One can only imagine that the general well-being of those in Europe is going to decrease pretty substantially on the back of CBAM. But hey, they voted for these morons, so they deserve what they get. The question is how much pain they will be able to withstand before changing their tune, and how long it will take.
Parallax
1 year ago
I think the intention of this might actually be to stop the bleed of USD in order to save the eurodollar system.
It’s important to consider that international trade is carried out in USD.
The federal reserve is starving the eurodollar with high barrowing and reverse repo rates. Some speculate that Powell is tryjng to crash the EU hard before the US does. So while these taxes will cause local inflation, it will also soften the landing compared to a hard default. This also shifts production preference and tax revenue locally.
Alot of these people aren’t actually stupid, they just profit more by not being authentic. I bet it’s an easy guess how their own investments are shifting.
RonJ
1 year ago
To prevent “carbon leakage”
Currently, due to local atmospheric conditions, people in Los Angeles are not permitted to use their fireplace.
RonJ
1 year ago
“Tit for Tat?”
Newton’s fig tree of economics.
tractionengine
1 year ago
Taxes, tariffs, adjustments are all costs levied on the buyers in the importing country showing up as price increases. The importing government receives the money and the exporter suffers the consequences. What does the government do with its newfound income?
Money goes where it’s treated best so the businesses being affected adjust their long-term plans. These companies offshore and the the tariff income supports the job losses. Rinse and repeat until there are no jobs.
Duck
1 year ago
Europe descends more into a medieval world. They will tax and starve their people. This is what happens when the population has no guns. Guns are the great equalizer in any country.
Perhaps pointing 3 or 4 AR15s at the guys operating the HIMARS?
FYI, it is much more difficult to continue feeding a HIMARS than feeding a bunch of rifles.
prumbly
1 year ago
Not sure if this will lead to more inflation outside the EU. It will certainly lead to a huge drop in demand for oil/LNG and manufactured goods in the EU, which sounds very deflationary to the rest of the world that produces these things.
vanderlyn
1 year ago
all this just strikes me as an 21st century twist on centuries of this kind of tariff stuff. whether tariffs on cotton goods in usa, or the book “confessions of an economic hit man”, all this stuff is old as dirt. only the puppies out there believed in some sort of free market trading. school girl gooey taught to middlebrows in post ww2 amerikan public schools. inflation has been raging. will continue to rage. not sure how folks conclude we are gonna be deflationary times. house prices can crater and pricing of taxes utilities and maintenance and food soaring. this is economics 101.
Don’t kid yourself, the free market is real! Just depends what market you’re talking about. Manual/low wage labor and the technical sector? You bet! Higher education, healthcare, and home prices? Nah…
go look up how many state government employees have grown over the decades. on top of the federal employees and local meter maid police level, too. our economy is no where near a free market on labor. not even close.
As a proportion of population, Federal Government employment peaked in 1967 been going down since. State Governments peaked in 1975 and plateaued through 2002 and have been on a slight decline since. Local Governments also peaked in 1975 and then dipped to a low in 1984 rising back to parity with 1975 in 2002 and then also have been in a slight decline since.
The main issue with government employees is their wages tend to keep up with inflation, where the private sector struggles to maintain pace, hence over time a greater proportion of wage earnings flow to the government side. That and the fact tax payers shell out beaucoup dollars to employ private sector employers to produce services and consumables for war which provides no direct benefit to the populace.
Governments have outsourced government jobs that s obvious , whether direct or indirect government employees, they are being paid by the government …..
A Raytheon retiree explained to me how he spent 20 years spending a $100,000 salary into the local economy and continues to spend his pension. Like it or not, war benefits the general population too.
killben
1 year ago
Instead of Carbon Border Adjustment Mechanism, it could have been aptly named as “Carbon Re-Adjustment Policy”, CRAP in short.
Mouse
1 year ago
We did this already when the EU tried to impose a tax on emissions on international flights. The EU lost… badly. EU airlines lost landing slots all over the world, while the EU was forced to rescind their tax. This latest act of stupid will end even worse:
First, every other country is going to sign a meaningless document certifying that all their exports to the EU are 100% carbon neutral. Maybe this is true, maybe not. But if the EU wants to challenge the certification, they can do so solely at the EU’s expense. Our country could use the tourism revenue when EU inspectors come to visit. The EU should expect every single case to be litigated to death, at the EU’s expense.
Second, we (insert non-EU country name here) impose a new “not a tax” tax on all EU exports to our country. This is clearly more effective for major EU export markets, but at its heart the EU is a mercantilist system that needs exports to survive.
Third, the EU will agree to grant waivers to any and all OPEC natural gas and crude oil. Yup we heard you: you said no waivers. So what? You will grant OPEC waivers or you can go buy natgas and oil from Russia. The EU is out of options, and everyone but Brussels knows it.
Fourth, when you infants are ready to stop this stupidity, we will be renegotiating all trade treaties. Right now, international treaties tend to favor G7 countries. That is going to change. Our products will not be hampered in any way going into Europe. European products will no longer get favorable access to our markets. If you don’t like this, we will focus exports to the global south until the EU freezes to death, starves to death, or both.
Thanks for playing Brussels!!!!
FromBrussels
1 year ago
We already knew we were dealing with worthless, messing up parasites in our good old Brussels ….the undemocratic corrupt EU circus seems to have gone totally berserk now …..
This is merely the tip of the iceberg, of course bags filled with Euros mean outright corruption , on the other hand we also ‘enjoy’ official corruption, with MPs lobbying for multinationals to get away with certain issues, this kind of corruption is totally acceptable and legal and therefore pervasively ubiquitous.
Actually, the real question is, did the MEPs receive a vibe that the satrapy of Qatar is a new desperately needed strategic gas supplier, and in bad need of whitewashing. So the MEPs just received some extra cash for extra services. Is the investigation going in that logical direction?
Webej
1 year ago
So on the cusp of being deindustrialized because energy is too expensive to manufacture anything profitably (or bake bread, open a shop, keep a pub). Europe decides to make everything containing energy even more expensive. They are looking for an even better way to commit suicide.
The calculation of the embedded carbon will be purely arbitrary. Many products of hundreds of components, sourced all over the globe, with scores of intermediate processing steps. Keeping track of carbon balances will prove impossible. You can’t even ship oil and be certain about provenance or destination in many cases.
“Finally, Let’s Review 50 Years of Dire Climate Forecasts and What Actually Happened
Many of the predictions are outrageously funny, especially AOC’s 2019 announcement that the world will end in 12 years.”
That depends on who is making the forecast. If it is a politician, a celebrity, a journalist, or a social influencer, it is likely to be uninformed and completely wrong.
If it is from climate scientists and their models, it is likely to be pretty accurate.
Pretending that global warming doesn’t exist because of stupid things that are said by the uninformed, makes one look just as stupid.
I cannot change how stupid some people are, or the stupid things they say. All I can do is look at what is actually happening in the world and then attempt to profit from it.
What is happening right now is that the world is attempting to transition from fossil fuels to renewable energy in order to deal with global warming. This transition is resulting in tight supplies and likely a shortage of fossil fuels, probably for the rest of this decade. Which will make oil and gas firms a great place to invest for the rest of this decade as they are gushing cash flow.
Example: WCP just reduced their net debt to 1.8B and will increase their monthly dividend by 32% in January. They expect to reduce net debt to 1.3 B in the next 6 months and will increase the dividend by another 30% at that point. Following that, they plan on a combination of special dividends and share buybacks in H2 2023.
Europe’s carbon tax scheme is is likely to help further restrict oil supplies, and keep oil prices higher for longer. What’s not to like? I can’t change it. But I can profit from it.
Scientists are the biggest shills in the world. Anything to get a research grant given out by a politician who makes them jump through hoops…or threatens their livelihood if they do not comply.
If it wasn’t for scientists, you’d be sitting on a rock by a fire gnawing the last bits of marrow out of a squirrel bone. You wouldn’t be effortlessly spreading your angry nonsense to the far flung corners of the globe using an artifact that you’re no more capable of comprehending than an ant is capable of comprehending algebra.
There is no difference between the Taliban saying all women must wear burquas and pray their way four times a day, or the Covid nazis saying everyone must wear masks and get a shot, or the eco-terrorists cutting off funding or taxing anyone who does not conform to their religion. These are all forms of state violence, even if some people (cough) are too timid to call it for what it is.
The Taliban have a better claim — one cannot definitively prove that Allah didn’t require burquas. Not saying Allah did or did not, only saying we cannot prove it. Covid masks (even N95) don’t work and that has been proven. The mRNA shot does not prevent transmission (according to Pfizer itself) and it does not prevent infection (ask all the people, including Fauci and Biden, who got covid after getting the shot). And Mish mentioned only a few of the more egregious f#ck ups in the environmentalists forecasts. Like the covid nazis, the eco-terrorists have been proven wrong.
The Taliban continue stoning people to death. The covid nazis are still trying to impose penalties (less than honorable discharge from military as a glaring example). And the eco-terrorists are trying to cut off funding of businesses that don’t conform to their religion — threatening jobs, investments, and families who cannot afford heat this winter.
The eco-terrorists can mouth off if that makes them happy, but when they force their opinions on others they are committing violence. Especially if they use the power of the state to force themselves on others.
Eco-terrorists are no different from the Taliban. Heck, they are even trying to burn books and internet posts that they think are blasphemy (see everything Google, Facebook and pre-Musk Twitter).
Telling papaDave he is full of it is quite different from telling him he must comply with my thinking or lose his job, access to healthcare, and ability to feed his family. That is what his ilk are doing. Its awful, and he must be called out for the violent nazi that he is
The injected mRNA injured didn’t ask to be victims. Neither were they warned that they could become one. “Safe and effective.” Now they are being victimized twice, by the CDC refusal to acknowledge their mRNA injuries.
If all the do-gooders in the world would quit their windmill tilting and just concentrate fully on making a profit like PapaDave, the world would be better off. Just imagine how much better an entire world of PapaDave profit seekers would be! Most people can’t change any of these things anyway. PapaDave says so.
TexasTim65
1 year ago
This just sounds like a reason for countries to stop doing business with the EU.
If I was those African nations I’d be looking to export my fertilizer, cement etc elsewhere rather than Europe. At the same time, I’d tell Europe that not only were those products stopping but so is oil, gas, food etc and anything else sent to Europe. In other words, I’d look to join OPEC and expand price controls from Oil to pretty much anything else sent to Europe and then force Europe to back down since they’d aren’t self sufficient.
Well, there’s always the Belt and Road Initiative.
Counter
1 year ago
What type of energy will poor people be using?
Millions cannot afford to heat homes as UK faces Arctic snap
More than 3 million low-income UK households cannot afford to heat their homes, according to research, as a “dangerously cold” weather front arrives from the Arctic.
The UK Health Security Agency has issued a cold weather alert recommending vulnerable people warm their homes to at least 18C, wear extra layers and eat hot food to protect themselves from plummeting temperatures…
But about 710,000 households will still struggle to pay for warm clothing, heating and food, according to analysis by the Joseph Rowntree Foundation.
A fifth of the 2.5 million low-income households were going without food and heating, it estimated. The JRF survey, of 4,251 people in the bottom 40% of incomes, which was conducted last month, also estimated that about 4.3 million households had curbed their spending on heating before the cold spell.
More than 7 million households have gone without at least one of the essentials since June, the JRF will say when its full report is released next week.
About 2.4 million households have borrowed money or used credit to cover their bills so far this year. The current cold snap means households with vulnerable people face the impossible decision over whether to take on more debt to heat their home to the level recommended by health professionals.
Until the dilettante children of the Fed Welfare Queens “needs” forcefully transferred trillions for the “geo engineering” nonense to “fight” “climate change.”
In other news, the Government recommends that everyone save at least $1,500,000.00 for their retirement.
You will need to save more if inflation exceeds 2%.
You’re welcome.
Billy
1 year ago
This sounds like a great way to control the BRICS.
Anyone who believes in global warming and is having guilt, I will sell you cheap carbon credits from my solar and Tesla. I will agree to suffer the burden for you. I’m even willing to sell derivatives of my carbon credits.
When the EU tried to impose a carbon tax on airline travel, the net result was that EU airlines lost critical landing slots at the busiest airports around the world. The EU was forced to reimburse foreign (non-EU) airlines for taxes collected — in order to get EU aircraft out of impound yards. And the EU was forced to rescind their stupid idea before the blow back completely destroyed all EU airlines (including state owned).
my favorite investment i saw being sold in pax dumbphuckistan was the viatical salesmen hawking early death payoffs. some of them knocking on my door as a hedge fund manager made me just LOL. i had to listen to their pitches, as it was the best ever. i tipped my hat to them and just said Bravo. nothing better in my life.
Captain Ahab
1 year ago
Never underestimate the ability of progressives to make a bad situation much worse. Why not just hand over the third world to China now and be done with it?
Agreed. Just look at the southern border. It’s downright chaos, and Title 42 ends Wednesday. The reports coming out of there will be completely off the rail zonkers by the time it starts to warm up some. Hell, January – March may actually bring beyond total chaos early for all we know.
Open a new browser tab, Zardoz, go to google.com and type “us border crisis”. It’s that easy. Your big tech censoring friend, google.com, returns 400M results in less than 0.60 seconds. Here’s an easy 10 for your brain to digest. BTW, I can’t wait for your liberal, denial minded reply. Can’t wait! Woohoo!
lol, glad to know the third world was the West’s to hand over in the first place.
Scooot
1 year ago
and interest rates would go up to combat the increased inflation which isn’t trade friendly either.
KidHorn
1 year ago
Sounds like countries that figure out how to generate electricity cheaply will be punished. They should just jack up electricity costs and use the proceeds to pay taxes for energy consumers.
denker
1 year ago
Carbon taxes are ludicrous. Why should governments receive money for what is a by-product of industry, transportation, energy generation etc. Do governments pay carbon taxes to themselves for their carbon emissions? Certainly the military emit large amounts of CO2 not to mention bureaucrats travelling all over the place. This latest compensatory (or punitive) carbon tax on imports is a nightmare. But Brussels loves red tape. That is the main raison d’etre of the EU isn’t it?
Zardoz
1 year ago
Could this be deflationary on a larger scale? That money that is collected from taxes could be removed from the economy by paying down debt… or at least minting less debt. Less affordable goods reduce demand, too, which, in the absence of a flood of free money, would drive down prices.
What perverse reasoning. Reduce demand (deflationary) by new, complex tariffs that increase costs for everyone, business and consumers. Good luck in the paying down debt or less emitting of new debt. Be sure Brussels will find other ways to spend the windfall. But your kind of thinking is just what they love in the EU administration and parliament, so you have a great future there.
What’s logically wrong with that premise? you’ve told us you don’t like it and you don’t like me, but I’d genuinely be interesting in finding the fallacy,
On the surface it seems like it should work. But when keep following through with what will happen you’ll realize all it will do is shift winners and losers around a bit but not reduce demand.
As a thought experiment imagine the Fed got Congress to pass a tax on everything sold that added $5 to the price of the item. In theory this should reduce demand as you stated ($1 items would suddenly be $6, gas would be 11/gallon etc) and the government would rake in record money. In reality what would happen is the lower economic class (poor) would collapse. They’d immediately clamor for welfare and stimmy handouts equivalent to the $5 item and unless the they wanted riots/political suicide they’d implement it (the so called level playing field Europe talks about). The truly rich wouldn’t notice all that much. The middle class who didn’t qualify for the handouts would be hammered in their standard of living (losers) and fall into the poor class.
Very plausible… I guess whether it’s a viable course of action boils down to how likely your people are to riot when they lose X amount of stuff. I think they’ll put up with a lot more than you’d expect. There are armies of utterly discarded people milling about in major cities. They’re a nuisance, but they seldom riot. If you can keep ’em fed, warm, and in front of as screen, they’re generally pacified.
The Iranians had to be utterly stomped and brutalized by their religious whackos before they got to it. Pretty much the same with the police murder riots… it was something far more egregious than the day to day that kicked them off.
Mon cher Zardoz, Liking you or not is not the issue. Certainly this monstrous, bureaucratic, red tape explosion-nightmare for business/importers etc. dubbed the Carbon Border Adjustment Mechanism may reduce demand by increasing prices and input costs but is that deflationary? Just the costs of calculating this bizarre mechanism will be massive. This way of thinking is what will in the end destroy EU competitiveness in world markets not to mention higher energy costs due to the Green New Deal European version. It amazes me that the blatant insanity is not self evident. I guess compared to so much lunacy coming out of Brussels this is just another installment.
Needed to create a 2nd reply to finish. To summarize your premise: Increase prices/costs via this carbon tax on imports which may result in reduced demand (demand destruction) which might be ultimately deflationary. Sounds logical?
just call it a border tax. a tariff. read history. YOU sir, Denker are 100% correct. anyone thinking deflation is coming hasn’t read history enough. imho. no disrespect to mish or many of the commenters. the amount of printing due to plague was 25 years worth in normal times. on top of that, we now have a world wide trade war with tariffs and de globalizing……..and sanctions all over the world. deflation. not on your life.
Import substitution called it in Argentina, that marvelous economy. Buy expensive and inefficient goods made at home instead cheap ones made abroad. Prices up, GDP down. It is not deflationary, production decreases, no prices.
it will accelerate the de-industrialization of Europe… CBAM will get repealed as it becomes clear the blow back will be crushing (its too easy for other countries to pass the costs right back to the EU).
In the meantime, damage will be done to the EU’s reputation. if the EU is not a stable place to do business, why not focus business development efforts on markets with better demographics and better growth potential?
Many of the predictions are outrageously funny, especially AOC’s 2019 announcement that the world will end in 12 years.”
Import substitution called it in Argentina, that marvelous economy. Buy expensive and inefficient goods made at home instead cheap ones made abroad. Prices up, GDP down. It is not deflationary, production decreases, no prices.