Free Markets, Free People

Germany


Europe discovers its gas problem

German Chancellor Angela Merkel has declared the G8 to be dead, thanks to Russia’s take over of the Crimea:

German Chancellor Angela Merkel declared the Group of Eight leading nations defunct given the current crisis in Ukraine, in a clear message to Russia that the world’s seven other major industrialized countries consider its actions in Ukraine unacceptable. “As long as there is no political environment for such an important political format as the G-8, the G-8 doesn’t exist anymore, not the summit nor the format,” said Ms. Merkel, in Germany’s parliament, the Bundestag. “Russia is widely isolated in all international organizations,” the chancellor said.

Ah, yes, the old “isolated in all international organizations” gambit.  And what have all the “international organizations” done in reaction to Russia’s Crimean takeover?  About what they did when Russia pushed into Georgia.  A whole lot of nothing. It is one thing to have international organizations that have teeth and are willing to do something in reaction to such a blatant act.  But when they mostly issue statements condeming the action and void the Netflix accounts of certain Russian officals, being isolated from those organizations isn’t such a big deal.  All it does is make further diplomatic efforts more difficult, not that it is clear that Russia is open to diplomatic overtures.

Another thing that is happening is Europe is discovering it has managed to put itself in an energy situation that isn’t at all to its advantage.  30% of Europe’s natural gas flows through Russian pipelines (Germany gets 40% of its natural gas supplies from Russia).

So the scramble is purportedly on to change that situation.

European leaders will seek ways to cut their multi-billion-dollar dependence on Russian gas at talks in Brussels on Thursday and Friday, while stopping short of severing energy ties with Moscow for now. EU officials said the current Ukraine crisis had convinced many in Europe that Russia was no longer reliable and the political will to end its supply dominance had never been greater. “Everyone recognises a major change of pace is needed on the part of the European Union,” one EU official said on condition of anonymity. As alternatives to imported gas, the Brussels talks will debate the European Union’s “indigenous supplies”, which include renewable energy and shale gas.

Now, one would think that such a situation would call for drastic and speedy action.  Anyone want to bet how long they dither and, should they decide to exploit their “indigenous supplies”, how onerous the rules and regulations will be?

When leaders of the European Union’s member states meet today and tomorrow (20-21 March) in Brussels, they hope to reach consensus on the EU’s long-term climate goals. But agreement appears unlikely because of deep divisions between east and west. Ahead of the summit, ministers from 13 member states signed a declaration supporting a European Commission proposal for an EU commitment to reduce carbon dioxide emissions by 40% from 1990 levels by 2030 – up from a 20% target set for 2020. This ‘green growth group’ includes France, Germany, Italy and the UK. But Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia are wary of the target and the timeline, and are resisting any such commitment.

The latter group will most likely be all for moving ahead as speedily as possible to exploit “indigenous supplies”.  They’ll meet some pretty stiff headwinds, apparently, from the Western EU nations. You can almost see this train wreck coming.

Meanwhile in the pursuit of “green energy”, Europe is apparently ready to toss in the towel:

Governments across Europe, regretting the over-generous deals doled out to the renewable energy sector, have begun reneging on them. To slow ruinous power bills hikes, governments are unilaterally rewriting contracts and clawing back unseemly profits.

You have to laugh.  “Unseemly profits”?  They’re subsidies, sir.  Not profit.

It’ll be interesting to see if the EU has the will to sort this all out in the next couple of days.  If one is a betting person, you’d have to guess that the odds for success are long, given the EU’s recent history.

~McQ


Sometimes you just have to shake your head and laugh ruefully

Mostly because you get tired of saying “I told you so”.  Focus – Germany:

With Greenpeace successfully forcing the shutdown of nuclear power, and keeping out fracking for gas, what’s left? A boom in coal. In fact, over the next two years Germany will build 10 new power plants for hard coal.  Europe is in a coal frenzy, building power plants and opening up new mines, practically every month. It might sound odd that a boom in German coal is the result of Greenpeace’s political success.

Yes, this is the sort of thing that happens when governments try to set priorities in a market for political reasons and it blows up in their face:

Europe’s appetite for cheaper electricity is reviving mines that produce the dirtiest Across the continent’s mining belt, from Germany to Poland and the Czech Republic, utilities are expanding open-pit mines that produce lignite. The projects go against the grain of European Union rules limiting emissions and pushing cleaner energy. Alarmed at power prices about double U.S. levels, policy makers are allowing the expansion of coal mines that were scaled back in the past two decades. Lignite demand worldwide is forecast to rise as much as 5.4 percent by 2020, according to the International Energy Agency.

And the preferred energy sources just don’t deliver:

Germany’s wind and solar power production came to an almost complete standstill in early December. More than 23,000 wind turbines stood still. One million photovoltaic systems stopped work nearly completely. For a whole week coal, nuclear and gas power plants had to generate an estimated 95 percent of Germany’s electricity supply.

But if you ask them, these same folks will tell you how much smarter they are than you, how their priorities make more sense than yours and why they should be able to use force to make you live with their choices.

The irony is simply hilarious:

Coal remains the biggest source of fuel for generating electricity in the U.S. and coal exports are growing fast. Demand is being stoked by the rise of power-hungry middle classes in emerging economies, led by China and India. By the end of this decade, coal is expected to surpass oil as the world’s dominant fuel source, according to a recent study by consultant Wood Mackenzie.

And that brings us to the paradox created by government:

Germany’s energy transition has also been a transition to coal: Despite multi-billion subsidies for renewable energy sources, power generation from brown coal (lignite) has climbed to its highest level in Germany since 1990. It is especially coal-fired power plants that are replacing the eight nuclear power plants that were shut down, while less CO2-intensive, but more expensive gas-fired power plants are currently barely competitive. Energy expert Patrick Graichen speaks of Germany’s “energy transition paradox”: the development of solar and wind farms, yet rising carbon dioxide-emissions.

Brilliant!

Oh … and we told you so.

~McQ


Another country from which to “learn”

The question, as posed earlier concerning Britain and France, is will we?

Electricity prices are rising in Germany – and citizen with a low-income are suffering particularly. They are at risk of fuel poverty. 10 to 15 percent of Germans are now struggling to pay their energy bills. 600,000 households have the electricity turned off every year.

Remember, Germany ran scared after the Fukushima disaster and dumped nuclear power (because, you know, German has so many earthquakes and tsunamis).  They then went “green”.  Result?  See above?

Other result?

The CEOs of manufacturing industries are warning that production in Germany is at risk because of low energy prices in the United States. The energy prices there are now only a third of those in Germany. “Many industrial companies are planning to build new factories in the U.S. and not in Europe because of low energy prices there,” said Gisbert Rühl, chief of steel trader Kloeckner. “We are now reacting to this development and plan new business units in the United States.” To move production to the U.S. is especially attractive for companies in energy-intensive industries such as steel and aluminium or chemistry.

That would seem to be good news for us, no?

Well, it should be … except for the Democrats plan to raise taxes on the oil companies.  And Obama’s new wave of regulations.  Oh, and the Obama desire to see fuel prices “skyrocket”, ably aided by his Secretaries of Energy and the Interior.  And the EPA.

Etc.

~McQ


Observations: The QandO Podcast for 20 May 12

This week, Bruce, Michael and Dale talk about Greece, and the folly of governments.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


Crony Capitalism is phony Capitalism–example 6,981: solar subsidies

Via Hot Air is an article by Bjorn Lomborg in Slate.  It reviews the subsides of German toward “green energy” and how that has worked out for them.

Lomborg points out that when the global warming scare was at its height, Germany bought in, hook, line and sinker.  And, as is their way, decided they’d become the “photovoltaic world champion” as it switched to solar power.

How much did the German government commit to this pursuit of clean and green?  $130 billion dollars.

What happened when this tax payer funded gravy train left the station?

Germans installed 7.5 gigawatts of photovoltaic capacity last year, more than double what the government had deemed “acceptable.” It is estimated that this increase alone will lead to a $260 hike in the average consumer’s annual power bill.

Because, you see, solar power is more expensive than that nasty fossil fuel generated energy.  Details, details.

Anyway the government handed out $130 billion in subsides, German’s responded and the net result was a huge drop in greenhouse gasses, namely CO2, right?  Yeah, not so much:

Moreover, this sizeable investment does remarkably little to counter global warming. Even with unrealistically generous assumptions, the unimpressive net effect is that solar power reduces Germany’s CO2 emissions by roughly 8 million metric tons—or about 1 percent – for the next 20 years. To put it another way: By the end of the century, Germany’s $130 billion solar panel subsidies will have postponed temperature increases by 23 hours.

Reality … what a slap in the face that must have been.  Suddenly, the German government gets “religion”:

According to Der Spiegel, even members of Chancellor Angela Merkel’s staff are now describing the policy as a massive money pit. Philipp Rösler, Germany’s minister of economics and technology, has called the spiraling solar subsidies a “threat to the economy.”

But, as usual, the German government had to learn this the hard way. Markets, we don’t need no stinkin’ markets.  For a $130 billion dollar “investment”, Germany now gets 0.3% of its total power from solar.  Any guess why governments should steer clear of picking winners and losers?

The German government has burned $130 billion to raise the average power bill by $260 a year and delay the dreaded temperature increases by … 23 hours.

Brilliant!

~McQ

Twitter: @McQandO


Stunning

I’m stunned every now and then when I see a story like this.  By the way this isn’t an indictment of Germany, necessarily, its not the only country in which you’ll find such knowledge gaps.  Japan has hidden its atrocities during WWII as well.  In fact, most countries would prefer not to discuss such behavior.  

But it sure makes it hard to say “Never again” and have it mean anything if part of the population doesn’t know what it refers too.

One in five young Germans has no idea that Auschwitz was a Nazi death camp, a poll released Wednesday showed, two days ahead of Holocaust memorial day.

Although 90 percent of those asked did know it was a concentration camp, the poll for Thursday’s edition of Stern news magazine revealed that Auschwitz meant nothing to 21 percent of 18-29 year olds.

And nearly a third of the 1,002 people questioned last Thursday and Friday for the poll were unaware that Auschwitz was in today’s Poland.

Maybe it’s not significant that 21% didn’t recognize a name that is so identified with concentration camps that it could be a synonym.  Perhaps it is good enough that 90% of the total knew it was a concentration camp.  Or does it signal that the shame and the knowledge of the shame brought to Germany by the Nazis is beginning to fade (of course my guess is if you asked the question of the same demographic here in the US, the percentage to which the name would mean nothing would probably be higher)? 

Or, does it perhaps point to a demographic in which a portion is so self-absorbed that history like that represented by Auschwitz simply doesn’t register?

I wonder at times, as I watch the WWII era dim as veterans die off, whether things like D-Day and its import or Pearl Harbor will even get a mention in a few years.  

But back to the poll.  If ever there is something every German school kid should know about it is the Nazi era.  If ever there was a subject to which they should be exposed, to include all of the atrocities by that regime, it is the subject of Germany and Nazism. 

I can’t help but believe, and I don’t know it for sure, that the subject gets taught but it isn’t something that is lingered over by schools.  And I wonder how sanitized it has become now days. 

The fact that a fifth of the young demographic said the name “Auschwitz” had no meaning for them has thinking it is both short and sanitized when presented.  

Wonder if they knew the name “Dachau” (10 mines northwest of Munich).

~McQ

Twitter: @McQandO


Ezra Klein: A larger welfare state might mean a smaller deficit

Honestly, that’s his premise.  You can read it here.  He bases his argument mostly in health care costs.  Obviously where he tries to go with it is toward a single payer system.  But he uses Germany as the model.  Anyone, does Germany have a single payer system?  No, it has a public health insurance program that covers 88% of the population.

Take Germany. They have a pretty big welfare state: pensions, health care, paid vacations, unemployment benefits equal to two-thirds of one’s income.

So that’s great and per Klein, who, like I said, wants you to believe by his vague general description, that Germany has a system like … Canada.

Don’t believe it?  Well it takes that sort of implication to make a statement like this:

To bring this across the Atlantic, you could argue that the United States’s debt burden is the product of an insufficiently large welfare state — at least with regard to health care. To see a stark illustration of that thesis, head to the Web site of the Organization of Economic Cooperation and Development and download their health-care statistics for Canada and the United States [emphasis mine].

Notice how apparently we transitioned seamlessly from a country with health insurance to a country with a single payer system without that being obvious?  In reality we’ve looked at the apple, now he plans on comparing it to the orange:

As recently as 1965, the cost of those two systems competed neck-and-neck. That year, Canada spent 5.9 percent of its GDP on health care. The United States spent 5.7 percent. But around that time, Canada was transitioning to its current single-payer system. Over the next four decades, the growth of health-care costs slowed in Canada while it accelerated in the United States. By 2009, Canada was spending 11 percent of its GDP on health care — and covering everyone. The United States was spending 17.4 percent of its GDP and leaving 45 million uninsured. In dollar terms, we’re spending $3,600 more per person, per year, than Canada.

Emphasis mine.  It’s a pretty ballsy attempt, I’ve got to say.  Here’s another question for those paying attention.  Can anyone tell me what began in 1965?  Anyone?  That’s right … Medicare.  Per Klein, we were actually spending less than Canada until the same year that Medicare and government intrusion into the health care market was made law.

Based on that extraordinarily flawed bit of reasoning which managed to factor out or ignore a major reason for the increase in US health care costs, Klein concludes:

If the United States had Canada’s health-care system, and Canada’s per capita health-care costs, we would have a much “larger” welfare state, but we wouldn’t have a deficit problem.

Really?  Seriously?  You really want to run with that one, Mr. Klein?

Perhaps a less rosy look at Canada might help temper that nonsense a bit. Here’s a Canadian economic analyst speaking about the Canadian healthcare system:

"There’s got to be some change to the status quo whether it happens in three years or 10 years," said Derek Burleton, senior economist at Toronto-Dominion Bank.

"We can’t continually see health spending growing above and beyond the growth rate in the economy because, at some point, it means crowding out of all the other government services.

"At some stage we’re going to hit a breaking point."

It means crowding out other government services or what? 

That’s right, deficits.

Well, except in Ezra Klein’s magic welfare state where one can happily spend whatever they want and there are no apparent consequences or … deficits.

~McQ

Twitter: @McQandO


Half Solutions Will Not Work

Brett Arends is skeptical about Europe’s current direction:

Their proposal is preposterous. Anything can happen in this life, but it would be remarkable indeed if this idea got off the ground. Anyone pinning their hopes that this will solve the crisis needs to think it through.

Why would the Portuguese accept the right of Germany to impose budget cuts on their country? Why would the Greeks?

Would we accept that role for the Chinese and the Japanese, the biggest holders of Treasury debt? How would you feel if you opened the paper to be told that the new Sino-Japanese “Fiscal Stability Commission” in Washington had just slashed your grandma’s Social Security checks by one-third, scaled back federal highway repairs, and that it would impose a 10% national sales tax?

That is, after all, effectively what is being offered to the people of Greece, Italy, Spain, Portugal and Ireland.

It’s absurd. There is no reason why these countries should have to surrender sovereignty. They can simply, where necessary, default. A default by, say, Louisiana would not destroy the dollar. Neither did the bankruptcy of Enron or Lehman.

What happens when after signing the new treaty (if it ever actually comes to be) the Greeks or Italians decide to thumb their noses at the EU and default anyway? Kick them out? Isn’t that right where we are now? Isn’t the fear that countries are kicked out or leave leading to financial chaos and defaults? Will these countries truly continue to pay their bills and accept austerity in the face of a severe recession/depression?

If that is the concern, just as I have been pointing out for some time, anything short of true fiscal and political union will fail. The right of existing states to refuse to honor the treaty (remember the last one was treated as inconsequential by violators, including Germany and France) cannot exist which means the right of states to secede or be expelled from the union cannot exist. If that option is not off the table then Eurozone bonds cannot be treated as risk free. If they are not seen as risk free then they will be rated accordingly and the Eurozone will be unstable as Louis-Vincent Gave points out:

Basically, we have to remember that the average sovereign debt buyer is not a hazardous investor. The guy who buys a government bond is looking for a very specific outcome: he gives the government 100 only so he can get back 102.5 a year later. That’s all the typical sovereign debt investor is looking for. Nothing more, nothing less.

But now, the problem for all EMU debt is that the range of possible outcomes is growing daily: possible restructurings, possible changes in currencies, possible assumption of other people’s debt, possible mass monetization by the central bank etc. Given this wider range of possible outcomes, and the consequent surge of uncertainty, the natural buyer of EMU debt disappears. Again, the typical sovereign investor is not in the game of handicapping possible outcomes; he is in the game of getting capital back!

This is very problematic because once uncertainty creeps in, bonds will tend to gradually drift towards what I have come to call the bonds “no-man’s-land”. Basically, once sovereign bonds reach 90c to par, they tend to have a much higher volatility and much greater uncertainty. As a result, they are no longer attractive to the typical bond manager or asset allocator looking to buy bonds to diversify equity risk (think how Italian bond yields are now correlated to European equities. If you want to be bullish Italian bonds, you may now just as well spend a fifth of the money and buy European banks for the same portfolio impact…). And once a bond enters into no-man’s-land, it has to fall a lot before attracting the attention of distressed debt and vulture investors (usually yields of 15%+). So the first obvious problem is that more and more European debt markets are entering this “no man’s land” bereft of “normal” investors.

Do these countries need the Euro over the long term to be prosperous? More Brett:

The British look smarter and smarter for staying out of the euro area in the first place. Prime Minister John Major, and then, later, Chancellor of the Exchequer Gordon Brown, each took the decision to keep the British pound free. At the time fashionable opinion predicted disaster for the Brits. So much for that.

(Predictably, fashionable opinion now says the Brits look “isolated” for staying out. Really, you couldn’t make it up).

My guess is Brett is correct that we are no where close to a real resolution, which is a path to political unification or breakup.

It has long been clear the Franco-German duo wanted to use their shared currency to bludgeon the continent into something closer to a federal system.

Any investor pinning their hopes on this bird flying needs to be aware it looks a lot more like a turkey than an eagle.

This week’s meeting of European leaders already marks the fifth “summit” to solve the region’s debt crisis since early 2009.

My favorite comment this time: “After a series of ‘final’ summits, it would be nice this time to have a real ‘final’ summit.” That was from Standard & Poor’s chief European economist, appropriately-enough named Jean-Michel Six. What’s the betting Mr. Six will be attending Summit No. Six in the new year?

Which is not to say that the ECB or some other entity couldn’t stem the immediate crisis and kick the can further down the road. Maybe, but if so the question is how far? A week, a year, five years? That I cannot answer now.


Observations: The QandO Podcast for 27 Nov 11

This week, Bruce Michael, and Dale record talk about the implications of Germany’s failed bond auction.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


Will Eurobonds Work?

(Originally posted at Risk and Return)

I have been skeptical and so is James Bianco:

The problem in Europe is simple – they created a common currency – the euro. For years, the market erred. It thought that meant that every sovereign debt had the same rating as Germany. I was buying Greek bonds. I was buying Irish bonds. I was buying Italian bonds. But I thought I was buying German bonds. Then, a couple of years ago, I had an epiphany – no, I was not buying German bonds; I was buying Greece, Italy, and Ireland, or whatever, not Germany.

Those countries, recognizing that they could borrow into infinity because everybody thought they were lending to Germany, pretty much did that and expanded their welfare states to the point where they cannot pay their debts.

Germany has disappointed everybody with its intransigence, its unwillingness to “get with the program,” and endorse massive ECB bond buying and Eurobonds. Their reason? They believe they will be stuck with the bill. Of course, they are right, they will be:

If a Eurobond market comes with with strict discipline/rules on borrowing and paying debt back, it might work.  Unfortunately no one will agree to a Eurobond market with strict discipline/rules.

If a Eurobond market comes with no discipline/rules, then it is just another way to trick the market into thinking they are buying German Bunds.   It will “work” for a while as the crisis will ease until everyone borrows too much money and then comes back much worse.

I am not even sure it will work more than a few days at this point, but maybe. Either way it is not a solution, but a stop gap at best. It is also a stop gap that should not be attempted unless an actual endgame is in sight:

So how do you fix the Euro crisis?  Unfortunately there are only three solutions and all are distasteful:

  • Call off the union and go back to legacy currencies.  This destroys the banking system who will be paid back with devalued/nearly worthless currencies.
  • Massive austerity.  This option is very unpopular among the electorates and will cause a bad recession/depression.
  • Fiscal union.  This is a nice way of saying Germany finally wins WW2.  Is the rest of Europe now ready to take orders from Berlin?  Didn’t they fight two wars to prevent this?

The only reason ECB printing keeps being mentioned is because the three options above are untenable and money printing is the only other thing they can think of.  Money printing does NOT fix anything, it just makes the problem better for a while until it comes back worse than before.

This dovetails with my analysis in The German Dilemma that their are no good options from the German perspective, and in fact fiscal union is far more problematic than commonly realized:

Full Fiscal Integration: Since all other solutions put in place circumstances that are unstable and merely kick the can down the road, the fundamental flaw in the Euro needs to be addressed. That is the lack of a unified fiscal policy. The answer then is the end of sovereignty, the creation of a US of Europe. An obvious objection is that Germany wants to be a sovereign nation. We’ll skip this niggling little detail, but even if they didn’t want to remain sovereign do they want to harmonize laws and economic policy with Greece and some of the other PIIGS? West Germany just  integrated with East Germany and the experience was traumatic featuring massive transfers to East Germans. The PIIGS will still not be competitive with Germany. That means internal adjustments (internal devaluation or austerity) to allow them to become more competitive for the PIIGS’ or massive transfers. Thus unifying the Eurozone under a single fiscal policy means massive transfers from Germany to the PIIGS to harmonize the welfare states and unify the debt and avoid austerity throwing the entire Eurozone into depression. Germans will pay for the debt in one fashion or another.

Cullen Roche points out that in the US we don’t worry much about the need for internal transfers between states to keep the system sound.  Today that is true, though it has led to large conflicts in our past, playing a role in civil unrest, uprisings, the conquest of a continent and near destruction of its former inhabitants and the Civil War. Our unity was easier to envision and still born of blood and tragedy.

I am not saying unification of Europe would lead to such tragedies and conflicts. However, we need to ask if Germany (or really all the countries) want to make the internal transfers that make such a system work? Germans would pay a great deal, Greece and the other PIIGS would suffer internal austerity to the extent that they contribute to the economic re-balancing. Do Europeans, or most importantly the Germans, view themselves as a people who will be responsible for paying all the bills to integrate the Greeks and others?

Are Europeans ready to think about their home countries in the same way Texans think of Texas? Their state, but completely subordinate to the US? Will they be able to secede? We answered that question in the US with a war of incredible savagery and destruction. My guess is a unified Europe would be far less stable. They will not choose a civil war comparable to the US, but instead countries leaving over time as well as never entering the union. That leaves us with all the problems we have now still being there. Without a European populace overwhelmingly in favor of a true union this will not work. We would be faced with a PIIGS like crisis with every election and the possibility of secession in each of the former countries.

The necessity of creating a union where there is no possibility of secession, where citizens are more loyal to the European sovereign entity than their own countries is incredibly unappreciated. Half measures will not work. If Texas were to get upset about staying in our own Union it would not matter how overwhelmingly popular the idea of leaving was in the Texas legislature, the US military will ensure that Texas stays a subordinate state. We decided that issue in 1865 at the cost of well over 600k casualties.

If a similarly firm enforcement of Eurozone union is not agreed to (and setting aside a war to force union) then why should the market assume the system will remain intact? Why consider the bonds issued by the various states, or the Eurozone as a whole, deserve a AAA rating?  My belief is that eventually the Eurozone will suffer other crises as states face local elections that wish to leave for one reason or another. Critically Eurobonds and fiscal Union make it easier for countries to leave, since the debt will be the Eurozone’s, not theirs. They can leave and stick the remaining members with the bill. That is an incentive which virtually ensures instability.

Treaties don’t matter if there is no enforcement mechanism, and all enforcement mechanisms at the end of the day have to have a credible belief in military force behind them to matter. Otherwise those who wish to exit can just thumb their noses at whoever stays behind. Has there ever been a successful union where the underlying members could leave? Not that I am aware of.

There are no good options, only more or less realistic ones.