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Asian banks offload their greenbacks
By Josh Gordon, Economics correspondent (Canberra)
The Age (Melbourne, Australia)
http://www.theage.com.au/
March 12, 2005
http://www.theage.com.au/news/Business/Asian-banks-offload-their
-greenbacks/2005/03/11/1110417685655.html?oneclick=true#
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
The US dollar's status as the world's main reserve currency is under threat as Asian banks back away from the superpower's ballooning twin deficits.
Over the past three years, central banks in the region have been scaling back their holdings of US dollars amid jitters about the United States' ever-expanding current account and budget deficits, which collectively soaked up at least $US1000 billion ($A1265 billion) of foreign currency last year.
A report by the Bank for International Settlements has estimated that the share of deposits held in US currency by Asian banks dropped to 67 per cent in the September quarter of 2004, from about 81 per cent of total deposits three years earlier.
The figures suggest that a dramatic but not widely publicised regional shift away from the US dollar is under way.
They follow a warning from Japanese Prime Minister Junichiro Koizumi that the Japanese central bank should consider diversifying out of US dollars. Korea expressed similar sentiments last month.
The report said the shift had been most pronounced in India, where the ratio of reported US-dollar holdings has plummeted from around 68 per cent to 43 per cent over the three years to September 2004. China has also been scaling back its holdings, taking its share from 83 per cent to 68 per cent.
[The great Sinologist Jiwei Ci explained modern China with grace and power in his 1994 Dialectic of the Chinese Revolution: From Utopianism to Hedonism. Confucian civilization, he suggested, had collapsed under the indignity of European military and commercial conquest, until Maoism brought a new source of Chinese identity in a utopian vision of plenty. But that eventual plenty remained messianic; it would come in the future, not now, and it must be earned for our descendants by our own asceticism and labor and altruistic hardship.
1989 showed that this promise, too, had failed to materialize. For those who had benefited from the four decades of Maoist industrialism, material life had improved while its utopian mythology had all but disappeared. While some could hope to enjoy higher living standards, political life remained severely constricted and the overarching meaning of Chinese identity - shorn of its Confucian moorings - would have to rest on little more than nationalism.
If 1968 showed Europeans and Americans in revolt against a liberalism that had achieved power but had failed to use it, 1989 found many Chinese better fed and better educated than ever before, but troubled by a crisis of meaning. There was the emergent hedonism of a prosperity modeled on the demonized West; the empty promise of Socialist utopia that had exacted so much blood and sweat, only for the humiliations of the "Great Leap Forward" and the "Cultural Revolution"; and finally, the damaged remains of pre-modern China's spiritual legacy. This last avenue is now enjoying a somewhat vexed revival in neo-Confucian thought, but the Chinese Communist Party continues to occupy the center of Chinese social space and intellectual life. Its legacy is disillusion, nationalism, and an obsession with numerical measures of economic growth - rather like contemporary America or the Russia of Stalin and Khrushchev.
Now that the Chinese economy is exploding and the American economy is on life-support - with China holding the plug - there is a cautious new Chinese triumphalism emerging. But here, as in so much else, the Americans and the Soviets and the Chinese find themselves guessing the same wrong answers to the same open questions. Win the game of economic growth, and the resources on which that growth is based will disappear. As for authentic cultural wealth, nothing can restore it but the end of consumerism - an economic calamity whose price in human suffering will dwarf the cultural efflorescence it may bring. In China as in the U.S., the hope lies in the limits. Even if nobody can slay the dragon - by which I mean consumerism and militarism alike - eventually it will starve. - JAH]
"The Chinese Miracle Will End Soon"
SPIEGEL Interview with China's Deputy Minister of the Environment
Interview conducted by Andreas Lorenz
Translated from the German by Patrick Kessler
DER SPIEGEL 10/2005 - March 7, 2005
http://www.spiegel.de/international/spiegel/0,1518,345694,00.html
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
The world has been dazzled in recent years by the economic strides being made by China. But it has come at a huge cost to the country's environment. Pollution is a serious and costly problem. Pan Yue of the ministry of the environment says these problems will soon overwhelm the country and will create millions of "environmental refugees."
SPIEGEL: China is dazzling the world with its booming economy, which grew by 9.5 percent. Aren't you pleased with this speed of growth?
Pan: Of course I am pleased with the success of China's economy. But at the same time I am worried. We are using too many raw materials to sustain this growth. To produce goods worth $10,000, for example, we need seven times more resources than Japan, nearly six times more than the United States and, perhaps most embarrassing, nearly three times more than India. Things can't, nor should they be allowed to go on like that.
SPIEGEL: Such a viewpoint is not exactly widespread in your country.
Pan: Many factors are coming together here: Our raw materials are scarce, we don't have enough land, and our population is constantly growing. Currently, there are 1.3 billion people living in China, that's twice as many as 50 years ago. In 2020, there will be 1.5 billion people in China. Cities are growing but desert areas are expanding at the same time; habitable and usable land has been halved over the past 50 years.
SPIEGEL: Still, each year China is strengthening its reputation as an economic Wunderland.
Pan: This miracle will end soon because the environment can no longer keep pace. Acid rain is falling on one third of the Chinese territory, half of the water in our seven largest rivers is completely useless, while one fourth of our citizens does not have access to clean drinking water. One third of the urban population is breathing polluted air, and less than 20 percent of the trash in cities is treated and processed in an environmentally sustainable manner. Finally, five of the ten most polluted cities worldwide are in China.
SPIEGEL: How great are the effects of this environmental degradation on the economy?
Pan: It's massive. Because air and water are polluted, we are losing between 8 and 15 percent of our gross domestic product. And that doesn't include the costs for health. Then there's the human suffering: In Bejing alone, 70 to 80 percent of all deadly cancer cases are related to the environment. Lung cancer has emerged as the No. 1 cause of death.
SPIEGEL: How is the population reacting to these health problems? Are people moving to healthier parts of the country?
Pan: Even now, the western regions of China and the country's ecologically stressed regions can no longer support the people already living there. In the future, we will need to resettle 186 million residents from 22 provinces and cities. However, the other provinces and cities can only absorb some 33 million people. That means China will have more than 150 million ecological migrants, or, if you like, environmental refugees.
SPIEGEL: Hasn't your government tried to get pollution under control?
Pan: Yes it has, and in some cities such as Beijing the air quality has, in fact, improved. Also, the water in some rivers and lakes is now cleaner than it's been in the past. There are more conservation areas now and some model cities that focus specifically on environmental protection. We are replanting forests. We have passed additional laws and regulations that are stricter than in the past and they are being more rigorously enforced.
SPIEGEL: But the economic growth fanatics in Beijing will still likely carry on just as before.
Pan: They're still playing the lead role -- for now. For them, the gross domestic product is the only yardstick by which to gauge the government's performance. But we are also making another mistake: We are convinced that a prospering economy automatically goes hand in hand with political stability. And I think that's a major blunder. The faster the economy grows, the more quickly we will run the risk of a political crisis if the political reforms cannot keep pace. If the gap between the poor and the rich widens, then regions within China and the society as a whole will become unstable. If our democracy and our legal system lag behind the overall economic development, various groups in the population won't be able to protect their own interests. And there's yet another mistake in this thinking.....
SPIEGEL: Which one?
Pan: It's the assumption that the economic growth will give us the financial resources to cope with the crises surrounding the environment, raw materials, and population growth.
SPIEGEL: Why can't that work?
Pan: There won't be enough money, and we are simply running out of time. Developed countries with a per capita gross national product of $8,000 to $10,000 can afford that, but we cannot. Before we reach $4,000 per person, different crises in all shapes and forms will hit us. Economically we won't be strong enough to overcome them.
SPIEGEL: You have advocated the introduction of the so-called "green gross domestic product." What does that entail?
Pan: It is a model that also takes into account the costs of growth, like environmental pollution for example, and is a topic we are discussing with German experts. We want the performance of functionaries to not only be measured in terms of economic growth but also in terms of how they solve environmental problems and social issues.
SPIEGEL: Does your agency even have the ability to clamp down on environmental criminals?
Pan: We recently shut down 30 projects, including several power plants -- one of those at the Three Gorges Dam. The companies involved failed -- as required by law -- to review what effect their new investments would have on the environment.
SPIEGEL: But 26 other projects were allowed to carry on. They only had to pay small fines -- peanuts compared to the billions that were invested.
Pan: Unfortunately, that's true. Which is why our laws and regulations need to be reformed. Even though we have little power, we will close down illegal projects, including economically powerful steel, cement, aluminum, and paper factories. And we will ignore the agendas followed by influential officials and companies.
SPIEGEL: Many environmental offenders have fistfuls of cash or are taking advantage of their political connections....
Pan: My agency has always gone against the grain. In the process, there have always been conflicts with the powerful lobbyist groups and strong local governments. But the people, the media, and science are behind us. In fact, the pressure is a motivator for me. Nobody is going to push me off my current course.
SPIEGEL: China lacks a grassroots, environmental movement. So far, the citizens have very little opportunity to stand up against questionable projects. Courts sometimes don't even accept the suits that the people are filing, and voicing opposition is not allowed.
Pan: Political co-determination should be part of any socialist democracy. I want more discussions with the people affected. However, I am not one to put on a show just to look democratic to the outside. We need a law that enables and guarantees public participation, especially when it comes to environmental projects. If it's safe politically to get involved and help the environment, then all sides will benefit. We must try to convince the central leadership of that.
US report acknowledges peak-oil threat
March 11, 2005 by Aljazeera.net
By Adam Porter in Perpignan, France
http://english.aljazeera.net/NR/exeres/5EF86883-8CDB-49B5-9A07-5759205A9DBE.htm
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
It has long been denied that the US government bases any policy around the idea that global oil production may be in terminal decline.
But a new US government-sponsored report, obtained by Aljazeera.net, does exactly that.
Authored by Robert L. Hirsch, Roger Bezdek and Robert Wendling and entitled the Peaking of World Oil production: Impacts, Mitigation, & Risk Management, the report is an assessment requested by the US Department of Energy (DoE), National Energy Technology Laboratory.
It was prepared by Hirsch, who is a senior energy programme adviser at the private scientific and military company, Science Applications International Corporation (SAIC).
They work extensively on defence and geopolitical issues for clients, including many for the US government.
Advisory roles
Among current job openings at SAIC are positions at Fort Benning (formerly School of the Americas) and a private military contract to help retrain the Albanian air force in Tirana.
Hirsch has held a wide variety of positions in the US energy hierarchy including senior energy analyst at the Rand Corporation, through to a presidentially appointed assistant administrator for solar, geothermal and advanced energy systems.
He has also previously worked for the US Department of Energy on numerous advisory committees, including the DoE Energy Research Advisory Board.
This new report follows on from two presentations by Hirsch last year. One on 1 March to the same National Energy Technology Laboratory and another on 14 June last year at the Annapolis Centre for Science Based Public Policy. Here Hirsch laid down his ideas on the peak of oil production.
The Annapolis Centre for Science-based Public Policy is a group which has received $658,000 in funding from Exxon Mobil since 1998. It openly disputes the idea that global warming is the result of burning fossil fuels.
But this brand new senior-level report on "peak oil" is unprecedented in US government circles. It is not just the existence of the report itself that is such a landmark in the current oil debate. Its conclusions also pull no punches.
Uncertain timing
"World oil peaking is going to happen," the report says. Only the "timing is uncertain".
The effects of any oil peak are similarly not ignored. Specifically, the impact on the economy of the United States. "The development of the US economy and lifestyle has been fundamentally shaped by the availability of abundant, low-cost oil. Oil scarcity and several-fold oil price increases due to world oil production peaking could have dramatic impacts... the economic loss to the United States could be measured on a trillion-dollar scale," the report says.
The authors of the report also dismiss the power of the markets to solve any oil peak. They call for the intervention of governments. But also they rather worryingly point to a need to exclude public debate and environmental concerns from the process. They say this is needed to speed up decision-making.
"Intervention by governments will be required, because the economic and social implications of oil peaking would otherwise be chaotic. But the process will not be easy. Expediency may require major changes to... lengthy environmental reviews and lengthy public involvement."
Hirsch notes, despite arguments from the major oil companies and producer nations, that new finds of oil are not replacing oil consumed each year. Despite the advances in technology reserves are becoming increasingly difficult to replace.
Three scenarios
The report sees "a world moving from a long period in which reserves additions were much greater than consumption, to an era in which annual additions are falling increasingly short of annual consumption. This is but one of a number of trends that suggest the world is fast approaching the inevitable peaking of conventional world oil production".
The report then takes three possible scenarios and outcomes. Firstly that energy replacement solutions, or "mitigation" as the report states, are started 20 years before any "peak". Secondly that solutions are only enacted 10 years before any peak and, thirdly, that solutions are only put into practice as the peak becomes apparent.
In what some may see as an optimistic assessment, the authors believe 20 years is enough time to limit damage from any peak. However, they point out that "if mitigation were to be too little, too late, world supply/demand balance will be achieved through massive demand destruction".
Demand destruction is a modern way of saying catastrophic recessions and shortages. But as well as these predictions, the report lays out "signals" it believes will be apparent in the run-up to any peak. This is perhaps the most worrying aspect of the report, as it seems to describe the very events that are taking place at the moment.
Supply insecurity
"As world oil peaking is approached, excess production capacity... will disappear, so that even minor supply disruptions will cause increased price volatility as traders, speculators, and other market participants react to supply/demand events," the report says.
"Simultaneously, oil storage inventories are likely to decrease, further eroding security of supply, aggravating price volatility, and further stimulating speculation... oil could become the price setter in the broader energy market, in which case other energy prices could well become increasingly volatile and unpredictable."
The report highlights a series of ways to minimise any impacts. From increased fuel efficiency to technological help in stopping the practice of "oil-left-behind" or non-extractable oil and various forms of new liquid fuels, liquefied coal and gas-to-liquids.
But in its conclusion the report makes troubling reading, noting that "the world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions were gradual and evolutionary. Oil peaking will be abrupt and revolutionary".
This report is the clearest signal yet that the U.S government is taking the subject of "peak oil" seriously. Yet it remains to be seen what actions can be taken to stop this potentially "revolutionary" change.
For the Hirsch report, see:
www.hilltoplancers.org/stories/hirsch0502.pdf (1.2 MB)
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Asian banks offload their greenbacks