French President Nicolas Sarkozy said on Tuesday the European Union should consider capping sales taxes on fuel products if oil prices rose further but his proposal got short shrift from Brussels. Sarkozy also suggested siphoning off extra revenues from sales taxes on petrol to create a fund for professionals, such as fishermen protesting about the price of fuel, who are hardest hit by the jump in energy prices.

“Oil has gone up 60% in 6 months putting big pressure on US household budgets,” says Bill Bonner in The Daily Reckoning.

“Now, instead of taking the hint – that it’s time to go in the other direction, by raising rates to head off rising prices – speculators think Ben Bernanke will continue battling deflation with further rate cuts. Maybe, maybe not… but our guess is that it doesn’t matter.

“Even if the Fed raises rates, it is unlikely to raise them enough to block the consumer price inflation already in the pipeline.”

The biggest laugh The Mogambo Guru has had all week was from Bloomberg.com reporting that “European consumers are ‘suffering as surging food and energy prices erode the value of their wages’, finance officials said.” The article continues that this is “urging governments to boost spending to help the poorest deal with the fastest inflation in 16 years.”

“Consumers are suffering because the stupid European governments boosted spending for a decade or more, the money financed by debt, and it is all of this spending that has made the purchasing power of the euro to fall,” says Mogambo. “And now the governments are going to boost spending some more Hahaha!”

The Wall Street Journal reports that many U.S. cities are now desperate to step up their levels of high-speed Internet access. They rightly see broadband as a backbone of future possibilities, from commerce to education to better delivery of basic goods and services.

While it’s not so hot to see the U.S. so far down the league tables on broadband, it is exciting to think of the opportunity being created elsewhere. As countries like Hungary and Poland pick up blazing speed online, opportunity for growth picks up speed, too.

It’s great news for investors to see the rest of the world charging ahead in key areas like broadband. That means more countries to invest in, more places to shelter from a falling dollar, and more chance to participate in the biggest story of the 21st century — emerging market growth.

Justice Litle

Editorial Director, Taipan Publishing Group

Source: The Broadband Arms Race

Down in Putney, along the bank of the Thames, there’s an oldish Jag parked on a side street with a personalised number plate. Given the one time reliability reputation of Jags, it was perhaps chosen with some justification.

It reads: PE51MST.

The word fits the view prevailing on the UK economic outlook – whether you’re a central bankers, a politician or most likely amongst the majority economists call ‘consumers’. Bad news is chasing us down the street…

The Bank of England says it could be recession down the road. Inflation is going up for some time to come – north of 3%, unemployment is starting to edge up too, credit is harder to come by and costs more – in spite of the best efforts of the Bank of England, house prices are going down and house building has slumped, commercial property prices have too – by 16% since last summer says the Bank of England. Our leading banks have lost billions – Barclays announces another £1bn write down this morning – and once proudly touted government golden rules on borrowing become instead lead weights around Gordon Brown’s increasingly vulnerable neck.

Okay so we’ve had our fill of the bad news. Is there anything we can be OPT1M1ST about? Well, looking at the stock market Mr Market’s mood appears to be cautiously more positive. The FTSE 100 hit a low for the year to date on March 17 closing a little over 5,400. It’s up 15% since at a little over 6,200. MoneyWeek is bullish on Japan and the Nikkei is showing signs of recovery. It hit a four month high close today.

UK stock market sentiment as measured by Sharescope has risen since its March low though remains marginally bearish. As we’ve said, stock markets are the great expectation machines and always straining their eyes on the horizon to see what’s coming…then discounting it before it arrives.

The worst of the credit crisis is over they say but as we can see from Barclays latest £1bn write down and collapsing bank shares, it is by no means over. The FTSE 100 is marginally higher today yet RBS, a constituent of it, has slumped 14%. The bank has given up half its market value over the past year, a grim stat that causes some degree of personal financial pain to your editor. Given the bank is reported to be sounding out shareholders about the level of support for top management; it has hardly a vote of confidence.

Commodities have edged down from their highs perhaps only temporarily but no boom lasts forever. Central bankers will hope this one ends sooner rather than later and the market price mechanism will assert itself once again as the universal regulator of demand. Oil is a little down from its high at $124 and food prices are showing signs of stabilising reports the FT.

As for the Eurozone, “old Europe” – France and Germany – is leading the charge. European growth in the first quarter came in at 0.7% against consensus of 0.5% and that in spite of the drag of sluggish Med economies such as Spain and Italy.

Growth has hit its fastest pace in 12 years in Germany and surprised on the upside in France. Eurozone rates remain at 4% as inflation has bubbled up to a 3.6% high in March, easing to 3.3% in April. If he can keep that virtuous cycle going in the face of ‘cost shocks from abroad’ the European Central Bank’s Jean-Claude Trichet will be in clover.

*** News from the frontline on the ongoing creative destruction of traditional print media… Johnston Press plc, a regional newspaper publishing business with a heavy debt load, is raising £200m plus in emergency funds as ad revenue wilts under the pressure of the internet.

“Traditionally,” reports the Independent “three-quarters of its revenue comes from ad sales.” Those sales have been falling relentlessly. Last year classified ads fell over 3%, car ads more than 8% and larger display ads 4%. Ad revenue fell another 4% in January and February this year. We’ve said it before, we’ll say it again. Sooner or later someone is going to start closing newspapers.

Regards,

Rob Mackrill
The Daily Reckoning

Source: Old Europe, New Growth

Gross domestic product (GDP) in the 15-country Eurozone increased by 0.7% in the first three months of the year, Eurostat reported. Analysts had predicted a growth rate of 0.5%.

Germany and France – which together account for nearly half the Euro region’s GDP – made the difference. The German economy, the continent’s largest, expanded by 1.5% in the first quarter, compared with a growth rate of 0.3% in the final three months of 2007. France also turned in a respectable performance, advancing at a 0.6% clip.

Although the strong growth underscores the global economy’s resilience in the face of a sputtering U.S. economy, and appears to justify the European’s Central Bank’s focus on taming inflation, analysts warn the celebration may not last.

A key cause for concern: Despite their strong performance, both France and Germany showed signs of declining consumer demand, which is why analysts are skeptical that such stellar growth can continue.

“A Chinese proverb says that it is better to light a candle than to curse the darkness,” Carsten Brzeski, an economist for Dutch finance group ING Groep NV (ADR: ING), told Reuters.” However, at the current juncture, one should not be blinded by the German GDP numbers.”

Indeed, earlier this month, data from Germany’s Federal Statistics Office showed retail sales in March were down 0.1% from February, and down 6.3% from a year earlier. Food, drink, and tobacco sales led the decline, as consumers cut back in the face of soaring inflation.  Consumer prices in April jumped 2.4%.

The story is the same for a multitude of other European nations. Eurozone inflation backtracked slightly in the month of April, sliding to 3.3% from a 16-year high of 3.6% in March, but remained well above the ECB’s 2.0% ceiling.

“There are significant pressures facing consumers in Europe,” Howard Archer, chief European economist at Global Insight Inc., told Forbes.com. “Higher inflation and soaring food prices are weighing down on consumer purchasing power in Europe. It is a depressing factor throughout the continent.”

“Consumer confidence is weak in Europe and low spending is bound to hurt the overall economy,” he added.

The European Central Bank (ECB) has remained hawkish on inflation, which it considers “the main problem that we have to face in the short term.” The ECB has held its benchmark interest rate steady at 4.0% for nearly a year now, despite an aggressive string of rate cuts by the U.S. central bank that has left the benchmark Federal Funds Rate at 2.0%.

Still, rising worldwide commodities prices and a weak U.S. dollar continue to drive up inflation throughout the Euro region.

The European Commission (EC), the executive branch of the European Union, said last month that Eurozone growth would continue to erode throughout 2008 and 2009.

The EC predicted the combined growth rate for the 15 countries that use the euro would slow to 1.7% this year and 1.5% next year. It was second time in six months that the commission has reduced its growth estimate for the region. In November the group was projecting growth of 2.2%.

According to the EC, “the recent sharp rises in food and energy prices have depressed households’ purchasing power and consumer spending in the last quarter of 2007 and are expected to continue to do so during most of 2008.”

If the Eurozone does lose its momentum in the months ahead, the ECB could find itself in a precarious position, as abiding inflation might keep the bank from cutting rates to spur growth.

“There is definitely no room for the ECB to cut rates,” Joerg Kraemer, chief economist at Commerzbank AG (OTC: CRZBY) in Frankfurt told Bloomberg News.

Source: European Growth Strong in the First Quarter, but Will it Last?

And both for what you thought I was saying: That nuclear power is The Answer to America’s (or the world’s) energy woes.

But I’d like to remind everyone reading this — pro, con, neutral, apoplectic or apathetic about nuke power — that I freely admitted in the first two parts of this series that I don’t know enough about nuclear energy generation to make an informed decision about its prospects. I never said atomic power was a panacea, or even that I believe it is. I only pointed out some realities about nuclear power generation so far in the United States…

First, that as far as I could discover from a good deal of research time, it has killed or sickened few, if any. Secondly, I reminded readers that the overwhelming majority of Americans favor nuclear energy, a fact that seems not to warrant much mention in the mainstream media’s portrayal of the debate. Also, I put a few numbers to some of the hazardous realities — both to humanity and the environment — of conventional American energy production. A side note on this:

~~~~~~~~~~~~~Special~~~~~~~~~~~~~

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Even after billions more in bank losses…even as foreclosures continue to soar…even as stocks on Wall Street fall apart. In fact, in spite of those things. With a lot less risk. And plenty of confidence that you’re doing the right thing.

All you have to do is follow seven steps. Click on the link below to learn how to protect your wealth (and turn a very nice profit) in the stock market meltdown:

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~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

One less-than-adoring reader observed that if I were to mention the tens of thousands of deaths related to coal mining, then injuries and deaths related to uranium mining should also be pointed out. Of course, I considered this when I wrote Part Two, in which I touched on the dangers of coal mining in my discussion of the human costs of American energy production…

According to my research, uranium mining was only recently resumed in the U.S. after being halted in the early ‘90s. Since its resumption in 2001, domestic uranium mining has been predominantly “open-pit” — which is far less hazardous and manual-labor intensive that conventional underground mining (like for much of our coal). Long story short: I couldn’t find much on the dangers of modern uranium mining in America.

However, this reader’s letter spurred me to some further digging — which led me to some old newspaper stories and other sources indicating that uranium mining in Utah, Colorado and other places in the American Southwest (mostly in the 1940s and ‘50s) may indeed have sickened or killed a number of miners and residents of mining communities. In fact, many of these people and their families have received payments under a 1990 law called the Radiation Exposure Compensation Act.

Again, specific numbers were hard to come by — but since I’m nothing if not objective, I felt this was worth mentioning. Also, since the U.S. currently imports more than 80 percent of the uranium used by domestic reactors, the dangers of mining the metallic fuel in Russia, Australia, and other major supplier nations must be considered (finding hard info on this is another matter, however).

Lastly, I must once again thank Whiskey & Gunpowder readers for their voluminous feedback — pro, con and otherwise. Special thanks to the numerous bona-fide experts who wrote in to express support for this series, among them a former U.S. Navy nuclear submariner and numerous active and retired nuclear engineers…

Now, back to the business of neither defending nor exalting American nuclear power generation — but considering it as objectively as I can.

From Ukraine, With Bile…

Always on the tongue-tips of those who’d thwart the spread of nuclear power in America is the 1986 reactor meltdown and explosion at Chernobyl, Ukraine. Of course, this disaster embodied all of our worst fears about nuclear energy — and I, for one, would never try to minimize or understate the horrors those in surrounding territories (especially Belarus) have experienced for the last 22 years because of the accident. I also agree with nuke-power’s harshest critics on one point at least: We’ll likely never know the true extent of the incident’s impact…

However, even the most jaded of nuke-haters would have to grudgingly admit that in the history of nuclear power around the world, Chernobyl has been an anomaly, albeit one of the most terrifying sort. To make an informed assessment of the risks of nuclear power, one must look at the whole picture. That picture includes 31 nations that are generating nuclear power in 439 plants — apparently without significant loss of life or destruction of the environment so far, Chernobyl excepted.