Archive for the ‘Financial melt-down’ Category

EU warns of climate change threat

Thursday, March 13th, 2008

An EU report says climate change will have a growing impact on global security, multiplying existing threats such as shortages of food and water.

It warns that climate change could cause millions of people to migrate towards Europe as other parts of the world suffer environmental degradation.

States that are “already fragile and conflict prone” could be over-burdened, the report says.

EU proposals to tackle climate change will be discussed by leaders this week.

The stark warning from the report – drawn up by the EU’s foreign affairs chief Javier Solana and the European Commission – is that climate change is not just a threat in itself – it is “a threat multiplier”.

It says shortages of food and water – even radicalisation and state failure – are likely to get worse if no action is taken.

Africa is likely to be especially at risk, which means migration could intensify, both within Africa itself and towards Europe.

EU External Relations Commissioner Benita Ferrero-Waldner told the BBC: “If the weakest countries cannot adapt, it may lead to, for instance, more forced migration, and even possibly radicalisation and state failure, causing internal and external security risks.”

Polar icecaps

The report also highlights the Arctic as a possible area of future conflict. With the melting of the polar icecaps, new waterways and trade routes are opening up.

The region is rich in untapped oil and gas resources, and last year Russia staked its claim by planting a flag on the seabed beneath the North Pole.

There is, it says, “an increasing need to address the growing debate over territorial claims and access to new trade routes”.

But the report does not offer much in the way of specific solutions. It recommends more dialogue, international co-operation and further research.

The EU prides itself on being a world leader on climate change, but turning talk into action is not easy.

On the one hand, the EU scheme for carbon emissions trading is being expanded to take in aviation for the first time.

But plans to limit car emissions and switch to renewable energy are being hampered by objections from industries and some member states, which say they are being unfairly penalised.

To the original article… 

React to Warming Now While Costs Still Low, OECD Urges

Thursday, March 6th, 2008

The world must respond to climate change and other environmental challenges now while the cost is low or else pay a stiffer price later for its indecision, the Organization for Economic Cooperation and Development said Wednesday.

A new report by the 30-nation organization looks at “red light issues” in the environment, including global warming, water shortages, energy, biodiversity loss, transportation, agriculture, and fisheries.

More…

The ethanol bust

Monday, March 3rd, 2008

– I’ve never had much faith in Ethanol as an alternative fuel.  To me, most of what drives us towards thinking Ethanol might be a good idea is our denial of another idea. The idea that we just can’t continue to sustain oil-based economies like the ones we are currently living in.

– Nobody wants to go backwards into a time when they have less.  So every idea that comes up that suggests that we might not have to, is embraced warmly.

– But there’s only so much land to grow crops on and finding enough to grow food for consumption is increasingly a problem so how can we take large tracts of land out of food production to grow corn for ethanol production?   

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The ethanol boom is running out of gas as corn prices spike.

By Jon Birger, senior writer

NEW YORK (Fortune) — Cargill announces it’s scrapping plans for a $200 million ethanol plant near Topeka, Kan. A judge approves the bankruptcy sale of an unfinished ethanol plant in Canton, Ill.. And that was just Tuesday.

Indeed, plans for as many as 50 new ethanol plants have been shelved in recent months, as Wall Street pulls back from the sector, says Paul Ho, a Credit Suisse investment banker specializing in alternative energy. Financing for new ethanol plants, Ho says, “has been shut down.”

How can the ethanol industry be slumping only two months after Congress passed an energy bill most experts consider a biofuels boon? The answer is runaway corn prices.

Spurred by an ethanol plant construction binge, corn prices have gone stratospheric, soaring from below $2 a bushel in 2006 to over $5.25 a bushel today. As a result, it’s become difficult for ethanol plants to make a healthy profit, even with oil at $100 a barrel.

More…

Financial instability

Thursday, February 21st, 2008

– One of the ‘legs’ of the Perfect Storm Hypothesis asserts that our first-world hi-tech societies are like houses of cards; being built higher and high each year and growing more unstable as we go.

nasdaq-stock-market.jpg– The increasing snarl of inter linkages and interdependencies are making the entire system more unstable. Many folks feel, however, that the additional redundancies should make it more robust but that is an irrelevancy because the deepest truth is that a chain is only as strong as its weakest link.

– The following two stories are both from the financial world and they both illustrate how something (insurance) that one would assume would make a system more robust against failure has, in these cases, actually made it more fragile.

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story #1:

Bonds Unbound by James Surowiecki on the Financial Page of The New Yorker Magazine, Feb 11, 2008

story # 2:

Arcane Market Is Next to Face Big Credit Test by Gretchen Morgenson, New Yorks Times, Feb 17, 2008

– research thanks to L.A.

– The second article is from the NY Times and they insist that folks have an ID and a PW in order to read their stuff. You can get these for free just by signing up. However, a friend of mine suggests the website bugmenot.com :arrow: as an alternative to having to do these annoying sign ups. Check it out. Thx Bruce S. for the tip.

UBS Reports Record Loss After $14 Billion Writedown

Wednesday, January 30th, 2008

– This story is not remarkable in and of itself. There are always financial reversals and some of them can be quite uncomfortable for those affected.

– What I find notable here is that this story is part of a pattern that’s been growing for months now. I can’t recall a time when so many stories of financial losses have appeared. The world’s financial markets certainly have a lot of resilience and protections built into them – not to mention the vested interests of those who participate in them and who therefore want to see them healthy. But there must be a limit somewhere to just how many hits the markets can take without deep instability setting in.

– Here are a list of such stories plucked from the ever passing river of world news and data:

= = = = = = = = = = = = = = = = = = =

UBS Reports Record Loss After $14 Billion Writedown

FDIC Approves the Assumption of all the Deposits of Douglass National Bank, Kansas City, Missouri

Banks may need $143 billion in fresh capital

French Bank Rocked by Rogue Trader

SunTrust: $555 Million in Write-Downs

Wachovia profit falls further than expected (98%)

BofA: $5.28 Billion in CDO Write-Downs

Writedowns Surpass $100 Billion

– I could go on, but need I say more?…

Study Details Catastrophic Impact Of Nuclear Attack On US Cities

Thursday, March 22nd, 2007

– Sobering stuff:

“The hospital system has about 1,500 burn beds in the whole country, and of these maybe 80 or 90 percent are full at any given time,” Bell said. “There’s no way of treating the burn victims from a nuclear attack with the existing medical system.”

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Science Daily A new study by researchers at the Center for Mass Destruction Defense (CMADD) at the University of Georgia details the catastrophic impact a nuclear attack would have on American cities.

The study, which the authors said was the most advanced and detailed simulation published in open scientific literature, highlights the inability of the nation’s current medical system to handle casualties from a nuclear attack. It also suggests what the authors said are much needed yet relatively simple interventions that could save tens of thousands of lives.

“The likelihood of a nuclear weapon attack in an American city is steadily increasing, and the consequences will be overwhelming” said Cham Dallas, CMADD director and professor in the UGA College of Pharmacy. “So we need to substantially increase our preparation.”

Dallas and co-author William Bell, CMADD senior research scientist and faculty member of the UGA College of Public Health, examined four high-profile American cities – New York, Chicago, Washington, D.C. and Atlanta – and modeled the effects of a 20 kiloton nuclear detonation and a 550 kiloton detonation. (For comparison, the nuclear bombs dropped on Hiroshima and Nagasaki were in the 12 to 20 kiloton range). Bell explained that a 20 kiloton weapon could be manufactured by terrorists and fledgling nuclear countries such as North Korea and Iran, while a 550 kiloton device is commonly found in the arsenal of the former Soviet Union and therefore is the most likely to be stolen by terrorists.

More…

The dollar’s slide: How far, how hard?

Wednesday, November 29th, 2006

– The US Trade Deficit and the US National Debt are, in many people’s minds, getting seriously over extended and there will come a time when this perception gains general traction with those foreign investors who like to stockpile their money in US Bonds because of their safe and certain returns. When they decided too much is too much and shift their investments elsewhere, the US is going to come in for a hard financial landing. Since the US Trade Deficit and National Debt continue to rise year after year as if there is no tipping point, one can only wonder when we’ll cross it and everything will suddenly change. This possibility is just one of the many threads that make up the Perfect Storm hypothesis.

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The currency sank about 2.5 percent against the euro in the last 5 sessions. More losses may be coming.

(Fortune Magazine) — U.S. currency traders gorged on Thanksgiving turkey and took a half day last Friday while the rest of the world quietly bet against the dollar.

At first, it looked like a handful of speculators were taking advantage of light trading volume, which makes it easier to move a market up or down. But then more players started lining up against the greenback, too, and the worries hit harder than post-holiday indigestion.

The dollar has tumbled about 2.5 percent against the euro in the five sessions through Tuesday. Although the greenback came back a bit Wednesday, the dollar’s near its weakest against the euro since March 2005. The dollar also fared badly against the British pound, though it’s done slightly better against the lowly Japanese yen.

“With the dollar debacle, the health of the economy, current and future, is on trial,” said Brian Wesbury, chief economist at First Trust Advisors.

More…

U.S. Trade Gap Widens to $69.9 Billion

Friday, October 13th, 2006

I’ve written before on the subject of the growing US Trade Deficit.  The US Government itself doubts that this behavior is sustainable.  But, it goes on and on carrying us into an ever shakier future….

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By JEREMY W. PETERS NY Times
Published: October 12, 2006

Most areas of the country have seen “few signs” of higher inflation in recent weeks, a new regional survey showed.

The Federal Reserve’s study, released today, also said that despite widespread cooling in residential housing, the nation’s economy is still expanding at a healthy pace.

The report, known as the beige book, surveyed economic conditions in all 12 Fed districts from late August to early October. It was generally more upbeat than the one released last month, which depicted a broader economic slowdown punctuated by less robust consumer spending, weakening residential home sales and high energy prices.

Since that survey, which looked at the economy from mid-July to late August, energy prices have come down and consumer spending has picked up.In a separate report today, the Commerce Department said the nation’s trade gap widened in August to a surprisingly large $69.9 billion, setting a new record for the ever-growing disparity between what Americans import and export.

More… :Arrow:

– this is in the NY Times and they require a password to read their stuff on-line. It is free and easy to get one and you only need to do it once.

Today’s Fiscal Policy Remains Unsustainable

Friday, September 15th, 2006

This is from the United States Government Accountability Office and it is entitled:Â The Nation’s Long-Term Fiscal Outlook September 2006 Update

GAO’s current long-term simulations continue to show ever-larger deficits resulting in a federal debt burden that ultimately spirals out of control. The timing of deficits and the resulting debt build up varies depending on the assumptions used, but under either optimistic (“Baseline extended”) or more realistic assumptions, current fiscal policy is unsustainable.

Simulations are not forecasts or predictions. They are designed to ask the question “what if?” GAO’s “what ifs” are that discretionary spending may grow faster or slower, and tax cuts may be renewed or allowed to expire – but in both cases, the Nation’s long-term fiscal future is “at risk.” Under any reasonable set of expectations about future spending and revenues, the risks posed to the Nation’s future financial condition are too high to be acceptable.

By definition, what is unsustainable will not be sustained. The question is how our current imprudent and unsustainable path will end. At some point, action will be taken to change the Nation’s fiscal course. The sooner appropriate actions are taken, the sooner the miracle of compounding will begin to work for the federal budget rather than against it. Conversely, the longer action to deal with the Nation’s long-term fiscal outlook is delayed, the greater the risk that the eventual changes will be disruptive and destabilizing. Acting sooner rather than later will give us more time to phase in gradual changes, while providing more time for those likely to be most affected to make compensatory changes.

What Drives Our Nation’s Bleak Long-Term Fiscal Outlook?

The long-term fiscal outlook results from a large and persistent gap between expected revenues and expected spending.

The spending that drives the outlook is primarily spending on the large federal entitlement programs (i.e., Social Security, Medicare, Medicaid). The retirement of the baby boom generation is one key element of this. In 2008 the first boomers will be eligible to draw “early retirement” Social Security benefits, and in 2011 the first boomers will become eligible for Medicare. Over the following 2 decades America’s population will age dramatically, and fewer workers will be asked to support ever larger costs for retirees.

Although Social Security is a major part of the fiscal challenge, contrary to popular perception, it is far from our biggest challenge. Spending on the major federal health programs (i.e., Medicare and Medicaid) represents a much larger and faster growing problem. Over the past several decades, health care spending on average has grown much faster than the economy, absorbing increasing shares of the Nation’s resources, and this rapid growth is projected to continue. For this reason and others, rising health care costs pose a fiscal challenge not just to the federal budget but to American business and our society as a whole.

More…

US ‘could be going bankrupt’

Saturday, July 15th, 2006

One of the elements in the ‘Perfect Storm’ of problems converging on our future is the ever growing U.S. budget deficit.

The problem is that the United State’s debt load is getting too large. Yes, we’re still paying our bills as regular as clockwork and yes we are still politically stable and have a strong economy. But that’s like saying, “Yes, Bob’s paying his bills every month and he’s got a good steady job and a stable personality, but….” The fact is Bob can’t just keep taking on more and more loans. The fact is that at some point, folks will stop loaning Bob more money because it’s obvious that sooner of later he’ll be in over his head. If Bob pushes the situation too far, he’ll begin to get a bad credit rating even though he’s paying everything on time. And once his credit rating’s suspect, folks will be a lot less inclined to give him new loans and those who already have loans out to him will be feeling nervous and wondering how they can recover them.

This scenario has been unrolling for a long time and many of us are just waiting for the other shoe to drop and hoping it won’t.

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The United States is heading for bankruptcy, according to an extraordinary paper published by one of the key members of the country’s central bank.

A ballooning budget deficit and a pensions and welfare timebomb could send the economic superpower into insolvency, according to research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St Louis, a leading constituent of the US Federal Reserve.

More…