of renewable energy: What have we done?

The Government has adapted the following initiatives:

– A new framework for PV in 2008 (RD1578/2008) that brings order to the pace of installation and marking signs ecstatic that transfer with May fast technological development gains to consumers

– Creation of a technology pre-registration for the remainder of May 2009 has allowed us to avoid the “bubble” that was generated in thermal and prevent the system being made even more untenable in 2010.

– Package of measures for the reduction to the tariff deficit with input from the traditional electric companies, consumers and government (without the contribution of renewable energy).

15) Situation of renewable energy: Difficulties in reducing the tariff deficit

– The Government is committed by law to eliminate by 2013 the tariff deficit

– Despite the evolution of the wholesale market (pool), the balance of certain items (the Iberian peninsula, nuclear waste) and higher light, the rate deficit was only slightly reduced.

16) Objectives

– Reaching 20% of final energy and 40% of electric generation from renewable sources by 2020.

– Reducing the deficit and preserve the competitiveness of industry and household welfare.

– Transfer gains in technological developments to consumers.

– Avoid speculation caused by excess profits, which damages its image and retards the construction of the plants pre-assigned (with an adverse effect on the industry).

– Mitigate the incentive for fraud that can generate the current differential between the rate and the price of the pool.

– Promote technological improvement and cost reduction, advancing the attainment of “grid parity,” which will allow greater installation of renewables until 2020.