Sustainable aquaculture?

By Julian Sudre

It does not take a lot of expertise to camouflage a problem with more quixotic projects. For all that, in times of dire warnings of fish stocks depletion in our seas and oceans, intervention was the source of all secrets. Well, maybe not quite. Finding alternatives to overfishing has shown that aquaculture is following the way of biofuels and yes, human intervention is in all its splendour a remedy that leaves a lot to be desired.

When scientists raised concern about chemicals used in farmed fish that were tested for 14 toxic chemicals known to be carcinogens, such as polychlorinated biphenols (PCBs), dioxins, dieldrin and toxaphene, not only we knew something was up but such move to farm fish and especially salmon at that time demanded answers and fired up bad blood from fish consumers. Surely, the answer is not far to look: the very thing that governments are good at is - clutching at straws. Salmon consumption has increased by 40 per cent in the last 20 years. The annual growth rate in the EU is 14 per cent and much higher in the US. At the same time salmon prices have plummeted, putting the fish alongside herring as the cheapest fresh fish in most shops.

Evidently so as to sustain a profit, Britain's $2bn fish market is no small beer and having recourse to aquaculture was second nature to the Government's ethos. On March 28, EU regulations enacted a law that would make it compulsory to label fish by distinguishing them from wild and farmed after reported fraudulent selling and labelling in these particular markets. Wild fish eat less-processed diet than farmed fish, which alters the balance of the chemical variants, known as isotopes, of which they consist.

According to the Sea Fish Industry Authority, more than 4000 tonnes of sea bass and 1700 tonnes of sea bream were consumed in Britain in 2006 and celebrity chefs have been a part of their publicity. On top of that we have seen the fashionable emergence of sushi restaurants which have flourished all over the world. The converted sashimi-eaters and carnivorous farmed salmons are to be spawning new dynamics in the fish industry. Today, close to 40 per cent of seafood comes from aquaculture. What's particularly detrimental to the ecosystem is the fact it takes a lot of input in the form of other, lesser fish - also called trash fish or reduction fish - to produce the kind of fish we prefer to eat directly. To create 1 kg (2.2 lbs) of high-protein fishmeal, which is fed to farmed fish (along with fish oil that also comes from other fish), it takes 4.5kg (10 lbs) of smaller pelagic , or open-ocean, fish.

Other niggling trends such as the rapid expansion of other species now being farmed, which have much higher feed requirements. Ranched tuna - that is corralled from wild and then fed in anchored pens - dine on live pelagic fish such anchovies, sardines and mackerel. It takes about 20 kg (44lbs) of such feed to get 1 kg of tuna ready for a sushi bar near you. This system was ironically called a reversed protein factory and if the current trend continues, demand for fish oil will outstrip supply within a decade and the same could happen for fishmeal by 2050. Noteworthy is the staggering 37 per cent of all global seafood now ground into feed, up from 7.7 per cent in 1948 according to recent research from the UBC Fisheries Centre. One third of that feed goes into China, where 70 per cent of the world's fish farming takes place. China devotes nearly 4000 sq miles of lands to shrimps farms.

But fish farming also affects the habitat of the fish as they are tightly packed - 50 000 fish in a two-acre area - undeniably damages their fins and scales as they rub against each other and the sides of their cages and becomes sickened with various forms of diseases and infections by parasites which may result in fish lice, fungi, intestinal worms, bacteria and protozoa. British Columbia's Broughton Archipelago received international media attention because of the occurrence of such sea lice where two species were found.

In the same vein, the use of gallons of water in aquaculture each year is one of the main environmental problems, and the release of organic wastes (that, for in instance, act as plants nutrients for harmful algal blooms) and toxic effluents into the oceans have definitely raised worried eyebrows amongst environmentalists.

Last but not least, it is important to note that the business of aquaculture in the long term deteriorates the social well-being of local communities by "poaching" trash fish used for feed production - often the main food for local people - and more to the point, encroaching their rights of food security alongside the displacement of coastal communities.

Now, feasting on fish is incontestably healthy if one is not vegetarian, but gone are the days of enjoying epicurean extravagance without philosophising on the repercurssions of our actions if the fish is farmed.

Earth Hour

By Julian Sudre

There are many ways that lead to Rome. They converge and diverge in a zigzag fashion that whitewash the eye of the susceptible beholder.

Then the Mephistophelean thump of political correctness rattles the pursuit of men's buffoonery. We traipse uphill and maunder down vale, looking for means of trundling out shell-pink dreams of eternal beauty. We snap - kerfunk - the rest won't be subliminal; the message will be clear and global. The shrill buzz of the alarm cuts through the vastest audience, tantalizes it to the extent of proselytising it. Its butterfly effects washed over a collection of identifiable heart-pumping, as-far-as-the-nose-can-see people who are accustomed to the ebb and flow of contemporary mercurial vacillation.

We are harnessed then spurred on, and again made to scurry along to the nearest point of evacuation. A collective sigh ensues until the alarm is raised again. The drill is over if only we had wished we had foresighted our future.

Television is not enough. When TV advertising overloads our lives with unsavoury band-aid solutions and feel-good bromides, organisations come up with bigger ideas. In an era of global warming, it's time someone used his ace up his sleeve - I put down the earth hour card, and instantly, yes I can tell you this, hue and cry shall come to pass. Not.

Earth Hour happened to be on Saturday, March 29th, 2008 between 8pm and 9pm and it is only two years old. Sure enough, I am not taking a stand against it and I advocate environmental awareness to the hilt as you know by now. In essence, it is meant to, pardon the pun, bring to light how far we have come to consume energy and electricity per se, without the least remorse.

Turning the lights out for one hour is certainly going to give food for thought to a whole society, ergo, purely on a reflective level, we will strive to keep our consumption down. Fat chance. Here lies the misconception and the faulty analysis of it: at bottom, the Earth Hour project has all the flavour of another plasticky marketing headliner. Instead of conveying a good cause, it is a vehicle of inflated publicity that flits through a time slot without a bang. For once, it is a bad piece of PR and although I will fight for driving our energy levels down, this attempt at raising awareness only fizzles out as fast as it appeared.

The latest graphs from the National Electricity Market Management Company in Australia show actually there was in fact no dip in power during the hour, instead it resulted in an orgy of self-congratulatory charade that marched to a different drummer. If we want to orchestrate changes in our attitudes, I don't believe Earth Hour will do much, apart from the fact that it goes incognito or maybe, at the best of time, raises a mere laugh from the populace. If this idea of papering over our sense of self-denial projects derision, then now it is time to change tacks: Kitsch PR is not any longer the lethal weapon du jour and energy companies should cotton on to it now and start pumping their price up. At least some public outcry could be the only ointment to alleviate the pain of environmental awareness.

The impact of water on the world

By Julian Sudre

Is humanity facing a looming crisis
that will extinguish the human race or
the solutions to quench our first are hidden deep into mankind's psyche?


The profligate use of water does not raise too many eyebrows in the western world. Its abundance flows systematically through our pipes and feeds graciously our golf courses and magick fairyland cities into being in the most inhospitable corners the world. But the tap is started screeching under the insatiable demand of our thirst and the Beijing Olympics have recently made their strangling urge for water felt over in the Shaanxi province.

China's construction of a huge network to divert water to the North is a timely manoeuvre that is about to sound the death knell of our limitless supply of water. Its synchronisation was no less well timed with the World Water Day on March 20 which also coincides with the International Year of Sanitation.

Access to water is one of humanity's biggest challenges, and in 2o00, the United Nations set a goal of halving the proportion of people without access to safe water by 2015. While toilet flushing is taken for granted for most of us, almost half the population of the world has consigned this very act to the realms of dreams.
There are 6 billion people on the planet with 1.2 billion people having no access to water and 2.6 billion without proper toilets. The arising climate warming issue is precipitating the alteration of hydrologic regimes throughout the world with impacts on water supply, water quality and water management. The effects on climate changes on water resources will vary regionally because of differences in climate impacts, vulnerability, and adaptive capacity, requiring widely societal and governmental responses.

According to a senior Chinese government official, social upheaval and environmental harm could be caused in the north-western provinces of China as those provinces are being required to pump clean water to Beijing in time for the Olympics. Unfortunately The Hebei province, which lies next to Beijing, is suffering from severe drought and the extra 300m cubic metres of back-up supplies to Beijing's 16m residents is already exacerbating the farmers' anger over the already lack of water which has a pivotal role in their agricultural land.
The entire project is expected to run up to $60bn, far exceeding the cost of the Three Gorges Dam. Hence, negative sentiments are running high as it could induce the relocation of ten of thousands of people, draining their farmlands and subsequently affecting the quality of the water.
The latter is an important point to highlight in conjunction with the International Year of Sanitation; UN Secretary-General Ban Ki-moon conveys the fundamental message of tackling urgently the sanitation of water and voices his resentment about the lack of political will. He goes on to add that every 20 seconds, one child dies as a result of abysmal sanitation.

On a socio-ecological level, water is a driving force that expedites productivity and provides indispensable "capital" for a healthy economy. About a quarter of the world's population lives in area of "physical water shortage" and rivers such as the Colorado and the Yellow are drying up. Australia is faced with major water scarcity in the Murray-Darling Basin as a result of diverting large quantities of water for use in agriculture. If the Nile were to disappear, an exodus of climate change refugees will trigger fantastic political and economical waves throughout the world. And this is no more so than a snippet of visionary possibilities whereby possibilities are imminent realities.

The UN recommends that people need a minimum of 50 litres of water a day for drinking, washing, cooking and sanitation. So when we for instance, look at Italy that spends about 3,300 litres of water a day to produce each person's food, of which about half goes on making ham and cheese and a third to pasta and bread and Thailand is very much nip and tuck with its counterpart, those statistics don't paint a rosy picture of our water management.

As the world's population is growing and thus is our food production, water becomes part of the element that needs adding to the equation. Seventy per cent of the water used worldwide is used for agriculture and with a prediction of 8.9bn people by 2050, scarcity will without question become part of everyone's vocabulary. Although shortages are already biting in Australia, water regulations are put into place, but the lack of awareness or rather our throwaway society does not stimulate a philosophy of safe-guarding in the wider context. Again, wastages are blatantly conspicuous and if immediate actions to use water sparingly were wide-spread, we certainly would prevent the proliferation of water-stressed countries.

Restrictions should be imposed on birthrate growth to start with
thereby the food production could be stemmed partially, which would reduce the exposure on world markets. Water diversion to agriculture and the expansion of areas used for growing crops and livestock perhaps should be more regulated by governments but sadly those platitudes remain at odds with driving a country's economy forward. Hence our thirst for water won't be tamed any time soon. While we know deep down , which policies to implement, our political system itself lack in conviction and the keen disposition to utilise our resources hand over fist and mismanage commodities in general never the less is accelerating a crisis instead of diverting it.

Fair Trade, the fresh fig leaf of business ethics?

By Julian Sudre




THE UNABATING flow of political ideas has urged multinational corporations to shake out their appearance by plumping for the new way of doing business. This is fair trade.

Fairtrade is a movement aimed at poverty alleviation and sustainable growth in Third World under-developed countries. The labelling of Fairtrade Solidaridad began at the initiative of Mexican coffee farmers in 1988. Since, it has spread out across the world and ushered in a new green revolution on the global markets.
Yet, under those undercurrents of benevolence, are lurking tinges of contradictions and undertow of resentments.
Proponents of the system are always good to point out the good it does, often on relying on evidence from particular communities that produce Fairtrade products and economists would tellingly concur that, as a niche brand, it would do more good than harm.
So does fair trade benefit the incumbent over the the very poor aspirant? I should cocoa.

The popularity of Fairtrade has drawn criticism from both ends of the political spectrum. The Adam Smith Institute claims that the system attempts to set a price floor for goods that is in many cases above the market price encourages existing producers to produce even more and new producers to enter the market, leading to excess supply. The scheme has appeared to be a re-hashed attempt to make up for market failures in which one flawed pricing structure is replaced with another. Opponents of the system believe that the reason why coffee prices are so low on the world markets is that there is too much production, Fairtrade makes the world price fall further making the majority of coffee producers worse off.
The exchange between producers and intermediaries does not occur in a competitive framework. The price distortion is relevant as the market price does not reflect the productivity of producers but their lower market power and it does not take into account the principles of products differentiation. In this sense Fairtrade can be considered as a market-driven innovation in the food industry.
Of course the mainstream argument that french author , Christian Jacquiau, exhorts about the lack of radicalness in the system such as higher fair trade prices should be implemented so as to maximize the impact, as most producers only sell a portion of their crop under fair trade terms.
Fair trade remains deficient in immediate trade policy changes that would have a larger impact on disadvantaged producers' lives. It is estimated that only 10 per cent of the premium paid for Fairtrade coffee in a coffee bar trickles down to the producer. Like the organic produce sold in supermarkets, Fairtrade coffee is used by retailers as a means of identifying price-insensitive consumers who will pay more.

Despite, its well-meaning intentions, the Fairtrade system cannot lift poor farmers out of poverty. At best, it makes some slightly less poor at the expense of others while drawing energy away from the possibility of genuine economic development. The system seeks to reduce voluntary exchange to a government-controlled privilege and to refuse agrarian societies the opportunity to become rich.
Another noteworthy point illuminates the lack of consistency with fair trade; most of the farmers helped by the system are in Mexico but not in places like Ethiopia. Although it could be at time contributing to better producers' lives by providing them with information and hence bringing forth more stability in the short term. The real issue lies in the failure of governments to provide legal infrastructure - rule of law, enforcement of property rights and the poor governance of many of the countries that fair trade ins involved in.

But there are two more niggling wrinkles that need mentioning; the first is what would happen to fair trade producers should the market price fall? If markets demand slumps then the producers of Fairtrade coffee for instance are simply left with spare produce on their hands that eventually will have to be sold into normal markets. Nonetheless, there is a guarantee in price-setting there is no conclusive guarantee that everything produced will be bought at the said price.
The second stumbling block is that the producers have to pay to join too. The minimum initial certification for the smallest cooperative of producers raises the bar at a level which is the antithesis of the ethical policy of Fairtrades. One would doubt if the implementation of a free trade by rich nations and transnational corporates in a third world country is a plausible solution to the annihilation of poverty.

On balance, Fairtrade has a very personal philosophy on enhancing and supporting developing countries, perhaps it helps resolve some prickly conflicts in the short term but one does only paper over the cracks and attempt to use prodigious PR companies to bring to light the very few smiles that it has given rise to.

The plastic bag guilt

By Julian Sudre

"Scientific progress engenders a rash of pseudo-rationales looked to at times through a subjective magnifying glass."

Newton warned against using the law of motion and universal gravitation to view the universe as a mere machine, as if akin to a great clock.

Scientists and philosophers relentlessly battle on the front line of objectivity by propounding resounding theories. They stimulate heart-singing discourses or cast gloomy shadows of foreboding catastrophe. Newton like Galileo - the Father of Modern Science - have etched into modern science elements of veracity; they have amplified and broken down to us the aspects of our solar system and the laws of gravity. The evolution of our understanding of the world, be it as it may, has proven to be on occasion mismanaged thanks to an anthropocentric viewpoint. The Gaia hypothesis developed by James Lovelock has apparently drawn a trickle of exposure from the public arena, perhaps due to a lack of self-awareness or more possibly ignorance. Moral values should be inherently yoked to our environmental pantheon as scientific progress engenders a rash of pseudo-rationales looked to at times through a subjective magnifying glass.

When Confucius said that men's natures were alike but it was their habits that carry them apart, his reasoning nonetheless points the finger at an imminent dysfunctional, epileptic behaviours that have become formulaic in scientific spheres. Once upon a time, we heard the soothing voices of scientists reassuring us that antidepressants such as Prozac or homoeopathy had the ability to alleviate modern-day anxiety and much later, once their honeyed words had sunk in that yeasty arguments would flare up abruptly and extinguish our beliefs. We would be rocked onto an ocean of unpredictability where our comfort could be jolted at any times by the arbitrariness of those arbiters of so-called life sciences. The most troubling recent examples of bad science is Andrew Wakefield's allegation, subsequently comprehensively quashed , of a link between the MMR vaccine and autism. History is sadly overpopulated with other examples. Of course time and again, scientists and environmental lobbyists have exaggerated a grain of truth into a larger falsehood.

Plastic bags now are demonised; they were inevitably pitched into the global markets, but today they are at the core of the environmental issue. Countries such as China banned them from June 2008 and Australia is in the process of phasing them out. In South Africa they are cynically known as the national flower and vendors can be sent to jail for 10 years for handing them out. Despite fresh reports from scientists that they did not deserve the hype of endangering the environment, British Prime Minister Gordon Brown is pushing ahead with the imposition of tax on plastic bags. Taxing is certainly not the answer to the symptom. Now I wonder if the cure is safer than the disease; the reality is at heart more complex than it is revealed. The brouhaha of ill-conceived schemes is about to send us back to the Oldivai Gorge.

Governments and scientists, on the face of it, give the impression that they muddle the facts, abuse the naivety of a pandering audience. Why waiting for people with authority to instill in us the next steps to take and then laying the blame on them when we latch on to the facts that they were misleading us? Our reaction is counter-productive. Our focus should be based on how we affect Nature on an individual basis and think about the consequences of our conduct. It is down to the individual to make choices; a behavioural change is capital because even small changes can make a big difference.

We are not talking here whether it be better to use paper bags over plastic bags but to use a bit more of our common sense and recycle as much as we can. It does not have to lead to a radically different lifestyle. It is simply to try to eliminate superfluous accouterments such as the plastic bag out of our life by re-using durable bags to go shopping instead for example.

Our symptomatic endeavour to re-address the problem indicates the gravity of our deeds. We are trying to remedy our symptoms by diagnosing the aftermaths. Perhaps it is high time we looked at the issue more objectively and excise the behavioural tumour mankind has developed.

Palm oil and its myths

By Julian Sudre

" Corporate greed and the lack of political will have embossed their mark of barbaric comportment on to virgin beauty spots"

Sometimes reacting in haste would not be a case of repenting at leisure. But when it comes to cracker-barrel philosophy, the inevitable is meant to be the canary in the coalmine of delusion.

These days, palm oil fetches its way in a myriad of food products and cosmetics and is at the core of rainforest losses, biodiversity destruction and its international trade is the key driver of human rights abuses on a massive scale. Palm oil which is high in vitamin A and magnesium has been difficult to trace from source to end use as it is concealed in the form of vegetable oil. The actual palm oil is not a bad thing but the way it has proliferated in terms of production is the main cause of man-made disasters.
Lands occupied by oil-palm have doubled in the last 10 years and orangutans and Sumatra tigers are being threatened according to scientists but also gibbons, tapirs, proboscis, monkeys, clouded leopards and more than 220 species of birds could go the same way. Corporate greed and the lack of political will have embossed their mark of barbaric comportment on to virgin beauty spots.
Malaysia and Indonesia together account for 84 per cent of the world production and it represents about 10 per cent of the gross domestic product of Malaysia. Such shocking figures express the cardinal importance of developing and adhering to strict regulations and frameworks.
Friends of the Earth reported that 80 per cent of companies could not tell where their palm oil came from and the development of oil palm plantations was responsible for an estimated 87 per cent deforestation in Malaysia between 1995 and 2000.
Large -scale tree plantations such as oil palm bring about a complete and permanent change to the local community's way of life, economy and culture. A monoculture export oriented crop is planted and a 100 per cent cash-based economy is installed.
Some serious questions need to asked about the policies of international institutions, national government and corporations in promoting the production of palm oil as an answer to the needs of the rural communities. Land rights and social conflicts need to be tackled with adequate measures so as to prevent atrocity such as torture and violence. Firstly, the Indonesian government should introduce a moratorium on clearing forest and peatland areas. Environmental pollution are permeating South-east Asia due to the fact of peatland fires and heavy sediments loading in rivers and streams and the excessive if not improper use of agro-chemicals. Waste management should be prioritised instead of giving way to the heavy weight of corporate avarice.
Secondly, international funds need to be made available so that tropical forest countries can reduce their greenhouse emissions from deforestation.

In essence, if companies enmeshed in the palm oil international trade, use their influence on how suppliers operate, and refuse to deal with those who decidedly destroy forest areas, they could change industry practices. Sadly green visionary fanfares won't trump the old business adage: "you get what you pay for" and the government has held on to it. Although it asked its consultants if a ban on importing environmentally destructive fuels would prevent further despoliation of forests, its consultants responded with consummate discipline that it would infringe on world trade rules. The easier option was to call for "some form of voluntary scheme instead."

Tajung Puting National Park on the island of Borneo is under threat today by the expansion of palm oil expansion. Wilmar, a Singapore-based company in which Archer Daniels Midlands (ADM) has a controlling share, continues to clear forests on all sides for palm oil plantations. Wilmar is the world's largest producer of palm oil with facilities in Indonesia, Malaysia and Uganda. To its west, The Gunung Palung National Park, another heaven for orangutans, is being encroached upon by Cargill-owned plantations. To the east, Borneo's largest national park - the Kayan Mentarang National Park - is being threatened by the proposed 850 kilometre Kalimantan Border Oil Palm Mega-Project. If developed, it would be the single largest palm oil plantation in the world, destroying intact tropical rainforests and the ancestral territory of up to a million Dayak people, according to the UN Permanent Forum on Indigenous Peoples Rights.
The rush of biofuels is expanding rapidly hence its demand will get out of proportion accordingly.
The biodiesel industry has accidentally invented the world's most carbon-intensive fuels and its consequences have dragged us into the dregs of human blinding Mammonism.

Heathrow expansion caught in a mist of propaganda

By Julian Sudre

"Flying propaganda of extending heathrow has sent the government in another bout of pathetic navel-gazing"

Something was in the air. A miasma of governmental projects has descended upon of all airports, heathrow, with noisesome waves of cringe-worthy arguments in favour of its expansion.
Last year, someone from the government had to voice, perforce, to us - citizen - of the English capital that London much needed the third runway to boost the British economy and its influx of businesses into the capital.
It would appear by all accounts that the transport secretary, Ruth Kelly knew with perfect consistency how to deliver platitudes to a more-than-weary audience of disenchanted spectators. She noted that environmental aspects of the dilemma would not constrain whatsoever negative impact on the planet as the appetite for air travel will continue to grow willy nilly at 5 per cent a year. It was almost as if a pseudo-festival of satire had been launched with her two-fisted command of the country.

I shall surmise that Kelly, by all odds, would not be entertaining the thought of having a property in the flightpath of the airport and even less to live withing a 10 miles radius of heathrow. After all, planespotting is not her bailiwick. But the year to come , if the juggernaut devotion to appropriate infrastructural monsters of modern times is not harnessed, will become an annus horribilis to the preachers and the converted.

Flying propaganda of extending heathrow has sent the government in another bout of pathetic navel-gazing.
Contemporary political discourses have paled into the morass of greed and wealth. Hence why cities reflect the spontaneous foibles we inherently have in all of us and airports are the manifest doors to blemished territories. Humans have spawned tracts of decadence into conurbation affixed to generators of demographical power.

Juvenal, the Roman poet and author of the Satires, pertinently expressed how the common people - rather than caring about their freedom - were only interested in bread and circuses.
The holistic approach to be content with the size of heathrow was kicked into the long grass, supported by the comforting locutions of the government. The art of peddling moronic policies and their self-congratulatory measures adhere remarkably well to today's shibboleths.

With a latest report that confirms that the extension of heathrow would not impact on the economy. At any rate, tourists visiting the UK spend at least 15bn pounds less per year than UK tourists going on holiday overseas. Expanding aviation simply means increasing the trade deficit for UK tourism.
Although, ministers were taken by surprise after 18 000 people lodged objections to the plans which has caused concern at the highest levels of Labour if plans for a third runway are given the go-ahead. The Department for Transport had felt a "wobble" within its premises about BAA's proposals as they realised it could cost them votes.

As Juvenal said, who will watch the watchers and who will guard the guardians themselves?

The next green gold rush

By Julian Sudre

The fever of discomfort has taken a derisive turn when oil started to become a red-button issue; a shift of strategy produced undertones of remedies and revolutions in the way we would pioneer the formation of a green, renewable energy.

Interest in agrofuel has gone from a casual trot to a full-on gallop of thoroughbred corporate activity. And today, governments seem to be more interested in feeding our cars than us. Such a scheme is beyond the realm of possibilities knowing that it would require 25.9m hectares of crops to move our vehicles with biodiesel. Only 5.7m hectares are in the UK. A blatant case that demonstrates how the markets respond to money as opposed to our needs and how facile solutions to global warming and carbon emissions are disguised as sustainable energies.

Industrial agriculture is responsible for 14 per cent of global greenhouse gas emissions and agrofuels need more nitrate fertiliser hence they emit more nitrous oxide which is nearly 300 times as powerful as carbon dioxide. In terms of biodiversity, we are seeing a shift towards GM crops and trees which poses risks in soil erosion, water depletion and more industrial monocultures. What's more, in the US and in Europe agrofuels operations rely heavily on subsidies and they probably would not survive without them; subsidies have given rise to competition across the world between crops for food and crops for fuel, causing havoc in poor countries through increased food prices and reducing global food reserves.

Rainforests being the next targets, their eradication for compulsive acres of oil palm and soya and sugar-cane plantations is turning local farmers into slave-like serf of unscrupulous policies. Food sovereignty and destruction of natural ecosystems and the displacement of million of small farmers are the causal factors of such dynamics. Policymakers know fittingly how to brush under the carpet of capitalism the thorny arguments of food security and food displacement in return for "principles" that are a bigger bang for the buck of large-scale multinational corporations.

The IPCC - Intergovernmental Panel on Climate Chane - highlighted that peatland destructions caused more emissions than deforestation which the latter brings about 18 per cent of global greenhouse gas emissions. Even though the UN Special Rapporteur for the Right to Food vocalised his stance by remarking that it was a crime against humanity to produce biofuels.

The agrofuel process has developed far too fast without having drawn up any measures to foresee any complication ahead in time. Controls should be in place before corporations and governments push ahead. We are at a critical stage where we are talking about expropriation on an unprecedented scale with the privatisation of communal land. Now, more than 100 groups have asked for a moratorium on EU subsidies for agrofuels. Unfortunately, financial sectors have seen the agrofuel boom as an opportunity to inject liquidity and blood-money by transfusion to ill market economies. The World Bank quickly jumped on the bandwagon announcing that it has potentially 10bn dollars to underwrite agrofuel development. Hence, the systematic leech-like knee-jerk approach of private sector investors to succumb to temptation.

On closer inspection, our civilization has become green with the wrong envy and impulsively is cutting its nose to spite its face. Perhaps when the masses swell up against the dictatorship of our economics that a ray of light will proffer hope for sustainability.

World of misconceptions and globalisation

By Julian Sudre








Scientists know how to use their brains while philosophers know how to use their minds. The cold war between those two dynamics have engendered conflicts and a perpetual disparity that swings the pendulum of reason into the delphic pronouncements of rationales.

Although, the quest for the fundamental answer that humanity has comprehended and established a pattern of distinctive evolution, the latter has not been concommitant with Earth's adaption of our deeds. The whimsical attributes of the scientists have confounded the conceptions of progress and therefore philosophical questions have emerged. If scientific progress has enabled to quicken our material needs, those needs have degenerated into anthropocentric pressures that eleminate all thoughts of altruism. The antithesis between compassion and egocentric-cum technology has precipitated an affront of cataclysmic results. Darwinism, to a certain degree, propounds that the mutation of our species by a natural cycle injects continuity in the linear time. Nevertheless the evolution of species by natural selection is rendered limited if our philosophy of captivating the essence of Nature's verity is diminished.

The insatiable need to develop most of the Earth has caused an ecological crisis, human overpopulation and extinctions of many non-human species. On an environmental level, we have followed the route of Machiavelli who was heard to say "It is much safer to be feared than loved." Machiavelli not only described a world but created one and consequently we have been inspired by it and contructed our political, social and economic conceptions.
Francis of Assisi spoke of brother Sun, sister Moon, brother Wolf; and of water, fire, trees and people as brothers and sisters as well.
Christianity has been critical of anthropocentrism as humanity is placing its own desires ahead of the teaching of Christ which leads to rampant selfishness. From a Buddhism perspective, the very core of globalisation and inherent progress is the cause of craving. Craving is the root cause of suffering. It could be said, mankind has absorbed an unconscious derivative of addictions that only a disaster could annihilate.
Our Western Judaeo-Christian civilization has been the result of many bifurcations we have determined. We have gone for superlative schemes to empower ourselves and our nations. The great Spanish Philosopher Jose Ortega y Gasser pointed out: "I am myself and my circumstances." Therefore we have found comfort in a certain dissociation from Nature by torturing her in order to extract from her what we believe to be the truth. We have conformed to Bacon's philosophy who was a fervent believer in absolute truth.
We are still under the spell of Galileo and Newton and Descartes. We have avoided Goethean science and Picot and Francis as science is the supreme manifestation of reason and reason is the supreme attribute of the human being.

Symptoms of narcissism and depression appear to be the major illnesses of our actions. But deep down, I daresay, the reductionist science and neo-liberal globalisation have metamorphosed our reality into schizophrenic confusion of where we are and what we have achieved. The parameters of understanding the laws of cause and effects have been cast aside, as mankind basks in complacency and believes that it knows a lot but understands very little.

The ontological argument and Pantheism should be harmonised in the interest of re-creating communities and fraternities and eradicate globalisation for localisation. We perhaps should accept more our intuition and spirituality to heal the wounds of the Earth. As the Earth is the reflect of our soul, we would relish the oneness and collective consciousness of the universe, tame our schizophrenia, and soothe the pains of ignorance we have absorbed.

We are witnessing the systematic karma of our modern Pac-man society and the disintegration of spiritual advancement. Once, we will get to comprehend that linear time is a misconception that cannot be boxed into another dimension and that we have delineated our successes only on a material level, the environmental, political and social problems alongside our own existence will mend apace.

Are our oceans in danger?

By Julian Sudre

A fresh new report was published showcasing the devastating impact of human-related activities around the globe. The map is the first to combine information on how different human influences are affecting the oceans. The ineradicable prediction confirms once again the chronic greed and implacable desire to push our societies to extremes that eventually tolls the death knell of another era.

So when scientists concurred at the beginning of the month that the human impact on the world had been so comprehensive and ushered in a new geological epoch which they called the Anthropocene era, it could have sounded like another instance of alarmist climate porn. For auld lang syne, it was suggested by geologist not only this new era had started since the start of the Industrial Revolution but also they remarked a transformation in erosion and sedimentation patterns, ocean acidification and changes to the cycle carbon.

The map on marine ecosystem has revealed that almost half of the oceans have been polluted and some of the worst-affected marine areas are found around the British Isles. The South and East China seas alongside the East coast of North America, the Mediterranean, the Red Sea, The Gulf and the Berring Sea and several parts of the west Pacific have menacing traits of ecological tragedy. The fact of the matter lies in conserving an ecological balance by avoiding depletion of natural resources such as the detruction of the cold-water corals off the Atlantic Shelf. Fleets of ocean trawlers gouge scars 2.5 miles long through the coral; seabeds have been despoiled and the Norwegians think they've lost 50 per cent of their coral. Certainly those trawlers are not vandals but their actions amount to plain ignorance.

The fundamental root cause of the problem is a combination of greed and ignorance that will undoubtedly lead to a complete "revamping" of our thinking and will open the way for pondering over simple decicions. When in 1999, a London court ruled that the UK government broke EU rules on wildlife protection by giving oil companies permission to explore the North east Atlantic.

One element pervades highly in our society which is the signal of a watershed that we have passed in the past year. The message is conspicuously sonourous, vivid with alarming innuendos. Much is debated whether in the media or in governments, but despite meetings, conference and UN resolutions virtually nothing has been achieved. Global warming PR companies are laughing all the way to the bank and the populace expects leaders and nabobs to set the example. Perhaps, it is high time we instilled into young and families that charity begins at home; it is for them to become eco-warriors than to be eco-worriers on behalf of their government leaders.

The sands of time are running out but we still are in control to reverse this all. One thing for sure, we won't get a second chance if we turn our nose up at it and inevitably it will be an ill waiting for dead men's shoes.

It's global misleading, stupid!

By Julian Sudre

I have wistfully wondered or even thought how on earth humanity could have decided to chop its own very hand off, well unwittingly.

Once upon a time when copious amounts of green expanse slathered Mother Earth, its denizen started taking for granted the crops and lands that proffered to their hearts’ content.

Luscious riches embellished fields and garlanded foothills; copses and groves were bedizened with age-old oak trees whence chirpy birds flitting about in the most remarkable rhythmic beauty. But was the music about to stop or to be faced?

Suddenly the roaring engine of Capitalist economies and the headwinds of free-trades tumultuously made a sally and the eroding result is spreading menacingly on the face of the earth.

Hence the confrontation of human-generated greediness against the humble offerings of our Green goddess slowly but surely heralds the beginning of our retribution.

Although, we have been rallying against non-ecological ideas, picketing at airports and supporting eco-friendly organisations and charities but as little as it may help, those are widow’s mite in the basket of Mother Nature. The fundamental problem lies in the ethical way people act upon their values and priorities. And because in a global economy, business values and freedom of choice, and the continuous evolution of technology systematically override any frank attempt at modifying our current comforts, people will, despite warnings, be treading down the claggy path of deterioration. Our greed has got out of hand, and the protection of the Earth still plays second fiddle, only due to a shift in antropocentric worldview of the here and now.

Sadly, a template for environmental sustainbility, global peace only belongs to the realm of the fantasy. We have had a tangible repertoire of green schemes but voracious, blood-hungry corporate activity intently puts its sticky finger in every pie. It has almost become beyond our control as if humanity had turned into a vampire that necessitates material values and physical enrichment and the Earth has been reduced to bare "resources".

Hence, we've become stuck into a catastrophic spiral that absorbs relentlessly our energies, drains our avarice to pump it back with a vengence into our mercenary mindset. The scenario is sombre with shades of ill-omens to come but yet not set in stone.

Ghandy believed that humanity should see itself as located in the wider cosmos, related to its other members as equal tenants. He intuitively knew that Nature should never be reduced to "environments" as it would ultimately lead to an industrialism that would "strip the word bare like locusts".

Much of our current predicament could have been averted today if humanity had paid heed to Gandhi's words, that is being interested in the present not in the future.

I, for one, think if the ship we are on today is rocked about then lists and suddenly lurched mournfully into the deep waters of our own pshyche, it's without question a law of cause and effect. The solution is written on the wall, our focus should be promptly shifted to the essence of life and the current issue at hand not the money-spinning vandalism sheme that has spun out of capitalism. Our resources should be rationed, apportioned with strict adherence.

Respect to Nature and altruism need more attention, as we all shall meditate over our origins and goals before the time is up. Soon the Noe's arch will loom over before long, but then it'll be too late.

Porsche in the fast lane?

Automobile


By Julian Sudre

Shifting into high gear is what Porsche excells at; but the recent statement from the luxurious car maker revealed it earned three times as much money from trading derivatives - or share options - as it did from selling cars. The latest news that the Stuttgart-based company made $5.2bn (3.6 bn euros) last year from those shares against just 1bn euros from its so called core carmaking business. As a result a fury of speculation erupted on all sides as Porsche could be more perceived as a hedge fund than a car maker.
But Porsche's stock has gained a hefty 70 per cent this year; with a workforce of only 12000 the volume of the company has reached 29.1 bn euros that is more than twice that of GM Corps, the world's largest automaker.

A sigh of relief was heard a couple of days ago when the company announced that it would not break up Volkswagen. Labour leaders and VW's work force were pleased to hear that their largest shareholder -- 31 per cent stake -- was keeping the current structure of the company.
Such a move could have created more confusion about the stance of Porsche as its recent critics named it a hedge fund that evidently could have taken apart VW.
Chief Executive Wendelin Wiedekin and Chief Financial Officer Holger Haerter also denied rumours of mergers but aknowleged that its stake-building in VW had caused "uncertainties" amongst some Volkswagen employees. Mr Wiedekin was lambasted when it referred to VW as a "goldmine".
Porsche has spent about $7.3bn over the last few years building up its stakes in VW and will stand to benefit heavily in the coming years of VW.
The luxury German automaker raised hackles recently when it confirmed it had set up a holding company for its VW stake that gives VW employees less influence than they are used to.
The company allocates three supervisory-board seats to VW workers and three to Porsche workers, an arrangement that is critised as inappropriate by VW labours leaders.
Shares in Porsche tumbled by 6.5 per cent today amid concern that the US economy is slowing. The company got 35 per cent of its revenue in 2006 from US sales. Operating profit fell to 1bn euros in its fiscal year through July from 1.2 bn euros a year earlier, excluding gains from VW.

MERGER OF NIKANOR AND KATANGA

By Julian Sudre



Mining

Nikanor, the Aim-listed mining group with assets in the heart of the African copperbelt in the Republic Democratic of Congo, had its shares lifted 24p to 644p today when a merger with Mining group, Katanga was announced.

Katanga, the Toronto Stock Exchange-listed company agreed to a $2.1bn to buy Nikanor and the combined firm is expected to generate a $3.3bn market capitalisation along with being the largest copper producer in Africa and the largest cobalt producer in the world.
Such merger will produce an output potential of 400 000 tonnes of copper cathode and 40 000 tonnes of cobalt.

Kantanga will issue 0.613 of a share and pay $2.16 for each share. Nikanor shareholders will hold a 60 per cent of the combines company and Kantaga shareholders will have the other 40 per cent.
Shares in Katanga soared 42 per cent while Nikara's were up 5.4 per cent.

"Transacting the deal now gives us the best opportunity to lower the overall capital spending and deliver maximum benefit from consolidated suite of operations" said Arthur Ditto, the CEO who will lead the merged company.

The merged company will retain the name Katanga Mining Limited and will apply for a primary listing on the main market of the London Stock Exchange and will have therefore have primary listings on the TSX and LSE.

BATTLE FOR CONTROL

By Julian Sudre




Banking


More fuel was added to the banking fire when Merrill Lynch announced 10 days ago that it was taking a $8bn-worth of losses on mortages related securities. The writedown was twice the size of the losses that the bank had forecast a couple of weeks back. But to add insult to injury, some financial analysts expect that the banks may make another $4bn write-off in the coming months.
UBS unveiled $3.4bn of third-quarter mortgage-related losses last week and could be prone to taking up to $8bn more losses in the fourth quater of this year. The lastest blow was taken by Citi when the world biggest bank reported $6.5bn in writedowns and losses from credit markets.
Since the announcement, Citi has lost more than a fifth ot its market value and its shares have plummeted 25 per cent in three weeks.
Evidence has proven that the credit turmoil not only has hit the big US banks but also British bank such as Barclays which triggered concerns for investors when shares at the bank lost nearly 6 per cent of friday and amid unsubtantiated reports that it had been forced to seek emergency funds from the Bank of England.
When bullish american analysts forecast that the the credit crunch was over in September, it seems now that people in the City and Wall Street are getting jittery to open more cupboards and find dead bodies lying there. Such tsunami of red ink has engendered a tremendous amount of anxiety amongst investors as this time the $20bn mortgage holdings-related writedown does not appear to have captured all the potential losses.

Citigroup's chief executive, Charles Prince resigned on sunday as investors hope his departure will lead to a break-up of the company. Meredith Whitney, the CIBC World Markets' financial analyst believes the only way forward for new Chairman Robert Rubin and interim chief executive Sir Win Bischoff is to carve the bank up and sell it off. Nevertheless Prince al-Waleed bin Talal, a long-term investor who owns 3.6 per cent stake in City oppposed any break-up.
Tough times for Prince have hit the headlines in recent days more particulary when back in the summer he was reported saying "as long as the music is playing, you have got to get up and dance." What's more he was branded a deal junkie and appeared to have turned a blind eye to the storm in credit markets. The bank said it faced additional writedowns of between $8 to $11bn with shares falling 4.9 per cent to $35.90 after a slide of 11.5 per cent last week and now lie at their lowest level in more than four years. But investors were stumped to know that the bank has a $55bn in subprime mortgage-related exposure on its balance sheet, a number that was vasly larger than the previous assessment of its position as closer to $13bn.

But yesterday the focus was on UBS, which indicated last week it may be forced to take further writedowns in the fourth quarter which could be up to $8.5bn according to Lehman Brothers.
Shares in Barclays and RBS dropped yesterday -- both banks with substantial fixed-income activities -- as investors fretted over more losses to be disclosed.

Nevertheless, after Merrill Lynch ousted its chief, Stan O'neil and Citi's resignation of Chuck Prince; the latter bank made a firm debut yesterday on the Tokyo Stock Exchange rising a five per cent. Citigroup is in the process of acquiring 100 per cent of Nikkio Cordial, Japan 's third-largest securities group, through a share swap that will give current Nikkio Cordial shareholders, shares in Citigroup.

Superfund... impulsive idea?

By Julian Sudre


When three major US investment banks teamed up to create a superfund of $75bn so as to dampen further catastrophy in the markets, instantly we knew that Armaggeddon will be kept in check -- er, maybe not quite.

As the passengers realised that the ship they were on was scuppered, they compulsively jumped off into cold waters; perhaps the knee-jerk reaction of Bank of America, Citigroup and JP Morgan could do with some restructuring.
The purpose of the fund is to buy assets of ailing so called " Structured Investment Vehicles" in order to prevent a firesale of billion of dollars, thus the prevention of dumping securities or putting them back on to the banks' balance sheets. The problem with SIV is they are unable to sell commercial paper pushing up bonds price and borrowing costs up hence the slowing down of the US and European economy growth.

Recently former Fed Reserves chairman, Alan Greenspan voiced concern about the fund as it may actually hurt jittery financial markets.
In effect, the lower dollar means a reduced trade deficit because the US is exporting more and importing less and more foreign investments are good for the american economy but the flip side of it is that the oil is priced in dollars -- that is, if the dollar keeps falling, the oil will go up.

Not to be oudone, the latest figure to pour scorn on the superfund encouraged by the US Treasury, the renowned investor Warren Buffet, believes those banks should sell 10 per cent of the fund into the open market to ensure it is properly priced.
Paulson, a former CEO of Goldman's Sachs and today US Treasury Secretary, is trying to get european banks into the fund. Deutsche Bank's chief, Josef Ackermann is nonetheless reluctant in joining the fund. Mr Ackermann said it was premature to make a firm judgement about the fund.
Obviously Paulson has been fighting off critics of the master liquidity enhancement conduit or M-LEC but he insists that such fund could accelerate the return of liquidity to parts of the markets; and therefore it should be seen as a complementary to other initiatives. The US Treasury Secretary stresses that the concept for investors working with banks to buy assets that are not credit impaired. Still, it is noteworthy to add that the superfund is a very complex initiative and some investment banks said they did not understand it.

Basically, the superfund is a super conduit or in other words a restructured SIV. Structured Investment Vehicles issue short-term debts to invest in longer-term securities. The fund is designed to hold these assets until investors can better evaluate the difficult rates for the mortgages backing these bonds and other securities. Although, in all fairness, this process could take a year or two to get off the ground.
Today, investors have become sceptical about it as they believe it's primarily another SIV and amounts to a bailout for banks. Would it amount to say that it is a restructuring of previously financed transactions? Well yes, and let us take into account that one bank -- Citi -- has its exposure to SIV's estimated at a stonking $80bn.

The superfund is slated to be launched at the end if the year but its lack of details and the way it will operate seem to be indeed opaque to investors, the reason why one gets to wonder if it is that super a fund.

MARKET REPORT

By Julian Sudre

There was a certain form of optimism in the air that investors have been breathing in lately even though the miasma of turbulence impaired healthy speculations; it has seemed that everyone was oblivious to the long-term repercussions in the markets. A string of banks issued profits warnings while shares were going north.
The latest investment bank Merrill Lynch announced yesterday that its US mortgage-related losses were not $4.5bn but $7.9bn which resulted in an indeed very volatile session for Wall Street stocks.
Now the procrustean bed has to be un-made as it is time people in the financial sector ate humble pie because on the strengh of another set of weak US housing data and a surge in oil prices added fuel to the fire once again.
Meanwhile Industrial and Commercial Bank of China - ICBC - is to aquire a stake of about 20 per cent in Standard Bank, the largest African bank by assets.
The chinese bank is coughing up £2.6bn according to a banker close to the deal.
It will be the largest banking deal in South Africa since Barclays bought Absa Group.
GSK, the second-largest pharmaceuticals company reported third-quarter profits 7 per cent lower at £1.9b is to take a significant charge this year that will depress earnings per share growth below the 2007 guidance it gave in February of 8-10 per cent at constant exchange rates. The £1.5bn "operational excellence" programme will see the closure of factories and several thousand job cuts in the coming months.
RV Capital, a london-based market-maker that trades in futures was the latest casualty of the credit market turmoil after putting itself into administration yesterday facing losses of £10.4m -£14m so far.
Another grim news for BP which reported it will cut about 17 per cent of its onshore workforce for the North Sea with an average of 350 jobs to be slashed as part of plans to downsize from the North Sea, where its production has dropped by more than a third in three years.
In the mining sector, production problems cut Kazakhmys' output in its third quarter, with copper ore extraction down 19 per cent year-on-year. The shares in the Kazakhsran-based company were pushed down 108p or 7.2 per cent to £13.77 yesterday.
The production of cathode, a refined copper, was almost 19 per cent lower in the third quarter.
The reduced output of the company has had a knock-on effect on production of other minerals.
Zinc in concentrate slipped 18 per cent and zinc metal was more than halved.
On the upside, Home Retail showed a 40 per cent rise in first-half profits as it benefited from stronger-than-expected earnings at Argos, its catalogue business. Underlying profits at Argos increased 50 per cent to £99.5m and sales were up 1.4 per cent like-for-like but down 2.5 per cent at Homebase. Overall group sales rose 3 per cent to £2.74bn. Pre-tax profits were £169.3m compared with £59.7m last time.
In the banking sector, JP Morgan is considering acquiring a stake in a chinese brokerage as part of its expansion strategy in the country. But other banks, including Merrill Lynch, Citigroup, Deutshe Bank and Credit Suisse, are believed to be preparing to negotiate deals to set up Chinese brokerage joint ventures.
Mounting concerns about the 787 programme has triggered Boeing to cut its sales forecasts for next year by $3.5bn or 5 per cent as a result of the announced delays to deliveries of the new 787 Dreamliner.

Where are the markets headed?

By julian Sudre

While major investment banks started licking their wounds and faced the rude awakening of issuing profits warnings with a write-down of altogether more than $10bn, caused by the sub-prime and credit woes. The turbulence in the money markets with the aggressive fed rates cut by half a point and a three-month Libor rate hovering at some vertiginous 6 per cent – those were decidedly the anaphylactic shock that has sent the American currency packing.

But to add insult to injury, the Australian dollar could be taking a leaf out of his Canadian counterpart when the “Aussie” yesterday reached its strongest level against the US dollar in nearly a quarter of a century. Worryingly enough, if the Fed would further step in for a cut, the dollar would be once again the one that would carry the can and European economists would be the ones who would try staunchly to dampen the rise of the Euro as a result. The effects could be dramatic, but all things considered that would explain the surge of funds into emerging markets and the outperformance of companies with profits outside the US.

The gymnastics of stocks fluctuations alongside fears of dipping into recession and flying speculations over the malaise in the credit markets have made themselves felt on the European markets – which remain below their highs.

Whereas in the US, The S&P 500 and the Dow Jones Industrial Average have retouched all-time highs perhaps thanks to last week’s US job report that was better than expected. So the American dollar could actually not be headed for the dungeon?

Some insiders have it that the dollar is cyclical not structural and a rally in 2008 could be a possibility. Well, it's noteworthy to take a long-view of factors that could destabilise the dollar. Thus, the real-estate bubble starts collapsing, the continued trade deficit, oil trading in Euro and the Iran oil Bourse; and the Bank of China's decision to to allow investors to buy and sell gold using their USD, and the increasing risk of conflict with China. Syria indeed, rattled the US's cage on February 14 2006 when it switched of all the state's foreign currency transactions to Euro from Dollar and Venezuela's president Hugo Chavez is also trying to get away from the fiat Dollar.

Over, at the other end of the financial spectrum, the steel industry has been on a roll. Over the last five years, demands and profits booms have proven that countries such as China are the main driver of the prosperity of the commodity. The reason behind this has been an increase in car production but also the 2008 Olympic Games. Ergo, prices of raw materials show no sign of easing; iron ore prices are on the increase with a 9.5 per cent rise this year after soaring 19 per cent in 2006 and jumping 71.5 per cent in 2005. It certainly is good news for the mining industry. But also, these are good time to be in aluminium with perhaps not such a dramatic boom as that of copper but it has triggered some of its biggest takeove deals.

Rusal of Russia in April completed a takeover of its smaller compatriot, Sual, and the aluminium assets of Glencore, the Swiss commodities trader, creating a company estimating to be worth in the region of $30bn. Today United Company Rusal has overtaken Alcoa of the US as the world's biggest aluminium producer. So now, where do we get from here?

Is the dollar in the doldrums?

By Julian Sudre

While the recent 50 basis points rate cut by the Federal Reserve to 4.75 per cent has undoubtedly boosted stock markets, the aggressive cut was a single whammy for the greenback and now investors are focusing on concerns over US growth and inflation. The dollar today has reached an all-time low against the euro and speculations that Saudi Arabia might revalue the riyal for the first time in 21 years has exacerbated sentiments – a move that Kuwait took in May when it dropped the long-held dollar peg.

Now, the US dollar is at parity with its Canadian counterpart for the first time since 1976. Analysts have started to wonder how far the impact of the US economy could be affected.

Sources close to the matter have said that the Fed was swapping systematic and liquidity risk for longer-term inflation risk.

Of course a lower currency typically fosters worries for inflation but its yearly continual decline that was too gradual did not trigger the Fed to consider raising interest rates instead.

On one hand, the falling dollar is good news for multinational corporations as American-made goods are more affordable in international markets but on the other hand foreign investors who contribute to finance the country’s debt will be frightened away. The result will aggravate investment in US Treasury securities and the US government will have to pay higher rates at weekly auctions to find buyers for its bills, notes and bonds. The borrowing costs for Americans could be pushed up.

US economic concerns were compounded by a six-month fall in sales of existing homes with a US home prices decline – a steepest drop in 16 years.

Those declines have given food for thought to the Federal Reserve and although it is too early days to lower the benchmark interest rate further, the question is now what will happen at the two remaining meetings this year.

Bank of England Versus FSA and Government

By Julian Sudre

Perhaps the old Victorian approach of the Bank of England after all has been extenuated by the recent bail out of the fourth biggest lender in the UK – Northern Rock. Well not just so. While we have a case of hands-on US intervention versus hands-off UK intervention, the vulture press has seemed to swoop down on Mervyn King.

As usual, someone has to take the rap; the Pavlonian response was Mr King to be blamed for as it was for the McCann’s.

While some say that the Governor of the Bank of England was stitched up by the Clunking Fist of New Labour. By doing a U-turn and injecting liquidity into Northern Rock, the latter will be perceived as nationalised and certainly will undermine Gordon Brown's credibility as he was the one who created a fully independent Bank. So Has Mr King bowed to political pressure to pump £10 bn into the financial markets?. I for one, believe that the BoE shouldn’t have provided funds but instead should have ensured that the financial system runs smoothly.

In any event, we should note that the FSE is responsible for the supervisions of the banks, hence the next in the line of fire: “please step forward Mr Callum McCarthy”.

Mr King had certainly his hands full when it came to gauge how far to extend liquidity against a wider range of collateral on the one hand and the concern of moral hazard on the other – the danger of rewarding banks that had taken a riskier approach than others. But he went on to say that the moral hazard was limited by a cap on the amount the Bank was providing to individual banks and by the penal rate of interest.

He insisted that it would have been irresponsible to have offered a full guarantee on savers’ deposits before the run on Northern Rock since that would have undermined confidence in the banking system. This is seen as yet another indication of how the Bank’s Governor has misjudged the delicate psyche of the markets.

But according to Mervyn King, Northern Rock debacle was blamed of four pieces of legislations: The Takeover Code, the Market Abuse Directive, the Insolvency regime enshrined in Enterprise Act 2002 and the Financial Services Compensation Scheme.

So after feeding Mr Kind to the Lions, in two weeks time FSA officials will appear in Parliament. And since this is the FSA which is supposed to know whether individual banks might face a liquidity squeeze and does routinely deal with asset managers, insurance groups and bankers, this time the FSA did not demonstrate any visible awareness of liquidity challenges before the summer in the banking world. Meanwhile I have come away with the feeling that the Bank's Governor has been used as a scapogoat by the dead hand of the Tresuary.
At any rate, all things being equal, if the Bank had agreed to accept mortgage collateral at its lending window ealier as Mr Darling believes, that is taking a cue from the Feds or the ECB, the damages could have been avoided. This remains to be seen because Northern Rock got itself into trouble through over-reliance on short-term funding from the capital markets.

Of course, we know by now that the FSA was more in favour of relaxing rules but it undeniably was not felt enough to make an impact across the board. Today relations between the BoE and the FSA are poisonous, no less.

Now, let's wait with bated breath if the whole issue revolving around the snap decision to inject money was a pretext from Labour to force a loosening in monetary policy.