Wednesday, April 30, 2008

Step Aside Dollar, Is Rice the New Global Currency?

By Otto Spengler, Asia Times. Posted April 24, 2008.

China is exchanging its depreciating reserves of the greenback for things of value, notably rice, with deadly consequences for U.S. foreign policy.

The global food crisis is a monetary phenomenon, an unintended consequence of America's attempt to inflate its way out of a market failure. There are long-term reasons for food prices to rise, but the unprecedented spike in grain prices during the past year stems from the weakness of the American dollar. Washington's economic misery now threatens to become a geopolitical catastrophe.

Months ago, I offered that China, Russia and other cash-rich nations held the antidote to the incipient credit crisis: "If the US wants to remain the magnet for world capital flows it became during the 1990s, it will have to allow the savers of the world to become partners in the US economy, that is, to buy into its first-rank companies."

No such thing occurred, of course, as Washington has made it clear that it would not allow sovereign funds to own the likes of Citicorp. What are the world's investors doing with the trillion dollars a year they used to invest in American securities, including subprime derivatives and various forms of collateralized obligations that turned out to have more obligation than collateral? They aren't buying American companies because they are not permitted to. They are buying food and other stores of value instead.

Washington has weakened the value of the dollar as a palliative for the credit crisis, so much so that "nobody seems to doubt that the US dollar will lose its status as the world's reserve currency", as journalist Amity Shlaes wrote in an April 9 Bloomberg News column entitled "Monks may hold clue to dollar's future".

"Perhaps the dollar won't surrender its anchor role so soon," Shlaes continued. "And perhaps that loss, if it comes, will happen because of events that take place nowhere near men in suits at a central bank. Maybe the answer to the dollar's riddle can be found in the cellphone photo image of a Tibetan monk in crimson and orange squaring off with a Chinese soldier China might recede into years of ethnic chaos. In any of these cases, the new Chinese government won't be forced to deliver the same growth, and therefore won't spend commensurate energy tending the dollar The flash of orange in the robe of the monk is important enough to change the picture for the greenback."

Misguided is not the word for this sort of thinking. However unlikely it might be, one cannot exclude the possibility that "ethnic chaos" will afflict China at some future point. The one thing that can be stated with certainty is that long before chaos reaches China, it will have shattered a great deal of the rest of the world.

China is exchanging its depreciating reserves of US dollars for things of value, notably rice, with frightening consequences for dependent countries, and deadly consequences for American foreign policy.

The chart below shows the price of 100 pounds of rice against the euro's parity against the US dollar during the past 12 months. The regression fit is 90%. There is an even tighter relationship between the price of rice and the price of oil, another store of value against dollar depreciation.

Rice price vs Euro/US$ rate, April 15, 2007 to April 15, 2008


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Real Solutions to the Climate Crisis

By Guy Dauncey, YES! Magazine. Posted April 28, 2008.

A look at climate-friendly options for buildings, electricity production, transportation, and food and forestry.

The crisis of global warming is deeply serious, yet many are finding that it is also powerfully energizing. Instead of trying to squeeze our existing way of life into a post-carbon life-jacket out of fear of a climate catastrophe, these people see the transformation as a great adventure. They are drawing on their imagination and courage to create the building blocks of a sustainable, post-carbon world -- one in which all beings -- not just humans -- will flourish and find fulfillment, within the harmony and limits that Nature provides.

Here are just a few examples of what is already being achieved. The only question is how quickly we can spread these innovations, knowing that the dark shadows of climate change are fast approaching.


Buildings use a lot of energy, so it's no surprise they're responsible for 30-40 percent of CO2 emissions. The challenge involves two tasks -- creating new buildings that are carbon neutral, and retrofitting all existing buildings to eliminate their carbon footprint.The first task is easier. In Germany, Passivhaus homes consume 95 percent less energy for heating and cooling by using super insulation, solar gain, and efficient heat recovery.

There are 6,000 homes in Europe built to Passivhaus specifications. Building codes should require that all new houses are built to this standard.There is no shortage of innovation. In Guangzhou, China, the 69-story high Pearl River Tower will generate more energy than it consumes, using wind turbines inside two floors of the building, solar photovoltaics (PV), and solar heated water.

In Målmo, Sweden, the Turning Torso tower, in addition to being powered by local wind and solar energy, recycles organic wastes into biogas that can be used for cooking and to power the city's buses. In the Chinese city of Rizhao, 99 percent of buildings in the city center use solar hot water. In Spain, all new buildings and renovations are required to get 30-70 percent of their hot water from solar panels.

The Architecture 2030 initiative is pressing to have all new buildings and major renovations in the United States be 100 percent carbon neutral by 2030 -- a goal that has been unanimously approved by the U.S. Conference of Mayors.

Britain is moving faster -- it is requiring that new buildings all be carbon neutral by 2016. The U.S.-based LEED (Leadership in Energy and Environmental Design) standard for green buildings needs to move in the same direction. The challenge is much tougher for existing buildings.

Most building owners could achieve a 20 to 50 percent reduction in energy use by investing in new windows, super-insulation, heat-recovery systems, and efficient appliances and boilers. Solar PV and solar hot water can be added, and carbon-neutral heat can be obtained from heat exchange with the air, earth, water, and sewage. There are furnaces that burn biofuels, and Sweden's district heating systems circulate hot water for 50 miles without significant heat loss. Super-insulation, combined with shade trees and white-painted roofs, can also reduce air conditioning load.

To encourage rapid renovation, we need tax credits, self-financing mechanisms, and rules like the Residential Energy Conservation Ordinance, which requires owners in San Francisco and Berkeley to upgrade a building before it's sold. Germany is paying for a complete retrofit of all older apartment buildings. London has launched a Green Homes Concierge Service to help home-owners upgrade. Since 1993, the small Austrian town of Güssing (population 4,000) has reduced its CO2 emissions by an incredible 93 percent, by switching, among other things, to biofuel district heat for its buildings. It's just a matter of vision and determination.


Our story of energy begins when humans discovered the secret of fire. We burned wood and brush to protect ourselves from predators, cook food, and, later, to survive the ice age. In 12th-century Europe, with the forests fast disappearing, we started burning the strange black stones we called coal. Later, we used coal to produce steam, launching the Industrial Revolution. It is astonishing how far we have come. To anyone from the 18th century, our world today would be unbelievable.

We burned the black stones, and their fossilized relations, oil and gas, and for those who have had abundant access to these resources, it has been good. But today the over-use of these fossil fuels is threatening life on Earth.


See more stories tagged with: climate change, global warming, renewable energy, clean energy

Guy Dauncey wrote this article as part of Stop Global Warming Cold, the Spring 2008 issue of YES! Magazine, on Solutions to Climate Change. Guy is a speaker, organizer, consultant, and author with Patrick Mazza of Stormy Weather: 101 Solutions to Global Climate Change, New Society Publishers.

We Must Imagine a Life Without Oil

By Mark Hertsgaard, The Nation. Posted April 29, 2008.

The era of cheap, abundant petroleum is just about over. How ready are we to change our habits?

It used to be that only environmentalists and paranoids warned about running out of oil. Not anymore. As climate change did over the past few years, peak oil seems poised to become the next big idea commanding the attention of governments, businesses and citizens the world over. The arrival of $119-a-barrel crude and $4-a-gallon gasoline this spring are but the most obvious signs that global oil production has or soon will peak. With global demand inexorably rising, a limited supply will bring higher, more volatile prices and eventually shortages that could provoke -- to quote the title of the must-see peak oil documentary -- the end of suburbia. If the era of cheap, abundant oil is indeed coming to a close, the world's economy and, paradoxically, the fight against climate change could be in deep trouble.

Though largely unnoticed by the world media, a decisive moment in the peak oil debate came last September, when James Schlesinger declared that the "peakists" were right. You don't get closer to the American establishment and energy business than Schlesinger, who has served as chair of the Atomic Energy Commission, head of the CIA, Defense Secretary, Energy Secretary and adviser to countless oil companies. In a speech to a conference sponsored by the Association for the Study of Peak Oil, Schlesinger said, "It's no longer the case that we have a few voices crying in the wilderness. The battle is over. The peakists have won." Schlesinger added that many oil company CEOs privately agree that peak oil is imminent but don't say so publicly.

One who does is Jeroen van der Veer, CEO of Royal Dutch Shell. Without using the term "peak oil," van der Veer warned in January, "After 2015, easily accessible supplies of oil and gas probably will no longer keep up with demand."

Of course, peak oil could arrive sooner than 2015; columnist George Monbiot has claimed in the Guardian that a Citibank report calculates the date at 2012. But even 2015 leaves a very short time in which to prepare, because modern societies were built on cheap, abundant oil.

"The world has never faced a problem like this," warned a 2005 study funded by George W. Bush's Energy Department. "Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary."

The United States, with its two-hour commutes, three-car families, atrophied mass transit and petroleum-based food system, is most vulnerable to an oil shock. But similar vulnerabilities exist in most industrial societies, not to mention the roaring economies of China and India, where oil consumption is rising faster even than GDP as newly middle-class consumers buy the cars they have long dreamed of.

At first glance, one might think that peak oil would help the fight against climate change. After all, less available oil should translate into less oil consumption and lower greenhouse gas emissions. But modern civilization, to borrow George W. Bush's term, is addicted to oil. If peak oil arrives before the addiction is treated, the junkie will seek even more dangerous ways to get his fix.


See more stories tagged with: peak oil, climate change, economy, oil dependence

Mark Hertsgaard, the environment correspondent for The Nation, is the author of six books, including "Earth Odyssey: Around the World In Search of Our Environmental Future." His next book is called, "Living Through the Storm: How We Survive the Next 50 Years of Climate Change."

Scam Artists Are Prepped to Fleece Green Industries as Soon as the Money Comes in

By Stan Cox, AlterNet. Posted April 28, 2008.

As long as an investing class makes all major environmental decisions, no new sources of energy will replace even one barrel or ton of fossil fuel.

Hard times are looming. And in their desperation to keep the American economy afloat, government and business will be tossing overboard any proposals for real environmental protection. No time for such romantic foolishness when there are investments to be protected. Get those tax refunds back into retailers' registers, quick!

Not that we won't be hearing about the environment; indeed, the next growth spurt, if it comes, is likely to be clothed in a green as green as the felt on a blackjack table.

Earlier this year, entrepreneur Eric Janszen declared in Harper's magazine that the next bubble -- alternative energy -- had already been "branded". His projection: the eventual creation of $20 trillion in fictitious, speculative wealth, "money that inevitably will be employed to increase share prices rather than to deliver 'energy security.'" and that "when the bubble finally bursts, we will be left to mop up after yet another devastated industry." After that next big bust, not only alternative energy but a host of other "green" industries will be left in ruin.

As long as an investing class is allowed to make all major environmental decisions, no new sources of energy will actually replace even one barrel or ton of fossil fuel; rather, they will go to further parasitizing the planet in the cause of growth. The boosters of "green" capitalism have never even bothered to argue otherwise in any effective way.

Typical is a book by Daniel Esty and Andrew Winston entitled Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage, which became an immediate hit among "green" tycoons when it was published in 2006. It was a how-to manual for business people wanting to run the kinds of companies that, in the authors' phrase, "get ahead of the Green Wave," whose "environmental strategies provide added degrees of freedom to operate, profit, and grow."

These are some of the helpful tips to be found in Green to Gold:

"Most successful green marketing starts with the traditional selling points -- price, quality, or performance -- and only then mentions environmental attributes. Almost always, green should not be the first button to push."
"Eco-labels can provide legitimate environmental information to a demanding public. But they can also be used as a trade barrier, disadvantaging competitors in the marketplace."
"Corporate strategy 101 tells us that a company can drive revenues by increasing price or volume. With green products, volume is a much safer route."
"Partnering gives a company a strong defense against NGO [nongovernmental (nonprofit) organization] attacks, but a large part of that defense is the demonstration of genuine progress. We call it brand inoculation ... " [their bold]

Right in the first chapter, Esty and Wilson rank companies they've designated as green "WaveRiders". Number One in their international ranking is petroleum giant BP. Their account of how BP reached the top of the green heap is little more than a description of a masterful public-relations campaign. "Despite being in a business with large environmental impacts, the company is now seen as green," they write, and "Here's the real proof: BP's brand value, as measured by experts in measuring intangibles, has jumped significantly."

But BP's primary mission is still to earn a profit by selling fossil fuels, so it was no big shock when the Independent reported in 2005 that the company had been lobbying against substantive proposals then before the U.S. Congress that would cap carbon dioxide emissions. Instead, BP supported a watered-down move that would have "companies only try to cut emissions with the promise of tax breaks."

Then, last year, the Environmental Protection Agency exempted BP from what the company regarded as a too-restrictive environmental law, allowing its Whiting, Indiana facility to discharge increased quantities of ammonia and other pollutants into Lake Michigan and to continue dumping mercury into the lake. This reportedly was done so that BP could refine heavy crude oil from Canadian tar sands.

Under a hail of criticism from local residents and environmentalists, BP promised, cross-its-heart, to stick to the old water-pollution limits, but its pending state permit for a $3.8 billion expansion of the Whiting facility has critics fuming over potential impacts on local air quality. The permit is expected to be approved by June 1. That is an important deadline, because it's then that some of BP's previously earned air-emission credits will expire. BP claims that by juggling credits, it will decrease the "net" carbon emissions from the new plant -- ecological virtue as thin as the paper the credits are printed on. And, according to reports, "particulate matter and sulfur dioxide emissions would increase."


See more stories tagged with: energy sources, consumerism, environment, capitalism, green investing

Stan Cox is a plant breeder and writer in Salina, Kansas. His book, Sick Planet: Corporate Food and Medicine, was just published by Pluto Press.