US debt crisis continues as turmoil infects Italy and Spain

Markets spooked as bond yields in both founder members of single currency hit monetary union records

guardian.co.uk, Tuesday 2 August 2011 21.14 BST

Financial markets in Europe and North America were gripped by a new sense of crisis as the turmoil caused by the narrowly averted US debt default moved back across the Atlantic and infected Italy and Spain – two key members of the eurozone.

Bond yields in both the founder members of the single currency hit monetary union records, forcing Spain's prime minister, José Luis Rodríguez Zapatero, to abandon his holiday plans. Italy responded to a fresh wave of losses in its banking sector by announcing a crisis meeting of economic policymakers.

Interest rates on Spanish and Italian bonds rose to well above 6%, the level that signalled the beginning of the bailout process for Greece, Ireland and Portugal.

Meanwhile, interest rates on assets seen as safer fell sharply, with the yield on UK 10-year gilts dropping to an all-time low of 2.77%. Gold rose to a new record level for a ninth day in a row on Tuesday.

Wall Street's Dow Jones index had lost 266 points by the close in New York – its eighth successive fall and longest losing streak since the global banking system was on the brink of collapse in October 2008.

US shares have given up virtually all their 2011 gains, while stocks in Europe and Asia are already trading below the levels at which they ended 2010.

"There is a growing sense of crisis enveloping markets in the northern hemisphere," said Nick Parsons, the global head of strategy at National Australia Bank.

Amid fears that Italy and Spain will require a financial bailout to bring down their borrowing costs, Bob Diamond, the chief executive of Barclays, said Europe's sovereign debt crisis, and woes in the US, justified the UK's new reputation as a "safe haven" amid the turmoil.

Diamond warned that the single currency's problems were not going to disappear – which he dubbed "chronic event risk", and said it was important to support David Cameron and George Osborne's efforts to put Britain's public finances back on track.

"If they don't address public spending they put at risk the [UK's] triple A rating. If the US gets downgraded, it is an issue for the US but it is still a relatively minor market event. But if the UK gets downgraded, it would have bigger implications for the economy," said Diamond. "I do support what the prime minister and the chancellor here are doing."

Diamond's intervention came as the US Senate voted for the deficit reduction plan agreed by Democrats and Republicans in Washington and as Fitch, one of the world's three big rating agencies, gave the US a breathing space by saying it would not immediately strip the world's biggest economy of its prized top-notch credit ranking.

Fitch stressed, however, that the respite could be shortlived. While pointing out that the risk of default was "extremely low", the rating agency said that without significant changes in fiscal policy, the US debt to gross domestic product ratio "will reach 100% by the end of 2012, and will continue to rise over the medium term – a profile that is not consistent with the United States retaining its triple A sovereign rating".

BNP Paribas bank was on Tuesday forced to take a €534m hit against its exposure to Greek government debt. The bank insisted it would be a one-off occurrence despite a large exposure to Italy, in the latest sign that banks across Europe are beginning to take hits against the country. HSBC set aside £65m on Monday.

Confirmation of the US debt deal prompted a fresh political row in the UK, with the government insisting the spending restraint agreed to by Barack Obama was tougher than that announced by George Osborne.

Conservative MPs said the US deal vindicated the coalition's approach and represented a setback to the shadow chancellor, Ed Balls, who has been urging the UK government to adopt the more cautious approach to deficit reduction hitherto favoured by the US.

Labour sources disputed that America's programme of cuts was now more draconian than Britain's and said the Republicans appeared to have forced Obama into "a plan that some believe risks going faster than is economically wise, just at the time when worries are growing about the fragility of the US recovery".

Unprecedented Extreme Weather In First Half Of 2011 Leads To Record $265 Billion In Losses

Amped Status, 2 August 2011

Insurance company Munich Re has a new report on the financial fall out from extreme weather events in the first half of this year. It’s another record-breaking disaster, in only six months it has already broken the record 2005 yearly total of $220 billion:

Accumulation of very severe natural catastrophes makes 2011 a year of unprecedented losses

An exceptional accumulation of very severe natural catastrophes makes 2011 the highest-ever loss year on record, even after the first half-year. Already, the approx. US$ 265bn in economic losses up to the end of June easily exceeds the total figure for 2005, previously the costliest year to date (US$ 220bn for the year as a whole)….

Altogether, the loss amount was more than five times higher than the first-half average for the past ten years. The insured losses, around US$ 60bn, were also nearly five times greater than the average since 2001. First-half losses are generally lower than second-half losses, which are often affected by hurricanes in the North Atlantic and typhoons in the Northwest Pacific…. It is very rare for such an extreme accumulation of natural hazard events to be encountered as in the first half-year.” [read full report]

Bringing farm life into the heart of the city — Gorgie City Farm

And from Edinburgh, Scotland another story about community gardens in the midst of an urban environment.

A lovely article with great photos.

Digital Journal,

2 August, 2011

Gorgie City Farm is nestled among tenements, schools, shops, sports stadiums and lies on a busy main road, Gorgie Road, which is one of the main arteries in and out of the city. It's also only a short bus ride from the centre of town.

Back in 1977 the land on which the farm now lies was derelict. There were a few plans tabled which would have seen houses built on the site but people in the area decided that they'd rather see the area developed as a green space and, thanks to the works of a local community group, the area was opened as Gorgie City Farm in 1982. 


Since then the farm has had tens of thousands of visitors each year.

For the article GO HERE

Lyttelton plans to be self-reliant to safeguard food

Radio New Zealand,

3 August, 2011

Here is a bit of good news from Radio New Zealand - the community of Lyttelton is growing its own food as a response to this year’s earthquake (and the suburb of Sumner is following suit).

Of course this makes good sense, not only in terms of natural disasters but in developing local resiliance to Peak Oil and economic hard times.  

Wouldn’t it be nice if other communities followed Lyttleton’s example.

To listen to the podcast GO HERE.

Italy under fire in widening euro debt crisis

And now the attention is back on Europe.

Reuters

ROME | Tue Aug 2, 2011 3:34pm EDT

Financial market pressure on Italy intensified on Tuesday, sucking Europe's second biggest debtor nation deeper into the euro area danger zone and prompting emergency consultations in Rome and among European capitals.

Italian and Spanish bond yields hit their highest levels in 14 years, with five-year Italian yields reaching the same level as Spain's in a sign Rome is overtaking Madrid as a key focus of investors' concern about debt sustainability.

Italy's stock index fell 2.5 percent to its lowest in more than 27 months, dragged down by banks that have heavy exposure to Italian debt. European shares hit a 9-month low amid worries that slowing economic growth will make it even harder to overcome the euro zone's debt troubles.

"The fear of the market is that the world is going into recession again ... and in the euro zone the peripheral markets are the ones that will suffer most," said Alessandro Giansanti, strategist at ING in Amsterdam.

For article GO HERE

Reflections on Collapse (and other matters)

As we move into August I am reminded of Michael Ruppert’s warning that he put out in April warning of the downstream effects of the disaster at Fukushima.

Basically he was saying back then that because of electricity shortages in Japan because of the ongoing nuclear catastrophe at Fukushima there would be problems for companies throughout the world - largely because of the shortage of electronic componentry  from Japan.  Companies such as General Electric and Siemens were directly affected by this.

He stated that the next round of quarterly earnings reports, due out in July would make it absolutely clear that the world was in depression.

His very definite statements (“even a caveman could see it”) attracted a lot of vitriolic ad-hominem attacks on Mike Ruppert - claims that he had lost his credibility.

As July came these attacks resumed again and Michael Ruppert was forced to respond to the attacks by admitting that he hadn’t got it 100% right, although he stood by his prediction.

Well, In early August (not early July) things  look very different. The earnings reports for a number of companies have shown major falls in earnings; companies have been laying off large numbers of staff (see, for instance today’s story about HSBC); economic indicators are much worse than anyone predicted.

The White House itself pointed to the earthquake in Japan and Fukushima as a reason for the dismal GDP figures it had to put out just a few days ago.

These sort of attacks seem to be what one can expect  especially when it comes to people like Mike Ruppert who have come to very definite conclusions based on sound research.  Not only is the message unacceptable to large numbers of people who prefer to take refuge in denial, but people like Mike Ruppert with his' large ego' (and big heart) become ‘inconvenient’ people.


If there was anything he was wrong about it was that it is impossible to falsify earnings reports and the statement that everything will unravel "by July" - read "by August".

Here is the video made back in April




Dealing with denial in the progressive Left movement

Just a day or so ago my partner met someone on the train who was experiencing significant degrees of anxiety about social and financial collapse - but significantly reported his experience of the inability of people in the Transition Towns movement to engage with this - so now he feels very much alone with his emotional response to collapse.


Another encounter was over the weekend.  


We went into a shop and without any cue from us the shopkeeper (a European) wondered aloud whether her money was safe in the bank.


This made me realise that there are people who do have a sense of what is happening.  They are not the people one would expect.


And, at the same time the people one might expect to have more understanding often DON'T.

Another interaction has been with someone within the Transition Town movement.  


This particular person (and they are fully representative of a strain within the movement) seemed to be lack any sense of urgency with regard to the issues that so bother me, and sees the future as ‘uncertain’, foreseeing problems in 10 or 20 years time.

The insistence on a ‘positive message’ goes with a failure to understand the nature of what confronts us today.  It reflects an attitude that is against any form of leadership and advocates solutions based on consensus.

What I confronted was the idea that ‘science’ has shown that if the message is too stark, too 'negative' then that will lead to ‘cognitive dissonance’ and a 'negative' reaction.

I completely failed to help this person see that the ‘potential’ problems of 10 years time are here right now and coming down on us like a tsunami, at first seemingly slow-moving but inescapable.

Basically what was being said boiled down to is that the ‘message’ has to be diluted to something that is ‘acceptable’.  Otherwise the result will be cognitive dissonance and denial.


For me this approach is the equivalent of a situation where a dam is about to break.  Instead of warning people and telling them to evacuate immediately a message along the lines of "it is possible that within the near future there might be some problems with the structural integrity of the dam"!

I freely admit that the numbers of people who really ‘get it’ and respond to this message are likely to be small - the vast majority either aggressively denying any problems or ‘moving the deckchairs on the Titanic’

However, if you dilute the message, try to be ‘positive’ and give people the illusion that there is time to agree and ‘solve’ the problem then you ensure that any consequent action is non-existent or meaningless.


It is also, in my mind, tantamount to a lie.

I can’t really help myself from thinking about the reaction of the Ministry of Magic (and the minister, Cornelius Fudge) to the ‘inconvenient’ news of the return of Voldemort and the Death Eaters in Harry Potter and the Order of the Phoenix -  a wonderful allegory for today of denial of something unacceptable that leads to political repression.

Some of the same group of people, in their anger have advised me to be 'careful what you wish for'. What sane person could ever wish for the collapse of society?!  


My conclusions are based not on emotion but on what Noam Chomsky calls "institutional analysis".


It reminds me of what a friend said years ago: "optimism is the absence of realism" - he was a Russian of course!

This week I have watched presentations that have forced me to further question my political assumptions.


Firstly, I watched a discussion on the Real News, which represents a Left perspective on things. In this program they were talking about the US debt ceiling crisis and opined that the debt was not that large and interest rates were low, so that when the economy recovered (sic) the US would be able to grow its way out of debt.


At the same time some of the most realistic and trenchant criticisms of US capitalism came from people who could only be described as libertarians and who believe in the free market.


Everything seems topsy-turvy.  The 'Left' defending the status-quo, the "Right' criticising it.


In this vein I have to re-evaluate the New Zealand Green Party.


There are values within the Party - based on consensus and ideals of social and environmental justice - that are laudable, especially in the context of the bear pit of politics.


However, ideas and policies that were relevant three years ago (or even, perhaps a year ago) are less so now.


From what I have seen, these Liberal attitudes I have been talking about are prevalent in the party and demonstrate an inability to confront the tsunami of economic and social collapse (that unfortunately is likely to elicit a political response that is closer to fascism than anything else).


I am having to confront the sad fact that the Green Party is in danger of becoming

dangerously out-of-touch with its failure to take a more aggressive stance on the issues of Peak Oil, climate change and (most notably) the economic tsunami.

I will never be a libertarian but I am rapidly losing faith in the liberal Left.

House of Representatives passes debt bill

Enough Democrats and Republicans reluctantly joined forces to see the proposed legislation through by 269 to 161

the Guardian, 2 July 2011

The weeks-long confrontation over the US debt has finally ended after the House of Representatives voted overwhelmingly in favour of a deal to prevent the economic catastrophe of America defaulting for the first time in its history.

The vote came only hours before the Treasury deadline that potentially would have seen the US run out of cash and no longer able to pay its bills.

Enough Democrats and Republicans reluctantly joined forces to see the proposed legislation through, 269 votes to 161. But there were significant revolts by both Democrats and Republicans. If the House had failed to vote in favour, markets would likely have gone into freefall.

For article GO HERE

Global economy is cooling rapidly

Exactly what was predicted by Michael Ruppert back in April.  More coming

Commentary: U.S., Europe and China all report weakness in factories

Marketwatch

Rex Nutting

WASHINGTON (MarketWatch) — Markets have been so preoccupied with the austerity theater playing out in Washington and Athens that they almost lost sight of the big picture: the global economy.

Which is cooling off rapidly.

Manufacturing, which had surged coming out of the Great Recession, has now throttled back.

According to the prescient Institute for Supply Management index, the U.S. manufacturing sector was barely growing at all in July, shackled by uncertainty in the political sphere as well as by very weak spending by consumers. Read full story: ISM manufacturing gauge falls to two-year low.

Almost every facet of the nation’s manufacturing deteriorated in July: new orders, employment, production, prices. It was the lowest ISM since the recession officially ended two years ago — and the nearly 10-point plunge in the ISM over the past three months was the kind of move usually seen only during recessions.

But it’s not just America. China’s purchasing managers’ index fell to a two-year low. Europe’s PMI dropped close to 50% — stall speed. Britain’s PMI contracted. Manufacturing activity slowed in India, Russia and Taiwan. Read full story: China manufacturing activity shrinks in July.

The optimists insist that growth is merely settling down to a sustainable pace after a couple of booming years.

Pessimists counter that global growth remains unbalanced and highly uncertain. The financial sector’s still bloated with toxic assets. Corporations are cautious. The developed world — Europe, America and Japan — has little capacity to spend as the painful de-leveraging process inches along.

It could be that everyone has just been sitting on their hands waiting to see how the twin debt crises in Europe and the U.S. would be resolved. In that case, the global economy should maintain momentum, and America’s growth rate should pick up again.

The next few months should test that theory.

Major headlines

Today I am posting all the major headlines for today together.  While we wait yet again to see if US government is going to vote for the agreement events continue apace and the unravelling continues.

Europe's Big Oil Sees Output Fall

Wall Street Journal

LONDON—Most European major oil companies posted a surge in quarterly profits last week, but their results were overshadowed by a trend that continues to trouble Wall Street and corporate boardrooms: Nearly every major oil company reported year-to-year oil-and-gas output declines, often in the double-digits.

Big Oil is throwing huge resources at the problem with more open embrace of unconventional petroleum developments, high-risk exploration in frontier areas and corporate restructuring. But even if these strategies work in some cases, there is little doubt that anemic petroleum output signals a long-term challenge confronting the sector.

Stocks: Manufacturing data erases debt deal rally

CNN

NEW YORK (CNNMoney) -- Stocks took a wild ride Monday. The day started with an early rally fueled by hopes of a debt deal, but a weak manufacturing report quickly deflated that optimism -- leaving stocks little changed as investors await a House vote.....

Last Friday's second-quarter GDP report in particular served as a stark reminder that the economy is growing at a sluggish 1.3% pace.

The gloom continued into Monday, with a report that showed that the manufacturing sector nearly stood still in July. The Institute for Supply Management's manufacturing index slid to 50.9 in July -- much worse than the level of 54 that economists were expecting, and down from 55.3 in June.

"We keep seeing data that shows the economy is getting worse," said Kim Caughey Forrest, senior equity analyst at Fort Pitt Capital Group. "Earlier this year, we thought the economy would improve -- albeit gradually. But all the negative surprises are concerning investors."

Stocks posted their worst weekly performance in more than a year last week, losing $700 billion in market capitalization.

http://money.cnn.com/2011/08/01/markets/markets_newyork/index.htm?iid=HP_LN

Tepco Says Highest Radiation Yet Is Detected at Fukushima Dai-Ichi

Bloomberg

Geiger counters, used to detect radioactivity, registered more than 10 sieverts an hour, the highest reading the devices are able to record, Junichi Matsumoto, a general manager at the utility, said today. The measurements were taken at the base of the main ventilation stack for reactors No. 1 and No. 2

For article GO HERE

UK set for low growth as the mood 'darkens'

the Independant, 1 August 2011

The Confederation of British Industry (CBI) warns today that there is a "darkening mood" among British business people as they face up to years of lacklustre, disappointing and fragile economic growth.

The squeeze on household incomes and consumer spending has hit UK business confidence hard in recent weeks, as has talk about the Government's planned spending cuts and sovereign debt crises in the eurozone and in the US.


For article GO HERE.

HSBC will cut 30,000 jobs

Business Insider

HSBC said on a conference call this morning it would cut 30,000 by the end of 2013.

"There will be further job cuts," Chief Executive Stuart Gulliver told Reuters. "Another 25,000 roles will be eliminated in addition to the 5,000 already announced."

The London-based financial company reported flat first half revenue of $35.7 billion, with weakness in Europe offsetting growth in emerging markets. Naturally job cuts will be focused on Europe and the U.S., with the possibility of hiring in emerging markets.

Laying off 30,000 amounts to a 10% workforce reduction.

RT: ‘Falling on debt ears’

In one way this is old news but the commentary of Max Keiser is always relevant. The ‘agreement’ reached in Washington changes little

The countdown to armadebtdon carries on and we are just 3 days away from the debt ceiling deadline. If a discussion is not reached will the US lose its AAA rating? The problem is we are not taking in enough revenue to continue spending like we are. Max Keiser of Keiser Report gives us his insight on what that means to the US

Campaign: No Free Pass for New Genetically Engineered Crops!

Stop USDA's Plans to Let Biotech Companies Like Monsanto Police Themselves 

In April, we asked organic activists to take action to stop an outrageous US Department of Agriculture (USDA) proposal for the biotech industry to police itself. Despite the opposition of 10,000 Organic Consumers Association members, the USDA is going forward with the controversial deregulation, which allows companies like Monsanto to decide whether their genetically engineered crops pose environmental risks.

And if this wasn't bad enough, this month, things got much, much worse. For the first time ever, the USDA announced that it was waiving its regulatory authority over a new genetically engineered lawn grass made by Scotts Miracle-Gro, letting the company start selling the Franken-grass without any review of how it might effect human health, the environment, or organic farmers whose pastures will be contaminated. Essentially, the USDA has created a new class of genetically engineered plants, animals and animal drugs that get a free pass through any government regulation or review.

If you are in the United States I urge you to support this campaign.  

Go to:  http://www.organicconsumers.org/articles/article_23694.cfm

Vaccines and autism: a new scientific review

Perhaps some of you might remember the controversy surrounding

Andrew Wakefield and his research claiming a link between the MMR vaccine and autism.  After publishing his research the authorities found “conflict of interest” and declared his research ‘fraudulent”. Wakefield’s career and reputation were destroyed and vaccines became ‘safe” again.

Now this.....

CBS News

For all those who've declared the autism-vaccine debate over - a new scientific review begs to differ. It considers a host of peer-reviewed, published theories that show possible connections between vaccines and autism.

For article GO HERE

Politicians reach deal to end U.S. debt crisis

CNBC

Published: Sunday, 31 Jul 2011 | 9:34 PM ET

WASHINGTON - President Barack Obama said on Sunday that Democrat and Republican leaders had reached an agreement to reduce the U.S. deficit and avoid default, but it was not clear if the spending cuts were deep enough to stave off a credit rating downgrade.

The White House said the compromise would cut about $2.5 trillion from the deficit over the next 10 years but the reductions would not happen so quickly that they would drag on the fragile U.S. economy.

The deal would still have to be passed in the House and the Senate ahead of an Aug 2 deadline to avert a potential debt default.

U.S. S&P 500 stock futures bounced 1.5 percent and U.S. 

Treasuries futures slid on news of the deal. Gold and the yen fell.

Credit rating agencies had indicated earlier that deficit-cutting measures of around $4 trillion would be enough for the U.S. to avoid losing its prized AAA rating. Moody's said on Friday that it may keep the rating unchanged but with a negative outlook, meaning there was a risk of a downgrade in the medium-term.

Crash club: when sputtering economies collide

I have already made reference to this article by Mike Davis - so here it is, from al-Jazeera.

If current trends continue, China, the European Union, and the US are headed towards a synchronised global depression.

Mike Davis

al-Jazeera, 31 July 2011

China's economic boom may be inflating a real-estate bubble: residential housing investment now accounts for 9 per cent of gross domestic product [EPA] 

When my old gang and I were 14 or 15 years old, many centuries ago, we yearned for immortality in the fiery wreck of a bitchin' '40 Ford or '57 Chevy. Our J.K. Rowling was Henry Felsen, the ex-Marine who wrote the bestselling masterpieces Hot Rod (1950), Street Rod (1953), and Crash Club (1958).

Officially, his books - highly praised by the National Safety Council - were deterrents, meant to scare my generation straight with huge dollops of teenage gore. In fact, he was our asphalt Homer, exalting doomed teenage heroes and inviting us to emulate their legend.

One of his books ends with an apocalyptic collision at a crossroads that more or less wipes out the entire graduating class of a small Iowa town. We loved this passage so much that we used to read it aloud to each other.

It's hard not to think of the great Felsen, who died in 1995, while browsing the business pages these days. There, after all, are the Tea Party Republicans, accelerator punched to the floor, grinning like demons as they approach Deadman's Curve. (John Boehner and David Brooks, in the back seat, are of course screaming in fear.)

The Felsen analogy seems even stronger when you leave local turf for a global view. From the air, where those Iowa cornstalks don't conceal the pattern of blind convergence, the world economic situation looks distinctly like a crash waiting to happen. From three directions, the United States, the European Union, and China are blindly speeding toward the same intersection. The question is: Will anyone survive to attend the prom?

Shaking the three pillars of McWorld

Let me reprise the obvious, but seldom discussed. Even if debt-limit doomsday is averted, Obama has already hocked the farm and sold the kids. With breathtaking contempt for the liberal wing of his own party, he's offered to put the sacrosanct remnant of the New Deal safety net on the auction block to appease a hypothetical "centre" and win reelection at any price. (Dick Nixon, old socialist, where are you now that we need you?)

As a result, like the Phoenicians in the Bible, we'll sacrifice our children (and their schoolteachers) to Moloch, now called Deficit. The bloodbath in the public sector, together with an abrupt shutoff of unemployment benefits, will negatively multiply through the demand side of the economy until joblessness is in teenage digits and Lady Gaga is singing "Brother, Can You Spare a Dime?"

Lest we forget, we also live in a globalised economy where Americans are consumers of the last resort and the dollar is still the safe haven for the planet's hoarded surplus value. The new recession that the Republicans are engineering with such impunity will instantly put into doubt all three pillars of McWorld, each already shakier than generally imagined: American consumption, European stability, and Chinese growth.

Across the Atlantic, the European Union is demonstrating that it is exclusively a union of big banks and mega-creditors, grimly determined to make the Greeks sell off the Parthenon and the Irish emigrate to Australia. One doesn't have to be a Keynesian to know that, should this happen, the winds will only blow colder thereafter. (If German jobs have so far been saved, it is only because China and the other BRICs - Brazil, Russia, and India - have been buying so many machine tools and Mercedes.)

Boardwalk Empire times 160

China, of course, now props up the world, but the question is: For how much longer? Officially, the People's Republic of China is in the midst of an epochal transition from an export-based to a consumer-based economy, the ultimate goal of which is not only to turn the average Chinese into a suburban motorist, but also to break the perverse dependency that ties that country's growth to an American trade deficit Beijing must, in turn, finance in order to keep the yuan from appreciating.

Unfortunately for the Chinese, and possibly the world, that country's planned consumer boom is quickly morphing into a dangerous real-estate bubble. China has caught the Dubai virus, and now every city there with more than one million inhabitants (at least 160 at last count) aspires to brand itself with a Rem Koolhaas skyscraper or a destination mega-mall. The result has been an orgy of over-construction.

Despite the reassuring image of omniscient Beijing mandarins in cool control of the financial system, China actually seems to be functioning more like 160 iterations of Boardwalk Empire, where big-city political bosses and allied private developers are able to forge their own backdoor deals with giant state banks.

In effect, a shadow banking system has arisen with big banks moving loans off their balance sheets into phony trust companies and thus evading official caps on total lending. Last week, Moody's Business Service reported that the Chinese banking system was concealing $500bn in problematic loans, mainly for municipal vanity projects. Another rating service warned that non-performing loans could constitute as much as 30 per cent of bank portfolios.

Real-estate speculation, meanwhile, is vacuuming up domestic savings as urban families, faced with soaring home values, rush to invest in property before they are priced out of the market. (Sound familiar?) According to Business Week, residential housing investment now accounts for 9 per cent of the gross domestic product, up from only 3.4 per cent in 2003.

So, will Chengdu become the next Orlando and China Construction Bank the next Lehman Brothers? Odd, the credulity of so many otherwise conservative pundits, who have bought into the idea that the Chinese Communist leadership has discovered the law of perpetual motion, creating a market economy immune to business cycles or speculative manias.

If China has a hard landing, it will also break the bones of leading suppliers like Brazil, Indonesia, and Australia. Japan, already mired in recession after triple mega-disasters, is acutely sensitive to further shocks from its principal markets. And the Arab Spring may turn to winter if new governments cannot grow employment or contain the inflation of food prices.

As the three great economic blocs accelerate toward synchronised depression, I find that I'm no longer as thrilled as I was at 14 by the prospect of a classic Felsen ending - all tangled metal and young bodies.


Mike Davis teaches in the Creative Writing Programme at the University of California, Riverside.  He is the author of Planet of Slums, among many other works.  He's currently writing a book about employment, global warming, and urban reconstruction for Metropolitan Books. 

US debt crisis: Capitol Hill ready to strike deal - but at what cost?

Compromise should stave off default but America could still lose its triple A credit rating

Jill Treanor,

Guardian, 31 July

America could soon lose its much-coveted triple A credit rating – possibly by the end of this week – as politicians in Washington race to clinch a deal to solve the debt crisis in what is likely to be a volatile week for global financial markets.

Just hours before the dollar started trading in New Zealand, the Senate was voting on a deal to raise the $14.3tn ceiling on borrowing to enable public workers to be paid, and the country to keep functioning. But while there was relief that an outright default on debt payments by the US might now be avoided, there was lingering concern that congressmen might not fall behind the $3tn of cuts needed in return for a $3tn rise in the debt ceiling before Tuesday's deadline – when the White House has warned the money will run out.

Anxiety was apparent on both sides of the Atlantic about the implications of the crisis in the US, where data on Friday showing the US economy has stagnated further heightened tensions in the market.

For article GO HERE

Biodiversity On Earth Plummets, Despite Growth in Protected Habitats

Huffington Post, 30 July, 2011

Despite rapid and substantial growth in the amount of land and sea designated as protected habitat over the last four decades, the diversity of species the world over is plummeting, a new study has found.

Over 100,000 so-called "protected areas" representing some 7 million square miles of land and nearly 1 million square miles of ocean have been established since the 1960's, noted the analysis, published Thursday in the journal Marine Ecology Progress Series.

And yet, according to a widely cited index used to track planetary biodiversity, the wealth of terrestrial and marine species has seen steady decline over roughly the same period, suggesting that simply protecting swaths of land and sea -- a common conservation strategy worldwide -- is inadequate for preventing the steady disappearance of earth's creatures

For article GO HERE