FIVE LESSONS FROM
THE RECESSION - RELEARNED (G&M, Tom Bradley)
∙ Don’t get
carried away with a theme & stray from your long-term strategy-
this is hard when others are making a bundle jumping on & off
bandwagons;
∙ Don’t assume
liquidity will be there when you need it - it is
always there on the way
up but by definition
never once the market has gone
‘over the top’;
∙ Risk management
systems work until they don’t -
they are like Keynes’ bankers who will lend you an umbrella when
the sun is shining but want it back when it starts to rain;
∙ It is not different
this time - when people say that, run, not walk, to the exits.
A while ago, Jeremy
Grantham, founder of Boston-based Grantham Mayo van Otterloo which manages
assets worth US$120BN, when asked by Barron’s if we would learn anything
from the crisis, responded that the historical precedent shows that
“we will learn an enormous amount in a very short time, quite a bit
in the medium term and absolutely nothing in the long term.”
AMERICA STRUGGLES
TO GET OVER AFFLUENZA (NYT, Maureen Dowd)
∙ This term was
defined in a book with the same title as “a painful, contagious, socially
transmitted condition of overload, debt, anxiety and waste resulting
from the dogged pursuit of more.” Americans like things super-sized
but the push by Messrs Bush & Cheney to make America a hyper power
has left it weakened & tapped-out, straining to defend its runaway
capitalism even at the cost of desperation socialism. Obama is now expected
to reconcile Americans’ visceral need for things super-sized with
their cerebral recognition that survival requires becoming leaner &
operating smarter.
So he must magically
cure Americans from their long-time addiction to the pursuit of instant
gratification & to buying things they don’t need with money they
don’t have?
ECONOMISTS POINT
TO RISING DEBT AS NEXT CRISIS (AP)
∙ The country first
got in debt during the Revolutionary War & has been debt-free only
one year, in 1834. The national debt now is US$11.4TR, 80% of GDP, growing
at US$1TR a year. Many economists warn this could trigger the next crisis
& Bernanke recently told Congress “Unless we demonstrate a strong
commitment to fiscal sustainability in the longer term, we will have
neither financial stability nor healthy economic growth.” Debt service
is now the fourth largest federal spending item after Medicare-Medicaid,
Social Security & defense, and is threatening to crowd out other
spending priorities
The deficit for the
current year is equivalent to an awe-inspiring 13% of GDP; while some
of it is of a non-recurrent nature,
too much of it isn’t.
UNDERPANTS AS ECONOMIC
INDICATORS? (MSN Money, Michael Brush)
After declining 12%
in a year, men’s underwear sales
have leveled off but need to start growing at a 2-3% annual rate before
they are deemed to herald the onset of a recovery.
TRAFFIC CONGESTION
DIPS AS ECONOMY FALTERS (AP)
∙ For the second
year in a row, American drivers spent less time in rush hour traffic
in 2007 (36.1 hrs), vs. 36.6 hrs in 2006 & a record 37.4 hrs in
2005 (this data series goes back to 1982 - three years after the
second ‘oil price shock’).
The 2007 number predates
the crisis, the mid-2008 US$147 oil price & the recession.
PICKENS CALLS OFF
MASSIVE WIND FARM IN TEXAS (AP)
∙ It would have
been the world’s largest wind farm, with a 1,000MW generating capacity,
to be quadrupled later). He is now looking for homes in the Midwest
& Canada for the 687 40 story-tall wind turbines, on order for over
a year from GE at a cost of US$2BN,
China is building
six big windfarms, each supposedly 15x that size. One more instance
of insular American thinking that needs to change if America is to remain
competitive.
CAN I CLEAN YOUR
CLOCK? (NYT, Thomas L. Friedman)
∙ For years Chinese
would say to me ‘Americans got to grow dirty for 150 years, using
cheap coal & oil; why shouldn’t we?’ My response was
‘pollute all you want. We will develop the technology to keep you
from choking to death on pollution & then sell it to you & clean
your clock’. But they may be turning tables on us. For Beijing is
finding it must ‘go green’ since its people can no longer breathe,
fish, swim, drive or even see; so it is innovating more energy-efficient
& clean power systems, planning to cut overall energy intensity
by 20% over five years & setting ambitious energy targets for its
industries (& is already ahead of schedule). Given its low-cost
platform, we may end up buying not just our toys but also our energy
future from China; for the US is now home to just two of the world’s
largest ten solar photovoltaic-, two of the top ten wind turbine-, &
only one of the most advanced battery-, manufacturers. So I question
Obama’s decision to focus on healthcare at the expense of energy climate
bill.
The two go hand-in-hand
: energy policy impacts healthcare spending & a more efficient health
care could free up resources to fund new energy policy initiatives.
A command economy can speed up change enormously; thus back in the early
80's, after the two oil price shocks of the 70's, MITI summoned the
heads of Japan’s leading steel makers, told them that they were to
cut the energy intensity of their products by 40%
over five years & sent them packing to get on with the job.
ALL THE GOP NEEDS
IS ONE GOOD LEADER (FP, Sheldon Alberts)
∙ South Carolina
Governor Mark Sanford’s trip to Argentina to see his paramour at
public expense (initially at least) & his steamy emails to her,
have eliminated him as a potential GOP Presidential candidate in 2012.
Milt Romney & Mike Huckabee are still trying to re-establish their
political credentials. Nevada’s John Ensign, the third-ranking
Republican Senator, has admitted to an affair with the wife of a former
staffer. Louisiana Governor Bobby Jindal faded after his weak rebuttal
in February of Obama’s speech to Congress. Utah Governor Jon Huntsman,
McCain’s campaign co-chairman, is now US Ambassador to China. And
Sarah Palin is up to her ass in alligators, incl. her battle with David
Letterman, her feud with the father of her teenage daughter’s
baby, her recently having had to pay back travel expenses for her
children she had charged to the State & now her abandoning
her power base as Alaska’s Governor.
So what? These are
early days still. Few people expected, even after his speech at the
2004 Democratic convention, that five years later Obama would be in
the White House.
THE PATIENTS DOCTORS
DON’T KNOW (NYT, Rosanne M. Leipzig)
∙ Medical students
get clinical experience in pediatrics & obstetrics but not in geriatrics
despite patients 65 & over accounting for 32% of work loads in surgical
care & 43% in medical specialty care, and 48% of all inpatient hospital
days. While Medicare spends US$8BN/year supporting residency training,
it doesn’t require it to cover geriatric healthcare. But pneumonia
symptoms in 50 year-olds differ from those in 80 year-olds, as do their
antibiotic dosages. And when old people are overdosed with antibiotics,
their kidneys may fail & they end up cured of their pneumonia but
in worse physical condition than before. Ditto for heart attacks, in
octogenarians they often present without chest pain. Medical students
need geriatric healthcare training to be able to give old people adequate
care.
The writer is a professor
at the Toronto’s Mount Sinai School of Medicine.
$15.3MM IN MISSING
GOLD NOT A BOOKKEEPING ERROR (CanWest, Philip Ling)
∙ The Royal Canadian
Mint in fiscal 2008 ‘lost’ 17,500 troy ounces of gold worth US$15.3MM.
With accounting- or bookkeeping errors now ruled out, it was either
lost somehow during refining or someone walked off with it from “one
of the most secure facilities in Canada”.
Despite a security
system capable of keeping track of the metal content in employees’
dental work, in 1996 one worker absconded with
3½ kgs (120 troy ounces) of gold (but theft charges were never pressed
- to avoid having to explain how he beat its security system?).
TUITION ATTRITION?
REPOSITION (G&M, Margaret Wente)
∙ Students complain
universities are cutting programs & charging more for less. But
this is just a taste of things to come. For shrinking endowment funds,
growing government deficits & competition from healthcare herald
budget cuts for universities after years of almost automatic 5+% annual
funding growth. Alex Usher, author of How the Recession of 2009 Will
Affect Post-Secondary Education, says those who think this is a
passing phase are dreaming. For him universities’ top challenge is
productivity & addressing that issue requires more than just boosting
class sizes, i.e. more standardized undergraduate programs &
more specialization rather than offering a full menu of programs,
less research of questionable value, less egalitarianism &
more merit pay (since a ‘shocking number’ of tenured professors
with the highest stipends spend the least time in class rooms), &
a shift in public funding focus from bricks & mortar to ‘buying
out’ unproductive teaching staff to permit their replacement with
qualified, younger, cheaper talent. While universities are
vital to our standard of living, they are among our most hidebound institutions
& have never been truly held to account as to whether they render
value for money. For Canada to remain competitive it must join the global
trend towards competency-based standards in education, “We’ve never
had a really good debate about what we are getting for all this money.
We’re into that now. And it’s not going to get nicer for the institutions.”
Universities have
finessed politicians’ predilection for hard assets & research
rather than more mundane things like infrastructure maintenance. So
research facilities have mushroomed
and teaching facilities & essential infrastructure
let go to hell in a hand basket (which now
creates a need for money to correct that self-induced calamity).
MELTDOWN BURNS
ST. FX ENDOWMENT FUND (G&M, Elizabeth Church)
∙ St. Francis Xavier
University is a small Nova Scotia university with a good reputation
that counts former Prime Minister Brian Mulroney among its alumni.
On July 6th, 2008 its endowment fund hit a high of $100.1MM
but by yearend had slumped to $50.1MM, down 43% on the year, about twice
the average loss for Canadian university endowment funds. This was caused
by its policy of 100% exposure to equity markets, in place since the
fund’s inception in the 60's (that in the past 15 years produced stellar
returns & permitted ‘generous’ annual payouts). But now, upon
the advice of an external consultant, it has cut its exposure to the
equity markets by 15%, & plans to cut it further.
Presumably the consultant
never calculated what the fund’s size might have been with a more
‘conservative’ investment strategy over the past 40+ years
(likely a whole lot less than $100.1MM
& with less “generous” payouts (likely a lot more). It’s irrational
to abandon a strategy that had served it so well
so many years because of a bad six months. And if interest rates
were to rise, the university will regret this strategy switch
– most such consultants are not worth the powder to blow them to hell,
because like so much of the financial community broadly defined, they
are more like lemmings than independent thinkers.
SCIENTISTS LINK
DAM TO QUAKE (NYT, Sharon Lafraniere)
∙ After China’s
Sichuan province’s devastating earthquake more than a year ago, Leonardo
Seeber of Columbia University’s Lamont-Doherty Earth Observatory suggested
it might have been triggered by the weight of the 1BN cubic metres/290MM
tonnes of water behind the fifty storey-high Zipingpu Dam, one kilometre
from a well-known seismic fault & 5.4 kilometres from the quake’s
epicentre. But the authorities deny this since “no reservoir-triggered
quake with a magnitude eight has ever occurred in history”. Such claims
are problematic for them not just because of the anger of Sichuan parents
at the loss of their children in school buildings that collapsed due
to negligent or corrupt officials allowing them to be built in an unsafe
manner (& due to the one child policy losing a child amounts
to a total loss of one’s offspring), but also because they want
to ‘max out’ the potential of the abundant water resources of the
country’s Southwest. Thus the US$750MM Zipingu Dam was part of a massive
dam building program in the region to generate electricity, irrigate
farmland, control flooding & provide water to the nearby 10MM-inhabitant
city of Chengdu. But as far back as 2001 already, one expert,
Li Youcai, voiced concerns that officials were downplaying the risk
of major earthquakes in the region & later a chief engineer with
the Sechuan Geology & Mineral Bureau noted that in the twelve months
to late 2005 there had been 730 minor quakes (of 3.0 magnitude or less)
in the region.
Given the evidence
of shoddy construction practices in the building of many dams across
the nation, this could herald many
more headline-making, man-made calamities
CHINA : A GREEN
ENERGY SUPERPOWER? (NYT, Keith Bradsher)
∙ Beijing is changing
the way China generates electricity. While coal will remain its main
source of power, it wants renewable energy to help slow the growth in
its greenhouse gas output. While the US Congress recently passed a bill
requiring US utilities to generate more power from renewable sources,
China two years ago already instructed power companies to produce at
least 3% of their power from non-hydro renewable resources by late 2010.
This year China will surpass the US as the world’s largest market
for wind turbines & companies are vying to build the most solar
plants fastest. The town of Dunhuang, deep in the Gobi desert, is part
of this drive to lead the world in wind & solar energy; for nearby
one of China’s six immense windpower projects is being built, each
capable of producing as much power as 16 large coal-fired plants. China
nevertheless won’t become a green power; for total power consumption
will rise steadily over the next decade as more non-urban Chinese get
the power-hungry “mod cons” their city dwelling brethren already
possess.
China seems to be
much better than the former Soviet Union at capitalizing on the competitive
potential of a command economy. This
move by Beijing could become problematic for the US at next December’s
Kyoto follow-up discussions in Copenhagen if
it were to use its move towards more
‘green’ power to hoist Obama on Bush’s petard (since the latter’s
opposition to Kyoto was largely based on China - & India & the
rest of the Third World - not having greenhouse gas reduction
targets).
‘JELLYFISH TYPHOON’
MENACES JAPAN’S FISHING INDUSTRY
(McClatchy Newspapers,
Koichi Yasuda)
∙ Swarms
of Nomura’s/Echizen jellyfish, weighing as much as 200 kgs & measuring
up to 2 metres in diameter, are expected in its coastal waters this
year for the first time since 2007. They are a fisherman’s nightmare,
tearing their nets, harming fish in their nets with their toxins &
stinging fishermen as they try & remove them from their nets.
Their fertilized eggs
turn into flower-like polyps, called
‘podocysts’, that ‘hibernate’ on the sea bottom until conditions
are favourable for them to turn into jellyfish. Last year they obviously
weren’t.
RUSSIA AMONG WORLD’S
MOST CLOSED ECONOMIES (WSJ, John W. Miller)
∙ A study by the
Davos-based World Economic Forum ranked Russia 114th out
of 121 nations in terms of ease of trade, behind Ethiopia, Mauritania
& Pakistan, but ahead of 118th place Zimbabwe. It ranked
Canada 6th (after Singapore, Hong Kong, Switzerland, Denmark
& Sweden), Germany 12th, the US 16th, France
17th, China 49th & India 76th.
It has suspended its
WTO membership bid pending completion, next year, of
the creation of a customs union with Belaurus & Kazakhstan.
POLLS SUGGEST UKRAINIANS
LEANING TO EAST (EJ, David Marples)
∙ Parliament has
set January 17th for the next presidential election. Former
prime minister Viktor Yanukovych, who lost in 2004 to President
Viktor Yushchenko, leads in the polls with 26.8%, followed by
Prime Minister Yulia Tymoshenko with 15.8%, former Foreign Minister,
& now Chairman of Parliament, Arsenii Yatsenyuk 12.3% & Yushchenko
2.1%. Yanukovych would beat Tymoshenko 38.8 to 28.8 in a run-off &
Yatsenyuk, a 35 year-old former Yushchenko protégé financially
backed by two ‘oligarchs’, 36.7 to 30.8.
Another poll showed that 35% want Ukraine to join up with Russia, Belaurus
& Kazakstan, 20% with the EU, and 23% for it to remain independent,
that 58% think positively of Putin, 56% of Belaurus’ hard-line president
Alyaksandr Lukashenka & 55% of Russian president Medvedev, that
the highest-rated Western leaders are Barack Obama (31%), Angela Merkel
(29%) and Nicolas Sarkozy & Poland’s Lech Kaczynski (22% each)
& that 57% felt positive about Russia, 45% about Belaurus &
20% about Germany but just 3% about Georgia (which Yushenko supported
strongly in its 2008 war with Russia). This leads to four conclusions.
The economy hasn’t changed people favouring strong leaders over weaker,
more democratic ones, & Russia over the US & EU. Tymoshenko’s
endless squabbles with Yushchenko & her single-minded pursuit of
the Presidency have turned people off. The country’s western
half is far more pro-Europe & anti-Russia than the east. And people
are deeply unhappy with Yushchenko who seems increasingly isolated &
unable to communicate effectively with the electorate but nevertheless
determined to run again despite being clearly unelectable.
The
problem for the West is that the pro-Western Western half of the country
is home to only about one-quarter of the population.
SOLAR FLIGHT TO
SPAN GLOBE (EJ, Business Browser)
∙ On June 26, at
an airport near Zurich, did Bertrand Piccard. unveil a prototype of
the solar-powered plane he plans to fly around the world to highlight
the potential of alternate energy sources. It has the 120 ft
wingspan of a jumbo jet but the 3,500 lbs weight of a family
car. It’s propellers are driven by four electric motors & it can
operate by day or night since any surplus power produced by its 24,000
solar cells is stored in high performance batteries. He says “If an
aircraft is able to fly day and night without fuel, propelled ... by
solar energy, let no one ... claim that it is impossible to do the same
for motor vehicles, heating and air conditioning systems, and computers.”
Physical possibility
doesn’t presage commercial viability. Still, people like Piccard are
needed to show the way to new commercial technologies. He is credible
because he captained the first non-stop, around-the-world balloon flight
a decade ago. The plane has been in development since 2003
and is expected to make its first test flight later this year &
its around-the-world flight by 2012.
CELIAC SURGE
(G&M, Marina Jimenez)
∙ Celiac disease
is an auto-immune disorder that attacks the small intestine. Sufferers
cannot tolerate gluten, a protein found in wheat, rye & barley.
Once relatively rare, research by Minnesota’s Mayo Clinic suggests
that today one in every 100 people has it, 4½x the rate half a century
ago, although as many as two-thirds may not know that.
One can only wonder
whether the higher incidence is a function of lifestyle or of better
diagnostics.
GOING ORGANIC
(The Week)
∙ Under USDA rules
fruits & vegetables can only be called “100% organic” only if
they are raised completely without man-made pesticides & fertilizers,
and meat & dairy products can only be labeled organic if it comes
from animals fed only organic feed & “allowed access to pasture”.
But on the whole, according to an official of a company that certifies
organic labeling claims, “It’s kind of like the Wild West in there”.
The market is small but growing rapidly; sales currently are about US$23BN
& growing at over 3x the less than 5% annual rate of conventional
foods. President Obama has appointed an organics food expert to the
No. 2 slot in USDA & earmarked US$50MM to promote organic farming.
Most consumers believe organic food is safer & does less harm to
the environment, and it has become somewhat of a status symbol among
affluent shoppers. The jury is still out on whether it is really healthier
: while there is some evidence to suggest that it is, the evidence is
not conclusive & skeptics think it’s a big ‘con’. Agribusiness
using industrial-farming techniques on their organic farms is a long
way removed from the movement’s original small-scale philosophy. It’s
unlikely that all the food we eat will eventually be organic because
organically-grown crops yield less than conventional ones.
The latter may be
the biggest con of them all; for there is a growing body of evidence
suggesting that after a lag, once a farming operation has settled into
a proper organic farming routine, yields are as high as those on industrial
farms (& farmers have a much lower overhead, and hence much less
exposure to risk, due to the elimination of the expense of various chemical
products). As to the credibility of many organic claims, last year a
big California 10,000 cow dairy operation was stripped of its organic
designation (which it should never have gotten in the first place because
anyone who knows anything about the diary business that it is physically
impossible to give cows in a dairy operation that size
“acees to pasture”.
U.S., CHINA PONDER
CUTTING CO2 EMISSIONS (Reuters)
∙ At the forthcoming
G-8 Summit in Italy discussions will focus on halving greenhouse gas
emissions by 2050, on doubling public investment in low-carbon technology
by 2015 & on boosting funding from both public & private sources,
and carbon markets.
President Obama’s
environmental stance at the G-8 constituted a refreshing change from
his predecessor’s. Meanwhile, in Australia, with Canada one of the
world’s biggest per capita greenhouse gas producers , Prime Minister
Rudd’s carbon trade scheme for the country’s 1,000 biggest polluters
hit a snag when the Senate deferred its vote till later in the year.
IT’S TIME TO
LEARN FROM FROGS (NYT, Nicolas D. Kristof)
∙ Frogs, salamanders
& other amphibians are sprouting extra legs. In Florida’s Lake
Apopka male alligators have stunted genitalia. In the Potomac watershed
80% of male small mouth bass are producing eggs. Among newborn baby
boys in America up to 7% are born with undescended testicles & up
to 1% with a condition in which the urethra exits the penis anywhere
but at the tip. While the chemical companies argue the scientific case
isn’t proven, many scientists worry all this is caused by a class
of chemicals called ‘endocrine disruptors’ in common use in agriculture,
industry & commonly found in consumer products.
There have now been
several documented cases of Canadians with dozens of chemicals in their
blood streams that have absolutely
no business being there, incl. known carcinogens & gene-altering
compounds. This is boosting the trend towards organic foods, urban farming
& grow-your-own vegetable plots (but these can only mitigate the
problem since rain water too is now adulterated &
no amount of washing produce can remove the rubbish that enters plants
though their root systems.
‘THE ICE IS NOW
THINNER THAN EVER’ (CanWest, Margaret Munro)
∙ Arctic ice reaches
its maximum thickness as spring begins in the Northern Hemisphere. While
this year it maxed out thicker than in four of the last five years,
it was still the fifth-lowest thickness on record & 90+% of it was
one- or two year-old ice more prone to summer melt than older ice (vs.
a long-term average of 70%). While most scientists still doubt the Arctic
will be nearly ice-free by 2013, it’s no longer deemed “out of the
realm of possibility.”
The issue is not whether
or not whether it manmade but that it is happening.
GLOBAL WARMING
: NOT BY MAN ALONE (OC, Tom Spears)
∙ Some time ago
the U.S. National Oceanic and Atmospheric Administration published a
study, Reanalysis of Historical Data for Key Atmospheric Features,
of climatic data for a period ended December 31st, 2007.
It found that natural causes are a factor, that over the 56-year period
temperatures had risen on average 0.9̊C, that seven of the warmest
ten years had occurred in the decade ended in 2006 & that the Western
half of the continent had experienced most warming. It concluded that
almost half of all warming in North America appeared due to “natural”
causes, such as shifts in ocean currents, but raised some interesting
& relevant questions.
The climate debate
often seems like a prime example of our inability
‘to accept things we cannot change, the courage to change things we
can & the wisdom to tell the difference’.
‘TIME TO DITCH
CLIMATE POLICIES’ (BBCNews, Roger Harrabin)
∙ A study by an
international group of academics, How to Get Climate Policy Back
on Course, sponsored by LSE’s Mackinder Programme & Oxford’s
Institute for Science, Innovation and Society, wants world leaders to
ditch their current policies on climate change; for they think emission
cut-based strategies have failed & will continue to fail. They propose
shifting to an approach focused on improving energy efficiency &
decarbonizing the energy supply. Mackinder Programme Director Gwyn Prins
says capping carbon emissions & allowing the trading of emission
permits will lead to emissions actually continuing to rise and that
carbon trading, & channeling billions of dollars into clean
energy technologies, won’t work. And he says that “Worthwhile policy
builds upon what we know and upon what is feasible rather than trying
to deploy never-before implemented policies through complex institutions
requiring a hitherto unprecedented and never achieved degree of global
political alignment ...(and) the world has been recarbonizing,
not decarbonizing.”
∙ Prof. Tom Burke
of the Imperial College London, a former government adviser, in rebuttal
said “They are ... right to identify significant weaknesses
in the major policy instruments currently being renegotiated ... But
nothing could be more harmful than to ... stop doing on climate
change and start working again in a different way ... This is neither
practical nor ... defensible and ... seems to have been born more
out of frustration than understanding of the nature of the political
processes involved ... This is a far more complex, and urgent, diplomatic
task than the strategic arms control negotiations and will require an
even more sophisticated … approach to its solution. Stop-go is not
sophisticated.”
The group seems on
solid ground on the need to improve energy efficiency but out of touch
with reality when talking about “decarbonizing” the energy supply.
Ditto for Prof. Prins : he likely correctly expects carbon credit trading
to become a boondoggle of epic proportions, but to suggest that
we build only on what we know is unworthy of a serious academic discussion
(President Obama said in his July 4th speech
‘We ... did not get here by standing pat in a time of change ... (and)
did not get here by doing what was easy”). Taking Prins’ idea to
its (il)logical conclusion we would still be living in caves. As to
warning of the need for for “a hitherto unprecedented and never achieved
degree of global political alignment”,
pollution doesn’t respect national borders & leaders all over
the world are now seemingly starting to realize that we are all passengers
on ‘Spaceship Earth’ & have only two choices, swim together
or sink together.
SHRINKING SHEEP?
EWE’VE GOT TO BE KIDDING (CSM, Ben Quinn)
∙ For some time
animal scientists have been puzzled by the shrinking size, about
5% over the past quarter century, of the sheep on Hirta, the largest
island in the remote Scottish St. Kilda archipelago. But as reported
in the journal Science, they now think they have found the answer
: while once harsh winters acted as a genetic selector by killing off
the weaker specimens in farmers’ flocks, milder winters, earlier springs
and more & better summer grazing have enabled more ‘runts’ to
live long enough to pass on their genes.
The farmers are more
pre-occupied with over-regulation by the
EU.
WHEN FAIL-SAFE
INEVITABLY FAILS (EJ, Charles B. Perrow)
∙ The disappearance
of an Air France jet over the South Atlantic & the subway crash
in Washington highlight the extent to which we have become dependent
on technology - the ‘driver’ of Washington’s Metro train had but
two tasks : to close the doors & to activate an emergency stop if
the computer failed to sense an obstacle ahead. But in ‘integrated’
computer systems “unforeseen events” can have domino effects
that bring the whole system down (in one case, a short in a coffee
maker triggered a chain of events that almost caused a jet liner to
crash). But since such events are “rare”, systems continue
to proliferate since they are cheap, ‘eliminate the human factor’
& leverage other technology.
As if Three Mile Island,
Chernobyl & the Québec blackout weren’t enough, the July 5th
crash of two monorail trains at Disney World disproved once again the
technical hubris that systems can be made
“fail-safe”. For them to collide was to
have been “physically impossible” since they were
supposed to run on different tracks& were
equipped with systems to automatically halt them if they came
too close to one another.
STYROFOAM DILEMMA
: CHEAP BUT FOREVER
(Montreal Gazette,
Catherine Solyom)
∙ Polystyrene foam,
invented by Dow Chemical in 1938, is everywhere & will be for at
least 200 years longer than the rest of us. It’s popular because it’s
cheap, light, durable, waterproof & well-insulating. But according
to the French Ministry of Ecology the 14MM tonnes of it manufactured
(& typically discarded after a single use) in the world each
year represents a staggering volume of material since it is 95% air.
In the continent-sized ‘Great Pacific Garbage Patch’ where currents
aggregate trash floating in the ocean, there is 6x as much plastic
detritus as there is plankton, a hazard for aquatic life that cannot
tell the one from the other. Americans throw away 25BN Styrofoam cups
each year. The EPA says that three quarters of the 3MM tons/year of
polystyrene produced in the US ends up in landfills & much of the
rest clogging up waterways. According to the American Chemistry Council
< 1% of all polystyrene in the US is recycled. California’s Department
of Conservation pegs the cost of recycling it at US$3,000+/tonne, vs.
US$89 for glass, limiting its scrap value (although Toronto has begun
to collect it & send it to a facility that uses it to make picture
frames construction moldings). It is now banned in 30 California municipalities
& the state legislature recently had a bill before it to altogether
ban the use of styrofoam & other non-recyclable containers in all
of the state’s restaurants & retail food vendors.
It’s
“cheap’ only on a ‘micro cost accounting basis that ignores society-wide
costs. One painful change likely facing North America in the not-too-distant
future will be a shift to a stricter application of the
‘user pay’ principle (which will cause polystyrene to go the way
of the dodo bird). Already one major Edmonton retailer recently shifted
from plastic- to biodegradable one-trip shopping bags. And the
industry is counter attacking; hence the recent headline that
“research” (based on the examination of just 16 people’s multi-trip
cloth shopping bags) showed such bags hosted a myriad of bacteria (as
does just about everything else in life, incl. our skins).
STRAWS IN THE
WIND
∙ Director Robert
Murray’s documentary The End of the Line now playing in art
houses across the US & UK postulates that consumer ignorance, fishing
industry clout & the West’s growing taste for sushi are causing
the “total collapse” of many fish populations (& Canada’s
cod experience suggests that, once collapsed, fish populations can stay
collapsed).
This is not news for
anyone who has been paying attention. Fish in the ocean are a
“free good”. No one owns them, so it becomes a race to catch them
before someone else does. Fishing fleets move almost in lockstep to
rape, pillage & fish to death one fish stock after another.
For years already the global fish catch has exceeded sustainable levels.
The amount of “bycatch” (of unwanted marine life that is dumped
back, dead, into the sea) can run as high as 70% of the total catch.
In Canada’s cod fishery the writing was on the wall when the maze
of the nets made so fine that cod was caught before it was old enough
to reproduce. The destructive effect of trawler nets on the coral beds,
a nursery for the young of many species & a hiding place for many
older ones, is said to be akin to that of a steam roller. Growing pollution
levels are boosting jelly fish populations
& oxygen-poor “blooms”, neither of them conducive to good
fish habitat. Nature.com sets the date the oceans will be
“fished out” at 2048. And yet the Vice-Chairman of Japan’s National
Union of Sushi Chiefs can only complain that Japan without sushi,
“It’s like America without steak.”
∙ For two decades
Ireland experienced GDP growth rates as high as 9%, making it Europe’s
“Celtic Tiger”. But after years of 4% unemployment, in the past
18 months it has tripled.
And the government
has been forced to effectively nationalize the banks.
∙ North American
food retailers are finding that shoppers have become more price conscious,
stocking up when there are sales & shifting from ‘name-’ to
‘house’- brands.
This will hit manufacturers’
earnings harder than retailers’; for they often subsidize the stores’
sales & house brands are more profitable for retailers, & hence
by definition less so for manufacturers.
∙ The UN document
The World Water Development Report published earlier this year said
global demand for water is rising rapidly due to industrialization,
rising living standards & the dietary effect of the latter. It warns
that squabbles over water in politically unstable areas, such as Israel
& the occupied territories, Haiti, Sri Lanka & Columbia could
turn nasty & that water shortages are starting to constrain economic
growth in places as varied as China, India & Indonesia on the one
hand & Australia & the US on the other. It expects that within
30-50 years water shortages will create a new category of “climate-change
refugees”.
It also provided
statistics on the total ‘water intensity’ of common staples (i.e.
the total used in growing & mining, manufacturing & processing,
and distributing, marketing & consuming them). Paper takes 80-2000
liters of water per kg. of product, sugar 3-400, steel 2-350, petrol
0.1-40, soap 1-35 & beer 8-25. But it doesn’t mention how often
it is a case of ‘clean water in, polluted water out”.
∙ Once MIT researchers
forecast temperature rises of 4̊F (2.2̊C) by 2100. Now they have doubled
that, due to a faster-than-earlier-expected rise in greenhouse gas emissions,
a lower takedown of CO2 by oceans & more Arctic permafrost melting
releasing more CO2.
The long-term risk
of ignoring such views appears to increasingly outweigh the short-term
benefits.
∙ Researchers have
found that consuming large amounts of cola can cause a potassium deficiency
that can bring on major health problems, and that its high sugar- &
caffeine content can change people’s blood chemistry in other dangerous
ways.
This must be compounded
by the trend towards the ‘super-sizing’ of soft drinks.
∙ Recently, at a
conference in London, US Energy Secretary Steven Chu said that, if every
roof in the world were painted white, the sunlight reflected back into
space would have an environmental effect equal to turning off every
car in the world for a decade (& would reduce the need to use energy
for cooling buildings & running air-conditioning systems).
This idea may seem
far-fetched but has a stellar pedigree : it
originated among researchers at California’s Lawrence Berkeley
National Laboratory & Chu himself is a Nobel laureate in physics.