2 Ex-Executives Of Body Armor Supplier Are Charged
Two former top executives of DHB Industries, the leading supplier of body armor to the U.S military, were indicted on charges of insider trading, fraud and tax evasion....
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AOL Slips To No. 3 On Internet
AOL has given up its title as the leading Internet service provider, a reflection of changing consumer habits and its own strategic shift....
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National Perspectives: A West Side Story With A Promising Ending
Two decades after deciding to resuscitate its economically troubled west side, Annapolis, Md., hopes a mixed-use development will continue its revival....
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Michael Bloomberg, New York Mayor, ’victim Of $430,000 Fraud Attempt’$
Two men tried to steal hundreds of thousands of dollars from the bank account of Michael Bloomberg, the billionaire Mayor of New York City, a court was told yesterday....
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Bush And Democrats In Accord On Trade Deals
The agreement clears the way for early passage of some pending trade accords and improves prospects for others....
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Sustainable News

Traditional Feng Shui

What’s credit got to do with the price of rice?

Now that the Bank of England has got off its high horse and decided to support British banks in much the same way that the European Central Bank has been supporting Spanish and German banks since last August, governments around the world are finally committed to publicly funded financial workouts. This is the “Plan B” that I have described here – the inevitable next stage in the credit crunch, once it became apparent that a market-based solution was doomed to fail. Now that Plan B has swung fully into action, global credit conditions should gradually return to normal in the months ahead. The bad news is that “normal” does not mean anything like the conditions that have prevailed in the world financial system and the global economy during the past few years. Three lasting changes in the world economy are likely to result from the credit crunch. First, the US economy, which should start to recover this summer in response to fiscal and monetary stimulus, will no longer be powered by housing and consumption, but mainly by exports and manufacturing. Secondly, the British and European economies, which are 12 to 18 months behind the US in a broadly similar monetary cycle, will only now begin to experience an economic slowdown and housing slump as serious as the one that has almost ended in the US. So, while the credit crunch may be in its final stages globally, its economic impact will probably be far more noticeable from now on in Britain and Europe than in the United States. Thirdly, the emerging economies of Asia and other developing regions will no longer enjoy export-led growth as consumption in America and Europe becomes structurally weaker. If the developing countries are to continue growing rapidly – and I believe that they will – they must rely on domestic consumption, infrastructure investment and their own home-grown property booms. These three fundamental shifts in the world economy are by now widely recognised. There is, however, another apparent consequence of the credit crunch that is less understood and is causing consternation and anxiety, especially in China and other developing countries. This is the upsurge in oil, food and commodity prices, many of which have almost doubled since the credit crunch began last August, even though the causal linkage between soaring commodity prices and a collapsing supply of credit remains obscure. If anything, the credit-induced slowdown in global economic growth and consumption since last August should have weakened demand for commodities and therefore pushed down prices. Yet the reality is that commodity prices have recently leapt higher every time the global banking system was hit by some new shock. As a result, China and other emerging countries, which last year were preparing to boost domestic consumption to compensate for weaker exports to the US, are now more worried about inflation and are raising interest rates to try to slow their domestic growth. This is potentially a very dangerous development for the world economy, which increasingly relies on domestic demand from Asia, the Middle East and Russia. This unexpected policy tightening by emerging nations also explains why stock markets fell far harder in Asia than in America and Europe in the first quarter of this year. Why, then, has a global collapse in credit created a boom in commodity demand? The short answer is that nobody knows. A common explanation in the media is that soaring commodity prices reflect a global panic about inflation, as the Federal Reserve Board supports the US banking system by printing money and slashing interest rates. This explanation does not pass muster for at least three reasons. First, because US inflationary pressures are already subsiding as a result of the credit crunch and the associated fall in house prices and employment. Secondly, because the ECB and the Bank of England show no sign of imitating the Fed’s expansionary monetary policies, yet commodity prices are soaring in sterling and euros as well as dollars. Thirdly, because the commodities rising fastest – such as rice, wheat and pork – cannot be used as long-term stores of value and so must reflect the balance of supply and demand for instant use, rather than fears about loose monetary policy and its possible effects on inflation many years ahead. What, then, has suddenly boosted demand for agricultural commodities and how might this be related to the credit crunch? A possible explanation is that the rise in prices itself has triggered a self-sustaining upward spiral of demand, in which investors, wholesalers and final consumers want to buy more of a commodity each time its price rises and this leads to more hoarding and still higher prices. Such self-sustaining price trends are normally rapidly reversed because value-oriented investors and commodity producers start to trade against the trend, selling more each time the price rises. In present conditions, however, it is harder than usual for speculators to trade against the rising price trend, because bank lending has dried up. Several American grain wholesalers, for example, have been pushed towards bankruptcy because they have sold futures against grain supplies they bought in advance from US farmers and have then been unable to finance these temporary “short positions” until the next harvest comes along. By draining liquidity in this way from all financial markets, the credit crunch has exacerbated trend-following behaviour among investors, promoted stockpiling throughout the global supply chain and encouraged hoarding by consumers. This financially driven process, rather than a sudden increase in Chinese and Indian appetites, has probably been the main cause of this year’s shortfall in global food supplies. Similar influences may explain other surprising linkages that have suddenly emerged between financial markets. Since the credit crunch’s start, commodity prices have developed an uncanny correlation with the euro/dollar exchange rate (see chart) and this currency trend, in turn, has been powerfully correlated to two other momentum-driven trends – the collapse in US Treasury bond yields and the widening of credit spreads. If all these trends are driven ultimately by lack of liquidity in global financial markets, they are all likely to turn at about the same time, or in a fairly tight sequence - and this process may now be starting. The trend in credit spreads began to reverse in mid-March after the Bear Stearns rescue – and last week, more or less on cue, the predominant direction of the US bond market seemed to switch from lower to higher bond yields. If this rise in US bond yields proves sustainable, the overwhelming currency momentum against the dollar and in favour of the euro may also start to reverse. If that reversal occurs, the trend in commodities should soon follow and the panic about inflation in China and other emerging economies should start to subside. At that point, we will finally be able to say that the worst of the global credit crunch is over.
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On the Irish Coast, Reconsidering Energy From the Town Up

The town of Dundalk, Ireland, is developing clean energy sources and reducing energy demand in a 1.5-square-mile site called a Sustainable Energy Zone.
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Digital Domain: Why Old Technologies Are Still Kicking

The mainframe stands as a telling case in the larger story of survivor technologies and markets. An old technology or business often finds a sustainable, profitable life.
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Key adviser says that UK’s new nuclear policy is flawed

The Government’s nuclear energy policy is fundamentally flawed because it relies on the “fiction” that a new generation of reactors can be built without state support, according to a key government adviser. Dieter Helm, Professor of Energy Policy at New College, Oxford, who has helped to shape energy policy for the past decade, is about to publish a paper in which he will lambast the Government’s new push on nuclear power. He told The Times that no country had developed nuclear power stations in such a way and that he believed that the Government would be forced to rig the market to ensure that new nuclear stations were built. Dr Helm said that the Government’s position, set out in a White Paper this month, was questionable on several fronts. “There never has been and never will be a nuclear power programme that is totally dependent on the market,” he said, adding that this was because of the extremely long time-frame required for nuclear investments - at least 50 years between upfront costs and decommissioning. He said that the Government should drop its “fig-leaf” approach and start detailed long-term planning itself. One problem that complicates the Government’s approach is that there is no long-term guarantee that a high price will exist for carbon, a vital prerequisite if funding is to be attracted. Dr Helm proposed a system in which the Government would auction long-term contracts for the supply of carbon emissions reductions over a far longer period, for instance 20 or 30 years. This would provide a revenue stream that could be used to secure finance. Dr Helm also criticised the linchpin role of British Energy, the struggling generator that owns eight of the most desirable UK sites earmarked for new build, as a potentially huge strategic mistake that could lead to “piecemeal decision-making” and spiralling costs. Because there are few other credible sites for new plants, the company is effectively able to pick and choose which will be used and which utilities it will choose to operate them. “The allocation of sites is being distorted by British Energy’s agenda and its desire to play a role in new nuclear generation,” he said. Dr Helm called for the Government to strip British Energy of the sites and for these to be auctioned to bigger utilities. British Energy rejected his claims, arguing that it is “ready for new build and has the sites, people, skills and experience essential to success”. Dr Helm said that on the issue of waste, the White Paper had effectively proposed a system in which utilities would pay for the State to absorb the risks of handling nuclear waste in exchange for payments into a fund: “It’s a fixed-price contract for the Government to take the waste. The Government absorbs the final-end risk.” Dr Helm, who is chairman of an advisory panel to the Department for Environment, Food and Rural Affairs and a member of the panel on Energy and Climate Security at the Business, Enterprise and Regulatory Reform Department, was a member of the Department of Trade and Industry’s Sustainable Energy Policy Advisory Board from 2002 to 2007. A spokesman for the Department for Business, Enterprise and Regulatory Reform said: “We have been clear that new nuclear will be paid for by the private sector, so it is for energy companies to make a judgment about the economics of nuclear power.”
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Online Bank Fails, and Regulators Shut It

NetBank Inc., an online bank with $2.5 billion in assets, was shut down by the government on Friday because of an unsustainable level of mortgage defaults.
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Sustainable Boston 2010: Green Business AwardsBoston Business JournalOn May 21, 2010, The Boston Business Journal will publish its Sustainable Boston: Green Business Report to honor some of the most innovative and effective ...

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