We've Got Bigger Problems Right Now

 As the global elite gather for the World Economic Forum this week the topic of discussion is less about creating wealth for the less fortunate or helping the developing world -- it's about saving the core. 

 

Perhaps not surprisingly, economist Nouriel Roubini says don't hold your breath, calling 2012 a year of "no progress." But Eurasia Group's Ian Bremmer is also worried about the retreat of democracy and inequality becoming a global class war. The two experts also reveal their surprising predictions for the big geopolitical and economic winners of 2012 -- and which former European finance minister shouted at Roubini to "Go back to Africa!"

Ian Bremmer: The folks at Davos intelligently recognize this problem, and they're calling it the great transformation -- it's a search for new models. I think it's appropriate because we're not at the new normal yet. The new models have not shown up. Nouriel and I both believe that we're presently at a G-zero, where there isn't global leadership, and that is articulating itself economically [with] the eurozone. If the Europeans don't get themselves out of this, the U.S. obviously isn't going to, the Chinese obviously aren't going to, no one else is. It's also proving itself in terms of political transition in places like Syria, across the Middle East, Pakistan, and Afghanistan. If the United States isn't going to be able to ensure democratic transition, well, who else is? They're going to have to do it themselves. More

 

Permaculture In Damaged Lands: Degradation And Restoration In New Mexico

 Alternately barren and spectacular, the southwest United States has piqued the imagination of Americans and people across the world for generations. 

The site of gold rushes, Native American homelands, and a culture of lawlessness that has yet to fade completely, much of the land was degraded and destroyed long before Hollywood discovered how to cash in on retelling stories from its checkered past. Films may glorify the breadth and scope of the iconic terrain, but the essence and character of the Southwest ecology has been drastically altered; it little resembles what it once was.

For the Southwest’s environment, 2010 was one for the books. I happened to arrive in New Mexico on June 28th, when the Los Conchas fire had spread within spitting distance of the Los Alamos National laboratories and locals were convinced radioactive material was going up in the huge smoke clouds. The fire whipped through 160,000 acres of New Mexico, the largest, swiftest fire in the state’s history. It took less than a week to break the record previously held by the Dry Lakes fire, which destroyed 94,000 acres in 2003 in Gila National forest — but neither compared to the Wallow Fire in Arizona which burned out half a million acres (200,000 hectares) in the same summer. There are always complex reasons for the explosion of such fires, but the proximate reason in this case was drought. 

A secondary reason for the situation is that the entire ecology of New Mexico has been abused and degraded for hundreds of years, and on arguably a larger scale than most US states, leaving it vulnerable to the weather shocks of climate change and drought. These days, many worry about the so-called mega drought, which seems always on the horizon. It isn’t an exaggeration to say that the environment of the southwest United States and New Mexico was systematically raped and pillaged, but the abuse began in many respects before the mining or deforestation that occurred later. It began with the importation of European cattle and sheep in the 16th century and 17th century under Spanish colonial rule. More

 

Governments Spend $1.4 Billion Per Day to Destabilize Climate

 We distort reality when we omit the health and environmental costs associated with burning fossil fuels from their prices. 

When governments actually subsidize their use, they take the distortion even further. Worldwide, direct fossil fuel subsidies added up to roughly $500 billion in 2010. Of this, supports on the production side totaled some $100 billion. Supports for consumption exceeded $400 billion, with $193 billion for oil, $91 billion for natural gas, $3 billion for coal, and $122 billion spent subsidizing the use of fossil fuel-generated electricity. All together, governments are shelling out nearly $1.4 billion per day to further destabilize the earth’s climate.

The government of Iran spent the most on promoting fossil fuel consumption in 2010, doling out $81 billion in subsidies. This equaled more than 20 percent of the country’s gross domestic product. Saudi Arabia was a distant second at $44 billion. Rounding out the top five were Russia ($39 billion), India ($22 billion), and China ($21 billion).

 

Kuwait’s fossil fuel subsidies were highest on a per capita basis, with $2,800 spent per person. The United Arab Emirates and Qatar followed, each spending close to $2,500 per person. More

 

Amazon Basin shifting to carbon emitter, study says

 The Amazon Basin, traditionally considered a bulwark against global warming, may be becoming a net contributor of carbon dioxide (CO2) as a result of deforestation, researchers said on Wednesday.

In an overview published in the journal Nature, scientists led by Eric Davidson of the Woods Hole Research Center in Massachusetts say the Amazon is "in transition" as a result of human activity.

Over 50 years, the population has risen from six million to 25 million, triggering massive land clearance for logging and agriculture, they said.

The Amazon's carbon budget - the amount of CO2 that it releases into the atmosphere or takes from it - is changing although it is hard to estimate accurately, they said.

"Deforestation has moved the net basin-wide budget away from a possible late 20th-century net carbon sink and towards a net source," according to their paper.

Mature forests such as the Amazon are big factors in the global-warming equation.

Their trees suck up CO2 from the atmosphere through the natural process of photosynthesis. But when they rot or are burned, or the forest land is plowed up, the carbon is returned to the air, adding to the greenhouse effect.

The paper estimates that the biomass of the Amazon contains a whopping 100 billion tonnes of carbon - the equivalent of more than 10 years of global fossil-fuel emissions.

Global warming, unleashing weather shifts, could release some of this store, it warned.

"Much of the Amazon forest is resilient to seasonal and moderate drought, but this resilience can and has been exceeded with experimental and natural severe droughts, indicating a risk of carbon loss if drought increases with climate change." Read more: http://www.ottawacitizen.com/technology/Amazon+Basin+shifting+carbon+emitter+study+says/6016986/story.html#ixzz1jw0zTDTn

Geopolitical Implications of “Peak Everything”

 From competition among hunter-gatherers for wild game to imperialist wars over precious minerals, resource wars have been fought throughout history; today, however, the competition appears set to enter a new—and perhaps unprecedented—phase. As natural resources deplete, and as the Earth’s climate becomes less stable, the world’s nations will likely compete ever more desperately for access to fossil fuels, minerals, agricultural land, and water.

 Nations need increasing amounts of energy and raw materials to produce economic growth, but the costs of supplying new increments of energy and materials are burgeoning. In many cases, lower-quality resources with high extraction costs are all that remain. Securing access to these resources often requires military expenditures as well. Meanwhile the struggle for the control of resources is re-aligning political power balances throughout the world.

 

This game of resource “musical chairs” could well bring about conflict and privation on a scale never seen before in world history. Only a decisive policy shift toward resource conservation, climate change mitigation, and economic cooperation seems likely to produce a different outcome. America’s Resource Geopolitics

The United States—the world’s current economic and military superpower— entered the industrial era with a nearly unparalleled endowment of natural resources that included an abundance not only of forests, water, topsoil, and minerals, but also of oil, coal, and natural gas. Like all other nations, the U.S. has approached resource extraction using the low-hanging fruit principle. Today its giant onshore reservoirs of conventional oil are largely depleted, and the nation’s total oil production is down by over 40 percent from its peak in 1970—despite huge discoveries in Alaska and the Gulf of Mexico. Its total coal resources are vast, but rates of extraction probably cannot be increased significantly and will likely begin to decline within the next decade or two. Unconventional hydrocarbon resources (such as natural gas liberated by the hydrofracking of shale deposits) are beginning to be commercialized, but come with high investment costs and worrisome environmental risks. U.S. extraction rates for many minerals have been declining for years or decades, and currently the nation imports 93 percent of its antimony, 100 percent of its bauxite (for aluminum), 31 percent of its copper, 99 percent of its gallium, 100 percent of its indium, over half its lithium, and 100 percent of its rare earth minerals.  More

 

 

The end of the Keynesian era

 In 1939, President Roosevelt’s Treasury Secretary Henry Morgenthau concluded: “[W]e have tried spending money. We are spending more than we have ever spent before and it does not work… I say after eight years of this Administration we have just as much unemployment as when we started.”

New York, NY - The beginning of the Keynesian Era can be dated, perhaps, to September 1931 - the year when Britain intentionally devalued the pound, throwing the world into turmoil and currency conflict. 

Today, we are again in an extended period of economic crisis. However, I suspect that this will turn out to be the end of the Keynesian Era - the time when it is, in fact, Keynesianism itself which destroys us. 

"Keynesianism" is really just this century's version of Mercantilism, which dates from the beginning of the 17th century. There's nothing particularly new or original about it. Behind the billows of academic obfuscation, it amounts to two policies: exaggerated government spending in the face of recession, and some sort of "easy money" policy. Although the term "Keynesian" has become unfashionable, virtually all academics and government economic advisers are Keynesians today.

The primary attraction of Keynesianism, I would say, is not its wonderful overall results, but rather, that it provides a good excuse for politicians do to what they wanted to do anyway. Any politician knows that a certain way to increase one's popularity is to hand out government money. In a recession, politicians are likely worried about their declining popularity, and thus their first instinct is to hand out more money. The Keynesian economists often boast that the money can be spent on total waste, such as "digging holes and filling them back up".

The other Keynesian trick is some form of "easy money" policy, which usually results in a decline in currency value. Currency devaluation can, in some cases, result in what appears to be a short-term improvement in economic conditions. However, it is said that "you can't devalue yourself to prosperity", and it is true. The countries that have the greatest success in the long term, also have the most stable, highest-quality currencies.

A basic effect of currency devaluation is to reduce real wages, since wages are paid in a devalued currency. This can increase "competitiveness", but it is easy to see that a strategy that reduces real wages cannot create long-term prosperity. More

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