Economist記事からアメリカ経済の行方
From The Economist Global Agenda
As the Federal Reserve raises interest rates again and the trade deficit breaks another record, the American economy continues to confound the sceptics. Thanks for that go largely to resilient consumers and booming productivity
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FOR several years now, economists have been watching American consumers with the same mixture of astonishment and anticipation that wide-eyed fans bring to endurance sports: amazing that they’ve made it so far, but how much longer can they go on like this? Strong consumer spending has underpinned America’s robust economic expansion, even as most other industrialised countries have struggled to get their economies back on track. But consumers have been running down savings to sustain this level of spending; the personal savings rate has actually been negative since June. Booming house prices and low interest rates have enabled consumers to take on more debt without suffering much, but with interest rates now climbing, Americans have begun to feel the pinch. Data from the Federal Reserve show that the percentage of household disposable income devoted to servicing debt was a record 16.6% in the third quarter.
Yet the consumers soldier on. Figures released by the Census Bureau on Tuesday December 13th show that retail sales in November, when the Christmas shopping season starts, were up by 0.3% from October, and 6.3% higher than a year earlier. And on Wednesday, the Department of Commerce announced that imports of oil, cars and consumer goods caused the already gaping trade deficit to balloon even further in October, to a record $68.9 billion (see chart). This surprised economists, who had been expecting the deficit to fall slightly as oil prices subsided from their September highs.
It seems unlikely that consumers will have the stamina to keep this up much longer. While petrol prices have fallen back, crude oil is still trading above $60 a barrel, pinching the pockets of fuel-guzzling Americans. Long-term interest rates are currently kept low by foreign central banks buying dollars—and dollar-denominated assets—to keep their currencies cheap. But those mountains of dollars are creating ever bigger problems for the banks, which may have to cut back soon. That would bring on a sharp increase in American interest rates, which in turn would deflate the housing bubble—if it doesn’t shrivel on its own first. There is growing evidence that this may be happening already.
Economists have long been warning of these risks. But someone plainly forgot to tell the economy that it was supposed to be in trouble. According to figures released earlier this month, GDP grew at an annualised rate of 4.3% in the third quarter, revised upward from a preliminary estimate of 3.8% issued in November. That is despite the ravages wrought by hurricanes in August and September, which not only destroyed a major port city but closed down a big chunk of the energy industry.
Better still, last week the Department of Labour reported that over the same period, productivity had grown by 4.7%. And payrolls, which barely grew at all in September and October, finally posted a respectable 215,000 new jobs in November. Little surprise, then, that George Bush is once again talking up the economic data, and seeking to claim some of the credit for his policies, particularly tax cuts.
Sadly for Mr Bush, it appears someone also forgot to tell the voters that the economy is doing well. Polls show approval ratings for the economy on a par with the rest of his dismal numbers. Employment has generally lagged behind the economy. Payroll employment troughed in May 2003, 18 months after the recession ended. Since then, the economy has added 4.5m jobs—and unemployment currently hovers around 5%. But wage growth has been sluggish, implying a soft jobs market.
The economy is also posing some difficult questions for the Fed, whose monetary-policy committee met on Tuesday. The central bank has steadily raised short-term interest rates over the past year and a half to fight off inflation. But where does it want to stop? As expected, the Tuesday meeting delivered another 25 basis-point increase in the benchmark interest rate, to 4.25%, but the language of the accompanying statement contained both hawkish and dovish signals. Unlike previous statements, there was no mention of “accommodation”, suggesting that the Fed considers monetary policy to be close to neutral, and will stop tightening soon. But strong wording also indicated that at least one or two more rate increases can be expected before the cycle turns. Nonetheless, the dollar dropped on the news, a decline that grew steeper after Wednesday’s trade figures.
High oil prices may not have translated into slower economic growth yet, but they are creating inflation, which ran well above 4% in September and October. On the other hand, core inflation, which excludes volatile energy and food prices, is still relatively modest. With gasoline dropping back to $2.19 a gallon from nearly $3 in September, fears that high oil prices will feed through into the broader price index have eased. And the stellar productivity figures increase the pace at which the economy can grow without fuelling inflation.
Ben Bernanke, the incoming Fed chairman, will want to be tough, to prove to financial markets that he is serious about keeping prices stable. But if current trends continue, he will not have to be so tough that he causes serious economic pain. Those economists may continue to be astonished for quite some time
貸し別荘の話
というホームページがある。
那須の貸し別荘と、草津のリゾートマンション一室を紹介している。
このお正月は、まだあいているとのことである。
草津の温泉に24時間はいれて、のんびり寝坊もできる。
旅館やペンションだと、朝食の時間に起きなくてはいけない。
また、そういうところの料理は、食べきれないし、もし食べてしまえば、カロリーオーバーで、
あとあと体重を減らさなければならないはめになったりする。
お正月に料理が出てくるのは、主婦にとっては確かにうれしい。
しかし、貸し別荘やリゾートマンションでも、今はレストランやコンビニがたくさんあるし、
デパートなどでも半調理品などいろいろそろっているから、大丈夫だ。
耐震偽造問題余波
耐震強度偽装問題は、不動産投資信託（ＲＥＩＴ）市場に徐々に影響を及ぼし始めている。今のところ、ＲＥＩＴが保有する物件に姉歯汚染は確認されていない。しかし、同市場の先行きに対する不透明感は強まっており、投資家による売買の手控えを懸念する声も上がっている。
今回の偽装問題で影響が大きいのは、賃貸マンションやホテルを主要な投資対象にしている住居系ＲＥＩＴ。この問題が発覚した１１月中旬から購入価格は下落基調を続けている。オフィスや商業施設に投資する非住居系の下落率が２％台にとどまっているのに対し、住居系の中には５％程度下がったところもある。また、今月２１日に東京証券取引所への上場を予定していたＲＥＩＴのエルシーピー投資法人（東京）が、上場延期を余儀なくされた。
ZAKZAK 2005/12/14
Economist
From The Economist Global Agenda
Britain has proposed cuts to the European Union budget in an effort to save the rebate it has enjoyed since the mid-1980s. But deep rifts over farm policy and competition will make it hard for Tony Blair, Britain's prime minister and current EU president, to resolve the row over who pays what at a summit next week
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THESE days, farmers account for only about 5% of the population of Europe. Yet they manage to cause an astonishing amount of trouble. Few can boast of dismantling a McDonald’s and dumping the rubble in front of the town hall, as José Bové, a French farmer, famously did in 1999. But as a group, those who work the land have nearly succeeded in derailing the World Trade Organisation’s latest round of negotiations. These have all but ground to a halt over the European Union’s refusal to consider deeper cuts to its lavish farm subsidies. And as the EU heads into an important summit next week, Tony Blair, Britain's prime minister, will try to keep Europe's farmers from taking the Union’s budget to pieces as well.
Mr Blair has the uncomfortable job of trying to get EU leaders to agree on a budget for 2007-2013. Britain currently holds the EU presidency, which rotates among the member states every six months, and it is Mr Blair’s job to propose something that everyone can live with at the upcoming summit, on December 15th-16th. Unfortunately, he is himself one of the main obstacles to a deal.
Negotiations over the budget came off the rails at a summit in June, thanks largely to a row over Britain’s rebate, which was secured in 1984 by Margaret Thatcher, Britain's then prime minister. At the time, Britain was one of the poorest countries in western Europe, but made outsized contributions to the budget because it had relatively few farmers (who have long received the biggest slice of EU spending). Now, however, Britain is wealthier, and a smaller share of the EU’s budget goes on the common agricultural policy (CAP). Furthermore, the Union’s recent eastward expansion has been relatively beneficial to the British, who are not competing with the new members for development funds; as a result, Britain will go from one of the largest net contributors to one of the smallest if the rebate’s growth is not checked. The budget proposed at the June meeting by the EU’s then president, Luxembourg’s Jean-Claude Juncker, would have frozen the rebate—which currently returns about two-thirds of the difference between Britain's contributions and its receipts—with the goal of eventually phasing it out.
Mr Blair’s government balked at this. Almost half of EU spending still goes on the CAP, and another large percentage is accounted for by transfers to poor regions, which also puts Britain at a disadvantage. Mr Blair insisted that there could be no substantial change to the rebate unless the CAP was also reformed, ie, cut back. Big beneficiaries such as France reacted angrily, pointing out that Britain had agreed to a deal on the CAP in 2003, and that further restructuring should be off the table until after that agreement runs out in 2013.
In the six months since then, the French have demonstrated just how serious they, and other big agricultural producers, are about protecting their farmers. Jacques Chirac, the French president, has led moves to block Peter Mandelson, the EU trade commissioner, from offering deeper concessions on farm policy in the Doha round of WTO negotiations, even though failure to do so may well mean that the round fizzles.
Mr Blair has sought to avoid a head-on clash over the CAP in his latest proposal for the EU budget, which was unveiled on Monday December 5th. Instead, he proposes to increase Britain’s net contribution by a total of €8 billion ($9.4 billion) over the six-year budget period, either through a lump-sum payment or a reduction of the rebate. In exchange, he wants to see the overall budget cut. His plan trims about €24 billion off the €871 billion figure proposed by Mr Juncker, largely through cuts in rural-development aid and assistance to the EU’s new members in central and eastern Europe.
But though the proposal avoids direct confrontation on the CAP, the issue still looms large. Britain wants to keep the bulk of its rebate as compensation for the EU keeping the CAP. And Mr Blair’s plan calls for a review of all EU revenue and spending in 2008, when Britain will presumably once again go after the CAP with a carving knife.
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 Since the EU budget must be ratified by all 25 member states, Mr Blair will have to fight hard to get his proposal, or something like it, passed |
Even before the details of the British proposal had been made public, José Manuel Barroso, the president of the European Commission, the EU’s executive, called the plan “very worrying, especially for new member states”; later, he went further, branding it “unacceptable”. Guy Verhofstadt, the Belgian prime minister, was equally blunt: “I don't intend to approve a budget that the representatives of the people, the European Parliament, will certainly reject,” he told a meeting of his party on Sunday.
After the official announcement, which came late on Monday afternoon, other EU governments reacted with similar dismay. Peer Steinbrück, the German finance minister, expressed scepticism that the proposal could form the basis of an agreement. It quickly became clear that most member states were unenthusiastic about the budget cuts—though a few countries, such as Sweden and the Netherlands, welcomed the idea—and downright hostile to Britain's rebate.
Mr Blair's government has indicated that there is some room for negotiation, but that domestic political considerations make it difficult to offer the deeper cuts in the rebate that other countries are demanding. Since the EU budget must be ratified by all 25 member states, Mr Blair will have to fight hard to get his proposal, or something like it, passed.
He will begin his campaign on Thursday and Friday of this week, when he is scheduled to meet the leaders of Portugal, Finland, Slovenia, Sweden, the Netherlands, Ireland, Greece and Spain. He has already spoken with Mr Chirac, who is demanding that Britain make a bigger contribution to the costs of EU enlargement. Other countries will undoubtedly echo this sentiment, particularly the central European newcomers, who will pay the greatest price for British concessions on the rebate: under Mr Blair’s plan, they stand to lose €14 billion, or 8.5%, of future aid. Mr Blair is expected to try to secure their approval by lowering the level of matching grants they must supply to qualify for EU structural funds.
Even if he gets their blessing, however, he must contend with general resentment of Britain's longstanding exceptionalism. It is not just the rebate, or Britain’s hostility to farm subsidies, that annoys other countries; since Mrs Thatcher’s time, Britain has championed free trade and deep economic reforms to Europe’s markets that would make them more like the “Anglo-Saxon” model, which is much derided by politicians in continental Europe.
EU enlargement has made those tensions worse by bringing in even more competition from central and east European companies that are less shackled by regulation, and pay lower wages, than their counterparts to the west. The rejection of the proposed EU constitution by French and Dutch voters this year was the culmination of long-simmering discomfort with the goals of ever-closer—and ever-larger—union. Mr Blair’s budget proposal does little to resolve these fundamental issues, though the cuts in aid might temporarily assuage voters’ anxiety over the eastward expansion. As for Europe’s farmers, they would dearly love to see the British leader brought down a peg or two. Next week, through their national leaders, they will have a chance to do just that.
Economist
Nov 30th 2005
From Economist.com
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Despite worries about imbalances in the economy, output has grown at an annual rate of 3% or more in each of the past ten quarters. But the economy still faces a number of challenges, including bloated budget and trade deficits, a wobbly housing market, the risk of higher inflation and a lacklustre jobs market.
Key changes from last update
Political outlook
In elections on November 8th, Democrats won the governors’ races in Virginia and New Jersey, boosting the party's hopes of making gains in next year's congressional elections. Republicans have sought to downplay the political damage, noting that Democrats already held the two governorships, but a last-minute campaign stop in Virginia by Mr Bush failed to sway voters to the Republican candidate.
Economic policy outlook
In testimony before the Senate, Ben Bernanke, Mr Bush’s nominee to head the Federal Reserve, said he would make it a top priority to continue the policies of Alan Greenspan, the current Fed chief. He also pledged to move slowly on inflation targeting—an issue on which Mr Bernanke and Mr Greenspan have differed. Mr Bernanke said he would only move forward with a formal inflation target if a consensus develops at the central bank.
Economist
Clicks, bricks and bargains
From The Economist print edition
The internet was supposed to batter traditional retailers. Instead they are coming to dominate it
IT'S a new phenomenon called “Cyber Monday”. On November 28th millions of Americans returned to work after the Thanksgiving holiday and fired up their office computers to take advantage of high-speed internet links and continue the arduous task of hunting for Christmas presents. Visits to some retail websites more than doubled and Visa reported that online spending by its card-holders grew by 26% compared with the same day a year ago.
Despite concerns about a fall in consumer confidence putting the brake on store sales, online purchases are soaring in most countries. But something else is happening, too. Increasingly, the websites run by conventional retailers—once considered dinosaurs of the bricks-and-mortar age—are growing the fastest. Indeed, on Thanksgiving day itself, the number of visitors to Wal-Mart's website exceeded those visiting Amazon—the first time that has ever happened, says Hitwise, which monitors internet usage.
Online sales in America (excluding travel) are expected to grow to more than $19 billion in the crucial two months running up to Christmas—24% more than the same period last year—according to comScore Networks, a research firm. Online sales of toys, computer games, clothing and jewellery are all more than 30% higher.
In many countries the websites run by eBay and Amazon get the most visitors. Both are considered “pure internet plays”, since they have no physical shops. But their business models have changed markedly and they now resemble online versions of vast department stores, where thousands of big and small third-party merchants also offer their wares. During Thanksgiving in 2004, Amazon for the first time sold more consumer electronics than it did books.
Amazon was the company that proved online retailing could be a huge business—and it still leads the pack. But things are changing quickly. The rise online of mighty Wal-Mart, the world's biggest retailer, is being closely followed by its chief supermarket rival, Target, which now operates the fourth-most-popular retail website in America. In Britain, Argos, a catalogue merchant, is the third-most-popular retail site, followed by Tesco, the country's biggest supermarket chain.
Europeans are surfing the web in record numbers and almost half now visit retail websites, especially those of traditional merchants. According to Nielsen//NetRatings, the leading retail websites in Europe include Germany's Tchibo, a diversified chain; OTTO, a German mail-order specialist; and Fnac, a French high-street favourite.
Far from wrecking retailers' businesses, the web plays to their strengths. Shopping-comparison sites, including America's Shopzilla and Ciao in Europe, are among the fastest-growing destinations on the web. These sites allow users to compare products, read reviews—and most important of all—see who is offering the lowest prices. They make money from advertising or charging retailers when users click on a link to the retailers' website.
With huge economies of scale it is hardly surprising that giants such as Wal-Mart often emerge as the vendor offering the cheapest prices. Besides attracting an online purchase, shopping-comparison searches can also be used by ordinary retailers as a relatively cheap way to advertise and attract consumers to their physical stores.
The traditional retailers are finding many other advantages in expanding their stores online. One is that in cyberspace, even the biggest supercentre is unconstrained by planning laws or dogged by protests, as Wal-Mart often is when it tries to expand offline. Both Wal-Mart and Target also use the web to test the market for certain products before they send them to their stores.
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Conventional shopkeepers might be late coming to the internet, but they now realise that they can offer more to their customers online, and that the technology required to do so is relatively easy to use, says Michael Silverstein of the Boston Consulting Group: “Retailers are starting to recognise that their most profitable customers...find the convenience of an online offering complementary to an in-store experience,” he says. As examples of successful exponents of this in America, Mr Silverstein points to Neiman Marcus, which has taken a lead in online top-end fashion, Victoria's Secret in lingerie and Circuit City in consumer electronics.
Circuit City was a pioneer of the “pick-up in-store” option, which is proving increasingly popular with internet shoppers. Around half the customers buying goods online from Circuit City collect their purchases at a shop. For this holiday season the company is offering what it calls a “24/24 Pick-up Guarantee”: if goods ordered online or over the telephone are not available for collection at a local store within 24 minutes of purchase, the customer can claim a $24 gift voucher.
Apart from instant consumer gratification, why would someone want the convenience of buying online only to trek to a store to take delivery? There are, it appears, many reasons. Some people want to examine items before they accept them; some want to save on delivery costs; others want to avoid hanging around for the delivery man to call. But for many, the chief reason is that they trust a big retailing brand with a local store—not least because they will know where goods can be returned if there is a problem.
With more than 3,700 stores in America alone, this hands Wal-Mart another big advantage. It is developing services that link the web with its stores, such as e-mailing digital pictures and picking up the prints.
Does this mean retailing giants will come to dominate the web just as they do the high street? Some might carve out large chunks of cyberspace. Tesco, for instance, has a huge 30% share of the British grocery market. Online it is even more popular: Nielsen//NetRatings says almost 70% of online shoppers plan to buy groceries this Christmas from tesco.com .
But even the big traditional retailers still face competition online. For instance, Wal-Mart may have more than five times the annual sales of Target, but Target's website is growing faster and, according to some analysts, the average value of an online sale at Target is roughly three times more than one made online at Wal-Mart. This is one reason why Wal-Mart is now offering more upmarket goods on its website, including diamond rings.
So, should Amazon have stuck to books? Jeff Bezos, its founder and chief executive, does not think so and likes to plug his site, with its growing army of other traders, as offering “earth's biggest selection”. Nevertheless, he is spreading his bets. These days Amazon also sells its e-commerce experience, helping to run the websites of big, traditional retailers such as Target and Britain's Marks & Spencer.
Economist
Putin's heroes
From The Economist print edition
A gruesome war that never really ended may soon flare up again
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THE guns are the most conspicuous things, more even than the bullet holes that scar the buildings like so much architectural acne. On November 27th, when Chechnya held parliamentary elections, the weapons often outnumbered the voters: guns brandished by the Russian troops who slouch at checkpoints; guns wielded by the uniformed Chechen police; and, at the polling stations, guns carried by the mainly young, jumpy men from the local militias—the most numerous, and the most feared, of which are the kadyrovtsy, or henchmen of Ramzan Kadyrov, the warlord son of a Chechen president who was blown up last year. Vladimir Putin has officially designated Mr Kadyrov junior a “hero of Russia”.
This much-delayed vote was the latest Kremlin bid to show that, after a decade of war with Chechen separatists that has left perhaps 100,000 dead and many more displaced from their homes, Chechnya is on its way to normality. By Russian standards, in some ways the election was indeed normal. Discounting the gang of voters that seemed to track a group of foreign journalists as they travelled between polling stations (at each of which traditional Chechen dancing magically broke out on cue), turnout appeared thin. Not everyone was enthusiastic: “death, hunger and destruction” was all that Chechnya's post-Soviet leaders had given it, said one man on the outskirts of Grozny, Chechnya's capital, who had crossed out all the names on his ballot paper.
Nevertheless the official turnout was over 60%, and—surprise!—United Russia, the Kremlin's pet party, took around 60% of the votes. Nothing abnormal there, at least in Russian terms. But what distinguishes Chechnya's election is the plethora of guns—and the war that the Kremlin misleadingly claims is over, and the rest of the world has largely forgotten.
The separatists who hide out in Chechnya's southern mountains continue to clash with Russian forces, and to pay local youths who bomb Russian installations and can supply video evidence to prove it. Russians are still dying in large, if sketchy, numbers. But Mr Putin's policy of “Chechenisation” has meant outsourcing most of the violence to local militias—especially the kadyrovtsy, who on most estimates number around 7,000. Many, like the Kadyrov family itself, are former rebels. “I was sitting at home,” comments one, with a smile, when asked what he did before joining the militia.
Officially, Mr Kadyrov junior is Chechnya's first-deputy prime minister, and his militia's job is to fight terrorism. In reality, and although the perpetrators are often hard to identify (and drunken Russian soldiers still murder people too), human-rights workers reckon that the kadyrovtsy are now responsible for many of the region's outrages: mass kidnappings, the extraction of meaningless confessions and incriminations under torture, and killings. They answer only to Ramzan, and, usually, there is no redress. “To whom?” asks one torture victim in Grozny, when asked whether he has ever complained.
It is not surprising that most people at the polling stations said that ending the war, which is officially over already, was one of the country's two top priorities. The other is jobs. Salaries for the kadyrovtsy begin at 14,000 roubles ($485) a month—five times what Tamara, a teacher with four children who was bombed out of her home in the village of Gorogorsk, says she earns. Besides a few roadside shacks and some shepherds, there is little economy to speak of outside Grozny, and unemployment is almost total. There are a few signs of life in the capital; but the city is still a wasteland of abandoned rubbish, stray dogs and half-bombed, half-inhabited apartment blocks, with washing strung across the shell holes and decorated by giant posters of Ramzan receiving his hero's medal from Mr Putin.
“This is how I introduce myself,” says Movsar Temirbaev, the city's mayor. “As mayor of the most destroyed city in the world.” There are more cars on the streets, it is said, only because after bombed-out Chechens have paid the 30-50% kickback needed to extract the federal compensation to which they are entitled, the cash does not stretch to a new apartment. Along with embezzlement, local money-spinners include pilfering of oil, trade in stolen military kit and ransoms, sometimes for live kidnap victims, sometimes for corpses. “It's none of our business,” says a man in the village of Gvardeiskoe, when asked where the money came from for the incongruously grand houses nearby.
Will the newly elected parliamentarians make any difference? “Only to themselves,” says one Grozny resident. The reason, as Andreas Gross, of the parliamentary assembly of the Council of Europe, puts it, is that “the real power [in Chechnya] is not with the elected authorities.” In a pre-election poll, 2% of Chechens said the election results would be determined by the voters; 9% said by Mr Putin; 72% said by Ramzan Kadyrov. Next year, when he turns 30—the age that Chechnya's constitution prescribes as the minimum for its president—Mr Kadyrov's de facto power may become official. The new parliament's main job, say some Chechens, will be to approve his nomination by Mr Putin as president.
It is hard to find many reasons for hope that Chechnya will get any better. Alu Alkhanov, who took over as Chechnya's president from Mr Kadyrov senior, said this week in Grozny that he was willing to meet followers of Aslan Maskhadov, an ex-president turned rebel leader who was killed in March (given his predecessors' nasty fates and Ramzan's impending birthday, Mr Alkhanov would do well to plan a retirement strategy). But there are few credible, moderate leaders left. A few recently demobbed separatists ran in the election; one, Magomed Khambiyev, is said to have turned himself in after several relatives were kidnapped. Mr Khambiyev stood for the Union of Right Forces, a liberal party whose strongish showing was the election's only semi-surprise. But no active separatists took part.
Conversely, it is quite easy to see how things might get a lot worse. Mr Putin's Chechnya policy amounts to a gamble on Ramzan Kadyrov's loyalty. It is a risky bet—not just for the benighted Chechens, nor only because the paramilitaries' abominations drive some young people to join the separatists as their best chance of vengeance. Russian soldiers in Chechnya say that the kadyrovtsy already clash often, and violently, with federal troops, as well as with official Chechen police. In the end, concludes one gloomy Russian lieutenant, “there will be another war”—this time, quite possibly, against a foe whom the Kremlin itself has succoured.
Economist
From The Economist print edition
As delegates from around the world meet in Montreal to discuss climate change, what science should inform their deliberations?
THE climate changes. It always has done and it always will. In the past 2m years the temperature has gone up and down like a yo-yo as ice ages have alternated with warmer interglacial periods. Reflecting this on a smaller scale, the 10,000 years or so since the glaciers last went into full-scale retreat have seen periods of relative cooling and warmth lasting from decades to centuries. Against such a noisy background, it is hard to detect the signal from any changes caused by humanity’s increased economic activity, and consequent release of atmosphere-warming greenhouse gases such as carbon dioxide.
Detection is, nevertheless, important, because the climate seems particularly changeable at the moment. Moreover, forming sensible policies towards climate change, as this week’s United Nations Climate Change Conference in Montreal aspires to do, depends on knowing what is going on. Fortunately, the past year has seen the publication of a series of results that help to disentangle signal and noise.
The first, and most basic, is the continuation of the warming trend at the Earth’s surface that has been happening since the early 20th century. The first chart below, assembled by Britain’s Hadley Centre for Climate Prediction and Research and the University of East Anglia, shows that the ten years to 2004 were the warmest decade since reliable measurements began in the early 19th century. Estimates of earlier temperatures made from data such as ice cores and tree rings, though not as reliable as thermometers, suggest the decade may have been the warmest in the past millennium.
The second result is that the Arctic, a place where any warming trend would be amplified by changes in local absorption of heat as the ice melts, does, indeed, show signs of rapid warming. A report published this year as part of the Arctic Climate Impact Assessment, which synthesised the work of 300 researchers, showed that the amount of sea ice has fallen by 8% in the past 30 years, and also found signs that Greenland’s ice cap is melting more rapidly than in the past.
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The third finding is the resolution of an inconsistency that called into question whether the atmosphere was really warming. This was a disagreement between the temperature trend on the ground, which appeared to be rising, and that further up in the atmosphere, which did not. Now, both are known to be rising in parallel.
The fourth is a study by researchers at the Scripps Institution of Oceanography, in California, into changes in the way the world’s oceans have warmed up at different depths over the past 65 years. These match climate models’ predictions of what happens when warming is induced by greenhouse gases better than it matches predictions of the result of changes in the sun’s activity, the main alternative hypothesis for what might be causing the climate to change.
The fifth is the observation in reality of a predicted link between increased sea-surface temperatures and the frequency of the most intense categories of hurricane, typhoon and tropical storm.
And the sixth, as reported in last week’s Economist, is an observation that ocean currents in the North Atlantic are faltering in ways that computer models of the climate previously suggested would happen in response to increased temperatures.
The signal, in other words, looks strong. That said, there are still a number of uncertainties. For instance, the solar hypothesis is not yet dead. A few researchers who look at the data and agree they show a warming trend nevertheless argue that this may be caused not by man but by nature, in the form of minute increases in the sun’s heat output. That output is known to vary during the course of the 11-year sunspot cycle, as well as over the longer term, and although such changes have not been matched to temperature changes in the way that rises in the level of greenhouse gases have been, they may still be making a contribution.
Another issue is that a second type of pollutant, aerosols such as the minute sulphate particles that form when sulphurous fuel is burned, promote the formation of clouds. These reflect sunlight away from Earth and thus oppose the effect of greenhouse gases. Some have seen this as a possible counterbalance and, indeed, such “dimming” has been noticed in several parts of the world. However, yet another study published this year suggests it is going away as anti-sulphur pollution-control measures kick in.
Perhaps the most important uncertainty, though, is that caused by a lack of enough good-quality, long-term, internally consistent data. Even the industrialised parts of the world, Europe and North America and their adjacent seas, have been well studied for only a century and a half. Too much climate science relies on drawing conclusions from patchy information. It is therefore a nice irony that only under the presidency of George Bush, the bête-noir-in-chief of many environmentalists, has a unified Earth Observation System of satellites, ocean buoys, terrestrial weather stations, balloons and aircraft started to take shape. Though the system involves some 60 countries, the moving spirit is America’s National Oceanic and Atmospheric Administration.
That the climate is warming now seems certain. And though the magnitude of any future warming remains unclear, human activity seems the most likely cause. The question is what, if anything, can or should be done.
One option, of course, is to do nothing—or, at least nothing beyond eliminating the sort of economic nonsense, such as subsidising coal mining, that not only encourages global warming (because coal is the most carbon-rich fuel around), but wastes money. Indeed, it is often forgotten that parts of the world would benefit from a hotter climate. In particular, the warming of the Arctic is opening sea lanes that early European navigators avidly sought but were unable to penetrate. The clearing of sea ice will also permit oil-drilling in places hitherto off limits. And a gentle warming should extend the growing season in places such as Canada and Russia.
Too rapid or too great a warming, though, risks serious, unpleasant and in some cases irreversible changes, such as the melting of large parts of the Greenland and Antarctic ice caps. There is, to put it politely, a lively debate about how far the temperature can rise before things get really nasty and how much carbon dioxide would be needed to drive the process. Unfortunately, existing models of the climate are not accurate enough to resolve this dispute with the precision that policymakers would like.
If greenhouse-gas emissions are to be capped, however, a mixture of political will and technological fixes will be needed. Political will is the subject of the Montreal meeting, which is seeing the opening shots about what, if anything, will replace the Kyoto climate-change protocol after 2012. But a good way to think about the technology is called “stabilisation wedges” and was invented by Rob Socolow of Princeton University.
Dr Socolow observes that on current trends the amount of carbon dioxide emitted by human activity will double over the next 50 years. He calls the space on the graph below between the trend line and the line representing stability at current levels the stabilisation triangle. That triangle can, in turn, be divided into a number of wedges, each of which represents a way that carbon dioxide emissions might be curbed. This way of looking at things, he observes wryly, decomposes a heroic challenge (eliminating the emissions in the stabilisation triangle) into a limited set of monumental tasks.
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What constitutes a wedge is, to a certain extent, a matter of taste. Dr Socolow lists six: greater efficiency, decarbonised electricity, decarbonised fuels, fuel displacement by low-carbon electricity, methane management (methane is a more potent greenhouse gas than carbon dioxide) and natural carbon sinks. Each wedge then breaks down into sub-wedges (for example, decarbonised electricity includes nuclear power, renewable energy, substituting coal with less carbon-intensive natural gas, and capturing and storing carbon dioxide from power stations).
As can be seen from this list, a lot of Dr Socolow’s subwedges rely on the wider deployment and sharpening up of existing technologies, such as ways of generating electricity from renewable energy sources. They also rely on building what might be called “emissions awareness” into a huge range of things that either generate or consume power—a fact that some firms see as a new business opportunity.
The wedge approach also lubricates conceptual shifts. The more hair-shirt sort of environmentalism has emphasised the idea of moving away from fossil-fuel use (though not, heaven forfend, towards nuclear power). Wedge theory, if it may so be described, balances that with thinking about ways to continue burning fossil fuels while keeping the carbon dioxide that generates out of the atmosphere.
One way to do this is to extract it at the power station and inject it into porous rocks deep underground, from which it cannot easily escape. Some oil firms do this already to carbon dioxide that forms part of raw natural gas. Statoil, Norway’s national oil company, has had such a “carbon sequestration” project in the North Sea for almost a decade, and BP now has a similar plant in Algeria.
Power-station extraction could either use the exhaust gases or be pre-emptive, by reacting the fuel with water in a process called steam reformation that yields hydrogen (which is then burned to make the electricity) and carbon dioxide. America’s Department of Energy is sponsoring a series of projects designed to see if either of these techniques can succeed without raising costs too much.
Then comes Dr Socolow’s last wedge. One other carbon-sequestration technology exists, and it is a tried and tested one—photosynthesis. Plants form themselves literally out of thin air, combining carbon dioxide, water and the energy of sunlight to give themselves substance. Photosynthetic carbon sequestration is a game that anyone, rich or poor, can play.
According to David Kaimowitz of the Centre for International Forestry Research, an intergovernmental organisation, 15-20% of greenhouse-gas emissions caused by human activity are the result of the degradation and destruction of forests. Simply replanting the equivalent of what is being lost would thus make a useful subwedge. Indeed, an annex to the Kyoto agreement allows rich countries to pay poor ones to do just that, instead of cutting their own emissions. Not every good idea has to be a new one.
Economist
From The Economist print edition
An ocean current in the North Atlantic is getting weaker. That may be bad news for north-west Europe
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THOSE who worry about climate change worry about many things: rising temperatures, rising sea levels, changes in rainfall and stronger storms, for example. One of the things they worry about most, though, is changes in the circulation of the ocean's currents. That is because these currents are the main way that heat is redistributed from the tropics, where there is a lot of it, to the polar regions, where there is not. If the currents shifted, it would mean that temperatures in some parts of the world changed much more than they would merely as a result of the local atmosphere warming up as heat-trapping greenhouse gases accumulate. Indeed, it could mean that in some places temperatures fell, rather than rising.
One of the places that both history, in the form of sediment records and ice cores, and computer models suggest is vulnerable to such a fall is north-west Europe. And a paper in this week's Nature, by Harry Bryden and his colleagues at the National Oceanography Centre in Southampton, Britain, suggests that history may be about to repeat itself. That is because Dr Bryden and his team have found evidence that the North Atlantic currents which keep the region warmer than its latitude suggests it deserves have weakened significantly over the past decade.
Most readers of this newspaper will be familiar with the Gulf Stream, which carries warm water from the Gulf of Mexico to the edge of the Arctic Ocean. They may be less familiar with the Deep Southerly Return Flow (DSRF), an ocean-bottom current that returns part of this water back to warmer climes. As the map shows, the Gulf Stream splits in two. Part of its water returns past the coast of Africa in a loop known as the subtropical recirculation. The rest takes the DSRF route. The northern arm of the Gulf Stream and the DSRF together constitute what is known as the Atlantic Conveyor Belt.
Since 1957, the International Geophysical Year, the south part of the North Atlantic has been studied from time to time by taking measurements along latitude 25°N from the Canary Islands to Florida. This line marks the point where the maximum amount of heat is being shifted around, and is also a place where the separation of the individual currents is easy to follow (seabed features further north tend to break the currents into separate streams).
Five such transects have been taken, the three most recent being in 1992, 1998 and the one Dr Bryden is reporting, which was done in 2004. Within the usual margins of error, the results in 1992 were the same as those of the earlier two. In 1998, though, the DSRF showed an appreciable drop in flow. And in 2004 it had dropped further. The surface flow of the Gulf Stream past Florida, though, was unchanged. And, to complete the equation, the volume carried by the subtropical recirculation had increased to compensate for the drop in the DSRF. The result, when the numbers were crunched, suggests that the volume of water being carried by the Atlantic Conveyor Belt has dropped by 30%.
If that is correct, and more importantly, if it were sustained, the result for places such as Britain would be a 1°C drop in average temperature—enough to be noticeable. If it were not merely sustained, but got bigger (and the 2004 figure was larger than that for 1998), the temperature drop would be greater. And if the conveyor belt stops altogether, as it has in the past on more than one occasion, Britain's climate would come to resemble that of Newfoundland. The questions, of course, are why is this happening, and can anything be done?
The reason to believe global warming is the cause is that the computer models suggest it. The conveyor belt is powered by the pull of water sinking from the surface to the seabed in three places. It sinks because it is salty and, by the time it has reached northern latitudes, cold. It is therefore dense. But a warming climate will, the models agree, put more fresh water into the sea around these so-called sinking regions. This water will come from increased rainfall feeding rivers that flow into the areas, and also from the melting of the Greenland ice cap. Fresh water is less dense than brine, and the result is a mixture that will remain on the surface and therefore slow the conveyor down.
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Dr Bryden's observations do not extend that far north, so whether this is actually the cause he cannot say. But measurements at one of the sinking regions, which were published four years ago, suggest the turnover rate has dropped significantly since 1957, and a three-year-old paper suggests that the surface waters of the North Atlantic are, indeed, getting fresher.
Everything, therefore, points to global warming being the culprit. It is probably no coincidence that the editors of Nature, who are no slouches when it comes to publicity, have published Dr Bryden's paper in the week that a meeting in Montreal is reviewing the implementation of the Kyoto protocol on climate change. But even if Kyoto were implemented in full, it would not save the conveyor belt if it really is slowing down.
The one positive thing about Dr Bryden's study is that it is the first of what should become a series of annual reports on the state of the North Atlantic. It should thus become clear soon whether this result is just a blip, and reasonably soon whether it is a shift that has run its course, or is part of a downward trend. If it is part of a trend, and you live in north-west Europe, it may soon be time to wrap up warm
Economist
Drowning in fines
From The Economist Global Agenda
Regulators love to trumpet the big penalties they impose on financial transgressors. How they treat the money is almost a crime in itself
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UNTIL 1934, the successors of those who first gathered under the tree that gave this column its name regarded themselves as the free-market regulators of America’s finest businesses (or at least the finest businesses that needed outside capital) and as the foremost advocates of investor interests (meaning their own). Among their proud achievements was the introduction of the annual report, first recommended by the New York Stock Exchange in 1895, to provide “a full report of the operations of the company during its preceding fiscal year”.
Initially, these reports were quite dry, often no more than a financial statement. The penalties for falsehood were simple, as well: a delisting, perhaps, or loss of reputation. The capital markets were known to be populated by sharks; investors participated at their own risk. Life became more complicated following the 1929 market crash with the creation, five years later, of the Securities and Exchange Commission (SEC) and the passage of disclosure laws. Over time, the annual report has swollen into the enormous volumes that today clog our mail, physical and electronic: part legal document, part bold-faced self-congratulation and part place to confess, carefully and unobtrusively, the odd failure. Few better examples of this delicate balance are to be had than the annual report recently released by the SEC itself.
Like most annual reports, the SEC’s begins with a unifying theme written by its leading executive, the chairman, Christopher Cox (“We are a nation of investors”), and a statement of integrity (“Our financial statements were presented fairly”) but then alludes to the kind of issues that, if the SEC were a private company, could send stock prices plunging: weaknesses in internal controls and overspending.
The newest problem to emerge is perhaps the mildest: an audit revealed that an extra $49m was spent on the new SEC headquarters. Mr Cox vows to extract the entire amount from the commission’s operating budget for this fiscal year (which began on October 1st), although this will mean curbs on resources and hiring. Apparently, the enthusiasm for boosting the SEC, born of the scandals of recent years, which convinced Congress to lavish as much money on the commission as it could take, has run its course.
Far more serious is a weakness discovered last year that has yet to be resolved: the inability of the SEC to make sense of all the money coming from various companies and individuals paying fines and “disgorgements” to settle charges from the flood of litigation in recent years. According to the footnotes in the SEC’s report, in the year to September 30th the commission collected $1.6 billion, of which only $302m went back to harmed investors.
Of the rest, $207m was sent to the Treasury and $1.1 billion is being held for future distribution, bringing the total that has yet to be paid out to roughly $2 billion. Another $1.4 billion in announced fines is yet to roll in—though the SEC expects to collect only $96m of it. Where, precisely, all this money came from and where it should go is not clear.
Worse still, after its audit in 2004, the SEC determined that its systems for recording penalties and disgorgements were inadequate, resulting in inaccuracies. In response to this problem, the commission’s staff put a tremendous amount of effort into trying to account manually for fines and disbursements. These efforts do not appear to have been entirely successful. An audit of the results found significant errors. Adding to the mess, there are apparently two SEC departments responsible for disgorgements and penalties, and communication between them is not as effective as it should be. A listed company that was similarly incapable of dealing with its revenues and accurately paying out claims could expect to face shareholder lawsuits. In fact, it might well receive a call from the SEC.
Other failings disclosed in the SEC’s report also look like precisely the sorts of problems the commission exists to prevent in listed companies. There are weaknesses in its information-security controls, resulting in “increased risk of unauthorised individuals being allowed to access, alter or abuse proprietary SEC programs and electronic data and assets.” The commission also admits to being unable to produce reliable and timely financial statements without a lot of manual labour.
As bad as this sounds, the SEC is in better shape than many of the states which in recent years have played prominent roles in prosecuting financial firms and received large settlements. At least the commission is being open about its problems. Numbers, even if they might be wrong, are published and there is clearly pressure from within to make them as accurate as possible. By alluding to the weaknesses on the first page of the annual report, Mr Cox, who is new to the job, is making his priorities plain.
As an example of the record of state regulators, take the office of New York’s attorney-general, Eliot Spitzer. New York received $100m in a settlement with Merrill Lynch, after the equity-research furore, and $40m in another with Canary Capital, over mutual-fund trades. All of it has been funnelled into the state’s general fund. None has yet gone back to the investors who had been ripped off. There is also a large pot of money, derived from the general equity-research settlement between Wall Street firms and federal and state regulators, that was earmarked for investor education and is sitting with something called the Investor Protection Trust. Most of this remains unspent, largely because no one can agree on what should be done with it.
The old system of deterrence run by the traders on the New York Stock Exchange clearly had its limits. Its expectations of behaviour, however, were also modest. If the SEC’s annual report has an underlying message, it is that the transition to a better system is far from complete.