Which Short-Selling Regulation is the Least Damaging to Market Efficiency? Evidence from Europe

An interesting article. I am very jaundiced towards the European Politicians and assorted people who drive their economic future. its a mess, to put it bluntly.

I quote the abstract:

Exploiting cross-sectional and time-series variations in European regulations during the July 2008–June 2009 period, we show that: 1) Prohibition on covered short selling raises bid-ask spread and reduces trading volume, 2) Prohibition on naked short selling raises both volatility and bid-ask spread, 3) Disclosure requirements raise volatility and reduce trading volume, and 4) No regulation is effective against price decline. Overall, all short-sale regulations harm market efficiency. However, naked short-selling prohibition is the only regulation that leaves volumes unchanged while addressing the failure to deliver. Therefore, we argue that this is the least damaging to market efficiency.

This is the idiocy behind the governments and economics people who try to ban short selling. The evidence that banning short selling introduces inefficiencies into the market is clear and incontrovertible. Where they aren't banned, the markets work better, absorb information faster and generally are good eggs. This exacerbates the insider outsider issue. If the idea behind the European Regulators and Politicians was to improve their markets, then this failed miserably. Spreads become wider. Trade volumes reduce. not good.

Letter from Italy: Slippery Business

Dear son

My friend Vikram Doctor shared this with me. As you know we cook with olive oil assuming that its nice and healthy. As it turns out, the world of olive oil is full of dodgy characters. And extra virgin is not so virginal at all

So why am I sending this to you? For you to see how government subsidies and rules distort the marketplace. And why a dis functional government can really screw up basic operating principles of a good society and economy. 

Fraud and crime is not stoppable. But incentives like subsidies etc will always encourage crime. And think of one statement. You can make more money and be punished less by stuff like this than by pushing drugs!

Fascinating. 

Love 

Baba

Letter from Italy: Slippery Business : The New Yorker
http://www.newyorker.com/reporting/2007/08/13/070813fa_fact_mueller

---

On August 10, 1991, a rusty tanker called the Mazal II docked at the industrial port of Ordu, in Turkey, and pumped twenty-two hundred tons of hazelnut oil into its hold. The ship then embarked on a meandering voyage through the Mediterranean and the North Sea. By September 21st, when the Mazal II reached Barletta, a port in Puglia, in southern Italy, its cargo had become, on the ship’s official documents, Greek olive oil. It slipped through customs, possibly with the connivance of an official, was piped into tanker trucks, and was delivered to the refinery of Riolio, an Italian olive-oil producer based in Barletta. There it was sold—in some instances blended with real olive oil—to Riolio customers.

Between August and November of 1991, the Mazal II and another tanker, the Katerina T., delivered nearly ten thousand tons of Turkish hazelnut oil and Argentinean sunflower-seed oil to Riolio, all identified as Greek olive oil. Riolio’s owner, Domenico Ribatti, grew rich from the bogus oil, assembling substantial real-estate holdings, including a former department store in Bari. He bribed two officials, one with cash, the other with cartons of olive oil, and made trips to Rome, where he stayed at the Grand Hotel, and met with other unscrupulous olive-oil producers from Italy and abroad. As one of Italy’s leading importers of olive oil, Ribatti’s company was a member of ASSITOL, the country’s powerful olive-oil trade association, and Ribatti had enough clout in Rome to ask a favor—preferential treatment of an associate’s nephew, who was seeking admission to a military officers’ school—of a high-ranking official at the Finance Ministry, a fellow-pugliese.

However, by early 1992 Ribatti and his associates were under investigation by the Guardia di Finanza, the Finance Ministry’s military-police force. One officer, wearing a miniature video camera on his tie, posed as a waiter at a lunch hosted by Ribatti at the Grand Hotel. Others, eavesdropping on telephone calls among Riolio executives, heard the rustle of bribe money being counted out. During the next two years, the Guardia di Finanza team, working closely with agents of the European Union’s anti-fraud office, pieced together the details of Ribatti’s crime, identifying Swiss bank accounts and Caribbean shell companies that Ribatti had used to buy the ersatz olive oil. The investigators discovered that seed and hazelnut oil had reached Riolio’s refinery by tanker truck and by train, as well as by ship, and they found stocks of hazelnut oil waiting in Rotterdam for delivery to Riolio and other olive-oil companies.

The investigators also discovered where Ribatti’s adulterated oil had gone: to some of the largest producers of Italian olive oil, among them Nestlé, Unilever, Bertolli, and Oleifici Fasanesi, who sold it to consumers as olive oil, and collected about twelve million dollars in E.U. subsidies intended to support the olive-oil industry. (These companies claimed that they had been swindled by Ribatti, and prosecutors were unable to prove complicity on their part.)

In 1997 and 1998, olive oil was the most adulterated agricultural product in the European Union, prompting the E.U.’s anti-fraud office to establish an olive-oil task force. (“Profits were comparable to cocaine trafficking, with none of the risks,” one investigator told me.) The E.U. also began phasing out subsidies for olive-oil producers and bottlers, in an effort to reduce crime, and after a few years it disbanded the task force. Yet fraud remains a major international problem: olive oil is far more valuable than most other vegetable oils, but it is costly and time-consuming to produce—and surprisingly easy to doctor. Adulteration is especially common in Italy, the world’s leading importer, consumer, and exporter of olive oil. (For the past ten years, Spain has produced more oil than Italy, but much of it is shipped to Italy for packaging and is sold, legally, as Italian oil.) “The vast majority of frauds uncovered in the food-and-beverage sector involve this product,” Colonel Leopoldo Maria De Filippi, the commander for the northern half of Italy of the N.A.S. Carabinieri, an anti-adulteration group run under the auspices of the Ministry of Health, told me.

Designed for failure: A critique of the Common Fisheries Policy of the European Union

You might wonder why a banker is talking about fish? Well, there are many reasons, not least that I am a Bengali and fish is in my blood or fishy blood or bloody fish, but anyway, you get what I mean. Fish is integral to my culture :). But that’s the jokey reason, i am interested in fish because it is a crucial part of the world’s economic, political and environmental system. If you do not manage your fish stocks properly, you WILL get into trouble because unemployment in a vital sector will plunge, nutrition across the wider population will be impacted, the upstream and downstream impacts of lack of fish is huge, and so on and so forth. Being in a bank unfortunately guarantees that every problem will ultimately impact the banking system in some shape or form. Whether its to do with corporate funding, interest rates, bankruptcies, you name it, a bank has to handle it.

One would have expected that a supranational body like the EU, which was original designed for making sure that the Coal and Steel production in the core European Union countries was coordinated, could have handled something like the fish stocks in the EU? After all, the Europeans have been fishing for thousands of years, much longer than they have been making steel. But no. This paper bluntly puts in clear terms, the reasons why the European Union has spectacularly failed in managing its fish stocks via the Common Fisheries Policy and has inexorably lead to overfishing, massive unemployment in so many fishing communities around Europe, huge subsidy bills and basically screwed up the sea environment. So what were the issues?

1. Biological Issues: Every year, the scientists propose a sustainable level of fish stocks based upon a rather clear mathematical model based upon unexploited stock size, the maximum economic yield, the maximum sustainable yield and a precautionary lower biomass limit. Based upon this model, you know how much fish to catch. There are other factors such as when do juvenile fish become adults and start spawning, how many times do you want the fish to spawn before being caught, etc. Guess what? the European Commission and the Council of Ministers usually agree a limit circa 50% higher than what the scientists propose. Hmmm, that really helps guys.

2. Economic Issues: Fish stocks suffer from the problem of common goods, everybody owns fish and nobody owns them at the same time. Its like common pasture grounds where everybody can graze their cows but nobody has to take responsibility for the pasture. So individual motivation is to overfish and thus have overcapacity. If you provide fishing quotas to fishermen, which is comparatively economically efficient (even if you consider the 50% over permissioning from above), it still doesnt work efficiently as monopolies can form, quotas dont really address the issue of the catch size itself and finally this doesnt apply to fishermen from outside the political structure. Not much can be done about Japanese fishermen fishing off the economic zones in Europe, can you? And who will validate once the fishing boat lands up in a Japanese port? not the EU authorities anyway. In the EU’s case, subsidies have been given for developing boats, subsidising fuel, and so on and so forth. Totally distorted economic market in Europe.

3. Legal Issues: You have to have ONE regulatory / legal body to handle issues such as this. But no, the whole panoply of rules, regulations, decrees, courts, councils, and and and is just complex, non transparent, riddled with inefficiencies, cannot enforce suitably, and so on and so forth.

4. Political Issues: The fisheries ministers in the respective EU nations are not judged on the basis of how well they manage fish stocks on an European wide basis but on how much quota they manage to get for their own constituents. There is no minister representing the poor fish, see? So everybody goes about raping the fish and devil take the hindmost. Also because this is a slow decline, politicians do not take responsibility as they will be long gone by the time the populations actually collapse. Due to different election timelines, there is no consistent policy making either. Consequently, the European Fisheries policy frequently reduces to the lowest common denominator.

These are just few of the issues that we are facing. Looking at how the EU actually handled something that was huge and crucial such as the Bosnian Crisis, the Kosovo Crisis or even the Greek Debt Crisis, I am not sanguine how it will handle a situation like this with the fish stocks, but still, some attempts need to be made to address this problem from a multi disciplinary perspective.

Low European Donations to Pakistan – Islamophobia or bad Pakistani reputation?

Found these 3 links on the Pakistani Floods situation.

1. Most Germans reluctant to donate to Pakistan

2. Why Europe Has Been Slow to Help Flood Victims. Quote:

"Many Pakistanis are struggling to understand why the response in the West has been so inadequate," writes Pakistani historian Tariq Ali in the columns of Süddeutsche Zeitung. "Some among them," he explains, "argue that Europe and the United States are reluctant to release funds because their country is now viewed as refuge for terrorists. In fact the issue is more complex, but it is clear that the problem has not been solely caused by Pakistan. The reality is that the main factor limiting international aid is the flagrant Islamaphobia that has that has emerged in Europe and North America since Sept. 11. In a recent poll, more than 50 percent of respondents associated the word "Islam" with terrorism.

"Of course," Tariq Ali remarks, "all of the people interviewed were in the UK, but the British, the French, the Germans, the Dutch and the Danes all think alike. Pakistan is under water and the rest of the world remains indifferent." And he bitterly insists, "Yes, latent prejudice against Muslim countries is one of the reasons for the lack of international aid. But the problem has also been compounded by another factor which is a specifically local: many Pakistanis themselves are reluctant to hand over money because they fear it will end up lining the pockets of the country's corrupt politicians."

In response, the implacable Jyllands Posten points out that "for years Pakistan has contributed to its terrible international reputation." The country "is now viewed as one of the most dangerous places in the world: a nuclear power with an army that is unwilling or unable to stand up to the Taliban and al-Qaida, and a secret service that supports the Taliban." Having said that, even if "it does not benefit from much sympathy, Pakistan still needs massive humanitarian aid," points out the Danish daily.

3. Record rains – but Pakistan is dying for water. Quote:

To put matters in their depressing context, the number of children who perish daily from water-related diseases is several times higher than the rate at which people perished in last week's devastating floods.

The poor Pakistani’s, somebody needs to save them from not only the floods, but their leaders, both civil and military, but the Islamophobia argument is very weak, based upon what I have read and figured, its more to do with the reputation of Pakistan due to corruption, terrorism and general incompetence all around.

 

Update: 21 August 2010: BBC asked some talking heads on this issue. I quote:

Dr Marie Lall, Pakistan expert at the Royal Institute of International Affairs (Chatham House) and senior lecturer at the Institute of Education, says: "I think there is donor fatigue all around. The [2004] Indian Ocean tsunami, the Burmese Cyclone [Nargis, 2008], the [2005] Pakistan earthquake, and [this year's] Haiti earthquake. It is getting too much; we are in a recession and people are short of money."

Rebecca Wynn, Pakistan specialist for UK-based aid agency Oxfam, says: "Many donors have made substantial contributions in humanitarian assistance to Pakistan over the years, particularly in response to the conflict-related displacements over the last two years. Of course, the fact that the people of Pakistan have been hit time and again by disaster is even more reason to give."

Dr Elizabeth Ferris, senior fellow at the US-based Brookings Institution, a foreign policy think tank, says: "It should also be noted that the international humanitarian system isn't set up to deal with more than one major crisis a year. USAID, for example, committed one-third of its annual budget to the Haitian earthquake response. And among the general public there may be a feeling of, 'Well, I donated to the victims of the Haitian earthquake and Haiti is a far needier country than Pakistan.'"

Corruption

Yale University economics professor Dean Karlan, an expert on charitable giving, says: "Corruption concerns may explain why giving is lower to developing countries than many would like it to be, but it does not explain why there is less money pouring into Pakistan now than does to disaster relief causes in other developing countries with similar governance issues."

Dr Marie Lall says: "People in Pakistan are sceptical the government will be transparent. But they are giving to philanthropic organisations. In the UK, I think people are sceptical of [non-governmental organisations'] overheads and costs. They don't know which ones are transparent and reliable, even though local organisations such as TCF [The Citizens' Foundation] are doing an incredible job."

Dr Elizabeth Ferris says: "People are always sceptical about their money reaching flood victims, particularly in countries with reputations for corruption. But Haiti didn't have a very good reputation in this regard. [Pakistan] President [Asif Ali] Zardari trip to Europe [during the floods] was not a good move. For a few days, that was the 'story' of the Pakistani floods, which doesn't inspire people to be generous, particularly in this economic climate."

Terrorism

Dr Marie Lall says: "British Prime Minister David Cameron's comments in India [when he said Islamabad promoted the export of terror] did not help."

Dr Elizabeth Ferris says: "People are less likely to donate to any country seen as a haven for terrorism. And more generally, the fact that so much Western news coverage in recent years about Pakistan has been negative, stressing its links with the conflict in Afghanistan. I think this is the major reason for the slow public response - the image of Pakistan in our media. There may also be a feeling, particularly in the US, that Islamic governments and charities should be stepping up to the plate to donate."

Timing

Rebecca Wynn says: "This disaster has come at a bad time, following the financial crisis and the Haiti earthquake. Many donors made huge commitments to Haiti, so may find it hard to fund another major disaster, particularly in the same year."

Dr Marie Lall says: "Timing may be a factor, but I think it's more to do with not realising the scale of the disaster, and the attitude by the British government; the UK should be leading the aid effort, given the Pakistani diaspora here and the fact that we need Pakistan for the war in Afghanistan."

'Wrong' disaster

Professor Dean Karlan says: "Sudden events seem to generate more funds. A flood (and droughts) happen gradually and build. There isn't any one single day in which news is huge. For the same reason, this pushes the story away from the media spotlight. But massive and sudden earthquakes or tsunamis draw our immediate attention and shock us."

Dr Elizabeth Ferris says: "It's important to note that in general people are likely to give more to emergencies occurring in countries geographically closer to them - although this didn't hold true for the tsunami. But when you trace contributions over time, you find that Americans and Canadians are more likely to respond to disasters in the Western hemisphere while Europeans tend to be more responsive to African countries (and their former colonies, in particular)."

Dr Marie Lall says: "This was not one cataclysmic event, but one which grew over three weeks. The fact that 25% of the country was or is under water is not understood. The low numbers of dead, relatively speaking, mask the disaster on the ground. The crisis has destroyed crops, dead livestock and damaged homes and infrastructure. Food prices are through the roof and there won't be a normal harvest. It will get worse. Farmers will starve."

So pretty much everything, eh?

More on the scandal of the European Union Accounts Fraud and Incompetence

I got this email from a list. This level of incompetence and fraud is shocking, and to think that they are doing this with our money. Bleah.

 

Subject: Re: EU audit

Date: Thu, 8 Apr 2010 10:46:10 +0100

Perhaps I can clarify things a little...

The only part of the EU's spending which is audited and signed off

is the part handled directly by the Commission, and that includes

the cost of the European Parliament. It accounts for less than 10%

of the total.

All the rest comes under what is absurdly known as "shared

management", on which I have waxed lyrical more than once in years

past. Effectively, the EU decides to give money for a project in a

member state or in a candidate country and then expects that

country's government to account for it properly, having added an

agreed percentage to the total cost of whatever is being

funded. (Example, Greece, whose application for subsidies for its

olive groves covers such a large land mass that it can only mean

that olives are grown in the middle of Athens and in the Aegean

Sea. Everybody in Brussels knows it is a scam and they have never

done anything to stop it.)

The Court of Auditors, another poodle of the EU and made up of

appointees from the member states (many of whom are not qualified

accountants, by the way), then supposedly checks on the information

provided, sends staff to a handful of locations to verify the

"facts", and then decides there are too many errors and

unsubstantiated sets of accounts for them to sign off the whole lot.

Added to which, when the EU switched from single-entry book-keeping

to double-entry in 2005 they were unable to agree the closing

balances on the existing accounts, which meant that there were no

opening balances under the new system!

So, in reality, they can NEVER sign off the accounts because they

never knew where they were starting from.

Hope that helps

Ashley Mote

(MEP 2004-2009, and member of the EP's Budget Control Committee

throughout that time)

PS: Double-entry book-keeping was the invention of an Italian monk

some 1500 years ago. Quite why it took the EU until 2005 to catch

up has never been explained.

No signoff on the EU accounts yet again

So this year again, the Netherlands government is refusing to sign off on the EU Accounts. I quote:

Finance Minister Wouter Bos has announced the Netherlands will vote against the annual financial statement of the European Union for 2007. He made his statement after a meeting of European finance ministers.
For the 14th time, the EU accounting office reports that many billions of euros in expenses have not been properly accounted for. Mr Bos says that the Dutch parliament would never accept such a statement from a finance minister, and that the Netherlands will therefore vote against.
The Netherlands is once again the only country to reject the EU financial statement. Mr Bos says an increasing number of countries agree with the Netherlands, but fear being punished financially should they vote against the statement.

I have complained about this before. But nothing happens. The European Union, in its estimable undemocratic way, keeps on going ahead, spraying my tax dollars on weird and wonderful initiatives, with no proper accounting for the funds. The Netherlands seems to be the only country which has a set of proper balls for proper accounting and treatment of their funds.

Now I wonder why the British Government does not follow suit? Oh! sorry, I forgot that the British Politicians are equally venal as the EU bureaucrats, and would prefer to keep their expenses secret. Welcome to the land of corruption. And dont tell me that we are cleaner than Nigeria or Bangladesh. We are NOT a third world country, we live in a trust society and in return for my tax dollars, you are to be open and transparent in your spending which you are doing on MY behalf. If you are incompetent, then you need to be fired and if corrupt, exposed. Is there anybody else besides the Dutch who would be brave enough to hold these EU incompetent gits to account?

Technorati Tags: Europe,European Commission,Corruption

Quote of the day:
Many would be cowards if they had courage enough. - Thomas Fuller

Evidence that Europe is elitist or mad

I have to admit that I did a little hop skip and jump when I passed a TV screen yesterday showing that the Irish had rejected the poxy EU Constitution. So, the bald facts are

1. The EU Reform treaty is rejected by Irish voters and by the rules of the EU, the entire treaty is now rejected.

So the people have spoken. And what do our people's representatives do? They persist in doing the SAME things that have lead people to reject the EU in its current shape. This qualifies them at best to be insane or at worst, to be corrupt, elitist, autocratic morons who are basically out of touch with the common man. See the BBC report here. And its basically across the continent. Here:

France and Germany have described the No vote in the referendum as a serious blow but have urged the EU to press ahead with the project.

So the people said no, but the leaders say yes, and lets just ignore what the people said, yes? Pesky people, who cares about those little people, no?

FRANK-WALTER STEINMEIER, GERMAN FOREIGN MINISTER

Naturally we are disappointed, it is a hard blow. Nevertheless, I am convinced that we need this treaty. Therefore we are sticking with our goal for it to come into force. The ratification process must continue.

HE believes it so it must go on, sod the people.

 

But here's the EC Head, Barroso who comes across as frankly a bit stupid. He says that the treaty is not dead. No? Its not dead? Really? Its as dead as the Norwegian blue parrot. The treaty is not going anywhere now. So the head of the EC says basically stupid things. I would have called him a liar, but stupid people's utterances are not lies, lies impute a degree of intelligence and motivation.

Then we have our little liar in our midst.

DAVID MILIBAND, UK FOREIGN SECRETARY

The Irish government have made clear they believe it's right for countries like Britain to continue the ratification process because there needs to be a British view as well as an Irish view... So I believe it's right that we continue with our own process and take up the Irish offer of further discussions about the next steps forward.

Did you notice that there was nothing in his statement about what the British people want? Of course, the British people do not want him and his lot anyway. So he is perhaps the foreign minister of one of the most unpopular governments in the recent times. Again, an elitist view of the world. Governments and elites talk to each other and decide for me, eh? Mr. Miliband, some people thought of you as a potential Prime Minister. Well, Sir, you are not. The British View is what the people say, not what you say. And if you say that your view is what the people want, lets put it to the test, shall we? When did I vote or say yes to this treaty? Oh! but I CAN CALL YOU A LIAR because YOU PROMISED in your manifesto for a referendum and then withdrew. Your frankly stupid protestations notwithstanding, you are basically a liar.

Thank you, Irish! As for the EU, remember the Danish referendum in 1992 and 2000? the Swedish rejection of the Euro? the French and Dutch rejections? And the previous Irish rejection? Here's an idea, try to look up what the word "rejecting" means in the bloody dictionary, you twits. I quote:

• To refuse to accept, submit to, believe, or make use of.
• To refuse to consider or grant; deny.
• To refuse to recognize or give affection to (a person).
• To discard as defective or useless; throw away.
• To spit out or vomit.

 

Technorati Tags: Ireland,EU,Europe,Constitution,democracy

Recycling ships

Ships are living creatures. Ask any sailor and he will agree and he will further say that ships are feminine. That combination of steel, paint, oil, blood, sweat, tears, sand, sea, wind and waves can be nothing but feminine. But unlike ladies, when ships reach the end of their lives, they are treated rather brutally. They are driven up dirty, oily beaches, and then are ripped apart unceremoniously till the only sign that a living breathing ship ever existed would be some oil stained patches of sand and a heap of unidentifiable steel pieces. The process of recycling a ship in the countries such as India, Bangladesh, China etc. has been highlighted in the western media. For us poor innocents who saw those videos and photographs that entire process looks horrifyingly like the personification of Dante’s hell. So I went poking around.

First of all, you think I am exaggerating? I am not. Here, take a look at some of these links on this ship breaking industry.

1. Ship breaking in Chittagong, Bangladesh.
2. The science behind the complaints
3. Two photo essays  here and here.
4. A video essay here.

See that I mean by Dante’s hell? Naked feet treading over hot oily sand, breathing in noxious fumes, no safety equipment, clearly devastated ships, fires and sparks around the place, dark eyes and mud, earnings in the bottom layers and garbage pickers. It is indeed a hell on earth. But, according to some estimates, there are more than a million people across the world directly engaged in ship breaking. Almost 200,000 in Bangladesh itself.

And for very poor people in poor countries such as India, China, Bangladesh, Pakistan, etc., the fact that they have employment is important. It will make the difference between starvation and existing. But this thought seems to have passed people by. When people get shocked at the sight, think about why ships are not being broken up in the USA, UK, Japan, Greece or the shores of Italy? Well, we in the west have put in so many rules, regulations, laws, notifications and ordinances that recycling equipment is simply not cost effective to break up ships here especially when you have lower cost locations available. You have to wear special shoes, wear a gas mask, worry about decontamination of the ground and so on and so forth. And if you lose your job, you will always have a welfare cheque or you can move to another job.

But there are no such human health and safety or environmental requirements in Alang in Gujarat in India or in Chittagong in Bangladesh. And still people are glad to have those jobs. If you put in those requirements for gas masks and decontamination in Chittagong, then you know what will happen? The ships will go to Sierra Leone to be broken up. The 200,000 people in Bangladesh will starve because as you know, jobs or welfare cheques are not really that readily available there. So while you blanch at the nightmarish conditions, do look at the smiles on the faces as well, they are doing honest jobs which the west has made it uneconomic to do in their own lands. But here is the Greenpeace site, quite an interesting site to read. The judgement call to judge employment versus environment protection is very difficult to read and make. Not an easy one at all.

There is an international convention which bars the transfer of hazardous waste between countries. The full name is, Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal. Quite a mouthful, eh? It was setup in 1992 and almost 170 countries have signed up to this declaration but it does not seem to be stopping the trade very much. An example of a successful usage of this convention to stop a dirty ship from landing on the shores of Pakistan or India was the case of the scrapping of the French aircraft carrier Clemenceau in 2006.

After a huge global protest campaign by Greenpeace who protested against the French violating the Basel Convention, the French decided not to send the ship to India to be broken up and the poor ship is currently tied up at the Naval port of Brest, gently rusting away. Quite a big victory, eh? It would have been if at exactly the same time, several other ships loaded with asbestos would not have been in the process of being broken up in Alang, India. And if no more French ships loaded with asbestos had landed in India. Or if Greenpeace had continued to campaign to make sure no more asbestos laden ships landed in Alang. But life goes on. An indication of the importance of this subject to Greenpeace can be seen at their main site for ship breaking. Notice the last date of update? It is early 2006. I suppose the camera’s and reporters have gone away but the labourers who are breaking the ships are still there.

The other main reason for scrapping in these countries is that they provide good quality steel at rock bottom prices. Bangladesh is notoriously lacking in raw commodity materials and by some estimates, this ship breaking industry provides up to 90% of the iron and steel usage in the country. Similarly, other countries utilise scrap steel in their domestic iron and steel industry. Have you sent the prices of steel recently? They have gone up through the roof. The Global Carbon Steel Composite Index has gone from 138.3 in February 2006 to 217 in March 2008. So for the poor countries that have to purchase steel, it makes more sense for them to get it in this way.

The European Union and the International Maritime Organisation seem to be working up the courage to implement a convention on doing pre-cleaning of the hazardous materials on the ships before they end up on the breakers beach and ship breaking in general. These hazardous materials are really bad, such as asbestos, dioxins, oil, chemicals, you name it. Now this is a very tricky area. And will be very difficult to implement. Who pays for the clean-up? Does the last owner of the ship pay for it? Does the owner of the last cargo on that ship pay for it? Who will enforce the ruling? Do you enforce the ruling where the ship has been tied up at the last port of call? Or where the ship has been registered? (Can you imagine a country like Liberia or Sierra Leone taking action?).

Or do you make sure that every cargo owner pays some element of the cargo fees aside for eventual cleanup? And if the fees are not paid, then where is the money to clean up going to come from? General taxation? Which general taxation? Do you wish this to be paid out of EU funds? Or national funds? If so, why would say Luxembourg have to pay for clean up of ships while it is totally landlocked? Who will enforce it? Do you change the penalties by size of the ship or by the cargo capacity of the ship? There are quite a lot of questions to be answered, but seems like some form of a convention will emerge and very slowly, with loads of holes and exclusions, take shape. Then countries will sign up slowly, the industry will shift its patterns, and over many decades or so, get to a stage where a global standard has been agreed, implemented, operationalised and policed. Long way to go yet. If you think I am joking, head over to the International Labour Organisation website and see the conventions they have written, the number of parties who have signed up and then look around to see if that has made much of a difference, these things take time.

I love ships, I adore their shapes and I love their behaviour. They are definitely human to me and could be the inner sailor in me speaking. They are definitely contrary, need to be handled very gently and carefully and very expensive to run. So much so that Admiral Chester Nimitz said, "A ship is always referred to as 'she' because it costs so much to keep one in paint and powder." Ships talk and murmur. Seriously, they do. Listen to them and you can listen to them talking, murmuring, creaking, screeching and whining. Not on those cruise ships, they are not ships, they are gaudy ornaments, sound proofed and carpeted all over. But a warship, a tanker, a container ship, a cargo vessel, serious vessels, who treat the sea warily and with respect, they talk to you.

Docks talk about ships taking birth in yards, joy you feel when the ship hits the water in the rush. It is very much like a human birth. Signing of the contract, the bringing together of men, materials and money in a womb like yard and the final birth as the ship rushes down and splashes into the water to be finally born. When a ship sinks and dies, it cries. Submariners who have torpedoed ships frequently talk about the sadness they feel when the ship dies. They talk about the haunting ship’s death groans when they hear the crumpling of the ships hull as it sinks down to the ocean depths.

But perhaps that is indeed the right grave for ships, the ocean depths. To be driven up a beach and then stripped naked, all the hull and steel cut away with flame torches, all the furniture and fittings unscrewed and unbolted, the oil drained away, till nothing is left but a patch of oil stained sand is somehow very distressing. But perhaps the fact that in the ship’s death, she has given back something to the humans who built and rode her while she was alive, makes the manner of her death worthwhile.

All this to be taken with a grain of salt!

Technorati Tags: India,Bangladesh,Pakistan,Turkey,China,European Union,Transportation,Shipping

Freedom of information case opens up EU files

Hear hear. Finally we might hope for more clarity and transparency from that secretive undemocratic set of organisations which belong to the European Union. Spending, deliberations, minutes, agreements, reports, all are generally hidden away. After all, we are mushrooms. But this is a good step. I quote:

 

The European Union's secretive lawmaking will be opened to more public scrutiny under proposals to overhaul freedom-of-information laws due to be unveiled on Wednesday.

The European Commission wants to update its rules after losing a series of court cases last year when it refused to hand over documents to journalists, activists and companies.

The reworked regime would take account of this case law. Crucially, national governments would no longer have an automatic veto over the release of correspondence with EU bodies. The names of lobbyists who meet EU commissioners, parliamentarians and officials would also be disclosed routinely for the first time.

Technorati Tags: Freedom of Information,EU