Confirmed from Iran sources about coup in Iran
Ten US banks fail ’stress tests’
Ten of America’s largest 19 banks need a combined $74.6bn (£50bn) of extra funds to boost their cash reserves.
That is the main finding of the so-called “stress tests” to see if the banks have sufficient capital to cope should the recession worsen.
Bank of America is the most at risk, needing an additional $33.9bn.
“Our hope with today’s actions is that banks are going to be able to get back to the business of banking,” said US Treasury Secretary Timothy Geithner.
Other banks that need more money include Wells Fargo, which is said to require $13.7bn, and GMAC, the financial arm of General Motors, which needs $11.5bn.
Citigroup requires an additional $5.5bn of funds.
The 19 banks that were tested account for two-thirds of the total assets of the US banking system, and more than half of the total amount of credit in the US economy.
US Treasury Secretary Timothy Geithner said earlier on Thursday that no US bank being screened by regulators was at risk of insolvency, comments echoed by Federal Reserve Chairman Ben Bernanke.
Mr Geithner said he believed that the majority of the banks would be able to raise any additional money they need from private sources, but if they were unable to do so the government may have to provide them with more taxpayer money.
Stress Tests to Show Banks Need Billions More - Updated
WASHINGTON — Some of the nation’s largest banks will be scrambling to demonstrate that they can raise capital after results of government stress tests leaked out, showing many need more funds. The Treasury Department will officially release results later Thursday.
The tests were designed to gauge whether any of the nation’s 19 largest banks would need more capital to survive a deeper recession. It turns out many of the banks do: Wells Fargo & Co., Citigroup Inc. and Bank of America Corp. all need billions more, regulators have told them.
The public nature of the assessments and Thursday’s planned announcement raised questions among some critics about whether the findings will reflect the banks’ actual conditions.
The tests put banks through two scenarios: one that reflected expectations about the current recession and another that envisioned a recession deeper than what analysts predict.
Citigroup will need to raise about $5 billion, according to a government official briefed on the results who spoke on the condition of anonymity because he was not authorized to discuss the matter. Earlier news reports had put that dollar figure closer to $10 billion.
Regions Financial Corp. will also need to raise more money, according to people briefed on the results, as will Bank of America and Wells Fargo.
Bank of America stock rose Wednesday after reports that the Charlotte, N.C.-based company would need to collect $34 billion in additional capital. The New York Times and Wall Street Journal reported the figure. The Journal cited unidentified people familiar with the situation, while the Times quoted a bank executive.
Stress tests have long been a part of the bank regulation system. They help regulators decide how to supervise banks and aid banks in deciding how to limit their risk. But those conversations between banks and regulators normally take place behind closed doors.
In recent weeks, the government’s unprecedented decision to publicly release bank-test results has fanned speculation, with analysts predicting the findings and investors staking out trading positions.
Critics are concerned that all the attention could make the tests much less effective. They say regulators seem so intent on maintaining public confidence in the banks that the results will have to say the banks are basically healthy.
Officials have said they will not let any of the 19 institutions fold. That makes it almost impossible for them to say anything about a bank that would threaten its survival, since a flight by investors could force the government to step in with additional bailout money — something the Treasury Department hopes to avoid.
“There is a real question as to the legitimacy of these results,” said Jason O’Donnell, senior analyst at Boenning & Scattergood Inc.
The stress tests are a key part of the Obama administration’s plan to stabilize the financial industry.
The tests estimated how much value the banks’ loans would lose as consumers and businesses faced more trouble repaying loans.
The first test scenario envisioned unemployment reaching 8.8 percent in 2010 and housing prices dropping another 14 percent this year. The second imagined unemployment rising to 10.3 percent next year and homes losing another 22 percent of their value this year.
But economic assumptions have changed since the tests were designed in February.
Unemployment already has surpassed the 8.4 percent the test’s first scenario predicts for 2009, which leaves some analysts wondering whether the tests were harsh enough.
The government is asking banks to keep their capital reserve ratios above a certain level so they can continue lending even if the economic picture darkens.
The banks that need more capital will have until June 8 to come up with a plan to raise the additional resources and have the plan approved by their regulators, officials said Wednesday.
Banks will have several options for increasing their capital. Some will be able to close the gap by converting the government’s debt into common stock. Others will have six months to attempt to raise money from private investors. If they cannot do it, the government will provide money from its $700 billion financial system bailout.
Representatives for American Express Co., JPMorgan Chase & Co., Bank of New York Mellon Corp., Citigroup and Regions Financial would not comment on the tests.
The remaining stress-tested banks are: Goldman Sachs Group Inc., Morgan Stanley, MetLife Inc., PNC Financial Services Group Inc., U.S. Bancorp, GMAC, SunTrust Banks Inc., State Street Corp., Capital One Financial Corp., BB&T Corp., Regions Financial Corp., Fifth Third Bancorp and Keycorp.
Financial stocks surged Wednesday amid reports on the stress tests. Bank of America gained 17 percent, Citigroup surged 16 percent and Wells Fargo gained 15 percent.
LEAKED! Bank Stress Test Reults !
The Turner Radio Network has obtained “stress test” results for the top 19 Banks in the USA.
The stress tests were conducted to determine how well, if at all, the top 19 banks in the USA could withstand further or future economic hardship.
When the tests were completed, regulators within the Treasury and inside the Federal Reserve began bickering with each other as to whether or not the test results should be made public. That bickering continues to this very day as evidenced by this “main stream media” report.
The Turner Radio Network has obtained the stress test results. They are very bad. The most salient points from the stress tests appear below.
1) Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent.
2) Of the 16 banks that are already technically insolvent, not even one can withstand any disruption of cash flow at all or any further deterioration in non-paying loans.
3) If any two of the 16 insolvent banks go under, they will totally wipe out all remaining FDIC insurance funding.
4) Of the top 19 banks in the nation, the top five (5) largest banks are under capitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.
5) Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular - JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank - taking especially large risks.
6) Bank of America`s total credit exposure to derivatives was 179 percent of its risk-based capital; Citibank`s was 278 percent; JPMorgan Chase`s, 382 percent; and HSBC America`s, 550 percent. It gets even worse: Goldman Sachs began reporting as a commercial bank, revealing an alarming total credit exposure of 1,056 percent, or more than ten times its capital!
7) Not only are there serious questions about whether or not JPMorgan Chase, Goldman Sachs,Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, can continue in business, more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts!
The debt crisis is much greater than the government has reported. The FDIC`s “Problem List” of troubled banks includes 252 institutions with assets of $159 billion. 1,816 banks and thrifts are at risk of failure, with total assets of $4.67 trillion, compared to 1,568 institutions, with $2.32 trillion in total assets in prior quarter.
Put bluntly, the entire US Banking System is in complete and total collapse.
-END-
A market factor? Enough so the US Treasury came out today with…
The U.S. Treasury said Monday there was “no basis” for a report that said its “stress tests” on the health of the nation’s 19 top banks showed several were “technically insolvent.”
A Treasury spokesman said the department has not yet received the results.
-END-
But, what good is what they say…
April 10 (Bloomberg) — The U.S. Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of “stress tests” that will gauge their ability to weather the recession, people familiar with the matter said.
The Fed wants to ensure that the report cards don’t leak during earnings conference calls scheduled for this month. Such a scenario might push stock prices lower for banks perceived as weak and interfere with the government’s plan to release the results in an orderly fashion later this month…
Source: http://www.lemetropolecafe.com/james_joyce_table.cfm?pid=7765
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The Obama Deception
The Obama Deception is a hard-hitting film that completely destroys the myth that Barack Obama is working for the best interests of the American people.
The Obama phenomenon is a hoax carefully crafted by the captains of the New World Order. He is being pushed as savior in an attempt to con the American people into accepting global slavery.
Foreign hackers penetrate U.S. Electrical Grid leaving behind rogue software
WASHINGTON — Cyberspies have penetrated the U.S. electrical grid and left behind software programs that could be used to disrupt the system, according to current and former national-security officials.
The spies came from China, Russia and other countries, these officials said, and were believed to be on a mission to navigate the U.S. electrical system and its controls. The intruders haven’t sought to damage the power grid or other key infrastructure, but officials warned they could try during a crisis or war.
“The Chinese have attempted to map our infrastructure, such as the electrical grid,” said a senior intelligence official. “So have the Russians.”
The espionage appeared pervasive across the U.S. and doesn’t target a particular company or region, said a former Department of Homeland Security official. “There are intrusions, and they are growing,” the former official said, referring to electrical systems. “There were a lot last year.”
Many of the intrusions were detected not by the companies in charge of the infrastructure but by U.S. intelligence agencies, officials said. Intelligence officials worry about cyber attackers taking control of electrical facilities, a nuclear power plant or financial networks via the Internet.
Authorities investigating the intrusions have found software tools left behind that could be used to destroy infrastructure components, the senior intelligence official said. He added, “If we go to war with them, they will try to turn them on.”
Officials said water, sewage and other infrastructure systems also were at risk.
“Over the past several years, we have seen cyberattacks against critical infrastructures abroad, and many of our own infrastructures are as vulnerable as their foreign counterparts,” Director of National Intelligence Dennis Blair recently told lawmakers. “A number of nations, including Russia and China, can disrupt elements of the U.S. information infrastructure.”
Officials cautioned that the motivation of the cyberspies wasn’t well understood, and they don’t see an immediate danger. China, for example, has little incentive to disrupt the U.S. economy because it relies on American consumers and holds U.S. government debt.
But protecting the electrical grid and other infrastructure is a key part of the Obama administration’s cybersecurity review, which is to be completed next week. Under the Bush administration, Congress approved $17 billion in secret funds to protect government networks, according to people familiar with the budget. The Obama administration is weighing whether to expand the program to address vulnerabilities in private computer networks, which would cost billions of dollars more. A senior Pentagon official said Tuesday the Pentagon has spent $100 million in the past six months repairing cyber damage.
Overseas examples show the potential havoc. In 2000, a disgruntled employee rigged a computerized control system at a water-treatment plant in Australia, releasing more than 200,000 gallons of sewage into parks, rivers and the grounds of a Hyatt hotel.
Last year, a senior Central Intelligence Agency official, Tom Donahue, told a meeting of utility company representatives in New Orleans that a cyberattack had taken out power equipment in multiple regions outside the U.S. The outage was followed with extortion demands, he said.
The U.S. electrical grid comprises three separate electric networks, covering the East, the West and Texas. Each includes many thousands of miles of transmission lines, power plants and substations. The flow of power is controlled by local utilities or regional transmission organizations. The growing reliance of utilities on Internet-based communication has increased the vulnerability of control systems to spies and hackers, according to government reports.
The sophistication of the U.S. intrusions — which extend beyond electric to other key infrastructure systems — suggests that China and Russia are mainly responsible, according to intelligence officials and cybersecurity specialists. While terrorist groups could develop the ability to penetrate U.S. infrastructure, they don’t appear to have yet mounted attacks, these officials say.
It is nearly impossible to know whether or not an attack is government-sponsored because of the difficulty in tracking true identities in cyberspace. U.S. officials said investigators have followed electronic trails of stolen data to China and Russia.
Russian and Chinese officials have denied any wrongdoing. “These are pure speculations,” said Yevgeniy Khorishko, a spokesman at the Russian Embassy. “Russia has nothing to do with the cyberattacks on the U.S. infrastructure, or on any infrastructure in any other country in the world.”
A spokesman for the Chinese Embassy in Washington, Wang Baodong, said the Chinese government “resolutely oppose[s] any crime, including hacking, that destroys the Internet or computer network” and has laws barring the practice. China was ready to cooperate with other countries to counter such attacks, he said, and added that “some people overseas with Cold War mentality are indulged in fabricating the sheer lies of the so-called cyberspies in China.”
Utilities are reluctant to speak about the dangers. “Much of what we’ve done, we can’t talk about,” said Ray Dotter, a spokesman at PJM Interconnection LLC, which coordinates the movement of wholesale electricity in 13 states and the District of Columbia. He said the organization has beefed up its security, in conformance with federal standards.
In January 2008, the Federal Energy Regulatory Commission approved new protection measures that required improvements in the security of computer servers and better plans for handling attacks.
Last week, Senate Democrats introduced a proposal that would require all critical infrastructure companies to meet new cybersecurity standards and grant the president emergency powers over control of the grid systems and other infrastructure.
Specialists at the U.S. Cyber Consequences Unit, a nonprofit research institute, said attack programs search for openings in a network, much as a thief tests locks on doors. Once inside, these programs and their human controllers can acquire the same access and powers as a systems administrator.
The White House review of cybersecurity programs is studying ways to shield the electrical grid from such attacks, said James Lewis, who directed a study for the Center for Strategic and International Studies and has met with White House reviewers.
The reliability of the grid is ultimately the responsibility of the North American Electric Reliability Corp., an independent standards-setting organization overseen by the Federal Energy Regulatory Commission.
The NERC set standards last year requiring companies to designate “critical cyber assets.” Companies, for example, must check the backgrounds of employees and install firewalls to separate administrative networks from those that control electricity flow. The group will begin auditing compliance in July.
What Obama’s Trip to Europe Revealed
Declaring something a success doesn’t necessarily make it so. We learned this at the Bush-led G-20 summit only four months ago, when global leaders were expected to do something far-reaching in response to the world-wide economic crisis, instead of chatting about it. When nothing came of the meeting, we were told that the summit “succeeded” because it “laid the groundwork” for the next G-20 gathering, recently led by Obama.
The four months between G-20 summits was one of rising massive unemployment and social misery for millions of people, creating an urgency that was unmet by the world leaders in London.
The truly pitiful joint-response of the summit sparked zero inspiration in the peoples of the world. The corporate controlled media, however, hailed the meeting a success of epic proportion and awarded Obama the title of Messiah.
What were these successes? The triumph most blasted through the media was the one trillion dollars of stimulus spending agreed upon, to be funneled through the globally-hated International Monetary Fund (IMF).
It needn’t be said that one trillion dollars, on a global scale, is peanuts. It should be mentioned, however, that much of this money was committed prior to the summit, and inserted into the G-20 numbers to beef up public relations.
Another G-20 “triumph” paraded through the media was a $100 billion dollars committed to the equally-hated World Bank, supposedly to help the poorest of the poor countries. This benevolent act — itself peanuts— was immediately contradicted by the Wall Street Journal:
“…anyone who has followed our editorials on the corrupt uses to which the bank’s [World Bank] existing $30 billion annual budget is routinely put can easily imagine that much of the G-20’s financial benevolence will never reach its intended targets in poor countries.”
And then you have the hot topic issue of financial regulation, the complete absence of which allowed the illusory financial boom to go on for years, thus intensifying the current recession. Regulation was a central demand of the European countries, who are seeking curbs on the U.S. financial institutions that out-competed European companies, while invading their economies with “top-rated” stocks and bonds that were actually worthless.
But a special hobby of Obama’s has been to prop up these institutions, as he continues to give billions of dollars of U.S. taxpayer money to U.S. mega-banks and insurance companies. This dynamic shaped Obama’s opinion on the G-20 debate: he agreed only to a vague and toothless international regulatory committee to be set up in the unforeseen future.
The New York Times commented: “Mr. Obama and his team seem more committed to domestic regulation than their predecessors — but fiercely resistant to the idea of a global regulator.”
And the Wall Street Journal concluded that the G-20’s “commitments will have to be implemented not by a single unit called the G-20 but by 20 or more separate, sovereign nations.”
Ultimately, this means that each country will police itself, and depending on the shifting and conflicting interests of each country’s corporate elite, little is likely ever to be agreed on in a coordinated fashion (the conflicting countries within the E.U. have yet to agree to a common set of regulatory standards).
In this light the G-20’s statement against economic protectionism is laughable, especially since the same statement was made at the last G-20 summit, and immediately afterwards nearly every country engaged in protectionist policy to one degree or another.
To avoid future protectionism, a meeting of the World Trade Organization was supposed to be set up during the G-20 to discuss the equally disastrous concept of “free trade.” Apparently, they thought that such a meeting would be as pointless as the one they were currently attending. The utter silence on the matter is telling.
All the frivolous talk of “global unity” was shelved when the G-20 summit ended, and the NATO summit began immediately afterwards. NATO was originally created as a U.S.-European military alliance to combat the influence of “communist” Russia and China, and is used presently to combat the rising influence of capitalist Russia and China, so as to maintain the international status-quo, with the U.S. and Europe on top.
The NATO-led war in Afghanistan — now spilling over into Pakistan — has revved up world tensions to a boiling point. Russia and China both correctly view the war as a threat to their sphere of influence, and see the new front opening up in Pakistan as proof of their theory.
In lieu of this, it was especially important for Obama to get further European support for his broadening wars. But the silence of the Europeans was deafening; only 5,000 troops were committed for Obama’s war. France’s President committed zero.
After hearing Obama’s plans for Afghanistan and Pakistan, many Europeans were stunned. This was not the change they expected. One French journalist reportedly responded, “We have all been surprised. He is so … American!”
Jennifer Loven, a White House Correspondent, explains why: “In real life, neither U.S. foreign policy nor that of other nations tends to change all that much when a government shifts to a different party.”
This is indeed true for the corporate-controlled U.S. two-party system, whose main interests are: securing markets for corporations so their products can be sold; securing raw materials for corporations to cheaply produce commodities; and securing “spheres of influence” so that the banks and corporations of other countries will be excluded.
Obama’s failure to secure more NATO troops — and adequate funds from
the G-20 — shows just how weak the U.S. has grown internationally. After World War II the U.S. needed only to snap its fingers and the rest of the world would fall into line. Now, however, these countries have mature economies of their own, led by giant corporations that compete with those of the U.S.
Ultimately, the global recession is having barbarous consequences all over the world and the problem is not being seriously addressed. The Global Monitoring Report from Unesco estimates that, in Africa starvation will endanger the lives of tens of millions of people. In the U.S. 1 in 9 people now need government assistance for food.
The G-20 correctly stated in their joint communiqué that “A global crisis requires a global solution.” The G-20, however, is unable to put forth such a solution. In charge of nearly every capitalist economy of the G-20 lies a head of state hated by its people, as it pursues policies that help the owners of banks and corporations, but not those who work for them. This public disdain was displayed during the NATO protests, where $150 million dollars was spent to protect the alliance government representatives from the native population.
An Op-Ed in The New York Times recently pointed out:
“Mr. Obama is the only popular politician left in the world. He would win an election in any one of the G-20 countries, and his fellow world leaders will do anything to take home a touch of that reflected popularity” (4/5/09).
This is only half true. Out of the countries fiercely clinging to the market economy (capitalism), Obama is indeed the ONLY popular President. But this popularity is based on lingering illusions and not concrete results. The only truly popular presidents in the world are from the Latin American countries that have begun to subordinate capitalistic principles (competition) to socialistic ones (cooperation).
In doing so, the above-stated interests of corporations that lead to international stalemates and conflicts can be subdued, and polices that benefit ordinary people and induce cooperation can be pursued instead. Only when society’s resources are run for the benefit of everyone, and not the profit of small groups of very rich people, will international cooperation be possible. Obama’s trip to Europe merely highlighted this fact.
North Korea Threatens War Against Japan Over Missile
North Korea’s government vowed to wage war against Japan if Japanese defense forces try to shoot down a missile that the communist nation says will carry a communications satellite.
“Should Japan dare recklessly to intercept the DPRK’s satellite, its army will consider this as the start of Japan’s war of reinvasion more than six decades after the Second World War,” the official Korean Central News Agency said today in an e-mailed statement. North Korea is also known as the Democratic People’s Republic of Korea.
Japanese Defense Minister Yasukazu Hamada ordered his forces on March 27 to shoot down any North Korean object entering his country’s airspace and deployed guided-missile units around Tokyo. Japan, along with the U.S., China, South Korea and Russia want to forestall North Korea’s plans to launch what the government in Pyongyang calls a “peaceful” satellite, and refocus on joint efforts to end its nuclear program.
“Bellicose rhetoric is not helpful to calming tensions in the region. North Korea needs to desist from this rhetoric,” U.S. State Department spokesman Robert Wood said.
North Korea accuses Japan of using the missile launch, scheduled to take place between April 4 and 8, as a pretext to build its own nuclear arsenal. U.S. Defense Secretary Robert Gates on March 29 called the launch “a mask” for development of an intercontinental ballistic missile.
“The primary aim sought by Japan through this is to bring the six-party talks to collapse and delay the denuclearization of the Korean peninsula and thus justify its ambition for nuclear weaponization,” according to the KCNA statement.
Japan doesn’t have atomic weapons and is the only country to have nuclear armaments used against it, during World War II. North Korea tested an atomic weapon in 2006 in the Korean peninsula’s first nuclear detonation.
U.N. ‘Climate Change’ Plan Would Likely Shift Trillions to Form New World Economy
A United Nations document on “climate change” that will be distributed to a major environmental conclave next week envisions a huge reordering of the world economy, likely involving trillions of dollars in wealth transfer, millions of job losses and gains, new taxes, industrial relocations, new tariffs and subsidies, and complicated payments for greenhouse gas abatement schemes and carbon taxes — all under the supervision of the world body.
Those and other results are blandly discussed in a discretely worded United Nations “information note” on potential consequences of the measures that industrialized countries will likely have to take to implement the Copenhagen Accord, the successor to the Kyoto Treaty, after it is negotiated and signed by December 2009. The Obama administration has said it supports the treaty process if, in the words of a U.S. State Department spokesman, it can come up with an “effective framework” for dealing with global warming.
The 16-page note, obtained by FOX News, will be distributed to participants at a mammoth negotiating session that starts on March 29 in Bonn, Germany, the first of three sessions intended to hammer out the actual commitments involved in the new deal.
In the stultifying language that is normal for important U.N. conclaves, the negotiators are known as the “Ad Hoc Working Group On Further Commitments For Annex I Parties Under the Kyoto Protocol.” Yet the consequences of their negotiations, if enacted, would be nothing short of world-changing.
Getting that deal done has become the United Nations’ highest priority, and the Bonn meeting is seen as a critical step along the path to what the U.N. calls an “ambitious and effective international response to climate change,” which is intended to culminate at the later gathering in Copenhagen.
Just how ambitious the U.N.’s goals are can be seen, but only dimly, in the note obtained by FOX News, which offers in sparse detail both positive and negative consequences of the tools that industrial nations will most likely use to enforce the greenhouse gas reduction targets.
The paper makes no effort to calculate the magnitude of the costs and disruption involved, but despite the discreet presentation, makes clear that they will reverberate across the entire global economic system.
• Click here for the information note.
Among the tools that are considered are the cap-and-trade system for controlling carbon emissions that has been espoused by the Obama administration; “carbon taxes” on imported fuels and energy-intensive goods and industries, including airline transportation; and lower subsidies for those same goods, as well as new or higher subsidies for goods that are considered “environmentally sound.”
Other tools are referred to only vaguely, including “energy policy reform,” which the report indicates could affect “large-scale transportation infrastructure such as roads, rail and airports.” When it comes to the results of such reform, the note says only that it could have “positive consequences for alternative transportation providers and producers of alternative fuels.”
In the same bland manner, the note informs negotiators without going into details that cap-and-trade schemes “may induce some industrial relocation” to “less regulated host countries.” Cap-and-trade functions by creating decreasing numbers of pollution-emission permits to be traded by industrial users, and thus pay more for each unit of carbon-based pollution, a market-driven system that aims to drive manufacturers toward less polluting technologies.
The note adds only that industrial relocation “would involve negative consequences for the implementing country, which loses employment and investment.” But at the same time it “would involve indeterminate consequences for the countries that would host the relocated industries.”
There are also entirely new kinds of tariffs and trade protectionist barriers such as those termed in the note as “border carbon adjustment”— which, the note says, can impose “a levy on imported goods equal to that which would have been imposed had they been produced domestically” under more strict environmental regimes.
Another form of “adjustment” would require exporters to “buy [carbon] offsets at the border equal to that which the producer would have been forced to purchase had the good been produced domestically.”
The impact of both schemes, the note says, “would be functionally equivalent to an increased tariff: decreased market share for covered foreign producers.” (There is no definition in the report of who, exactly, is “foreign.”) The note adds that “If they were implemented fairly, such schemes would leave trade and investment patterns unchanged.” Nothing is said about the consequences if such fairness was not achieved.
Indeed, only rarely does the “information note” attempt to inform readers in dollar terms of the impact of “spillover effects” from the potential policy changes it discusses. In a brief mention of consumer subsidies for fossil fuels, the note remarks that such subsidies in advanced economies exceed $60 billion a year, while they exceed $90 billion a year in developing economies.”
But calculations of the impact of tariffs, offsets, or other subsidies is rare. In a reference to the impact of declining oil exports, the report says that Saudi Arabia has determined the loss to its economy at between $100 billion and $200 billion by 2030, but said nothing about other oil exporters.
One reason for the lack of detail, the note indicates, is that impact would vary widely depending on the nature and scope of the policies adopted (and, although the note does not mention it, on the severity of the greenhouse reduction targets).
But even when it does hazard a guess at specific impacts, the report seems curiously hazy. A “climate change levy on aviation” for example, is described as having undetermined “negative impacts on exporters of goods that rely on air transport, such as cut flowers and premium perishable produce,” as well as “tourism services.” But no mention is made in the note of the impact on the aerospace industry, an industry that had revenues in 2008 of $208 billion in the U.S. alone, or the losses the levy would impose on airlines for ordinary passenger transportation. (Global commercial airline revenues in 2008 were about $530 billion, and were already forecast to drop to an estimated $467 billion this year.)
In other cases, as when discussing the “increased costs of traditional exports” under a new environmental regime, the report confines itself to terse description. Changes in standards and labeling for exported goods, for example, “may demand costly changes to the production process.” If subsidies and tariffs affect exports, the note says, the “economic and social consequences of dampening their viability may, for some countries and sectors, be significant.”
Much depends, of course, on the extent to which harsher or more lenient greenhouse gas reduction targets demand more or less drastic policies for their achievement.
And, precisely because the Bonn meeting is a stage for negotiating those targets, the note is silent. Instead it suggests that more bureaucratic work is needed “to deepen the understanding of the full nature and scale of such impacts.”
But outside the Bonn process, other experts have been much more blunt about the draconian nature of the measures they deem necessary to make “effective” greenhouse gas reductions.
In an influential but highly controversial paper called “Key Elements of a Global Deal on Climate Change,” British economist Nicholas Lord Stern, formerly a high British Treasury official, has declared that industrial economies would need to cut their per capita carbon dioxide emissions by “at least 80% by 2050,” while the biggest economies, like the U.S.’s, would have to make cuts of 90 percent.
Stern also calls for “immediate and binding” reduction targets for developed nations of 20 percent to 40 percent by 2020.
To meet Stern’s 2050 goals, he says, among other things, “most of the world’s electricity production will need to have been decarbonized.”
By way of comparison, according to the U.S. Department Of Energy, roughly 72 percent of U.S. electrical power generation in 2007 was derived from burning fossil fuels, with just 6 percent coming from hydro-power and less than 3 percent from non-nuclear renewable and “other” sources. And even then, those “other” non-fossil sources included wood and biomass — which, when burned, are major emitters of carbon.
Click here to see the Department of Energy report.
US backing for world currency stuns markets
US Treasury Secretary Tim Geithner shocked global markets by revealing that Washington is “quite open” to Chinese proposals for the gradual development of a global reserve currency run by the International Monetary Fund.
The dollar plunged instantly against the euro, yen, and sterling as the comments flashed across trading screens. David Bloom, currency chief at HSBC, said the apparent policy shift amounts to an earthquake in geo-finance.
“The mere fact that the US Treasury Secretary is even entertaining thoughts that the dollar may cease being the anchor of the global monetary system has caused consternation,” he said.
Mr Geithner later qualified his remarks, insisting that the dollar would remain the “world’s dominant reserve currency … for a long period of time” but the seeds of doubt have been sown.
The markets appear baffled by the confused statements emanating from Washington. President Barack Obama told a new conference hours earlier that there was no threat to the reserve status of the dollar.
“I don’t believe that there is a need for a global currency. The reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world,” he said.
The Chinese proposal, outlined this week by central bank governor Zhou Xiaochuan, calls for a “super-sovereign reserve currency” under IMF management, turning the Fund into a sort of world central bank.
The idea is that the IMF should activate its dormant powers to issue Special Drawing Rights. These SDRs would expand their role over time, becoming a “widely-accepted means of payments”.
Mr Bloom said that any switch towards use of SDRs has direct implications for the currency markets. At the moment, 65pc of the world’s $6.8 trillion stash of foreign reserves is held in dollars. But the dollar makes up just 42pc of the basket weighting of SDRs. So any SDR purchase under current rules must favour the euro, yen and sterling.
Beijing has the backing of Russia and a clutch of emerging powers in Asia and Latin America. Economists have toyed with such schemes before but the issue has vaulted to the top of the political agenda as creditor states around the world takes fright at the extreme measures now being adopted by the Federal Reserve, especially the decision to buy US government debt directly with printed money.
Mr Bloom said the US is discovering that the sensitivities of creditors cannot be ignored. “China holds almost 30pc of the world’s entire reserves. What they say matters,” he said.
Mr Geithner’s friendly comments about the SDR plan seem intended to soothe Chinese feelings after a spat in January over alleged currency manipulation by Beijing, but he will now have to explain his own categorical assurance to Congress on Tuesday that he would not countenance any moves towards a world currency.