France

RERUN–Benghazi

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(Here is something I wrote in November of last year)

At a minimumat a bare minimumthe Benghazi affair reveals a dismal level of incompetence pervading the Obama administration. There is also reason to believe that it reveals decison-making about life-and-death matters based on this President’s desire to preserve his “narrative,” rather than facing reality and acting upon it. And, I suspect, the more we learn about what happened in Benghazi, and  why  it happened, the more disturbing the answers are going to be.

I’m currently re-reading the memoirs of General Edward Spears, who was Churchill’s emissary to France in 1940. There was a disturbing amount of defeatism, and in some cases actual sympathy with the Nazi enemy, among certain government officials and other French elites. Weygand’s friend Henri de Kerillis, a Deputy and newpaper editor, had been consistently pressing Prime Minister Daladier to investigate some sinister behavior by members of the extreme Right.

“Il faut de’brider l’abces,” he had said time and time again to the Premier. He had done so again lately and received this strange answer: I have done exactly what you urged, I have opened the abscess, but it was so deep the scalpal disappeared down it, and had I gone on, my arm would have followed.” This was really very frightening, and I said so. “You cannot be more frightened than I am,” said Kerillis.

I feel sure that we are going to find that the abscess revealed by the Obama administration’s behavior re Benghazi goes very deep indeed.

5/9/2013: A useful source of information about the Benghazi debacle and the related investigations is the site  Special Operations Speaks.

Coming Soon, to Places Near You?

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I’ve written before about Rose Wilder Lane, the writer and political thinker. In 1926, Rose and her friend Helen Dore Boylston, both then living in Paris, decided to buy a Model T Ford and drive it to Albania. I recently picked up the book Travels With Zenobia, which is the chronicle of their adventure.

Acquisition of the car–a “glamorized” 1926 model which was maroon in color rather than the traditional Ford black–went smoothly. Acquisition of the proper government documentation allowing them to actually drive it–not so much:

Having bought this splendid Ford, my friend and I set out to get permission to drive it, and to drive it out of Paris and out of France. We worked separately, to make double use of time. For six weeks we worked, steadily, every day and every hour the Government offices were open. When they closed, we met to rest in the lovely leisure of a cafe and compared notes and considered ways of pulling wires…

One requirement was twelve passport pictures of that car…But this was a Ford, naked from the factory; not a detail nor a mark distinguished it from the millions of its kind; yet I had to engage a photographer to take a full-radiator-front picture of it, where it still stood in the salesroom, and to make twelve prints, each certified to be a portrait of that identical car. The proper official pasted these, one by one, in my presence, to twelve identical documents, each of which was filled out in ink, signed and counter-signed, stamped and tax-stamped; and, of course, I paid for them…

After six hard-working weeks, we had all the car’s papers. Nearly an inch think they were, laid flat. Each was correctly signed and stamped, each had in addition the little stamp stuck on, showing that the tax was paid that must be paid on every legal document; this is the Stamp tax that Americans refused to pay. I believe we had license plates besides; I know we had drivers’ licenses.

Gaily at last we set out in our car, and in the first block two policemen stopped us…Being stopped by the police was not unusual, of course. The car’s papers were in its pocket, and confidently I handed them over, with our personal papers, as requested.

The policemen examined each one, found it in order, and noted it in their little black books. Then courteously they arrested us.

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Never Give up on the Cause of Freedom

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It is only after an unknown number of unrecorded labors, after a host of noble hearts have succumbed in discouragement, convinced that their cause is lost; it is only then that the cause triumphs.

François Guizot

Guizot is an under-appreciated writer, a Classical Liberal of the French school, a truly embattled group who struggled against long odds. In the new book by James C. Bennett and Michael J. Lotus, America 3.0: Rebooting American Prosperity in the 21st Century-Why America’s Greatest Days Are Yet to Come, we cite to Guizot’s General History of Civilization in Europe (1828), which is a brilliant book. I also hope to read his The History of the Origins of Representative Government in Europe (1861).

Cross-posted at America 3.0.

I don’t mean to be negative but….

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I know this is a cousin to stealing but you need to see this. I remember when those who warned of the danger were ignored or punished.

Seventeen years ago, Bernard Connolly foretold the misery that awaited the European Union. Given that he was an instrumental figure in the EU bureaucracy and publicly expressed his doubts in a book called “The Rotten Heart of Europe,” he was promptly fired. Mr. Connolly takes no pleasure now in having seen his prediction come true. And he takes no comfort in the view, prevalent in many quarters, that the EU has passed through the worst of its crisis and is on the cusp of revival.

As far as Mr. Connolly is concerned, Europe’s heart is still rotting away.

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Electricity Update – France and Texas

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France and Nuclear Power – Losing Its Edge

France has long pioneered a tradition of being reliant on nuclear power. France has 59 nuclear reactors and delivers a very high percentage of their total power needs through nuclear power, as well as being a major exporter of electricity to adjacent nations. France chose nuclear power after WW2 because they lacked local energy resources and had a strong engineering capability.

The company that runs the nuclear industry is called EDF. EDF is 84% owned by the French government, so you could basically say that the French government owns by far the most significant portion of their own electricity industry (and 15 nuclear reactors in the UK, to boot). Currently EDF pays a very high dividend, yielding 7.7%, due to the fact that their market capitalization has declined precipitously while the company has tried to keep the dividend constant.

For many years EDF provided France low cost electricity, which provided a competitive advantage against their industrial neighbors such as Germany. Today, however, Germany has a cost advantage over France in terms of power, since the price of coal has dropped and Germany uses a significant amount of coal to burn their own electricity. One of the main reasons that the price of coal has dropped is the rise of natural gas in the USA, which in turn allows the US to export their surplus coal overseas to Europe. This article from Bloomberg provides a good overview of the competitive situation.

“French energy used to be competitive,” said Emmanuel Rodriguez, head of energy for the French unit of ArcelorMittal, the world’s biggest steelmaker, which also has operations in Germany. “This model is crumbling. Germany is now better than us whereas a decade ago they were much more expensive.” French power prices for big industrial users are projected to average as much as 25 percent higher next year than in Germany, according to Uniden, a lobby whose members consume 70 percent of electricity used by industry in France.

In another sign of the upside-down world we live in, EDF’s dividend at 7.7% is far higher than what they are paying in yield on debt of 4.375%, even debt that looks suspiciously like equity here in the US (a perpetual dated bond is debt without a maturity date).

France is also struggling as they try to build new nuclear reactors. The next generation plant being built for EDF by Areva has had cost overruns and schedule delays:

EDF has previously said France’s first EPR would cost €3.3 billion and start commercial operations in 2012, after construction lasting 54 months. The estimated cost has now increased to €8.5 billion ($11 billion) and the completion of construction is delayed to 2016.

Energy Futures Holdings

Energy Future Holdings took a major Texas utility (TXU) private in a 2007 deal that leveraged up the company with $45 billion in debt in 2007. 2007 was a horrible year for most deals across almost all sectors including real estate as it was the “height” of the bubble before it all came crashing down. TXU, one of their entities, has bonds trading as low as 15 cents on the dollar (for bonds that have an interest rate of 10.25%, to boot) per this Bloomberg article.

The company has struggled to be profitable ever since the LBO, as the shale revolution created a glut of natural gas, pushing U.S. prices to the lowest since 1999 last year

While EFH is not a public company, they do have publicly traded debt and thus they have an active investor relations department. If you read through one of their documents you can see their expectations for natural gas prices and how they have been able to keep the company going for as long as it has due to a strategy of hedging against low priced natural gas, as well as through what seems to be very effective management of costs. However, the large debt load likely has to be restructured since a company that was built to profit from a marginal cost of power based on $14 / unit priced natural gas cannot service that debt load with the cost of natural gas between $2 – $4 / unit.

Cross posted at LITGM